Should term insurance or cash value life insurance be purchased?

Several principles should be followed in addressing this issues. It must first be recognized that in
any life insurance purchasing decision, there are at least two basic considerations: how much and
which type. The amount of life insurance that you need may be so large that the only way in
which this can be afforded is through the purchase of term insurance with its lower premium. If
your ability to pay life insurance premiums is such that you can afford the desired amount of life
insurance under either type of policy, you will need to decide which type to buy. Important factors
affecting this decision include your income tax bracket, whether the need for life insurance is
short-term or long-term, and the rate of return on alternative investments possessing similar risk.

back to list