| Why term life is better for most people in today's | | | | however, so be sure to ask for them specifically if |
| economy | | | | you want them. On the other hand, cash value |
| Simplicity | | | | policies only work out well when they are held for |
| Planning financial goals around a cash value insurance | | | | life. Once you're in, it's tough to get out without a |
| plan can get really complicated. There are non-trivial | | | | little financial pain. |
| rules governing things like the size of your cash value | | | | Tax-advantaged savings available elsewhere |
| savings versus the policy death benefit, and the | | | | The fundamental savings advantage of cash value |
| repayment of policy loans. Term life, on the other | | | | insurance savings is tax-sheltered earnings. Most |
| hand, is the essence of simplicity -- pay the premium, | | | | Americans, however, now have access to a wide |
| get covered for the term. | | | | variety of tax-sheltered savings plans, including |
| Competitive pricing | | | | employer-sponsored retirement plans, individual IRAs, |
| Because they are so simple, term life policies can be | | | | education IRAs, and state-sponsored tuition savings |
| easily compared on the basis of price. This has led to | | | | plans. Moreover, the IRS has recently relaxed |
| a very competitive market in which term life policies | | | | penalties on early withdrawals for things like first-time |
| are rapidly becoming a commodity. | | | | home purchases, educational expenses, and |
| Flexibility | | | | catastrophic medical bills. |
| Many term life policies are both "renewable" and | | | | Investment options |
| "convertible." The former insures that you can re-up | | | | As is the case with some employer-sponsored |
| for another term policy without a medical exam. The | | | | retirement plans, cash value investment options are |
| latter allows you to convert your term life policy into | | | | often limited. Variable life policies typically offer index |
| an equivalent cash value policy from the same carrier, | | | | funds, but not necessarily a broad-market index fund, |
| should this make sense during the term of the policy. | | | | and rarely the option to buy individual stocks. |
| Not all term life policies offer these features, | | | | |