What Do Liability Policies Mean?

Have you ever wondered what the tax implications are of cashing in your term life policy?

QUESTION: A listener asks Dave to elaborate on different types of liability insurance.

ANSWER:
Most policies say 25-50-25, 50-100-50, etc.  That means that the smaller amount has to do with one part of the coverage and the bigger amount has to do with the overall coverage.  For example, $500,000 is usually the most you can get on homeowners or car insurance policies and that is the very least that you should have.