Senin, 30 Juni 2008

Life Insurance Without Life Value: Why Young People Are Snubbing Financial Advice

This article is written by a 27 year old female (borderline Generation X / Y) called Rachel. Rachel spent six years at university, has no outstanding debts with the exception of government student loans. Rachel also has no pension plan, no life insurance, savings or property investment. Despite reports of average starting salaries for graduates beginning at £18,000, some even at £25,000, Rachel started on £14,000 three years ago, despite gaining a First Class Honours and offering extensive work experience.

This isn't therapy through Microsoft Word, but it's not uncommon to read reports of "apathetic youth" in the media. For driven young graduates who didn't quite land where they expected - it is a little frustrating to be branded "ignorant", when it is already difficult working off university debts and fighting your way onto the career ladder in a very competitive market.

What is the point of having independence in old age, if you cannot experience it in youth? That is not to say young people should be encouraged or supported in their debateable extravagance, only that we remain unconvinced by old age. We may have seen our parents lose money in shares or private pension funds, or get divorced and lose money through property. We may be worried about global warming and in an age of suicide bombers, we may not even be confident about how much control we have on our lives anyway. With so much choice on what we can do, but so few people empowering us with confidence, we may well rebel for years to come - chopping and changing until we find something that fits or until we get tired.

It's too easy to brand young people as apathetic just because they haven't got pensions or life insurance. Smug thirty-somethings who received full grants, graduated in a less competitive market and bought property when the house market was low are quite happy to "tut tut" at their twenty-something shadows in their lack of financially savvy experience, but today's twenty somethings are being squeezed from all angles:

* Student loans replace university grants
* Commercialisation of university life, with banks and credit card companies actively courting student customers
* High property prices
* Very competitive job market

What we need are comprehensive financial research sites that provide information which directly relates to our circumstances. Websites such as moneynet ( ) with their product price comparisons and finance guides (especially the student finance guide) -do go most of the way, but we want something that also takes into account our aspirations, situations and will go the distance. We're not adverse to pensions, life insurance and mortgages, but if we're going to splash out lots of dough, it has to be a reasonably reliable investment and we remain unconvinced from we've seen so far in provocative, panic-stirring media.

It's true that products such as life insurance would at least protect our families from our debts and that's important, but with regard to pension, who's to say that in our old age, we may not revert back to student lifestyles - living in communities and on budgets.

The Life Insurance Policy and What You Need to Know Before You Buy

Are you looking to buy a life insurance policy? Well, be careful. Life insurance can be difficult to understand and it's easy to be conned into buying something under false pretenses.

Recently a prominent life insurance company together with several of its agents paid a huge fine because it permitted the sale of a life insurance policy disguised as a retirement plan. There was little attention given to what a life insurance policy is truly designed to provide.

Life insurance is not an investment for your benefit. It's guaranteed income tax-free cash paid to someone you designate in the event of your death. If you love someone and want to protect them, then buying a life insurance policy makes sense.

As primary bread winner in your family, your lost income could jeopardize the ability of those you love to continue to enjoy their standard of living.

The only way to guarantee an immediate replacement of this money is with the intelligent purchase of a life insurance policy.

Notice I didn't say term life insurance, low cost life insurance, or whole life insurance.

To your loved ones ... this doesn't really matter.

Over the years I've delivered millions of dollars of life insurance benefit to the families of deceased bread winners. And you know what?

No one ever asked me what type of life insurance policy it was. They were just extremely grateful to get the money.

Term is the cheapest, but it's unlikely the death benefit will be paid since the life insurance policy will probably lapse before you actually die. Right now the premium may seem cheap compared with other types. But what happens when you're older?

Term life insurance premiums can be level for a specific number of years, but when that number of years is up the price will skyrocket to the point you won't be able or willing to pay.

Whole life insurance provides a lifetime level premium until the policy is paid-up. This can be 10 years, 20 years ... or when you reach age 65, 85 or 100. One big advantage is you don't have to worry about your policy expiring before you do.

One type of life insurance policy is not necessarily better than another. But it's critical you understand what you are buying, how it works and your net cost.

After all, if the policy isn't in force when you die you have thrown your premium dollars right down a rat hole.

By the way, don't fall for that line about buy term and invest the difference. Anyone who cons you with this bunch of malarkey has absolutely no idea how to intelligently evaluate the purchase of life insurance.

An excellent life insurance policy to consider is universal life. This guarantees the death benefit up to age 115 regardless of the performance of the underlying investment.

Although more expensive then term life insurance, universal life is far less costly than a typical whole life insurance policy. But be careful because some universal life policies are sold by focusing on projected interest rates rather than contractual guarantees.

If you are considering the purchase of a whole life insurance policy from a mutual company that declares annual dividends, ask the agent for a hypothetical illustration using a dividend forecast at least one percent less than the current rate.

In the past, when long-term interest rates were higher, mutual companies credited very handsome dividends to their policies. But today with long-term rates still depressed, it's unlikely a life insurance policy will perform as illustrated.

In summary, pay close attention to the guarantees of whatever life insurance policy you decide to buy. Also, make sure you know the credit rating of the life insurance company.

There is nothing wrong with term life insurance, but understand your options about converting to a permanent plan. This could be critical if you become uninsurable before the policy expires.

By Don Adams

Natures Fury - Time to Check Your Insurance

The communities of Exmouth and Moora in Western Australia don't have a lot in common with Sydney.

But this year there is a uniting bond. All have felt the full force of Mother Nature.

Flooding in the Wheatbelt town of Moora caused an estimated $10 million dollars worth of damage to homes and property. Cyclone Vance ripped through Exmouth in the North West of the State costing the community millions more. Sydney's hailstorm bill has topped $1 billion and is still rising.

All this is a timely reminder about insurance to protect your assets from acts of nature over which we have no control.

Insurance is one of those intangible things - you pay out the money but you never see anything tangible in return - except in the event of some misfortune.

Insurance companies try hard to position themselves as being reputable and fair and spend millions in advertising trying to get this message across. The benefits they are selling include timeliness and ease of making claims and trustworthiness when it comes to paying claims.

Even banks are now are now becoming more sympathetic when it comes to natural disasters. Westpac has offered a special relief program to assist customers seriously affected by the Sydney hailstorm. Customers with home loans may now apply to suspend repayments for up to three months and may defer credit card payments for a month.

Despite all the goodwill, you need to do your homework when considering the best options for insurance. Here are 10 tips when considering insurance for your hard-earned assets.

Insure with a reputable company. All companies must be licensed under the Insurance Act 1973 and comply with its regulations. The Australian Prudential Regulation Authority (APRA) oversees this. Their role is to see that companies have the ability to meet future claims. If there is a dispute between an insurer and a domestic claimant, the matter may be referred to the Claims Review Panel of Insurance Inquiries and Complaints Limited for an independent decision.

Ask around. Talk to your neighbors, friends and contacts that have made a claim. Word of mouth travels quickly during a natural disaster. Check out what the company's attitude is when it comes to paying out. It's when the chips are down, like in Exmouth, Moora and Sydney that insurance companies have to perform.

Ensure you are adequately insured. Don't try and save a small amount of money on your policy and find out later that you've under insured.

Revalue your assets annually. Prices change, houses appreciate and cars generally depreciate. Maintain the sum insured at current day values.

Cover all your assets. The major insurance categories are houses, cars, personal valuables and home contents. Make sure some form of insurance covers all your personal assets.

Check the speed of claims payments. The quicker you get paid the quicker life gets back to normal. The time value of money means that any delays will actually be leaving you out of pocket.

Shop around. There are a range of products on the market. Ring around and find the policy that best suits your needs - both from a value perspective based on price and premiums and also breadth of cover.

Check the details. Remember to always check the details and don't be afraid to ask questions so you know exactly what you are and aren't covered for.

Store your policy in a safe place. Set up a system so you know where your policy is if you need to refer to it at any stage. It's amazing how frustrating it can be looking for those misplaced important documents during a time of crisis.

Seek help. If you require help, seek out a professional insurance broker who can provide you with advice and options.

Stick to these tips and you'll have peace of mind next time a natural disaster hits your home.

By Thomas Murrell MBA CSP

Finding Term Life Insurance Online

What exactly is Term Life Insurance?

Term life is a form of life insurance where you're covered for a number of years - the number of years is called the term. Term life insurance policies can be for as long as 30 years or for 20 years, 15, 10 or 5. After those years the policy can either be over or it can be renewed at a higher price based on your age at that time.

What's the best way to utilize term life insurance?

Term life is very good to have a lot of insurance - for now. It makes sense if you have kids at home who are dependent on your income coming in for years to come for their living expenses. Also, a spouse, even if working, would have a financial hardship in case of your death. If you can't develop the funds for permanent life insurance like whole life insurance then get the most term that you can.

Are there "stores" for term life insurance on the web?

Yes, but they are not all the same:

a. There's the sort that asks for information about you which is marketed to agents as a sales lead.

b. Then there are ones that sell life insurance but want you to give your information before giving you insurance quotes.

c. The websites of life insurance companies themselves which are usually informational in nature and if you email them, you're referred to one of their insurance agents.

d. An internet site that gives you direct and anonymous access to term life insurance rates. Then if you get a quote that works for you, you can make contact. One that does this is

Suggestion/Action Plan

If something happened to you and you have people financially dependent on you, it's crucial that you have ample life insurance whether term life insurance or if finances allow it - permanent life such as whole life or universal life. Go to a website that allows you to learn on your own and get various quotes from a lot of life insurance companies. The web can be of immense help to you in this research.

Neil Willner is a co-author of The Life Insurance Blog and The Disability Insurance Blog.

Home Insurance Terms

Home insurance, or even homeowners insurance, is an insurance policy that combines insurance on the home, its contents, loss of the use of the home (additional living expenses) and, typically, the more individual possessions of the homeowner, as well as liability insurance for accidents that can transpire at the home.

The cost of homeowners insurance scales upward depending on what it would cost to replenish the home, and which extra "riders", meaning extra items to be insured, are bound to the policy. The insurance policy itself is a long contract, and list what will and what will not be paid in the case of various cases.

Virtually all insurers charge less if it appears less likely the home will be damaged or even destroyed: as an example, if the home is situated next to a fire station, or even if the home is equipped with fire sprinklers and fire alarms.

Often, claims aren't paid because of earthquakes, floods, "Acts of God", or even war (whose definition occasionally includes a nuclear explosion from any source). Some kind of special insurance can be purchased for these possibilities.

In the United States, virtually all home buyers borrow money in the form of a mortgage, and the mortgage lender always requires that the buyer acquire homeowners insurance as a condition of the loan, consecutively to protect the bank if the home were to be destroyed. Anyone with an insurable interest in the property should be listed on the policy.

By Fern Kuhn, RN

Types of Homeowner Insurance

There are 6 different types of homeowners insurance in general that are consistently utilized. Of these HO-3 is the most usual policy then it is followed by HO-4 and HO-6. Others less used, but still important, are HO-1, HO-2 and HO-5. Everyone is described below:


A limited policy that offers varied degrees of coverage but includes items that are specifically included in the policy. These may be used to include a valuable object in the home, such a painting or certain types of jewelry.


Similar to HO-1, HO-2 is a limited policy in that it will cover only specific portions of a home against damage. The coverage is ordinarily a "named perils" policy, which lists the cases that would be covered. As above, these factors must be spelled come in the policy.


This policy is the most common one written for a owner and is designed to cover all aspects of the home, its structure and it contents. Also includes any liability that will arise from daily living. This includes visitors in the home that might encounter an accident or even injury on the premises. Covered aspects of liability must be clearly spelled out in the policy to insure proper coverage. The coverage is ordinarily called "all risk".


This is unremarkably referred to as renter's insurance. Similar to HO-6, this policy covers those aspects of the living accommodations and its contents not specifically covered in the blanket policy written for the renter's complex. This policy can, as well, cover liabilities arising from accidents and injuries for guests and passers-by up to 150' of the renter's complex.

Extremely low in cost and high in coverage, this is an extremely recommended policy for anyone renting an apartment


This policy, similar to HO-3, covers a home (not a dwelling or even apartment), the owner and its possessions. Liability that might arise from visitors or even passers-by. This coverage is differentiated therein it covers a wider scope and depth of incidents and losses than AN HO-3.


As a form of supplemental homeowner's insurance, HO-6, a.k.a. a Condominium Coverage, is designed especially for the owners of condos. It includes coverage for the share of the building closely-held per insured and for the property housed in that of the insured.

Designed to span the gap between what the homeowner's association can cover in a blanket policy written for associate entire neighborhood and those things of importance to the insured. Occasionally the HO-6 covers liability for residents and guests on their private property. The liability coverage, contingent to the underwriter, premium paid, and more factors of the policy, can cover incidents up to 150' from the insured property, all valuables in the home from theft, fire or even water damage or even more forms of loss.

It's significant to read the Associations By-laws to determine the aggregate amount of insurance needful on your lodging.

Extremely low in cost and high in coverage, this is a extremely recommend policy for anyone owning a condo.

By Fern Kuhn, RN

Basic Coverage of Homeowner Insurance Policies

The insurance policy is a package that includes more than 1 type of insurance in a policy. There are 4 types of coverage contained in the home insurance policy.

Included are:

Dwelling and Personal Property
Personal Liability
Medical Payments
Additional Living Expenses

In this article, Dwelling and Personal Property Damage will be explained:

Property damage coverage will help pay for any damage to your dwelling or personal property. Other parts of your home, such as a detached garage, a shed, or any other building on your property are usually covered for about 10% of the amount of coverage on your home.

Personal property coverage pays for your personal property, which includes your furniture, clothing, and other personal property.

The amount of that insurance coverage is about 50% of the policy limit on your home. This type of coverage is also limited by the type of loss specifically listed in your policy.

The coverage usually only pays the current cash value of the item damaged or destroyed, unless you actually purchased replacement cost coverage.

Your home insurance policy also includes off-premises coverage. What this means is that the policy covers your personal belongings against theft even when they are not in your dwelling.

Your insurance company will reimburse you for the cost of replacing your suitcase and whatever its content is if it were lost or stolen when you were away on vacation, but only for replacing them with the personal property of the same kind and quality.

By Fern Kuhn, RN