January 23, 2022 The Newspaper Serving LGBT Los Angeles

Should You Purchase Universal or Whole Life Insurance?

When looking for a life insurance policy that has a cash value, there are two main types to consider. Whole and universal life insurance both offer coverage for as long as you live, but they have some key differences worth noting. In this article, we’ll take a close look at the difference between universal vs. whole life insurance, how each policy works and which one may be right for you.

What Type of Life Insurance Can You Sell?

If you have whole or universal coverage, you can still sell your life insurance policy through a life settlement if you meet the criteria. This guide covers everything you know about the process so you can acquire much needed liquidity. When you sell your term life insurance policy through a settlement, it may be ideal if you plan to use coverage as a form of retirement planning or financial investment.

Selling your policy can also be used for things like paying off student debt, making a large contribution toward your mortgage or funding a business venture. Whenever you sell your insurance policy, the lump sum cash payment is yours to use however you see fit. As you explore your coverage options, consider not only your long-term plans but the total value each policy provides. You should choose a plan that offers both future value and present protection for your beneficiaries.

What is Universal Life Insurance?

Universal coverage offers the greatest level of flexibility, so it’s a great choice for someone who plans on extending their family or who may want to lower their death benefit later. As a young single girl, you might not think a policy is necessary but universal allows you to take one out now that can flex with your life as needed. Premiums are also varying, which means you can adjust them to suit your budget.

If you go with universal coverage, you have adjustable benefits and premiums that allow you to match your policy to your needs. The only thing that stays consistent is a minimum amount, which you’ll have to meet in order to keep your policy active. Universal policies also have a minimum guaranteed cash value, so you can grow your wealth depending on the size of your premium contributions. For someone who wants to use their policy as a form of investment, there is more room to modify how much you earn and what amount of cash you generate over time.

What is Whole Life Insurance?

Whole life insurance has less flexibility, but it does build a consistent, tax-deferred cash value. Your premiums never change, so what you pay when you enroll is the same cost 10, 20 or even 50 years later. The money you put toward your policy each month is broken up into both a payment for the insurer and a contribution. Your cash value will generate over time, and once you hit a minimum amount, you’ll be able to either borrow against your policy or withdraw funds. In some cases, whole life insurance policies can pay dividends, which allow policy holders to reinvest and lower their monthly premiums or increase their overall cash value. This grants some flexibility, but in general, a whole life insurance policy is fixed and best suited for someone who is looking for long-term investment and permanent coverage.

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