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1/5/2009
Monday morning
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Topics taken from open source list. I hope you find this useful.
This site is for our clients only as an information resource.
| With the many products out there, picking one can prove to be quite
confusing. There are, however, really only two basic types of life
insurance--term and whole life (also called cash value), each having its
advantages and disadvantages. For most people, term life is the best
option though the ultimate choice will depend upon your health, age, income
level, and special needs. But, since most insurance agents tend to push
whole life or cash value insurance because of the fatter commissions they
get from it, a greater number of people tend to take whole life thereby
shortchanging themselves by paying too much and ending up with little death
benefits for the same amount of premium compared to term insurance. |
| Advantages.
* Much less expensive than whole life, e.g., term life may be as much as
ten times less expensive than whole life for the same amount of coverage. *
Lower premium costs provides you the opportunity to save through
investments outside of the policy. * Separate life insurance policy from
your investment programs affords you more flexibility to change either your
protection or investment program without affecting the other. * Greater
control over your choice of investments. * Can retain full access to your
alternative savings and investment products outside of your policy |
| There are four varieties of term life: Annual Renewable Term (ART), Level
Term (LT), Modified Level Term (MLT), and Decreasing Term (DT). The
differences between them are in the way the premiums and death benefits are
structured. |
| Disadvantages
* Much more expensive than term life. You have a much smaller death
benefit for the same amount of coverage.
* Even though you may borrow your cash value, it is really
disadvantageous to do so because your policy loans will result in
interest charges and may reduce your death protection unless you repay the
loan. * The investments in your policy may realize a rate of return far
below investments made separately from a life insurance policy. |
| Should it include the baby, the high school student, the college student,
the young couple just starting out, the couple with a growing family, or
the older couple whose kids have all moved out? Everyone should have life
insurance because some expenses will be incurred in the passing away of
anyone, even a baby, such as funeral expenses. For everyone to have life
insurance, however, is an ideal situation. On a more practical basis, you
should have life insurance if you are a breadwinner of your family in order
to protect your d ones from financial difficulties arising from loss of
income that will result from your premature death. |
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