Term Life Insurance or Whole of Life Insurance Policy?
When buying life insurance its vital you get the right policy for your needs. With a plethora of web sites offering discount life insurance, it’s often easy to end up with a policy that is not suited to your unique needs and circumstances.
Many people need clarification regarding the various types of life insurance, and which is best for them.
Term Life Insurance:
Term life policies cover you a predefined term.
Term life insurance only offers protection for the duration of the mortgage, and is normally of no value when your mortgage is paid off.
Term insurance is also cheap, and can even become cheaper over time. There are also a number of different types of term life insurance to choose from as follows:
* The first type is known as level term insurance, and it is a very popular policy. Here, the premium costs are locked in for the entire term of the policy. This means you pay the same amount every month/year for the term of the policy.
* The next form of term life insurance is escalating term cover. This policy can be more expensive, as you pay an increasing amount each year. However, the lump sum payable at death also increases. These are normally low cost policies, and are best suited to younger people.
* Next, we have decreasing term insurance, and in this type of policy monthly payments stay the same, although the amount of cover reduces each year.
* The forth type of term life cover is increasing term insurance, where the pay out on death increases. However, to make up for this increase it will be necessary to increase the premiums from time to time, in line with changing circumstances.
* The fifth and final type of term life insurance is known as convertible term insurance. This type of term life policy provides a way for you to convert your policy into an investment/insurance policy in the future. With this type of policy the price of your future investment policy is based on your health when you bought the cheaper term insurance.
Whole of Life Insurance & it’s Advantages:
A whole of life policy can be more complicated and more expensive than term life insurance. However, a whole of life insurance policy covers you up until the time of your death, providing that you keep paying your premiums!. The advantage of these types of policy is that your family could receive a considerable lump sum when you die.
The amount generally increases in value over the years. Also, the contributions you make to your policy normally earn interest each year. When this happens, your premiums may reduce over time, to the point where you no longer have any more premiums to pay.
However, it’s important to understand that the final cash-in-value of a whole of life policy may or may not equal the amount of money that has been paid into the policy over it’s full term.
Summary:
Buying a term life policy, or whole of life insurance is an important decision and one that needs to be made carefully. Before you take the plunge, you need to examine your needs, and exactly what you wish to achieve.
The simplest form of life insurance is a level term policy with renewable option. This allows you to buy life cover for as long as you may require it.
On the other hand, a whole of life policy might suit you better if you need a policy that grows in value over the years.
Both types of policy have advantages and disadvantages, and that’s why it’s always a good idea to get advice from a competent insurance adviser.
Michael Pettigrew writes articles for insurance website Best Insurance Quotes, who provide quality cheap life insurance cover. Visit Best Insurance Quotes for great life insurance cover
Read More...What Does It Mean To Buy Term, Invest The Difference
You have probably heard of the saying “Buy term, invest the difference” when getting insurance and putting your money in investments. But do we really comprehend what it actually means? What could be the reason why majority of financial planners strongly recommend that you should “buy term and invest the difference” ? On the other hand why is your insurance agent forcing you to buy his or her recommended product?
Most financial planners would tell us to stay away from whole life insurance products as they are considered rip offs. These kinds of products are not so popular anymore in the United States. In order to fully understand “whole life” versus “term” they are differentiated as follows: Term insurance refers to life coverage only while “whole life” refers to term policy with an investment scheme. Insurance agents usually present whole life insurance as something that will help you save for your retirement. Forcing you to save is probably something that is good for you, however the bad thing about this is that the returns for the investment in whole life insurance is very low. It is a pity that these type of products are still sold in the Philippines. Sadly, people still buy them because of inadequacy of financial knowledge.
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.
The total money that my sister will be receiving under the insurance scheme is around P3,520,000.00. This is derived from the P 40,000.00 she will receive per month until she reaches 65. Add to this the P 400,000.00 she will receive lump sum during that age. We should also take into consideration that she is insured for P2,000,000.00 hence giving us total benefits of around P 3,520,000.00
On the other hand, if we follow the buy term invest the difference scheme, if her insurance company will allow her, she will convert what she has already paid into “term insurance” which usually runs for only 20 years and then invest the P 200,000.00. If she will invest the P 200,000.00 at a vehicle of investment that gives about 10 % return per annum and also re-invest the returns of the investment taking full advantage of compounded interest at age 65 she will get a whooping P 17,639,497.05.
Now do you see the difference? What is P 1,500,000.00 vs. P 17,000,000.00+. Even if you add the insurance coverage that is only a mere P 3,500,000.00, it still cannot compare to the P 17,000,000.00.
But what if her investments will incur losses ? That is no problem at all. She can just buy term insurance and renew it every time it expires anyway, term insurance is very cheap and affordable.
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.
Buy term invest the difference? It certainly does make sense!!!
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
Read More...Franklin TN Real Estate: Your Info On TN Investments
Looking for a home or real estate investment in Tennessee, Franklin TN real estate may be what you are looking for. Whether it is in the heartland of country music or Franklin Tennessee neighbourhood, you can find some good if not great deals of real estate property. All you need to do is find them.
But that is easier said than done. If you think you are about to buy your dream house or an experience investor, Franklin TN real estate is worth to look into.
Before you dive into the real estate market, you need to do your homework to find and get the best deal or buy for your money. There are steps you need to do to improve your chances of getting the best buy for your buck.
First is to find where you can honestly get your down payment for your mortgage. Is it from mom and dad? Or is it from your 401K or RRSP? Or is it from your stock investments? Get it on hand so that you can honestly say you have the money. Secondly, get your financing in order so that you know exactly how much mortgage you will be approve of. Get your pre-approved loan from your trusted bank or lender this way you have the confidence to shop around for houses.
Then, take your time and do not rush to judgement. Scour the Franklin TN Real Estate market and find that dream home. Once you have chosen a property, do a competitive market analysis of other properties recently sold. This way you can make a sound and well informed decision on your offer to purchase. Check out too what is going on with the foreclosures bank owned in your area as this may bring you an excellent deal.
One thing you should always bear in mind when buying a property, is leave yourself the option to get a second opinion.
Try putting a clause in your offer that gives you the option to get a home inspection and cancel if the outcome is unsatisfactory to you. A home inspection can save you a great deal hassles if something turns wrong.
Closing for home buyers needs a lot of attention. Closing Escrow or Settlement is the process of transferring the ownership title of the property from the seller to buyer. While the settlement issues are arranged or taken cared by the real estate agent, the buyer and the seller are ultimately responsible for attending to these details.
Getting financing is the buyers responsibility. It is also the buyer who is responsible for buying the home insurance or simply called hazard insurance. This is to protect the lender and the receipt should be brought to the settlement. The buyer should expect and estimate of the closing cost.
Closing costs including the loan commitment letter, mortgage interest, first payment due, escrow for property taxes and insurance and other taxes and recording fees must be ready and brought to settlement.
Foreclosures bank owned can be 30 to 50 percent less than the market value. So do not forget to check out the foreclosures bank owned. You might be able to land the deal of a lifetime.
Whether you are in Knoxville Tennessee, Clarksville Tennessee, Memphis Tennessee, Jackson Tennessee, or Johnson Tennessee, Franklin TN Real Estate properties are an excellent buy or investment.
