when a policyholder dies the insurance company keeps the account s cash value your beneficiaries will be paid just the death benefit as the policyholder can only use the cash value while they are alive however some life insurance policies allow you to increase the death benefit as you build the cash value 8
universal life insurance vs term life insurance vs whole life insuranceuniversal life is a form of permanent life insurance that gives policyholders flexibility in paying premiums a cash savings component and a death benefit universal life insurance allows you to borrow against or cash in their savings portion which grows tax deferred over your lifetime term life provides coverage often through an employer for a set number of years generally 20 or 30 and expires once the term is up term life is usually more affordable with low premiums but there isn t a cash component to borrow from or cash in nor is there a death benefit if you die after the term is up ul premium costs may change with interest rates and as the policyholder grows older whole life insurance is also a form of permanent life insurance with a cash value savings component an important difference between universal life and whole life insurance however is that the ul interest rate is not guaranteed it is set by the insurer and can change frequently whole life insurance premiums are fixed for the life of the policy whereas universal life premiums can vary cash value and death benefits are guaranteed with whole life but not with universal life 