Life Insurance Worksheet 1. Your dependents' sources of other income, including salary, interest and dividends, social security, pensions, etc. The general guideline is between 5 and 10 times your annual salary. The debate over term versus whole life insurance goes on. Some experts recommend that if you're under 40 years old and don't have a family disposition for a life threatening illness, go for term insurance, which offers a death benefit but no cash value.
Whole life offers both a death benefit and cash value, but is much more expensive.
The Wall Street Journal has reported that half of all cash value policies are surrendered within the first seven years, making the coverage very expensive because commissions and fees limit the cash value in the early years. In this more traditional life insurance policy, the premiums stay the same over the life of the policy. The policy stays in effect until your death, even after you've paid all the premiums, which can often be paid up within a certain amount of time. A cash reserve is built up, but you have no control over how it's invested. Whole Life Insurance Summary Variable Life Variable life polices build up a cash reserve that you can invest in any of the choices offered by the insurance company.