Universal Life Insurance 

Most people like the idea of being completely covered by life insurance until death, however, they never really purchase these policies. So why is this? Well term life insurance is more affordable, flexible, can be cancelled and new ones started. These are significant reasons why people always choose Term life insurance. So rises another question, what is the need for permanent life insurance?

Well for  a start, Whole (permanent) life insurance offers life insurance cover until your death. Another benefit is that the coverage will never expire meaning that the customer doesn't have to shop around for new quotes  and reapply. As a knock on effect of this, the customer will also never be denied later in life due to decreasing health and old age. The premiums are stationary throughout the entire contract, thus the rest of your life. Due to these fixes there is no surprising changes or rise in premiums, but there is no flexibility.

The main difference between the permanent and temporary policies is the duration of coverage with the standard term policy lasting for a specific time period, thus a 'term'. If the insured dies during the term of the policy, the life insurance is paid out. If they die after the policy, there will obviously be no payout. Term life insurance is renewable but the premiums usually increase as the client has aged more, however, with permanent or Universal, the policy is fixed until death.

Another major difference between term and permanent life insurance is that permanent can offer a type of 'savings', an accumulation of cash value whilst term does not, it is purely insurance. Universal also offers this kind of savings, in that you can accumulate a cash value after time. 

Early in the life of a whole life or universal life insurance policy, the price of insuring against premature death is lower than the premium value. The insurer deposits the excess amount of money--less the company's profits and fees--into a tax-deferred savings account. This value of capital is otherwise known as "cash value." This money is invested and the earned money afterwards are credited to the account, increasing the cash value. These funds are applicable to the policyholder in like a loan etc. If the policyholder cancels the policy, he or she receives the cash value as the policy "surrender amount".

Universal life cover differs from permanent by the flexibility available. Whilst Whole cover is not flexible, the insurer has the chance to change the premiums (within limits) and the cash value payout (within limits) if he/she so desires. So in general, Universal is the same as Whole, but takes into account peoples affordability.

Many individuals, who want complete guaranteed insurance of Permanent life insurance but are scared of the fixed premiums, find that Universal is a more ideal option for them. 

Illnesses Insured