Life Insurance
08/05/2009
As people
continue to struggle through the recession, there’s increased focus on taking
care of savings and other assets in order to secure the future. One of the best ways to provide a
safety net for your loved ones is by purchasing life insurance. There are two different kinds of life
insurance: term life and whole
life.
Term life
insurance is generally the best fit for the largest number of people. Simply, this is life coverage only,
meaning in the event of the death of the named insured the policy pays face
value to a designated beneficiary.
Term life can be purchased in increments of one to 30 years. Except for the extremely elderly, these
policies are always less costly than whole life insurance.
Term life
insurance has two types of premiums.
Level-term premiums remain constant over the life of the policy and can
be paid in increments; annual renewable premiums increase as the policy holder
ages. Some term policies offer the
option to convert to whole life later on without a medical examination. This can be a good choice for policy
holders who have become seriously ill or have developed a severe medical
condition, but for the average life insurance customer these conversions are generally
not advisable.
Whole life
insurance combines a traditional term policy with an investment piece—typically
bonds and money market accounts or stocks. The investments attached to the policy build cash value over
time which can be borrowed against before the policy term is reached. The two basic elements of whole life
policies are the mortality charge, which is the part of the premium that pays
for coverage, and the reserve, which goes toward the investment portion that
earns interest. As the policy
holder ages the reserve portion of the premium gradually decreases and the
mortality charge increases. Some
whole life companies credit the reserve annually with investment dividends.
Whole life
polices may seem like easy money, but the fact is that they are risky. The value of the policy can fluctuate
along with the markets and usually do not earn as much return on the initial
investment as other more traditional portfolio options like stocks, bonds and
mutual funds. Whole life is also
very expensive and those on a fixed income or limited budget probably cannot
afford to purchase as much coverage as they need.
When
estimating how much life insurance coverage you need, calculate the approximate
amount your spouse or dependents would need to maintain their current lifestyle
in the event of your death.
Factors to consider are any retirement income or pension you would
eventually be eligible for, when that income would begin, and the age of your
dependent children at the time you purchase the policy. Most experts recommend buying coverage
equivalent to at least ten years’ worth of your current salary. People over a certain age and those
with pre-existing medical conditions tend to pay higher premiums so it’s a good
idea to purchase life insurance while you’re relatively young and healthy,
though you should hold off until you have dependents.
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08/05/2009
Just like individual health insurance, the purpose of life insurance is
the same: to provide financial aid. Life insurance policy holders also pay
premiums: monthly, quarterly, or annually. Policies can run for one year up to
a full lifetime. In health insurance, the policy holder receives the benefits
in the form of discounts, reimbursements, etc. In life insurance, the policy
holder’s beneficiaries will be paid a specified amount upon the death of the
policy holder.
Life insurance started in ancient Rome. Burial clubs collected money
from the poor to pay for the funerals of their members. Starting in the Middle
Ages, labor guilds, religious and fraternal organizations, and mutual life
insurance companies took over the life insurance business. Mutual life
insurance companies are owned by its members, just like credit unions. Edmond
Halley, an astronomer in the 17th century, developed the very first actuarial
tables that were used to calculate insurance risks according to mortality
statistics. As a rule of thumb, higher risks result in higher premiums.
Risk calculation determines how much a premium will cost, or whether an
applicant will be given a policy at all. Everything from the applicant’s full
medical history, hobbies and lifestyle, driving record, travel history, and
credit history will be taken into consideration by insurance actuaries when
determining the actual cost of the applicant’s premium.
Some of the major factors that affect the cost of life insurance
premiums include age, gender, and pre-existing medical conditions. Men and
older people are likely to pay higher premiums. People with “dangerous”
hobbies, such as scuba diving and skydiving, also pay more for life insurance
policies.
It is possible for life insurance claims to be denied. For example, most
life insurance policies do not provide coverage for suicide. Fraudulent claims
will be fully investigated.
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03/03/2007
Allianz in Austria focused on growth in 2006
In 2006, the Allianz Group in Austria focused its efforts on the market for retirement provision. "We want to grow steadily and have found the way to do so," says Chairman of the Board Wolfram Littich. The driving force behind this growth was the demand for life insurance. In this market, Allianz has increased its premium volume including savings portions by 10.8 percent to 383.2 million euros, putting it way ahead of its competitors on the Austrian market. In fact, Allianz has increased its market share in life insurance by 12 percent to 5.8 percent.Total premium income has gone up by 2.
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02/28/2007
The Longevity Express is here. People are starting to live longer faster than ever before. Isn't it wonderful? The average age is now around eighty and climbing quicker than the actuarial tables have estimated. People in their fifties and sixties now consider themselves part of the new middle aged. More and more of them are starting to work from home.
Where will it all end? No one knows, but certain scientists are estimating average life spans of well over one hundred in the not to distant future. At this rate people in their seventies may soon consider themselves middle aged.
What are we doing to prepare for this Longevity Express?
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