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- In the mid 80's someone sold me a universal life insurance policy.
- The agent showed me these computer printouts of the fantastic values my
- policy would be worth when I retired. No one told me to question the
- assumptions on which these projections were based. Would the interest rates,
- which were high back then, always remain that high? Right now at the time of
- this writing (1992) they are very low. No one told me to ask how much
- commission I was paying. (Would you pay a bank a $100 commission for the
- privilege of opening a CD?) After I bought the policy, I found it difficult
- to track the return on my investment. How could I be sure that it would
- really be worth what I had been to believe it would? After a while, I sold.
- I'm not the only one who has come to this realization. A magazine article I
- read said that about one-third of the people who buy a whole-life policy cash
- in during the first two years.
- Since that time I've learned a few things in the reading I've done.
- One thing is to keep insurance and investments separate. There are good
- reasons for this. You pay high commissions on whole life and universal life
- and such. It's hard to track the performance of such policies when used as
- investments. Avoid these commissions and track your investments more easily
- with no load mutual funds, which are recommended almost universally by
- financial experts.
- Another tip - don't buy life insurance unless you need it. You need
- it only if and when you have dependents who rely on your income. Also, you
- don't need it for minor children. If something should happen, your loss will
- be great, but it will not be a financial loss.
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