Term life insurance, also known as temporary insurance, is for individuals that want simple, inexpensive coverage. Īlthough you’ll see insurance companies advertise various life insurance products, all policies can be divided into two categories: term and cash value. Term policies tend to be far cheaper than permanent ones, and for that key reason many financial planners say they represent a better value for most consumers.īefore purchasing a policy, here’s what you need to know about cash value life insurance. The main alternative, term life policies-which are in place for a specific term, such as 10 or 20 years-have some big advantages of their own. Still, financial planners say you should think carefully before choosing a cash value policy. In 2022, they represented about 80% of the life insurance market, according to trade group Limra. Given those advantages, it may come as no surprise that cash value policies are popular. Policies also have a savings or investment feature that you can tap in to while you’re still living. Cash value policies aim to deliver that reassurance.Īssuming you stay current with the premiums, cash value policies remain in effect as long as you live, allowing your heirs to collect the benefit no matter what. When it comes to life insurance, knowing you will always be covered can offer you extra peace of mind.
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