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The decission to max out the 401(k) is a good idea. When considering the issue of life insurance one should first determine the amount needed. This is expecially the case if you have small children or dependents who rely on your income.

After you determine the amount of insurance you then may wish to determine the length of time you will need the coverage. If it is simply income portection - then you may take the youngest child's age and project forward through college.

If you have a high income or income potential and anticipate building an estate of any size you may have a second need for life insurance, estate tax funding.

If you determine that you have a long term need for live insurnace then term insurance may not be your most economical alternative.

One other issue not discussed thus far is a risk management tool provided by a cash value policy. If one practices the buy term and invest the difference and also owns disability insurance they often feel very good about their situation.

However, if the individual were to become disabled yet live continue to live into retirement the buy term and invest the difference strategy would be at risk. There would no longer be an income sufficent to invest.

Whole life insurance provides a waiver of premium option which would pay the insurance as well as the investment portion of the premium in the event the insured is disabled. Thus, the individual in the earlier example would have a cash value from which to draw on during his/her retirement.

Inconclusion, the individual should purchase the correct amount of insurance on the most economical basis given their time horrizon and utilize the most efficent savings tool available. At the same time their is a place for cash value insurance for certain situations and to manage specific risk.

I hope this helps

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