Is whole life insurance the same thing as universal life insurance?

UPDATED: Jul 3, 2012

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Asked July 3, 2012

1 Answer

Whole life, also called permanent life insurance, is a particular type of life insurance. For insurance goals that have predetermined time limits, term life policies expire after a specified period of time. For life insurance that will remain in effect throughout the insured person's lifetime, whole life policies are the better choice. But choosing a whole life policy is the first choice, because there are a number of permanent life insurance policies to choose from.

A whole life insurance policy is a broad definition. The policy could be variable whole life, universal whole life, or some other type altogether. Each type remains effective throughout your life as long as the premiums are up to date, but they provide different financial tools that could affect the final value of the policy. For instance, universal whole life allows the policy owner to choose mutual funds or other investments for the policy, and has the potential to gain a great deal of value while the guarantee cash payout will never go below the stated policy value.

Other types of whole life insurance include final expense insurance, no medical exam insurance, and variable whole life, to name only a few. Each one is designed to meet specific goals, such as final expense and no medical exam policies providing guaranteed death benefits without the inconvenience of undergoing a medical exam. These two policies do not offer much in the way of financial tools, but they do provide coverage for those who might otherwise have a hard time finding a policy.

To answer your question in simple terms, yes, a universal life policy is the same as whole life. The difference is that universal life is one type of whole life policy, with the definition of whole life insurance simply being a policy which does not expire. Universal life insurance is typically one of the more expensive types of whole life coverage, owing in large part to the way the accrued cash value can be manipulated by the policy owner.

Answered July 3, 2012 by Anonymous

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