Life Insurance – just a Death Benefit?
There are two types of life insurance to choose from, and before you commit to buying either one you should have a good understanding of what each can offer. They both have pros and cons. When it comes to life insurance, you do need to read the small print.
Term is bought more frequently than any other kind. It is in force for a certain period of time, the term, and coverage can be purchased for 5, 10, 15, 20, 25 and in some cases, 30 years.
If the breadwinner of the family dies, there needs to be a way to provide for the family after his death. A stay at home mom is the most common victim of a family with no life insurance. Her sole method of income has disappeared. If her husband did have a policy, at least she has something coming in for bills as she plans her future.
They charge depending on your level of insurance risk and then they determine how likely you are to die during the time they are covering you. Your premiums will increase if you are over 50, have heart problems, survived cancer, or are a smoker – these will surely put you into a high risk category.
Universal life is another kind of insurance. Also called cash value, it costs more to be covered for less. Unlike a term policy, cash value will cover you for your entire life, but of course you are paying premiums forever, too.
Cash value is the other type of insurance. It is much more expensive because it lasts for your entire life. So, unless you cancel the policy, the company will indeed pay out on your policy at some point. It has two basic sections: one that pays your death benefit, and the other that takes your money and invests it for you. They also don. ‘t want you to read too much of the fine print in your policy because you’ll find out that the money you invest is benefiting the insurance company more than you.
Even though the company might promise you a huge return, you yourself will only get a tiny portion of it. The company helps itself to the money you make.
Last but not least, if your insurance agent tells you that your policy will pay for itself after so many years, ask how this is done. Agents want their customers to believe that after about 20 years no more premiums are due. This isn’t true at all. Premiums are due, but they are taken out of your cash value portion, reducing it significantly. If you ever need a loan, you’ll be in trouble.
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Buying Term And Investing The Difference
Some of us has probably heard of the saying “Buy term, invest the difference” when it comes to buying insurance and considering investments. But do we really understand what this means? And if we do understand what this means, why do financial planners recommend that you buy term and invest the difference while your insurance agent is pushing you to buy their recommended product instead.
The majority of whole life insurance products available today is tantamount to “rip offs.” In fact, these kinds of products has already been phased out in the United States. When we talk about “term insurance”, this refers to insurance with life coverage only. On the other hand whole life insurance is a term policy coupled with investments. Your insurance agent will always present whole life insurance as something that will “force” you to save for your retirement. This is actually good, but the problem with this setup is that most insurance companies do not usually give a good rate of return for the “investment” component. Sad to say, whole life insurance products are still actively sold in the Philippines. People still buy these products because of lack of financial know-how.
In order to fully understand this, let me give you an illustration. My mother asked me if she should continue paying an insurance product that she bought for my sister. The insurance product was worth about P 400,000.00 (Philippine Peso) She already paid half of it so the balance left is P 200,000.00.
According to her, the benefits of the insurance product are as follows; After 20 years, my sister who is still 18 years old will receive P 40,000.00 per annum until she reaches 65 years of age; At the age of 65 she can either choose to receive P400,000.00 lump sum or continue receiving P 40,000.00 until she dies, plus she is also insured for two million pesos for as long as she lives.
To evaluate whether or not she should continue paying the P200,000.00 we will evaluate the benefits of the insurance product versus the “Buy term, invest the difference” option.
Under the insurance scheme, the total benefits my sister will be receiving is as follows; she will get a total of P1,520,000.00 at age 65. Plus she is insured for P2,000,000.00 giving total benefits of P 3,520,000.00.
On the other hand the benefits of the “buy term invest the difference scheme” is as follows: The P 200,000.00 will be invested at a vehicle of investment that gives about 10 % return per annum. She will then re-invest the profits made through the investment in order to take full advantage of compounded interest. If she does this consistently she will get around P17,639,497.05 when she reaches the age of 65. As for the payment she already made for the insurance product, she will just ask the insurance company to convert what she has already paid into “term insurance.” This is usually good for only 20 years. (That is if her insurance company allows it)
Can you see the big difference? What is P 1,500,000.00 plus P2,000,000.00 insurance vs. P 17,000,000.00+.
You might ask what about insurance protection? Take note that pure term insurance is very cheap. She can just buy term insurance and renew it every 20 years.
The next thing you could probably ask, what investment vehicle would give me 10 % return per annum? Well there is and there are lots of them. You can put it in mutual funds. It does not guarantee a rate of return but historically most mutual fund companies give you more than 10 % return per annum especially if they are invested in equities. Now that the stock market is very bullish returns ranges from 40 % to more than 70 % per annum. You can even directly invest in the stock market. Even the most conservative investors in the stock market earn more than 10 % per annum.
Buying term and investing the difference certainly does make sense !!!
Would you want to know more about investment strategies ? Visit the blog of Zigfred Diaz where he writes about several interesting topics such as investments, money management, business, making money online and Stock market investing
The Difference Between Term Life Insurance And Whole Life Insurance
Whether you’re simply considering purchasing a life insurance policy, or have already made the decision to purchase a life insurance policy, it’s important to know the difference between a term life insurance policy and a whole life insurance policy. Knowing these differences will help you choose the best life insurance policy for you.
The most recognizable difference between term life insurance policies and whole life insurance policies is the fact that a term life insurance policy will cover you for a certain number of years, whereas a whole life insurance policy will cover you for your entire life. If you’re only looking for life insurance coverage for a specific amount of time, a term life insurance is probably your best bet. However, if you wish to be insured for the rest of your life, you should purchase a whole life insurance policy.
Another difference between term life insurance policies and whole life insurance policies is that whole life insurance policies offer a tax-deferred accumulated cash value. This acts as an investment component. Some people are interested in the ability to invest using their life insurance policies, so they choose to purchase a whole life insurance policy. However, if you use other methods of investment, a term life insurance policy is probably the best for you.
A third difference between term life insurance policies and whole life insurance policies is the difference in price. Term life insurance policies are generally cheaper than whole life insurance policies; however, whole life insurance policies often offer fixed annual premiums, so you won’t have to worry about your rates increasing if your health begins to deteriorate. Most term life insurance companies will raise your premiums based on the current condition of your health, as well as your age.
So, when you begin your search for the perfect life insurance policy, take these differences into consideration and decide which type of policy is best for you.
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Pre Qualified Life Insurance Leads
As the insurance market undergoes stiff competition, there is no assured way of getting continuous leads at all times. Besides, people are becoming more aware of issues by the day, making it more difficult to get them to buy insurance. In such a scenario, pre-qualified life insurance leads are better than other types of leads.
Many life insurance lead companies adopt various strategies to get customers to fill out a form on their websites or at their physical locations. These are generally people who are somewhat aware of the importance of life insurance and who also roughly know what they want. These people often search for the best insurance policy on their own. The Internet has become a good place to start searching for life insurance as well.
Once there, in order to tap into the wealth of information available on a particular site, or just to know whether the person is eligible for a particular life insurance policy or not, they are asked to fill out a quick online form. This form is then analyzed by the lead company, depending on the needs of the customer, required conditions, and the prevailing life insurance business codes. They segregate these leads and investigate who is extremely interested (hot prospects) in a policy and who is not. Such leads that have been analysed for suitability are known as pre-qualified life insurance leads.
Pre-qualified life insurance leads are very important methods of getting prospective customers for an agent. These leads are considered highly important by agents because here the customer is actively scouting for life insurance and may already be partially convinced about a particular policy.
This means that if the agent plays his cards right, there are very good chances that he or she would be able to convince the customer to buy a policy. In the competitive field of life insurance, a pre-qualified life insurance lead comes as a blessing for the agent.
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Gauging A Need; Life Insurance.
Having a Life Insurance policy becomes less of an option as we develop in today’s society. Having a correctly developed plan, viewed with sobriety and thought of as a investment is paramount. This purchase of a product is more a purchase in defense of your families overall safety than ever before. Far too many stories exist today that involve the head of the household unexpectedly passing on, leaving personal and medical debts, as well as funeral costs, a mortgage, and even more behind to relatives for consideration above and beyond the normal grieving process and loss that already present at the time.
There are many great products made available by insurers on the current market. Each one of these have pros and cons that only a buyer can assess. Studying each individually and making smart decisions in purchase is a top priority.
Having the assistance and input from a somewhat neutral and professional agent is very helpful, but does not replace the thought and research needed from the buyer. Life Insurance does require a certain level of customization, as well as careful consideration.
Just a few of the many Life Insurance products available are, Term, Whole Life, Endowment, and Universal. Each may or may not be the product for your need, and each requires at least some consideration and discussion to clarify suitability.
Once a suitable Life Insurance product has been decided upon a coverage amount must be found. The actual value, or pay-out of any policy chosen is the actual determining feature. It is only logical that a ten thousand dollar payment would be at a lower premium than one valued at one million. Looking at a all encompassing personal and family debt picture would be of great assistance. After these numbers have been gathered, tax responsibilities should also be weighed as should actual premium costs for the amounts needed.
Life Insurance is more of a common necessity today but to over-insure is not. Insurance should be a expenditure that grants you a level of personal security and not bear a premium that is outside of a reasonably affordable level. Actual numbers will vary greatly of course, according to the incomes of the people or household involved, the monthly expenditures made by the household, etc. Be very sure of staying reasonable as well as cautious in decisions.
When a policy is finally purchased Life Insurance can grant a sort of peace and ease to the holder or holders. Knowing that you are invested in your family, its future and security is a great comfort to many. Even the family itself is able to also feel relaxed in the knowledge that you have cared enough to remove possibilities of additional stress during a very hard and emotional time to come.
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Saving Money with the Correct Car Insurance Deductibles
When shopping for car insurance, there are a few deciding factors when choosing a policy. There is the initial cost, type of coverage and the deductible amount. Car insurance deductibles can range anywhere form $250 to $1500 depending on the policy and insurance provider.
The deductible is the amount of money that is paid out of pocket by the policy holder in case of accident or damage. Car insurance deductibles are normally found with collision and comprehensive style policies. The lower the amount of the deductible, the higher the monthly premium is that needs to be paid to the insurance company.
While visiting the insurance providers websites and browsing their policies, each one should have different rates for different deductible amounts listed right there. Choosing a policy with a higher deductible amount may be financially easier at the outset of a policy. However, if the vehicle becomes involved in a major accident, the high deductible may be more than is readily available to the average individual.
Car insurance deductibles can however be tailor made to fit in many standard policies offered by most insurance companies. By selecting an affordable policy with a reasonable deductible, the vehicle and the owner can be well protected and a little less worried about the “what ifs” if an accident happens. The average comp and collision deductible that many providers offer is about $500 on most policies of this type.
By visiting the insurance company’s websites, the deductibles can be figured out by using a deductible calculator (most sites have one available as a tool). This lets the consumer know how much the monthly premium will be along with the amount of deductible should anything happen. This helps them in fitting the proper policy in to their budget.
By using the websites as a tool for shopping for vehicle insurance, an easy comparison can be made between many different providers. A short online search brings all major and minor car insurance providers directly to the consumer. Many of the websites not only provide their own rates, but the rates of others for a side by side look at just which policy is most affordable for the customer.
As with shopping for any type of insurance, car insurance can be a little confusing to the average person. Many websites offer a question and answer section to help alleviate this along with and email address and phone number for more direct contact. More that one website has an online chat feature that allows the consumer to speak directly to a live support person instantly and get many of their questions answered immediately instead of waiting on an email or being on hold on the phone.
The time to do the research is time well spent as it will save money in the long run and let the consumer know exactly what their policy covers and how much it will cost them if an accident should occur with their vehicle. The Internet is one of the greatest tools in assistance of locating the proper and most affordable policy for each individual. With all of the information only a few clicks away, this makes for a pain free insurance shopping experience.
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Why Term Life Insurance Vs Whole?
While shopping, you will see that you have a choice between term life insurance vs whole life. A whole life insurance policy is a good option for you if you have the funds to make the larger premium payments These policies also allow you to invest, borrow and even make withdrawals from your policy’s cash value. They do cost much more than a term life policy.
When it’s time to purchase a life insurance policy, you basically have two options. You will choose between term life insurance vs whole life insurance You will have to decide what your current and future needs are and what plan is the most affordable for you now.
Are you still not sure which one is for you? If not here’s why term life insurance is a good idea Term life insurance is ideally bought for the intention of covering debts, business insurance, or check replacements to guarantee that the beneficiaries of the insured will still be secured with financial resources upon the perishing of the insured individual. This is also purchased to protect the needs that will be lost even before the insured’s death.
Term life insurance is an awesome way to protect your family or business during the period when they are most vulnerable. Having term life insurance will render you a feeling of serenity that you have taken steps to protect your loved ones. The best part is term life insurance is very low-cost for most people.
If you’ve decided on term, what about no exam life insurance? Insurance companies amass big amounts of demographic and medical data to help them determine risk factors. While it may look very sinister and morbid, insurance companies use the data collected on applications to help them envision the life expectancy of someone applying for a policy. A troubled medical history, smoking, excessive weight, even being single–these are all elements that tend to lower life expectancy and thus elevate risk for the insurance company that a policy will need to be paid.
No Exam Life Insurance is precisely as it sounds; a life insurance policy that does not need a medical exam. While there are many great features to this particular type of life insurance, one needs to understand that since no medical exam is required, the insurance company is taking a greater risk, and therefore the monthly payments will be much higher
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Discover The Best Price Insurance Quotes On Line
In todays time it is becoming increasingly easy to obtain Insurance Quotes from any source be it from an insurer or on line. Even after one has obtained auto insurance there is a constant strain of rising premiums of which the company gives no explanations what so ever.
It is best to understand your auto insurance tool better to make it work well for you and secure yourself; your premiums will be fewer against a good credit. Your credit ratings are to ascertain if you will ever place a claim on the company for the auto insurance you are trying to buy.
The auto insurance company checks of you pay all your dues on time, a regular and steady account is what they are looking for, they avoid someone who is unsteady with bad credit and unpaid bills. The auto insurance risk score is drawn on your credit report besides other factors used to decide your eligibility for the insurance.
If your credit-report is not stable, wait to steady it, work over it for a month and then go for the Insurance Quotes. The premium you pay depends upon your car-model; the rate is decided according to the Auto insurance Services Office which has devised a rating system from 1 to 27.
Your Insurance Quotes depend upon the data reflecting the safety and theft possibilities of your vehicle, the higher the risk with your car the higher premium you pay. If you already do not own a car then visit the Auto insurance Services Office or inquire with the auto insurer for the premiums of various cars; surfing the Internet for the 10 most costly cars to insure should give you some idea of how much premium each automobile may cost.
You can avoid the installment fees by paying the premium for the year in a lump sum, thus save money; there are options of paying your premiums in 3, 4 or 6 months this is offered at an administrative fee stated in Insurance Quotes which differs from company to company. It is in your best interest to pay the installments regularly if you have the resources to pay the premiums all at once then do it and save a few more dollars.
Please note that the auto insurance does not cover the personal belongings in the car only the car and its parts, for example the CD player which came with the car will be covered and not the CD in it. If you are a bad driver and your premium will go up by 40% after the first accident your car is in; therefore if your premium is $200 then it will increase by $80 after first accident due to your carelessness.
When you buy an insurance policy ask for Insurance Quotes and their forgiven policy, as it may vary from company to company though most forgive the first time. It is important to hand your car keys to a dependable careful person as you will be able to claim for the initial accident yet the premium will rise for you.
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Make Sure You Know How Much Home You Can Afford
Decide how much you can afford for a home before you shop for it, not later. This will save you untold hours looking at houses that you should not really be in the market for to begin with.
If you understand how banks determine the mortgage you can afford by examining your income, amount of down payment and total closing costs, you will have a better concept of this. Lenders will also look at your current debt and fixed expenses, since you will have to go on paying such bills and they want to make sure you have enough income left to pay the mortgage.
To do this, lenders use certain ratios that tell them what you will be able to afford, ratios calculated on income, expenses, debt, down payment and closing costs.
You can calculate these factors to within some degree of accuracy, or you can contact a professional mortgage expert who can assist you with these calculations.
The first thing that most folks have a problem with is having enough of a deposit to begin with. Many people new are not able to put aside some funds to accumulate the necessary funds for a decent down payment. We can forget about no down payment mortgages now that the credit crunch in the real estate market has forced banks to be stricter about their terms.
Assume at least a 10% deposit to buy a house. So, if you are looking in the $200,000 price area, you have to have $20,000 on hand, plus a reasonable amount for closing costs. You can request an estimate of closing costs from your bank.
A very low estimate of closing costs would be $5,000, which makes a total of $25,000. Can you also afford the mortgage payments? You can visit many sites on the internet that will help you calculate what you can afford for a monthly home loan, or you can call a mortgage broker.
The traditional rule is that your housing costs should not exceed 25% of your income. Excessive credit card debt will have an effect on your disposable income, however. They have to make sure you have enough money to pay the mortgage after you have paid for your food, utilities, education and other such expenses. Spending too much to pay for your credit card debt will give you less disposable income to pay your mortgage.
Barring high credit card debt, you can figure that if you earn $6,000 a month, you can afford to pay $1,500 for the home loan, taxes and insurance. This is at least a starting point for your shopping trip for a new home.
Ways To Find Adequate But Low Cost Life Insurance
It is quite very easy for you to find the right life insurance coverage at a lower price. Here are a number of things that will help you reach this goal…
Although this may not be an issue for most people it should be said.
The use of banned drugs will raise your life insurance costs. Misusing drugs also will make you spend more in life insurance.
Avoid self-medication as well and you’ll certainly get lower rates than individuals who don’t.
If you decide to pay your premiums monthly, you’ll attract higher life insurance rates. You may be told paying monthly is convenient but what you’re not told is how much extra you pay for this..
There are transaction charges that are attached to processing a check. For twelve checks (that is, your monthly premiums) you will have a total of twelve transactions. you will then have to pay the sum of 12 transaction fees..
That’s just part of it: Insurers also incur higher administrative costs for your monthly payments. A good example of such is the cost associated with sending out payment notices..
These and more are then included in your life insurance rate thereby making it more than if you paid annually.
Don’t be shortchanged by the cheapest rate as you shop for low cost life insurance. You want a low quote that also gives you much value. You can get very cheap quotes that include the value you are after if you do your shopping right. Nevertheless, if you have to pay little more for the right coverage, then do just that.
I say this because some cheap rates could be that low because they have much value to offer you. Such low life insurance quotes won’t be a good deal since you’re not getting the right coverage for you.
The use of tobacco in any form will increase your life insurance rates. For instance, you’ll attract a more expensive life insurance premium if you chew or snuff tobacco.
Therefore, you’ll help yourself attract more affordable rates if you avoid tobacco use in any form.
You’ll save much if you will shop around and do thorough comparison. The range of quotes returned per request could be as wide as $1,000 for a particular profile. Notwithstanding that this is a good thing, it’s crucial that you don’t get too excited yet. It’s not usually that straightforward if you want the best price to value ratio. The cheapest price may not offer you the best price/value. Although each of the quotes offered will definitely give you the same basic coverage, there may be several differences in the details of each insurer’s coverage. This makes it crucial that you find out if there aren’t any exclusions you won’t like. Remember to treat these no-obligation quotes just that way. Don’t feel you have to pay until you’ve had all your questions answered satisfactorily. You will saved from rude shocks down the road if you do this.
