Life Insurance

Life Insurance

Posted by Safe In4 Hub

Universal Life vs. Term Life Insurance




Life insurance providers offer a variety of products to suit every need?from short-term policies for specific periods, to policies that cover your entire life and provide investment opportunities. While the number of choices benefits consumers, it also requires some homework to determine which kind of policy best suits your goals and budget. Certainly cost is an important factor, but there are other benefits and limitations to consider when choosing either Universal or Term Life.

Term Life Offers:

- Low-cost coverage for a specific period, usually one to 30 years
- Possible renewal option with health requalification requirements and higher premiums
- No cash equity accrues on your premiums

A Term Life policy with the same face value costs less than a Universal Life policy because Term Life does not build equity - at the end of the term you will receive no cash back. Because of the low cost, Term Life may be a good choice for young people who need extra protection until their children are grown. Others may purchase larger amounts of Term Life insurance to cover specific expenses, like paying off a mortgage or business debts in the case of an untimely death.

Universal Life Offers:

- Coverage for your entire life
- A return on part of the policy premiums
- Investment and premium payment flexibility
- The opportunity to use the premiums' accumulated cash value as collateral for loans, to pay premiums, and for other uses
- Tax-deferred earnings while the policy is in force

Universal Life policies are more expensive than Term Life, but they have several attractive options. First, Universal Life covers the span of your lifetime so no health requalifying is required. Second, and most importantly, part of your premium is invested on your behalf. As this accumulated cash value grows, you can choose to use it in any of several ways, including to supplement your retirement income. Unlike traditional Whole Life policies, Universal Life offers you the opportunity to choose your investment vehicles. However, this choice also means that you take more risks as your return rate is not fixed or guaranteed.

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