Find Out About Life Insurance Companies, Policies, Rates And Quotes.
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Of all types of Insurance that people need and get, it seems that there is more confusion about Life Insurance than any other kind of insurance. So many questions come up as to this subject and it is difficult to know the answers.
Some of the questions people have are whether or not they need life insurance in the first place, how much insurance they should purchase, as well as which kind of policy they should get.
The main reason people purchase life insurance in the first place is to replace the income of that the person who is insured in case of their death. That way, the person who is the beneficiary on the policy, like their husband or wife, will not be left without any type of income that they have depended on. If you have children that depend upon your income for support, you should consider getting life insurance.
If you are a younger person, say from age 25 to around 35 or if you are single and without any children, then you probably don't need any life insurance. However, if you are single parent or a stay at home parent, you might want to consider getting a policy.
A stay at home parent could believe that it isn't really
important to get life insurance, as they don't earn an income, but if you think about the huge expense that it would be if they had to hire someone to do all of the tasks they do now, it would be considerable. Or if you had a special needs family member at home, living with you, it would cost a lot of money to hire a person to to the daily errands, cooking, cleaning and so on that you now do for that person.
Life insurance for a stay at home parent would allow the family to hire people in the event of your death to continue doing all of those daily tasks that you were formerly doing for the family members.
You would calculate the amount needed for a life insurance policy based on the amount of money you earn now and what is needed to replace that income in the event of your death.
What are the types of life insurance?
There is Term Life Insurance. This kind of a policy is for a certain set term or period of time. You pay monthly toward the coverage and at the end of the term, you do not collect any sum of money, but you are fully covered in case of death for the duration of that term.
Whole Life Insurance is different. A Whole Life policy is when you are fully insured for the entire period of your life.
The money paid into this policy is placed in an investment fund and usually the premium remains the same in the beginning but usually is increased after the first few years.
This kind of policy is more expensive but the benefit is that there is a payout.
You need to carefully calculate the sum insured. You should calculate your assets and debts value and also compare your annual income and expenses. Then find out how much amount your family will need to have so they do not face a financial crisis if something should happen to you.
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Theoretically you could, but whether it made any sense is a different story. If you don’t need the insurance anymore then you could just convert the whole policy into an annuity and have no loan. Consult your financial advisor.
You can borrow money from the cash value. You will be charged about 8% interest on the loan. If someday you die, the loan balance plus the interest will be deducted from the face amount. The remaining balance of the cash value is kept by the insurance company upon your death.
If someday you want to cancel the policy, you should pay off the loan first before doing so. If you don’t, you will owe income taxes on the loan balance.
By the way, annuities won’t pay much interest. They have high management fees, which reduces the rate of return on your investment.
You can but you will always loose money because no one pays you what they charge you and even though you are "borrowing" your money you pay interest to the issuer
You can take a loan against the value of your policy. You are unlikely to find a fixed investment that would cover your loan costs. Call your insurance company for details.
You can’t "take it out" but you can borrow against that cash value, and then you have to pay interest to the insurance company on the "loan" of your own.
I think you haven’t done the math on this.
Unless you invest a very large, six figure sum of money in the annuity, you have to wait YEARS before you can get any kind of payout. And if you HAVE that much money, to buy an annuity with a lump sum, why in the world are you buying LIFE insurance?
The interest rate on the cash value loan, is going to be two to three times the interest you’d earn on the annuity.
Both those products, whole life and annuities, are very, very heavy on the fees cost. You’re going to be paying a large amount in commissions, for both of those.
I don’t understand why, if you can afford the whole life insurance, you would NEED to borrow cash value (which reduces death benefit) at an interest rate, to buy the annuity. If the goal here is INVESTING, you’ve picked just about the most expensive way to do it – the most dollars out of your pocket, for the smallest return.