But your dependents will thank you for it. There are several life insurance policies available and it can be confusing to buy. Term life protects against premature death and provides no buildup of cash value. Cash value of the policy builds up tax-deferred. Policyholders can borrow against the value, which reduces the benefit if it is not repaid.
Policyholders can see huge monetary losses if their cash value policy lapses.
Before deciding which type of policy is best, a consumer should decide on how much coverage to buy, said Hunt. He suggested a general rule of thumb is to buy coverage that equals six to eight times the policyholder's annual income. Choose a financially strong company, advises Natalie Grossner, a certified financial planner in Carmichael. Consumers can check the claims-paying ability of insurance companies by checking with independent rating agencies. The best known is A.M. Best.