Monthly Archives: July 2015

Picking Your Life Insurance

Do you want your family members to be unburdened with problems after you pass away? Death is a very sensitive topic, but practicality demands that the issue be addressed. So, aside from the gloom and anxiety that your passing may cause among others, they will be the ones burdened with funeral costs. This topic may sound strange for some people and they may not want to talk about it. However, one needs to accept the fact that they need to prepare for this matter – especially if they have assets; and if that person has some debt left over by a National Credit Company, they may also need to concern themselves with how it is managed, after they pass away.

Are you familiar with life insurance? Life insurance implies life assurance. It is a legal contract between a person (the insured, or the holder of the policy) and the insurer (the one that offers the service of life insurance), wherein it promises to give a sum of money to the beneficiary of the deceased. This is not only dependent on the occurrence of death (of the insured individuals), but it is also dependent on other events, like critical illness or terminal illness. Here are some of the benefits of life insurance:

1. Life insurance offers cash for dealing with the finances of the insured, upon his death.

2. Life insurance enjoys reasonable tax treatment, unlike to other financial sources:

  • Death benefits are broadly tax-free to the designated beneficiary.
  • Death benefits can become estate tax-free, when the policy is owned correctly.
  • Cash values grow within the insured person’s lifetime.
  • The withdrawals (and the premiums) are tax-free.
  • Policy loans are tax-free.
  • A life insurance policy can be exchanged for another policy.

Aside from tax benefits, some policies deal with the remaining debts of the decease or debt collectors, go to to find out more .

While these tax features exist in policies, life insurance has limitations regarding tax benefits. It can be lost under the wrong set of circumstances.

  1. There are various life insurance policies that are very flexible, depending on the policy holder’s needs. The death benefit can be diminished any time and the premiums (the amount to be paid for the insurance policy) may be increased, reduced or skipped.

If there are many advantages or benefits of life insurance, there are also some disadvantages, here are the following:

  1. Some of the policy holders renounce or give up some of their previous (non-essential) expenses, in order for them to pay for the premiums.
  2. The surrendered cash values are less than what the insured have paid in the first year, and there may be a case that the policy owner (or the policy holder) may not get the paid premiums, when the policy has been surrendered.
  3. The purchase of life insurance, and the life insurance positioning, may become complex – particularly, if it is for business situations, complex family situations or estate planning.
  4. Some individuals who go through life insurance acquisition process, will find it irritating and baffling. Say for instance, are the agents of said life insurance policy, trustworthy? Or do they have the right carriers or products for you?


Though the holder and the insured are always the same person, there is a difference between them. Say for instance, if the head of the family purchases a policy, he becomes both the insured and the owner; when his wife purchases a policy (as the head of the household) she becomes the owner and the head that is insured. The policy holder will be the one who will pay for the policy. The insured becomes the participant. There are also some companies that allow the owner & payer to be different; for example, a parent who is paying the premiums for insurance of his children, this policy is owned by the parent and the children are the insured.

So what is the minimum age for an individual, before he is allowed to have life insurance? There is no age limit. Even a 2-year old baby can be insured, however, their actual benefits only begin after reaching 7 years of age. If in case there is some unforeseeable circumstance that happened to a person, before 7 years of age, he will only get cash, but not the death benefit amount. Thus, anybody – be it a young or old individual – can have life insurance.

There are two types of life insurance, such as term insurance and whole life insurance. The former has no investment component. A person is buying life insurance that only lasts for the designated period of time, provided you had paid your monthly premium on time. You will renew it yearly, when it is an annual renewable term. You will purchase it every year, though you do not need to re-qualify through giving evidence of your good health, each year. If you chose a policy with special financial options, you may have to disclose extra financial information, like the outstanding debts you have with banks, creditors or collection agencies, like Afni Credit Collections.

The latter is a type of permanent insurance, which includes life coverage with an investment fund; with this type of life insurance, you are purchasing a policy that has a fixed, stated amount upon your death. The part of the premium you pay (monthly) will go toward building cash value from investments made by your insurance company!

Therefore, having life insurance will help your family members the moment you depart from them. It will guarantee that there will be a reasonable sum of money available to them as a financial resource.