Whole life insurance vs universal life insurance: what’s the difference?

Life insurance is a financial program that allows policyholders to financially protect their beneficiaries after their death.

It can also be used as a long-term investment or savings for retirement or other projects. There are two types of life insurance that are popular in the market: whole life insurance and universal life insurance.

In this article, we will examine the differences between these two types of insurance contracts.

whole life insurance

Whole life insurance is a permanent insurance policy that offers lifetime protection and guaranteed death benefit payment.. This insurance also offers a surrender value for policyholders who wish to terminate their contract before the end of the term.

Fixed premium

Whole life insurance is characterized by fixed premiums, i.e. the amount of the premium remains the same throughout the duration of the insurance.. Premiums are often higher than for other types of insurance, such as term insurance, but they provide permanent protection. Whole life insurance premiums are generally used for the payment of dividends or profit sharing.

Surrender value

Whole life insurance also offers a surrender value that allows policyholders to redeem their contract in whole or in part before its expiry. The surrender value depends on the amount of premiums paid and the duration of the contract. Policyholders can also use this surrender value as a source of financing..


The insured can designate a beneficiary to receive the death benefit. The beneficiary can be a person, an organization or an entity. The beneficiary must be designated precisely and must be recorded in the insurance contract.

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Whole life insurance

universal life insurance

Universal life insurance is a type of life insurance that provides permanent death coverage and a long-term savings option. It is often considered an alternative to whole life insurance due to its flexibility and higher growth potential.

Flexible premium

Universal life insurance provides you with flexible premiums that allow policyholders to change the premium amount based on their financial capacity.. Premiums can be increased, reduced or even suspended, subject to sufficient cash value.


Universal life insurance also offers profit sharing, which means that policyholders can receive dividends or participations on their premiums in addition to the growth in the value of the insurance policy. Profit shares can be used to pay premiums, to increase the value of the insurance policy or to be paid out to policyholders as dividends.

Surrender value

Universal life insurance has a cash value, but it depends on the performance of the underlying investments. The policy owner can change the premium amount and timing of premium payments to suit their needs. This means that it can also increase or decrease the cash value of the contract. Beneficiaries of universal life insurance thus benefit from lifelong protection in the event of the death of the insured.

Choosing between whole life insurance and universal life insurance

The choice between whole life insurance and universal life insurance will depend on the individual needs and goals of each policyholder.

  • I’whole life insurance is generally considered a safer and more stable option, as it guarantees cash value and permanent insurance coverage. It is best suited for those looking to protect their family and provide permanent life insurance;
  • I’universal life insurance offers greater flexibility in terms of premiums and cash values, as well as potentially more lucrative investment options. It is best suited for those looking to maximize their investment.
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Consider considering the costs and tax benefits of each type of life insurance. Premiums for whole life insurance are mostly higher, but can provide long-term tax protection. Universal life insurance offers more flexibility, but premiums may increase due to fluctuating interest rates.

The decision between whole life insurance and universal life insurance will depend on each individual’s needs for financial protection and financial flexibility. Each type of life insurance has its advantages and disadvantages, and it is advisable to fully understand these differences before purchasing a policy.

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