Help to chose insurance

Posted: Thu Jul 12, 2012 05:58 pm Post Subject:

Great question. I can think of no better way to figure out how to take care of one's family than to ask questions of anonymous people on the internet.

Posted: Thu Jul 12, 2012 06:01 pm Post Subject:

You cannot really ask that question here. This is a question which requires considerable insight on the part of a licensed insurance producer and, possibly a registered representative, in order to help you determine the proper path to take.

What can be said, in general, is that "fixed deposits" are usually too conservative to keep pace with inflation. Thus, the longer the money remains in such an account, the greater the actual decline in future purchasing power.

Mutual funds, stocks, and bonds expose a person's savings to "market risk", which means your money could lose value. It could gain value. It could experience no gains and no losses. In other words, when you put your money to work in the stock market, you have to be personally responsible to maintain a well-allocated prortfolio, and be responsible for its performance.

Life insurance is not necessarily the place you would want to "save money" for a child's college education. The rate of return may not be much better than the conservative savings accounts banks offer. Although the interest would accrue tax-deferred, all your money will not find its way into the cash accumulation -- you have to pay for the cost of insurance.

You cannot simply dump $40,000 into a life insurance contract. Even for a 2-year-old child. There are premium and cash accumulation tests which can prevent that much money from going into a policy with too little death benefit.

It could require a $500,000 or larger policy to avoid any problems. And what 2-year-old child actually needs a half-million dollar life policy?

You need to work with an agent to discuss all of this and more, in order to determine your true objectives and identify the best method for reaching your goal.