Note: Hale Pai is no longer being published. These archives of passed issues will remain available as long as there is interest. - Courtesy of San Jose Web


Hale Pai
Pacific American-News Journal

Iulai-July 1996 Volume 2 Issue 7

Financial Q&As

I've Heard A Lot Of Different Views On Social Security, What Can You Tell Me?

Most experts agree that Social Security must undergo dramatic changes if it's going to survive into the 21st century and at least partially assist Americans in their retirement years. While the last major changes now provide greater income from Social Security taxes than that paid out, the experts believe that by the year 2020 the fund could be in trouble. Remember that Social Security should be just one measure of your retirement planning. An investment portfolio and participation in a pension benefit plan are the other two legs of the 3-legged retirement planning stool. Save sooner, save more, and invest wisely.

My Portfolio Manager Mentioned These Terms To Me, Asset Allocator And Contrarian. What Do They Mean?

An asset allocator tries to capitalize on the cyclical behavior of both the economy and market price trends by moving in and out of the equity, fixed income, and cash markets in anticipation of these cycles. Basically, an allocator tries to cover all bets. A contrarian invests in stocks that are out of favor or which have little current market interest, on the premise that gain will be realized when they return to favor.

What's The Difference Between Term And Whole Life Insurance?

Term life insurance may be defined as a contract that provides protection for a limited number of years, the face amount being payable only if death occurs during the stipulated term, and nothing being paid if the insured survives the stipulated period. Term insurance has no cash saving value and has been called temporary or pure protection; since it provides pure protection, it furnishes the maximum amount of insurance for the lowest price. There are several types of term policies, the most common being level, decreasing and increasing.

Whole life insurance, the most traditional form of "permanent" insurance, is a contract based on the level premium concept where the assumption is that the premiums will be paid by the policyowner throughout the insured's lifetime. It provides permanent protection with a constant face amount insofar as it never has to be renewed or converted. In addition, it is characterized by cash surrender value buildup during the life of the contract.

I Am Considering Purchasing Either A Universal Life Insurance Or A Variable Whole Life. What Factors Should I Consider?

Both are relatively new products in the life insurance field and are referred to as interest-sensitive whole life policies. A universal life insurance is a contract that offers an insured a great deal of flexibility. It permits the policyowner to adjust the death benefit of the contract or its cash value depending upon his varying needs, and involves the combination of term insurance protection with cash savings value. The interest rate will vary depending upon the investment performance of the cash value fund.

A variable life insurance was designed to combine the protection and savings features of life insurance with the growth potential of common stocks. Benefits, payable upon death or surrender, vary with the investment performance of an underlying portfolio of securities. Remember that the premiums charged are fixed.

David E.K. Cooper is a Certified Financial Planner. Send your questions to Hale Pai. 

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Copyright 1996 Hale Pai Pacific American-News Journal
Last modified: February 28, 1998

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