Whole Life Insurance vs. Universal Life Insurance Know the Difference

Whole Life Insurance vs Universal Life Insurance: Key Differences

Differences between whole life and universal life insurance in coverage, premiums, flexibility, and cash value to select long-term protection.

Written by : Knowledge Centre Team

2025-11-04

884 Views

6 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

Buying a life insurance plan is not as complicated or confusing as it once used to be. But often, the kind of lingo used by banks to differentiate between different types of products they offer can befuddle someone who is new to the world of finance and investment. The closest some people come to have a financial portfolio is to get life insurance for themselves or their family, but sometimes even something as simple as insurance comes with a myriad of clauses and categories that can make the average citizen dread going to the bank.

One such confusing and similar-sounding set of terms is that of ‘whole life insurance’ and ‘universal life insurance - they may sound almost synonymous to you, but their implications in the banking sector are quite differentiated.

What is Whole Life Insurance?

To put it simply, whole life insurance provides coverage for your entire life, i.e., for as long as you live. This implies that even if you pay the premium amounts only for a specific and predetermined period of time, the death benefit that is promised by the bank will be valid for the remainder of your existence.

A whole life insurance plan is often recommended for people with families that have a lot of dependents, especially if the potential policyholder is the leading breadwinner of the family whose loss will be felt sorely in terms of finance. Whole life insurances can provide the peace of mind that the dependents will be taken care of if the policyholder dies an early and unfortunate death.

The amount accumulates over the years and becomes available to the policyholder or their dependents on maturity, by which time it would be significant enough an amount to cover whatever expenses the family may need after the death has occurred. The savings amount is also kept on a tax-deferred basis and can be borrowed if there is a need for it.

In this manner, whole life insurance helps an individual complete their long term financial goals for the entirety of their lives. Because it functions both as insurance and savings, banks tend to ask for higher premiums compared to ordinary term insurance.

What is Universal Life Insurance?

Universal Life Insurance is different from an ordinary life insurance plan because it is far more flexible in terms of the death benefit amount, which you can increase or decrease depending on your health and your preferences.

Of course, to increase the assured sum that is your insurance cover, you have to undergo a thorough medical examination that assures the bank that you are in good health. Decreasing the coverage, which means paying fewer premiums, can be done without giving up the entire policy if you pay a small amount as surrender charges.

Learn more on increasing sum assured in a term insurance plan and how it can beat the inflation.

The flexibility also extends to the frequency of the payment. Under universal life insurance, you can pay the premiums at any time; even all at one go, if you prefer a lump sum. From this amount, a policyholder can withdraw smaller sums partially, mimicking the way investment components work in other insurance-savings plans.

The only con of universal life insurance is that if the policy starts performing poorly, you cannot expect growth - you may end up spending a lot of money as premiums to keep the cash-value amount to the highest, and backing outcomes with the risk of high surrender charges. However, if flexibility is one of your priorities, you should definitely choose universal life insurance.

Differences between Whole Life Insurance and Universal Life Insurance

People are often torn between the two, but both whole life insurance and universal life insurance are permanent life insurance policies that combine components of life coverage and investment. The main difference between the two types is flexibility.

While universal life insurance is far more flexible on many fronts, the assurance and consistency that a whole life insurance policy offers is a robust income replacement in case something happens to the policyholder and the dependents need to be taken care of.

Which One should you Choose?

Your choice between universal life insurance and a whole life insurance plan depends entirely on what you are looking for. If you are searching for a policy that offers consistency and an assured payout that is predetermined, you should not think twice before opting for whole life insurance.

But if you are a risk-taker who prefers flexibility or are someone who cannot afford to pay for a whole life cover, universal life insurance is the choice for you since it can adapt to your financial situation.

People whose professions do not assure a stable flow of income usually prefer to go for universal life insurance, while people with a large number of dependents choose whole life insurance. Whole life insurances are highly recommended for people whose largest incentive to purchase insurance is their concern for their family’s future. Also, there are term insurance plans that offer whole life option along with return of premium. If you opt for such a plan, it’s a complete win-win for you.

Learn why a whole life plan with ROP is the smarter way of buying life insurance.

How iSelect Smart360 Term Plan can Benefit you with a Whole Life Option?

Canara HSBC Life Insurance offers term insurance plan with whole life option in India. iSelect Smart360 Term Plan comes with the following additional perks, which are helpful for anyone’s financial portfolio:

  • Assured returns of premium, with an affordably priced premium rate. This makes it easier for you to align your plan with your financial status and goals.
  • Increasing sum assured, as well as the option to change your coverage by purchasing additional inbuilt coverages for Accidental Death, Child Support, and in case of accidents.
  • Cover your spouse in the same plan so that you do not have to purchase a second plan.
  • Limited premium payment options.
  • Tax benefits depending on the prevailing tax laws.
  • There are multiple options to receive benefits either as a lump-sum or in settlements as monthly income or a combination of the two options.
Benefits of iSelect Smart360 Term Plan

Purchasing a term insurance plan with a whole life option like iSelect Smart360 Term Plan can give your family the confidence to broaden their horizons without the fear of financial crisis. On the other hand, the flexibility of the universal life cover can give you options that whole life plans may not offer. At the end of the day, the choice between the two depends on what is best suited for your situation and family.

Get Life Cover Instantly

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy Holder Name

Policy No.

Policy Number

Address of the Policyholder as per records

Address

Unclaimed Amount

Unclaimed Amount
Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Recent Blogs

How Life Insurance Reduces Financial Stress During Illness?
12 Feb '26
61 Views
7 minute read
Learn how life insurance helps manage medical expenses, income loss, and family financial security during serious illness with practical examples.
Read More
Life Insurance
What Is Non-Traditional Life Insurance & Why It Matters?
11 Feb '26
127 Views
5 minute read
Explore non-traditional life insurance plans, how they differ from traditional policies, and why they matter for modern financial planning.
Read More
Life Insurance
GST on Life Insurance: Rates, Charges & Rules in India
10 Feb '26
2898 Views
10 minute read
What impact does the Goods and Services Tax have on life insurance plans and your premium payments towards them? Here’s all you need to know.
Read More
Life Insurance
Terminologies of Life Insurance: Key Terms You Should Know
10 Feb '26
1083 Views
7 minute read
Learn common life insurance terms and definitions, including premium, nominee, sum assured, riders, and policy benefits to understand your coverage better.
Read More
Life Insurance
What are the Various Charges in a Life Insurance Policy?
10 Feb '26
1685 Views
7 minute read
Learn about various life insurance policy charges, including premium allocation, mortality, fund management, and administrative fees affecting policy cost.
Read More
Life Insurance
Life vs Health vs Term Insurance: Key Differences Explained
09 Feb '26
1233 Views
10 minute read
Understand the difference between life insurance, health insurance and term insurance, what each one covers, when you need them, and how to choose the right protection.
Read More
Life Insurance
Life Insurance Policy Lapse: Impact, Risks and What You Can Do?
16 Jan '26
3003 Views
10 minute read
Know what a life insurance policy lapse means, why it happens, how it affects coverage and benefits, and the options available to restore protection.
Read More
Life Insurance
What Is Premium in Life Insurance? Meaning & How It Works
15 Jan '26
1480 Views
8 minute read
Insurance premium is an amount paid by an individual to the insurance provider for availing of the insurance policy. Know the meaning & how to calculate the life insurance premium.
Read More
Life Insurance
Subrogation in Insurance: What it Is and Why It's Important?
13 Jan '26
1259 Views
8 minute read
Learn about subrogation in life insurance and how it affects your claims. Discover more insights with us for smarter coverage and financial security.
Read More
Life Insurance

Life Insurance - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover