Doing the Right Thing
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When I sit down with a client who has no life insurance, I explain to them what would happen if they die tomorrow. It's different for every client. Some clients own a home and others do not. Some have kids and some don't. Almost all of them had some sort of consumer debt (loans and credit cards).
Then I go over the two types of life insurance, which is cash value life insurance and term insurance, which you are interested to know.
Cash value life insurance (whole life, universal life, variable life) is a term insurance coverage to age 100 plus a savings plan in it. Because of the savings plan, cash value life insurance are very expensive. The cash value has a low rate of return of 3-4% and if you ever want to use it, you have to borrow it and pay a loan interest of 6-8% on it. When you die, the insurance company keeps all the cash value, unless it is stated in the policy that the beneficiary will receive the death benefit and the cash value.
Term insurance has no savings plan in it, so the premiums are much lower than cash value life insurance. Premiums remain level through out the term (which is 10, 15, 20, 25, or 30 years). Since there is no such thing as cash value in term insurance, you decide where you want to save your money (either in a bank account, CDs, money markets, mutual funds, bonds, stocks, or in your retirement accounts). If you die during the term, the beneficiary gets the death benefit and all your savings.
I get this question most of the time, "what happens if I outlive the term?" The answer would be that the premiums will go up. No one likes that their premiums will go up, not even me. If you do outlive the term, there are some things you can do. 1) You can lower the coverage to keep the premiums down. 2) You can exchange the policy to a shorter term policy. 3) You may cancel the policy. But I tell the client that he/she doesn't need to worry about that until 20-30 years later (whatever term insurance I plan to give them). All they need to worry about is protecting the family's income now and save money for the future.
Right now, you and your partner probably own a home, have kids, and have some or lots of debt. Both of you probably don't have much money saved, so both of you would need lots of coverage. In the later years, your kids are all grown up, your mortgage is paid off, and hopefully you don't have too much debt, so you don't need as much life insurance coverage. You are nearing retirement, so you better have lots of money saved. Now you know the difference between cash value life insurance and term insurance, which would you prefer? |
Bhim S
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how much risk cover you need? you can take product mix. that means you can take different kind of policies package. you can take a policy of term insurance,and a policy of ulip, a policy of whole life ,a policy of endowment and a policy of money back. make all these policies as package . you will get maximum benifit. contact senlife2002@yahoo.com mobile no. 09817015102 |
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