You may need very little or no life insurance. To be direct, all insurance is an expensive way of protecting what you can not afford to protect alone. If you are young and without responsibilities, or old and with plenty of money, life insurance (except perhaps for burial expenses) may be a needless expense. Make up your own mind before you talk to a life insurance agent.

Life insurance, your will, or your trust can also be used to create an enduring legacy. Beneficiary gifts and endowments may be made to schools, organizations, and charities - consider this when modifying your estate plans.

Let's look first at life insurance products that are sold as investment vehicles. These financial products pay the salesman great commissions, but they provide you with little benefit. A term life insurance policy will provide you with far more life insurance coverage - but pays little if any commission.

I was going to grab some comparative numbers, but the old line companies that push expensive whole life insurance want a rep to talk to you. These following numbers may be way off, they are as I remember them from a brief period after college when I was a licensed life insurance salesman - I had to quit when I realized the only way to do what was best for the client was for me to starve.

I should also add that life insurance is very important in many instances. If you need to pay a huge premium to be talked into protecting yourself - do it. If not find and act on the information yourself - and get far more coverage for far less money.

Of particular note is mortgage insurance often required by housing lenders, the lenders should accept a much cheaper term policy with the loan payoff listed as a beneficiary.

When I sold Life Insurance, a healthy man age thirty could expect to pay about one dollar a year for one thousand dollars of term life insurance coverage. One hundred thousand dollars of life insurance coverage - one hundred dollars - per year. (not a lot of room for commissions in that)

A whole life policy can be priced a hundred different ways and structured thousands of ways; universal life - term plus annuities - investment life. Think of a solid comforting word and it will probably have been applied to a life insurance product.

I had one client that had been sold a ten thousand dollar whole life policy. He paid close to three hundred dollars a year for this life insurance coverage - and he was healthy and less than thirty years old. With a term life policy he could have had a quarter million dollars of life insurance. (we did make sure he was approved and had the new policy before he chose to cancel the old one.)

Here are some standard objections a life insurance representative will make to the above:

• Yes, but the term life policy will go down in coverage or up in price as time passes.

This is true, but total cost will remain far smaller. Except for some estate planning issues, life insurance is mostly needed for young families, to decrease insurance latter in life as other assets grow may be a reasonable action.

• Ok, but there is no investment in term life, what will you do when you retire?

Hopefully you learn to speculate (check out this site), and retire well before your policy matures. If not your uncommitted money sitting in a bank is probably going to yield more than tied up in a whole life policy. Buy the best life insurance policy at the best price - make the best speculations separately - do both under your own counsel.

• Sure, if people would save -- but most people need a built in expense to force them to save.

If you are in this position, have 10% of your gross pay removed before you see it - for a standard or Roth IRA - a 401K - or for a stock purchase plan. If you think you can't do that - why would you want an expensive life insurance policy to do it for you? That is a policy you will probably cancel when the bill arrives.

• In case of emergency a whole life insurance policy will have built up a cash value available to the holder.
  

Lets look at this one a bit closer. That cash value is supposedly your money, right? Why if you ask for it does it cost you interest? Why if you borrow it does the value of your policy decrease by the borrowed amount? If you die why is your cash value kept by the insurance company - not passed through to your heirs?

To illustrate this last one. A ten thousand dollar policy may slowly grow a cash value - that is the built in retirement feature. Lets say after twenty years your policy has built up two thousand in cash value - supposedly your retirement fund.

If you borrow the two thousand:

• you pay interest on the borrowed amount
• you still pay your full policy premium
• if you die your heirs only get eight thousand dollars
• if you pay it back - your heirs will get ten thousand dollars, not twelve thousand

In essence- you are increasingly self insuring. The insurance company has over charged you and pretended to refund part of the over-charge as "cash value."

If you live to the life insurance policy's retirement age they will hand you this over-charge as your "investment return." Assume however the amount of your cash value is $9990.00 a year before an age 70 retirement. If you die - the insurance company will toss in ten bucks and hand your heirs a check for ten thousand, your cash value was just part of the policy.

Notice that you were still sending in that same payment at age 69 -- in effect for ten dollars of life insurance coverage.

With term life insurance that charge is up front and understood. If you want to get insurance while you are sure you qualify - get an inexpensive policy that allows you to convert or add to it latter. (In the competitive life insurance market it may pay to shop for a new term life policy every five or ten years. If you do find a much better deal in the future, be sure to own the new policy before you cancel the old)

As an aside: Insurance and retirement plans may be used for planned giving. Declare Bastiat Free University or other object of your philinthropic intent as a beneficiary - this is revocable. There aer many other otions available, you may want to seek professional legal and estate planning advice to assist you in establishing a planned gift (a promised future donation) that satisfies your philanthropic desires. Giving without reservation is one indication of true wealth.

Let's expand this discussion back up to investment vs speculation.

When that investment adviser, financial analyst, insurance salesman, hedge fund manager, broker, or other finance professional calls -- they have a list of "financial products" available -- some with high commissions and management fees, others that might fit you perfectly.

Which do you think they want to talk about?

An important speculation rule is to do your own research, contact your own suppliers. If they call you -- hang up.

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