The Risks And Rewards of Buying Life Insurance

courtesy of www.healthysciencebuilding.com

Life insurance can be an important tool to pay for any expenses after your death and some expenses while living depending on your policy. Once you have the magic number for amount of coverage you want, seek out comparisons for monthly premium rates and plan benefits. Be sure to check the company’s reviews. Also, get to know the financial strength ratings from S&P, Moody’s, Fitch, or A.M. Best, this will show how stable the company is. 

There are many rewards for buying life insurance

                                              -Paying off debt and hospital expenses
                              -Leave less financial responsibility on your grieving family
                                                            -Covering funeral costs
                                          -Providing a cushion for your spouse and/or kids
                                                      -Creating wealth for your heirs
                                                           -Protect a small business`
                -Some policies offer cash reserve--additional source of supplemental income

courtesy of www.sentinelgroup.com

But there are also many risks to buying life insurance:

      -The purchase price for your coverage changes as you age

                  -Health conditions diagnosed prior to buying life insurance can limit the amount of coverage you can purchase

-The financial institution or the company holding your benefit can go under, making it impossible to pay your benefit 

-Purchasing too little insurance can leave a burden on your family and purchasing too much coverage can be a waste

-Purchasing life insurance with your employer is more cost effective but if you leave your employer the plan may not transfer to an individual policy

The most common types of life insurance is term, whole, and variable. Term life is the purchase of a death benefit based on a group of years usually in 5 or 10 year increments. It is usually a cheaper alternative with high coverage but if you do not pass away within that time then you have to purchase another term. Whole life is the purchase of death benefit for the remainder of your life, stays in effect from purchase date until death. This type of policy offers a cash reserve and it is invested by the insurance company until the benefit is paid. Variable life is not as commonly selected but operates like whole life insurance with changes throughout a term of years for investment on cash reserve. For example, you would personally choose where your cash reserve is invested every ten years.

Last words of advice—keep your contact information up to date and your policy information accessible for people to find upon your passing. Hopefully, we will all live a long, beautiful life. In meanwhile, this gives you a head start to a make a decision on what will be best for you. Feel free to comment or share below or on social media at Instagram @practicalwallet, Twitter @practicalwallet,  and Pinterest @practicalwallet.

Does your debt nail you down?

 It's time to get MOTIVATED! It's time to get ENGAGED! It's time to be HOPEFUL!
Our current financial status whether good or bad is not a description or map of who we are. We decide who we are and we are in control at all times. Take back your control mentally by building confidence in knowing you can achieve your goals. Once we open our mind to it, we can begin to create the tools to knock our debt down and out. Debt shouldn't nail you down. By nailing you down, I mean debt should not control you and limit your personal life enjoyment.

Courtesy pic by www.animatedviews.com

Our financial status is simply a creation of past decisions and current income. If  we want to change it to make it better, we have to be optimistic. You can't win a fight if you think you are going to lose. If your money is limited, there are ways to have fun without spending money or by being frugal with your money. For example, try substituting a night out at the restaurant for a family potluck or substituting a day at an amusement park for a nature walk or picnic at the park. If your money is not limited but you make spontaneous purchases that limit your savings then you should put place your savings in an account before your go freely spending. 

The biggest way to fight debt is to increase our disposable income. Disposable income is everything you have after you pay your essentials. Three debt fighting strategies that have helped me are below:

      1.  Find out how much interest is added monthly to your credit card or loan account. Then pay the total interest plus your minimum payment plus a little extra cushion. These payments can be divided into weekly or biweekly submissions but will help you aggressively take control of the account.

Courtesy pic by www.idcwebs.com

                2.     Pay the account with the highest balance first; preferably the higher interest rate too. As you pay one account off, snowball the payment used for the previous account to remaining accounts. You can pay each credit card account until it is under 35% of the credit limit or you can pay it off to use only during emergencies.

3.      When creditors threaten to report you to the credit bureaus, be proactive early, and find out if you have other options. Ask for a payment plan to avoid reporting and see if you qualify for a reduction for being concerned about the account being paid.

Watch for our next personal finance post on ways to increase our income so we can begin to increase our disposable income. Feel free to leave comments on this post or social media on Instagram @practicalwallet, Twitter @practicalwallet,  and Pinterest @practicalwallet.