Although the history of the United States is not long, its life insurance industry has a history of more than 100 years, and it is already a mature and developed market. In addition to complying with complex legal regulations and setting relevant deposits, insurance companies can also transfer risks through a comprehensive reinsurance system, and finally the relevant insurance departments of the state government and special deposits will cover the bottom line to ensure the safety of customers’ funds from the root.
Today’s life insurance is not just compensation for the insured, but also has many functions. Among those of interest are:
- After a healthy policyholder purchases (for example, a million) life insurance, if he is sick before his death, he can get the insurance money. If you suffer from a long-term chronic disease or have a terminal illness, you can take out about a quarter (250,000) or half (500,000) of the insured amount for the policyholder’s use. The rest of the sum insured is reserved for posterity.
- Whole life insurance has a cash value. After investing a certain amount in the life insurance account and after a few years, if there is a need (such as a child/grandchild’s college education fund or supplementary retirement income), cash can be withdrawn from its cash value or borrowed for use. The interest rate of the loan is low, and there are rebates to offset the interest, and the loan is almost interest-free. This loan can not be repaid, and it will be deducted from the compensation amount in the future.
- Life insurance has tax advantages. The cash value of the insurance is obtained through investment with interest rate, and this income is not taxed; when the policy is valid, the cash is borrowed for use, and there is no tax; if the person dies, if the death benefit is within the limit of not paying inheritance tax, Still no income tax. If the compensation exceeds the limit that does not need to pay inheritance tax, the life insurance can be set up as an “irrevocable trust”, and the death claim does not need to pay inheritance tax.
Life insurance also has an investment function. The most popular life insurance product nowadays is Index Universal Life (IUL for short). This type of product can follow the stock market index to obtain income and guarantee that it will only earn no loss, and has tax incentives. It has won the favor of more and more people as a guaranteed and guaranteed investment method. At present, this type of financial product Only available in the US market. Everyone also knows that the annual investment income of Hong Kong insurance depends on the performance of the insurance company’s investment department, while the mainstream index life insurance in the US market does not directly participate in the stock market with funds, and uses low-risk bond investment + options. Large indexes (S&P 500, Euro Stoxx 50, Hang Seng Index) are the benchmarks, and the income tracks the stock market, and the annual return rate is open and transparent. That is to say, when the index rises, the insurance income also rises (the rate of return has an annual cap limit-each insurance company has different regulations), but when the index falls, the insurance can guarantee that the worst rate of return is zero, and it will not lose money. The annual return is around 7% – 8%. People often have doubts about the saying “the worst rate of return is zero, and you will not lose money”. To briefly explain, the zero yield at worst is achieved through the “low-risk bond investment” part of “low-risk bond investment + options”. Younger people may be more interested in this and take advantage of its tax-free benefits to put more money than life insurance pays as a long-term investment.
The amount of insurance required to pay varies with the age and gender of the policyholder. The younger you are, the lower the premium you pay. Since the average life expectancy of women is higher than that of men, women’s insurance premiums are lower than men of the same age. The numerical examples may be of interest to the reader. To purchase the above-mentioned IUL product, if the insurance amount is one million, men aged 50 to 60 need to pay 300,000 to 400,000, and women need to pay 200,000 to 300,000, and pay 1/10 every year for ten years. However, policyholders in their 18s and 20s only need to spend 70,000 to 80,000. After the first payment, the policy will come into effect according to the post-mortem claims of one million.
Investing in life insurance is a major financial decision that uses relatively precious after-tax money. Therefore, when choosing, we must first find a highly professional, experienced and trustworthy insurance broker. The policyholder can decide whether to purchase insurance through the communication experience with the insurance broker, such as checking whether he has a sense of responsibility, whether he can provide and explain the information needed by the customer in a timely and clear manner, and whether he can provide some examples to illustrate the problem and many more. You should learn as much as you can about the insurance company you are recommending through contact and discussions with your broker. In addition to establishing the reliability of the broker and the insurance company he recommends, you also need to consider whether the plan he is proposing is practical, effective and reliable. You have to discuss issues with the agent, put forward your questions and opinions, and participate in the formulation and modification of the plan, so that you can get a meaningful plan and get better results. This is the formulation and execution of a plan, not a simple transaction of buying and selling commodities. A reliable insurance plan with a reliable insurance company through a reliable broker is the most valuable, and the possibility and extent of problems in the future are also reduced, and even if there are problems, they are easy to solve.
In addition, this financial decision must be made when all aspects of the body are relatively healthy. Insurance companies will undoubtedly have stricter requirements in this regard. It’s too late to think about it after a friend has a chronic illness. There are also friends who were in good health when they first got the insurance, but after two or three years they wanted to increase the investment and expand the insurance amount to take a medical examination again. However, some indicators were not up to standard and the request for insurance expansion was rejected. Of course, the original insurance amount will not be affected. This shows that in the middle-aged and old age, physical conditions are prone to uncontrollable changes, and it is better to make such financial decisions as soon as possible.
Get life insurance when you are healthy, plus annuity as the first step in retirement financial planning. With this feeling of living long or leaving early, and having financial security in both directions, it makes people feel safe and comfortable.
