Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Term life will pay a death benefit to those that you love if you die within a specified period of time. A universal life policy is a “permanent” life insurance policy in that it can be used to provide coverage until the day of death whether that is soon or many years from now. The term policy is pure expense. The universal life policy, while more expensive now, can actually reduce the cost of protection over many years by accumulating cash values. Discuss this with your agent.
Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
The main difference between Term Life and any form of permanent Life, Universal included, is that Term is pure Life Insurance without any frills. What I mean by that is that, so long as it is in force, it pays the stated amount as a death benefit to your named beneficiary when you die. Permanent plans include other features such as some form of inside cash accumulation that Term Insurance does not.
Some differences between Term and Universal Life are:
1) Term rates are locked in for a set number of years. Universal life rates may be locked in for life (but not always).
2) Term rates are based on cost of insurance. Universal Life rates are based on costs of insurance and interest rates.
3) Term rates must be paid within at least two months of the due date, or the policy will lapse. Universal rates may possibly be paid by cash value within the policy (but not always).
4) Term policies do not have any cash value. Universal Life policies may have cash value (but not always).
5) Term policies are pretty inflexible. Universal Life policies have much more flexibility.
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1) Term rates are locked in for a set number of years. Universal life rates may be locked in for life (but not always).
2) Term rates are based on cost of insurance. Universal Life rates are based on costs of insurance and interest rates.
3) Term rates must be paid within at least two months of the due date, or the policy will lapse. Universal rates may possibly be paid by cash value within the policy (but not always).
4) Term policies do not have any cash value. Universal Life policies may have cash value (but not always).
5) Term policies are pretty inflexible. Universal Life policies have much more flexibility.