April 30th, 2010

General Information About Whole Life Insurance

Would your death leave your spouse or family with financial problems? You could consider purchasing life insurance coverage that will pay out a certain amount in the event of your death to help cover their needs. Here is some general information about whole life insurance.

A Whole Life Insurance Description:

This is a life insurance policy that can cover you for your entire life and not just for a specific period such as term life insurance. Your death benefit and premium will generally remain the same.

A whole life policy also builds cash value. This is a return on the portion of your premiums that the insurance company invests. Your cash value is tax-deferred until you withdraw it. You may also borrow against it.

Who Needs Whole Life Insurance?

If you are in need of life insurance the tax benefits and cash value of a whole life policy can be a bonus. A whole life policy will earn you tax-deferred interest near the market rate and will pay your beneficiaries a death benefit.

You may also consider purchasing a whole life policy if you require more tax-deferred savings than you have available. You can also get the life coverage you need if you can afford to pay the higher premiums.

Cash Value in a Whole Life Policy.

The cash value is what you could get if you cashed in your policy. If you decide to surrender your policy, your cash surrender value can be paid in paid-up insurance or cash.

The earnings on the cash value of a whole life insurance policy can be borrowed against the policy in the form of a policy loan. The death benefit is reduced by the amount of the loan if the loan is not repaid.

Cashing Out A Whole Life Insurance Policy.

Cashing out a whole life insurance policy may be difficult owing to the surrender charge. The surrender charge is a charge which insurers remove out of the cash savings amount you have developed. This charge can be as high as 10% of the payoff value of the life insurance policy. It may stay in force for up to 20 years after you purchased the policy.

Borrowing Against Whole Life Insurance.

You may borrow against the guaranteed cash value of a whole life insurance policy in the form of a policy loan as long as the policy is valid. Just remember that borrowed amounts diminish the death benefit and cash surrender value of your policy.

The Best Whole Life Insurance Benefit.

There may be many different opinions regarding the best whole life insurance benefit. This can also be influenced by personal needs and circumstances.

The following are three possible whole life insurance benefits:

Premiums are normally level and payable for life.

A quantity of the money you pay into your whole life policy collect as a guaranteed cash value.

A part of your life insurance premium may be returned to you as a dividend if real life insurance costs turn out to be less than was believed in setting the premiums.

April 29th, 2010

The Best Whole Life Insurance

Whole life insurance may be a good choice if you have extended future goals. Whole life generally offers level premiums and the accumulation of cash values. The guaranteed cash values may also provide you with money in the future to help with temporary needs.

Do you need life insurance coverage?

You may consider purchasing life insurance:

* If you become a parent.
* If your family does not have a lot of money saved.
* If you are a stay-at-home parent.
* To cover the mortgage or other large shared financial commitments.

The different types of whole life insurance policies you may choose from.

To help you choose the best whole life insurance, you may first need to know more about the different types of whole life policies you can choose from.

Level Premium Whole Life Insurance:

This whole life policy features premium payments that are:

* level.
* are required to be paid as long as the insured is alive.

In the early years the premium is more than enough to pay the current cost of insurance security. The surplus makes up the insufficiency of premiums in later years when the annual premium is not sufficient to pay the yearly cost of insurance. These extra premiums are held and invested by the insurer. This creates the cash value of the policy.

Indeterminate Premium Whole Life Insurance:

This type of whole life policy is similar to an ordinary whole life policy save for it providing adjustable premiums. The company will charge a premium based on its current estimate of expenditure, investment income and mortality. The company will adjust the premium in view of these estimates changing in later years. It will never be adjusted above the maximum guaranteed premium declared in the policy contract.

Single Premium Whole Life Insurance:

Single premium whole life is a limited payment whole life insurance policy with one quite large premium payment payable at issue. The policy is fully paid up and no further premiums are necessary. Owing to the single premium payment the policy will have an immediate cash and loan value. This could be considerable depending on the sum of the single premium payment.

Limited Payment Whole Life Insurance:

This whole life policy gives you life insurance protection but involves only a limited number of premium payments. The premium payments will be higher than with an ordinary whole life policy since the premiums are paid over a shorter timespan. Limited payment plans can provide for the payment of premiums for a set number of years such as 20 payment whole life insurance.

Participating Whole Life Insurance:

This whole life policy pays dividends corresponding to:

* the positive experience of the company.
* results from surplus investment earnings.
* favorable mortality.

The dividends may be:

* paid in cash.
* used to decrease your premium expenses.
* left to build up at a particular rate of interest.
* used to buy paid-up supplementary insurance.

Non-Participating Whole Life Insurance:

A non-participating whole life policy has a level premium and a fixed insured amount during your entire life. However, this policy does not pay out any dividends.

Contact Joshua Cumrine Financial for more information about the best whole life insurance for your personal life insurance needs.

April 27th, 2010

Why You Should Roll a 401(k) Over to a Self Directed IRA

 

While 401(k) plans have some good points, they also have a down side compared to a self directed IRA. It is suggested that anyone who wants to rollover an old 401(k) change over to a self directed IRA. There are many reasons for this and this article will help explain why it is better to roll over the 401(k) to a self directed IRA. One of the biggest reasons for changing the 401(k) over to an IRA, in the first place, is to allow for greater variety in investment choices. If changing over to a traditional IRA, a big part of the benefit is lost, as traditional types of IRA still have many limits on the type of assets you can invest in. The person rolling their 401(k) over should choose a self directed IRA, as it allows for full control of your money.

 

All IRAs are better than a 401(k) because 401(k)s are bound to your employer and their investment company. This means the company sets things up for the greatest benefit for itself and not for the greatest benefit of the person who holds the account. A self directed IRA is the best way to go as this type of account has a custodian that guides you through all the pitfalls and the rules, but does not control what happens in the account. When the account holder is not bound by other interests, there is no limit to the investments that can benefit the account holder. In conclusion, a self directed IRA is simply the best choice for rolling over a 401(k).

April 27th, 2010

Advantages of Whole and Term Life Insurance

As is obvious from the name, whole life insurance is a permanent life insurance covering the whole life of the policy holder with timely premium payments, as long as the policy holder is alive. Whole life insurance is apt for those who plan on long term goals.

Though term life insurance has gained popularity due to various reasons, whole life insurance cannot be set aside entirely as it has a lot of advantages to its credit. Primarily whole life insurance guarantees the death benefits that never decrease and nonfederal income taxes are charged upon death and lasts an entire lifetime which is a good advantage.

Premiums are generally a little higher than term life insurance and as the age progresses, the annual premium tends to lessen. As against term life insurance which has no cash value, whole life insurance has some money stored as cash value. If the policy is terminated, accumulated guaranteed cash would be paid. It is also feasible to take loans against the whole life insurance policy. The guaranteed cash values can be used for emergencies and temporary needs. The cash value increases as the premiums are paid.

When a policy holder has a participation in whole life insurance, he or she is eligible for earning dividends which would be paid in cash. This cash can be either used to keep within the policy to generate interest or used to minimize the premiums. All the cash that are accumulated or borrowed are on a tax free basis except when it is withdrawn.

Whole life insurance policies can never be struck off by the insurance company. As the whole life insurance policy gets older, the surrender value becomes more or less the amount that has been paid and thus, the cash value along with the dividend far exceeds the premiums that have been paid.

The dividend from a whole life insurance can also be used to purchase paid up additions that are small, fully paid up whole life policies.

Whole life insurance is not only a tool to protect the dependents after the demise of the policy holder; it is also a way of saving for the future and has an emotional attachment to it. Hence, sufficient thought and time have to be spared to get the best quote and option available and decide accordingly, to ensure a secure future and a comfortable present life.

April 26th, 2010

Which One Rules? Term Life Insurance Vs Whole Life Insurance

What do you think is a better insurance? As per my point of view, these are two different policies serving different purposes. Term life and Whole life both have their own strong and weak points. So the question of comparison does not even arise. If you are living in India then this is most useful to choose right life insurance plan.

Referring history, all insurance was term insurance covering life only. But with time consumers started complaining about the benefits one should receive after paying the premium over 20-30 years. They felt it was injustice. Henceforth, life insurance started giving the option of cash value.

Let us discuss the main features of Term Life Insurance and Whole Life Insurance as described below.

Term Life Insurance:

It covers life only.

Premiums are paid only for the term period

The premiums are cheaper

Beneficiary is eligible to benefits only in case of death.

If the policy holder lives after the maturity term, there are no benefits.

It covers life only, has no additional benefits to it.

Whole Life Insurance:

It takes care of both life and investment.

Premiums are paid life long.

The premiums are expensive.

Beneficiary is eligible to benefits in case of death.

If the policy holder lives after maturity period, the policy holder receives both the maturity value plus cash value as applicable.

It has dual purpose, covers life and offers added benefits like cash value.

Which one is better according to you choosing?

From the above we can make out that both these policies are different and do not serve the same purpose. Term life insurance benefits people who generally have good health and follow healthy living. They can save on the large premium to be paid out and go for other better investment instruments. Whereas Whole life insurance benefits people who are already suffering from certain kind of disease and cover is necessary. It generally works for people who are wealthy enough to carry on paying huge premiums life long.

The combination of both term life insurance and whole life insurance is the best portfolio of life insurance one can possess.

But first and foremost, it is necessary to understand why you are purchasing life insurance. You will be more content when you figure out why you wish to buy the policy. Analyze your needs and its importance. Figure out what needs to be covered and who should receive the benefits, etc. Once you make a decision, start shopping for quotes from various sources like the local representatives, brokers and sites having online comparing tool. Compare the quotes received, the coverage level, other added values, offers, etc. they are offering. Choose the policy that fits your requirement in the best way at the most competitive price available.

April 25th, 2010

Types Of Life Insurance

Life Insurance is a form of life risk management or life cover that helps guard against the risk of a contingent loss of individual’s life. In general terms Insurance can be defined as the equitable transfer of the risk of a loss of Life and critical illness cover, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss.

Having a life insurance policy makes the insurance company agree to pay a sum of money upon the occurrence of the insured individual’s death or other event, such as terminal illness or critical illness. Every life insurance policy matures when the insured individual dies or reaches a specified age like 100 years.

Life insurance may be divided into two basic categories – temporary life insurance and permanent life insurance which may be further broken into subclasses as term, universal, whole life and endowment life insurance.

Temporary life insurance:
This type of life insurance provides for life insurance coverage for a specified term of years where the premium buys protection in the event of death and nothing else. A policy holder insures his life for a specified term only. If he dies before that specified term is up, his estate or beneficiary receives a payout. If he does not die before the term is up, he receives nothing.

Permanent life insurance:
The type of life insurance in which the policy remains active until it matures unless the owner fails to pay the premium when due is called permanent life insurance.

This type of life insurance is further divided into four main types:

Whole life coverage: The whole life coverage ensures guaranteed death benefits, guaranteed cash values, fixed and known annual premiums, and mortality and expense charges that will not reduce the cash value shown in the policy in any way.

Universal life coverage: Universal life coverage provides permanent insurance coverage with greater flexibility and ease in premium payment and the potential for a higher internal rate of return.

Limited-pay: In such an insurance policy the premium pay periods commonly include 10-year, 20-year, and paid-up at age 65. All premiums are paid over a specified period after which no additional premiums are due to keep the policy in active.

Endowments: Endowment Insurance is paid out after a specific period in either the conditions whether the insured lives or dies, In this policy, the policy cash value equals the equals the death benefit at certain age. In terms of annul premium, endowments are considered as expensive as compared to the other types of life insurance as the premium paying period is shortened.

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