Term life insurance and universal life insurance are two different types of life insurance policies with distinct features and benefits.
Term Life Insurance
Term life insurance provides coverage for a specific period, typically ranging from 10 to 30 years. It offers a death benefit to the policyholder's beneficiaries if the insured person passes away during the term of the policy. Here are some key features of term life insurance:
1. Affordability: Term life insurance is generally more affordable than other types of life insurance because it provides coverage for a specific period and does not accumulate cash value.
2. Fixed Premiums: The premiums for term life insurance remain fixed for the duration of the policy term.
3. No Cash Value: Term life insurance does not accumulate cash value over time. If the policyholder outlives the term, there is no payout or return of premiums.
4. Renewability and Convertibility: Some term life insurance policies offer the option to renew the policy at the end of the term or convert it into a permanent life insurance policy without the need for a medical exam.
Universal Life Insurance
Universal life insurance is a type of permanent life insurance that provides coverage for the entire lifetime of the insured person. It offers both a death benefit and a cash value component. Here are some key features of universal life insurance:
1. Flexibility: Universal life insurance allows policyholders to adjust the death benefit and premium payments to suit their changing needs and financial circumstances.
2. Cash Value Accumulation: A portion of the premium paid for universal life insurance goes towards the cash value component, which accumulates over time and can be accessed by the policyholder.
3. Investment Options: Universal life insurance policies often offer investment options, allowing policyholders to potentially grow the cash value component through investment returns.
4. Premium Flexibility: Universal life insurance policies may offer the flexibility to adjust premium payments, within certain limits, based on the policyholder's financial situation.
It's important to note that the specific features and benefits of term life insurance and universal life insurance can vary depending on the insurance company and policy. It's recommended to consult with a licensed insurance professional to understand the details and determine which type of life insurance policy is most suitable for your needs and goals.