Cash Value Life Insurance

Your life insurance and investments are "bundled" together.

You pay higher premiums for less death benefit.'

Contains an investment component but returns on these investments tend to be lower with higher fees than with other savings vehicles like investing in stocks over time.'

Borrowing from your policy reduces the face amount available at death. If you borrow too much money and do not repay the loan and make premium payments, it may cause the policy to lapse. If that happens before you have repaid the loan, you could owe taxes on the unpaid loan money.

Investing in a cash value policy is not the same as investing in a retirement plan such as an IRA or 401(k) account.

Although it can accumulate a cash value, with most policies you only receive this money if you surrender the policy. If you die, your family receives only the face amount, not the cash value.

Most consumer advocates do not recommend cash-value life insurance for families with few assets.

The Answer: Individual Term Life Insurance

"Term insurance is pure protection, like fire insurance or auto insurance, its sole function is to support your family if you die. You can buy large amounts of coverage for modest amounts of money - and big policies are what your spouse and children need."

Making the Most of Your Money Now, Jane Bryant Quinn

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