Finding the right policy may be simpler than you think.
There are two basic types of life insurance: term and cash value. Cash value (or “permanent”) life insurance
policies offer death benefits
and some of the characteristics of an investment – a percentage of the money you spend to fund the policy goes into a savings program. Cash value policies have correspondingly higher premiums than term policies, which give you death benefits
only. At first glance, despite these higher premiums, cash value policies may appear to provide a significant advantage over term policies based on the added investment benefits, alone—but, careful analysis reveals that these benefits only begin to tip in the investor’s favor after 10 to 20 years of monetary contributions. Term may be a good choice for young adults because it is relatively inexpensive. But there is an economic downside to term life coverage
: if you outlive the term of the policy, you and/or your loved ones get nothing back. Term life
policies can be renewed (though many are not) and some can be converted to permanent coverage