Category: Insurance

Importance of checking maturity benefits while choosing a life insurance policy

insure your lifeYou must have considered life insurance as something that only provides support in the event of a financial crisis. But you may not have considered its potential in the form of a long-term investment. Life insurance yields a great shield of safety around your household members in the event of an unforeseen wage loss e.g. accidents causing disabilities or death. The consideration of income loss for the future helps in determining the amount of compensation although the true worth of a human life can’t be measured in terms of money.

Under circumstances when the policyholder gets disabled or passes away, the family members achieve a guaranteed sum of money termed as the “sum assured”. Even with a term insurance plan, the policyholder needs to think of what he’ll achieve from this type of investment in case nothing unfortunate happens. Will he be able to meet the other inevitable expenses like that of bearing the cost of his children’s education, a world trip with his loved ones, and the marriage of his children?

Types of maturity benefit plans:

Term Life policies- Term insurance is a financial plan that reimburses extra premiums to the policyholder when the policy terms end and the insured survives through this period.

Endowment policies- The benefits of insurance and investment are combined under these plans. The money doesn’t yield great returns as it’s invested in debt funds. However, the risks can be managed more easily. The sum assured is actually not that high.

Unit-Linked policies- Compared to traditional forms of life insurance, the risk is much higher with this type of unit-linked products. The policyholder needs to bear some other associated charges, but he gains exposure to equity and obtains a fair growth of his money as against a higher return. These plans even allow money to be withdrawn partially that can be utilized for coping with the financial challenges whenever they surface. Death benefits are provided when the policyholder passes away within the tenure, but the guaranteed returns are provided when he survives before the policy period.

Maturity Benefit from life policies

Upon maturity of a policy, the benefits can be claimed by the policyholder. The completion of the plan tenure entitles the policyholder to receive a variable amount for ULIPs and other products linked with the market performance alongside the principal amount. However, for achieving the variable benefit, the policy needs to be concluded according to the pre-set terms. For traditional products, the owner will be entitled to receive the fixed amount only. The benefits that provided on maturity usually comprise of the sum of premiums that have been met during the entire policy tenure and the other return benefits stated in the paperwork.

The maturity benefits yield a sum of money that increases each year but is restricted to the overall premiums paid. That’s one reason why these plans are considered to be both a coverage benefit as well as an investment option. The corpus exhibits a uniform increase and the entire amount is paid out at the end of the maturity term.

After The Loan: What To Consider When Purchasing Your First Car

loan for carYour car is perhaps proof that you’re one step closer to your financial independence. However, sometimes you just can’t help but loaning your first car. Loans of course have their respective advantages and disadvantages, and they sometimes play a big role in determining just how your first purchase affects your overall financial situation. Before you decide to do that, however, always remember to have these considerations in mind when purchasing your first car.

Budget Counts

Chances are, you’re going to want a certain car immediately, especially when you get your loan approved. This is why sometimes we tend to immediately go for the dream car by the time we have the loan ready. Try to avoid this. Remember, you can’t take the car home if you can’t exactly pay for it.

● Let the rule of thumb be that you can’t spend more than 25-percent of your income for the cars you have at home. This amount should include everything about the car, including insurance and fuel.

● Try your best to calculate just how much your new car will be affecting your income. If it takes up more than 25-percent of your expenses, now might be a good time to re-assess the kind of car you want.

● Remember, if you have to suffer financially to get your car, then you’re doing the wrong thing. After all, you’re not supposed to suffer in the first place. Find a car with a budget you can adjust.

What Car, Finance Wise?

When we choose cars, we normally pay attention to the kinds of models we need or our preference based on family size. However, perhaps a more important consideration is just what kind of car do we need, based on the kind of finances we have? For instance:

● Certified Pre-Owned (CPO) cars are becoming the more go-to option nowadays thanks to a wide number of lease returns. This means cars more than three years of age are becoming on sale. Three years is actually not bad, considering car depreciation values. There are cheaper CPO cars as well, so make sure you take this into account as well.

● Used cars, however, tend to have a shorter warranty period and a higher interest rate. You also wouldn’t know the full history of the car in question. However, you may be getting your money’s worth, because it can be extremely cheaper than CPO cars.

● Leased cars are probably going to help you secure an upscale car for your budget. However, you don’t get to own the car immediately, and would instead have to pay for it with set terms. Be careful about these terms, though, as they also tend to have strict penalties.

● Brand new cars can be an option for you, though chances are you’d get a car with lesser features based on your budget. Getting this would also mean you have a lower interest rate and full warranty, though. Sometimes, dealerships even offer maintenance and assistance.

CPOs tend to be the go-to choice of a lot of people, since the vehicles that are marked CPO tend to be quite cheaper. Sometimes, these cars also have some duration of warranty left as well.

Narrow It Down Further

Chances are, you’re going to have a selection of cars you want based on the budget you have. You may want to write a shorter list, though, because you have to know by now that there are potentially more expenses that you should expect. You have to take into account maintenance options, fuel, and other expenses you would have with the car. With these in mind, you also have to:

● If your automaker has a website, try to visit it and compare the specs of your car with reviews from other websites. Take note of the features that matter most to you, so you can narrow down your list of prospective cars.

● Take note of what’s called the MSRP, or the manufacturer’s suggested retail prices and take note of invoice prices as well.

● You may want to check the local inventories of your dealership and find out which of these selected cars are in your local vicinity.

● Try to choose the cars that would at least be 5-percent less than the monthly budget you have. This 5-percent will more or less go for repairs, insurance, maintenance, and gasoline.

Be sure to print out or save images of the web pages with important information about the cars you like. Don’t just go to the dealership yet, though.

Ownership Costs Matter

With your short list at hand, try to create estimate costs for each of them and try to see if they fit your budget. There are websites such as Kelley Blue Book (kbb.com) or Edmunds (edmunds.com) that have ownership costs in the area, so you can at least narrow your choices down.

● If you want, you can also make a personal calculation for better accuracy. Assess the miles you drive per year, and try to obtain a quote on insurance on the cars you may want to buy. Give the insurance agents the model and make, trim level, and even the engine just to get an exact quote.

● You should also get to learn the invoice price, wholesale price, the MSR, and the asking price whenever applicable. Check third party websites for invoice prices, and while they may not be extremely accurate, try to negotiate for one that is close to what those websites indicate. This is of course, before applying any discounts.

● The next step be you researching all the possible discounts you can get. There are a ton of ads promoting cash-back deals, or discounts to military members, students, and even credit union members. These discounts can also be stacked alongside the cash-back rebates if your preferred model has them.

Secure The Financing Before Visiting Dealers

Remember that dealers want to coordinate your car loan because they also receive a commission on the loans they get to manage. This means you have to secure financing immediately from credit unions or banks in advance, just so you could compare their loans to what the dealership offers.

● A lot of credit people and unions tend to be open to people living in their communities, so this means you don’t necessarily have to be a part of a certain industry or company to join. Credit unions are good options because they tend to have rates that are a few percentage points lower than banks. You may click here for more information about credit people.

● You should also remember that dealerships don’t always offer good deals, no matter how attractive they are. Only about a fraction of car buyers even get to qualify for low-interest deals, which means your chances of getting in on it are low.

● Even if you do get to qualify for the rate, you may be better off with your credit union or bank. Always remember, if you feel like you’re stuck with your finances at this point, it’s not bad to get a consultation with an expert.

Conclusion

Purchasing your first car is an extremely big financial risk which has its advantages and disadvantages. Loans are always a good option if you can’t purchase your car for the full price, but always remember the considerations above before purchasing a car. Always consider the loan as part of your long-term financial plans. What about you? What do you think are other factors when purchasing a car for the first time?

Knowing Your Retirement Options: Ways to Get a Little Extra Cash

retirement cashGenerally speaking, the kind of people who focus on retirement tend to be those who are fast approaching retirement age. But this doesn’t have to be the case! In fact, more people really should start thinking about their retirement sooner rather than later. You’re not going to be able to work forever, and when the day comes that you deserve to kick back and relax, breaking ties with the nine to five working world, you’re going to want to be able to live as comfortable a lifestyle as possible. This can only be made possible by having sufficient finances. Now, a retirement plan will be able to put all of this in place for you. But it’s always good to have a few ideas stored away and a few tricks up your sleeve just in case you find yourself in need of a little extra cash when retirement does come around. Here are just a few to keep tucked away in your mind.

Reverse Mortgages

By the time you’re looking at retirement, you may think that mortgages are a thing of the past. Hopefully, you will have already paid yours off. However, it’s always good to be aware that if you are looking for extra cash to make your retirement more comfortable, you can always take some equity back out of your property without having to sell up. This is where a reverse mortgage can come into play. In order to know exactly how much you can gain from a reverse mortgage, you will have to have a fair amount of personal information. This may include your property’s value, it’s age, and any repairs that it may need to be carried out. Your own age at the time of taking out the reverse mortgage would also be taken into account. However, for a more general idea of the money you could hope for, you can always use reverse mortgage calculator aarp.

Savings Accounts

We’ve all been taught since we were little that we should save a little cash for a rainy day. Well, believe it or not, there are likely to be more and more rainy days the longer you’ve been out of work. Many people find themselves becoming increasingly bored and wanting to treat themselves to something a little special to put a smile back on their faces. Savings accounts can provide these little extra boosts for occasional pick me ups. So open an account as soon as possible. Deposit money in it regularly. This can be a relatively small amount. Something that you won’t notice missing. The cash that you’d usually fritter away on bits and bobs that you really don’t need. However, these small amounts really will mount up over time, and way down the line, when you finally dip into the cash, you’ll really thank yourself for it.

These are just a couple of ways that you can make yourself a little comfier and more content in retirement when the time does roll around. While retirement may not be top of your priorities right now, it could take up a large part of your life, so keep it in the back of your mind at all times.

Building a Nest Egg for a Happy Retirement

happy financial retirementWhen you are young and care-free, planning for a silver-haired future might feel weird. It’s difficult to image how next week is going to go, never mind figuring out how you are going to support yourself when you no longer want to work.

However odd it might be, planning for the future while you are young will give you the best chance of a happy retirement. It may be unpleasant to imagine a day when you will need full time care or perhaps can’t make decisions for yourself, but thinking about it now will certainly help.

Start Young

As soon as you start earning, you should be thinking about how you are going to save up and build your retirement nest egg. By starting young, you are giving yourself plenty of time to build up your financial portfolio and save without really feeling the loss. The older you are when you start, the more aggressive your saving plan will have to be.

Set out your financial goals early on and work steadily toward achieving them over a long period of time. This method will help you to budget properly without sacrificing all the good things you enjoy like meals out with friends or holidays.

Invest Smart

In order to accumulate, you must speculate. This means making smart investments in things such as stocks and shares or alternative opportunities like antiques or gold. In fact, a gold-backed IRA is an excellent supplement to your portfolio as it reacts slightly differently to the rest of the market. This is an advantage because it will help to smooth out any risks as the market naturally fluctuates.

If you aren’t too confident about what you should and shouldn’t be investing in, or how to balance risks, you must see an independent financial advisor before you part with any cash. They will be able to create a personalized financial plan for you and offer good advice to ensure you can save enough for your future.

Save, Save, Save!

If you have a budget, and stick to it as best you can, then saving a portion of your income each month should be fairly easy. In fact, if you get the balance right, you probably won’t even notice it’s happening.

Some of the best advice for building your nest egg is to put any windfalls into savings rather than splurge on things you don’t need. Find other ways to treat yourself without completely blowing your budget out of the water. This isn’t to say that you can’t treat yourself every now and again, but just to make sure that you adjust your budget accordingly.

With a sensible portfolio, your retirement plan should be easy to manage and your nest egg will gradually build up over the years. Try to keep this fund separate from your other savings to prevent you from being tempted to dip in for some extra cash. Keep a rainy day fund as well as a contingency fund and your nest egg will be safe for the future.

The Golden Rules of Taking Out a Loan

loan timeIf the world was perfect for everyone, no one would ever need to borrow any money. Unfortunately, things just don’t work like that yet – and as long as we have a banking system, it’s unlikely to change. The reality is that we have to borrow money to lead the lives we want. However, there are limits, and many people are guilty of stepping over the mark.

The truth is there are good debts and bad debts, as you probably already know. And even if you are in good enough shape to take out the former, after a few missed payments or a challenging life event, it can quickly turn into the latter.

When it comes to personal loans, the temptation is strong enough to turn heads of even people with the strongest financial constitutions. Advertising is everywhere, and almost all speak to your aspirations and the life you could have – if only you would borrow a few thousand dollars or more.

To make sure you don’t fall into a trap, there are a few things you need to consider when taking out a loan. These golden rules should be set in stone, as when you step outside of them, it’s often the first step down a slippery slope to unaffordable, bad debts. Let’s take a look at everything you need to know.

Always shop around

It doesn’t matter whether you are borrowing money to buy a car, a home, or just pay for something quickly with cash loans, always shop around and look for the best deal possible. You should compare percentage rates for interest, but also check the length of the loan. Sometimes, cheaper interest rates over a longer time period will result in a higher overall cost.

Always check your credit score.

Another thing to consider before applying for a loan is your credit rating. When you make an application and get turned down, your credit score takes a hit. Not only that, however, but when you are attracted by a fantastic looking deal that you see in an advertisement, you have to remember that these deals are only offered to consumers with the best credit scores. If your rating is anything less than perfect, you won’t be offered it, and instead, have to put up with a much more expensive deal than you applied for in the first place. A lot of people fall for this, so ensure your credit rating is up to scratch before you apply.

Always read the small print.

The terms and conditions on loans are notoriously detailed, and the vast majority of borrowers never pay them a blind bit of notice. It’s no surprise – who has time to read the reams of paper that often come with your application form? However, you should make time. Banks and lenders of all varieties depend on your ignorance and lack of time, and will often include some pretty dire conditions that you need to meet to qualify for any of the supposed advantages. Another thing to watch out for is early repayment charges – you should always include them in the overall cost of the loan when you do your initial sums. Ideally, all loans would be free to pay off whenever you want, but the reality is somewhat different.

Consider insurance

Loan insurance gets a bad rep, because of a lot of malpractice in the past. However, it’s a valuable protection if you can find the right deal. For a few dollars a month you can protect yourself in the event you suffer an injury at work or get ill and can’t earn any money to pay the loan back. Again, shop around – there are varying rates from all kinds of lenders and insurance companies, and you will often find it is more expensive to buy insurance from the company offering the loan.

Compare with a credit card.

Another major misconception is that personal loans always have better deals than credit cards. To be fair, this used to be the case, back in the day when credit cards were only for the very wealthy, but times have changed. When you consider the long 0% deals you get on credit cards – some of which go for around 18 months at the moment – they often compare very favorably to a personal loan at, say, 6%. And if you can pay off the card before those 18 months are complete, it won’t actually cost you a penny.

Pro tip: borrow more money

As a rule, you should never borrow more than you can pay back. However, when you consider that banks and lenders will offer lower interest rates for higher loans, wouldn’t it make sense to get the better deal? In short, of course, it would, but you have to have a lot of self-discipline. You could borrow a larger amount of money, only spend what you need, and then pay it back over time using a combination of your personal repayments and the surplus. Over the course of a 4-5 year loan, this could actually save you a four-figure sum, so it’s well worth investigating – if you have the discipline, of course.

Be careful with secured loans.

Secured loans will always give you a fantastic sounding deal. But there is a reason – it’s because you have capital at stake. When a loan is secured against your possessions, lenders tend to sleep easily, content in the knowledge that if you fail to pay, they get your house, car, or treasured objects. Yes, the deals can be tempting. But unless you are 100% sure that you will be able to pay them back. Unsecured loans may attract higher interest charges, but ultimately if you have a problem paying them, there is little a lender can actually do.

Always stake the shortest path.

Finally, whenever you take out a loan, the cheapest option will always be to pay it back as quick as possible. It’s down to your personal circumstances, of course, but if your idea of the perfect loan is that it ends up costing you less, it’s the only way to go.