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>>Life Insurance  

Life Insurance

Life Insurance Life insurance is a vehicle for you to show how much you love others, such as your spouse, children, parents and relatives.

Two basic methods to determine how much you should buy:

Method #1: How much do I love the person(s) whom I am buying the life insurance for?

Method #2: How much do I need to buy for the person(s) I care and love?

How does life insurance work:

Cost is determined by: your health, your age and coverage amount

A general formula: Premium + Interest you earn - Cost of insurance = Cash value (Your saving account)

Types of life insurance:

Universal life: It has a saving feature, and most life insurance companies guarantee to pay a minimum 4% interest for your savings in the policy (refer to the general formula above). Usually, universal life policy pays a higher interest rate than banks. As a policyholder, you determine your premium for the policy. In another words, your insurance agent can suggest, but cannot set the premium for your policy. One thing to keep in mind is that choosing a lower premium may result in an increase in the length of time that the premium payment is due on the policy.

Whole life: This is the most conservative life insurance policy because the premium is carefully calculated by an actuary, and the premium is level from year to year. On the other hand, the interest rate on this policy is not affected by the ups and downs of the economy as much as the universal life policies are affected.

Term: The least expensive policy without saving account. There are 1-year term, 10-year, 15-year, 20-year, and 30-year ones. For example, if you buy a 10-year term, the policy will expire in 10 years.

Variable universal life: VUL is more suitable for people who want to have investment feature on their life insurance policies.

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