7 Killer Insurance Mistakes You're Probably Making

The term insurance lies

What Jemaine does not mention is the differances between permanent policies. He tells us that if you borrow against the cash values and do not pay it back, your death benefit is reduced. Only true with Universal Lifte and not Whole Life. He also does not mention what happens when the TERM policy runs out and one is uninsurable. That's right...you no longer have life insurance!!! After all, isn't life insurance for the unknown. Further, I did not read anything about the non tax growth of the cash value...translates to a higher interest rate doesn't it? Millionaires still buy whole life in droves because attorney's and CPA know the benefits. So A L WILLIAMS PEOPLE. STOP PUTTING YOUR ADVERTISING ON VENUES SUCH AS THESE.

Randy Chapman of IN @ Sep 01, 2009 10:32:42 AM

Buy Perm and Invest the Difference in your Policy's Cash Value

Permanent (often called cash value insurance) vs term insurance is best for most folks. Some have suggested that it is folly to buy permanent insurance.....that it is better to buy term and invest the different. That's exactly what happens in a permanent life insurance policy. The premium you pay "overfunds" the coverage that you purchase. In other words, you establish and build a reserve, which can be used for emergencies. Or this reserve can be used to keep the policy from lapsing if you experience temporary unemployment or other financial problem loss. If life insurance premiums are paid over a long period, cash can be withdrawn to help supplement retirement. Finally, permanent insurance is especially beneficial for those who have difficulty saving money. The overfunding mentioned above provides "forced savings." Probably 80% or more of us need that. Buying term and investing the difference sounds like sound advice. But most spend the money and have little to show for it down the road.

u. s. bennett of TX @ Aug 19, 2009 11:51:12 AM

Education Does Equal Common Sense

I do understand that for some older individuals cash value products may have some benefit. But from a common sense point of view, why would I want to invest through a life insurance policy when I can purchase a term policy, which sufficiently protects my family for a much lower cost as compared to a comparable cash value policy, and invest my money in the global market where I can gain much higher returns on my investment. However, all term policies or term insurance companies aren't equal, so be sure to familiarize yourself with the features of a policy and the company before getting involved. If I were to put my money in the cash account of a life policy, the insurance companies would invest it anyway. Thats why they make more money selling these types of policies and turn around and charge you interest to borrow your own money because if you take your money out they could no longer invest it so they try to recover losses by charging you interest. So why not do what they do and reap the benefits for myself. Cash value policies may guarantee you a 3% or 4% return but at these rates you are sure to lose buying power since inflation has average about 4.32% over the past 30 years or so. And you better be sure to repay any money borrowed from your cash account because if you dont do so before you die, the insurance company is going to subtract the amount that wasn't repaid from the face value of your policy. So for example, if you have $100,000 coverage provided by a cash value policy and you borrowed $5,000 from your cash account and wasn't able to repay the $5,000 before you died, your family or beneficiary would only receive $95,000. Now, why would I want to put myself in this position? I still believe term insurance offers the most cost effective and viable protectioin for the masses.

Jemaine of MD @ May 28, 2009 11:26:27 AM

what a rip off insurance is thats so true

we have great insurance for home,auto,jewlery. we pay it off every year never been late, never had reason to use it. resently we had to use it because i lost a pair of earrings because i was'nt thinking straight.needless to say you have to get an appraisal for your jewlery. pay all that money which is not cheap. and when you put in a claim it does'nt mean anything.they pay you what they feel its worth and its its less than half of the value. they pick and choose and you have no say mean while we pay out our ass for insurance we have been with the same company for 14 years. you think that matters no! do they care no! and yes your rates go up for every little thing for no reason. how does this happen.as long as you have a receipt for your purchase and it shows what and how much you payed that should be it,why should you have to get an apraisal if they don't use it. you follow protocol and you get screwed.

ann of NY @ May 28, 2009 09:51:15 AM

Universal life insurance

You definately have to know the terms above so you will have an easier time defining what the insurance company offers so there is no misconception or misunderstaninding later. An insurance agent isn't going to give you an education on how they operate, you have to understand what the defination of the terms mean, such as a mortality expense, what their expenses are after cash value,cash accrues and becomes an offset to the face value. Know what this means and don't let them give you mumble jumble fast talk. Before making a decision know these terms and don't let them close you until you review and understand definations and calculations of how much money you pay in and exactly what you will get out later.

Igor of CA @ May 28, 2009 09:12:15 AM

Insurance Is A Game Like Everything Else

Whole or Universal life is a money maker for insurance companies. They take your premium and after their expenses, put the rest of your cash into a policy. The cash accrues and becomes an offset to the face value. When you die, your heirs do not get the face value and the cash accumulation. They get the face value and the insurance company keeps your cash. They invest your cash through the life of the policy for their benefit after paying you a nominal interest on it. Also, if you want to take out some of the cash value they will "loan" it to you. It is your money but you have to arrange for a loan and they charge you interest on the loan of your own money. It is a racket but it is pretty much the only game in town. Term is better if you are younger because you can invest and control the difference and have something later that you can use as you see fit without the borrowing phase. So, read up before you purchase a policy and "buyer beware".

Dave of CA @ May 14, 2009 13:43:37 PM

Misconceptions

Lots of posts expressing absolutes... such opinions may seem sensible and even logical. But they're not all true.

Somebody posted that VUL is the way to go. Complete rubbish. No need to explain, seriously it's rubbish.

Somebody else posted that term is the only way to go. Again, rubbish. Term is a racket and insurers are incredibly profitable on their Term business.

Somebody else posted that Whole Life is the way to go. Maybe, but only if the company is a mutual participating insurer. That means the company pays a dividend. And guess what, each insurer pays a different dividend and has different costs associated with the mortality expenses. This is where research pays off. Be sure to investigate the company you're considering buying from. The right company will be there when you or your family needs it.

Last misconception: "I need the cheapest insurance I can get." Do you buy the cheapest car on the market, the cheapest TV at Costco, the cheapest house on the block? Of course not, each one is priced differently because of the inherent value of the product and you choose it based on your likes, needs, and budget.

Caveat emptor.

NB of FL @ May 08, 2009 17:19:13 PM

what a rip off insurance is.

insurance is such a rip off. you can pay out your ass for coverage and as soon as something happens, either you aren't covered for that particular thing, or your rates get raised if you have a claim. i don't think anyone should have to have insurance.

mary of MI @ May 04, 2009 23:19:00 PM