Principal, LifeNet Insurance Solutions, Redmond, WA
Universal life insurance can be designed in many ways with varying guarantee periods, premiums and cash value. You can think of it as a car chassis where everything above the wheels and frame can be changed depending upon needs of the applicant. Term insurance is much more limited with specific guarantee periods and no cash value in most cases.
Renwanz Insurance & Financial Solutions, Carlsbad, CA
Universal Life insurance, also known as UL, is a form of permanent life insurance. A UL can be designed to last your entire lifetime. Because age is a critical element in the formula for figuring the cost of Universal Life, if you purchase a UL when you are young, the low rate you pay can be locked in for life.
Term life insurance has a definite end. If you purchase 20 year term life insurance it will last 20 years. If you were to die 20 years and one day later, your coverage would have lapsed and no death benefit payout would occur. If after the first 20 year term you decided to get another term policy, you have to re-qualify by having another medical exam performed. Your age and possibly even changed health conditions would cause the cost of this new term policy to be considerably higher.
Some types of UL policies can have a cash build-up inside them adding a savings component to the policy. The cash value grows tax deferred and can be used along life's path for just about anything you deem appropriate including college education and even a retirement income stream.
Speak with a qualified independent insurance agent to learn which type of life insurance will work best for your individual situation.
That is a great question! There are a couple of similarities, and a lot of differences between the two. They are alike in that they can provide a death benefit, should you pass while they are in force. They are alike in that the cost of the insurance rises as the policy ages. They are alike in that they both can end abruptly. Term policies have a designated end date, and to receive the death benefit, you must pass during that term period between policy start and end dates. There is no cash value, or perks, and the price may be set, or it may increase after a guaranteed period, at which point the rates increase. Universal life policies are term policies with whole life characteristics The policy is guaranteed to last a certain number of years (generally 20), but can end sooner, or last longer, depending upon your payments, and the performance of the policy investments. Term policies generally come with guarantees, UL policies generally come with few. They can grow large cash values, (and that is the hook that they will use to sell it to you) but there have to be several things that fall into place for that to happen. In a term policy your greatest risk is that you outlive your policy; In a UL, it's that you outlive your policy, and lose what you paid into it. Whole life policies fall right into the middle, and offer the least amount of risk, with the best guarantees, and benefits. Please contact me if you would like to discuss them, okay? Thanks for asking!
Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
The main difference between Term and Universal life insurance is that it is possible to continue a Universal policy all the way through a person's life even if they live to 100. I say possible because more often than not it doesn't work out that way. But if one were to "over fund" the policy in the early years of the policy or continue to increase the premiums they pay as the cost of insurance goes up with their age they could keep the policy going. Where with a Term policy it will end and may not be renewed in most cases past age 80.
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Term life insurance has a definite end. If you purchase 20 year term life insurance it will last 20 years. If you were to die 20 years and one day later, your coverage would have lapsed and no death benefit payout would occur. If after the first 20 year term you decided to get another term policy, you have to re-qualify by having another medical exam performed. Your age and possibly even changed health conditions would cause the cost of this new term policy to be considerably higher.
Some types of UL policies can have a cash build-up inside them adding a savings component to the policy. The cash value grows tax deferred and can be used along life's path for just about anything you deem appropriate including college education and even a retirement income stream.
Speak with a qualified independent insurance agent to learn which type of life insurance will work best for your individual situation.