How Much Would You Rate Your Life?
In my opinion, people who have decided to purchase life insurance are a step closer to getting the guarantee that their loved-ones will be financially secured in the future.
It is true that nobody wants to really give his own death a thought, but you can’t deny that each of us will come to this point. So why not plan for it as well?
Wouldn’t it be a relief for us to know that we will still be taking care our families and loved-ones even after our passing?
Whole Or Term Life Insurance?
After you decide to buy insurance, evaluate and select whether term life insurance or whole life insurance will suit the your budget, needs and requirements.
Forced Savings
Whole life insurance is expensive: You’re paying not only for insurance but also for the investment portion.
That extra cost might almost be worth it if these policies were a good investment vehicle. But usually they aren’t.
Insurance agents like to call these policies retirement plans, emphasizing the “forced savings” inherent in forking over the premiums each month “for retirement.”
Leaving aside the fact that there are many better ways to save for retirement, these policies come with high fees and commissions, which sometimes lop off as much as three percentage points from the annual return.
On top of that, there are up-front (but hidden) commissions that are typically 100% of your first year’s premium.
Worse, it’s often impossible to tell what the return on the investment will be, and how much of what you pay in goes toward the insurance and how much toward the investment.
Premiums for term insurance are downright cheap for people in good health up to about age 50. After that age, premiums start to get progressively more expensive.
The same holds true for whole life policies, though people who need coverage starting in their 60s and beyond may have no alternative but to buy whole life. Most companies simply won’t sell term policies to people over about age 65.
Term Life Insurance: Where the Value Is
To get a real sense of the value of term, let’s compare a term policy and a universal life policy.
For example, say a 40-year-old nonsmoking male has a choice between a $250,000 Met Life universal policy with a $3,000 annual premium and a same amount of renewable term coverage with a 20-year fixed premium of $350.
Universal policy: At the end of one year, the universal policy, assuming it paid 5.7% per year, tax-deferred, would have a cash value of exactly zero (cash value is the amount you would get back if you canceled the policy).
Term policy: But say he had instead invested $2,650 (the difference between $3,000 and $350) in a no-load mutual fund that averaged a total return of 10% annually.
At the end of the first year, he’d have $2,841, accounting for taxes on the earnings at a 28% rate.
At the end of 10 years, he would have accumulated more than $46,000 in after-tax savings in the mutual fund.
Over the same period, the cash value of the policy would have climbed only to $31,819.
Wealthy people can use whole life in their estate planning by setting up an insurance trust that will pay their estate taxes from the proceeds of the policy. And for the growing number of people in their late 40s or early 50s who are just starting families, whole life is at least worth a look.
As a consumer looking for an effective insurance policy, you should be aware of the different insurance quotes insurance companies offer so that you may be able to choose the best that will suit your budgets and needs.
Compare policies and rates that are offered by a wide and diverse range of insurance companies across the country. Make it a habit to choose from a shortlist of the best available insurance quotes and features for life insurance.
Once we find the best company that offers whole life insurance quotes that fit our needs, all we have to do is sign up for the insurance policy and pay the insurance premium each year.
Here’s How To Get Life Insurance Quotes At A Click Of A Mouse
I’ve been saying this all along: It’s a buyer’s market out there.
Take advantage of the new interest rates and take advantage of the internet.
At a click of a mouse, you can get enough life insurance quotes to make an informed buying decision in the comfort of your home.
So come take a look at our Term Life Insurance Quotes and get started on the right foot to the lowest cost life insurance.
More Power To Us All,
Erwin Chua Consumer Advocate Life Insurance Quotes For Consumersloading...
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