Whole life insurance
- Lifetime coverage with premiums that are typically level
- Builds cash value over time according to the contract
- Participating whole life may pay policyholder dividends. Dividends are not guaranteed and depend on the insurer’s results.
Universal life insurance
- Lifetime coverage combined with a separate account that can grow on a tax-advantaged basis within limits set by tax rules
- More flexibility in premiums and investment options, which also means more responsibility to monitor the policy
- Account values can rise or fall depending on the options chosen
Common uses
- Covering taxes owed at death on investments or property
- Leaving an inheritance or charitable gift
- Funding a buy-sell agreement or protecting a key person in a business
- Final expenses
Permanent insurance costs significantly more than term for the same death benefit. Any illustration of future values depends on assumptions that are not guaranteed. I’ll show you the guaranteed and non-guaranteed parts separately. For tax and estate decisions, involve your accountant or lawyer.
Coverage descriptions are general. Your policy wording, limits and exclusions determine what is covered. Availability and premiums vary by insurer and by your circumstances.