I know the premium is considered more flexible, but what about after-death benefits? is there a general summary you can provide detailing the pros / cons of each product
Just came from a long meeting on this topic - good timing. All permanent life insurance products are complex and not as transparent as I would like but they still have merit for many investors. Here is my best explanation within the limits of this Q&A format ( A phone call or in person meeting with an qualified advisor that you trust would offer you the a deepest understanding of these products) Whole life: Pros-You have a guaranteed death benefit for your life time as long as the premium is paid. You also have high cash value build up. Cons- It is very expensive and inflexible; you cannot put in more or less than the exact premium each year. Universal Life (traditional): Pros- less expensive and more flexible than whole life; you can put in more or less each year. Cons: less cash value build up than whole life. May or may not have a guaranteed death benefit depending the on product type and design. A newer type of Universal life that is getting attention from investors and advisors is indexed Universal Life, where there is potential for greater cash build than traditional as your return each year is tied to an index ( usually the S&P 500 fund without dividends) with certain "constraints". The program I just evaluated has constraints as follows: A "floor" of 0% and a "cap" of 10.75%, so if the S&P changes by -5% you earn 0 that year and if it changes by + 20% you earn 10.75% that year. These products can be structured with a guaranteed death benefit for a certain duration or your lifetime (even if your earned 0 every year). It sort combines the favorable elements of whole life and Universal Life. This is a very broad stroke description. All of these these products have other fee's - some of which are guaranteed, some not. But again, they do have Merit compared to a term policy which covers you only for a certain time period and expires -with no cash value. I urge you to find someone you trust who is qualified and speak with them on the phone or meet with them in person and be sure to obtain a complete NAIC compliant illustration from the issuing Insurance Company before making any purchase decisions - don't get into anything based on a proposal an advisor or agent puts together without reviewing the complete NAIC illustration from the carrier. Best of luck!