Universal Life Insurance vs Whole Life Insurance- Which is Best?

Thinking of buying a permanent life insurance plan but don't know which is best? We've got the answer for you. People widely select universal life insurance in Toronto and whole life insurance policies to provide financial security to beneficiaries.

Which of these policies offers better cash flow? Which is more expensive to buy? What are the key differences between these policies? Likewise, many questions come into the mind while investing in universal life insurance in Toronto or whole life insurance.  To clear all the doubts, let's read a detailed comparison to make an informed decision.

Universal Life Insurance

Universal life insurance is often known as flexible life insurance as it offers flexibility to increase or decrease death benefits. Policy holders can pay for the premium anytime. Depending on the policy's potential cash value, it can be utilized as a premium payment or set alone with potential cash to accumulate value for a certain period of time.

The actual growth in a universal life insurance policy depends on certain specifics of the individual policy. When you purchase a policy, the providing insurance company imposes a minimum interest crediting rate that is specified in the policy contract.

However, if the lender's portfolio generates more than the minimum interest rate, the extra earnings may be credited to the policy. Because of this, universal life plans can yield more often than whole-life policies in certain years.

How does Universal Life Insurance Work?

When someone invests in universal life insurance in Toronto, half a part will go into an investment account/ the interest generated on investment will be credited to the account, which grows according to a tax-deferred basis. This further increases the cash flow. The perk of buying universal life insurance in Ontario is adjusting the benefit amount when required. Alternatively, policyholders can use the cash value to pay policy premiums as long as they have sufficient money in the account.

Whole Life Insurance

Whole life insurance provides financial coverage for the rest of your life despite how long you live. The policy is designed to get long-term key responsibilities such as post-death and adult child care expenses, including estate taxes. The beneficiaries will get the benefits of the policy when they die.

How Does Whole Life Insurance Work?

Toronto's universal life insurance company in Toronto put some part of the policy premium payment in investment and high-interest bank accounts. The cash value will increase with the premium payment you make every month. Also, the saving component of the policy helps to build up the cash value based on tax-deferred. This policy is specific to fulfill long-term financial goals. Hence it is essential to continue premium payments as long as you survive.

Difference between Universal Life Insurance and Whole Life Insurance

The key differences between both these insurance policies are as follows:

Universal Life Insurance	Whole Life Insurance
Flexible premium with certain limits	Premium is fixed
Multiple policy options available to grow the cash value	The cash value will grow based on a fixed rate of interest
Death benefits will be flexible within certain limits	Death benefits will be fixed. This will not change.
Low premiums with different products like guaranteed universal life insurance	Premium is high

Universal life insurance in Toronto allows individuals to adjust their death benefits and premium amount. The growth rate of the cash value will depend on the universal life insurance type your options, such as:

• Indexed universal life insurance:The growth rate of cash value is tied to a particular index like the S&P 500.
• Guaranteed universal life insurance: The cash value growth rate will be minimal. However, it still provides the lowest premium amount for financial coverage for life.
• Variable universal life insurance: Individuals will select their investment accounts, and the cash value gains depend on how the investment performs.

Which Is More Expensive: Universal Life Insurance or Whole Life Insurance?

Universal life insurance in Toronto is less expensive than whole life insurance. Whole life insurance costs twice in comparison to universal life insurance. The premium amount of whole life insurance doesn't change throughout the year, which means you need to pay the same amount throughout the policy tenure. Moreover, the amount of death benefits don't change.

On the contrary, the universal life insurance premium amount is flexible. You can make the minimum payment every month towards a universal life insurance policy. This reduces the premium cost, which makes it cheaper than whole-life insurance. Above this, you can adjust the death benefits your beneficiary receives.

How do you Choose Between Universal Life Insurance and Whole Life Insurance?

While finding the right permanent life insurance, you need to emphasize the above-listed key difference between universal life insurance in Toronto and whole life insurance. In addition, you can ask questions listed below:

• Do you need the stability of guaranteed returns or flexible returns with universal life insurance?
• What do you prefer, higher risk or high cash value? If you have a higher value you want, then universal life insurance can be the best option.
• Would you prefer a fixed premium and beneficiary amount or a flexible premium with death benefits as covered in universal life insurance?

Find the Right Insurance Plan for You With Us.

Certified financial advisors can help you decide on a better policy if you still have vague thoughts regarding insurance plans. INSUREDCAN is here to help you select the best insurance plan that meets your budget, needs and financial goals. Call us now and get a free consultation.