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- The theory of decreasing responsibility is a life insurance philosophy that holds that individual financial responsibilities rise and then decline over the course of a lifetime and that life insurance amounts should reflect those changes. These responsibilities include paying consumer debts, mortgages, funding children's education and income replacement. It is promoted by proponents of term life insurance (as opposed to cash-value insurance). Many financial responsibilities exist for a fixed time interval. Most mortgages cover a fixed number of years. Most children become independent adults. Further, most adults accumulate financial resources during their working life, whether in the form of home equity, savings, investments and/or pensions. For example, if a term insurance policy ends with retirement, the money used to pay premiums can be redirected to consumption, paying for an annuity, etc. Typically, permanent (whole life) insurance costs at least five times more than term insurance. Investing the difference in a segregated fund/separate account policy allows the insured to access money in an emergency instead of taking a loan from the policy. Policy loans have high-interest rates and deplete the policy's adjusted cost basis (ACB), thus compromising its tax advantage. "Buy term and invest the difference" implements the theory. (en)
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- The theory of decreasing responsibility is a life insurance philosophy that holds that individual financial responsibilities rise and then decline over the course of a lifetime and that life insurance amounts should reflect those changes. These responsibilities include paying consumer debts, mortgages, funding children's education and income replacement. It is promoted by proponents of term life insurance (as opposed to cash-value insurance). "Buy term and invest the difference" implements the theory. (en)
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- Theory of decreasing responsibility (en)
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