1. Life Insurance is not needed if you are young, single and no one depends on you for financial or income support. Also, if you have enough money for burial and funeral expenses, you don’t need any life insurance policy.
Given the extraordinary growth of the U.S. life settlement industry over the last decade, it is not surprising to find increased attention to and scrutiny of life settlements by academicians, the media and legal enforcement authorities including, among others, state and federal securities regulatory and self-regulatory organizations. The securities laws regulators argue that investments in all forms of life settlement transactions involve the sale of securities and that the full spectrum of security laws applies; for the most part they may be right.
In general, there are two basic (and quite different) categories of life insurance: temporary and permanent.
Temporary life insurance, also known as term life, is a no-frills way of insuring yourself for a specific period of time—for example, one, five, or ten years. When the temporary life insurance can be automatically renewed every year at increasing rates, it is called annual renewable term (ART) insurance; when the premiums are constant for a longer term, it is referred to as level premium term insurance. In the latter case, as I explained earlier, your monthly premiums are guaranteed for the term of the insurance, and the insurance coverage ends at the end of the term.
There are two approaches to determining how much life insurance a person requires. The first approach—the income approach—looks at how much money you can expect to earn over the course of your working life; this is your human capital, which can be viewed as an asset that you possess as a result of your natural and acquired skills and abilities. Then, you subtract taxes (since the death benefit is not taxable), subtract the expenses you would have incurred had you been alive, and set that as the amount of insurance you require.
The insurance prices you pay actually depend on something we have not stressed before: your health status. For example, a 50-year-old male who is in exceptional health would pay only $23.85 per month for a 20-year policy whose death benefit is $100,000. In contrast, a 50-year-old male in only average health would have to pay $38.69 for the same contractual terms. As you can see, the 62% markup is quite a substantial incentive to prove you are in exceptional health (if you are) when purchasing life insurance. (more…)
Life insurance is the mirror image of pension annuities and is the subject and focus of this chapter. The word “life” insurance is a misnomer, since this type of insurance pays off only upon death. But then “death insurance” is a much tougher sell even for marketing specialists.
One of the most basic ways to plan for the future well being of your loved ones is to invest in an affordable life insurance policy. While most of us plan on living into ripe old age, reality is that not all of us will make it to our golden years. With that in mind, we want to make sure those closest to us are able to financially carry on should we suddenly no longer be with them.
According to a study by LIMRA International, 44 percent of the US household population either don’t have life insurance and believe they should, or they own a life insurance polcy and belive that they need more. Also, 3/4 of the american household don’t have any financial advisor or life insurance agent.
LIFE ( Life and Health Insurance Foundation for Education) has created a website - http://www.life-line.org/. The website provides basic information and helps consumer find the best coverage without any pressure to buy.
It’s very common for people to insure their laptops, new television set but many give very little attention to themselves. According to a survey, 1 in 4 families are at risk of losing their home if the main breadwinner died. One of the main reasons for that is many are forgetting to take out insurance to pay for the mortgage. Most people don’t like the fact that their family having to sell the property if they had died. Around 69% of the people have life insurnace that will cover the mortgage if they died while around 92% of have content insurance only. It is very important for one to realize that life insurance can soften the financial burden during tough times.
“Every year you bring in an income that allows your family to survive financially. By not protecting this income with life insurance, you are putting your family at a great risk. Do you have enough in savings and retirement that your family could financially survive? More than likely, you don’t. You need to have enough life insurance so that if you were to die prematurely, your family would still be receiving a portion, if not all, of your income for many years to come. “
Benefits of a Term Life Policy
1. It’s straightforward. If you die during the term of your policy your beneficiaries get paid-that’s all there is to it.
2. It’s inexpensive. You aren’t paying anything extra to fund a savings account or cover investment fees.
3. You pay only for what you need when you need it. You typically need life insurance coverage for a specific period of time (until the kids are out of college, for instance).
Benefits of a Permanent Life Insurance Policy
1. Flexibility. A permanent plan can give you access to some or all of the premiums that you have been paying for at some future point.
2. It’s with you until you die. This type of policy coverage is guaranteed for your life with no out of the blue payment increases. A term policy will expire at a certain date, and a renewed policy could have much higher premiums.
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