Compare Life Insurance: Universal vs. Variable
What is Universal Life Insurance?
Universal life insurance is a form of permanent life insurance, which means that it not only offers the death benefit, which is payable to your beneficiary upon your death, but it also comes with an investment component that allows you to grow funds in a separate account at a fixed rate of growth.
What’s unique about this type of coverage is that as your savings/investment amount grows, it becomes a cash value that you can take out. Even better, you can make an arrangement to have your savings applied to your premium so that you no longer have to make out-of-pocket payments anymore. However, because it comes with this added investment feature, it is often more expensive that other policy types.
What is Variable Life Insurance?
Variable life insurance is very similar to universal in that it is a form of permanent life insurance, offers the death benefit at the predetermined premium, and offers an investment component. However, whereas universal’s investment component only allows you to invest in one account, variable allows you to take part in various investment funds. By taking this route, you can choose among both risky and safe options, allowing you to make decisions that can grow your account at a faster rate.
There are benefits to purchasing both variable life insurance and universal life insurance. The key to choosing which is best for you rests primarily in your investment preferences. So if you know how you’d like to invest while paying your premiums, then deciding between the two should be that much easier.
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