Life Insurance For Adults Or Children

When families make the decision to purchase life insurance, they are often in the process of experiencing a major life-altering event such as getting married, starting a family, or purchasing a home. In fact, there are many good reasons for purchasing a insurance policy and most of us, at some point in our lives, will realize that owning insurance is very important to ensure our sense of security. Can you even imagine the anxiety of driving on the freeway without auto insurance? All of us know that at some point an accident is almost inevitable. When you purchase life insurance, you are making a plan to be sure your family will be safe from the effects of losing your contribution to the household income

Life insurance insures your life and pays your survivors.

Importance of insurance No one likes to think about the need for life insurance, but if you were no longer in the picture what would happen to the people who depend on you for financial support?. Even if the deceased has some life insurance, the amount is often inadequate. insurance is an essential part of any financial program. Your insurance coverage should be reviewed regularly as changes occur in your life, career and financial goals. Most people buy insurance to replace income that would be lost at the death of a wage earner. Proceeds from a life insurance policy also can help ensure your dependents are not burdened with significant debt when you die.

An important advantage of insurance is that the proceeds pass income tax free to beneficiaries and without going through probate. Most people think of life insurance only as a legacy something left behind after they die. If diagnosed as terminally ill, the insured may request payment of the insurance policies face amount instead of the death benefit being paid to a beneficiary. Portability Under most group policies employees can take their life insurance protection with them when they leave the company or retire and take advantage of group rates and the convenience of direct billing. Cash accumulation some insurance policies have a cash value account or investment component that lets you contribute premium in addition to the amount you pay for your insurance coverage.

Here are answers to other common questions about insurance. How much insurance you need depends on your financial situation and your specific circumstances at this point in your life. Our insurance needs calculator will help you estimate how much insurance you may need to sufficiently provide for the well-being of your loved ones. Everyone’s situation is unique and only you can determine the exact amount of life insurance you need.
Why insurance is so important for us?

On this post I’ll try to make a simple explanation about the importance of life insurance. Everyone surely die now, with health insurance, we can manage the risk of death leaves us with the things of value and benefit to families who leave when we die. With health insurance, we have to give stock to my family when we die, where the insurance company will pay the amount of money insurance money to my heirs, in this case is our family and that money can be used to pay for school children’s etc. That is the most common example of the benefits of life insurance. If expanded, the product according to each insurance company, there are many more benefits from life insurance. After we know a basic knowledge about the importance and the benefits of life insurance, then the second step is to act and find one of the best insurance companies that we can trust. Finding the best insurance companies and the right policy for our insurance plan can be hard if we didn’t know much about the terms in insurance plan.

In most families the major bread winner will have a term insurance policy as it can be very damaging to families when the main means of financial support is cut off. It is always difficult to determine if you should carry term or permanent life insurance.

Term life insurance really only offers death benefits such as funeral costs etc, so if you die then it is worth having the policy. Term insurance is the more affordable way to have death benefits. Currently term life insurance is the simplest form of insurance you can purchase. You can purchase large amounts of this insurance for a long time at very low prices. If you need to pay off a loan and may have difficulties if a family member dies or if you want to protect your children then term life insurance is an excellent insurance choice. The main benefit from term insurance is that you receive large payouts after a short time period. Having term insurance coverage is great if you are carrying debt as it can cover the debt instead of leaving your debt to your nearest relative.

It ensures that your family will not suffer the consequences of living without your earnings. You want to be sure that your family won’t have to uproot their lives and change their living standards in the event their income level is affected by your premature or unexpected death. And you can continue driving through the highway of life, without having to suffer the anxiety of wondering what will happen to those who depend on your earnings.

Avoid These Six Common Life Insurance Mistakes

Life insurance is one of the most important components of any individual’s financial plan. However there is lot of misunderstanding about life insurance, mainly due to the way life insurance products have been sold over the years in India. We have discussed some common mistakes insurance buyers should avoid when buying insurance policies.

1. Underestimating insurance requirement: Many life insurance buyers choose their insurance covers or sum assured, based on the plans their agents want to sell and how much premium they can afford. This a wrong approach. Your insurance requirement is a function of your financial situation, and has nothing do with what products are available. Many insurance buyers use thumb rules like 10 times annual income for cover. Some financial advisers say that a cover of 10 times your annual income is adequate because it gives your family 10 years worth of income, when you are gone. But this is not always correct. Suppose, you have 20 year mortgage or home loan. How will your family pay the EMIs after 10 years, when most of the loan is still outstanding? Suppose you have very young children. Your family will run out of income, when your children need it the most, e.g. for their higher education. Insurance buyers need to consider several factors in deciding how much insurance cover is adequate for them.

· Repayment of the entire outstanding debt (e.g. home loan, car loan etc.) of the policy holder

· After debt repayment, the cover or sum assured should have surplus funds to generate enough monthly income to cover all the living expenses of the dependents of the policy holder, factoring in inflation

· After debt repayment and generating monthly income, the sum assured should also be adequate to meet future obligations of the policy holder, like children’s education, marriage etc.

2. Choosing the cheapest policy: Many insurance buyers like to buy policies that are cheaper. This is another serious mistake. A cheap policy is no good, if the insurance company for some reason or another cannot fulfil the claim in the event of an untimely death. Even if the insurer fulfils the claim, if it takes a very long time to fulfil the claim it is certainly not a desirable situation for family of the insured to be in. You should look at metrics like Claims Settlement Ratio and Duration wise settlement of death claims of different life insurance companies, to select an insurer, that will honour its obligation in fulfilling your claim in a timely manner, should such an unfortunate situation arise. Data on these metrics for all the insurance companies in India is available in the IRDA annual report (on the IRDA website). You should also check claim settlement reviews online and only then choose a company that has a good track record of settling claims.

3. Treating life insurance as an investment and buying the wrong plan: The common misconception about life insurance is that, it is also as a good investment or retirement planning solution. This misconception is largely due to some insurance agents who like to sell expensive policies to earn high commissions. If you compare returns from life insurance to other investment options, it simply does not make sense as an investment. If you are a young investor with a long time horizon, equity is the best wealth creation instrument. Over a 20 year time horizon, investment in equity funds through SIP will result in a corpus that is at least three or four times the maturity amount of life insurance plan with a 20 year term, with the same investment. Life insurance should always been seen as protection for your family, in the event of an untimely death. Investment should be a completely separate consideration. Even though insurance companies sell Unit Linked Insurance Plans (ULIPs) as attractive investment products, for your own evaluation you should separate the insurance component and investment component and pay careful attention to what portion of your premium actually gets allocated to investments. In the early years of a ULIP policy, only a small amount goes to buying units.

A good financial planner will always advise you to buy term insurance plan. A term plan is the purest form of insurance and is a straightforward protection policy. The premium of term insurance plans is much less than other types of insurance plans, and it leaves the policy holders with a much larger investible surplus that they can invest in investment products like mutual funds that give much higher returns in the long term, compared to endowment or money back plans. If you are a term insurance policy holder, under some specific situations, you may opt for other types of insurance (e.g. ULIP, endowment or money back plans), in addition to your term policy, for your specific financial needs.

4. Buying insurance for the purpose of tax planning: For many years agents have inveigled their clients into buying insurance plans to save tax under Section 80C of the Income Tax Act. Investors should realize that insurance is probably the worst tax saving investment. Return from insurance plans is in the range of 5 – 6%, whereas Public Provident Fund, another 80C investment, gives close to 9% risk free and tax free returns. Equity Linked Saving Schemes, another 80C investment, gives much higher tax free returns over the long term. Further, returns from insurance plans may not be entirely tax free. If the premiums exceed 20% of sum assured, then to that extent the maturity proceeds are taxable. As discussed earlier, the most important thing to note about life insurance is that objective is to provide life cover, not to generate the best investment return.

5. Surrendering life insurance policy or withdrawing from it before maturity: This is a serious mistake and compromises the financial security of your family in the event of an unfortunate incident. Life Insurance should not be touched until the unfortunate death of the insured occurs. Some policy holders surrender their policy to meet an urgent financial need, with the hope of buying a new policy when their financial situation improves. Such policy holders need to remember two things. First, mortality is not in anyone’s control. That is why we buy life insurance in the first place. Second, life insurance gets very expensive as the insurance buyer gets older. Your financial plan should provide for contingency funds to meet any unexpected urgent expense or provide liquidity for a period of time in the event of a financial distress.

6. Insurance is a one-time exercise: I am reminded of an old motorcycle advertisement on television, which had the punch line, “Fill it, shut it, forget it”. Some insurance buyers have the same philosophy towards life insurance. Once they buy adequate cover in a good life insurance plan from a reputed company, they assume that their life insurance needs are taken care of forever. This is a mistake. Financial situation of insurance buyers change with time. Compare your current income with your income ten years back. Hasn’t your income grown several times? Your lifestyle would also have improved significantly. If you bought a life insurance plan ten years ago based on your income back then, the sum assured will not be enough to meet your family’s current lifestyle and needs, in the unfortunate event of your untimely death. Therefore you should buy an additional term plan to cover that risk. Life Insurance needs have to be re-evaluated at a regular frequency and any additional sum assured if required, should be bought.

Conclusion

Investors should avoid these common mistakes when buying insurance policies. Life insurance is one of the most important components of any individual’s financial plan. Therefore, thoughtful consideration must be devoted to life insurance. Insurance buyers should exercise prudence against questionable selling practised in the life insurance industry. It is always beneficial to engage a financial planner who looks at your entire portfolio of investments and insurance on a holistic basis, so that you can take the best decision with regards to both life insurance and investments.

How Does a Whole Life Insurance Policy Work?

How exactly does a whole life insurance policy work? Whole life policies are popular with some select groups of people but they are a little bit more complex than their plain vanilla easy to understand term life insurance counterparts.

The business of insurance has to be one of the most underrated services offered in the United States nowadays. Not many people think having life insurance is important and because of this we see that the industry is not as successful as the auto and homeowners insurance business. It is important to know however, that death comes at any age; and if a person wants to protect their family or other people after their death it is imperative for them to purchase a life insurance policy.

There are two basic types of life insurance in the United States that work in completely different ways and because of this have different premiums. One of these types of insurances is one that is called a temporary policy. This policy covers a policyholder for about 5 to 30 years and their premiums are most of the time stagnant. On the other hand we have the permanent policy in which members are covered for life as long as they pay all their premiums. Part of your premium will go toward a little saving portion of the policy that will accumulate over time and the other portion of the premium goes towards the insurance cost of the death benefit.

Whole life insurance is one of the three types of insurance polices that you can obtain if you want a permanent life insurance policy. This means that whole life will cover you for life and that your cash value (saving portion) will get higher as time goes by. However, whole life is different in that your cash value is tax deferred until the beneficiary withdraws it and you can also borrow against it.

A person should consider whole life insurance when the need for coverage is lifelong. Whole life may be used as part of your estate planning because it accrues money after a person pays the premiums, as mentioned before. Because premiums for this type of policy are much higher than those of temporary policies, a person must know that this is what they want after all. Whole life is a good choice if you want to make sure that your family or dependents have a good life after your death, and that the transition from the death of a person close to their lives is a close one.

Within the whole life realm, there are six different kinds that a person can choose from.

1. Non-Participating Whole Life Insurance: This type of whole life policy has a leveled premium and a face amount through the entire policyholder’s life. Since the policy has fixed costs the premiums will not be necessary high, but it will no pay you any dividends after the policyholder dies.

2. Participating Whole Life Insurance: This type is much different from the first type mentioned. One of its differences is that this one does pay dividends and because of this premiums can be said to be a little bit more expensive. These dividends can be used to reduce your premium payments because they can be paid in cash, they can be left to accumulate at a specified rate of interest or they can be used to purchase additional insurance which in turn will increase the value in cash that a beneficiary will receive after a policyholder’s death.

3. Level Premium Whole Life Insurance: This kind of insurance is one that has the same premiums with no significant drop or rise in the money paid monthly through the entire life of the policy. At first the premiums will be enough to cover the services given and a little portion of it can be put away to cover the premiums that will come in later years when the cost of insurance in the market rises. The insurer can also pay extra premiums that will go toward the cash value part of the policy one the policyholder dies.

4. Limited Payment Whole Life Insurance: This is the type of policy that will allow you to only pay premiums over a specified period of time. This means that if you only want to pay premiums for about twenty to thirty years or up until age 65 or 85; this is the type of policy that you want. Because premium payments are going to be paid over a specified period of time, your premium payments will be significantly higher, but after you get done with them you will be covered for life.

5. Single Premium Whole Life Insurance: This type of policy is one that is very common for people that select the whole life insurance type. This is a limited policy with a single relatively large premium due at issue. Due to the fact that the owner of the policy will pay the single premium payments when the policy is first signed, the life insurance policy will immediately have cash and loan value! This type of whole term life insurance is mostly an investment oriented type than some of the others.

6. Indeterminate Premium Whole Life Insurance: This is the easiest type of whole life policy to understand and also one of the most common ones in the life market. With this insurance the company will give you a premium based on how the company is doing economically and on expense costs. This means that while one year the premiums can be slightly lower than expected, in the next the company can charge more if they are not doing up to expectations. It is also good to note that there is a maximum guaranteed premium when you first sign your policy and that the life insurance company can never charge above the premium stated

While the cost of whole life coverage is substantially higher than a term life policy with the same death benefit it is important to keep in mind that the reason for the difference in price is that the death benefit for the whole life policy will almost certainly be paid out – after all everyone dies sometime! With the term policy of course the insurance company is counting on not paying the death benefit out on over 90% of the policies it issues.

The issue of life insurance should not be taken lightly if one has a family or dependents. While some people in the United States are fed up paying all the different kinds of insurances and they figure that they don’t need to pay extra for life insurance when they are young, it is important to understand that life insurance can be a life saver after a family member, husband or parent dies.

Whole life insurance covers you for life and it will allow a beneficiary to continue life only having to cope with the issue of death and not having to worry about the economic hits that come with it. Life insurance policies are a must for anyone that has someone that relies on them for support and it’s time for all responsible Americans to realize that.

Ignoring A Life Insurance Cover Could Be Fatal – Check Why

Many of us feel that investing in a life insurance cover is a big burden. This info is especially for them. Statistics suggest that one in four breadwinners in the UK does not have a life insurance. This is an alarming ratio as the families would be left to live a financially unstable life in the event of the breadwinner’s death. That means almost one fourth of British families live under the risk of facing an economic crisis. As a solution, the support from NHS or other government schemes could be taken. However, all government support may not be enough for the education of kids, rentals, medication for critical illness or other basic facilities.

Find here some of the myths associated with buying a life insurance policy:

Life insurance is for the man!

A survey suggests that 45% of British men and 38% women are insured for a life cover. Again, both the percentages are quite low. Moreover, its general psyche that women who do not earn do not feel the pressing need of an insurance. It was observed by Cancer Research that more than 130 women die every day due to breast cancer. With such an increasing number of women health issues, women should not keep themselves without a life insurance cover. Again 1 in 3 people is likely to suffer from critical illness. This way, life insurance cover is vital for both men and women. Ignoring a life insurance cover could prove fatal as your family would be left with many financial burdens.

Contents insurance is enough!

Contents insurance is enough! This is another misconception. While we get our car, house, laptops and other accessories insured, we tend take for granted the most important part of the family i.e. its members. Losing a family member especially if one was a breadwinner may result in a sudden financial crux. Your loved ones may need to manage for money required for the daily needs. Thus, even if you have contents insurance it is always important and urgent to buy yourself a life insurance cover. You never know the future but can certainly prepare yourself for the worse.

Mortgage cover would do!

Mortgage is a common thing in the UK. People who have a mortgage should also go for a life cover so that in case of their accidental death, the insurer would pay the remaining mortgage amount. The facts do not point to any such awareness in the Brits. According to statistics, nearly 50% of people have a mortgage with no associated life cover. All these facts and figures bring out the importance of life insurance. Be it an existing mortgage, a critical illness or death, a life cover helps the beneficiaries to manage the economic situation easily and comfortably. The lump sum amount received from insurer helps in paying for the funeral cost, mortgage, debts or other family expenses.

Reasons for a life insurance cover:

  • To support you in case of a critical illness
  • To support the family in the event of the breadwinner’s death
  • To manage funeral and other expenses
  • For financial support to the family in the future
  • For paying educational expenses of the kids
  • For mortgage payments

Who needs life insurance cover?

  • Anybody who has dependents
  • Married people
  • Newly married couples
  • Parents with a new born child
  • Every family that plans for the future
  • A retiree with a dependent partner
  • If you have a mortgage

Types of life insurance covers:

There are different types of life insurance policies in the UK. Depending on the age, health and occupation, the life covers are categorised into the following types:

Term insurance: This cover gives your life assurance for a pre-decided and specified interval of time. If the policyholder dies within this time frame then the beneficiaries would get a lump sum amount. Otherwise, the policy will lapse.

Group life cover: It is provided as part of a complete employee benefit package. This cover is for people who die while they are working with the employer. It is not required that the death should have happened during the work hours or in the office premises.

Critical illness cover: This life insurance cover is bought if one has a particular medical condition. If you die due to any other disease or ailment then the policy would lapse.

Over-50 plans: Specially designed for people who have crossed the 50 year mark, this cover pays money that can be used for various financial needs of the beneficiaries. As the policy is taken after 50, one can expect higher premiums.

Whole of life plan: Offers you cover for entire life. It is the best cover to meet your debts or can be left to a loved one when you die.

Reasons why people do not buy life insurance cover:

Lack of awareness: If you think that a certain illness or cancer cannot happen to you then you are living in an illusion. With an increasing risk of sickness and critical ailments, one cannot afford to think that ‘this won’t happen to me’. This is lack of awareness and such a biased optimism may turn out to be fatal. A life cover works well for everyone and is much needed by healthy individuals with dependents.

Too expensive: The premiums would feel nothing when compared with the cost of your life and the amount of damage your death can cause to your family. A small monthly investment as premium would give lump sum amount in case of the policyholder’s death. The return on investment is much higher as far as life cover is concerned. So, there is no point thinking that it is costly.

Government support is enough: Many of us think that NHS and other government schemes would be enough to facilitate the dependents. Well, please check with the friends and family of people who have lost a loved one and who are living on the Government’s support. You will quickly realise that this help is not enough for all the financial expenses of the family. If your partner is suffering from critical illness then the NHS service may not be enough and so, a personal insurance is a must.

Better save than insure: Few of us have a mind-set of savings. In their opinion a decent amount of saving can replace a life insurance cover. Savings may not be the best idea as it takes a longer time to accumulate a big chunk of money. For life insurance covers, we may need to pay monthly or yearly premiums but the total amount received in return is much higher than the premiums paid. This way, insurance gives much more return of investment than savings.

Considering the pros and cons, a life insurance cover seems much more reliable than any other way of ensuring the wellbeing of the dependents and loved ones. If you have not insured yourself yet then it is high time to get yourself insured so that your demise may not prove fatal for the family. Therefore, do not ignore buying a life insurance cover as it would be the best help to the family in the event of your permanent absence. Isn’t it?

Smart Tips For Finding Roofers

A Guide to Choosing the Ideal Commercial Roofing Services

In a commercial building is undoubtedly an essential part of the building and also signifies a colossal financial investment made. Hence, as a property owner, it is paramount that you maintain the roof to ensure that your portfolio is sound. Bearing in mind that roof leaks can compromise the integrity of your property as well as the interior building structures. It is essential that you hire the right commercial roofing services. Bearing in mind that there are thousands of commercial roofers in the industry, it is hard figuring out what exactly one should be keen on to ensure that you are getting quality commercial roofing services. Keep reading the following the post as we have highlighted some crucial elements that you ought to take into account when selecting commercial roofing services in Orlando.

When it comes to picking commercial roofing services, experience matters a lot. New commercial roofing contractors may have some skills that can offer decent work, but the risk factor is significant, and you are safer when partnering with a seasoned commercial roofer. A season roofer will have worked on many projects over the years, and know how they should be done, what techniques to use as well as the likely results. That leaves the commercial roofer with practical expertise and knowledge that ensures your installation or repair project is handled appropriately, and you gain quality results. On top of that an experienced commercial roofing firm will have close attention to details ensuring that you get a well-made roofing free from leakages or seepages.

Secondly, it is critical that you check the licensure and certification of the commercial roofer you are hiring. The roofer must produce proof that they are credentialed to operate in your state and that their paperwork is valid. Furthermore, it is critical that the commercial roofing firm shows you proof of having insurance documents which comprise of a worker’s compensation coverage and liability insurance. With that, you are freed from any liability in case property is destroyed or injuries are sustained.

Before you partner with a roofing firm that has contractors skilled in commercial roofing works you have. Prior to hiring them, it is necessary that the firm shows proof of hiring contractors that have gone through training and will do the work rather than subcontracting it to various firms. They should offer you a portfolio which you can use to evaluate their aptitude.

Last but not least, you will want to inspect the material and supplies used by the commercial roofing firm and ensures that they are of top-quality and the required standards. Quality materials ensure you have top-notch results and a durable roof. it is necessary to ask for a warranty for the work done and materials used.

Life Insurance: Back to Basics

Life Insurance: A Slice of History

The modern insurance contracts that we have today such as life insurance, originated from the practice of merchants in the 14th century. It has also been acknowledged that different strains of security arrangements have already been in place since time immemorial and somehow, they are akin to insurance contracts in its embryonic form.

The phenomenal growth of life insurance from almost nothing a hundred years ago to its present gigantic proportion is not of the outstanding marvels of present-day business life. Essentially, life insurance became one of the felt necessities of human kind due to the unrelenting demand for economic security, the growing need for social stability, and the clamor for protection against the hazards of cruel-crippling calamities and sudden economic shocks. Insurance is no longer a rich man’s monopoly. Gone are the days when only the social elite are afforded its protection because in this modern era, insurance contracts are riddled with the assured hopes of many families of modest means. It is woven, as it were, into the very nook and cranny of national economy. It touches upon the holiest and most sacred ties in the life of man. The love of parents. The love of wives. The love of children. And even the love of business.

Life Insurance as Financial Protection

A life insurance policy pays out an agreed amount generally referred to as the sum assured under certain circumstances. The sum assured in a life insurance policy is intended to answer for your financial needs as well as your dependents in the event of your death or disability. Hence, life insurance offers financial coverage or protection against these risks.

Life Insurance: General Concepts

Insurance is a risk-spreading device. Basically, the insurer or the insurance company pools the premiums paid by all of its clients. Theoretically speaking, the pool of premiums answers for the losses of each insured.

Life insurance is a contract whereby one party insures a person against loss by the death of another. An insurance on life is a contract by which the insurer (the insurance company) for a stipulated sum, engages to pay a certain amount of money if another dies within the time limited by the policy. The payment of the insurance money hinges upon the loss of life and in its broader sense, life insurance includes accident insurance, since life is insured under either contract.

Therefore, the life insurance policy contract is between the policy holder (the assured) and the life insurance company (the insurer). In return for this protection or coverage, the policy holder pays a premium for an agreed period of time, dependent upon the type of policy purchased.

In the same vein, it is important to note that life insurance is a valued policy. This means that it is not a contract of indemnity. The interest of the person insured in hi or another person’s life is generally not susceptible of an exact pecuniary measurement. You simply cannot put a price tag on a person’s life. Thus, the measure of indemnity is whatever is fixed in the policy. However, the interest of a person insured becomes susceptible of exact pecuniary measurement if it is a case involving a creditor who insures the life of a debtor. In this particular scenario, the interest of the insured creditor is measurable because it is based on the value of the indebtedness.

Common Life Insurance Policies

Generally, life insurance policies are often marketed to cater to retirement planning, savings and investment purposes apart from the ones mentioned above. For instance, an annuity can very well provide an income during your retirement years.

Whole life and endowment participating policies or investment linked plans (ILPs) in life insurance policies bundle together a savings and investment aspect along with insurance protection. Hence, for the same amount of insurance coverage, the premiums will cost you more than purchasing a pure insurance product like term insurance.

The upside of these bundled products is that they tend to build up cash over time and they are eventually paid out once the policy matures. Thus, if your death benefit is coupled with cash values, the latter is paid out once the insured dies. With term insurance however, no cash value build up can be had.

The common practice in most countries is the marketing of bundled products as savings products. This is one unique facet of modern insurance practice whereby part of the premiums paid by the assured is invested to build up cash values. The drawback of this practice though is the premiums invested become subjected to investment risks and unlike savings deposits, the guaranteed cash value may be less than the total amount of premiums paid.

Essentially, as a future policy holder, you need to have a thorough assessment of your needs and goals. It is only after this step where you can carefully choose the life insurance product that best suits your needs and goals. If your target is to protect your family’s future, ensure that the product you have chosen meets your protection needs first.

Real World Application

It is imperative to make the most out of your money. Splitting your life insurance on multiple policies can save you more money. If you die while your kids are 3 & 5, you will need a lot more life insurance protection than if your kids are 35 & 40. Let’s say your kids are 3 & 5 now and if you die, they will need at least $2,000,000 to live, to go to college, etc. Instead of getting $2,000,000 in permanent life insurance, which will be outrageously expensive, just go for term life insurance: $100,000 for permanent life insurance, $1,000,000 for a 10-year term insurance, $500,000 for a 20-year term insurance, and $400,000 of 30 years term. Now this is very practical as it covers all that’s necessary. If you die and the kids are 13 & 15 or younger, they will get $2M; if the age is between 13-23, they get $1M; if between 23-33, they get $500,000; if after that, they still get $100,000 for final expenses and funeral costs. This is perfect for insurance needs that changes over time because as the children grow, your financial responsibility also lessens. As the 10, 20, and 30 years term expires, payment of premiums also expires thus you can choose to use that money to invest in stocks and take risks with it.

In a world run by the dictates of money, everyone wants financial freedom. Who doesn’t? But we all NEED financial SECURITY. Most people lose sight of this important facet of financial literacy. They invest everything and risk everything to make more and yet they end up losing most of it, if not all- this is a fatal formula. The best approach is to take a portion of your money and invest in financial security and then take the rest of it and invest in financial freedom.

Ultimately, your financial plan is constantly evolving because you are constantly evolving. You can’t set a plan and then forget it. You need to keep an open eye on your money to make sure it is working hard because that money needs to feed you for the next 20-30+ years that you will be in retirement. You have to know how to feed your money now so that it can feed you later.

Life Insurance – Learn From an Old Agent

Life Insurance is an insurance product that pays at the death of the insured. It really should be called “Death Insurance,” but people don’t like that name. But it insures the death of an individual. Actually, what is insured is the economic loss that would occur at the death of the person insured.

Those economic losses take a lot of different forms, such as:

– the income stream of either “breadwinner” in a family
– the loss of services to the family of a stay-at-home-mom
– the final expenses at the death of a child
– final expenses of an individual after an illness and medical treatment
– “Keyman” coverage, which insures the owner or valuable employee of a business against the economic loss the business would suffer at their death
– estate planning insurance, where a person is insured to pay estate taxes at death
– “Buy and Sell Agreements,” in which life insurance is purchased to fund a business transaction at the untimely death of parties in the transaction
– Accidental death insurance, in which a person buys a policy that pays in case they die due to an accident
– Mortgage life insurance, in which the borrower buys a policy that pays off the mortgage at death – and many more.

Life insurance has been around for hundreds of years, and in some cases, has become a much better product. The insurance companies have been able to develop mortality tables, which are studies of statistical patterns of human death over time…usually over a lifetime of 100 years. These mortality tables are surprisingly accurate, and allow the insurance companies to closely predict how many people of any given age will die each year. From these tables and other information, the insurance companies derive the cost of the insurance policy.

The cost is customarily expressed in an annual cost per thousand of coverage. For example, if you wanted to buy $10,000 of coverage, and the cost per thousand was $10.00, your annual premium would be $100.00.

Modern medicine and better nutrition has increased the life expectancy of most people. Increased life expectancy has facilitated a sharp decrease in life insurance premiums. In many cases, the cost of insurance is only pennies per thousand.

There is really only one type of life insurance, and that is Term Insurance. That means that a person is insured for a certain period of time, or a term. All of the other life insurance products have term insurance as their main ingredient. There is no other ingredient they can use. However, the insurance companies have invented many, many other life products that tend to obscure the reasons for life insurance. They also vastly enrich the insurance companies.

Term Insurance

The most basic life insurance is an annual renewable term policy. Each year, the premium is a little higher as a person ages. The insurance companies designed a level premium policy, which stopped the annual premium increases for policyholders. The insurers basically added up all the premiums from age 0 to age 100 and then divided by 100. That means that in the early years of the policy, the policyholder pays in more money that it takes to fund the pure insurance cost, and then in later years the premium is less than the pure insurance cost.

The same level term product can be designed for terms of any length, like 5, 10, 20, 25 or 30 year terms. The method of premium averaging is much the same in each case.

But this new product caused some problems. Insurers know that the vast majority of policyholders do not keep a policy for life. Consequently the level term policyholders were paying future premiums and then cancelling their policies. The insurance companies were delighted because they got to keep the money. But over time, they developed the concept of Cash Value.

Cash Value Insurance

With Cash Value insurance, a portion of the unused premium you spend is credited to an account tied to your policy. The money is not yours…it belongs entirely to the insurance company. If you cancel your policy and request a refund, they will refund that money to you. Otherwise, you have other choices:

1. Use the cash value to buy more insurance
2. Use the cash value to pay existing premiums
3. You may borrow the money at interest
4. If you die, the insurance company keeps the cash value and only pays the face amount of the insurance policy.

So, does this cash value product make sense? My response is “NO!”

Cash Value Life Insurance comes in lots of other names, such as:

– Whole Life
– Universal Life
– Variable Life
– Interest Sensitive Life
– Non-Participating Life (no dividends)
– Participating Life (pays dividends)

Many life insurance agents and companies tout their products as an investment product. But cash value insurance is not an investment. Investment dollars and insurance premiums should never be combined into one product. And investment dollars should NEVER be invested with an insurance company. They are middle men. They will take your investment and invest it themselves, and keep the difference.

Think about the methods that agents use to sell life insurance, and compare them to any other type of insurance. What you’ll see is that life insurance sales tactics and techniques are ridiculous when compared to other insurance products.

Would you ever consider buying a car insurance policy, or homeowners policy, or business insurance policy in which you paid extra premium that the insurance company kept, or made you borrow from them? But, curiously, life insurance agents have been wildly successful convincing otherwise intelligent people that cash value life insurance is a good product to buy.

Care to guess why insurance agents have aggressively sold cash value insurance and eschewed term insurance?

Commissions.

The insurance companies have become vastly wealthy on cash value insurance. So, to encourage sales, they pay huge commissions. Term insurance commissions can range from 10% to 50%, sometimes even 100%. But cash value insurance commissions can be up to 100% of the first year’s premium, and handsome renewal commissions for years after.

But it’s not just the commission rate that matters. It’s also the premium rates that come into play. Term insurance is FAR CHEAPER than cash value insurance.

Here’s an example of a 30 year old male, non-smoker, buying $100,000 of coverage:

Term insurance costs $0.50 per thousand for a premium of $50.00. At 100% commission, the commission would be $50.00.

Cash Value insurance costs $12.50 per thousand for a premium of $1,250.00. At 100% commission, the commission would be $1,250.00.

So you see that it would be easy for an agent to place his own financial well-being ahead of the well-being of his client. He would have to sell 25 term policies to make the same commission as only one cash value policy.

But, in my opinion, that agent would have violated his fiduciary duty to the client, which is the duty to place the client’s needs above his own. The agent would also have to set aside his conscience.

My opinion is that life insurance agents operate from one of three positions:

1. Ignorance – they simply don’t know how cash value insurance works.
2. Greed – they know exactly how cash value insurance works and sell it anyway.
3. Knowledge and Duty – they sell term insurance.

Which agent do you want to do business with?

How do I know this stuff? Because I sold cash value life insurance early in my career.

When I started as an insurance agent in 1973 I knew absolutely nothing about how life insurance worked. The insurance company taught me to sell whole life insurance, and to discourage clients from term insurance. But, after some time of reading and research, I learned that cash value insurance is a bad deal. I began to sell only term insurance. I refused to set aside my conscience. I also went back to some early clients and switched their policies from cash value to term.

The insurance company fired me for that decision.

I found a new insurance company that only sold term insurance and also paid high commissions. I made a good living selling term insurance, so I know it can be done.

So, as you shop for life insurance, please accept the advice of an old agent. Never, never, ever buy cash value life insurance. Buy term insurance.

Quick Approval Life Insurance – Life Insurance Criteria For Being Approved Quickly

What are some of the life insurance criteria for being approved quickly? Many people are interested in finding a quick approval life insurance policy as they do not want to go through a long and drawn out medical underwriting process. Enforcements and the criteria for people to be approved quickly into life insurance policies within life insurance industry are simply made by the companies so that they don’t lose money when it comes to claims.

For life insurance companies there is a risk associated with insuring someone because you are basically either going to have to end up paying the death benefit of the person that is deceased, or you will gain money by their paying of premiums; however, it’s important to understand that there are applicants that have it easier when it comes to life insurance policies, and that the life insurance criteria for being approved quickly varies according to many factors and is not the same from company to company.

Age Is Perhaps One of the Most Important Criteria to be Approved Quickly For A Life Insurance Policy

Although not all the companies are the same, one of the most important things about life insurance is to try and get the policy while you are still young. Just like the health insurance industry, the life insurance industry understands that the risk of dying increases as your age increases. It is because of this reason that premiums for younger people are less than those of older individuals, and it is also because of this that many life insurance companies are starting to use medical examinations as one of the most important factors in being approved.

An example of this would be a person trying to get a term life insurance policy in an insurance company that has offices all across the United States. If the person is younger or of middle age, endless possibilities will arise because they will be able to purchase term life insurance (temporary life insurance that only covers you for a specific amount of time) or a permanent life insurance policy (a type of policy that covers you for life) because the insurance company knows that the chances of you dying young are very slim (unless you have a critical illness that is). It is for this reason that many senior citizens have trouble qualifying for life insurance and they must go apply in companies that specialize in senior citizen products.

It is important to highlight that just because a person is old it does not mean that they won’t be approved easily for life insurance. If you are a senior citizen of 50 years of age or older and you are in perfect health conditions with no risk of any serious illnesses, the life insurance company might even propose a term life insurance policy, a whole life insurance policy or any other type of policy; but it all depends on how good your health is.

The Credit Report and It’s Role For a Person to Be Approved Quickly

Another way or criteria for which a person can be approved very quickly when applying to life insurance is credit reports. Many people argue about this measure because they don’t think its fair that their credit report is now taking the place of any paperwork and it is becoming more and more important in all aspects of life. The reason credit report can get you accepted very quickly is simply your commitment to the company.

What this simply means is that if you have a better credit report it will be more credible when you tell your company that you will be paying premiums every month at the exact same date and the entire amount without a penny less. On the other hand, if you have a bad credit some companies might not even take the risk of insuring you because they don’t want to insure an individual that is true to his or her word. As you can see credit report has not become a major thing when it comes to life insurance companies.

Your Lifestyle Can Help You Get Approved Quickly

Last but not least in order to get approved quickly you should be a person that does not take many risks in life. This means that your job is not a high risk one and that you do not have any hobbies that threaten your life. If you want to see an example of what this means let us compare a firefighter with a lawyer. A firefighter will more than likely be faced with life threatening conditions every single time they go into a fire. They have to run into a house consumed by flames to prevent other houses from burning or to save a life. On the other hand you have a lawyer that spends most of his or her day sitting behind a desk wondering about how to win the case. All they do that can cause harm their lives other than health related conditions involve driving to and from work, and to the courthouse. Unfortunately for a firefighter it will be a little bit more difficult for a company to insured them because they know the risk associated with their job. The same thing applies to hobbies.

Who do you think will have an easier time applying and getting accepted for a life insurance policy? A person that enjoys sailing, sky diving and kayaking in wild rivers or a person that enjoys going out on the beach, spending time with the family and maybe on occasion playing chess? The answer is the person that has the hobbies with the least degree of danger. Life insurance is a business and like any other industry, its companies are concerned with making money and not losing money.

Compare Life Insurance Quotes Because Of Differences In Underwriting

As you can see the criteria for being accepted when you apply for a life insurance policy is not that hard. You must always try to apply when you are younger not mattering if you want a term or permanent life insurance policy (always remember that the younger and healthier you are, the less your premiums will be). You must also have an OK credit report that should be good when checked by the life insurance company. This helps because they can see that they are insuring a person that is making a commitment and will try to pay premiums on time.

You will also have to show the life insurance company that the risk of insuring you is not that great and show them that your hobbies are nothing to be worried about. If you follow all these steps a life insurance company will never deny you and they will be happy insuring you. The criteria for an easy acceptance in the life insurance world is not that hard; go and get the policy that you have always dreamed of!

How to View Life Insurance As An Investment Tool

A lot of people have been approached about using life insurance as an investment tool. Do you believe that life insurance is an asset or a liability? I will discuss life insurance which I think is one of the best ways to protect your family. Do you buy term insurance or permanent insurance is the main question that people should consider?

Many people choose term insurance because it is the cheapest and provides the most coverage for a stated period of time such as 5, 10, 15, 20 or 30 years. People are living longer so term insurance may not always be the best investment for everyone. If a person selects the 30 year term option they have the longest period of coverage but that would not be the best for a person in their 20’s because if a 25 year old selects the 30 year term policy then at age 55 the term would end. When the person who is 55 years old and is still in great health but still needs life insurance the cost of insurance for a 55 year old can get extremely expensive. Do you buy term and invest the difference? If you are a disciplined investor this could work for you but is it the best way to pass assets to your heirs tax free? If a person dies during the 30 year term period then the beneficiaries would get the face amount tax free. If your investments other than life insurance are passed to beneficiaries, in most cases, the investments will not pass tax free to the beneficiaries. Term insurance is considered temporary insurance and can be beneficial when a person is starting out life. Many term policies have a conversion to a permanent policy if the insured feels the need in the near future,

The next type of policy is whole life insurance. As the policy states it is good for your whole life usually until age 100. This type of policy is being phased out of many life insurance companies. The whole life insurance policy is called permanent life insurance because as long as the premiums are paid the insured will have life insurance until age 100. These policies are the highest priced life insurance policies but they have a guaranteed cash values. When the whole life policy accumulates over time it builds cash value that can be borrowed by the owner. The whole life policy can have substantial cash value after a period of 15 to 20 years and many investors have taken notice of this. After a period of time, (20 years usually), the life whole insurance policy can become paid up which means you now have insurance and don’t have to pay anymore and the cash value continues to build. This is a unique part of the whole life policy that other types of insurance cannot be designed to perform. Life insurance should not be sold because of the cash value accumulation but in periods of extreme monetary needs you don’t need to borrow from a third party because you can borrow from your life insurance policy in case of an emergency.

In the late 80’s and 90’s insurance companies sold products called universal life insurance policies which were supposed to provide life insurance for your whole life. The reality is that these types of insurance policies were poorly designed and many lapsed because as interest rates lowered the policies didn’t perform well and clients were forced to send additional premiums or the policy lapsed. The universal life policies were a hybrid of term insurance and whole life insurance policies. Some of those policies were tied to the stock market and were called variable universal life insurance policies. My thoughts are variable policies should only be purchased by investors who have a high risk tolerance. When the stock market goes down the policy owner can lose big and be forced to send in additional premiums to cover the losses or your policy would lapse or terminate.

The design of the universal life policy has had a major change for the better in the current years. Universal life policies are permanent policy which range in ages as high as age 120. Many life insurance providers now sell mainly term and universal life policies. Universal life policies now have a target premium which has a guarantee as long as the premiums are paid the policy will not lapse. The newest form of universal life insurance is the indexed universal life policy which has performance tied to the S&P Index, Russell Index and the Dow Jones. In a down market you usually have no gain but you have no losses to the policy either. If the market is up you can have a gain but it is limited. If the index market takes a 30% loss then you have what we call the floor which is 0 which means you have no loss but there is no gain. Some insurers will still give as much as 3% gain added to you policy even in a down market. If the market goes up 30% then you can share in the gain but you are capped so you may only get 6% of the gain and this will depend on the cap rate and the participation rate. The cap rate helps the insurer because they are taking a risk that if the market goes down the insured will not suffer and if the market goes up the insured can share in a percentage of the gains. Indexed universal life policies also have cash values which can be borrowed. The best way to look at the difference in cash values is to have your insurance agent show you illustrations so you can see what fits you investment profile. The index universal life policy has a design which is beneficial to the consumer and the insurer and can be a viable tool in your total investments.

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