What Is The Difference Between Universal Life Insurance And Whole Life Insurance?

Universal Life insurance and Whole Life insurance are both considered to be permanent life insurance products. Although, there are distinct differences between the two types of life insurance. Below I’ll go over some of the differences.

Whole Life:

  • Caters to long term goals by offering customers consistent premiums and guaranteed cash value accumulation. 
  • Whole life covers you as long as you live. (As long as necessary premiums are paid. However, after a pre-determined period, many times premiums can be made from the cash value of the policy or from dividends.)
  • Level premium amounts throughout the policy. (In other words, you pay the same premium amount for a specific period of time.)
  • Generally whole life pays dividends each year.
  • Provides a built in savings feature in addition to life insurance coverage.
  • Generally customers have very little to no choice in how the investment component (savings element) is invested.
  • Because of the level premiums, the built in savings feature, fixed death benefit, ability to access the cash value thru loans, dividends, and withdrawals, whole life is generally is the most expensive type of life insurance.

Universal Life:

  • Universal life can provide guaranteed lifelong protection (or to a specific age) as long as necessary premiums are paid. However, after a pre-determined period, many times premiums can be made from the cash value of the policy.
  • Gives customers more flexibility with premium payments, death benefits, and the savings element of their policies.
  • Customers can choose how the investment component (sometimes referred to as the savings element) is invested.
  • Customers also have the ability to access cash that has accumulated, in the form of loans and withdrawals after a certain period of time. 
  • Lets customers establish a permanent life insurance policy with a lower premium than they would have to pay under a whole life policy.
  • Universal Life may be set up to have a guaranteed death benefit up to a specific age, such as age 90 as an example rather then lifetime, thus reducing the premium amount. Also the savings element can basically be stripped out to give almost pure death benefit, additionally reducing the premiums.


Permanent life insurance is designed to give you and your loved ones livelong security. Whole Life is more rigid in that many features are preset and fixed. Where as Universal Life is a lot more flexible. Whole Life generally pays dividends and Universal Life generally does not. Because Universal Life is more flexible, it may be able to be customized more to your specific needs. With Universal Life customers have the ability to change the premium amount and the death benefit amount. Also Universal Life may be set up to have same amount of guaranteed death benefit as Whole Life, but strip out the savings element to keep the premiums a lot lower than Whole Life.

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Note: Life Insurance information can be confusing to many people. As an "independent licensed agent" I can explain things to you in simple terms so you feel comfortable making a decision. Then I can help you choose a life insurance policy, from many choices of different insurance companies, that you feel fits your needs. Plus if you choose to work with me you will have personalized service by a local agent that can shop premium quotes for you. If you would like my assistance to discuss and/or start the process of getting you insured please call me at 941-404-5334. 

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