Both whole and universal life insurance are sometimes called permanent life insurance policies. They offer lifelong coverage and a cash value growth component that helps the policyholder saves as it grows with each premium payment and could earn interest tax-deferred.

These policies are fairly similar but differ in how premiums, death benefits, and cash value growth components work. These differences make each suitable for different policyholders.

This article will dive into the differences between whole and universal life insurance to help policyholders pick the best policy type for their needs and budget.

What is whole life insurance?

Whole life insurance is known as permanent life insurance coverage that offers fixed premiums and death benefits.

The cash value growth component grows at a fixed, guaranteed rate. Once it grows enough, the policyholder can borrow against it or withdraw from it. They may also get the total cash value minus surrender charges if they surrender the policy.

What is universal life insurance?

Although Aflac does not offer universal life insurance, it is known as a type of permanent life insurance that offers adjustable premiums and death benefits. Policyholders can reduce their premiums by lowering the death benefit or requesting a death benefit increase in exchange for higher premiums and, in some cases, a new medical exam.

The cash value lets the policyholder borrow, withdraw, and pay premiums once it grows large enough.

Differences between whole and universal life insurance


Whole life insurance tends to charge fixed premiums that are higher than universal life insurance premiums.1 In many cases, policyholders can’t change whole life insurance premiums once they take out the policy.

On the other hand, universal life insurance tends to have lower premiums, and policyholders can adjust premiums within certain limits if needed.

Death benefits

Whole life insurance death benefits are fixed. Policyholders generally cannot change their death benefits once they get their policy.

Universal life insurance, on the other hand, allows the policyholder to change their death benefits within certain limits if necessary.

Cash value usage

Both policies typically let policyholders build cash value and borrow or withdraw against it when it grows large enough. Further, both typically pay out the cash value minus surrender charges if the policyholder surrenders the policy.

However, universal life insurance also lets policyholders pay premiums directly with their cash value. As long as they maintain sufficient cash value, their policy won’t lapse.

The verdict: whole life insurance vs. universal life insurance

Whole and universal life insurance are excellent potential choices for someone needing lifelong coverage and an additional way to prepare for the future. However, key differences suit each distinct type of policyholder.

Whole life insurance may work well for someone who wants the simplicity of fixed premiums, death benefits, and cash value and has the budget for higher premiums.

Meanwhile, universal life insurance may work better for someone looking to save money, get increased flexibility, and be willing to manage their policy more closely.

No matter the type one chooses, prospective policyholders should talk with a benefits advisor to see if a whole life insurance or universal life insurance fit their needs.

Then, they must shop around to gather and compare quotes. This will help them find the best rates on the coverage they’re looking for.

Coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.

68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Virginia, Policies ICC0965JTO & ICC0965JWO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series: Whole: In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Q60000 series: Term: In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.

Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. The life insurance policy described herein contains an optional Accelerated Death Benefits Rider that is intended for favorable tax treatment under Section 101(g) of the Internal Revenue Code. Aflac does not give legal or tax advice. Please consult with a qualified legal, tax, and accounting advisor before engaging in any transaction. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).

This is a brief product overview only. Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.

Aflac does not offer Universal or Variable Universal life insurance.

Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.??

WWHQ | 1932 Wynnton Road | Columbus, GA 31999

NY | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211

[Footnote sources]

1 Forbes. “Whole Life Vs. Universal Life Insurance” April 2023

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