Question : How do major life insurance policies work? I have only ever had the ones offered through jobs.?
I am single, non-smoker, 25 year old female in reasonablly good health. Non-homeowner & no kids. How do you invest through life insurance? Etc...
- asked by candi82
All Answers:
Answer #1
First of all, investing and life insurance are twodifferent things and you do them for differentreasons. You purchase life insurance to protectyour loved ones from the loss of your income andto pay off your debts at your death. You investto have money to buy the things you want, when youwant them and to have a comfortable retirement. Inever recommend you invest through life insurance. How it works is simple. You decide how much youwant to purchase, you buy the insurance and whenyou die they pay your beneficiary. The amount youneed varies by individual and I would suggest youcontact a local insurance agent who can talk withyou about what is right for you.
- answered by deep5223
Answer #2
1. as a single person with no one that relies onthem for income, your insurance needs would beminimal. Until that changes, you should prettymuch just keep what you have at work. A very smallpersonal policy would be ok, but probably notneeded. Life insurance is to replace income fromsomeone that has others relying on them (kids,spouse, parent, etc...)2. Dont invest through alife policy. I am assuming you are speaking ofVariable life. I personally am not a big fan ofthese. I think investments & insurance should bekept apart from each other. If you want to invest,then do so. If you need insurance, get it. But itshould not be a 2 birds with 1 stone kind ofthing.
- answered by ricks
Answer #3
Well, you DON'T invest through life insurance. Ifyou did, it would sound like this:Hiya! If youpay me $1,000 a year, I'll invest it, keep 95% ofwhat I make, and give you 5% back!Doesn't thatsound great? NO. Because life insurance is NOT agood investment tool. Do you want LIFE insurance,to pay someone if you kick off, or an INVESTMENT? There are MUCH MUCH MUCH better ways to savemoney than life insurance (like, a mayo jar underthe bed). If you're looking for an INVESTMENT,check with your employer for a 401K plan. Or setup an IRA plan at www.schwab.com. Or just startputting money in the BANK every month. But don'tEVER buy life insurance as an "investment". That's just like buying a pair of Prada heels tobang the nail in the wall with. It's not theproper tool for the job, and you're wasting yourmoney using the wrong tools.
- answered by mbrcatz17
Answer #4
You generally cannot "invest in life insurance"because most contracts are not securities. Theonly life insurance policies that would qualify assecurities are variable life policies. Furthermore, most broker-dealers (that's theentity in charge of overseeing folks who can sellsecurities) disallow that colorful turn ofphrase.I'm sure the spiel included something aboutincome tax-free retirement etc, and you feelcomfortable with the investment options. Ask thisagent about the volatility of the life contractitself (not the underlying investment). may scratch head> To help that agent demonstratethis to you, ask him or her for an illustration atthe SAME interest rate on the guaranteed andcurrent side. The difference between thesecolumns reflects the swing that the adjustablemortality and administration costs have on youraccount. This is out of your control and companystrength etc has nothing to do with whether andhow much these charges may increase.Oh, then talkto a real financial planner and get a game plantogether.
- answered by aaron p
Answer #5
Life insurance is designed to protect a familyagainst the financial burdens that accompany thesudden, unexpected loss of a breadwinner. You havetwo options: term life and whole life. You pay amonthly premium with each. A term life policy willpay a death benefit in the event that you dieduring the specific time, or term, covered by thepolicy. A term life policy has a start date and anend date. If you die the day after the policyends, the insurance company does not pay a deathbenefit. The premiums that you pay for a term lifepolicy will be gone when the term is up. You willnever see that money again.A whole life policycovers your for your entire life. If you die theday after you take out the policy, you arecovered. If you die in 20 years, you’re covered.And if you die when you’re 80, you’re covered.In the mean time, the insurance company investsthe money you pay in premiums, and some of theearnings are put into your policy in the form ofcash value. The cash value builds over the years.At some point—when you are on a fixed income,for example—you can use your cash value to paythe premiums, keeping your policy in force. Awhole life policy costs more than a term lifepolicy, of course, because of these investmentfeatures.Some people say that you could invest themoney you save by getting term life in somethingthat earns more money than a whole life policy.That may be true, but be realistic about yourinvesting skills: Would you really invest thepremium savings? Do you know enough aboutinvesting to guarantee a profit? Whole life isguaranteed to build cash value. Good luck!
- answered by Bradley S
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