Understanding the Different Types of Life Insurance Policies
While there are different types of life insurance policies, they all accomplish the same goal: pay the death benefit to the policy holder’s beneficiaries. Additionally, wage earners buy life insurance to make up for lost income in the event of their early death, so their family members are protected.
Due to the high cost of whole life insurance, we believe that term life insurance is the best option for most people. But, whole/permanent life insurance does provide tax benefits, such as tax deferment of the cash value and the ability to avoid estate taxes. Consequently, permanent life insurance policies are attractive for estate-planning purposes and to those looking for a tax-favorable investment vehicle.