It is designed to cover you for a specified period, typically between 10-30 years. If it’s not renewed, the policy becomes null and void. It pays out only when death occurs within this specified ‘term’ period, hence why it is referred to as term-life insurance. These policies have lower premiums than others, but do not accumulate any value.
Universal Life Insurance provides protection as well as savings by combining flexible insurance premiums and an investment account, which increases tax-free with time. Universal policies, however, provide a guaranteed minimum rate of interest regardless of the market conditions. This makes them less risky and more secure than variable policies. They also offer the flexibility to change their insurance amount to suit their needs, while still paying lower premiums than traditional plans.