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There are life insurance policies that benefit you in two ways: they pay in the event of death and they allow you to accrue tax-deferred savings. It can be a bonus if you are in need of insurance anyway, but you shouldn’t buy an insurance policy as a way to save money. There are better, more economic ways to save.

The most common form of life insurance is term insurance. It doesn’t build savings; instead, you are basically renting a policy. You pay a fixed premium for a preset amount of years, like five, 10 or 20 years. Your premium remains the same each year. If you die during the period, the insurance pays you the amount of life insurance that has been promised. Once the term is up, the coverage ends. All promises between you and the company are cancelled. If you outlive the coverage or if you cancel the policy, you will not receive any benefits. This is simply a death benefit, not any form of savings.

Permanent insurance policies cover you for life and offer a tax-deferred savings opportunity for as long as you pay the premiums. There are primarily three variations of permanent insurance: life, universal life and variable life.

Permanent life insurance provides you with an opportunity to build cash value in addition to the death benefit. The face value of the policy is the amount of money that is paid at death or policy maturity. Most permanent policies will mature when you reach 100 years of age. The cash value amount is available to you if you die or surrender a policy before its maturity.

The cash value of your policy will grow until tax-deferred until you withdraw it. You are able to borrow against the cash value of your policy, but if you don’t repay it your beneficiaries will receive reduced benefits. In order to build cash value, you will have to pay higher premiums. These policies are much more expensive than term insurance.

According to the Life and Health Insurance Foundation for Education (LIFE), whole life policies provide you with a guaranteed death benefit, plus a guaranteed rate of return on your cash value. Your set premium is guaranteed to never increase.

With a universal life policy, your insurer separates your death benefit from the investment portion of your premium. The investment dollars are placed into bonds, mortgages and money market accounts. Your investment fund will pay for the cost of your set death benefit. Even if your investments do poorly, you will be guaranteed a minimum death benefit. If you do well, your beneficiaries receive more money.

A variable policy has death benefits and cash values that vary based on the performance of underlying investments. You assume a greater risk by trying to achieve greater returns.

There are instances where permanent life insurance is a better fit than term insurance for a family. If you have a disabled dependent that will need long-term care, a permanent life insurance policy might be your best choice. Most parents only insure themselves for as long as they have children and school and are working outside the home. In your situation, you may want to insure yourself for your entire life.

Permanent life policies can be hard to understand. Be sure that you understand all for the terms before you buy a policy. Most advisors say that you shouldn’t use these policies for saving for retirement or a college education. There are better options through a 529 plan, prepaid tuition plan, Coverdell Plan, a 401(k) or an IRA. In these plans, you do not have to pay for an insurance premium to build your money.

Martin Lukac ( MartinLukac.com MartinLukac.com), represents RateEmpire.com RateEmpire.com and 1AmericanFinancial.com 1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

No Comments » Posted by Matt Cubb / Uncategorized

If you own a home, then likely you have homeowners insurance on your biggest and most expensive asset. True, if you own your home outright, then there is no law requiring you to have homeowners insurance. Only mortgage companies will insist on insurance if they have a lien on your home. Is it wise to go without insurance? Should you? Keep reading and we shall look at the value of having or getting rid of your homeowners insurance.

Homeowners’ insurance rates are spiking especially for homeowners in areas where hurricane damage has been high, such as Florida. Some homeowners are finding their rates have doubled or tripled in just one year while others are learning that their policy has been cancelled by the insurance company meaning they must shop for new insurance.

The temptation to drop insurance altogether is a big one, but a dangerous choice to make unless you have a bundle of money to absorb the loss.

Home insurance makes sense for the following reason:

–If there is a catastrophic loss, then your home can be completely replaced. Just make certain that your policy has been updated to reflect the current replacement cost of your home. If you live in earthquake or a flood prone area, you will need to purchase separate insurance to cover these disasters.

You can save money on your policy via:

–Comparison shopping. All insurers are different and rates can vary by as much a 10 to 20 percent. Shop around and don’t just go with the best rate. Companies that pay a fast claim are worth more than a slower payer any day, even if there rates are high.

You are your home’s best advocate because:

–You know your home. You are in the best position to determine loss, therefore you must be aware of what is allowed or not allowed before filing for a claim. A tree that falls on your home means that you are covered, while floods and earthquakes are only covered through the writing of a separate policy.

Yes, insurance on your home can certainly seem expensive and almost worth dropping until you need to use it. Your insurance company isn’t always your best friend, but they can be your only friend when disaster hits and able to help restore you financially if you selected the policy with the best coverage.

Joseph is the proud owner of AutoCreditTrust.com Money Info, a website that will
explain everything you need to know about 1CardCreditSite.com Home Insurance. We invite you to visit our site today and see what we have to offer.

No Comments » Posted by Matt Cubb / Uncategorized