The difference between term and universal life insurance

Oct 07, 2011

Families should learn the differences in types of life insurance they can purchase.

With September being Life Insurance Awareness Month, Richard Egleston wrote a post on the Insurance Networking News website that tried to break down and differentiate different forms of life insurance.

He said group term plans end when the employee at a company dies or when he or she leaves the company. With individual term life plans, the same rules apply but the plan can be extended with a higher premium. Egleston writes that term life plans initially have lower premiums but grow far more expensive than universal life insurance plans as the policyholder ages.

"Universal life insurance was created to offer protection as long as an insured needs coverage," Egleston writes, saying universal is probably the better of the two options. "The policy is designed to last up to 100 years of age, under current assumptions, with no premium increase. As long as premiums are paid and the policy doesn't lapse from withdrawals or loans, the cash value grows, tax-deferred."

According to a recent life insurance survey by MetLife, 45 percent of working women and 28 percent of working men with insurance haven't recently evaluated their insurance plan and whether more or less is needed. Life Insurance Awareness Month may be a good time to reevaluate.

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