What distinguishes a universal life policy from a whole life policy?

A universal life policy is distinguished from a whole life policy primarily by its flexible premium schedule. In a universal life policy, policyholders have the ability to vary the amount and timing of their premium payments, which allows for greater adaptability to changing financial situations. This flexibility is one of the key features that attracts consumers to universal life insurance, as it enables them to adjust their contributions based on personal circumstances, such as changes in income or unexpected expenses.

In contrast, a whole life policy typically requires fixed premium payments that are set at the time the policy is purchased and remain consistent throughout the life of the policy. While whole life policies build cash value and provide a guaranteed death benefit, they do not offer the same level of premium payment flexibility that is characteristic of universal life policies. This difference in premium structure is fundamental to understanding how these two types of life insurance work and the options available to policyholders.