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What Is The Difference Between Universal And Term Life Insurance?

What Is The Difference Between Universal And Term Life Insurance?

There are some big differences between universal and term life insurance. It is these differences that can help an individual determine which is right for them and which is not. Everyone has their own preference.

It is in identifying the differences between universal life insurance and term life that individuals can make the right decisions for them and their families. Some of the questions that come about include the cost differences, as well as what benefits exist.

As for why you should compare the two, you may find that one suits your needs better than the other. The idea behind life insurance coverage is to make sure you have a policy that fits your situation, whether it is financial or something else. Everyone needs to have life insurance in order to protect their families from the financial consequences of their untimely death.

Differences in Cost

There are differences in cost. The difference is that universal life consists of a higher premium than term life. This has much to do with the fact that there are certain features that universal life consists of that term life doesn't.

Basically, it is all in the features. Universal life has a premium that can change. However, term life does too, but the changes occur in a different way and here is how: Universal life does not have a term. It is a form of permanent life insurance in which a person is always insured as long as they keep up their premium payments.

Term life insurance also ensures that a person is always insured as long as they keep up their premium payments. However, there is a term and this means that it is not permanent. This term can be 5, 10, 20, 30, or even 40 years. If a person does not die within the term, then the policy expires. It can be renewed, but it will be renewed at a higher rate than it was before because a person ages and the premium increases with age.

These are just some of the features that make the two different. But there is one more difference and that is that term life insurance requires a health exam and universal life doesn't. This is because, despite the fact that term life insurance is cheaper, it does pay out a higher death benefit. As a matter of fact, it can pay out a very high death benefit.

Individuals have been known to get high amounts of coverage for very little money. However, the better a person's health, the cheaper they can ensure a high payout to their family. Those in poor health are going to have to pay more for the extremely high death benefit.

Premium Payments

On both universal life insurance and term life insurance, premiums have to be paid. If the premiums are not paid, then the policy lapses and there is no more coverage. However, there is an option with universal life that you can take advantage of.

With universal life you have flexibility with your premium. This means that it can change based on your needs. This is one of the reasons why the premium tends to be higher than term life insurance. You have options. You can also use your cash value to pay your premium so that your policy does not lapse.

So now you know the differences between term life insurance and universal life insurance. You can choose which is best for you based on your needs and your goals. The best way to decide is to compare life insurance quotes and decide from there.

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