Life Insurance as an Inventment?

There's a good deal of controversy about the value of insurance as an investment.Whole life policies,with their fixed premiums and cash value that grows over the course of the year (that can be collected when you decide to terminate the policy or borrowed against up to the current value of the policy),are considered by many to be an effected way to protect a family financially and invest wisely.Term insurance,on the other hand,is a much less expensive type of insurance,and achieves much the same purpose as whole life (of course,only during the "term" of its existence).But there is no cash surrender value or borrowing privilege.Since both current protection and a good future investment are necessary,the consumer must carefully weigh the advantages of life insurance before making a purchase.

How to Read a life Insurance Policy

All life insurance policies,regardless of type,can be divided into 3 parts:

1.Summary-This is the basic agreement of the insured,the face amount of the policy,the beneficiary's name,and premium amount, as well as the type of policy,any riders (additions to the policy you might have bought),and weather or not the cost of the insurance has been figured on a guaranteed basic or a participating basic.

2.Details-Approximately 10 clauses giving the specifics of the policy's operation,such as due date of premium,value of the policy when you surrender it for either cash or a loan,the amount paid at the time of your death,and options for how your beneficiary can receive that money are included.

3.Application-This is a two-fold section that gives personal information about you and lets you make some decisions about how the policy will work.Among typical items covered are what happens in the event of your suicide,whether you engage in dangerous sports or occupations,what tour rights are under the policy,etc.

As with any legal document,it is important to read and understand what you are purchasing.If you need further information,a good source is the America Council of Insurance,1850 K. St.N.W.,Washington,DC 20006.