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The Curious Bag
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Term life coverage is an insurance policy set up for a specific term. These policies can range from one year to 30 years. A term life policy can provide a significant savings when compared to other types of insurance.
Cash Value
You cannot borrow against a term life policy because it does not build cash value. These policies do not have an investment portion built in. Term life only provides coverage.
Cost
The premiums for term life insurance are typically lower than those for a whole life policy because there is no build-up of cash value.
Invest
Term life insurance policy owners are encouraged to invest the money that they save because their premiums are lower. For example, if you save $50 per month because you took out a term life policy, the money should be invested.
Insurance Proceeds
If the premiums are paid up to date, the beneficiary will receive the face amount of the policy if the account owner dies.
Value
According to SmartMoney.com, the cost of a whole life policy is expensive and the investment is usually not worth it. The fees as well as the commissions can eat away at your return which can make a term life policy a better deal in some situations.
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