What is the best life insurance to get? whole or term? what's the difference? what's "cash value"?

For you, or for him? What's the GOAL of the life insurance? I think life insurance on children is a waste of money. TERM insurance is pure insurance - it's about 1/10 the cost of "whole life". It fills MOST people's goals at the best price. There's no one "best" company, and not all companies write in all states. Cash value, is when you buy a policy like whole life, and you pay 10X as much for it, and about 10% of what you pay, they save (keeping the other 90%), and if you want, you can borrow your own money back, and pay the insurance company interest on it. But if you die, your own money that you borrow back, they subtract from the payout amount. And if you die, without borrowing it, the insurance company keeps it. It's a GREAT deal, for the insurance company AND the agent, who makes a lot more money off of whole life than term. So it's a "forced savings plan" where you save 10% of what you pay in, which you have to pay to borrow out. yes, with whole life, you get cash out if you decide to cancel. BUT, run the numbers. If you have a $100,000 term policy, it's probably costing you about $100 a year. A $100,000 whole life policy is probably costing you about $100 A MONTH. About $100 a year of THAT will go to cash value. So after 10 years, you've paid about $12,000 in, and have "cash value" of $1,000. Compare to Term. After 10 years, you've paid . .. $1,000 in. If you put HALF the difference into a mayo jar under your bed, you're $5,000 ahead of the game.

Ok, I assume that you want life insurance for yourself. Term life insurance only pays out if you die while the policy is in force. Usually, the premiums are lower, especially when you are young and healthy. For example, many women would qualify for term life insurance for around 20-30 per month per 100K of coverage if you are under 30 years old, and have no serious conditions that would prevent you getting life or health insurance. Whole life insurance builds value over the life of the policy, and if it is paid for with post-tax dollars, the cash value can be used tax-free in most cases after you reach a certain age. If you die before the policy is paid up, then the death benefit is paid to your beneficiaries, otherwise, it grows like a savings account. You surrender the policy, and the insurance company gives you the cash value. In some cases, it is possible to borrow against the cash value of your whole life insurance to buy a home, etc, without incurring serious tax penalties. Which way to go is largely dependent on what you are trying to do. Whole life is more expensive...and the return on your investment is projected, not guaranteed. Whole life is often used as a retirement or college investment vehicle. Term life is excellent for protecting your family in the event of tragic, unexpected death of a wage earner. I strongly encourage you to get with a financial planner or licensed insurance agent (like myself), discuss your needs, and get some insurance. Also, it may be possible to buy additional term insurance through your employer above the amount that your employer may already pay on your behalf (usually will pay out 1 years salary). I encourage all young families to insure both parents at a level that would allow the surviving parent to raise the children without suffering from lost income. Example: (Your income + costs to pay for your lost services) x # of years to raise the youngest child = the base amount of insurance that I start with. That doesn't include mortgages or college costs, etc. So, if you make 30K per year, and childcare and household services to your family would cost 12,500 for someone else to come help your surviving husband, you would need atleast 42,500 per year...times atleast 16 years...and honestly, that amount is about 700K of insurance. A wife is very valuable! That roughly breaks down in term life to about 120-150 per month for a high level of security. However, remember that if a surviving spouse invests carefully, it would be possible to live on just the interest alone from the insurance. You could probably safely get by on 500K. And if that is too expensive....get SOMETHING! I have seen too many young people killed in car accidents and families struggling to pay medical, ER, and final burial expenses, without going under. Car accidents happen all the time...get insurance. It is money you may never see again, but if the unthinkable happens, your children will be thanking their stars that you did your homework!

You first need to know how much you need to insure. If money is the concern, you only have one choice, term insurance. If money is not the concern, you have 2 choices, whole life or term. If you trust insurance company can do a better investment than yourself or other investment company (e.g. unit trust company), you go for whole-life or else just term. Whole life and term serve different purposes. Check out the link...

You are correct. Whole life builds a cash value that has tax savings and you can withdraw it. Term is the cheapest form of life insurance and only pays if the insured dies. Actually, whole life is term life plus a savings plan.