Term life insurance means that you pay premiums to cover the cost of the insurance that will be disbursed upon your death. The idea is that the closer you get to retirement your coverage will diminish, as your replacement figure will lessen. Your kids are out on their own and no longer need your income to sustain them and you can more than likely drop the policy that has been renewed annually with no penalty or problem. Term life is basic and to the point. Cash value (encompassing whole, universal and variable life insurance) is not.
Cash value policies take basic term life insurance and then add a savings aspect that is tax sheltered and long term (long term meaning for your whole life!) With cash value plans, you pay for setting up a savings plan and its investment as well as the fees for your agent's commission for doing this (not inconsiderable). To begin to make financial sense, you will need to hold onto the policy for fifteen to twenty years.
A part of your premium (comparable to the amount you would spend on term life insurance) goes to the actual life insurance. The rest of the yearly bill goes toward a cash value account and management fees. The idea was for this savings account to provide for your post retirement needs. When you die, the remainder is passed on to your beneficiaries. However, actually getting some of that money for those post retirement needs is not a slam dunk, and the amount taken out is taxed.
Your best bet is to buy the term life insurance and take what you would pay for them to invest and invest it yourself. Buying term life is a relatively simple procedure that allows you to compare apples with apples when shopping around for the best policy at the best price. Get a renewable policy and you do not have to have a physical exam each year. Get a convertible policy and you can opt for a cash value policy in the future.
Cash value policies have the advantage of being tax sheltered. There are other tax sheltered savings plans that are not as costly nor as constricting including IRA's, company retirement plans, etc. that enjoy lessened financial consequences if you tap into your funds for college, first-time-home down payments for example. Cash value policies proffer limited variety in the type of investment options as well. Don't look for a shopping mall of opportunities in your plan. What cash value offers the consumer is a disciplined savings investment. But a more financially astute option would be to have an amount automatically deposited to savings or other investment accounts from your payroll check.