What’s the difference between a cash value policy and regular term life insurance policy?
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Asked February 10, 2011
Term life insurance is a life insurance policy that is good for a specified term, or length of time. At the end of that time, the policy can be extended, usually at a much higher cost, or allowed to expire. Term life policies that are allows to expire generally become worthless. They are an affordable type of insurance policy to help insure certain events can be paid for if you die, but do not provide much profit in the event of your survival.
At a higher premium, you can add a cash value to the amount of the policy, making sure that there will be a cash payout when the contract expires, but it is much more financially sound to purchase term insurance policies for short-term goal, and whole insurance with a full cash value for the bulk of your financial worth. In additional to providing a stable payout after death, whole life insurance policies allow you to borrow against them or even take a hand in how the funds are invested.
Term life insurance with a cash value may be useful under very limited circumstances, but combining individual term life and whole life policies will almost always yield the best results. Choose the combination which offers the most stability for your situation now, and in the future as well. In most situations, whole life insurance will offer lower premiums than any sort of term coverage, and a cash value term life policy is likely to be one of the more expensive types available.
Answered February 10, 2011 by Anonymous