Showing posts with label Life Insurance Basics. Show all posts
Showing posts with label Life Insurance Basics. Show all posts

Wednesday, 29 February 2012

Life Insurance and Life Assurance are Not the Same!

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The average man in the street assumes that Life Insurance and Life Assurance names for the same type of insurance. How wrong they are! But do not hang your head in shame, many financial analysts also wrong! Life insurance and life insurance in various financial roles and are poles costs - so it helps to navigate the right product.

Life insurance provides protection for a specified period (called a "term" policy). So, if you as the policy is in force, die, the insurance company pays a tax-free amount. If you survive the end of the period, the contract is complete and has no residual value whatsoever. No value if there is no demand - in this context is the same as your car insurance!

Life insurance is different. It is a mix of investment and insurance products. A life insurance policy pays an amount of at least guarantees the well under the terms of the insurance policy or investment account. The value of the investment element is then dependent on the profitability of the investments of the insurance company and how long you have paid into the system.

Each year, the insurance company an annual premium for the guaranteed amount of his life insurance and it is usually a "premium" extra point at the end. So over the years from your life insurance policy increases the value of the cumulative investment commitments. Value of these bonds is determined by the investment performance of the insurance company. Once goodwill has been allocated to the policy, you can cash in on the insurance company. However, most people get a better price for your life insurance by selling to a specialized investment broker rather than cashing the insurance company.

If you die during the term of a contract of life insurance pays the highest minimum guaranteed amount and the total value of the annual investment grants. However, if you still live in the political ends usually a higher payment. This is because most insurance companies, an additional terminal bonus is awarded.There is also a specialized form of life insurance is called "life." These measures shall remain in force as long as you live and as such, have no set time.

There is also a practical impact for the user. Although you can life insurance online life insurance financial services authority in principle to buy as an investment product. So believe it is more likely to be sold with advice from a financial advisor for a full understanding of their personal data Advisors basis. Therefore, you will not be able to buy life insurance online. However, you can use the internet to allow you to meet a suitable financial advisor to discuss and find your needs.

What are the policies of life insurance and life insurance are they used?

Life insurance is usually a focal point for the economic protection of the family. It is ideal to ensure that known as mortgage debts are paid in full in the event of the death of measures.

If it dies in the provision of a lump sum for general use in case of the insured during the policy comes into force, either life insurance or life insurance can be used. The differences are that the life insurance payment would be the size of predefined, while life insurance depend on the guaranteed minimum investment performance of the insurance. But remember, at the end of a term life insurance is worthless, whereas life insurance pay a considerable amount of investment.  

In this context, life insurance seems much more interesting, but in practice, most people choose a life insurance policy. Why? It is a matter of cost. Life insurance is much cheaper than life assurance. In addition, in recent years, investment income life insurance companies have significantly reduced and many insurance companies have placed sanctions to hit early capital. This has negatively affected the resale value of life insurance.

Finally, if you want to offer a lump sum on your death a product is always a guaranteed minimum payment is probably quite decide for life insurance. It really is a form of investment for life with a guaranteed minimum benefit. They are particularly useful for Inheritance Tax Planning.Challiner Michael has over 15 years experience in the marketing of financial services at the advanced level. Michael works as an editor of the online brokers life insurance []Read the questions life insurance Futher []Another website life insurance specialist reading []

Thursday, 2 February 2012

Whole Life Insurance Basics

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If you are shopping for life insurance, start with two important questions: How much insurance do I need? And what type of policy should I buy?

If your short-term and long-term calculated, it is time to decide which type of policy is right for you: term life insurance or life insurance.

Term life insurance provides protection for a specified period, such as 10, 15 or 20 years, premiums increase over time, if you buy a term "level" policy, which means that the premiums stay the same safe. It is possible that the duration of the contract, in the event that your contract expires and you have to shop for another policy if you want to get even coverage survive.

With a whole life policy (also called permanent insurance), you do not have to make your long-term policy on potentially survive because your contract offers insurance protection for your entire life, as long as premiums are collected. With life insurance, unlike term life insurance, you also build "value" in politics that you can tap into the future.

Premiums are much higher for permanent life insurance term because of costs and fees (see box) that you do not pay with term life.

Value of money is an important selling point for the whole life: This is an account in your policy that accumulates over time, tax-deferred, of a portion of your premiums and interest rates fueled by the insurance. In fact, the entire contract period is designed for you to enjoy this money in the future. When you die, your beneficiaries receive the death benefit, not the money, except for certain universal life insurance policies.

Fonts whole [] build cash value, slowly at first, but then the pace after a few years when your life begin result to grow faster than the cost The "mortality" (the cost of insurance you). If you want a life insurance explained in detail, your life insurance agent should be able to show some pictures of the types of policies.

Lifetime could be an interesting option for any of these reasons:

    Others rely on you for financial support in the long term.

    They are concerned about the survival of a term life insurance and not buy additional insurance deteriorated due to age or health status in a position.

    You want to build cash value in addition to protecting your beneficiaries.

    You want to create a legacy for your beneficiaries after your death.

    Your beneficiaries will have to pay the benefits for the property taxes on other assets.

"Whole life insurance for anyone who loves someone is suitable," says Scott Berlin, senior vice president in charge of the Department of Human Life at New York Life Insurance Co. does two things for you "Age: protect your family and allows them to save for the future. "

Berlin says that the benefits of whole life is that you do not have to survive on your policy (which is possible with term life) to take care of and it is the "savings forced" component of the account of the surrender value, which grows tax-deferred. Once the cash value is built, you can access all - retirement, your child's college tuition or the vacation you've always wanted. Life insurance policies are also entitled to dividends (depending on the company and unsecured), which can be used in a variety of ways, such as providing additional life insurance paid up, the increased earning both the benefits and the present value of the life insurance.

"Term is like renting your insurance purchase," says Berlin. "You do not build up any residual value whole life is like owning a home -., You build equity."

Berlin warns against buying term life insurance just because of the difference of the highest quality.

"If you think 35, 20 years is a long time, but life is not always what you think," he said. "People who are permanently buy insurance, the value they provide for their families."

If you feel that a contract of life insurance is right for you to decide, but you think you are not in a position to premiums for the nominal value paying wish recommends Berlin purchase as much life as you can afford and fill the remaining amount of your face with the term life. Later, you can convert your term life insurance whole life.

For the rich with large fields, the confidence of a whole life insurance is a way to pay estate taxes when they die.

A range of decisions
 If the characteristics of life insurance [] do the trick for you, there are several varieties depending on your needs and financial risk-taking.

    Ordinary life insurance: Premiums are level for as long as you live and your policy increases the value of money. The initial annual cost will be much higher than the same amount of temporary life insurance, but when you get older that gap closes.

    Limited payment life insurance: This strategy allows you to pay premiums for a specified period, say 20 years or 65 years, but you are insured for your entire life. Thus, the premium payments will be higher than if the payments were spread over the course of your life.

    Single Premium Life Insurance: This policy will be freed after a large deposit.

    Life Insurance Universal (VU): This strategy allows you to vary your premium payments and adjust your death benefit according to the changing needs of the recipient. You must be aware of how much is in your account and if you make payments to the policy must remain in force. There are also UL policies, uniform premiums and UL policy with an option premium and expected delivery guaranteed life can offer death. These policies may offer lower premiums in exchange for a slow accumulation of cash value, if any.

    In universal life insurance variable capital (LCV): Here's your money value and death are associated with a particular investment account. Their value of cash and increase the death benefit if the underlying investments do well, or they can shrink considerably under poor investment performance. Please read the prospectus carefully and never buy a VUL policy, you do not understand. There may be an additional premium required to guarantee a certain amount of death benefit.

    Life survival, as second-to-die life insurance: This type of insurance offers lifetime two lives at once (usually a man and a woman) and pays the death of the second person. This is good for people who require the beneficiary disappeared after two. It is also less expensive than life insurance in two separate policies.

    Could be any type of whole life insurance above "participating" or "non-participation": Participating or non-participating life insurance. You have a contract with the participation, if your life insurance company pays the policyholder if it has a good exercise. Dividends are not guaranteed and will vary from year to year if they are paid for, but if you participate, you can take your dividends in cash, use it to pay premiums or use for the face value of your insurance purchase to increase policy. The dividends are not as long as they do not exceed the taxable premiums you have paid in.

The presentation of the life insurance

If you are considering a policy in which premiums and benefits vary in case of death or the interest on the investment, you should get a life insurance illustration from your agent. This is a picture of what could happen to your policy. Or maybe not.

The presentation should show you that the insurance company guarantees (such as guaranteed interest rates or death) and what remains will be open to market conditions. You will be prompted to a form stating that you understand that some parts of the sign representation not guaranteed.

Being paid

Happy stage of the life insurance is when the values of the expected future dividends and dividend policy sufficient to cover your future premiums, and you have to make premium payments from his pocket. This is called a premium offset proposal or arrangement "POP". Means "pop" as the present value is now big enough that it can be used to pay your premiums for the rest of your life by the insurer. You can always have the value of your money, but you have to take the premiums to keep the policy in force or support for the reduced value of the remaining cash services.

You can also calculate a policy of "limited" compensation for the premiums for a certain number of years or a certain age, such as 65th

New York Life, "New York Life Custom Whole Life", a life insurance policy that you can set your own choose paid guaranteed. (You have to pay premiums for at least five years and can not afford the premiums 75 years of this policy.) So if you want to retire in 12 years and you want to release your warranty policy at this time. New York Life will calculate the premium necessary to have your full in 12 years as political, that you do not have to pay through the payment of premiums for life insurance during your retirement worries. If you need the full benefits of life insurance is reduced during your retirement, you can also start withdrawing or borrowing to supplement the value of the money in your retirement income.

Plan for all situations

Life insurance companies offer a number of drivers that can be placed in life insurance. (All driver can not be offered by all companies, and many insurers offer other specialized riders not listed here, so check with your agent.)

    Accidental death benefit rider: Pays an additional benefit if you die in an accident.

    Disability Rider: Provides a regular income from the insurance if you are totally and permanently disabled.

    Level with regard to rider: Adds a fixed amount of care to the whole life policy for a specified period.

    Living benefits rider, also known as accelerated death benefit known: pays a portion of your death benefit during your lifetime if you are diagnosed with a terminal illness and have a life expectancy specified (such as 12 months). You can add these drivers after the purchase of the policy.

    Care (LTC) rider in the long run: Country LTC expenses if you meet certain criteria.

    Option to purchase the policy you are the contractual right to purchase insurance without evidence of insurability. For example, you may need additional life insurance after the birth of a child.

    Waiver of premium rider: premium waived in the event of disability or unemployment. (Conditions depending on the insurer).


    The hard sell: An unscrupulous insurance agent can push life insurance if the care is sufficient for your needs, all sales of life insurance could offer a great commission.

    Churning: If your agent suggests your current policy should be changed, beware. "Churning" is when an agent convinced you to abandon the old policy and buy a new one because it's a new commission to you.

    You thought you were paid: you may be used to document the value of your money, have signed to buy a different policy.

    Term or Permanent: a comparison service

You've probably heard the advice "buy term and invest the difference." And to do this job, you must have the financial discipline to actually invest the difference each year. And if so, how much you get in advance, or do you prefer?

The Consumer Federation of America (CFA) provides a return (ROR) service that compares you with a report that invests "real" return on investment estimates on policy cash value over a long-term policy with premium difference in a savings instrument. The service is run by James Hunt of the CFA, the life insurance actuary and a former Vermont insurance commissioner.

The analysis can be used for the policy you are considering or already have done. The cost is $ 70 for the first figure and $ 50 for each additional illustration submitted at the same time. The cost of the variable life insurance policies that you have already purchased (except during the free look) and for the life of the survivor (to die a second) is $ 80 / $ 50.

Maximize your policy cash value

 Hunt, who analyzed the life insurance for almost 25 years, said that because of the high costs associated with living together, you have options to keep your premium dollars will be found in the policy to maximize. He suggests that these strategies:

Deny all riders (except term care insurance on your own life and disability waiver of premium rider riders) because they eat into your potential monetary value.

    If you look at the picture, make sure that the present value of the first year is an important part of the cost of the premium for the first year. (A good number would be 50 percent or more.)

    Consider buying directly and not through a full officer. Examples of direct sellers Ameritus and TIAA. The returns of this policy of "low stress" are higher than the returns for comparable measures usually bought by agents.

If you value in life insurance money may be looking supplement retirement income, shows that hunting you may be better off buying term life and maximize other tax-deferred retirement are the first, as 401 (k), 403 (b), IRA or Roth IRA.

Test Winner 

Perhaps you no longer want or need a whole life policy many years ago. If it will be your policy "outdated" just simply paying the premiums and you need to chalk it. Up to a costly mistake If the policy long enough to have kept build cash value, your insurance company will begin to use the value of the money to cover the premiums to the value of the cash runs out.


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