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My mom is 71 and debt-free. She’s investing $600 a month in a universal life insurance policy worth $250,000 because she wants to leave something behind when she dies. What could she invest this money in, other than the life insurance policy, in order to leave an estate?
This is a good question. You don’t use life insurance to leave an estate. It’s a bad idea. You leave an estate by saving and investing. The only people who will tell you to use a life insurance policy to leave an estate are life insurance salesmen.
Unless she’s ill, I wouldn’t keep the policy. Instead, I’d do some long-term investing. It won’t take long to get to $250,000 with $7,200 a year. It’s the kind of thing that sounds like it’ll take forever, but you’ve got to remember you’ve got growth and interest in the equation. I wouldn’t put money into a life insurance policy at age 71 unless there’s someone being left behind who really needs the money — and it doesn’t sound like there is in this case.
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