Universal life insurance and whole life insurance are both forms of permanent life insurance, but there are several differences between the two types. Universal life insurance is more flexible, notes Investopedia. This means that policyholders may have some control over their monthly premiums and benefit amounts during their lifetime, while with a whole life insurance policy the policyholder must pay the same premium throughout their lifetime.
The benefits of the flexibility of the universal life insurance style is that policyholders can scale back on their benefit amount and monthly payments. Most insurance companies require policyholders to pass a health exam before getting this type of policy. The flexibility of the policy could be beneficial if the policyholder loses her job and needs to pay a lower monthly premium or wants to invest in something other than a life insurance policy. The ability to pay a lower monthly premium could free up some cash to invest in other financial endeavors.
Though whole life insurance policies are less flexible, they do have their own benefits. Part of the policyholder's monthly premium payment gets deposited into a high-yield savings account, according to Investopedia. This can mean higher cash value for the policyholder's beneficiary when the policyholder dies.