Comparison between: Participating Whole Life Insurance, Universal Life insurance with Level Premium and Term Life Insurance

Before we move on to the comparison table, let’s briefly review these products.

Term Life Insurance – this is the simplest of all types of insurance. You know upfront how much you’ll pay over a set period (e.g., 10 or 20 years) and the amount that will be paid to beneficiaries in case of death. The policy isn’t indexed to inflation, and monthly (or annual, if you choose that option) payments are fixed. At the end of the term, it’s often, but not always, possible to renew the policy without additional medical questions, though the cost will be significantly higher. Current rates for term life insurance can be found on our website.

Universal Life with Level Premium – this is a type of life insurance with a savings component, where the insured person knows the minimum premium needed to keep the policy in effect. This is not the only option for Universal Life (there’s also Universal Life with Annual Renewal Term premium), but in my view, the level premium is optimal for most people, as the cost won’t increase in the future. Additionally, it’s possible to pay more than the minimum, and any excess funds will be invested and accumulated in the policy’s cash value.

Participating Whole Life Insurance – this type of life insurance participates in the insurance company’s profits. Generally, each year, a portion of the profit is added to the policy’s cash value, which the insurer uses to purchase additional life insurance coverage. This way, both the investment and the life insurance coverage grow year after year. This isn’t the only option for Whole Life insurance, but it is, in my opinion, the best choice for most clients.

To download the comparative analysis page in a PDF file, click on this link.