Understanding Permanent Life Insurance

Author: Thomas Corley
Source: ezinearticles.com

No one likes to deal with the topic of life insurance. It brings up too many realities that we all try to avoid thinking about, such as our own mortality, depressing thoughts of providing for our families if we die prematurely and lastly, money. You will die. I will die. We know this but we don’t want to consider it. When you consider that seven out of ten people are underinsured in this country you get the point that life insurance is something we just ignore or defer action on.

Like a surgeon who somehow manages to get over the site of blood in medical school, insurance agents have somehow managed to get over the emotional part of life insurance and are able to approach the topic in a matter-of-fact, business-like way. This unemotional, analytical approach is necessary when dealing with life insurance. When you cut through the fog of emotions you are able to approach the topic in a logical manner. So let’s clear the fog for a moment and talk about your life insurance needs.

There are essentially two types of life insurance; term insurance and permanent insurance. Term life insurance is the least expensive because it only covers you for a set period of time. You can have a term policy, where the premium changes every year (meaning: goes up every year) or you can buy a term policy where the premium is fixed for a period of time, for example ten years. The annual premiums on these multi-year term policies are generally more expensive than the one-year term policies. Permanent life insurance polices, on the other hand, provide a death benefit for life (a/k/a for your “life expectancy”). The premiums are higher because you are locking in the cost of your life insurance for as long as you live (up to age 100). In order to lock in this cost you are obligated for the premium payment every year. Most permanent life policies are also investments, in which you build some type of cash surrender value during the life of the policy.

Clients often bristle at the idea of buying a permanent life policy over a term policy. This usually is in response to the higher premiums associated with them. My response is to ask them if they own or rent their home. Invariably most of my clients will answer that they own their home. I ask them why and they tell me because they consider it a good investment that will build equity over time. This is precisely why you should own some permanent insurance. Think of term insurance as renting something and permanent insurance as owning something that is building value and equity. Permanent insurance is a way of not only securing a death benefit for life but a way of building a valuable investment that will kick in when you need it, which is usually in your retirement years. You see, with term life insurance the premiums increase every year as you age. When you reach retirement age, term insurance oftentimes becomes too expensive. Granted, your life insurance needs diminish as you approach retirement age, but they do not go away. I usually have my clients combine term insurance with permanent insurance while they are younger. For example, if my clients are in their forties and have young kids, I will usually fix the term period at twenty years. This insurance serves a very specific purpose, to replace the income of a breadwinner, in the event they prematurely pass away during their earning years. This term will make up about 60-75% of their total life insurance needs. I will add a permanent life policy for the remaining 25-40%. After the twenty years is up and my clients enter their retirement years, they will have built up some cash surrender value, which they can then borrow against, tax-free, to help supplement their retirement needs. Best of all, the permanent life insurance death benefit is still there, so if either spouse dies, the surviving spouse not only has enough money to pay for the ever increasing funeral costs, but also enough to help supplement their retirement needs.

The most common type of permanent life insurance policy is called “Whole Life”. Whole Life is a fixed premium product that covers an individual until age 100, typically. If a person lives until age 100, they are considered “dead” by the insurance company, and will be paid the face amount of their policy at that time. Whole life policies contain insurance and cash surrender value. The cash surrender value is small in the beginning but is structured to build up over time until it equals the face amount of the policy.

Another popular type of permanent life insurance is “Universal Life”. Universal Life provides flexibility in two ways. You can increase or decrease the death benefit (face amount) and you can increase or decrease the premiums you want to pay. The policy owner can even skip premium payments as long as the policy has built up enough cash surrender value.

A third popular type of permanent life insurance is “Variable Life”. Like Whole Life, the premium is fixed, however, instead of building up cash surrender value at a pre-determined rate, part of your premium is invested in a variety of investments that might include stocks, bonds, money market accounts etc. This means that you can make or lose money just like any other investment. Thus, a distinguishing factor of Variable Life insurance is that the death benefit and investment value are not guaranteed.

Tom is a Certified Public Accountant, a Certified Financial Planner, CLTC (Certified Long-Term Care) and President of Cerefice & Company, the largest CPA firm in Rahway, New Jersey. Tom works with clients helping them manage their money, retirement planning, college savings, life insurance needs, IRAs and qualified plan rollovers with an eye towards maximizing tax benefits and minimizing taxes. Tom is founder of the Rich Habits Institute and author of “Rich Habits”.

Changing The Theme Song To Your Life – How To Reprogram And Revamp The World You Live.

Author: Robert Worstell
Source: isnare.com

Your personal theme can be changed, just like you change the theme of your browser or your computer. Your theme is built from partly what you have experienced in your life, partly what you have been taught, and partly from you genetics. These are the recurrent attitudes you approach life with. That’s your theme.

If you are worried constantly, “easy to anger”, take life with a “grain of salt”, are “always optimistic” about what is going to turn up – these are all life themes.

You change them, like any habit, through substituting another habit for them. Yes, attitudes are habits. They are adopted by repetition.

You can control any of your attitudes, and should. Just as you stand out if you are laughing at the wrong point in a theater or crying when everyone is jubilant around you at a football game, you attitudes should be appropriate for what is going on around you. This doesn’t mean you agree with everyone’s reactions – but you can decide whether you want to call attention to yourself.

I covered this point of controlling your attitudes in my book “Go Thunk Yourself(TM)!” Re-programming your habits was covered in my “Go Thunk Yourself, S’more!”.

Of course, I’m doing this for myself as I write this. The re-programming I’ve been doing in my own life has some interesting results so far. The program, as you may recall, is to play “The Secret” DVD several times every day for at least 30 days – and follow the tips and techniques in this DVD. You can also use Earl Nightingale’s “The Strangest Secret”.

I often listen to this as background while I am doing other work. What I’ve found is that my basic core attitudes have been changing. The text of the DVD has been becoming almost subliminal – listening to something like this makes it become nearly learned by rote, you often know the upcoming part and what is going to be said next. This is the exact point. If you can find a single recording which has a complete system on it, playing it over and over enables you to learn this and reprogram your life with it. There aren’t a lot of these recordings, but you will find that many authors such as Wayne Dyer and Earl Nightingale said to constantly play other self-help tapes in your life, to surround you with these articles, books and so on. You are going to reprogram yourself in this fashion.

Oddly, you can do this by simply turning off your radio, TV and reading less newspapers during your day. It’s interesting to see how quiet things are and what thoughts now come into your mind. If you do this, you can see what you are constantly thinking about during the day – what your “theme” is in life. You will see what your attitudes are and how you deal with things around you. Because you aren’t constantly being inundated with stories of the dead, dying, or threatening – you now have time to track your own thoughts. And then you can decide whether you want to change them or not.

Reprogramming is like gradually replacing all the colored clothes with whites or vice-versa. You mostly only can pull out a single item at a time and sometimes you pull out the wrong thing – but it’s ok to drop something back in. Sometimes you don’t have a choice, since a white long-sleeved shirt might be entangled with a pair of jeans. But you simply take out the pair, untangle them, and then put back in the one you want.

As you play an MP3 or DVD daily, you start to give yourself a recurrent line of thought to compare your other thoughts with. What I’ve found is that this method will show up a regular and definite chronic line of thought in your life. With “The Secret” DVD, I’m starting to change any old patterns of self-doubt, anxiety, temper with the positive emotions I really always have cherished. Only now, I can simply keep these positive emotions in my life as a constant theme.

So in your efforts to change your own theme, you are simply changing the world around you. That’s just the way it is. The only way this could fail would be in your keeping all this great stuff to yourself. But then, you’d be surrounded by people with secrets, wouldn’t you? And you would have mysteries constantly appearing in your life, wouldn’t you?

Your world and what you think is entirely up to you. What you experience around you is up to you. If you don’t like the stress in your life, if you don’t like the arguing, if you feel like you don’t control where your life is heading – change it.

I’ve laid out in this article how you can do it. You can change your life to whatever you want it to be. You can travel, become a millionaire, live a rock star’s life – anything you want. For me, I like living on a farm and having the time to do my artwork and write. You might like more action in your life – I cherish solitude. What you want in your life, what your theme is – all of this is up to you to change and sort out for yourself.

Whatever your life’s theme song is – it’s up to you. And only up to you. No one can change your life for you. Get one of the classics, or one of my books, or several – or listen to Dyer’s tapes, or Nightingale’s. Or pick up anyone else’s and play them constantly for yourself, for your own personal good.

And you’ll find your theme changing – so let us find you constantly humming your own theme song.