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November 14, 2011

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I think the author overlooks one of the most important advantages of using permanent life insurance - it is an asset protection tool. In my state 100% of the cash value of permenant life insurance is protected against creditors, meaning the entire cash value is judgment proof and bankruptcy proof. And the cash value grows tax-free and can be removed tax-free in retirement. Permanent life insurance is a nice tool for high income earners who, after maxing out their 401k and IRA, have additional savings they would like to protect.

If someone is single, with no family, and very little money (just enough to cover funeral costs) there's no need for life insurance, right?

BD --

Probably not...

I think I was a typical "Term life insurance" purchaser.
I bought it when I had a young family, a mortgage and limited savings. That, and also "Disability insurance" gave me a nice warm feeling that my wife and children would be well taken care of in the case of my premature death or disability.

Once the children have moved out and are self supporting, your debt is approacing zero, your income investments have grown very substantially, and you have confidence that your wife would be able to manage without you, you can safely let the policies lapse.

I have $15k term insurance with my retirement from the state. I pay $34.80 per month for $10k. The state provides the other $5k. I am 74 y/o and my premiums will not go up. This should be enough to pay for my funeral. Since I want a cardboard coffin and no vault, my kids will get the difference, if any.

There is no extra cash value on this policy. I paid the same premium whether working or retired. Works for me.

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