Avoid Mistakes Buying Life Insurance

Many people make simple mistakes when considering the purchase of life insurance.

These mistakes can have a devastating effect on the beneficiary of the life insurance and can cause unnecessary and undue harm.

Approaching the purchase of the life insurance policy with sufficient information can help avoid these basic mistakes and have the policy provide the desired protection. The three basic mistakes made in the purchase of life insurance:

1. Selecting the wrong type of coverage: A life insurance policy is one of two types: temporary or permanent. If the need is only temporary (such as debt coverage) then a temporary policy may be appropriate. These policies are known as term insurance and can be for almost any term period such as 10 years or protection to a specific date such as age 70. A permanent policy (such as whole life) will provide protection for your whole life. This policy will pay the death benefit regardless of how long you live.

2. Not buying enough protection: Many people look at life insurance as a necessary evil and the thought of a large amount of money for a beneficiary can be unsettling. But the fact remains that in the event of death income and debt will need to be offset and having enough life insurance is important. The formula for a reasonable amount of life insurance to purchase is 7 times your gross income plus the unpaid amount of a mortgage. Other considerations could be funds for retirement of the remaining spouse or funds for a childs education. It is always suggested that to error on the side of too much coverage is prudent.

3. Not being informed: Many people are not sufficiently informed about their options when it comes to buying life insurance. There are numerous policy choices and numerous company choices. It is always smart to investigate several choices before making your selection. Many well qualified insurance professionals are available to assist you in your policy selection and being informed as to your options will help you make the correct decision

The Black Swan

The Black Swan

The recent movie, The Black Swan, starring Natalie Portman as a ballerina dancing Swan Lake earned her an Oscar and the movie a nomination for an Academy Award.

In addition to the Black Swan being an important part of Swan Lake, it also has a second meaning in the financial world.

The term “Black Swan” is also used to describe a scenario involving sudden and unpredictable financial movements or an unforeseen event. Most financial forecasters admit that a “Black Swan” cannot be predicted and then is therefore outside their area or responsibility.

A recent “Black Swan” event is the aftermath of the financial disaster caused by the recent Tsunami in Japan. The damage caused physical damage which in turn caused a loss of jobs and a loss of commerce to the Japanese and world economy.

Being unable to predict what will happen in the future, can cause serious stress when it comes to your important money, money that must be depended on for a safe and secure retirement. Some people have no clue of how to prepare for the Black Swan (Tsunami) so their important funds are often at risk.

One approach many people have used is the benefits provided by annuities. Annuities are safe and secure and out of the reach of a Black Swan event.

Annuities also provide:

* Guaranteed income
* Guaranteed rate of return
* Avoidance of probate
* Protection from risk of loss