Wealth Creation and Saving Strategies | OnMoneyMaking

In 2020, many life insurance companies saw double-digit growths in policy sales. That’s in comparison to the number of life insurance policies they sold in 2019. Despite this, just a little over half of US adults now own a life policy.

However, Deloitte predicts the global life insurance sector to grow by 3% in 2021. So, if you don’t have a life policy yet, now’s the best time to purchase one. Besides, the sooner you get a whole life policy with paid-up additions, the bigger the benefits you get.

What exactly are these “additions,” though, and how can they boost your benefits? What makes them a smart and worthy life investment?

This guide will answer all these questions, so be sure to keep reading!

What Are These Paid-up Additions All About?

Paid up additions (PUAs) are also known as “paid-up riders” (PURs). They serve as an extra or additional whole life insurance coverage. You can think of PUAs or PURs as “mini” whole life insurance policies within a standard whole life policy.

As a mini policy within a policy, PUAs increase the overall value of the entire policy. One way it does so is by raising the main policy’s overall death benefit. Moreover, a whole life policy with a PUR has a higher guaranteed net cash value than one without.

So, a whole life policy with paid-up additions yields bigger death and living benefits.

How Do Paid-up Insurance Riders Work?

On its own, whole life insurance earns cash value for as long as the insured sustains the policy. Keep in mind that whole life coverages don’t expire, unlike term insurance. So long as policyholders pay their premiums, their whole life insurance remains valid.

For this reason, whole life insurance earns cash value for as long as the policy is intact. A huge chunk of the premium payments goes toward the death benefit, while some build up cash value. The latter also increases over time, thanks to its compounding interest.

If you include a PUR to the policy, more money will go toward both its death benefit and cash value. Of course, this also means that your premium payments will be higher.

Most insurance companies require upfront PUR purchases. This means that you might have to buy the paid-up additions together with the whole life policy. This is perfectly fine, as it means that the “mini” whole life policy starts to accrue interest right away.

Some insurers do permit existing policyholders to purchase PUAs at a later date. This is an ideal set-up if you can’t make bigger premiums payments at the start of your policy.

Bigger Death Benefits

Did you know that the average casket already costs more than $2,000? However, some mahogany or bronze caskets can cost five times more, with prices reaching up to $10,000! That’s already a lot of money, and it doesn’t even cover basic funeral service fees.

The thing is, the high cost of funeral services is only one of the issues mourning families face. A much bigger concern is the potential loss of a household’s primary breadwinner. The most at risk are single-income families, which comprise one in four US households.

In any case, the loss of income can take away the roof over a family. Granted, mortgage debts don’t get passed on to the living survivors of a borrower who dies. However, the survivors would still need to keep paying the mortgage if they want to stay in that house.

The thing is, only about four in 10 US homes are mortgage-free. If yours isn’t one of these, it’s best to consider getting a whole life policy with a bigger death benefit. If you get a policy with paid-up additions, you can leave your beneficiaries with a bigger benefit.

More Substantial Living Benefits

Paid-up insurance riders allow you to cash in bigger living benefits. This is especially true if you purchase the paid-up additions up-front. More of your premium payments go toward the policy’s cash value, so it accrues more interest.

PURs also accrue interest on a compounding basis. So, the overall cash value it builds gets bigger and bigger with each passing year. That’s how a whole life policy’s cash value with a paid-up option swells faster than one without.

Since you earn money faster with your PUI, you may be able to withdraw against your policy sooner. You can also wait a bit longer so that you can cash out a larger chunk of your living benefits. Either way, you can use your earnings whichever way you want, as it’s your money, after all.

Even More Earnings With Dividends

As a stand-alone mini whole life policy, PUAs can also earn dividends themselves. In this case, “dividends” are part of an insurance company’s profit distribution. They award these to their policyholders with PURs, usually once a year.

If you acquire dividends with your paid-up additions, you can use it to pay some of your policy premiums. You can also convert their value to secure reduced paid-up insurance costs. Either way, these profit-sharing tools help policy owners save on premium payments.

Some insurers also permit policyholders to use dividends to raise their PUR’s value. In this case, you add the dividends’ value to that of your paid-up additions. It starts to accrue interest, too, as it already becomes part of your PUR.

Make the Most Out of Your Whole Life Policy With a PUR

As you can see, paid-up additions are an excellent way to boost your whole life policy’s benefits. At the very least, it guarantees your beneficiaries a larger amount. You also get to enjoy more substantial earnings that you can use while you’re still around.

So, as early as now, consider purchasing a whole life policy with a paid-up insurance rider.

Ready for more wealth creation guides and money-saving strategies? Feel free to browse the rest of our site’s financial how-tos then!

One of the most important decisions you can ever make is to take out life insurance. It will protect the people you will eventually leave behind, and it can also help far before then. However, you may not know exactly what you need in a life insurance policy.

There is a plethora of things to consider when taking out life insurance, but we have compiled the three most necessary. These three things to consider before taking out life insurance will be able to help you with your important decision.

How long do you need coverage?

You can decide to take out life insurance for a certain period of time, or a lifetime, depending on your needs. When you’re deciding on how long you need life insurance, there are a few things you need to consider:

• Why you’re purchasing the policy in the first place
• If you’ve just had a child
• If you’ve recently bought a house
• What you will receive
• What your family will receive

For example, if you have just had a little one join your family, you would likely go for a policy that covers you until they’re no longer financially dependent on you. That can range anywhere from 20-30 years if you plan to cover their college/graduate tuition. Then, it is much the same if you’ve just purchased a house.

Owners of a new home may want to consider looking at a 30-year policy because that is how long your mortgage usually is. If you only have a 20-year mortgage, it is also a good idea to go for a 30-year coverage just in case of refinancing or circumstances changing.

A beneficiary

Firstly, let’s understand what a beneficiary actually is. A beneficiary is someone who receives the proceeds from your life insurance policy. However, there are a few things to remember when you’re naming your beneficiaries, here are some options:

• Choose one or multiple people
• The trustee of a trust that you have set up
• A charity or not-for-profit organization
• A minor (be careful as sometimes they cannot receive funds)
• Your estate (be careful as this may have tax implications

Because you are the one giving your assets away, you are named as the benefactor. This means, that with you in charge, you can decide on the who, what, when, where, and why of the assets you’re giving away. You need to make sure that you remain very specific about who receives it for the sake of your family and your wishes. It is also a great idea to consider no exam life insurance.

Insurance costs

There are plenty of costs associated with life insurance, but the cost you will pay greatly depends on several factors including:

• Your age when you start your policy
• Your health when you start your policy
• Policy features (how long payments must continue)
• The level of cover that is chosen
• The type of cover that is chosen

In plenty of cases, a life insurance policy will actually cost less per month than what you pay for all of your streaming subscriptions.

Funerals can be expensive, and so often we aren’t in a position to plan for them. Funeral costs vary depending on where you live and what arrangements are made. But the average casket cost is about $2,000 today and can run well over $10,000.

This can be a huge burden to your loved ones. To help alleviate this constraint, many people are turning to burial insurance. Continue reading to find out what is burial insurance, how it works, and how it might help you.

What Is Burial Insurance?

Burial insurance is also known as “final expense insurance.” It is essentially a whole life insurance policy that can be used for almost anything.

The insured pays a monthly or annual premium, which is based on their age, general health, and the amount of the policy. Typical payouts range from a few thousand dollars to upwards of $25,000.

Burial insurance policies are available for purchase through most life insurance agents. Some funeral homes offer them as well. Anyone can purchase them, but it is a particularly attractive option for people who want peace of mind following a health scare, such as after a heart attack.

Advantages of Burial Insurance

There are a number of advantages to having burial insurance. These include:

• Financial peace of mind
• Planning for the unexpected
• Flexibility and ease of purchase

Financial Peace of Mind

Funeral prices continue to rise across the board. Even the most basic funeral can be expensive. The cost of embalming, memorial services, headstones, funeral plots, flowers, and wreaths can all start to add up.

Cremation can save on embalming and casket costs. And even mushroom burial suits are becoming popular, for economic and environmental reasons. But these alternatives to traditional burial are not without expenses. The jumping-off point for mushroom suits is $1,500, and urns can be quite costly as well.

Regardless of what arrangements you wish for your funeral, burial insurance makes sure that all of these expenses are taken care of.

Planning for the Unexpected

Covering costs is not the only advantage of burial insurance. Most people don’t like thinking about their funeral. And, for this reason, this can make it difficult to plan for. This is even moreso the case if it is an unexpected death.

The point is that a funeral is not a time conducive to loved ones “shopping around” and finding the best deals on arrangments. The ones we leave behind will be in a sorrowful emotional state. It is a time to grieve, not worry to worry about finances.

Having an influx of funds to cover expenses can help this time go more smoothly for them. It is one less thing they have to worry about.

Ease of Purchase and Flexibility

One of the biggest advantages of burial insurance is that it is easy to get. Unlike many life insurance plans that require in-depth medical examinations, burial insurance usually only requires the insured to answer a few simple health-related questions.

Also, unlike other savings mechanisms that require payouts to be used for specific things, beneficiaries of burial insurance plans can use the money however they like.

Find a Plan Today

Don’t risk waiting to finalize how your funeral expenses will be paid. You can plan for it today by purchasing a burial insurance plan that will cover these costs, whether they are far down the road or tomorrow. It will give you the peace of mind to know that your loved ones will be taken care of in their time of grief.

We hope that this information has been useful. In addition to exploring topics like “What is burial insurance?” our blog covers a wide variety of lifestyle topics, including travel, food, and fashion. Be sure to check them out.

Did you know that around 44 million Americans do not have health insurance? The reason that so many people take a chance with their health insurance is for financial reasons. If you are wondering “what is the average cost of family health insurance?” we have the perfect article for you below.

Keep reading to learn more about costs and some tips and tricks to help you find the best rates out there.

What Is the Average Cost of Family Health Insurance?

In 2018 the average cost per month for family health insurance was $1,168.00. The costs can vary based on family size, the states you live in, and how much coverage you opt for. Understanding the cost of the different plans means that you have to know what to expect when it comes to the deductibles and co-payments.

The deductible is how much money you will have to pay before your health insurance provider begins to pay for your coverage. The higher your deductible the lower your monthly premiums will usually be. Keep in mind that with some family plans you will probably have two deductibles (an individual deductible and a family deductible).

Copayments and Coinsurance

Another cost to take into consideration is your copayment. This is a fixed amount that you will pay every time you receive a service at either a hospital or a doctor’s office. The copayment might come into effect before or after you reach your deductible.

A coinsurance is a percentage that you will pay for covered services once you reach your deductible. You will more than likely pay coinsurance until you reach your out of pocket max.

Government Assitance

If your household income is not very high then you might qualify for government assistant to afford health coverage for you and your family. There is a Children’s Health Insurance Program (CHIP) that provides inexpensive or free health insurance to families with children that do not make enough money per month.

For families that make less than $99,000 annually, they might also qualify for some federal assistance or state programs to make health insurance affordable.

With Obamacare or the Affordable Care Act (ACA), there are tax credits for those that make a certain percentage of the federal poverty line and can’t afford to pay for health coverage. The lower your income and the larger your family size, the larger the subsidies you receive.

Ready to Shop Around for Health Insurance?

Now that you are more familiar with the average cost of family health insurance, you can start the research process in your area. This is the time to gather your options and see if you qualify for any government help. Even though the tax penalty for not having insurance was removed in 2019, you still do not want to go without it.

Did our blog post help you out today? Please feel free to browse around the rest of this section for some more helpful reads.

Life insurance offers a diverse range of benefits, whether you apply when young or aged. Your dependents can use it to clear your debts or mortgage when you’re gone, provide for their daily needs, or even finance other investments to guarantee a better future.

All the above are possible if you apply the policy correctly without making the mistakes we share below. After all, familiarizing yourself with life insurance facts is an essential step in making a decision that you won’t regret along the way.

Here are the common mistakes that policyholders ought to avoid when buying business life insurance.

Choosing the wrong life insurance policy

While it’s crucial to choose a life insurance policy that aligns in pricing with the marketplace, the cost shouldn’t be the only factor to consider. It helps to understand the exact benefits that the plan offers to your personal needs before all else.

For example, this life insurance cover sourced by Caspian is an excellent choice when you’re employed. With it, your employer pays for the protection whilst getting tax relief from the government for being a business expense.

Before spending money on any life plan, find out about the terms and possible restrictions that come with it. While at it also, consider the benefits if the risk occurs vis-à-vis the total amount of premiums that you’ll pay during the entire coverage period.

Waiting too long to purchase

The interesting fact about life insurance policies is that they cost more as you grow older. This stems from the fact that older people are at a higher risk of life-threatening health conditions than younger people. For this, insurance providers tend to charge costlier premiums as you approach old age.

Besides, sometimes you might struggle to find suitable coverage if you wait too long to purchase the life insurance policy. And if you’re lucky to get it, the benefits might not be as lucrative as those available to people who apply when younger.

Forfeiting premium payments

Not all life insurance policies are leniently flexible when it comes to monthly payments. For example, the terms of a universal life policy are strict to late payments. Therefore, if you choose it, ensure you’re up to date with your premium payments. Doing this will guarantee full payout when the covered risk occurs.

Even with the above strictness to forfeiture, insurers offer a grace period before cancellation of a policy. For example, it’s not uncommon for the UK insurance firms to wait up to 90 days whilst reminding you to update your premium payments. An ideal approach when unable to raise premiums is to communicate with your provider to find you practical ways to clear the outstanding balance.

Relying on Group Insurance Policy

Registered companies in the UK often take group insurance policies to cover their employees against life risks. Normally, you benefit from it only if you pass on while still working for the entity. In that case, if you lose your job or get into a situation that puts you out of the workforce, you will lose that coverage.

Moreover, group life policies might not guarantee sufficient coverage for all your personal needs. Although the payout will cover the costs associated with your funeral, it might not be enough for mortgage, children fees, and other costly expenses. If possible, choose a personal term life insurance policy that’s flexible to changes in your status quo, for example, switching workplaces.

Incorrect listing of beneficiaries and policyholder

The life insurance application requires you to be very keen especially on the crucial details you provide. For instance, your insurer will offer the option to place the policy into a Trust to allow you to nominate the beneficiaries. In this case, you’ll want to make sure that you have the rightful people as your trustees who will control the proceeds from the insurance cover.

When choosing a policy, ask yourself these basic questions:

Who will be the primary and contingent beneficiaries?

For example, listing your children as primary beneficiaries has the least problems compared to your spouse. Unfortunate marriage risks such as divorce can present considerable obstacles to your policy.

How many people will depend on the policy, and what are their ages?

Remember minors quickly outgrow the dependent age than the elderly people, such as your parents.

How much does each beneficiary receive as payout?

Finding answers to this question helps you determine a reasonable premium to pay for your chosen policy. For example, underspending on premium payments when you can pay for a better cover can deny your loved one sufficient proceeds.

Which of these mistakes sounds relatable? We’d like to hear your thoughts below.