Financial planning is a critical exercise in ensuring long-term financial security.

A financial plan is a road map to help you achieve your life’s financial goals.

Here are three basic questions that you will answer during financial planning:

 Where are you today? What is your current financial situation?

During the financial planning process you analyze what your financial needs and goals are.
Then, you quantify in money terms what resources you need to meet those goals, and
quantify the time period during which you want to achieve these goals. Finally, you write an
action plan on what you need to fulfill your plan in terms of what products to buy and what
types of savings to make.

Insurance is an important element of any sound financial plan. Different types of insurance protect you and your loved ones in different
ways against the cost of accidents, illness, disability, and death. The insurance decisions you make should be based on your family,
age, and economic situation. There are many forms of insurance and, unfortunately, no one-size-fits-all policy. Life insurance, for
example, is a virtual necessity if you have a spouse and children, but perhaps is less important for a single person. Disability insurance,
which provides an income stream if you are unable to work, is important for everyone.

1. All policies fall into one of two camps.

There are term policies, or pure insurance coverage. And there are the many variants of whole life, which
combine an investment product with pure term insurance and build cash value.

2. Insurance is sold, not bought.

Agents sell the vast majority of life policies written in the U.S. because the life insurance industry has a vested
interest in pushing high-commission (and high-profit) whole-life policies.

3. Whole life is expensive.

Policies with an investment component cost many times more than term policies. As a result, many people who
buy whole life often can't afford an adequate face value, leaving themselves underinsured.

4. Whole-life policies are built on assumptions.

The returns quoted by the agent are simply guesses - not reality. And some companies keep these guesses of
future returns on the high side to attract more buyers.

5. Keep your investing and insurance strictly separate.

There are better places to invest - and without the high commissions of whole-life policies.

6. Buy enough term coverage to fill your needs.

7. Match the term of the policy to your needs.

You want the policy to last as long as it takes for your dependents to leave the nest - or for your retirement
income to kick in.

8. Buy when you're healthy.

Older people and those not in the best of health pay steeply higher rates for life insurance - so buy as early as
you can, but don't buy until you have dependents.

9. Tell the truth.

There's no sense in shading the facts on your application to get a lower rate. Be assured that if a large claim is
made, the insurance company will investigate before paying.

10. Use the Web to shop.

Buying life insurance has never been easier, thanks to the Internet. You can get tons of quotes - and avoid the
pushy salespeople.

Whole-life policies, a type of permanent insurance, combine life coverage with an investment fund. Here, you're
buying a policy that pays a stated, fixed amount on your death, and part of your premium goes toward building
cash value from investments made by the insurance company.

Cash value builds tax-deferred each year that you keep the policy, and you can borrow against the cash
accumulation fund without being taxed. The amount you pay usually doesn't change throughout the life of the
policy.

Universal life is a type of permanent insurance policy that combines term insurance with a money market-type
investment that pays a market rate of return. To get a higher return, these policies generally don't guarantee a
certain rate.

Variable life and variable universal life are permanent policies with an investment fund tied to a stock or bond
mutual-fund investment. Returns are not guaranteed.

The other type of coverage is term insurance, which has no investment component. You're buying life coverage
that lasts for a set period of time provided you pay the monthly premium. Annual-renewable term is purchased
year-by-year, although you don't have to requalify by showing evidence of good health each year.

When you're young, premiums for annual-renewable term insurance are dirt cheap - as low as a few hundred
dollars per year for $250,000 worth of coverage.

As you get older, premiums steadily increase. Level-premium term has somewhat higher - but fixed - premiums
for longer periods, anywhere from five to 30 years.

Life insurance is a highly competitive business, in which the salesforce depends almost entirely on commissions.

Insurance companies pay fat commissions to their agents for selling whole-life policies - perhaps 80 percent of
your first year's premium goes to paying the agent's commission - and the premiums for these polices are often
five times that of term. By contrast, the typical commission to the agent who sells a term policy is about 10
percent.
It's no wonder, then, that agents push whole-life policies as if their livelihoods depend on it, because, well, they
do. If whole-life policies were beneficial to consumers, our story would end here. The fact is the vast majority of
those who need insurance should buy term.

Today, the annual premium on a $500,000 term policy for a healthy, nonsmoking 40-year-old male might be
about $500. The same policy for a healthy woman, aged 30, might cost about $260 annually.

Not long ago you couldn't buy term policies with level premiums for periods of more than 10 or 15 years. Today
you can easily find 20- and 30-year term policies.

Agents will argue that whole-life policies are superior because you can keep them the rest of your life and build
up cash in them tax-free, which can then be borrowed.

That's true enough, but they don't tell you about the high fees and commissions built into whole life as well as
surrender charges (if you want to cancel the policy) that often leave you with little or no cash value five and even
10 or 15 years after you take out the policy.

The point of a tax-free buildup of cash just isn't that powerful anymore, given the proliferation of IRAs, 401(k)s,
and other tax-advantaged savings vehicles that have tiny commissions, much higher yields and complete
portability.

So stick with term, and do your investing elsewhere

There is no simple answer to how much coverage is enough.

Some financial planners say you need enough insurance to replace five to seven years of your salary. If you
have young children or significant debt, you should bump up your coverage so you have enough to replace as
much as 10 years of your salary, they say. That would mean a person making $50,000 a year should have
anywhere from $250,000 to $500,000 worth of coverage or more.

Remember, the sole purpose of life insurance is to replace your income in case you die, so that your dependents
can maintain their current lifestyle.

Factors to consider include whether the surviving partner will have child care expenses if one partner is out of the
picture. Do you have other assets on which to draw? Will your children be out of the nest soon? These, and
many other factors, influence the decision on how much coverage you need.

Buying a whole-life policy doesn't necessarily mean you are fully insured. Because of the investment component
of whole life, the policies are much more expensive than term. Don't simply buy less coverage, as it defeats the
purpose of buying insurance in the first place: to cover dependents

Agents like to talk about policies you can keep throughout your life. What they sometimes won't tell you is that
you don't need life insurance coverage throughout your life.

The secret to buying a policy with the right term is figuring out how long you need to be insured. You start by
estimating when your children will be out on their own and no longer in need of your financial support.

So if your children are 3 and 5 now, you'd probably want a policy that covers you at least until the youngest is 22,
so that's about a 20-year term. But this depends somewhat on your age as well.

Say you also want to cover your spouse for your lost income until what would be your normal retirement age, 65,
and you're only 35 now. Then you would want a 30-year policy.
Keep in mind that insurance gets very expensive as you leave your 50s. So you may pay more to cover yourself
until 65, even if you lock in a level-premium, 30-year policy when you are 35. Coverage past age 70 or so may be
unattainable.

Life insurance is not a substitute for a retirement plan. You want to plan so that you'll have enough to live on
when you retire, and you won't have to keep paying insurance premiums.

There are exceptions, however. People who start families late in life, or who have complex estate-planning
issues, may well have a need for life insurance beyond the customary retirement age.

One more thing: Steer clear of so-called mortgage insurance policies, which pay off the balance on your
mortgage if you die. The problem is that you are paying for a steadily declining amount of coverage, as you pay
down your mortgage. It's best to include the mortgage payments in your calculations when determining how
much coverage you need.

The cheapest rates, known in the business as select or preferred, go to those who are in good health and who
have a family history of good health.

If you take heart medication or are grossly overweight, you may pay 50 percent more than preferred rates.

If you smoke, have a risky occupation, or engage in risky sports like skydiving, you'll pay even more for life
insurance.

If you fall into one of these more expensive categories, it pays to shop around. One company may charge much
more than another, depending on how it estimates the risk of your condition (that's called underwriting). This is
where a knowledgeable agent may come in very handy. Internet and phone quote services aren't set up to deal
with nonstandard policies.

Why, some people might ask, should I tell the insurance company about negative information that will raise my
rates? Well, even if you somehow get around the medical tests and other checks done before the policy is
issued, it doesn't pay to try to fool the insurer.

Insurers may investigate suspicious claims. If the company finds out you've lied, the claim may be denied, or your
heirs could be tied up in court for years.

So there's a good case to be made for getting a policy early in life while you are still in good health. However, it
doesn't make much sense to buy one until you have dependents.

Many companies now sell life insurance on the Web, as well as give free quotes and advice.

The key to buying on the Web is to shop by price and by the company's rating. Several agencies, including
Standard & Poor's and A.M. Best, rate insurers on their claims-paying ability. Stick with companies with low
prices, the term you want, and a top rating.

Here are some sites that sell the policies of multiple companies:

- Insure.com has quotes from over 90 companies and plenty of detail on the policies available. The site also
supplies ratings for the insurers from the major rating agencies, such as A.M. Best.

- Insweb has some pretty good worksheets and advice, lets you save quotes for later retrieval, and lists an 800
number.

- Accuquote has over 1,600 policies in its database. But you need to fill out a lengthy form to get a quote. The
site is an independent service. 
Life insurance is a cornerstone of financial planning because investment plans usually assume that you will live to your
life expectancy, so your income will continue to be generated until retirement. But what happens if the family
breadwinner meets and untimely death? How will your children fund their college education? How will your spouse live
in retirement? What happens to the assets you’ve accumulated if there is no insurance to cover everyday expenses?

A life insurance policy can help cover immediate expenses and can provide long-term protection of the assets you’ve
earmarked for your family’s future. For example, insurance will help pay for final expenses, such as unpaid medical
bills, funeral expenses and estate settlement costs. And, life insurance can help provide the money to meet the
ongoing costs of running a household — without dipping into savings and depleting assets needed for the future.

The Death Benefit proceeds — from a properly structured life insurance policy received by your beneficiary — are
generally free from Federal income tax and can help put the children through college and continue building a
retirement nest egg for loved ones.

Keep your insurance up to date with your changing needs

Consider the following questions:

 How long ago did you buy your life insurance? Were your family circumstances different?
 Have there been changes in your family’s income, savings, debt or financial goals that could impact your
insurance coverage needs?
 If you have term coverage, what is the duration of the coverage? Will it be long enough to provide protection
until your children are through college? Will it help protect your spouse’s retirement assets?
 Do you anticipate any significant changes in your financial situation?
 Have you reviewed your insurance in light of your long-term savings goals?
 Who is your beneficiary? Is this who you want to get the proceeds today? Can this beneficiary manage the
cash provided by the life insurance?

As you consider these questions, take time today to review your present life insurance coverage. Talk to your financial
professional about reviewing your existing coverage to determine if it is adequate to help assure a sound financial
future for your family.

AXA Advisors, LLC does not provide legal or tax advice. Please consult your tax or legal advisor regarding your
individual situation.