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What factors should be considered when deciding whether or not to purchase cash value life insurance?
Wiki User
∙ 11y ago
Cash value life insurance also called permanent life insurance has two different types: Whole Life Insurance, and Universal Life Insurance. They are pretty similar to the extent that both accumulate cash value that can be used for different purposes like: increase the death benefit, can be used as loans for personal use, etc.
The permanent life insurance is designed to last until age 100 - 121 if premiums are paid according to the schedule.
In comparison, Term Life Insurance will last for a determined amount of years (10, 20, 30) or until age 65 - your choice. With term insurance there is the risk of outliving your policy and the contract ends. At the end of the contract you are not covered and there is no cash value normally. If you had the Return of Premium feature, you will receive cash back for all the premiums paid, which you can use to get a new term policy, or convert to a permanent life insurance policy, or use the premiums returned for any purpose and the coverage terminates.
You have to figure for how long do you really need the coverage, if you want to have life insurance for a certain amount of years (say, until kids get out of college and get on their own), or if you want to leave a legacy or protect your assets from taxation after death.
You should consult with a good life insurance broker who can provide you with multiple options.
Wiki User
∙ 11y ago
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The amount if life insurance you can get depends on several factors that the insurance company takes into consideration, including: 1. Your health status. 2. Your family's health history. 3. The amount of life insurance you already own. The insurance company doesn't want you to be over-insured. Most life insurance company will allow you to purchase up to 10 times your annual income, or more in life insurance. So, if you earn $100,000 per year, the insurance company may allow you to purchase up to $1,000,000 or more of life insurance. Life insurance is something that you need to ensure that your loved ones are financially safe and secure, in case of your death. Therefore, it is always advisable to have the maximum insurance cover depending on your present needs. Life insurance needs are determined by various factors like: gross income, age, period, inflation rate etc. Refer to life insurance calculator: http://www.accuquote.com/term-life-insurance-calculator.cfm to determine approximate life insurance coverage for your particular situation
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