insurance

Agents are always extremely keen about selling my family whole life insurance instead of term. According to the agents, whole life is preferable to term since it does not expire and as a result the beneficiary is guaranteed some payment upon the death of the insured. However, why would the insurance company profit from such a setup if they are bound to pay back an amount that is at least equal to the total amount paid?

I have tried to do some research on my own, but I still can't seem to fully understand this matter. Any help will be greatly appreciated!

Basically insurance only works when a large groups of people own that particular insurance. Everyone pays to protect their income, but not everyone is going to use their insurance. So that's how basically insurance companies stay in business, unless something extraordinary has happen in this country where there's lots of people are filing for claims and the insurance company can't pay them all (such as the Hurricane Katrina event).

What is whole life insurance?

1) Its a level term insurance to a specified age (usually to age 95, 98 or 100) plus cash value.

2) It is very expensive when compared to term insurance

3) Cash value grows at a very low rate of return. In the first 10 years, you see a negative return on your money. But long term average is anywhere between 1-4%, depending on the company.

4) If you want to take money out, you have to borrow it and pay loan interest of 5-8%.

5) If you die someday, the insurance company pay the face amount of the policy (minus loans and missed premiums) to the beneficiary, but they keep all the cash value.

6) If you do get to live by the end of policy date (when you around age 100), the insurance company pay you the cash value, but you lose the insurance.

There's only one reason why that agent is trying to sell you whole life insurance: MONEY!

Next thing you'll know, that agent would try to sell you universal life insurance, a product that is more horrible than whole life, but it pays out more commissions.

Go with your instinct and find a different company who would listen to your needs. Try this site

http://free-best-life-insures-comparator-usa.blogspot.com/

Here you can get quotes from different life insurance companies in your area, its the best way to find an affordable life insurance with a reliable company.

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all about insurance:

http://unblocknetlog.cn/health-insurance.html

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Insurance companies are experts on statistics. They know that at your age you have a certain life expectancy. They will take your payments and invest them mostly in long term bonds, real estate mortgages, and some other investments. They will calculate the return on these investments over your estimated life span, calculate their expenses and profit, and charge you a premium large enough so that they can pay you the face value at the time of your calculated death.

The advantage of whole life is that you will pay a fixed premium over the life of the policy. The disadvantage of term insurance is the premium will increase every year or every couple of years until you can not afford to keep the policy. By the time you are 70 or so, the annual premium will be the face value of the policy. A better option would be a 20 pay or 30 pay life policy. With this kind of policy you would pay premiums for 20 or 30 years, and then your policy would be paid up in full. Thus in retirement years, when your income drops you would not have to pay any premiums. Also, if you got laid off and could no longer afford the policy, you could withdraw the cash surrender value.