Making money: When to cash in your life insurance, and more

3 top pieces of financial advice — from appreciating CDs to following the barbarians

Before you bite the dust you might want to cash in that life insurance policy...
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Tapping your life insurance

You may want to think about cashing in your whole life insurance policy before you die, said Sandra Block in Kiplinger's Personal Finance. If you've had the policy a long time, you've probably built up plenty of cash, and that can come in handy "if you're heading into retirement with a decimated investment portfolio, a mortgage, and increased medical expenses." To access that money, you can make a partial withdrawal, take out a policy loan, sell your policy to a life-settlement company, or trade it in for an annuity or long-term-care policy. A whole life policy "is like a Swiss army knife," said Dave Simbro of Northwestern Mutual. "There are all these things you can pull out." But be sure to consider tax ramifications, and "don't underestimate the need to provide for your spouse."

Don't write off CDs

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CD yields may be minuscule, but they are not as bad as other options, said Tom Lauricella in The Wall Street Journal. It isn't hard to find yields that top those of U.S. government bonds. A 0.3 percent yield on a one-year CD "might seem like peanuts," but U.S. Treasury one-years are yielding just 0.17 percent. What's more, CDs carry government insurance of up to $250,000 per depositor as long as they are purchased at an FDIC-insured bank. "By locking up money for fixed amounts of time — subject to early withdrawal penalties — CDs also can be useful for savers who might otherwise be tempted to dip into savings ahead of plan."

Follow the barbarians

Hedge fund managers often make big bucks by investing in ailing companies. Consider "mimicking their moves," said Paul R. LaMonica in Money. In July 2011, "agitator" Carl Icahn pressured Motorola Mobility to do something with its patent portfolio. A month later, the company sold out to Google for a 63 percent premium. Similarly, shares of Yahoo are up 15 percent since Third Point's Dan Loeb disclosed his stake in the company. Loeb is now pushing for change at Murphy Oil, while Bill Ackman of Pershing Square is targeting Proctor & Gamble. Of course, investing in troubled companies is risky, and "gurus can fail." Icahn, for instance, dumped his stake in the film studio Lionsgate in 2011, before it realized "huge gains" on The Hunger Games. So following the "barbarians" isn't foolproof. But when they're right, "the little guy can profit too."

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