I was running $100,000 permanent life insurance quotes today for a woman in her late 30’s. I quoted MassMutual for whole life. Premiums for guaranteed universal life with PennMutal were about half as much. But I recommended whole life even though it was more. Being under 40 the quality of whole life is worth the extra price.
With a participating whole life’s dividends like MassMutual, the face amount increases over the years: $101,000, $102,000, etc. There is also paid up insurance. Whole life has guaranteed cash value and dividends will increase the cash value higher. Over time the policy holder will have many options as those dividends and cash value increases to vary their premiums.
With the guaranteed universal life it’s a fixed course. The face amount remains level. $100,000 all the way. That’s my biggest concern with setting a level face amount too in one 30’s. What will $100,000 be worth 40 to 50 years from now? The payments are level but if you miss a couple of payments, changing banks or whatever, you may rescue the universal life with the cash value, but the lifetime guarantee is broken.
Granted with a universal life (UL) you can opt to structure it with an increasing face amount and to endow, worth it’s cash value, just like a whole life. But it’s not guaranteed to do so like whole life. When you add whole life type features into a UL, the premium rises so close to a whole life you might as well go for the real thing. That is when you’re in your 20’s or 30’s.
Now when you’re in your 60’s or 70’s it’s a different story. You don’t have time to build up cash value in a whole life and the premiums are much higher. A guaranteed UL is better.