Most U.S. households have some form of life insurance. But some of us know how to most effectively use it. 5 is the most destructive myths lead to costly errors in life insurance. . .
Myth 1: I just need enough life insurance, my family's future.
Facts: If you really want for his family welfare, you will need more than that. The good news is that this extra coverage will not go back up to your imagination.
A typical family should be integrated to the rest of your mortgage. . . Adjusted for inflation, is expected life of the other annual cost of living. . . If the cost of college as a factor (assuming the costs would increase by 3% to 5% of years) to determine the amount of the family needs to succeed. Minus the amount the surviving spouse will receive his / her will at some point to return to employment.
For example: a 40-year-old who is in good health pay for 20 years, single-stage life insurance policy of about $ 875, to provide 100 million dollars per year range, which would be sufficient to cover all future costs of his family.
In addition, about 1,750 yuan, you may be from 200 million in policies, enough to replace your life, if his wages will be for his career of more than 25 years of $ 80,000, an annual average. An additional $ 875 per year (about $ 73 per month) is a small price to pay to ensure that your family will not be because of the economy after his death.
In order to compare life insurance costs, consult your insurance professional.
Myth 2: Term life insurance is always a better deal than life.
Facts: Term life insurance policies typically provide a lower premium policy of permanent cash value life insurance, like all the integration and investment, tax bill, a pure long-term policy beneficial. However, in certain circumstances – if you intend to continue more than 20 years of policy. . . Can pay premiums. . . And have exceeded the limits of other taxes, such as a 401 (k -, delayed investment) and the Irish Republican Army life insurance industry more meaningful.
Suppose you do not use their investment for at least 20 years, the overall performance of a lifetime policy, including death benefits and return on investment may be greater than the number of reported earnings for the purchase of a similar long-term investment in municipal bonds, the cost difference – a Investment is risk and tax treatment comparable.
Other options include permanent insurance, variable universal life insurance, because the investment component, it can be aged 20 to 30 years, couples appropriate, will be placed on high-growth mutual funds. . . And universal life, which may be those with an income appropriate, it may fluctuate significantly year by year, as sales personnel, so that the insured within a year decided to pay premiums.
* Prices are subject to change.
Learning (CASB value of insurance): You can borrow against its reasonable interest rate policy, the cash value of other benefits. In addition, the extracted amount of your investment is tax-free.
Of course, the long-term insurance to lose its appeal, if you need 20 years or before, through access to more money. Insurance companies face the burden of medical costs, so if you withdraw money before that date, the investment rate of return will be seriously affected.
Myth 3: My wife did not work, so you do not need to own life insurance policy.
Facts: stay at home spouse may not produce revenue, but the requirements are often expensive to replace such as cleaning, cooking and child care, an important service. Some spouses also found that their ability to win after being a partner in economic loss.
For example: a lawyer in private practice spent a year after his wife died in the clouds on foot, so that revenues plummet.
Couples with children should have the right to non-working spouses are covered by at least $ 1 million of people, especially if the family is large or expensive places to live. You may consider lowering this figure, if the child after puberty again and reduce the children's house. A 40-year-old, healthy non-smoking women should be able to get $ 1 million 20-year long-term level of about $ 730 1 year policy.
Myth 4: My long-term life insurance policy can be converted to life, so do not worry about losing health insurance, if a chronic disease.
Reality: Although this is a fact that over two thirds of the long-term policy to enable policyholders to convert life more, regardless of health problems, a number of "convertible" policy can be a conversion window of 5 years or 10 years – and insurance companies can not be to tell you when the window is closing. If you do not become extinct and policy, the insurance company all the money, you pay the premium without having to pay a penny policy.
This is not uncommon for policyholders who develop serious health problems, involuntary loss of opportunities for a lifetime, and then found themselves without insurance and basic insurance.
Self-defense: Make a habit to review your policy at least once a year, not to be missed opportunity for conversion – or any other provisions.
Myth 5: I am about to retire, so do not need life insurance.
Facts: This may be true in some cases, but life insurance can be retirement planning, and / or estate planning is useful.
Instance. . .
* If your employer offers a pension plan benefits, is likely to have two kinds of payment options – a life annuity, providing the only income of his life, and joint annuities, the smaller the monthly payments, and Until you and your spouse die. Although these small amounts, most preferring to live together after marriage spouse.
Suppose you good health, single life is a better choice, if you also have with your spouse as the beneficiary of life insurance policy. If you die first, your spouse may live in the product. The best of 10 years or more before retirement locked in an attractive time for the cost of insurance based.
* If you want is a large housing estate – 300 million or more – may need to use life insurance to pay inheritance tax. Very often, people do not buy this insurance. A typical choice is "second to die" policy – when you pay the death of a spouse. However, when the number of the crisis, and the second died at 60 years of age policy could reduce the benefits the majority of couples. . . Any couple, the husband was more than 5 years older than his wife or a woman has more than 10 years older than her husband, because women on average live five years longer than men. It is the best of each spouse to purchase a separate policy, in such cases.
Scenario: a husband and wife, 45-year-old, healthy, and will pay the second $ 1 million is about 11,000 yuan, the annual premium whole life policy death. If they bought a 500,000 yuan respectively, the policy of a lifetime, they will pay about 17,500 U.S. dollars, the annual total premium. (Costs are high, reflecting the life insurance policy.)
At first glance, the second die policy is good, save about $ 6,500 a year, but the insurance company will pay for what, until both spouses die. Have an independent policy, the insurer must pay the $ 500,000 first death of a spouse. If the surviving spouse's investment of $ 500,000, you can make more than $ 800.01 thousand years or even 5% in after-tax income.
Bonus: Once the first one after the death of his wife to pay the premium only in the remaining spouse's political and reduce costs.
The second policy, the meaning of the chip, if both husband and wife about the age of 60. In this case, the odds would be long dead separately below.

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