FEDweek

Picking the Proper Policy

You might think of wills and trusts when you make up your estate plan. Life insurance may not be on your radar screen.

Don’t worry about such an oversight. You probably will hear from salespeople, reminding you of your need for life insurance.

Often, insurance agents will urge you to buy a policy that has a cash value. Such policies pay high sales commission, which may work well for the seller, but they’re not always right for you.

Instead, you should ask about term insurance. Term insurance is pure life insurance, effective for a certain length of time. As you grow older, the cost of term insurance will increase.

Even with these increases, the cost of term insurance is probably far lower than the cost of permanent insurance. For a $500,000, 20-year term life policy, a 35-year-old man might pay $500 a year, For a $500,000 cash value policy, the cost to a 35-year-old man could be over $6,000 a year.