Which type of life insurance offers flexible premiums and a savings component?

Universal life insurance is designed to provide both flexible premiums and a savings component. This type of insurance allows policyholders to tailor their premium payments according to their financial situation. Unlike whole life insurance, which has fixed premiums and benefits, universal life insurance provides the option to adjust the premium amounts and the death benefit, within certain limits.

Additionally, universal life insurance accumulates a cash value over time, which can be accessed or borrowed against, adding a savings component to the policy. The cash value grows based on a credited interest rate, which may vary with market conditions, providing policyholders with the potential for greater growth compared to other forms of permanent insurance.

In contrast, term life insurance generally provides coverage for a specified period and does not build cash value, focusing solely on providing a death benefit. Whole life insurance, while it does include a savings component and guarantees a death benefit, typically features fixed premiums and does not offer the flexibility found in universal life policies. Accidental death insurance only covers death resulting from accidents and does not include a savings feature or flexible premiums. This makes universal life insurance the optimal choice for individuals seeking both flexibility in premium payments and the opportunity to accumulate savings within their life insurance policy.