Smart Money

DEAR BRUCE: Can you explain what the cash value of a life insurance policy means? -- N.V.

DEAR N.V.: If you have term insurance, there is likely little or no cash value at any time, but it's the cheapest insurance to purchase. Cash value or whole life insurance does, after a relatively modest period of time, start to develop a cash value.

Every year, a certain amount of cash value is added to the policy. In other words, there is a certain amount of cash value that is yours to draw upon in the event that you wish to. The value develops very slowly at the beginning, but as the policy has more money paid into it, the amount of cash value increases substantially.

Cash value insurance can be a better choice because of this activity. If you elect to buy whole life insurance, the cash value then becomes a significant factor.

DEAR BRUCE: My mother has been very ill for the past year. She was diagnosed with stage 4 lung cancer. I am considering putting her in hospice for the remainder of her time because she can be looked after while I work. Does hospice require payment for my mother to stay until she passes? -- D.S.

DEAR D.S.: In almost every case, you can work out a partial or complete care plan for your mother with hospice folks in your area. Some hospice organizations require payment and some of them don't. You'll have to do some investigating, but I am sure you'll be able to make the appropriate arrangements.

(Send questions to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.)

(The Bruce Williams Radio Show can now be heard 24/7 via iTunes and at www.taeradio.com. It is also available at www.brucewilliams.com.)

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