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  1. In a whole life policy, the premium is determined by averaging the annual mortality cost (the actuarial cost of paying the death benefit in a given year) over the insured’s life expectancy. It is basically no different than a level term policy underwritten for the period of one’s life expectancy, then guaranteed for the insured’s lifetime.

    In a universal life policy, the average cost of insurance is determined the same way, but the excess premium that accumulates when the current cost of insurance is less than the average mortality cost (cash value) is held in a separate account that is flexible. Because of this, premiums can be paid that are lower than the average (underfunding the policy), or higher than average (overfunding) for the purpose of tax-deferred (and potentially tax-free) savings. While a whole life policy is guaranteed never to lapse as long as the premium is paid, no such guaranty exists with a UL policy. Once the UL policy’s cash value reaches zero, the policy lapses.

    ADDED: Odd; the only response to my answer is a thumbs-down. It’s strange how people in this section don’t seem to like accurate life insurance information.


  2. ULIP is an investment cum insurance product. The proceeds of ULIP are invested mainly in the equity markets. The returns from ULIP are dependent on performance of the share market. The risk is borne by the investor as per rules.

    Whole Life Insurance is an Endowment Product where the proceeds are invested in infrastructure and government securities. The returns therefore are moderate. The premium here is decided by age and term of policy.


  3. Ulip Plans are mainly investment plans.The total money collected from this plans is invested in Shares by the Insurance Fund Managers.Depending upon the performance of shares daily a NAV ( Net Asset Value) is declared.

    Whole Life Plans: Whole life Plans are not exposed to market.The money invested is mainly kept in Govt Bonds and Securities.There is life insurance cover on this plans until ceratin age. Mainly till 80 years of age.If a person dies during the policy term the SUM ASSURED + PROFIT (BONUS) is paid to the nominee of the policy.If the person survives the policy term he gets the profit + the invested amount.


  4. Hi,

    Whole Life insurance and a ULIP follow the same underlying ideology of covering your risk for your whole life time. A whole life insurance will have you paying premiums till a particular age, preferably til all your responsibilities have been taken care of and then the whole maturity amount can be encashed.

    In case of a ULIP, around 10% of your premium paid is invested in various stocks and get you their dividends periodically. A ULIP is basically insurance + investment and are meant for individuals who understand investing and the stock market but prefer to leave it to the experts to do the active money management.

    Hope this has helped you!