Term life insurance or cash value life insurance – which one is right for you? If you can’t answer this question right away, don’t worry. This is a decision that should be made after you understand the differences between these two types of insurance and after you consider the amount of coverage you need, how much you can afford to spend, and how long you need the coverage to continue.
Term Life Insurance
This type of life insurance is often referred to as pure insurance and provides coverage for a specific period of time. Typically, these policies can last anywhere from 1 to 30 years. If you die within the duration of the policy, your beneficiaries will receive benefits. However, if you do not die during the length of the policy, your beneficiaries do not receive anything, and the coverage simply ends.
Cash Value Life Insurance
In comparison, cash value life insurance is often called permanent life insurance. When you have one of these policies, you retain this policy throughout the duration of your lifetime, and a portion of each premium you pay is placed into a cash value account. As you grow older, a smaller percentage of your premium is placed into this account. If you choose to cancel your policy, you are entitled to receive the funds in this account, minus any debts and surrender charges you owe.
Determining which type of life insurance policy is best for your situation, while it is essential, can be confusing. At Wise Insurance Agency, LLC, we can guide you as you make this decision to ensure you make the right choice.