A term life policy is the purest form of life insurance available. If the insured dies during the term of the policy, the beneficiaries will receive the guaranteed death benefit. It is expected that the insured is most likely to outlive the policy, thus no payout will be made. For this reason term insurance is cheap and the cost increases with the age of the insured, as the risk of death occurring becomes more likely.
A universal life policy is a type of permanent life insurance. It provides cover for life (in the form of an annually renewable term policy) combined with a tax deferred savings element. Part of the premiums paid goes towards the insurance and administration costs; and the rest is invested into the insurer’s investment portfolio. The premium and death benefit can be altered within set limits. There is the potential for such a policy to pay for itself via returns on investment. However, when interest rates are low the premiums may need to be increased to keep the policy in force. Early cancellation of a policy may incur penalties in the form of surrender charges. There is a large element of risk involved with a universal life policy. It is far more expensive than term insurance because cover is for life and the investment part of the policy requires a large cash outlay.
Most life insurance shoppers are typically advised to opt for term insurance and to fulfil their savings needs elsewhere. Universal life insurance is most suited to wealthy individuals, who can afford the high premiums and will gain from the tax benefits in their estate planning. Protected.co.uk is a good place to find latest insurance articles and news updates. You can get your insurance quote online from that website and compare life insurance quotes.