Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Aug 3, 2021

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The Brief

  • Term life insurance is a simple life insurance policy that lasts for a specified time
  • Universal life insurance is a permanent life insurance policy that builds cash value based on interest rates
  • Term life insurance is typically the most affordable life insurance option and has little-to-no risk
  • Universal life insurance has a higher risk of loss but more growth potential

With so many different life insurance options (term life insurance and universal life insurance included), it can be confusing trying to decide which policy option is best for you and your financial situation.

Understanding term life insurance vs. universal life insurance can help narrow down your options. These two types of policies are substantially different, which can make your decision easier. Keep reading below to learn more about each type of policy.

Enter your ZIP code into our free quote comparison tool above to compare term vs. universal life insurance quotes now.

How much are term vs. universal life insurance rates?

Let’s begin by taking a look at some sample term life insurance rates:

Average Monthly 20-Year Term Life Insurance Rates by Age & Gender for Non-Smokers
Policyholder AgeRates for Male with $100,000 CoverageRates for Female with $100,000 CoverageRates for Male with $250,000 CoverageRates for Female with $250,000 CoverageRates for Male with $500,000 CoverageRates for Female with $500,000 Coverage
25$14.53$12.70$23.27$18.72$34.79$27.39
30$14.96$13.22$24.59$20.44$37.39$29.59
35$17.57$15.40$26.09$22.19$40.04$32.19
40$21.40$18.62$33.72$28.49$54.79$45.69
45$26.54$22.97$45.47$37.42$79.19$66.14
50$36.02$29.32$69.59$54.59$126.14$96.99
55$50.98$38.11$105.72$78.97$203.14$143.99
60$84.91$60.20$183.79$131.17$355.39$248.84
65$144.51$97.44$323.42$220.99$625.09$432.84
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Next, let’s take a look at some sample universal life insurance rates:

Monthly Universal Life Insurance Rates, $250,000, for Non-Smokers
AgeMonthly Rate for FemalesMonthly Rate for Males
25-35$71 - $96$96 - $122
35-45$96 - $148$122 - $171
45-55$148 - $238$171 - $303
55-65$238 - $445$303 - $491
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Term life insurance is one of the cheapest types of life insurance, but it provides less growth potential. If you can afford to pay more for life insurance, universal life insurance may be able to help you grow your wealth.

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What are the differences between term and universal life insurance?

Term life insurance is a type of non-permanent life insurance policy that lasts for a specified duration, while universal life insurance is a permanent life insurance policy that will last for the policyholder’s whole life as long as they continue to pay their premium.

In most cases, the premiums for term life insurance are fixed and will not change. However, the premiums for universal life insurance can fluctuate based on whether you use your cash value to pay all or part of your premiums or if you choose to pay higher premiums to build cash value.

Term life insurance policies also do not accumulate cash value like universal life. Cash value allows policyholders to save money in an account that can be accessed while they are still living for large expenses, but beneficiaries typically do not receive the cash value after you pass.

Universal life insurance policies may include investment options to allow for financial growth, whereas term life insurance does not have these options.

If you’re trying to decide between term and universal life insurance, it helps to understand the differences between the two types of insurance. Term life insurance is an easier product and meets most people’s needs. Universal life insurance has more customization options, but it may take the help of a professional to understand them all.

What are the pros and cons of term life insurance?

Before deciding whether to buy term life insurance or not, you should understand the advantages and disadvantages of a term life policy.

The advantages of term life insurance include:

  • Affordable premiums
  • Large death benefits.
  • You can convert some term life policies to permanent life insurance

The disadvantages of term life insurance include:

  • Not permanent, and you must re-qualify to get another policy
  • Health issues may make it difficult to find a policy unless it doesn’t require a medical exam
  • No cash value

Term life insurance is a very simple type of protection. It provides basic financial assistance for your beneficiaries after you pass, but doesn’t provide many benefits while you’re living. However, it makes life insurance easy and affordable.

What are the pros and cons of universal life insurance?

If you’re considering buying universal life insurance, it is important that you also understand the advantages and disadvantages of a universal life policy.

The advantages of universal life insurance include:

  • Premiums and policy options are flexible and customizable
  • Returns on cash value growth
  • Other investment opportunities

What are the disadvantages of universal life insurance?

  • Premiums can fluctuate, which means you should be prepared to pay more if they rise
  • Variable interest rates can be low, which means that your cash value may not grow as much as you would like
  • A positive cash value is typically required to keep your policy active
  • A solid understanding of investment vehicles and risk is necessary

Universal life insurance is much riskier than term life insurance, but it also offers more growth opportunities. If you want to see your return potential with universal life insurance, you can use an online universal life insurance calculator.

Should I buy term or universal life insurance?

Is term or universal life insurance better? This will depend on your personal preferences and financial situation.

If you’re looking for a simple life insurance policy or expect that your financial situation could change in the future, a term life insurance policy may be right for you. And you would have the ability to change your policy at the end of the term to reflect a new financial situation.

Term life insurance also offers the cheapest rates, so it’s great for people on a budget. It can also be good for those who don’t anticipate needing life insurance for their whole life.

Universal life insurance may be a better option for people who are looking to build an estate and protect assets. This policy can leave behind a substantial inheritance for beneficiaries, especially with the opportunity to use the policy as an investment.

It can also be beneficial during your lifetime if you have unexpected large expenses. You could borrow against the cash value of the policy, and you could take advantage of flexible premiums.

If you need help finding an affordable term vs. universal life insurance company in your area, enter your ZIP code into our free quote comparison tool below to start comparing life insurance quotes today.