a universal permanent and traditional structure
Answers
Explanation:
The downside of this option is that you pay premiums on the full face value for the life of the policy regardless of how much cash value the policy has. So as you increase the face value/death benefit over time, the premium would also increase to keep up with the larger amount of coverage.
Whole Life Insurance
Whole life insurance covers you for the rest of your life, regardless of how long you may live. As long as you keep paying the premiums, your beneficiaries will receive the death benefit when you die.2 This policy is highly suitable for long-term responsibilities such as a dependent adult child's care or post-death expenses like estate taxes.
How Whole Life Insurance Works
One of the features of this type of life insurance is that it combines coverage with savings. Your insurance company puts part of your premium payments into a high-interest bank account or investment account. With every premium payment, your cash value increases. This savings element of your policy builds up your cash value on a tax-deferred basis.1 Whole life insurance is made to fulfill an individual's long-term goals and it is important to keep it going for as long as you live.Universal Life Insurance
Universal life insurance is also called adjustable life insurance because of the flexibility it offers. You have the liberty to reduce or increase your death benefit and pay your premiums at any time in any amount (subject to certain limits) once there is money in the account.4
How Universal Life Insurance Works
When you make a payment to your universal life insurance plan, part of it goes into an investment account, and any interest accrued is credited to your account. The interest you earn grows on a tax-deferred basis, increasing your cash value.5
You can adjust the death benefit when needed, increasing it (often subject to a medical exam) if your circumstances change, or lowering it to reduce premiums.6 Alternatively, you can use your cash value to pay premiums as long as there is enough money in that account.4