Total Life Insurance

For death risk insurance, the benefits include financial protection for your loved ones, while the disadvantages are that you have nothing to show for the premiums you paid. The advantages and disadvantages of life insurance are, among other things, the biggest advantage, which is having cash that you can borrow at any time. The main drawback is that the high premiums you pay over time generally exceed the present value when you withdraw them. Total life insurance is much more expensive than death risk insurance: you end up paying 5 to 15 times more for premiums. The present value component also does not yield as high a return as a traditional investment account.

For example, many people eventually have pension savings, a paid home and adult children. Full life insurance, on the other hand, includes not only death benefits, but also an investment component. The insurance company charges considerably more than the costs of the real insurance and invests the extra premium in shares, bonds or both. Unlike death risk insurance, all life has no fixed term; the insured can remain insured for life. And lifelong policies have a present value that is returned to the insured if the policy is ever canceled.

As a quick update, death risk insurance is as simple and inexpensive as it sounds. If the insured dies during the term of the policy, his beneficiaries will receive death benefits. It’s the type of life insurance my wife and I have had since we adopted our children seventeen years ago.

However, the main purpose of this policy is to pay your beneficiaries a death benefit when you die, and this benefit represents a significant part of the cost of buying a policy. Therefore, full life insurance and other life insurance with present value are meaningless as an investment unless one of your goals is to have lifelong coverage. To get a real idea of the value of the term, let’s compare a policy of terms and a policy of universal life. At the end of a year, the universal policy, assuming you paid 5.7% per year, with deferred taxes, would have a present value of exactly zero . But let’s say you invested $ 2,650 (the difference between $ 3,000 and $ 350) in an investment fund instead, yielding an average total return of 10% per year.

But this strategy is more flexible with universal life insurance, because you no longer have to pay in years if you don’t have the money. Vida is considering a guaranteed universal life insurance for permanent coverage, but already has a broad health insurance in China for foreigners investment portfolio and wants to diversify. By means of a life insurance policy with a present value, you can obtain a guaranteed return or run a higher risk, such as investing the present value in an actively managed index or portfolio.