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Hi Ray:

I really can't comment further on the subject of annuities, since I haven't chosen to buy one, but I can comment on my brother, since I have chosen to do business with him for many years. My husband and I have almost all of our life (variable), disability and long-term care insurance with him. As well, I have the tax-sheltered retirement accounts (which have decent equity options) which have served me from job to job over the last 20 years with him. He is the most knowledgeable person I know about insurance and retirement planning, and is a person of integrity. He has also guided me into a diversified large cap portfolio, and taught me how to look at stocks carefully for value. He was the executor of my dad's estate, and before he turned its assets over to my other brother and me, he bought us copies of Roger Lowenstein's biography of Warren Buffet and practically stood over us until we read it. Then he helped us set up discount brokerage accounts. He spurred my interest in finding things out for myself, which ultimately led me to the Motley Fool. I think he's a closet Fool.

He sells term and permanent life ins, according to what his clients need. He said, when I told him we were having this on-line discussion, that he could see a place for both. Term well serves investors who are just starting out, and are able to put the money they are saving thru a cheap term policy to good use in investments that they have studied and have decided will produce well for them. But permanent insurance (particularly variable life, which lets you choose equity options and is not confined to interest-bearing instruments) also has its advantages as a person's net worth increases (which is what we certainly all hope ours is doing.) There are advantages to having these policies which increase in tax-sheltered cash value, which can be borrowed at need, and which can be directed into bypass or irrevocable trusts or otherwise directed to heirs. They are also very useful for a person like my husband, who has heart disease, and who could not now qualify for a term policy, at least not at reasonable cost.

In other words, I think it is simplistic to imply that term life insurance answers everyone's needs, or that annuities or permanent life ins. are always a bad choice. Every person who investigates buying these things needs to press the salesperson as to EXACTLY what the expenses, risks and rewards are and how they fit into their family's personal financial plan. I would wish that such a person had the good luck to run into my brother.

Regards - Minna
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