What Should I Buy? Term Life or Cash Value Life Insurance?
Knowing you need life insurance is one thing. Understanding what kind of life insurance you need is a completely different matter. In theory, the simplest way to find out whether you should purchase a term life insurance policy or a cash value insurance policy is asking friends and family members what they’ve done, but since everyone has their own opinion and reasons for picking a specific type of insurance, it’s likely you’ll emerge from the conversation even more confused than you were before you asked about insurance.
The Difference Between Term Life and Cash Value Insurance
Term life insurance is a type of life insurance that covers a specific time frame, which is generally anywhere from 1 to 30 years. Meanwhile, cash value insurance, which is frequently called permanent life insurance, allows you to save funds in a “cash value” account associated with the policy. The cash value is separate from the death benefits your beneficiaries would receive in the event of your death; instead, the cash value is an investment that you can use to take out a loan. You can also receive the cash value of your policy if you decide to surrender your benefits.
There are pros and cons to both types of insurances.
The benefits of term life insurance include:
- Flexibility in terms of cost of the policy and when the plan ends
- Competitive Prices for most plans
- The plan can often be renewed without a medical physical
The benefits of cash value insurance include:
- Some Federal tax benefits
- The policy’s value continuously grows
- Life long protection
- Better long-term flexibility
- Investment options
The reality is that a term life insurance is going be better for some people, while others do better with a cash value life insurance policy.
Which is the Best Choice
If you’re older, you should definitely set your sights on a cash value policy. The companies that issue term life insurance policies are reluctant to take on senior citizens. The company wants to collect premiums, they don’t want to pay out, and they worry that senior policy holders simply won’t live long enough for the policy to mature. Sometimes the insurance company will make an exception if you submit to a medical physical, but even then the requirements are often too strict for the average senior to pass.
Why People Avoid Cash Value Life Insurance
The biggest reason why many people shy away from a cash value insurance policy is the cost. The premiums are often higher than the potential policy holder wants to commit to. What many don’t realize is that there are some great Federal tax benefits connected to owning a value insurance policy. The IRS allows you to use the insurance policy to develop a nice source of tax-deferred income. Another benefit you might not know about is that many banks allow you to borrow money against the insurance policy.
Contact Texan Insurance Today!
Rather than trying to figure out which type of life insurance best suits your needs, you should get in contact with Texan Insurance. Not only does Texan Insurance have a relationship with several different life insurance companies, but they will also work closely with you to determine which type of life insurance is the best bet for your lifestyle, budget, and long term goals.