The goal of life insurance is to provide a degree of financial security to cover against the risk that an important bread-winner dies. Therefore purchasers of life insurance policies should consider the standard of living they wish to maintain after the insured dies, and expenses beneficiaries will likely face--for example burial and moving costs, and any remaining medical bills, mortgages and daycare expenses.
Term Life vs Cash Value Policies
Term Life Insurance pays off once the insured dies, but provides for no buildup of value in the policy. Because the potential payout term policies does not grow as premiums are paid, term policies tend to be cheaper than cash value policies such as
whole life,
variable life and
universal life--which pay death benefits and also provide for the buildup of cash value as premiums are paid in the policy.
