Well my first question is what to you mean by someone close to you?  Are you talking about a co-worker, acquaintance, friend or relative?  Whoever this person is, my first suggestion is that you distance yourself, at least in terms of your finances, with this person.

The reason for this is because when you are trying to save and invest for your retirement, your starting point shouldn’t be life insurance.  In terms of your options, life insurance should be way down on your priority list, if at all.

That doesn’t mean life insurance is unnecessary.  If there are people in your life depending on your income such as children, a wife, or other family members, you need to ensure that in the event that you should die an untimely death that they will be well taken care of.

However the kind of policy for providing that kind of assurance is term life insurance.  You pay a premium annually and an insurance company promises they will pay your beneficiary a death benefit in the event of your death.  A term life insurance policy is ideal when it comes to basic insurance protection because it gives you a big bang for your bucks or the most in death benefits for the amount you pay in premiums.  This frees up more money to do other things such as save for your retirement.

When you have life insurance with cash value, by contrast, only part of the premium will go toward paying for the death benefit, with the rest going into the investment or cash value part of the policy.  Depending on what kind of cash value type policy, could be something close to having a savings account where you receive interest to a more mutual fund-like investment.

This approach, the way I see it, does have several drawbacks.  Because only a portion of your money is going towards the death benefit more money will need to be shelled out in order to get an equivalent benefit that you would get with term life insurance.  Expenses associated with investing via life insurance tend to also be higher than costs paid for retirement investments not involving a life insurance policy. Generally higher costs result in lower returns.

Also, hybrid investment-insurance policies tend to be hard to assess and complicated.  Finally, the tax advantages that often highly tour about  these types of investments is often overstated in my opinion.

If life insurance is not the best solution, what’s the best way to get started on saving for your retirement?

Fortunately, several retirement investment and saving vehicles are available that offer tax benefits that are more straightforward, and more convenient and more cost-effective as well.

If you have a retirement savings plan through work, like a 401(k) that should be a top priority.  401(k) plans offer sever important advantages.  First there is the federal contribution ceilings which are relatively generous- $16,500 and for people who are 50 years or older an additional $5,500 (although lower limits can be set by specific plans).  Also, your pre-tax dollars along with the investment earnings generated, will not be taxed until they are withdrawn.  Many employers offer matching funds.  The typical amount is fifty cents for every dollar you contribute from 6% of your salary.  It basically amounts to you getting paid an extra amount to save for your retirement.

If you don’t have a 401(k) plan available to you, or you have contributed the maximum but still can save more, a ROTH IRA or traditional IRA is something you may want to consider.  They do have lower contribution limits: $5,000 per year and for those older than 50 an additional $1,000.  However if you do meet the eligibility requirements, an IRA can be a great way of building up a nest egg for retirement, particularly if you get an early start while you are still young, make maximum contributions over many years, and also stick with low cost investments.

If you happen to exhaust all of these possibilities you can then move into tax-efficient investments that are part of taxable accounts, like tax-managed funds, ETFs and index funds.

One final thing when it comes to your life insurance policy.  Be sure that your beneficiaries will be prepared for dealing with the payout on your policy upon your death.

This is always wise.  However it’s even more relevant currently given that the attorney general from New York State last week announced his office will be conducting an investigation of the industry industry to determine whether or not beneficiaries on policies for nonmilitary federal employees and military members have been put at a disadvantage by having their death benefit proceeds put into low yielding accounts.

At this point is isn’t clear whether or not insurers have done anything that is actually wrong.  However no matter what the outcome is eventually from this investigation, the broader lesson for now at least is making sure your beneficiaries know how to properly handle insurance policy proceeds, particularly since the amount of money is more than what many people ever see in their entire lives, in order to make sure they will be able to maximize any benefits they receive from a payout.

Actually, the answer is no. If you are planning to stay insured for the rest of your life, then a whole life policy is a better investment. There are several reasons for this.

* Whole Life Insurance Covers You For Your Entire Life
Whole life’s biggest advantage is one policy covers you for life provided that you make all your premium payments. You don’t ever have to renew your policy. Also, although you pay extra money for whole life insurance than you do for term life insurance, the cost of your premium stays the same over your lifetime, making it easier to budget for the expense during your lifetime.

However, if you decide to purchase a series of policies for term life insurance, the premium costs will keep increasing each time you renew or buy new policies because of your age increasing and potentially your health getting poorer.

* Whole Life Insurance Carries A Cash Value
Another important advantage to whole life insurance is that there is a cash value component to it. You are able to access this cash value whenever you want or need to. You won’t have to qualify for it, and the interest rate will most likely be lower than it would be on a regular loan.

* Dividends
Whole life policies have an investment component. Part of your premium cost goes toward the payout on a claim and the rest of the payment is invested. Some of these policies pay out investment dividends to their customers, depending on what the insurance company’s profits are for the fiscal year.

* Cessation of Premium Payment
Some whole life policies have an added benefit of premium payments stopping once you are a certain age. As long as you have made all your premium payments, these types of policies continue to provide you with coverage without you needing to pay any more premiums. This is a very good option for retirees whose incomes may be reduced after they retire.

* There Are Some Important Uses For Term Life Insurance
Of course this doesn’t mean that term life insurance is useless. You just need to know which type of insurance is most appropriate and beneficial for your particular situation and status in life. Usually term life insurance is more suited for covering temporary types of situations. Young newlyweds, for example, who aren’t planning to have children for several years may be able to get low cost protection on a temporary basis and then still be able to switch over to fairly inexpensive whole life insurance while they’re still young.

For those who have a long term mortgage loan or young children you should take a life insurance policy out to help with repaying the mortgage and other big bills in the event you were to die. That way your family isn’t left with financial difficulties and burdens on top of their grief.

If you have a mortgage you can set the term on your policy for term life insurance to match the mortgage repayment term. This will help your family in the event you should die before the mortgage is paid for. The lump sum payout on the term life insurance will pay off the mortgage.

Because life insurance is such a large and competitive industry, you should be able to find just what you need for a good rate. There are many different types of life insurance policies, including index linked and joint life. It can be confusing to figure out which one to choose. The more complicated the insurance is, the more expensive it is. That is why so many people favor inexpensive term life insurance.

The most inexpensive type of life insurance that you can purchase is term life insurance. It will pay a lump sum out should you die within the term’s length. The reason it is so inexpensive is that there is no payment made on term life insurance if you haven’t died when the term ends. When buying term life insurance you need to make sure you are not over paying.

The cost of life insurance has been doing down. In fact the cost for life insurance premiums on average are forty percent less than the prices from a few years ago. The reason for this is because people are living longer due to medical advances.

The internet makes it very easy to get multiple policy quotes for life insurance in just a few minutes. There are other places you can visit, including financial institutions and banks, but the internet is the easiest. Insurance companies have made their quote systems and websites very fast and easy to use, which makes it really easy to get a quote.

You do need to remember that the quotes you get online are just guidelines. Once you have completed a full application the price could change. However if this does happen and you are not happy with your new price that you are not under any sort of obligation to buy that policy.

In many ways term life insurance is similar to permanent life insurance. The same exact mortality tables are used to calculate the cost of the premium along with the death benefit. On both types of insurance the death benefit is free of income tax as long as all of the premiums have been paid and the policy is still in force. This is true for both term as well as permanent insurance. However the premiums work in very different ways.

With term life insurance the reason the cost is different than with permanent life insurance is because the term on term life insurance could expire without anything having to be paid. Permanent life insurance has a pay out that is guaranteed for anyone having a policy. When it comes to term life insurance, many times the term will expire without the insured dying and so no payout is made. However, permanent life insurance is not always an option that is cheaper due to the fact that many of the new policies come with cash accumulations built in that an insurer has to pay. This also makes this form of insurance more expensive.

There have been many studies that show that it is unlikely for term life insurance to payout a death benefit. It does provide a way for individuals to cover themselves and ensure that their loved ones will be provided for. However a death benefit is usually not paid, and when the term expires it is often too expensive for individuals to renew. The reason why most people end up buying term life insurance is when they are young and have a family that needs to be provided for if they die. Most people switch over to whole or permanent life insurance when they get older in order to stay covered for life. Those that do get a death benefit payout on term life insurance generally do end up with a death benefit that is higher, however, because of the higher costs of remaining with term life insurance.

Term life insurance that is renewable annually is life insurance with a one year term. This type of life insurance is the simplest kind. It lasts for just one year. If the insured individual dies within that one year time period a death benefit will be paid out to the beneficiary. If the person doesn’t die during the term no benefit will be paid, even if they were to die one day following the end of the term.

The premium cost on one year policies is based on the probability of the insured dying during the year of the term. The likelihood of anyone dying during a particular one year term is quite low. Insurance companies don’t often accept this type of policy. One year coverage is pretty rare as well as anyone purchasing this type of policy.

With term life policies that are renewable, whether for one year or longer, there are potential problems an individual can face. If the individual becomes terminally ill during the term but doesn’t die before the end of the term, they will end up having a terminal illness without having any insurance. Their terminal illness will prevent them from renewing or buying a new policy. They will be uninsurable. There are some term insurance policies which fix this problem. There is a new kind of feature which is called re-insurability. If a person’s term life insurance has this feature, they have the ability to renew their term insurance and not have to prove insurability.

One common kind of term life insurance that people buy is Annual Renewable Term (ART). It is similar in some ways to term life insurance for one year. To begin with the individual is buying one year’s worth of insurance coverage. However, this type of policy enables the insured to continue the policy for a certain period of time. It could be from 10 to 30 years or another option would until you reach a specific age like 95. As the insured gets older, the price of the premium will continue to increase. They could end up paying a lot more than they would have if they bought a whole life policy, depending on how long they lived. The death benefit, however, would be in effect for as long as they paid their premiums.

In fact, term life insurance is the simplest type of insurance in existence.  The purpose of term life insurance is to provide affordable and temporary life insurance coverage for individuals and families who are on limited budgets.  This form of insurance is affordable for most people.  For a 30 year old healthy and nonsmoking male, the typical cost is about $2,500 a year for a $50,000 death benefit.  As you get older the cost of  your premium will increase as well, but only when the term on the policy expires.  When it comes to term life insurance, the premium price is set when you originally agree to the term.

What many families who are trying to pay their mortgages and other debts off will do is buy a term life insurance policy as backup just in case anything should happen to either spouse during the time they are trying to pay for the mortgage or debt.  In today’s economy, a majority of households can barely meet their living expenses on the two incomes.  That is why life insurance coverage is a necessity in case the family loses one of these incomes due to death of one of the spouses.  One of the other main reasons why people  may invest in a term life insurance policy is to ensure that their children and spouse are provided for.  Many parents obtain term life insurance when they are raising their children and then allow the term to expire when their children go to college.

Although term life insurance is very beneficial in the event you should pass away, it is not intended to be a long term investment due to the fact that it doesn’t accumulate cash value.  The major purpose for term life insurance is for covering the financial responsibility of the insurance policyholder should they die.  The death benefit proceeds can be used to pay funeral expenses, cover any outstanding bills and supplement the income of the family while they are in their period of adjustment.

If you happen to be a healthy individual who doesn’t currently have any life insurance, then you should strongly consider buying term life insurance.  This will provide you with the peace of mind knowing that your loved ones and family will be well taken care of in the event that you should die.  While it is true that losing a member of the family can be quite devastating, you don’t want to add on financial burdens such as funeral expenses, debt and loss of your income on top of their grief and loss.  Investing in term life insurance provides you with the assurance that your family will be provided with the death benefit from your life insurance policy if you were to die within the term on your policy.

It can be a difficult decision to make for people who want to have insurance.  The first question you should ask yourself is, why do I need insurance?  If you have a spouse who doesn’t  have a high earning potential and young children, then term insurance might be the best answer to help get your children through college.  If you work under dangerous conditions, then term insurance might be a better option than whole life insurance.

For families who have young children, income needs are lower once the children have finished college.  The expense of paying for college is over once they have finished school.

Working under dangerous conditions where you could face work place death on a regular basis is another short term need when it comes to life insurance and you might be able to obtain term life insurance for a period of five years or so until you are able to change jobs or move up the job ladders into a position that isn’t as dangerous.

Term life insurance does offer some types of flexibility that is not provided with whole life insurance.  Term life insurance is a lot less expensive than whole life insurance is.  And for individuals and families with short needs, term life insurance is a better option.  It is very true that whole life insurance offers a guaranteed payout and is basically a savings account that will mature and be paid out to your beneficiary at the time of your death.  By the time the payout happens,  you will have already paid the death benefit amount and probably then some to the insurance company.  When it comes to term life insurance, this may not be the case and you may have only paid only a fraction of what the death benefit payout is over the policy term.  If you pass away, your beneficiary will receive the death benefit which will probably end up being a lot more money than you had paid in premium costs.

Whole life and term life insurance policies both provide us with a safety net.  It gives us the knowledge of knowing that when or if we die that our loved ones will be provided for.  It is a way for us to take care of our loved ones even after we have died.  The ultimate amount of savings that you will get with whole life insurance may not be worth it once you start comparing it with other types of available savings programs.  When it comes to term life insurance, you pay for premiums to your insurance company for a service that you might not ever use or that your family might not ever benefit from.

If you are on a limited budget, then term life insurance is probably your best option.  If you happen to have a need for life insurance that is short term and immediate, then again term life insurance is probably a good option and whole life insurance will waste your money and time.

If you buy an insurance policy now, you can lock the rate in for the life of the policy (or in the case of whole life insurance, your own lifetime).  What this means is that you will pay the rates of a healthy twenty year old (or whatever age you are now) for the policy’s duration no matter how sick or old you may become.  Life insurance is a  great investment to obtain now so that later when you aren’t a swinging single anymore you will have have already taken care of it.

When you do get ready to settle down and have a family you will already have protection in place for your family.  In the unfortunate event that you should die young, your partner, parents or some other relative will have means for paying for your funeral, which can end up being a heavy burden.  Life insurance is a great investment, and the younger you happen to be the better the investment will be.  In terms of investment, a whole life insurance policy will also earn a cash value that you will be able to borrow against if you ever need it.  You will also have the ability to cancel the policy and withdraw your cash value in the form of a lump sum.

So now that you have a better understanding of why life insurance is really a good idea even for single people, the next question is what type of investment or insurance should you get?  If you do not have dependents, usually whole life insurance is the best best.  Term life insurance is better for helping to defer risks of a loan like on a mortgage or car or for additional coverage when your children are young.  Since you don’t have the concern about passing a financial burden onto your spouse yet, you probably don’t have a need for term life insurance.

On the other hand, whole life insurance will help to pay for your funeral expenses and will last for your entire life provided you make your premium  payments.  Over time you can add on term life insurance to take care of those theoretical children and spouse you might have some day, but still have whole life insurance that you lock in now to get a great rate that will cover you into your golden years and retirement.

If you take responsibility now and take care of your future, in a few years you will be thanking your lucky stars when it’s time for you to start a new way of living.  You will be relieved that you had the foresight and took the time for taking care of business when you were young to give you coverage that will last for your entire life.  Congratulations on you making a great decision.

The drawback to these types of policies is that monthly premiums are much more expensive than policy premiums for term life insurance. Also, because some of the money ends up going towards the cash value, often the coverage is less than a term policy. Term insurance is often a better option for most people. You can quite often profit more from investing what the difference in cost is between a term and whole life premium than what the life insurance company can provide you with.

Now that we have established that, your next question might be how much life insurance do I really need? One way of estimating this is finding a life insurance calculator which will allow you to input a few numbers. It will then provide you with an estimate of the amount of insurance you may need. You do always need to be cautious with what an insurance company who is trying to sell you an insurance policy is telling you in terms of how much you need to buy.

Before you talk to an insurance agent or plug some numbers into a calculator, you need to have a fairly good idea of what you actually need. This will help you in determining whether or not the insurance company you are considering is trustworthy. If the calculator or agent’s numbers are quite a bit different than yours, you should try to find out why. Most insurance agents will be honest with you and should be able to provide you with valid explanations for how they arrived at their figures.

So what factors do you need to look at to figure how much you need to be covered for? Your lifestyle and current income are two of the most important factors. You need to calculate how much income your family would require to maintain your current lifestyle until your children are able to earn on their own.

You will also need to consider what bills you will want the insurance proceeds to pay off. Having a car loan or mortgage paid off will help your family meet their basic needs. You also need to consider any types of future expenses like your children’s’ college education. Do you want them to have enough to pay for their entire education, or just enough to get them off to a good start? If you are part of a two earner household, you need to figure out how much of the living expenses your spouse will be able to contribute to.

Once you have compiled some basic information and arrived at a figure of what you will need, then it is time to talk to an insurance professional. An insurance agent will be able to arrive at a number and be able to explain how they came up with that figure. It is a waste to pay too much for insurance premiums, and it is quite unfortunate to have an inadequate amount of insurance that will not cover all of your family’s financial needs if you should die unexpectedly.

After the term on the insurance policy is over, you can either choose to drop the policy or continue paying for it on a yearly basis to continue your coverage. Usually the premium increases over time. Most policies for term life insurance cover a period of time ranging from ten to twenty five years, although they can be customized for an individual’s specific needs. If the policyholder dies during the term period covered on the policy, the policyholder’s beneficiary, who is usually either a child or spouse, will receive the death benefit.

Term life insurance is the least expensive way to buy and maintain a significant death benefit. Term life insurance policies work very similar to all other types of insurance coverage. You pay quarterly or monthly premiums and in exchange receive coverage that is stated in the policy. As long as you keep up with your premiums and the term hasn’t expired, any claim that is filed with be paid out. It is important to understand that you will receive any premium returns on the policy if a claim is never filed. Term life insurance is strictly for risk protection of your loved ones as well as yourself.

Term life insurance is the simplest type of life insurance. It provides death protection for a term, or predetermined time period. Term life insurance is very well suited for families who are on a budget that need short term life insurance protection. The form of life insurance can purchased for either long time periods or in large amounts at very low premium prices that are affordable for most people. The affordability and flexibility is ideal for families who just need a little extra coverage while they are raising their young children as well as situations in which they may need to pay of a loan in the event of a spouse’s death.

Term life insurance is not intended to be permanent life insurance. Usually it can be renewed only until you reach a certain age. It is usually 85 or 95, and varies from state to state. Apart from this limitation, term life insurance may be the best solution if you don’t have any type of life insurance but have a family or spouse that you are responsible for in the event you should die.

Just like with most other types of insurance plans, in order to get term life insurance, you will most likely need to take a basic physical test. This exam is usually undertaken by a nurse who is employed by your insurance company to be certain you are insurable. Not all insurance companies required a medical exam. Some companies accept policyholders without needing to undergo any form of medical screening excepting for filling out a simple questionnaire.