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The difference between whole and universal life insurance policies is minimal.
Whole life policies pay dividends to the policyowner. These are not dividends in the usual investment sense; they are considered a return of a portion of your annual premium. These dividends can be taken as cash, reinvested, or used to reduce premiums or buy additional insurance. Unlike whole life insurance, universal life policies do not produce dividends. Instead, interest is applied to the policy’s cash values without an immediate income tax impact.
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