Buying Life Assurance? Have a look at this before you leap

You will hear various things coming from the mouths of agents who are trying to sell you some form of life insurance cover. Do a favour to yourself, and don’t believe everything they say. A cash value life policy may at times be a complete waste of money.

This does not however mean that no one requires Life Assurance. For some individuals, Life Assurance is really considered necessary. Here are three specific circumstances, in which an individual would need a specific form of cover:

• Parents of children, who are also the sole or primary source of income for the family, should purchase enough cover that will pay off any outstanding debts, over the children’s college expenses, and leave something for the surviving spouse.

• People who are subject to Estate Tax need to purchase life cover. A guaranteed life assurance policy, inside an insurance trust fund, is the most economical way to transfer wealth.

• The third type of cover is directed towards high income earners. People who find themselves in this category, should opt for a 412i Fixed Benefit plan. More than a life cover, this policy is better described as a retirement plan, than high income earners can opt for, instead of the 401k plan.

This plan, allows investors to make a larger contribution into their plan as opposed to the normal IRAs, and thus reduce the amount of taxable income. This plan is ideal for small business, where the number of employees is 10 or even less. This category includes estate agents, doctors, consultants or small business owners.
The contributions going to a 412i plan may be up to five times bigger, than contributions directed to other types of retirement plans. This would mean that, since the contributions come from pre taxed income, the taxable income value would be reduced, thus saving you tax money. Moreover, this plan will also provide a death benefit to its named beneficiaries, in the event that the life assured dies before reaching retirement age.

Reference: http://resorttown.blogspot.com/2009/03/truth-about-life-insurance.html