| Not too many years ago life insurance was | | | | - Generally returns a fairly low rate of interest |
| considered to be the indispensable platform upon | | | | - Does not begin to accumulate any real value for |
| which all other estate planning efforts should be | | | | the first 10-15 years |
| based. In fact, for those in the median and lower | | | | - If the policy is surrendered within the first few |
| income ranges, it was often the only recognized | | | | years, money paid into it is lost |
| method for protecting one's heirs, particularly in | | | | - Does not provide the investment value of a |
| the event of untimely death. However, over the | | | | mutual fund or other investment |
| past twenty or so years, the concept of financial | | | | Term Life Advantages: |
| planning has changed considerably. The | | | | - Premiums are generally very inexpensive |
| proliferation of varied retirement plans available | | | | - Lower premiums allow the buyer to purchase |
| through work (IRAs, SEPs, SARSEPs, mutual | | | | more insurance with higher death benefits |
| funds, etc) has changed people's perspectives | | | | - Can be quite useful if the buyer only needs |
| about the need for life large life insurance policies. | | | | coverage for a specified period (while paying off |
| Does that mean that you don't need life | | | | the mortgage or while kids are in college, etc.) |
| insurance? No. Most people, perhaps with the | | | | - Leaves the buyer with more money to |
| exception of the very wealthy, do need some | | | | purchase other investment vehicles like mutual |
| sort of life insurance, although even the very | | | | funds, stocks, bonds, etc. that provide higher |
| wealthy may opt for a life insurance policy | | | | rates of return than whole life |
| (generally whole life) to defray the costs of burial | | | | - Often beneficial for younger families who can't |
| and estate taxes. | | | | afford whole life rates, but need to insure the |
| In general, the options are whole life (also called | | | | primary income earner |
| permanent insurance) and term life, with variations | | | | Term Life Disadvantages: |
| like universal life or variable life that combine some | | | | - Only pays if and when you die; you can never |
| of the benefits of each. Different companies offer | | | | personally recoup any of the money spent on |
| different options, but which you need and how | | | | term life insurance |
| much you need are matters for heated debate. | | | | - While premiums are lower than whole life, they |
| Those who sell one and make most of their | | | | also tend to go up and can become unaffordable |
| commissions from it will vehemently try to | | | | - Term life is only available for a specific term (up |
| convince you that the other is not a good | | | | to 30 years), and then goes away; if you don't |
| investment. Here are some facts for your | | | | die within the term, your premiums are lost |
| consideration. | | | | Almost everyone needs life insurance of one |
| Whole Life Insurance Advantages: | | | | variety or the other. The type of insurance and |
| - Offers a guaranteed death benefit no matter | | | | the amount to purchase depend entirely upon |
| how long you live | | | | you, your family and your mutual goals and needs. |
| - Is generally not subject to rising premiums; | | | | In any case, make sure the company you |
| rates stay the same | | | | purchase insurance from is reputable and |
| - Many policies become "paid up" at some point | | | | financially solvent. Don't be convinced by a |
| (15 years, age 65, etc.) after which no more | | | | fast-talking sales person without doing your |
| premiums are paid | | | | homework first. There are few remedies if your |
| - Has investment value which can be cashed out | | | | life insurance company dies before you do. |
| after some specified interval | | | | About Ronald E. Hudkins; |
| - Can be borrowed against in case of financial | | | | Ronald Hudkins is a retired U.S. Army Military Police |
| emergency | | | | member that was assigned as a staff researcher. |
| - Can, in many cases, occasionally earn dividends | | | | He has coordinated with military and criminal |
| depending on the company's solvency and | | | | investigators, set on court marshals and worked |
| accuracy in predicting actual costs | | | | closely with the Staff Judge Advocate Generals |
| - The income from a whole life policy is tax | | | | Office (JAG). He has a keen sense of legal |
| deferred | | | | matters - their interpretation, initiatives and |
| - Can be cashed out after age 65 and used for | | | | guidelines. For imperative financial planning needs |
| retirement | | | | he suggests his book "Asset Protection and |
| Whole Life Insurance Disadvantages: | | | | Estate Planning for All Ages. |
| - Costs more than term life insurance | | | | |