Smart Money: Life insurance is a personal decision


DEAR BRUCE >> Can you help me find out which is better, term life insurance or whole life insurance?

— R.R.

DEAR R.R. >> There is no determining better or worse without adding your conditions, the things that make it better or worse for you. For example, say you have a couple of kids, are 37 years old, and you realize things are fine as long as the checks are coming in. When the checks stop, your family is in deep trouble. Term insurance, in this case, would be the way to go. Term insurance is pure insurance. It pays only when you die. Because there is no built-in banking and savings included, the cost is significantly less.

On the other side of that, if you have some extra money, it may well be that whole life insurance is better-suited to you. Whole life insurance, aside from offering insurance, offers you a savings plan. After a few years, you will build up extra money that you can draw upon, borrow against, or in some way put to use when you need money. This will probably be the cheapest money you're going to find.

That's a brief view of both, but there are many variations. Before you sign, research carefully.

DEAR BRUCE >> I have a 401(k) in the market invested conservatively because I am only 44 years old and still have over 20 more years to put more money into it. My question is, should I put more money into the market or stay conservative?

— Debbie

DEAR DEBBIE >> You have things backward. You want to put your money where it will earn more in the long run. Why? Because you're young enough that, even if you take some losses along the way, you'll have more than enough time to make them up. As you get older, in your middle 60s or so, you might want to consider being more conservative, but if you're conservative at your present age, you're punishing yourself.

The most important thing is not to panic if the market goes down a couple of days. Generally speaking, you should ride it out at your age. Every time the market goes down and other people sell, they are the ones who lose, not you who hung in there.

DEAR BRUCE >> I am interested in purchasing stock through SparkGift for birthdays, holidays, etc. A partial stock can be purchased using the dollar amount you choose. Please give me the pros and cons.

— J.S.

DEAR J.S. >> What a lovely idea. The gift of a stock or a partial stock can encourage excitement for investing that can last a lifetime. Furthermore, the idea of saving is good, and the possibility of consequences for the receiver is actually good, too. Yes, there may be taxes on the money the stock will hopefully earn, but that is not anything you should consider, in my view.

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