Types of Insurance

Whole-life and term-life policies are the two basic types of life insurance you may purchase.

Term Life Insurance

Term life insurance is the simplest insurance policy to own. Developed to provide temporary protection for people on a limited budget, term life provides a death benefit for a fixed time period or term. Premiums are small and there is not a cash value or cash surrender value with a term-life policy.

Whole Life

Whole life Insurance is in force for the "whole life" of an insured. Premiums are required to be paid every year. Premiums are higher than with term life insurance. and whole-life policies have a cash value, or cash surrender value, upon early cancellation or termination of the contract.

Face Value

Actual death benefit if the terms of the policy have been met is the face value of an insurance policy. Beneficiaries will be paid the face value of the policy upon the death of the insured.

Cash Surrender Value

Whole life policies have a savings component of the policy that may be paid before the term of the contact or maturity date. Two years of policy payment are required before a cash value begins to accumulate. Death of the policyholder will result in the payout of the face value of the policy.

Expert Insight

If you choose to terminate your insurance policy and take payment of the cash value of the policy. you will be responsible for the capital gain, which is the cash surrender value minus the premiums paid. The amount you will receive will be less any surrender charges that may be assessed, any outstanding loans with interest or any contracted monthly charges.

Source:

New York Life

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