Sac Valley Retirement

Consolidate Retirement Accounts To Save On Fees

2008-06-17T23:43:00.000-07:00

I was at my credit union the other day consolidating certain accounts. I did this to simplify my statement and my life.

If you have multiple retirement accounts at various places, you might want to take some time to consolidate accounts so you save on fees associated with those accounts. Saving on those fees mean that your hard-earned money will count toward your retirement, not your investment firm.

Roll over any 401(k) and other employer-sponsored retirement accounts from previous employers into fewer IRAs . Fees are not always based on the balance in the account so you can simplify your life and save your money.

If you have multiple accounts in institutions that are FDIC insured, keep in mind that retirement accounts are now insured up to $250,000. Your non-retirement accounts are still capped at $100,000. Your banker can help you if you are unsure which accounts qualify for the higher limit. But if you have accounts at two or three institutions, roll them over into fewer accounts.

Simplifying can be an incredibly powerful tool for emotional well being too. Fewer statements in the mail, fewer address changes if you move, and the ability to get your asset balances at a glance rather than spreading multiple documents out on the table.

If you're sitting on the fence right now trying to decide where to put your money, consolidate and you'll be poised to take action when you make a decision.

Do People Really Know How Much They'll Need For Retirement?

2008-06-17T23:17:00.000-07:00

I was talking with a colleague the other day and he expressed his concern that too many people he talks to claim they are right on track with their retirement savings.

Yet the statistics do not support this.

I seriously wonder if people who plan on retiring 10 or so years from now are really aware that they need a minimum portfolio of $1 million, and more if they have a long life expectancy, a higher standard of living, or are unsure how medical costs will factor in to their living expenses.

For most middle class people in California, a portfolio approaching $2 million will be necessary absent a generous pension pegged to your pre-retirement earnings.

I do understand how uncomfortable it is to talk about money for most people. However, a few uncomfortable moments now could be your lifeline to comfort in retirement.

If money matters intimidate you, find someone you can trust to be non-judgmental. What you need is a counselor to advise you as to what is possible given your circumstances. I realize that not everyone will be able to save what they should. But it is still important that you do something.

There are no guarantees that any savings and investment plan will achieve a certain goal. But you can almost guarantee that if you do not have a goal, you won't get close.

Please give me a call and let me go over your plan with you. My goal is to provide you with information with no obligation.

Working Seniors Keep Teenagers Out Of Job Market

2008-05-31T13:19:00.000-07:00

Seniors trying to make ends meet with an entry-level job are keeping teenagers out of the summer job market according to this article in the Sacramento Bee.

To be fair, the lack of jobs for our youth is due to a combination of factors where the economy also plays an important part. But I don't think seniors are standing for long hours ringing up sales or working in the food and entertainment industries because they want to work.

The article cites a statistic that seniors age 65-74 experienced a jump in employment of 5 percentage points from 2004 to 2006 and their unemployment rate was cut by over 50%.

Seniors are working these jobs because their Social Security and whatever other retirement income they have aren't paying the bills. I think that if they wanted to work, they'd be doing part-time work in a professional, skilled, or semi-skilled position as opposed to these entry-level jobs that can take a toll on an aging body.

Just as important as the need for youth to have employment opportunities to develop character, is the need for adults to prepare for the future and put money away for retirement.

Y-S Shop Local Event Successful

2008-05-18T21:05:00.000-07:00

On Sat May 10, I participated in the Y-S Chamber of Commerce Shop Local Festival in the Raley's shopping center parking lot in Yuba City.

We had a few hundred people come out to visit local companies and find out why shopping local is best for our community.

There was a mixed range of responses to my Retirement Planning booth. The happiest people were those who are already retired. The inquisitive came from younger people who knew they needed to start saving but weren't exactly sure how to do it. I also saw some 40-somethings who didn't even want to talk about it.

The sad reality is, we all must thing about how we will fund and live our retirement years.

Congratulations to the following raffle prize winners:

- 1 hour debt consultations to Lisa, Angeleena, and Michelle

- Gardening gift basket with $35 gift certificate to Sperbeck's to Lori

If you were at the Shop Local Festival, thanks for stopping by. If you need help with your retirement planning, your debt, or your credit score, contact me for help at www.karenhess.biz

Community Means So Much More in Retirement

2008-05-18T20:58:00.000-07:00

After your working days are over, how do you plan to keep up with what is going on?

Community events are so important to all of us. I wanted to share the video of the recent Wheatland Pet Parade with all of you as a reminder of the importance of community.

In addition to the fun of parading pets in front of the community, pets are also an important part of life for many people, including those that are retired. Pets offer us unconditional love and also get us up and going in the morning to take care of their needs.

If you know of other pet celebration events going on in the Sac Valley area, send me information and I'll be glad to post those stories here.

Buying Your Retirement Home With Your IRA

2008-05-06T22:32:00.000-07:00

If you are years away from retirement and want to lock in current prices for a retirement home, you can purchase your dream getaway with your IRA funds. This article explains how to do it.

This transaction is not for the uninitiated. You will need to set up a LLC which entails legal and accounting help, and manage the property as a rental until your retirement. You should also do a careful cash flow analysis as well as looking out for appreciation potential in your desired target area.

When the time comes for you to live in the home, you will have to take the full distribution of the value of the home in a single year. In a traditional IRA, this could result in a large tax bite. A Roth would not be taxable.

This could be a risky endeavor. Be sure to consult your tax advisor and attorney. Many people say they want to retire to a certain area and then change their minds once retirement hits. Also, be sure to understand the appreciation potential of certain communities as resort and remote areas tend to have unpredictable property values.

The bottom line is, this could be a way to finance the purchase of your retirement home if you are absolutely certain where you want to live in your golden years.

Put Your Tax Stimulus Payment Into Your IRA

2008-05-06T22:25:00.000-07:00

Almost half of those surveyed say they plan to pay off bills with their tax stimulus payments.

How about putting that check into your IRA if you have earned income? Then pay your bills with your earned income.

You'd need to put the money in your IRA anyway. Why not just take that government check and turn it right over to your IRA custodian?

Of course, each situation is different. But consider socking this away for your long term future. The choice is yours.

Mortgage Notes from Your IRA

2008-04-27T21:01:00.000-07:00

A lot of people don't know that there are many alternatives for your IRA investments.

Using a self-directed IRA, you can do a multitude of things with your money. Today I'd like to talk about how you can lend money on a mortgage note for real estate investments.

With the current real estate market offering bargains, investors are out there taking a look at opportunities. Your IRA funds can be used in many ways.

1. Your mortgage loan could provide down payment assistance for a relatively short-term loan until they rehab the property and/or wait until the market improves.

2. With a sizable IRA fund, you can loan 100% toward the purchase of a short sale against a property either in foreclosure or in danger of foreclosure. If the investor intends on flipping the property for resale at a considerable discount to fair market value, this could be a way to earn quick interest returns.

3. For a family member, you could take a 2nd position and get paid when they re-finance when the market improves.

Please don't consider using your IRA funds to structure a deal toward the purchase of your primary residence. That is not OK and will get you in trouble with the IRS. However, you can properly structure a loan to your LLC or corporation for an investment property.

If you'd like to explore some options further, email or give me a call.

Should PERS Handle Private Plans Too?

2008-04-13T23:51:00.000-07:00

Assemblyman Kevin de Leon has introduced AB2940 which would open up CalPERS to manage retirement accounts for non-government employees.

On the plus side, this could give many Californians access to plans and professional management to help them save more for retirement.

What I'm afraid of is the negative side. Employers who currently have plans may give them up and turn their plans over to a state program. In addition, CalPERS already has tremendous power and influence in the markets. I'm not convinced it is in the best interest of all involved to increase that power. I'm also concerned about the administrative costs of managing accounts for a transient workforce; government workers usually stay put for a while and don't churn transaction changes. And who is to say that the employers that currently don't offer 401(k) plans will sign up to allow their workers to participate in a CalPERS program?

Most of all, my personal choice is to promote free markets rather than have the government take on additional roles.

My preference would be for the US Congress to amend the tax code to allow those without 401(k) type accounts to increase their contributions to an IRA so they could be on parity with employees who contribute to their retirement savings at work as well as to a personal IRA. The inequity between the employees who have access to plans at work and those who don't has bothered me for quite a while.

We'll wait to see how this develops. There's plenty of sharp people to enter the debate on this.

A Fun Primer on Real Estate Cycles

2008-04-13T02:35:00.000-07:00

This informative and entertaining 7 minute cartoon gives a good overview of the cyclical history of the housing market over the last 40 years.

This was created by a consultant to home builders and is directed at that market.

But the same principles apply for purchasers of real estate.

Including real estate in your retirement savings portfolio is not about "flipping" property for quick gains. It is about a buy and hold strategy as the cyclical nature of the real estate market will repeat. It is my opinion that over the long haul in California, real estate will continue to appreciate due to demand pressures from net immigration and population growth.

Retirement Revolution Documentary on PBS

2008-04-12T20:17:00.000-07:00

The Sacramento PBS affiliate, KVIE, will air a 2-part documentary titled Retirement Revolution on Tues Apr 15th at 2pm and Thurs the 17th at 11pm.

Hosted by respected TV journalist Paula Zahn, the documentary explores the challenges and opportunities of the nearly 78 million baby boomer retirees. For more information about the documentary, go to the PBS website.

The Retirement Revolution website has a lot of different things to take a look at as well as offering the documentary for viewing online.

Sallie Mae Halts Student Loan Consolidations

2008-04-12T15:56:00.000-07:00

The tight money in the markets has rolled over into the student loan industry and not only is it getting harder to get a student loan, Sallie Mae has just announced they will stop doing consolidations effective immediately.

The Washington Post article today also goes on to report that Sallie Mae will also start charging a loan origination fee for federally guaranteed student loans. This fee used to be absorbed by the lending banks.

This latest development will hurt people who need to restructure their debt to keep expenses in line with income. The federal government may step in and do consolidations and there is probably enough public sentiment on this to make it happen.

Anyone with student loans or those who may want to get a student loan should bookmark www.finaid.org to stay up to date on what is going on in this market segment.

29% of 55-59 Year Olds Plan to Work After 65

2008-04-04T22:48:00.000-07:00

Today's article in the Sacramento Bee highlights Sac Co Sheriff McGinniss and a few others but is not off the mark for similar studies.

Consider this: You are eligible to begin withdrawals from your retirement accounts at age 59 1/2 yet can wait until you are 70 1/2 before you must start withdrawing funds from your retirement accounts. In addition, the age at which full Social Security benefits are available has risen from the traditional 65 to years and half-years above that based upon the year you were born.

Therefore, for many people, whether out of necessity or for reasons related to being active and involved, retiring from any type of work until later makes a whole lot of sense. Delaying retirement for a few years can preserve capital you can draw on much later. So even if you retire from your regular career and take on what I call a "survival job", you can keep those retirement accounts growing and still be able to be engaged in the workplace.

For many baby boomers, I certainly recommend they consider doing some work until 70 unless they have adequate retirement savings assets to retire earlier. This is especially true if they don't have risk factors for death before 85 yrs of age.

But if you can't work due to illness or disability, you need to have retirement assets in place that you can draw upon. There is no harm in intending to work beyond traditional retirement, but if you can't work, you will need income before Social Security kicks in as well as supplemental income to Social Security after you elect to take it. This is I think the main reason for playing it safe when it comes to socking away savings for retirement.

You just don't know what is going to happen.

Health Insurance After 50

2008-03-17T01:05:00.000-07:00

If you don't know that the country is in a debate about how to make sure people have access to health care, you've been living under a rock.

Some politicians are advocating a universal health care plan, whatever that means. Others are citing the figures of how many people do not have health insurance.

In planning your retirement, you must consider the cost of the health care you desire. The problem in doing that is that we cannot adequately predict the future.

Your current employer may tell you that you will have health insurance through them when you retire until Medicare kicks in. But this is not a guarantee. You must plan to handle your health care needs if you retire before 65. Your employer can change their mind on this at any time, and many employers are.

Health insurance companies are writing few policies for 50+ persons and are basing it on pre-existing conditions and/or current height, weight and lifestyle choices. I have not met a 50+ person yet who was able to get private health insurance.

Insurance companies are also not writing policies for individual care with large deductibles. I personally did an exhaustive search for a policy that had a $10K, $20K and even a $100K deductible and there were no policies out there that encouraged some portion of self-insurance and only kicked in for major medical. This is tragic in that there are no choices available for people who are willing to underwrite most of their own healthcare costs and only require insurance to protect assets from significant expenses.

Medicare itself might change. It has already changed for current retirees and as the baby boom retires in force, figure on paying more under the Medicare program.

The bottom line is, most of the current retirement calculators out there are too simplistic and do not help people consider alternate scenarios about their actual expenses in retirement. Your retirement planning advisor should be able to help you consider some possible scenarios and show you how your expenses might look and how much money that may mean you need to amass in your retirement savings accounts.

In the end though, it is all an estimate. We have no way of knowing how the future will differ from the present. Your job is to do the best you can and hope for the best. The bottom line though is that you should try to save the most you can so you are better prepared for an uncertain future.

Calculate Retirement Expenses To Figure Out How Much You Will Need

2008-03-17T00:55:00.000-07:00

This article in CNN Money does a good job explaining how most people try to put the cart before the horse when it comes to figuring out how much money you will need in order to retire.

As this article clearly points out, a lot of people arrive at their advisor's office, papers in hand, telling the advisor how much money they have stashed away and asking if it will be enough to retire on.

While this information is certainly important, it is equally important for an advisor to understand what your expenses will be in retirement.

Will you still be paying on a mortgage or paying rent?

Do you have a special needs adult dependent you are financially responsible for?

If you are considering early retirement, how will you cover medical expenses and/or insurance?

Do you have or expect debt like car payments or credit card debt that will need to be serviced?

Beyond normal living expenses, do you have plans such as travel or country club memberships to pay for?

The analysis that needs to be done includes both supply and demand. You need to understand the supply of funds and where the funds are coming from (savings, pension, social security, other) and the demand for money in terms of expenses. It is impossible to do a one-sided analysis.

The article linked above is an easy read and useful for someone who has typical questions. I highly recommend it.

UBIT and the Self-Directed IRA

2008-03-11T11:50:00.000-07:00

I was recently asked about purchasing rental real estate within a self-directed IRA.

As I've said many times before, this type of investment is legal but should be pursued carefully and in conjunction with your tax advisor and possibly your legal advisor as well.

Here's an article from WikiInvestor on the topic.

UBIT - Unrelated Business Income Tax - is the concern you need to have when you purchase rental real estate within an IRA. If the IRS determines that your IRA is receiving income not related to the purpose for which it was created, you must file an annual income tax form from within the IRA to report the income and pay any income taxes.

I'm more than happy to work with a client to pursue this option as it can be an effective way to grow the assets within an IRA. You just have to know what you are doing and make sure you pay attention to the details.

An Alternative To Reverse Mortgages

2008-03-07T14:19:00.000-08:00

The Virgin brand has recently expanded into financial services and is known as VirginMoney.

One of their unique services is an alternative to a traditional reverse mortgage.

Instead of having a lender provide funds to a senior based upon the equity in the home, Virgin's service is to help family and friends loan money to the senior and structure a deed of trust that is payable according to the terms and conditions they want to set up.

As an example, if a child has money, and mom is considering a reverse mortgage for some cash to live on, the child can loan mom the money backed by a deed of trust, and when mom passes, the child can either sell the home to recover the funds, or if the home was bequeathed to someone else, the new homeowner would begin making mortgage payments to the child.

One of the complaints about reverse mortgages that has made the papers is of children who want the parent's home but can't afford to purchase the home to pay off the reverse mortgage when the homeowner dies or ceases to live in the house.

Structuring a secured loan within the family can help avoid some of the issues heirs are currently having with reverse mortgages.

If your senior is contemplating a reverse mortgage and there is money within the family or close circle of friends, check this alternative out. It may be the way to keep peace within the family.

Some Diversification Advice for Retirement Savings

2008-03-07T13:47:00.000-08:00

Business Week has an excellent article on diversifying your retirement savings strategies into multiple types of vehicles based upon how they are taxed.

Since nothing is certain other than death and taxes, what is tax preferential today may not be treated the same when you retire. In other words, there is no guarantee that your Roth account withdrawals will be tax free when it is time for you to take them.

Therefore, some financial planners are recommending you invest for the future in a variety of ways so that you aren't putting all of your eggs into one type of vehicle.

For example, diversify your retirement savings into traditional IRA/401(k), Roth account(s), taxable securities accounts, real estate, and short-term liquid accounts like CDs and Money Markets.

That way, when retirement age arrives, you have some choices as to where and how much money you pull from each strategy. The point here is that if your income tax rate is relatively high after retirement, you'd pull the minimum distribution from your IRA/401(k) and the rest of your money from selling assets subject to capital gains tax, which is currently much lower than income tax rates. Conversely, if Congress increases capital gains taxes, your withdrawal strategy would change again.

The other point I'd like to make about this strategy is this: Current law limits how much you can contribute to IRAs, 401(k)s, 403(b)s, and other tax-preferential retirement accounts. Most people will have a difficult time saving enough money in these types of accounts to supplement their social security. There are no limits though on how much money you can put into securities, real estate, bank accounts, and other investments. These other accounts can also be tapped prior to retirement if needed without incurring the penalties you would pay with a retirement account.

If you feel comfortable working out your own diversification strategy, you can do the research yourself to figure out a plan that works for you. Otherwise, spend some money and have a qualified financial planner help you devise your strategy. It would be money well spent.

Drop in Homeowner Equity Can Affect Retirement Plans

2008-03-06T12:11:00.000-08:00

The big news today is that homeowner equity rates have dropped to the lowest level since 1945.

This statistic is an average, where some people either owe very little on their houses, or own them outright, vs those who are highly leveraged.

Many people in California look to their homes as a source of money for retirement. In my opinion, the combination of appreciation over the long term, plus equity build up by paying down the mortgage, provide many seniors the opportunity to tap into that equity to make ends meet.

What worries me the most right now is that people in their 40's and 50's do not have the equity build up that their parents had at the same age. There's just been too much activity in refinancing and using home equity loans to pay for lifestyle items.

Buying a home in California, and paying the mortgage down can be a very simple and prudent way to build equity for the future. This strategy along with regular contributions to tax-preferred vehicles like IRAs, 401(k)/403(b)s can provide a comfortable retirement if the strategies are implemented by your 30's and you stick with it.

I realize the pain that the current mortgage and housing market is causing many people. In addition to the people who took risky steps, the current situation is affecting people who play by traditional rules yet are being locked out of the mortgage market or can't sell their homes.

It is my hope that the current painful situation leads us back to a sense of normalcy and prudent behavior with our personal finances. If you haven't already pulled back, please reconsider the use of home equity for current wants, and let that value grow for your future.

The Value of Carefully Selected Real Estate in Your IRA

2008-03-04T22:27:00.000-08:00

I've been speaking to some real estate professionals in the Sac Valley are lately regarding the value of rolling over IRA assets into carefully selected California real estate.

For the most part, I've received good feedback.

California real estate has been one of the best performers for lont-term appreciation for several decades.

There are some areas within California that are more conducive to higher appreciation than others.

This is where I offer my expertise. You can find California real estate that you believe will provide you with better returns than the stock market. I will be more than glad to help you explore those areas.

But I also offer you the chance to choose from areas that may offer you greater appreciation than the areas you currently know.

Contact me if you want to explore including real estate in your retirement portfolio. California has generated some very positive appreciation values for many, many years. I can help you with whatever your wants are.

FHA Financing May Be Experiencing a Resurge

2008-03-04T22:07:00.000-08:00

For people living in areas that conform to existing limits on FHA mortgages, that is excepting high cost of living areas like SF, LA, Boston, Wash D.C., etc, FHA mortgages and financing options may experience a resurge of popularity as a result of bad news of other loan products.

For many years, FHA provided a source of insured mortgages for many home buyers. But, over the years, competitive products from traditional lenders seems to have sent many former FHA buyers over to conventional loans.

Now it looks like FHA loans might be undergoing a type of resurgence as buyers and re-fi's look for ways to obtain financing.

FHA has limits on how much they will finance. If you live in high cost areas like San Francisco, Boston, or Los Angeles, FHA might not be able to help you. But if you live in middle America, you should take a serious look at FHA mortgages. If your current lender doesn't offer FHA mortgages, find a lender who does.

My parents bought their homes with FHA mortgages and I bought my first 2 homes that way. I have nothing but good things to say about FHA.

If your existing lender does not offer FHA mortgages, send me an email and I will hook you up with one who does.

FHA not only offers loans for new home purchases, but you can also do home equity loans for many purposes.

FHA has done so many good things for average families over the years. FHA can do similar things for you.

"Start Late Finish Rich" Available at Your Local Library

2008-02-28T23:25:00.000-08:00

Richard Bach's book is available through the Sacramento Library system which also does inter-library loans to some library systems outside Sacramento County.

Tonight I had an opportunity to talk with a woman in her 50's who realizes that they need to start saving for retirement but was about ready to give up because she felt it was too late.

It is not too late.

Bach's book is very well written and inspirational for middle-aged people who find they either haven't saved enough or have weathered a financial crisis and find they must start over.

The Sutter County Library system is part of the Sac system. I was able to go to the Sutter Country Library website and do a search on this book and found several copies within the Sac system. Your helpful local librarian can arrange for a library loan and get the book delivered to your local library for you to check out.

I highly recommend this book for those of you who need to jumpstart your retirement savings strategy later in life. I promise you won't be disappointed.

One of Three Retirees in Calif Living Solely on Social Security

2008-02-27T02:56:00.000-08:00

I heard this news on Fox radio so I can't provide a link for you. But this does not surprise me.

The gist of the news story is that a legislator is trying to convince the Dep't of Agriculture to extend food stamp benefits to an amount higher than the national poverty average so to allow these seniors to be eligible for food stamps.

Folks, our current retirees had access to traditional pension accounts unless they worked at smaller firms or switched jobs throughout life.

We do not have access to traditional pension benefits, and if we do, these are sure to go away. We must sock away money for our retirement.

As we all know, the cost of living is higher in California than in other states. Even if you live in your home free and clear, social security is not enough to pay for food, utilities and medical care.

I rent a place to a couple who live on social security. Per market rates, I could raise the rent. But I won't. The husband works part time. There is no way in my reasonable mind that I would raise the rent on them unless my costs absolutely required me to do so. But I am not the normal landlord. I care about people.

But for the average retiree who does not own their own home, finding affordable housing in California is almost impossible if you rely on Social Security for a major portion of your income.

We who are younger have choices. We can modify our current living arrangements and put money away. Yes, I know it is hard to do. But we can.

But I'm afraid that when the Baby Boomer generation retires, we will not see much of an improvement over the current senior reliance on Social Security. This scares me.

Just about all of us can find $5 a day that we can avoid spending and put into savings. Why we don't do it amazes me.

Take a look at your spending. Find a way to save a little every day. Then put that money into an IRA or a regular savings/brokerage account. You'd be amazed as to how much it starts to add up and how much it will come in handy when you retire.

401(k) Loans on the Rise To Finance Lifestyle

2008-02-19T23:27:00.000-08:00

In this stunning article from the Associated Press, retirement plan administrators are reporting a rise in loans from 401(k)s that people are using to maintain their lifestyles.

Typically, people borrow from a 401(k) to launch a business, pay for college, or put money down on a home. This latest trend that has people borrowing to make mortgage payments, pay down debt or pay for regular living expenses is troubling on so many fronts that I'm not sure where to start.

I can understand borrowing from a 401(k) in the event of a job loss in an effort to keep the family afloat. But borrowing to maintain a lifestyle?

There are a lot of economic factors that are leading some people to this desperate raiding of their retirement savings. In previous recessions, you could at least sell your house and rent for a while.

I just have to wonder if some of these people have really tried everything to reduce their expenses and/or increase their income. Many of these steps are hard to swallow. Like downgrading to basic cable or foregoing cable/satellite TV where you get reasonable antenna reception. Or downgrading phone service and using calling cards for long distance or use free weekend minutes on the cell phone. How about cooking at home instead of buying prepared foods? Make the adult children living at home pay rent.

An even tougher choice is to consider renting a room out of the house.

In this brief post, I can't begin to go into all the reasons why tapping your retirement funds should be the last tactic. I just hope this trend doesn't continue or get worse.

Life Insurance for Infants and Older Adults: Not Worth Your Money

2008-01-31T17:14:00.000-08:00

I've been meaning to write about this for quite a while now. Now CNN Money has a great article on the topic as it relates to buying life insurance for your child.

You watch TV. There are ads that tell new parents that they can buy life insurance for their baby for pennies and that it will only grow in value.

On the opposite side of the spectrum are ads for adults typically over 50 that promise no health questionnaires or medical exams. They always emphasize the cost of funerals.

Well, both of these plans are a ripoff in my view.

Life insurance should only be purchased to pay for the loss of income to a family. This typically means buying insurance to provide you with 3-5 years of income replacement value for the person who passes.

Unless children are actors or models, there is no need to protect their income to a family.

For older adults, the plans as advertised on TV pay only a limited amount and that is only likely to cover the cost of a funeral. An older adult is much better off purchasing a pre-need funeral plan at a local funeral home than purchasing this type of insurance. And, in case you haven't had to deal with a funeral lately, the funeral home wants full payment for services before they are conducted. Waiting for an insurance payout will not provide you with any sense of duty to the deceased and you will have to pay for the services in advance and collect the insurance disbursement later.

You are much better taking this money and saving it for college expenses for a child, or putting the savings in a 'pay on death' banking account for an older person. I know I have a modest savings account with my sister designated as the beneficiary and, who will have immediate access to the account upon my death so as to pay for funeral expenses before my estate is fully probated.

If you have any questions about life insurance, please contact your local insurance agent. I don't have any confidence in these big name companies that feed upon your fears with TV advertising for products you don't need.