A policy that falls under the title of “universal insurance” is simply one that is permanent, as opposed to contingent upon a job or some other condition. While term life insurance can seem attractive due to its much lower cost, universal (or whole life) insurance actually gains in cash value over time. Unlike term insurance, the value of a policy can be used as source of lending if one finds themselves in need of money.
With term life insurance if you lose your job, you lose your coverage after a certain period of time. This can be a problem if you are in the throes of a long illness. The term life insurance that was acquired through your place of employment may not last as long as the time in which you are ill, thus exposing a major negative of term life insurance. This could have the sad effect of leaving your family with no resources upon your death.
Conversely, universal insurance can attain a point in which it actually pays for itself due to the interest earned on the monetary value accrued. As long as the premiums are kept up it remains in effect. Upon the insured’s passing, the accrued cash amount of the policy is disbursed to the listed beneficiaries.
Though whole term or universal life insurance can be more costly, its benefits can easily outweigh the alternative and can lead to a huge difference in the quality of life for a family if the worst happens and the covered person dies.