More on Life Insurance

Here are some common points of confusion about life insurance:

- The "premium" is the price paid for a policy (even though it sounds like a good thing).

- An insurance "dividend" is a partial return of overcharges of the annual premium (again, it sounds good, but it isn't a benefit).

- The price of a cash-value policy can be 10 times the premium for a term policy. A wise investor can invest the difference and build savings so insurance isn't necessary.

-Even term policies are priced different from one insurer to another. Shop around. Look for insurers who are rated better and are more likely to stay in business.

-The "death benefit" is the money beneficiaries receive after the insured person dies, but the amount may be significantly less than a policy's face value. Consequently, in a cash-value policy, coverage can decline. With a term policy, the coverage remains constant.

-One "benefit" insurance salesman promote is that people can borrow from the cash value of their policy. However, when the insured dies, the death benefit of the policy is reduced by the amount borrowed plus interest. This can greatly reduce the benefit for surviving family members.