Last updated: June 12, 2025 | Reviewed by Catherine Malone
When it comes to permanent life insurance options, two popular choices are whole life insurance* and universal life insurance. While both offer lifelong coverage and a chance to have a cash value component, there are important distinctions between these products that you should know before selecting a policy.
* Keep in mind, there are two types of whole life insurance policies, participating and non-participating. Participating whole life insurance gives you the chance to receive dividends based on the insurer's performance, while non-participating whole life insurance does not offer this feature.
What are the main differences between whole life vs universal life insurance?
| Features | Whole life insurance |
Participating whole life insurance |
Universal life insurance |
|---|---|---|---|
Premiums (fees) |
Remain the same (fixed) throughout the life of the policy. | Remain the same (fixed) throughout the life of the policy. | Can change premium payments within certain limits.* |
Death benefit |
Payout is set and guaranteed. | Payout is guaranteed and may grow based on how you set up your policy. | Payout is guaranteed and may grow based on how you set up your policy. |
Cash value |
Policy accumulates cash value at a predetermined rate depending on the policy you choose. | Policy accumulates cash value at a predetermined rate with a chance to grow when dividends are paid. | Cash value grows depending on how you set up your policy. It also may be based on current interest rates or market performance. |
Tax-preferred growth |
Available from any guaranteed cash values within the policy. | Available from guaranteed cash values and any dividends received. Keep in mind, dividends are not guaranteed. | Available from any guaranteed cash values. It also may be based on current interest rates or market performance. |
Management |
Requires little management from the policyholder. | Requires little management from the policyholder. | Depending on how you set up your policy, you can adjust payments and investment account options.* |
* Policy changes – including changes in the death benefit and premiums – may have tax implications. Seek independent tax advice before making any changes to your insurance policy.
How to choose between whole life and universal life insurance
The choice between whole life and universal life insurance depends on your individual circumstances and needs.
Whole life insurance may be ideal for those who prefer guarantees and simplicity, and are comfortable with fixed premiums.
Universal life insurance may be ideal for those who want payment flexibility and are willing to actively manage their policy.
What’s the cost difference between whole life and universal life insurance?
The cost difference between whole life and universal life insurance can vary.
Participating whole life insurance is generally more expensive than non-participating whole life insurance and universal life insurance. This is because participating policies have the chance to receive dividends and see growth in their policy in the early years.
Whole life insurance (non-participating) is priced similarly to universal life insurance . But whereas whole life premiums are fixed, universal life offers more flexibility in premium payments.
Ultimately, the cost difference will depend on factors like age, assigned sex at birth, health, coverage amount, and specific policy features. It's important to get a personalized quote through an advisor, and compare specific policies to determine the exact cost difference for your unique situation.
What type of insurance is right for you?
There are several different types of life insurance policies. The “right” one for you depends on your financial goals, your family and personal needs, the stage of life you’re in, and what you can afford.
You may need only one type of life insurance policy. Or, you may need more than one life insurance policy to cover all your needs.
Connect with an advisor for help in figuring out what’s best for you. An advisor can walk you through all your insurance options, answer any questions you have and help you build a personalized plan.
This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply.