Universal life insurance VS term life insurance

Universal life insurance VS term life insuranceUniversal life insurance is a flexible system of life insurance that offers permanent life insurance with a cash savings element. The savings build up can be used in accordance with the policy holders circumstances and may be used in order to help pay premiums.Term life insurance is a simpler option whereby the policy holder takes out a fixed length contract of insurance at a set price. This may be paid off on a monthly basis, and the insurance is valid only during this period or ‘term'.
One of the main advantages of term life insurance is that it offers relatively low premiums to those most in need of insurance at an earlier stage in life. This is a time when they usually have the most financial obligations such as a mortgage or car loan and also have others depending on their financial income, such as a spouse or children.
Term life insurance policies are taken out over a set period of anything from one year up to around twenty years. The longer the policy the larger the premium will be. This is due to many factors, the main one being that if a policy is taken out for just one year, then it is very unlikely that the policy holder will die within that time. Over a fifteen or twenty year period that chance increases dramatically.
One of the major drawbacks to term life insurance is that should the policy holder become terminally ill by the time the policy runs out, it is unlikely that they will be able to renew the policy as the insurer will not want to pay out on a high risk policy.

Universal life insurance is much more complex in its set up and there are a number or variants that can affect the terms of the policy. Essentially it is a whole life insurance whereby there is the ability to shift money between the insurance and savings components of the policies. If the savings portion of the policy is earning a low return then it can be used to pay off the premium payments. This allows for more flexibility depending on your circumstances.
There are a number of different options of universal life insurance options available. Single premium insurance is where the policy holder pays one lump sum into the policy at the beginning, and this was very popular prior to the late 80's. Fixed premium is paid off by a series of payments over an agreed time period. This is generally a shorter time than the intended period of insurance. Flexible premium policies allow the policy holder to make variable payments over a period, based within certain restraints. This allows the policy holder to make larger payments if they with to increase the balance amount.
One of the major pitfalls of the universal life insurance policies is that they have often been sold to people under misleading circumstances in the past. The policies have been unlawfully sold to people as an investment, and people have also been misadvised to buy the policies under false pretences. This is due to the conflict of interest that can arise from the wants of financial institutions to make money from the