With a renters' policy, much like a homeowners policies, look for replacement cost coverage as opposed to an actual cash value policy, Smith said. A renter's policy can also pay for temporary living expenses if your house or apartment suddenly becomes uninhabitable. It's no fun planning for your own death. 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.