The premium stays the same throughout the person's lifetime, and in later years decreases because the policy earns a cash surrender value. The insurer can borrow against the policy in the amount of the cash surrender value, or if the policy is surrendered the consumer will be paid this value. Woods said the whole life policy is designed for a long-term need and is more expensive than the term life policy. A benefit is that premiums can be deferred or suspended in later years dependent upon the cash value of the policy. Tomlinson said whole life policies can be guaranteed, and involve less risk than the third option, a universal policy.
Universal policies are similar to whole life policies, but only one-fourth the cost.
Many people are choosing to blend components of a term life and whole life policy to reap the cash value of the whole life policy while paying a smaller premium for the term life policy. This policy is for those who don't want a total term policy because it terminates and has no cash surrender, but don't want to pay the higher premium. Woods said consumers should remember you get what you pay for. You don't get something for nothing. But if you ever have any doubts you should call another agent and get a second opinion.