What Is The Difference Between Life Insurance And Term Life Insurance? 
Term life insurance has a definitive ending . If you purchase 20 year term insurance it will end in 20 years . Other types of life insurance include Universal Life , Indexed Universal Life and Whole Life and each of these would be considered a type of permanent life insurance . Universal Life insurance can last your entire life if structured correctly . Universal Life can have a flexible premium which will allow the excess of premium above the actual cost of insurance to be credited to the cash value of the policy . Interest is credited to the cash value each month , adding to the cash value , once policy expenses are taken out . The interest percentage is set by the insurance company . Using the same flexible premium concept , when you determine the amount of interest to be credited to the policy by referencing a financial index such as the S&P 500 , it is an Indexed Universal Life -LRB- IUL -RRB- policy . No money is actually invested in the referenced stock market . The IUL can be designed to build up a large cash value over the years and that cash value grows tax deferred . If you need cash along the way , you can get a loan against your policy and use it for your own needs . Many people use an IUL to build cash value for college expenses or to supplement their retirement income . Whole Life insurance policies generally offer fixed premiums . In a participating whole life policy , the cash value inside the policy increases as the insurance company provides dividends based on the overall return on its investments . Earnings beyond those required to cover policy expenses go to the policy 's cash reserve from which you can borrow against during life 's journey or to supplement retirement income . 