Life insurance is so pricey -- and estate taxes are so high -- that simply thinking about the costs could kill you.

Robert N. Cohen, a financial planner based in Framingham, Mass., has come up with a strategy for minimizing the expense.

"First, purchase an investment-oriented life-insurance policy with funds from your qualified pension or profit-sharing plan," says Cohen. The life-insurance policy is considered part of your plan's assets. "You get one tax benefit because you're buying insurance with pretax dollars."

It can also be a good idea to spend down your retirement dollars. Here's why: Many people don't realize that they may get socked with a 15% excise tax as well as income-tax liability if their retirement accounts build so high that they, or their beneficiaries, eventually have to take any distribution that the IRS deems excessively large -- more than $155,000 in 1996.

Back to Cohen's example. "Let's say that you spend $100,000 from your retirement plan during each of two years to purchase a life-insurance policy with a $2.5- or $3-million death benefit," suggests Cohen. "Normally, one of the great disadvantages of investment-oriented life insurance is that front-end commissions are so high that it takes a few years to start building up any type of cash value. But that works to your advantage with this strategy."

Here's how: Suppose that after you hold your insurance policy within your retirement account for three or four years, it builds a cash value of $20,000. (The rest of the money you've spent goes to pay for the policy's death benefit.) "If you take distribution of that insurance policy to a trust that you've set up to own it, you pay gift tax only on that $20,000. What you've done is remove $180,000 worth of economic benefits from your retirement plan without paying taxes on it."

Check with your financial adviser to see if the strategy makes sense for you.