Which Is Better Whole Life Or Universal Life Insurance?

  1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    They are different forms of “permanent” insurance. In order for a policy to be permanent, that is last the entire lifetime of the insured it must develop cash value. A whole life policy guarantees cash value in the policy. A universal life policy doesn’t guarantee cash values. It is possible for a universal life policy to exhaust its cash values rendering the policy worthless. The universal life policy invests in a separate fund that is generally managed in a more aggressive manner than the guaranteed whole life cash value fund.
    Answered on August 6, 2014
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  2. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question! The answer depends upon a couple of things, your tolerance for risk, and whether you are a "buy and forget about it" or a "keep tabs on everything" person. If you want to buy a policy that draws automatically from your account, and you never have to think about it again, (other than to change beneficiaries, or borrow from it) buy whole life. If you have a high risk tolerance, and like to check often on how things are doing, then you might be fine with a UL policy. There is a much greater risk of this policy lapsing than with the whole life, and this is a great possibility if you aren't paying attention to how well it remains funded. Your premium payments can increase with this type of policy, to keep it afloat, so this is definitely not a "buy and forget" type of policy. I hope that helps, thanks for asking!
    Answered on August 11, 2014
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