| Traditional Whole Life, is the original cash-value policy. The insurance
stays in force as long as you pay your premium, i.e., it is permanent. The
premium you pay is fixed and depends on your age when you buy the
insurance. The insurance company will invest your premiums and you can
borrow from the cash value built up if you so wish at a favorable rate of
interest. |
| The amount of insurance you need depends on a number of factors such as
your mortgage payments, and the cost of education, health care and daily
living expenses of your family. You will also need to consider questions
such as: Is your spouse working? If not, will he or she require job
training to be able to provide enough income for the whole family? Will
your house be sold or retained? What effect will inflation have on your
estate? How many years will your children be living at home? Answers to
these questions will help in determining the amount of insurance you should
buy. Several rules of thumb and formulas are available to use as a guide
in deciding the amount of life insurance coverage you need. One of the
simplest is to take your annual salary, multiply it by 5, and minus the
coverage you already have. |
| In view of what we just experienced on naijanet from the passing away of
one of us and the subsequent discussion of life insurance, I am forwarding
this article to the net. I had written the article for the May 1996 issue
of the NACO (Nigerian Association in Colorado) Newsletter, and had posted
it on naijanet net about a year ago when a Nigerian passed away in
Baltimore and there was subsequent discussion of life insurance. The
articles addresses issues such as: |
| I would advise most people to dump cash value life insurance policies
and put the money in anything else -- even a passbook savings -- that
way all your money is working for you instead of buying a Lincoln Town
Car for your life insurance agent. |
| There are four varieties of term life: Annual Renewable Term (ART), Level
Term (LT), Modified Level Term (MLT), and Decreasing Term (DT). The
differences between them are in the way the premiums and death benefits are
structured. |
