What is the primary difference between a Universal Life and a Whole Life policy?

The primary difference between a Universal Life policy and a Whole Life policy lies in the premium payment structure and flexibility associated with each type. Universal Life policies allow policyholders to adjust their premium payments and death benefits, providing them with the ability to vary the amounts paid into the policy as their financial situation changes or as their needs evolve over time. This flexibility is a significant feature of Universal Life insurance, making it appealing for those who want more control over their financial planning.

In contrast, Whole Life policies generally have fixed premiums that are predetermined for the life of the policy. The premium amounts remain constant, providing predictability in terms of cash flow and protection but without the ability to adjust payments as circumstances change. Therefore, the correct understanding emphasizes the flexibility of premium payments in Universal Life policies as the primary distinguishing characteristic compared to Whole Life policies.