Whole Life Insurance:

Whole life insurance is a life insurance policy that pays out the value of the policy at the time of death. As long as the required payments are made to the insurance company, the policy remains intact for life. The amount of money paid out fluctuates depending on the amount of money put into the account and the returns on the money accumulated throughout the life of the policy. The funds that are deposited into the account grow because they are usually put into the insurance company’s general fund, which gets invested in money markets and bonds.

Term Life Insurance:

Term life insurance is temporary life insurance that remains intact only as long as the initial contract specifies. A premium is paid regularly and payouts are made if the policyholder dies within the life of the policy. Term life insurance does not build cash value over the life of the policy and the premiums are not returned to the policyholder if there are no claims made against the policy.

Universal Life Insurance:

Universal life insurance is similar to whole life insurance in that it is permanent. The policyholder can pay more than the cost of insurance and the excess premium is invested into whatever vehicles the policyholder chooses. The premium can vary over the life of the policy so that the policyholder can have more funds in the policy to invest. There are certain tax benefits associated with universal life insurance which makes the policy an attractive option for certain individuals.