Life insurance falls into two general categories: term insurance and cash value insurance. Term insurance is something most people can understand: You pay a premium, and upon the death of the insured person, you collect money.
Cash value insurance is a broad term that describes policies in which the money paid for premiums is placed into an account that is supposed to earn income. This option is attractive -- after all, who wouldn't want payments to do double duty? But it comes with some caveats.
These policies can cost up to eight times more than term policies that offer the same coverage. Sometimes projections of potential earnings are inflated. Also, companies generally charge fees to administer the accounts. All in all, a term insurance policy may be a safer bet.
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