Mark Carolin

Archive for the ‘Insurance’ Category

Life is unpredictable. Unexpected events that strike without warning can disrupt the smooth rhythm of life. You must be prepared at all times. As the primary earning member, you will do anything for the ones you love and ensure that nothing is lacking even if you are taken away from them forever. Do your best today to ensure that your family can always enjoy a comfortable lifestyle.

Life Insurance:-

Thinking about why you need life insurance can be an emotional and stressful task. However, life insurance is one of the most responsible decisions you can make to help ensure that your spouse, children or other loved ones can continue to enjoy the quality of the life they deserve.

Life insurance is nothing but its a way to replace the loss of income that occurs when someone dies. It ensures that your family will receive financial support in your absence. Put simply, life insurance provides your family with a sum of money if something happens to you. It protects your family from financial crises & provides some financial peace of mind.

In addition to serving as a protective cover, life insurance acts as a flexible money-saving scheme, which empowers you to accumulate wealth-to buy a new car, get your children married and even retire comfortably.

With a life insurance policy in place, you can:

Provide security to your family Protect your home mortgage, loans, credit card borrowings etc. Provide finance to your loved ones to achieve their goals in your absence Ensure that your family is able to maintain their lifestyle, no matter what happens Take care of your estate planning needs Look at other retirement saving/investment vehicles

Health Insurance:-

Although health insurance can not prevent a serious injury or illness, it can help you maintain financial stability. A serious injury, disability or critical illness can impact a person’s emotional well-being and financial security. And while it can be difficult to think about these things, you will make a smart decision by planning for the unexpected now.

Health insurance policies insure you against several illnesses and guarantee you stay financially secure should you ever require treatment. They safeguard your peace of mind, eliminate all worries about treatment expenses, and allow you to focus your energy on more important things like recovery.

Health insurance is required when an individual is ill or requires medical checkups. It can prevent the patient from being expected to pay out of pocket expenses towards medical bills because they do not have any health insurance. Without health insurance, one may even not be able to afford expensive medical services when needed.

Benefits of having a Health Insurance:-

Helps protect your income – Disability Income Protection Insurance Provides a monthly benefit to help maintain financial stability while you recover from a disability. Long-Term Care Insurance Provides a daily benefit to help you offset the cost of care administered in a long-term care facility or at home. Critical Illness Insurance Provides a lump-sum payment to be used in case of contingency Hospital Cash Plan Provides a daily allowance to help you pay during your hospital stay.

Usually we buy life insurance to be sure that the future of our dependents is secured upon our death. This is main reason why we buy an insurance policy for life. Then, it really confuses us when an insurance agent tries to convince us to buy child life insurance. I mean your children have no dependants. You would appropriately wonder why they would need it. This article will help you broaden your thinking about insuring your child and appropriately make wise decisions. Information about it will make you conclude that it is really not about death alone. You will realize that so called “baby life insurance”, like other policies are about future preparation as well. Parents realize that a good policy serves to help protect their children from experiencing financial burden later in life.

I know of parents who refused to buy life insurance for their children because they just could not imagine that their child would die. However, if you carefully evaluate how you can go about it, you will realize that insuring your child’s life is a good thing. If you have gotten to that point, the best advice for you now is not to waste time. It is cheaper if bought when the child is still young. Remember, depending on the policy you opt for, your child will get the benefits of accumulated cash values or even borrow loans against it.

As a parent, if you choose child life insurance, you will be sure that your children are covered for any chronic illnesses that may befall them later in their lives. The agent will emphasize on this advantage when talking to you about it. In fact, most of the time he will stress that you should buy the policy because you love your child.

It is wise to consider other reasons too for buying life insurance for your child. Remember, since significant amount of money is involved, you must never be coerced. A good insurance agent will always provide facts so that you are able to make an informed choice.

The final decision is yours. Like the agent, I will also say that if you love your child, you will realize that buying a life insurance policy is important for him/her. Explore with him the type of policy your child will need and be quick in getting it before he/she ages. The rule is: the older the child, the more expensive is the policy.

Life insurance rates or life insurance premiums are fixed amounts, taking into consideration the average well being and life expectancy of the insured. This is the amount that goes forms the corpus fund through which payments are made in case of a loss. An additional amount is also incorporated in the premium if a double accident benefit or any extra rider is added to the policy. The rates also differ depending on the amount insured, the period of insurance the modes of payment and the type of policy.

Life insurance rates take into account risk factors, the age at the time purchase, the health of the insured and capacity to pay. Additionally, interest, administrative expenses, unexpected contingencies and fluctuations are also taken into account. Using actuarial science, tables are set out that give rates payable for different ages, periods and plans. As an example, if in a particular area with a population of 10,000 people of a specific age, one death might occur within a year, then the mortality rate of those people at that age would be 0.01%.

The risk premium charged is $0.10 for every $1,000. Depending on the health of the person there is an additional amount payable. In this way, rates are calculated and premium tables formatted. Another area that is taken into consideration is the lapse of a policy. A policy lapses when the premium due is not paid. Here the administrative costs would increase and added into the premium calculation factor.

Insurance rates also differ according to the mode of payment. The usual modes of payment are yearly, but premiums may be paid monthly, quarterly and half yearly. A rebate or incentive is given for the different modes — yearly premium amount are slightly less than two half yearly payments or four quarterly payments.

Universal Life Insurance

Universal is a variation of whole life insurance. It is a blend of term insurance and a savings account. It earns interest at a money market rate, the policy holder paying an annual fee for coverage, which includes a fee for managing the policy. Funds not used for paying the insurance earn a tax deferred interest.

With a universal life insurance policy, the premium can fluctuate. The policy holder decides how much to devote toward insurance and how much toward savings. The face amount of the policy can be changed as well as the amount of premium payments and how often they are paid. However, the insured must make certain their savings are large enough to cover the monthly premiums for the insurance as well as the policy expenses. If the savings are not sufficient enough, the monthly charges will consume the cash value and the policy will be of no value.

Universal insurance offers two options. The first option is keeping the death benefits the same from year to year if the policy holder does not request any changes. The second option is having the death benefit at any time stay equal to the original face value in addition to the policy’s cash worth.

This type of policy can often give an elevated interest rate when inflation rises, even if the insuring company guarantees a low rate. Because of this risk, premiums are lower for whole life insurance but pricier for term insurance for younger individuals. In addition, when the price for managing the policy is added to the premium, the policy holder will receive a lower return on their investment. It is crucial to keep in mind that changes in interest rates will affect both a policy holder’s yields and premiums.

Variable Life Insurance

Variable life insurance is a type of permanent life insurance that allows the holder to target their premium to one or more detached investment funds. These funds can be fixed income investments, stocks, bonds, or money market funds. Depending on the company policy, the holder can change their investments from two to five times annually. Unlike universal life insurance, with variable insurance the insured can manage the investment of their cash value.

The policy, however, can be risky because the investment has the ability to rise or fall. The cash value and investment will differ, depending on what the investment fund does. The death benefit cannot fall below the total amount of life insurance primarily purchased. As with traditional whole insurance, the policy holder pays fixed premiums and can borrow against the policy at either fixed or variable rates.

Because an individual decides where to invest their money and put themselves at risk, variable life insurance should be considered. Insurers must, by law, offer variable insurance by prospectus. A prospectus is a document that gives the prospective policy holder important facts concerning the company and the policy. Variable insurance can often cost more than other varieties of cash value life insurance. According to current laws the cash value of variable insurance, unlike term life insurance, cannot be taxed until the policy holder cashes in their policy.

Universal Variable Life Insurance

Universal variable insurance is also commonly referred to as flexible premium variable insurance. This kind of policy combines the flexible features found in universal life insurance policies and the investment alternatives of variable insurance. As with universal insurance, the policy holder can choose to raise or lower their premiums in a single policy. As with variable insurance, individuals have the right to decide how their cash worth will be invested.

The insurance company does not have to make any kind of guarantee on the policy holder’s cash value. With universal variable insurance, the value of the cash fund is in direct relation to the market worth of the assets in the cash worth fund. Therefore, a policy holder could have $15,000 in net cash worth one day and $10,000 on the following day, dependent on market fluctuation. Thus, one of the central problems with universal variable insurance is that the policy holder can lose their insurance coverage.

Adjustable Life Insurance

Adjustable insurance is another variety of permanent protection that allows the policy holder to change the amount of their premiums. They can also increase or decrease the face amount of the policy, or lessen the protection period. If the policy holder increases the death benefit, they must prove that they are still in fact insurable.

There are various types of life insurance polices available. The most familiar life insurance is the policy in which someone’s life is taken; the policy then pays the amount of the insured. Term insurance polices have a premium granted not to increase for a certain amount of years, roughly 10-20 years. Whole life policies are designed to be a permanent plan that a person could have their whole life. They build in cash value and in addition to the death benefit. The cash value policy can be borrowed against, and sometimes with drawn.

The disadvantages about the two insurance policies are the occurring differences that happen in peoples life’s as they get older. For example if a couple were to have a baby they might want to have a higher level of term insurance. When the child then grows up the amount could be reduced. Another example would be say for instance a couple wanted to down pay their mortgage they would need more coverage, but as the mortgage gets paid they might need smaller amounts of insurance. Insurance companies introduced flexible universal policies.

Flexible universal life polices of course vary by company. Normally they allow customers to adjust the amount of term coverage up or down with a certain time frame. After the first year the payment is available to be adjusted. For example a customer could have the option to skip a payment or pay less of the amount. For as long as they wanted, as long as the cash value in the account is high enough. The customer always has the option of paying into the account. If for any reason the policy is ever not needed anymore you can surrender the policy and get the cash value that has built up. Other options normally offer special riders and benefits.

Whole life insurance also known as “permanent” or “straight” life insurance is one of the most applied forms of insurance. This life insurance policy covers one’s entire life. This is much in demand because of its ability to provide financial protection and accrue cash value and pay dividends to the insured. In other terms, you can say it as an investment, that you make to secure your future build up finance that helps you in your indigence.

Taking a whole life insurance policy leads to a number of benefits and advantages. Few of them are listed below.

1. The first advantage is The Death Benefit.

The whole life insurance policy guarantees you the death benefit that never decreases. Moreover no federal income taxes are charged upon death. And if you desire, death benefit can be taken as a monthly income instead of a lump sum.

2. Consistency of premium level.

Unlike term life insurance’s premiums, which increase at the time of renewal, the premium you pay in whole life insurance remains consistent. There’s no increase. However, use of dividends can minimize the premiums that you pay and contracted for.

3. “Cash value” is another beneficial feature of whole life insurance.

Unlike other life insurance policies, whole life insurance policy accumulates the useable cash reserves. This increase as one pays premiums and also accumulates tax deferred. And if you decide to surrender the policy, you receive your cash values.

4. Participation in whole life insurance policy earns you the dividends.

You are eligible to earn dividends if you own a participating whole life insurance policy. You receive this dividends in cash, which you can further use to either purchase a paid up additions, to minimize premiums or you can keep it within the policy to generate interest.

These advantages of whole life insurance policy are really worthwhile. If you are not confident you should consult an expert before taking up any policy.