Buying whole life insurance good for certain situations

Dec. 11--Dear Rick: I have two life insurance questions. First, should you count the insurance you get through work when analyzing if you have enough life insurance? Second, I've been told that whole life insurance is generally not a good product to buy. Are there any exceptions to this? -- Joan, Reading

A. Joan: As to your first question: No, you shouldn't count the insurance you get through work when doing a life insurance needs analysis because if you leave -- or lose -- your job, you're almost never allowed to take the insurance with you. And if you are, the cost of retaining it will be far too expensive.

The answer to your second question is yes. There are three situations where buying whole-life or another type of cash-value life insurance -- insurance that has both an investment and an insurance component to it -- is not a bad idea.

--If the only type of life insurance you can qualify for is cash-value insurance -- usually, it's because you have some type of medical condition.

--If life insurance is used as part of an overall estate plan, usually to save on the amount of estate taxes your estate must pay. And, for the purpose of these estate plans, a cash-value life insurance policy is the only type of policy that will work.

--If you will have someone who will be financially dependent on you for their entire life, a special needs child, for example. In those cases, you usually need insurance that will remain in place for your entire life, and longer. The only way to guarantee that is with some type of cash-value life insurance.

One final piece of advice: If the reason you buy cash-value life insurance is the second or third situation noted above, be certain you also set up appropriate estate plans and estate planning documents, which should only be done by an experienced estate planning attorney.

If you would like your financial question answered, email it to Rick Shaffer at: [email protected].

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