February 17, 2020

How Does Universal Life Compare to Whole Life?

If it’s not something you deal with on a daily basis, life insurance can be confusing. There are a lot of great options, but also a lot of terminology that only people in the life insurance industry can understand.

Universal life insurance is one of the more complicated products available. It has a lot of great features, including flexibility and good growth potential, and it could be an appropriate option for you. To help you get a better understanding of universal life, we’re going to compare it to its better-known cousin, whole life insurance.




Premiums are the payments you make either quarterly, monthly, semi-annually, or annually to purchase and keep your life insurance protection.


  • Universal Life: Universal life has flexible premiums, which means you can increase or decrease your premium payments over time. If money is tight, you can even skip a premium if needed without losing your life insurance protection*. However, there can be consequences for skipping or reducing payments, so we recommend talking with your agent when considering these options.
  • Whole Life: With most whole life insurance policies, your policy premium will remain the same as long as you keep your policy and continue making premium payments. Purchasing life insurance now instead of later will help you lock in a lower policy rate as life insurance premiums will increase as you get older.

Cash Value

Cash value is the money that grows inside your policy over time. It can provide extra financial security. Not all life insurance policies have this feature.

  • Universal Life: Universal life insurance offers the opportunity to grow a cash value. The cash value amount is dependent on a few things, such as how much money is invested in the policy, how many years have gone by, and premium payments you’ve made for your cash value to grow. These are details that your agent can help you break down and understand. In case of an emergency, you can withdraw part of your cash value or take a loan out** against it, however, there can be consequences for doing so. Make sure you always talk to your agent before making these types of withdrawals.
  • Whole Life: With whole life insurance, the cash value is guaranteed. Your agent will be able to show you what your cash value will be every single year in the future. Some policies, such as our whole life policies at BetterLife, offer the possibility of earning dividends. These dividends are not guaranteed as the dividend value is based on the financial success of BetterLife. If successful, the dividend end value will offer you a few options for additional financial security. If earned, you can choose to receive your dividends in cash, use them to make a premium payment on your life insurance policy, pay for additions on your policy, or leave the cash in your policy to earn interest.

Death Benefit

The death benefit is used to describe the money the beneficiary receives if the insured person passes away.

  • With either whole life or universal life insurance, your beneficiaries (who you choose) will receive a death benefit that is generally not subject to income taxes***. This benefit helps provide your loved ones with a financial security net to help cover funeral expenses or replace income after you are gone.


Both whole life and universal life insurance policies are designed to offer long-term protection.

  • Universal Life: Universal life insurance can cover one or two people, such as a married couple or business partners. With the flexibility of universal life insurance, the coverage (or the death benefit amount) you choose can be adjusted, and your policy can stay in place for your entire lifetime provided adequate premiums are paid.


  • Whole Life: Whole life insurance offers permanent protection, which means you are guaranteed to be covered your entire lifetime as long as you pay enough premiums. Unlike universal life insurance, the coverage you choose for your whole life insurance policy will remain the same and is not adjustable. If you have family members who also need coverage, children can sometimes be added to the whole life policy through riders. Riders are additions to an insurance policy that provides specialized, additional coverage that is not originally included in the basic policy.

Member Benefits

When you become a member of BetterLife, you gain access to our Member Benefits at no additional cost. Our benefits include scholarship opportunities and extra financial protection. You can read more about our benefits here.

Universal life and whole life insurance are great options for individuals, business partners, or families that want financial protection. An insurance agent can help you determine the best route to reach your goals. Find an agent in your area and reach out today!


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*Skipping premium payments can affect the overall performance of your policy. **Cash values can be accessed through loans and/or withdrawals, but these will reduce the death benefit. In addition, withdrawals from some policies may be subject to surrender charges and could have a permanent effect on cash value and death benefit. ***According to tax laws IRC Sections 101 & 7702