Primerica Financial Services operates on a "pyramid" recruiting scheme (although they call it "multi-level recruitment".) You must pay a fee to be "hired" by the company as an agent! Unlike working for other insurance companies, you get dinged for all minor expenses all the way down the line, and if your upline is dishonest, you could suffer losses from this, too. I switched from Primerica to another insurance company and have made much more money. You make your money more from recruiting your down line and taking a share of their earnings. IT reminds we a bit of ANMWAY!

My articles rail against cash value/wholelife insurance in general. There about about 3,000 ins. companies and they all sell the garbage. I am writing against the whole industry, not one company in particular. To single out one culprit, just lets the others off the hook. __________________________________ "THE TERMITE" (part 1) Copyright 1997 Marsh Kaminsky CPA __________________________________ As a CPA veteran of six years as an IRS agent and 17 years in private practice, I thought I knew it all -- that nothing could surprise me. Then one day I got a call from a client who had some pointed questions about life insurance I could not answer. Since my tax and other financial books didn't provide answers, I went to the library expecting to spend no more than an hour or so on this research. After all, how much was there to know about life insurance? The title of the first book I picked up, "What's Wrong With Your Life Insurance" by Norman Dacey gave me a clue about what I was about to learn. I then came across another book, "How Life Insurance Companies Rob You" by Walter S. Kenton. I was learning that there is plenty to know . . . that life insurance is a minefield of unpleasant surprises. As my reading progressed, I thought, "this can't be all true! I don't believe it! " I had apparently bumped into a raging controversy that I was unaware of during my entire professional career. As a result, I stayed at the library the entire day and returned for three more days the following week. The picture that emerged was a miserable image of the life insurance industry -- it's shoddy products, unconscionable profits, unbelievable political muscle, and deceptive sales tactics. My ignorance about life insurance really bothered me. As a CPA, I believed that it was my job to watch over my client's financial affairs. I was their mother hen, there to protect them against the wolves. Sure, my six years as an IRS field agent may have taught me how to smell a phony tax shelter scheme or tax fraud, but in this very important field of life insurance, I was dumber than a brick. As my reading continued, I began to have some very unsettling thoughts about a client who had died a few years earlier of cancer, leaving his widow and two small kids $150,000 from a whole life insurance policy. My research taught me that for the same premium dollar, his widow would have received an extra half million dollars had I did this homework long ago. To this day, these thoughts still make me cringe with guilt. My ignorance cost my client's widow and children a half million dollars!!!! WHAT'S THE PROBLEM? In a nutshell, it's cash value insurance of any name, shape or form. About 150 years ago some diabolical wizard in the life insurance industry mated common term insurance with an investment feature. The offspring of this mating was not an innocent cuddly baby. Instead this creature was sneaky, schizoid, smelly, impossible to understand, and ridiculously expensive to feed. More than that, this offspring bore a remarkable resemblance to a piglet. The insurance industry took this foul smelling piglet, gave it a bath, drenched it in expensive perfume, disguised it further with a respectable wardrobe, and then foisted it on an unwary and overly trusting public. They even gave the creature a new name, changing it from Porky to CASH VALUE. Over the years this now fully grown sow has cleverly and systematically bilked Americans out of billions of dollars, much of it off the backs of widows and their children. To this day the rip-off continues unabated, easily qualifying cash value life insurance as the biggest financial swindle of all time. By comparison, the recent savings and loan fiasco was a campfire weenie roast. Those days in the library opened my eyes -- angered me -- and forced me to act. I decided to share my new found knowledge with my clients and anyone else who was willing to listen. I quickly became a dedicated "termite," (one who only advocates term life insurance). Like real termites, I had a lot of "chewing" to do. One of the methods I use to spread the truth about cash value life insurance is to present seminars at continuing adult education centers in the Chicago land area. Called "Winning The Life Insurance Game," these seminars strip away all of the nonsense and misinformation about life insurance and gives participants the hard core facts they must know before buying life insurance. People come to my seminars because they are confused about life insurance. Most of them have already been subjected to a long and polished sales spiel, accompanied by indecipherable computer generated projections. They come to hear some straight talk, a different viewpoint, from someone who is independent of the industry and does not sell life insurance or any other financial products. That's me. THE SEMINARS I begin the seminars by asking a simple question. "Is it possible that you or your spouse will die today?" Whether death suddenly occurs by a stroke, auto crash, or other means, everyone quickly agrees that life today is no guarantee of life tomorrow. That question quickly establishes the all important fact that life insurance protection is an urgent TODAY need, not tomorrow's or fifty years from now. TODAY! NOW! With the TODAY concept in mind, I ask another question. "If you knew for sure that your spouse was going to die today, how much life insurance would you carry on his or her life assuming that the premiums are EXACTLY THE SAME -- $75,000 or $425,000?" It is, of course, no great surprise when everyone quickly agrees that a $425,000 policy is far superior to a $75,000 policy, especially if the premiums are the same. I sometimes think that just by asking those two simple questions, I could sell a billion dollars worth of term insurance a year and still have time left to tend to my roses. "Folks, this seminar is all about making absolutely sure that if you die today, your dependents will have that extra $350,000." I then explain in simple to understand English the difference between cash value and term insurance, deliberately leaving aside confusing technical jargon or incomprehensible sales hype that the insurance industry loves to invent. Because I use the KISS principal, no one leaves my seminars in the dark about life insurance. "There are just two types of life insurance, term and cash value. The only issue at hand tonight is which of the two is the best buy and why. "Term insurance is pure life insurance protection and is just like an auto or homeowners policy. If you pay your premium and die, the insurance company pays the face value of the policy to your beneficiary. It is available to age 90 and can be purchased yearly, or on the basis of a guaranteed level premium for five, ten or twenty years. The product is uncomplicated, easy to understand, and very inexpensive. The premiums increase as you get older. "Cash value life insurance (sold as whole life, endowment, variable life, endowment, variable life, universal, permanent, straight life and a zillion other names) is the second type of life insurance. It differs significantly from term because there is a savings or investment feature attached -- the cash value. You will soon learn that the cash value is the bad guy that causes all the trouble. These policies typically last to age 100 and the premiums remain the same during your entire life." Next comes a discussion of why no one, under no circumstances whatsoever, should ever purchase any form of cash value life insurance. "You all now know," I begin, "that cash value life insurance is a combination of insurance protection and an investment. But you should also be aware that this investment element causes cash value to cost anywhere from FIVE to TEN TIMES as much as the same amount of term insurance. Because cash value life insurance is so expensive, most Americans are severely under insured. They simply cannot afford all the coverage they should have. This is the major failing of this type of life insurance. If tragedy strikes and the insured dies, the beneficiary is left with peanuts instead of big dollars. I am here tonight to make sure that this does not happen to you. "Listen up folks . . . here is a hypothetical example that I hope hits home: "Take two families with the husbands both earning about $40,000 per year. Both are married, have two children, and own similar homes. Jack and Scott are friends and live in the same neighborhood. They drive together to work every morning. One day disaster strikes and they are involved in a head-on crash with a drunk driver. Both are killed instantly, thus ending all their worldly problems. But for their spouses and children, their problems have just begun. "About five months ago both men were smart enough to buy life insurance to protect their families in the event of their premature deaths. Jack purchased a $75,000 whole life policy which had a $500 annual premium. Scott purchased a $425,000 twenty year renewable term policy for the same $500. The result? "Zelda, Jack's widow, had to go back to full-time work, sell her home, and pull her kids out of nursery school. Her life was in shambles. "Jane, Scott's widow, with an extra $350,000 in her bank account, didn't have to sell her house, paid off the mortgage, and still had enough left to provide for her children's college educations and still maintain a reasonable standard of living. Life was now no bed of roses without her husband, but at least she did not have any severe financial pressures to make things worse. One widow had to struggle mightily for years . . . and the other did not. Then I literally shout, FOLKS, THIS IS THE CURSE OF CASH VALUE LIFE INSURANCE! "Whoever sold Scott his life insurance policy knew the only thing that really counts in life insurance is the size of the insurance check that the beneficiary receives if disaster strikes. NOTHING ELSE MATTERS. Every other consideration is an illusion, total baloney. "Let me put it this way, whoever sold Jack his policy literally robbed Zelda and her children of $350,000. That's more than a third of a million dollars!" No one ever smiles as this sinks in. Somebody always asks, "Why didn't Jack buy a $425,000 term policy too?" And my answer is, "probably because his agent never told him about it." Unfortunately for Zelda, Jack got his priorities mixed up. The agent mislead him by stressing the long term investment feature of cash value life insurance instead of Jack's urgent life insurance need TODAY. That bit of chicanery robbed his family $350,000." I continue to pound on this theme. "How do you think Zelda feels knowing that her friend ended up with a third of a million dollars more than she did? Do you think that it makes her feel any better to know that her husband was saving for the future? FOR HER, THE FUTURE IS RIGHT NOW!" By now, the Zelda story is making everyone very uncomfortable. Lots of frowns. One participant once piped in with, "Marsh, you just called the life insurance industry a pack of thieves. That's uncalled for." I replied, "Go ask Zelda what she'd call them. She's the one who is missing $350,000." _______________ end of part 1 _______________

"THE TERMITE"(part 2) THE PHANTOM CASH VALUE The next question quickly leads to participant outrage -- the same feeling I had when I first learned about it. The answer to this important question reveals a deep dark secret that the life insurance industry has carefully kept hidden from the American public for the last 150 years. They know that if this secret was ever fully exposed, no sane American would ever buy cash value life insurance. The question is, "WHAT DO YOU THINK HAPPENS TO THE CASH VALUE, THE PROMISED POT OF GOLD, WHEN THE INSURED DIES? WHO GETS IT?" If I asked them the square root of 5,422, I would get a similar response --total silence. No one knows the correct answer! Had I been asked that question prior to my time in the library, I would not have known the right answer either. Some people in the class respond, "The beneficiary?" "Wrong, guess again." Blank stares. "Okay folks, I''ll tell you. The life insurance company keeps it. All that extra premium you paid for so many years ( five to ten times more than term) to build up an investment for the future was spent in vain because the cash value vanishes - literally DISAPPEARS." Someone usually asks, "Marsh, are you sure about this?" "You bet I am. Read a cash value insurance contract. In it, buried somewhere in very small print, is the statement that the insurance company holds legal title to the cash value. THEY OWN IT, NOT YOU. Their name is on it, not yours. And if the insured dies, they never hesitate to keep it for themselves." "But the beneficiaries still get something, don''t they?" "They sure do," I reply. "They get the face amount of the policy, not a dime more or less. But remember, they''d get that same face value with a term policy at 1/5 to 1/10 the cost." "But the insurance agent told me that the cash value belongs to me and it was just like a bank savings account! IT''S MY MONEY!!!" "Mam, I don''t want to upset you, but the cash value resembles a bank savings account about as much as a shark resembles a goldfish." That statement elicits both giggles and more frowns. "But you can borrow the cash value . . . right?" "Borrowing your cash value from an insurance company is NOT the same as withdrawing money from your bank savings account because you must pay the loan back, with interest, making this so called feature no big deal. More about this later." "Can we ever get the cash value?" someone asks. "You sure can. All you need to do is ask your life insurance company for it. But to dissuade you from taking what is yours, your insurance company will cancel your life insurance coverage as a punishment." "I thought you just said that they own the cash value. If so, why do they give it to you if you ask them for it?" "It''s because the sow is schizoid, meaning that it acts differently under different circumstances. If you are alive and ask for it, you can get it. But if you die, the insurance company gets to keep it. Weird, huh?" "None of this makes any sense." "Believe me, nothing about cash value life insurance makes any sense. The product is totally bizarre." By now there are a lot of unhappy campers in the room. It is not pleasant for them to learn that the life insurance industry, with its benevolent mom and apple pie image, plays lots of sneaky tricks and is anything but benevolent. I will never forget what one participant once said in disgust, "The good hands people apparently have lots of dirt underneath their fingernails." Another participant, who must have heard all he needed to hear, was in no mood to relax when I announced a break. The burly 300-pound gorilla grabbed his coat and left the room muttering something about strangling his brother-in-law who sold him "chump change" whole life insurance! "NO ONE MAKES A SUCKER OUT OF ME!" The seminar continues . . . THE BORROWING ILLUSION The ability to borrow the cash value is endlessly hawked by the industry as a major benefit of cash value life insurance. It''s not, as the following illustrates. "Folks, let me change your thinking on this matter. Let''s say that you open a savings account at a bank with $5,000. In a year''s time, you have a balance of $5,250 including the $250 interest you''ve earned. Now you decide to withdraw the $250 in accumulated interest. Tell me, what would you say or do if, in a month, the bank sent you a bill for the $250, plus interest?" One participant once said, "I''d call out the Marines and scream bloody murder. My bank would never do that . . . that''s my money!" "You are correct . . . your bank would never do that because the money in a bank savings account is really your money. You can demand it from the bank anytime and you will get it with no strings attached. What''s more, they will never send you a bill. But in the zany world of cash value life insurance, things aren''t quite like that because they treat your cash value withdrawal as a loan and they will send you a bill. "What''s even more amazing to me is that they have managed to convince the public that this loan "feature" is some kind of a big deal. If a bank did it, you''d scream. But when the insurance industry does it, nary a whimper. They are lending you your own money and charging you interest to boot." " I see what you mean by the shark and the goldfish." Someone once said, "All this talks about whose money is whose and what money is which is scrambling my poor little brain. Whatever happened to the good old KISS (keep it simple stupid)?" "The sow deliberately murdered it. The insurance industry knows that their greatest ally is misunderstanding and confusion. That''s how they have managed to hoodwink so many people for so many years." Then I hit everyone with another whammy. "Let''s say that you have owned a $50,000 cash value policy for 10 years and that the cash value is about $3,000. You then decide to borrow the $3,000 from your insurance policy to pay your income taxes. But as fate would have it, on the very next day, you have a massive coronary and die. Now tell me folks, how much will the life insurance pay your beneficiary?" Someone always says, "$50,000, the face amount of the policy." "Try $47,000. The insurance company will first deduct the $3,000 loan from the $50,000 face value of the policy before it pays out a dime to the beneficiary." "Why didn''t they just offset the cash value against the loan? Isn''t the cash value supposed to be the collateral?" "Because, like I said before, they consider the cash value to be their property. Thus, they don''t offset the loan against it. It''s further proof that the cash value is not always yours. "Do you all see all the madness and duplicity of it? The insurance company paid itself back TWICE for the $3,000 loan . . . once by keeping the cash value, and again by reducing the payment to the beneficiary. Neat trick, eh? Now you are getting a glimpse of how they manage to build such big tall buildings." Someone says, "Seems to me that like the guy borrowed money from his beneficiary." WHERE''S THE PORK? Life insurance agents trying to sell customers on a cash value policy go to great lengths to illustrate how much customers will earn on the policy. They do this with reams and reams of computer printouts that overwhelm and thoroughly confuse their customers. The question now is . . . really, how good is the investment and what is the rate of return? "More bad news, huh Marsh?" "You could say that. The rate of return . . . well . . . it''s kind of hard to figure, especially since the investment vanishes if you die. If that happens you might say that the rate of return on your investment is zilch." "But what if we don''t die and cash the policy in for its cash value. What''s the rate of return in that case?" "Dismal, at best. For the first two or three years, there is no cash buildup at all because of all the heavy loading charges. Someone has to pay for the life insurance agent''s commission and the insurance companies will elect you. Add to that the cancellation charges that you may be charged for having the gall to withdraw your money. Notice that a bank has no such see or charges on it''s savings accounts. "Folks, how many of you would open a bank savings account under these conditions? I sure wouldn''t." Someone produces lots of giggles with, " . . . not much pork on the sow." "Here''s another way to look at the situation. When people buy a cash value policy, they think that they are getting both life insurance protection and an investment in one package. But that''s not true. No matter how much you slice up the sow, you cannot get both. It''s either/or, but never both. What''s more, whatever you do end up with, the life insurance protection or the investment, will be totally inadequate." "Like I said, not much pork on the sow." More giggles. "Now, would you all like to know how to have your cake and eat it too?" Everyone sits with rapt attention waiting for my words of wisdom. "First, purchase a term policy that adequately covers your family in case you die. Then take the difference in cost between that policy and a cash value policy and buy an investment in your own name -- a bank savings account, real estate, or shares in a mutual fund. Do this and you will come out many thousands of dollars ahead because you will get both - lots of family protection and the investment with your name on it." POLITICAL MUSCLE Someone invariable asks me, "Why do they sell this cash value garbage and why doesn''t someone stop them?" "Why? Because of the insurance industry and its agents make lots of money from cash value insurance. Tons of it. The agents who sell it make no less than 55% of your first year''s premium as a commission and sometimes up to 105%. Contrast that to the measly 25% or less that they earn on term policies. This is why Jack was never told about term insurance. THE NAME OF THIS GAME IS GREED, GREED, AND MORE GREED." "As for why no one stops them, the individual fifty states regulate the insurance industry. The Feds have no control over them as they do with banks, savings and loans, and the securities industry. Thus, we have fifty state insurance commissioners to protect us from the wolves and very few of them have the guts or the brains to challenge the industry for the public well being." "You would think that as government agencies, they would protect the public from the ravages of cash value life insurance. Instead these toadies'' act as the life insurance industry''s agents, assisting in by letting this rip-off continue. "One of the ways they do this is to freely disseminate to consumers a pamphlet entitled "A Consumer''s Guide to Life Insurance, written by the American Council of Life Insurance, an industry lobby. This industry propaganda is the most slanted and misleading baloney I have ever read. It is shameful that governmental agencies would buy into this and freely disseminate it to the public. Talk about Judas Goats . . . "Political muscle? Here''s what the insurance industry did to the Federal Trade Commission. In 1979, after investigating the life insurance industry, the FTC issued a scathing report and promptly ran into the power and wrath of the life insurance industry. Among other things, they didn''t appreciate the FTC''s disclosure that cash value insurance was paying, on average, a miserly 1.9% return on investment. The FTC didn''t have a chance against these power brokers. Soon after the report was issued, Congress passed a law (guessed who instigated it) preventing the FTC from ever sticking their noses into the industry again! NOW THAT''S CLOUT!" "Marsh, would you do to make matters right?" "There is only one cure for the scourge of cash value life insurance." IT MUST BE OUTLAWED! "C''mon Marsh, the stuff isn''t that bad." I reply . . . "Considering massive number of people who have been robbed by the sow in the last 150 years and the amounts involved, I don''t think that a law declaring cash value insurance illegal is too severe. Maybe we should ask Zelda her opinion. "To really fix matters, I''d dump the 50 state insurance commissions and federalize the whole shebang." The seminar continues . . . "During the last few years I''ve had occasion to discuss cash value insurance with agents, financial planners, and others who sell it. I wanted them to tell me -- convince me -- why anyone should buy the stuff. I hoped that everything I had learned was wrong, that I missed something crucial in my research. "However, once the agents figured out that I knew my stuff and had tons of supporting proof, they dropped all of their well practiced jargon and hype. Nothing they ever told me and nothing I ever read, has changed my mind about cash value life insurance in the slightest. "But what I did learn from these conversations was something about their appalling ignorance. It was as if the people who sell this junk never bothered to learn anything except what the industry wanted them to learn. Some of them, amazingly enough, didn''t even realize that their companies kept the cash value if the insured dies. Can''t these people read? Don''t they realize the awful consequences of their actions? Is money so blinding?" QUESTIONS AND COMMENTS Q. Marsh, this is not a question. I have read the Consumer''s Guide To Life Insurance at home and I read it. It doesn''t say word one about the disappearing cash value. A. Why should they shoot themselves in the foot by mentioning this little tidbit? Do you want to have some fun? As of today, their toll free number is 800-942-4242. Call and ask their representative about who gets the cash value if the insured dies. I have done it several times and all I get is a bunch of hemming and hawing. One rep said that it comes to you as "part of the death benefit." That means that you are self insuring with your own money. Q. Are you telling us to replace our cash value policies with term right away? A. YES! And do it as soon as you can. But be sure that you are first covered by the new term policy before you dump the cash value policy.And be aware that you might get a visit from an agent who will try to dissuade you. They can be very convincing so watch out. Q. Don''t they pay dividends on cash value policies? A. They do pay you back money but it''s definitely not a dividend in the true meaning of the word. The money you receive each year is really a nontaxable return of your overpaid premium. In substance, they are merely refunding to you your own money, your overpaid premium. If you don''t believe that, call the IRS and ask. If it was a real dividend, the IRS would surely tax it. Q. Buy why? A. To fool consumers into thinking that they are getting a return on their investment. It''s a sales gimmick, pure and simple. Q. My agent told me, "Why should you pay premiums for so many years and get nothing back?" A. This is another cute sales gimmick. Tell me, do you expect something back on auto, health, or homeowners insurance? Why is it only in life insurance that we are told we should get money back? Q. Buying whole life insurance instead of term insurance sounds like you''re paying $90,000 for a $15,000 car. A. I''ll have to remember that one for my for my next seminar . . . thanks. Q. If you don''t sell life insurance, are you still a CPA? A. No, these days I spend my time inventing spelling and math games for kids. It''s much more fun than accounting and taxes. Q. What is this "split dollar" stuff I hear about for businesses? A. It''s the same old cash value garbage wrapped up in a neat package for the business sector. With it, the employer pays for part of the life insurance and the employees pays the remainder. There are a zillion of such plans out there but the net effects are the same: the employee ends up with peanuts for coverage. Avoid this junk like the pox. Q. Doesn''t term insurance get very expensive as you get older? A. This is the line of baloney that sells more cash value life insurance than anything else. Yes, it does get expensive, particularly for people over 60. However, an equivalent amount of cash value insurance is always about 500% more expensive! The fact that life insurance gets expensive is actually one of the best reasons for buying term insurance, not cash value. Q. But term life isn''t "permanent . . . " A. The term "permanent" is a buzz word used by agents to sell cash value insurance. All it really means is that the insurance is in force until the insured is 100 years old. Since renewable term insurance can easily be purchased to age 90, when most of us are long dead, the word is meaningless. Besides,how many people need life insurance at the age of 100? Q. Doesn''t cash value have a lifetime level premium? A. Yes, but believe it or not, this is a disadvantage, especially for young couples raising a family. To compute a level premium over your life expectancy, the insurance company simply averages out the cost of your coverage for the rest of your life. This means that you are paying much more for your life insurance when you are young and can least afford it and paying less when you get older when life insurance is not so important.And by the way, don''t forget that term insurance can be bought on a level premium basis for up to twenty years. Q. How much coverage do I need? A. As a rule of thumb, buy somewhere between eight to ten times your yearly gross income. For most families, that means at least $250,000 in coverage. That will cost a 30 year old nonsmoker about $350 a year for term. A cash value policy for the same coverage could run as much as $1,800 or more. Take your pick. But do not rely entirely on this rule of thumb as you may need significantly more or less coverage. That is up to you to decide, based on your particular circumstances and life style. Q. Does everyone need life insurance? A. No. People who do not have dependents to protect certainly don''t need it. Nor do others who have sizable estates to protect their dependents. Q. What about life insurance on my children''s lives? A. Life insurance is a wonderful invention to protect dependents from financial ruin if the breadwinner dies. That is its sole function.This means that you should not waste money by buying insurance on your children''s lives. Every available insurance dollar should be on your life. But if you feel you do need some life insurance on their lives, get term, of course. Q. How about life insurance to protect my estate against estate taxes? A. A bad bet. As Charles Givens so cleverly put it in his book, Financial Self Defense, "When you buy a life insurance policy to pay estate taxes, all you are doing is paying estate taxes before you die instead of afterwards. That''s like paying income taxes on money you haven''t earned yet." He has a point. Q. What''s this I hear about vanishing premiums in Universal life Insurance? A. It''s a case of the old smelly sow playing more gimmickry tricks. You know that in life that there are no free rides. This is especially true when it comes to dealing with the insurance industry. If your premiums vanish, all it means is that you paid them too much in premiums to begin with. Q. How do we know that you are not full of baloney and just grinding your ax? A. That is a fair enough question. My answer is that right now you don''t know, but for the sake of your family, do some research and find out for yourself. Take out some time and do some reading at the library as I did. Isn''t the well being of your family worth a few hours of your time? Your job, if you can do it, is to prove me wrong about anything that I have told you tonight. If you can do that, I will happily refund the cost of this seminar. But if you cannot prove me wrong, then do what I am telling you to do. Fair enough? As for my ax, you bet I have one to grind! It is estimated that most people own about two times their yearly gross income in life insurance protection. That''s pitiful. That means that there are millions of vastly under insured households in America . . . millions of time bombs just waiting to explode. Do you remember that what I told you about my client and how his cash value policy robbed his widow and two children of a half million dollars? I did not make that story up just to impress you. It really happened. My guilt is real and so is my anger. Q. Are you trying to say that a term policy makes em pay through the nose if my husband croaks? A. You betcha! Q. The guy who sold me the policy last year never said one word about any of this. A. If he had, would you have purchased the cash value policy? A. Not a chance. A. That''s why he didn''t tell you. Q. I have some credit life insurance for my home mortgage and car loan. Is that ok? A. Not ok. What you have is very overpriced term life insurance. Dump them all and replace them with a regular good term policy. Q. I am a member of AARP and I received in the mail an offer for term life insurance. Since it is term, should I purchase it? A. No. The stuff is extremely expensive term. In fact, it is a good rule of thumb to never buy any kind of insurance from a mail offer. I am surprised that the AARP would endorse such garbage. Q. Any guidelines on where to get inexpensive term insurance? A. No. I will not recommend any specific company. If I did, you might think that I work for someone in the industry. But you should know that there is is a wide variance in prices for this product, so you must do some shopping. Get quotes from at least four companies before you decide. Also, make sure that the policy is guaranteed renewable and that you do not have to take another physical at time of renewal. You do not want something called "reentry". A valuable tip . . . Avoid having multiple term insurance policies as they usually have a base policy fee. Combine all the policies and pay just one fee. THE GRAND FINALE Here is where I really lay it on thick. "For most of us, life insurance is the most important purchase we will ever make. That''s because so much depends on whether or not we have adequately protected our dependents. In this arena, there is simply no room for error. You will probably purchase life insurance only a few times in your life so please make sure that you do it right. Cash value insurance tries to accomplish two very worthy goals: family protection and family savings. It doesn''t work. The two goals rub each other the wrong way and cannot coexist together. If you need protection, buy pure protection (term insurance) and as much as you need to fully protect your dependents today. If you need a savings or investment plan, that''s a separate financial planning issue. But never buy a product (cash value insurance) that attempts to fulfill both goals in one package. *********AND********** NEVER - NEVER - NEVER FORGET ABOUT ZELDA WHAT SOME OTHERS HAVE SAID: * Cash value policies, such as whole life, are inappropriate for most families. Too often such policies provide less protection than families need for more money than they can afford. Consumer Reports, September 1993 * Existing cash value policies, in almost every case, should be replaced...When you die, the insurance company steals your savings -- the cash surrender value. The Canadian Buyer''s Guide to Life Insurance * Term is the no-frills model of the life insurance industry. It is relatively inexpensive, easy to understand, and in general, the best value of the premium dollar. However, there is a good chance that your agent will not discuss term insurance as an option for your family unless you bring it up. New Jersey Dept. of Insurance Buyers Guide To Life Insurance * Agents make five to ten as much cash value life insurance policies as they do selling term insurance policies of the same face amounts, yet no disclosure of this fact is made to consumers. Policies are not sold on the basis of consumer need, but on industry greed." Ralph Nader * Life insurance companies and their agents intentionally mislead consumers about how much their life insurance policies will cost and what those policies will be worth when they need them the most. United States Senate, Subcommittee Hearing, 1993 * Never buy whole life insurance. The truth is there are no good whole life policies. Not one. Not for anybody. Charles J. Givens, "Financial Self Defense" * Term is the wave of the future and the nation''s consumers will be the real beneficiaries...Nothing I did in my eight years at the Commission holds the potential for bringing greater economic benefit to more Americans than the simple act of releasing the FTC Report on life insurance. Michael Pertschuk, former FTC Chairman * Many families with cash value policies are tragically under insured... had they bought low premium term insurance, they''d have 10 times the money, but agents earn bigger commissions by selling cash value, so they often push it, even if it leaves a family short. Newsweek, May 8, 1989 Jane Bryant Quinn * Don''t buy any life insurance with cash values. National Insurance Consumers Organization, 1982 ____________________________________________________________________ ABOUT THE AUTHOR: Marshall Kay is a non-practicing CPA who has a consumer interest in the subject of life insurance. Mr. Kay lives in the Chicagoland area where he invents and markets educational math and spelling games for children. He appreciates Julie Larsen''s editorial contributions to this article. Anyone wishing to order reprints of this pamphlet or to contact the author can reach Mr. Kay by e-mail at TheTermite@aol.com. * * *