When comparing cash value life insurance policies, some people are confused by the terminology of the different policies. Cash value life insurance includes:

• Whole Life insurance. This is considered permanent insurance, covering you for life as long as you pay the premiums. Cash value accrues over time with these policies, and you can take out loans against the cash value when enough has accrued.

• Universal Life insurance is a form of cash value life insurance that offers the benefit of tax deferment on the cash value. These programs are considered more flexible than Whole Life. You can add riders and other optional coverage as you go to suit your needs.

• Variable Life insurance allows you to have flexible premiums which can be invested in the stock market to help grow the cash value of your account. There is financial risk associated with these plans, so your insurance agent should explain all risks and potential for loss to you before you sign.

Cash value life insurance isn't for everyone; it is important to study each plan carefully before investing. People usually choose cash value life insurance to help save for retirement, for investments or to help them meet financial goals.

Before signing a cash value life insurance policy it is very important to know what the actual amount of your payout would be to your beneficiaries. Many policies only offer the face value if you die prematurely. The money you invested in the policy is not returned to the family.

Some people have no problem with such terms because cash value life insurance serves a specific purpose for them, but if you are interested in larger payouts for your family if you die, consider term life insurance or a different whole life insurance product that better suits your needs.

Know all the risks and limitations on your specific policy and remember that missed payments can jeopardize your policy. Lapsed policies may not be renewable according to the terms of your insurance. Know these details before you sign.