UL vs Term

Many people always wonder what exactly is the difference between Universal Life versus Term plans. This is mainly due to a big difference between the premiums payable for both plans. Take for instance, a client who is 50 years old. Premium for a 1 Million USD coverage will cost a one time premium of USD 300K. In a term plan, it will cost the client about USD 10,500 per annum and the client will have to continue paying the premium till age 99 when the coverage ceases.

In this situation, client will be paying a total of $10,500 x 49 = $514,500 versus a upfront one time premium of $300k for a Universal Life plan.

The main differences between the 2 plans are clearly illustrated in the table below.

Universal Life Term Plan
Premium Outlay Single Premium Paid Yearly till coverage ceases
Cash Value Yes No
Guaranteed Interest From 2% NA
Maximum Coverage Term Lifetime Till Age 99
Premium Financing Yes No


All figures quoted are indicative and do not represent quotations from any company.

In summary, it largely depends on the client’s financial situation and age to determine which is the more appropriate plan. Total premiums outlay will be higher for term plans usually and clients do not get to enjoy any investment benefits along the way. Clients usually prefer Universal Life plans as they are not certain how long, they require the coverage. They also like the flexibility since they are able to retrieve their capital amount paid along the years and use that for their retirement.