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