During this time, where good investments are hard to come by, some life insurance agents are touting permanent life insurance policies as an attractive alternative. However, AccuQuote.com, a leading provider of affordable term life insurance quotes, advises as with any "investment", it's important to know the pros and cons of permanent life insurance policies before deciding whether or not to buy one.
Wheeling, IL (PRWEB) May 19, 2008 -- During this time, where good investments are hard to come by, some life insurance agents are touting permanent life insurance policies as an attractive alternative. However, AccuQuote.com, a leading provider of affordable term life insurance quotes, advises as with any "investment", it's important to know the pros and cons of permanent life insurance policies before deciding whether or not to buy one.
The basic difference between term life insurance and permanent (whole or universal) is this: On the death of the insured, both term life insurance and permanent policies pay a death benefit to the named beneficiary. However, permanent life insurance plans include "living values" in the form of cash values. These values can be accessed in the form of policy loans, withdrawals, and also by surrendering the policy.
"A permanent life insurance policy is a type of 'forced savings' plan. However keep in mind, assuming the same death benefit, they premiums on these types of plans are generally 5-12 times as much as a level term life insurance policy," says Byron Udell, founder and CEO of AccuQuote. "A permanent policy will typically not work out well for you unless you're prepared to stick with it for a long time. Unfortunately, most people aren't able to afford the face amount of insurance they need to protect their family in a permanent insurance chassis. Even if they stretch their budget to buy permanent coverage, they often lose the faith and bail out too early. When this happens, they find out that they'd have been better off never having started the plan. They have no life insurance protection, and the surrender values add up to abysmal results on the 'investment' side of the transaction."
Udell prefers term life insurance for most people because it is affordable, making them less likely to lapse their policy. "The main purpose of having a life insurance policy should be to protect your family," says Udell. "Term life insurance accomplishes this need for a lot less. If you are determined to consider permanent coverage, you might consider the old adage, 'buy term life insurance and invest the difference'. Simply take the cost difference between a permanent policy and term life insurance policy and invest that money."
According to AccuQuote, at today's rates (which are the lowest in the history of life insurance), the annual premium for a 40-year-old male (non-smoker) in good health for a $500,000, 20-year term level term life insurance policy is only about $350!
To get a real sense of the value of term life insurance, let's compare term life insurance quotes and universal life quotes. A healthy 40-year-old nonsmoking male would have to pay about $3,000 per year to acquire a $500,000 universal policy. For the first few years, most of these policies have zero surrender value. But say he had instead invested $2,650 (the difference between $3,000, the cost of the universal policy, and $350, the cost of a term life insurance policy) in a mutual fund that averaged a total return of 10% annually. At the end of the first year, he'd have $2,841, accounting for taxes on the earnings at a 28% rate. At the end of 10 years, he would have accumulated more than $46,000 in after-tax savings in the mutual fund. Over the same period, the cash value of the policy would likely only have climbed only to about $21,558.
AccuQuote provides these tips when comparing term life insurance quotes:
Buy a term life insurance policy worth at least seven to ten times the breadwinner's annual salary
Buy from a reputable term life insurance company that is financially stable
Review life insurance needs every 2 to 3 years
AccuQuote helps consumers find the most affordable term life by combining instant online quotes with the personal service of unbiased life insurance professionals that can help answer questions, identify important issues, and make meaningful recommendations. The company offers consumers an extensive selection of life insurance options, including term life, whole life, and universal life, as well as selected annuities. The website has many handy insurance tools, including a life insurance needs calculator to help you figure out how much to buy, a glossary that explains industry terminology, a collection of articles that cover the basics about life insurance, and a blog which answer many questions about life insurance. For additional information or to get quotes for cheap term life insurance, please call 1-888-314-4455.
According to the Risks and Process of Retirement Survey Report, a new study from the Society of Actuaries (SOA), inflation is the top retirement concern. The report identifies other concerns among pre-retirees and retirees and offers actuarial approaches to manage those risks.
Schaumburg, IL (PRWEB) May 19, 2008 -- From the high price of milk and eggs to the unprecedented cost of gas, inflation is affecting every American. Among the largest groups affected are the 78 million baby boomers inching ever closer to retirement and current retirees who are experiencing soaring costs in a volatile economy.
In fact, according to the Risks and Process of Retirement Survey Report, a new study from the Society of Actuaries (SOA), inflation is the top retirement concern. According to the report, pre-retirees and retirees are worrying about keeping the value of their assets up with inflation as well as having enough money to pay for long-term care, paying for adequate healthcare and the challenges of maintaining a reasonable standard of living after the loss of a spouse - all of which are also impacted by inflation.
The report identifies concerns raised from both pre-retirees and retirees on their retirement resources and offers approaches to help manage them. "Today's retirement environment is much more complex than it has been for previous generations," said Anna Rappaport, Fellow of the Society of Actuaries (FSA), MAAA, chair of the Committee on Post-Retirement Needs and Risks, and leader of the report's project oversight work group. "With generally acknowledged gaps in many employees' retirement benefits and resources, actuaries are helping people understand the risks associated with retirement and the importance of sound management of their retirement funds."
Among today's 65-and-older population, average life expectancy for American men and women is 17 and 20 years, respectively. Nearly one-third (30 percent) of all women and almost 20 percent of men age 65 can expect to reach 90 years old. As a result, pre-retirees and retirees are concerned that inflation will impact the adequacy of their retirement investments and savings by significantly contributing to their depletion. "With life expectancy reaching the highest level ever, there is a real possibility that those in retirement may outlive their assets," said Steve Vernon, FSA, MAAA, and president of Rest-of-Life Communications. To manage this risk, actuarial approaches include investment strategies to preserve principal, such as investing in annuities, joint and survivor annuities and deferred annuities commencing at later ages, such as 75 or 80.
Long-Term Care and Healthcare Concerns Highlighted
The survey also revealed that pre-retirees and retirees are concerned about their ability to afford long-term care. For example, nursing home care costs may reach $70,000 or more per person per year. To manage this risk, actuarial approaches include strategies such as personal health and wellness commitments and long-term care insurance that helps pay for the cost of seniors with care needs.
In addition, pre-retirees and retirees are concerned inflation will impact their ability to afford adequate healthcare. With catastrophic illness, medical costs for an over-65 retired couple not
covered by Medicare can be a major financial burden exceeding $1 million over their lifetime. To manage this risk, actuarial approaches include strategies such as medical insurance and Medicare supplements.
Women's Concerns Higher Than Men's
Other findings of the study provide insight into the differences of how men and women perceive retirement risks and are affected by them. Women are more concerned than men that inflation will significantly impact their retirement resources. Such concerns may be magnified for women who have experienced the loss of a spouse. "For retirees living on a fixed income, the longer the period of retirement, the greater the impact of inflation," said Rappaport. "For this reason, women are more adversely affected by inflation than men because of their longer life expectancy. Traditionally, women have been younger than their husbands; therefore, periods of widowhood of 15 years or more are not uncommon. For many women, the death of a spouse is accompanied by a decline in standard of living."
Women expressed higher levels of concern versus men regarding the following risks:
Inflation - 62 percent versus 51 percent
Affording long-term care - 57 percent versus 47 percent
Healthcare costs - 56 percent versus 45 percent
Depleting savings - 52 percent versus 37 percent
Staying in their home - 44 percent versus 29 percent
To manage these risks, actuarial approaches include investment strategies to produce income, including joint and survivor annuities and life insurance.
Actuaries are at the forefront of identifying the retirement needs, risks and roles of all stakeholders involved in retirement including consumers and businesses. The Society of Actuaries and its Pension Section Council is spearheading the first-ever Retirement 20/20 initiative. Launched in 2006, Retirement 20/20 is leveraging the insights of more than 60 experts, including leading retirement actuaries, corporate benefits managers, attorneys, public policy advocates and academics. Retirement 20/20 will analyze the retirement landscape with the goal of developing a new retirement system different from traditional defined benefit and contribution plans in the coming years.
Future Retirement Survey Reports
In ongoing efforts to identify, understand and manage the retirement risks facing today's pre-retirees and retirees, the SOA will release a series of three retirement survey reports on the phases of retirement, long-term care concerns and retirement risks for women. The SOA's three survey reports are scheduled to be released later this year.
Actuaries bring a complex future into focus by applying unique insight to risk and opportunity. Known for their comprehensive approach, actuaries enable smart, more confident decisions.
About the Society of Actuaries
The SOA is an educational, research and professional organization dedicated to serving the public and its 19,000 members. The SOA's vision is for actuaries to be recognized as the leading professionals in the modeling and management of financial risk and contingent events. The SOA's mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal problems involving uncertain future events. To learn more, visit www.soa.org.
Kim McKeown - SOA
Mike Nowak - GolinHarris
Providers of CareOne Credit Counseling Services offer some helpful, timely advice on how to effectively spend the money from your Economic Stimulus checks. The article also provides a simple explanation for how the Stimulus Package is intended to help the U.S. economy.
Baltimore, MD (PRWEB) May 19, 2008 -- CareOne Providers Share Free Tips on Getting the Most Out of Economic Stimulus Checks
Economic stimulus checks rolled out in early May to US consumers. Providers of CareOne Credit Counseling Services are offering free advice on spending and using that extra money, showing families and individuals how to get the most value and biggest benefits to them.
Many eligible US consumers have received, or will be receiving, economic stimulus checks from the government for amounts starting at $300. The concept of the economic stimulus checks is simple. Amidst the recent credit crunch, buying on credit has slowed down and less money is being exchanged in the marketplace. By giving money to consumers who will then spend it on various goods and services, the government hopes to increase the country's overall spending and consumption rates. Furthermore, because every dollar handed out by the government will be spent a countless number of times by various consumers, the effect of that one dollar is multiplied and has an even greater impact on economic growth.
For example, if a consumer receives a $1,000 economic stimulus check and spends it on clothing for the family, that $1,000 has now been introduced into the economy. In addition, these funds now represent new revenue for the retailer who sold the clothes. This cycle continues as portions of this money are spent on goods and services for the business itself. The store owner will also use a percentage of this $1,000 to pay his or her employees who, in turn, will spend a portion of their paycheck elsewhere, making further contributions to our economic growth.
CareOne Service providers want to help consumers better understand the economic stimulus package, enabling them to make more informed decisions on how to use their stimulus checks.
"Some consumers will receive their economic stimulus check and be tempted to go on a shopping spree," says CareOne Credit Counseling Services Spokesperson Clarky Davis. "Maybe they've wanted to buy a big screen television, make a down payment towards a new car, or even to take a vacation, but they didn't have the opportunity before receiving their stimulus check. On the surface, any spending would be good for the economy. Consumers should think about what's best for them. There are ways to use that extra money which could save or make them more money overall, help them get out of debt, or better prepare for their future."
CareOne Agencies offer the following ideas for using the funds from economic stimulus checks:
1. Use the money to pay down credit cards or other interest-bearing debts. Paying more now means saving more in interest payments, which can accumulate quickly.
2. Place all, or a portion, of the money into an interest-earning account or tax-saving account. By setting aside funds in this way for things like a child's future education, retirement, a new car or home, consumers can earn extra money on the deposit and save on income-tax payments.
3. Consider setting aside a part of the check exclusively for emergency expenses. This allows credit card spending to be avoided if a sudden need arises (such as car repairs).
"While politicians are hoping the economic stimulus package will improve the economy in the short run, consumers can use that money in whatever way benefits them the most, knowing they can still improve the economy in the long haul," says Davis. "By paying down credit cards or other bills, consumers keep that added interest payment amount in their own pockets to be spent later. By putting money into a retirement account, consumers are ensuring their ability to spend and bolster the economy in the future. By saving for a child's college education, that child has a better chance of securing a higher-paying job by getting their degree, leading to them spending more in the course of their lifetime. These 'little' choices now help the consumers in the moment and have the potential to help the economy on a grander scale."
About CareOne Credit Counseling Services:
CareOne Credit Counseling Services is a service mark of 3C Incorporated and is an industry leader committed to providing consumers with education and debt management services related to improving and maintaining their financial health. CareOne providers have helped over 4.5 million people pay down debts through their solid relationships with over 220,000 creditors. For more information about CareOne Credit Counseling Services, please visit www.CareOneCredit.com, or contact Clarky Davis at (410) 925-9769.