Posts Tagged ‘whole life insurance’

Choosing your whole life insurance cover

Wednesday, August 18th, 2010

You are considering buying a whole life insurance policy. The agent prepares and prints out an illustration. It is 10 pages long with rows of columns and terminology you have no idea about. What should you focus on? Let’s take a look.

A whole life insurance policy is a staple of the industry. It is a policy that carries not only a death benefit, but allows you to build up savings within it that are invested to grow tax free in different ways. The policy is more expensive than a term life policy, but comes with the tax free growth advantage that is not available with the term version.

The first thing to look at with these policies is the premiums. A policy is only helpful to you as long as it is in force. If the premiums push the bounds of what you can realistically afford, you are probably going to end up dropping the policy. That more or less defeats the purpose of buying it in the first place!

The second thing to consider is the cash value column. This is projection of how money will grow in the policy as you pay premiums per the dictated schedule. Importantly, this is just a projection and you should treat it as such. I personally tend to view it as a marketing tool in that the numbers tend to entice one to buy the policy with great expectations.

To know what the insurance company really thinks about the growth potential, you’ll need to focus on the guaranteed cash value. This is exactly what it says. The life insurance company will guarantee this growth, which you should then treat as the bottom line value of the policy. Hopefully you will do better, but at least you know this is where the bottom line can be found.

The final column to focus on is the surrender fees. This is an arbitrary fee that the insurance company charges for termination of the policy or, more importantly, the withdrawal of money from the cash value. You want to make sure this fee isn’t going to eat too much of your cash value.

Whole life insurance policy illustrations can be intimidating. Don’t let them be. Focus on these four issues and you should do fine.

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Comparing Whole life and Term life insurance

Wednesday, July 14th, 2010

A whole life insurance clarification should be desired reading for anybody going to get life insurance. Whole life, in my opinion, has lately received a nasty reputation. Folks seem to buy term life insurance as it’s less expensive. Although I believe that a good term insurance can deal with the insurance wants of most individuals, a first-rate whole life insurance coverage is worthwhile having a look at.

The death benefit of a whole life insurance coverage is guaranteed to remain level with the period of the policy. If you consider it, that means a lifetime. That sort of promise cannot be taken lightly. The premiums of your whole life insurance plan is also assured never to rise. This is moreover a very necessary characteristic. The coverage won’t ever be cancelled by the insurance company.

Once you evaluate the whole life insurance rates you have got, probably the most affordable shouldn’t be at all times the very best one to decide on. They are often somewhat reasonable on account of the payment of premiums stretches out over an prolonged interval of time. When you are comparing the online life insurance quotes you get, you should not simply think about the amount of the month-to-month premium but the length of time that you must pay the rates for.

As the majority of whole life insurance policies are participating policies, you gain dividends on your policy. Every year the life insurance firm declares a dividend, some of which goes to policy house owners who possess a whole life plan. You may take your dividend in cash, the company can ship you a check each year, you’ll leave the dividend to build up interest, or else you can select to buy paid up additions alongside together with your dividends. Paid up additions are single premium policies of the identical kind, that is whole life insurance.

With a purpose to see just how much of a death benefit you might like through whole life insurance, you must sit back and consider how much cash your family would need to survive after you will be gone. You have to have a look at the truth that the bills nevertheless should be paid and your salary will no longer be around. The amount of the death benefit is among the facets that does affect the value of the whole life insurance estimates you collect. Different factors comprise your age, occupation and physical condition.

For a whole life coverage, you’ll be able to put in an accidental death benefit rider which says that for those who might pass on in an accident the insurance firm can pay your benefit to the value of two times the quantity of life insurance you made an application for.

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Life Insurance Plans – Learning the difference

Monday, July 5th, 2010

Today, almost everybody owns a Life Insurance policy. It could be for various reasons like investment purposes or for tax benefits, but the key point is that it provides complete peace of mind. With life insurance plans, one does not have to worry about their family’s future security in their absence. Life insurance plans provide financial security to the surviving family members after the death of the insured.

Life insurance is a must for anybody who has financial dependents. The age bracket to buy a life insurance plan is approximately from 18 – 75 years of age. Most of the banks have a minimum and a maximum amount of money to be assured.

Types of Life Insurance Plans

Broadly, the two main types of life insurance policies are term life insurance and whole life insurance. Term Life Insurance Plans are the most basic and simplest plans. These plans provide a cover for risks only for a short period of time. After the term comes to an end, you can renew the plan but chances are that the premiums will rise. Term life insurance plans are economical.

On the other hand, Whole Life Insurance Plans are expensive but these policies continue for as long as the insured lives. Whole life insurance plans are sometimes treated as investment options because one does not receive any money till the death of the insured.

Other insurance plans include unit link life insurance plans that offer great investment options along with financial security. Usually, one has to pay two separate premiums – one for the life insurance and one for investment. These plans are beneficial as they provide financial solutions during your lifetime as well as after your lifetime to your family members.

There are retirement life insurance plans available for senior citizens too. Life insurance policies are extremely important for such people as these plans offer security and freedom to the surviving spouse.

Child plans are another choice in life insurance plans. These policies provide financial aid for your child’s education, marriage, etc. Another option in life insurance plans are the health insurance policies. Health insurance policies provide a cover for medical expenses. These plans are suitable for people who suffer from health problems like diabetes, cancer, etc.

Riders in Life Insurance

Riders are the additional benefits that one can add to their life insurance policies. However, the premium amount increases with the inclusion of these riders. There are several types of riders in life insurance plans offered by banks. The most popular of all are:

Critical Illness Benefit Rider: It offers financial aid in case the insured gets diagnosed with critical diseases like cancer, heart attacks, kidney failure, etc.
Accidental Death and Disability Benefit Rider: In case the insured becomes disabled following an accident, this rider covers this risk.

Tax Benefits

Tax benefits as per the Income Tax Act, 1961 offer a deduction in the premium amounts, investments, dividends, etc. However, these benefits are subject to amendment regularly.

Life Insurance Plans protect the needs and requirements of your loved ones in case of unfortunate events. It helps keep your family safe and secure even when you are not around.

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