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Baca juga : How life insurance looks like an investment tool

Life insurance has been used as an investment tool for various purposes. Do you believe life insurance is a property or a responsibility? I will discuss life insurance, the best way to protect my family. The main question is whether buying word insurance or permanent insurance as a key question.

Many choose insurance because it is the cheapest and provides insurance for the period of 5, 10, 15, 20, 30 years. Since insurance is not always the best investor for everyone, people can live longer. If you choose one option, 30 years can not be perfect when having the longest time at the age of 25 and choosing a 30-year policy in March of a man 20 years from the end of the period to 55 years. If 55 is still healthy but still requires life insurance, insurance costs are very expensive at 55. Do you buy words and invest in others? If you are a trained investor, can it work for you, but what is the best way to pass a tax-exempt property? If a person dies within 30 years, heirs can freeze his face. If more than life insurance is passed on to beneficiaries, in many cases investment will not pass taxpayers for free. Term insurance is considered temporary insurance and may be beneficial for a person to start his life. Many term policies lead to permanent policy changes, insurance guarantees needs in the near future,

The next type of policy is whole life insurance. As the policy states it is good for your whole life usually until age 100. This type of policy is being phased out of many life insurance companies. The whole life insurance policy is called permanent life insurance because as long as the premiums are paid the insured will have life insurance until age 100. These policies are the highest priced life insurance policies but they have a guaranteed cash values. When the whole life policy accumulates over time it builds cash value that can be borrowed by the owner. The whole life policy can have substantial cash value after a period of 15 to 20 years and many investors have taken notice of this. After a period of time, (20 years usually), the life whole insurance policy can become paid up which means you now have insurance and don't have to pay anymore and the cash value continues to build. This is a unique part of the whole life policy that other types of insurance cannot be designed to perform. Life insurance should not be sold because of the cash value accumulation but in periods of extreme monetary needs you don't need to borrow from a third party because you can borrow from your life insurance policy in case of an emergency.

In the late 80's and 90's insurance companies sold products called universal life insurance policies which were supposed to provide life insurance for your whole life. The reality is that these types of insurance policies were poorly designed and many lapsed because as interest rates lowered the policies didn't perform well and clients were forced to send additional premiums or the policy lapsed. The universal life policies were a hybrid of term insurance and whole life insurance policies. Some of those policies were tied to the stock market and were called variable universal life insurance policies. My thoughts are variable policies should only be purchased by investors who have a high risk tolerance. When the stock market goes down the policy owner can lose big and be forced to send in additional premiums to cover the losses or your policy would lapse or terminate.

The design of the universal life policy has had a major change for the better in the current years. Universal life policies are permanent policy which range in ages as high as age 120. Many life insurance providers now sell mainly term and universal life policies. Universal life policies now have a target premium which has a guarantee as long as the premiums are paid the policy will not lapse. The newest form of universal life insurance is the indexed universal life policy which has performance tied to the S&P Index, Russell Index and the Dow Jones. In a down market you usually have no gain but you have no losses to the policy either. If the market is up you can have a gain but it is limited. If the index market takes a 30% loss then you have what we call the floor which is 0 which means you have no loss but there is no gain. Some insurers will still give as much as 3% gain added to you policy even in a down market. If the market goes up 30% then you can share in the gain but you are capped so you may only get 6% of the gain and this will depend on the cap rate and the participation rate. The cap rate helps the insurer because they are taking a risk that if the market goes down the insured will not suffer and if the market goes up the insured can share in a percentage of the gains. Indexed universal life policies also have cash values which can be borrowed. The best way to look at the difference in cash values is to have your insurance agent show you illustrations so you can see what fits you investment profile. The index universal life policy has a design which is beneficial to the consumer and the insurer and can be a viable tool in your total investments.