Life Insurance basically provides for payments of a specified
amount of money upon the insured's death, either to his estate or to a
designated benefeciary. There are two basic forms of life insurance:
(1) term, and (2) those with cash value, the best known of which is straight
life.
Term Insurance offers life protection only and is limited to a
specific number of years. It can generally be renewed without a
physical examination and, to start with, is usually less costly than
straight life. Term insurance is ideal for the person who wants only
one thing from life insurance: as much life protection as possible for
the premium dollar - at the moment of purchase.
Straight Life costs more than term, but has more to
offer. It provides a "forced" savings by building a cash value which can
be borrowed against and allowed to accumulate as part of your net worth.
It also serves as a tax shelter for interest on savings. For as long as
you hold the policy, straight life costs the same as when you originally
bought it. It appeals to those people who want to make a decision just
once and who want their insurance to serve as a savings plan, too.
