Term life versus cash value life insurance

I’m going to tell you all I know about insurance in five minutes. So here we go.

When it comes to houses, we all know the difference between renting and owning.

With renting, each month your landlord gets a rent check. You get to live on their property for a month. If you don’t pay you’re out! Lather, rinse, repeat.

Stay in the same place and you can count on one thing – your rent will go up.

If you stay for a long time, what do you get back? Absolutely nothing, unless your landlord is also your mother.

Term insurance is like renting a house.

You pay the insurance company a premium. They give you life insurance. Like a lease, the premium is fixed for a “term” such as five, ten or twenty years. Thus, “term” insurance.

What happens if you stop paying premiums? The policy lapses and you have no protection, just like a renter who doesn’t pay.

What happens if you pay faithfully for the entire term? Just like renting, the price goes up!

If you pay your premiums for a long time, what do you get back? Nothing they are definitely not your mother!

Cash value life insurance is like owning a house.

Part of your monthly mortgage payment pays interest, and part goes into your “piggy bank”, home equity. The value of your property can go up, also increasing your home’s “piggy bank”. Plus, mortgage interest earns you a tax break so Uncle Sam gives you money back.

What happens when you pay your mortgage faithfully? You own your home free and clear, and you don’t owe another penny. You have a permanent, no-cost dwelling.

With cash value life insurance, part of your premium pays for “pure insurance” and part of your premium goes into a “savings account”. This account compounds, growing on its own. As well, Uncle Sam gives excellent tax advantages to this “savings account”.

What happens if you don’t pay your premium? Your “piggy bank” will pay it for you, for as long as there is cash. This can make all the difference during tough times, maybe from illness or layoff.

What happens if you pay your premiums faithfully for thirty years, just like a mortgage? Eventually, the interest from your savings account gets big enough to pay the premiums, so you don’t have to. The policy will never lapse, guaranteeing your heirs a tax-free payoff. Thus, the name “permanent” insurance.

With a good policy held for the long-term, every penny you pay in premium is returned to you, with a bank-like return.

Owning a house costs more at the beginning, and in the end pays you. In the same way, term insurance costs less in the beginning, but much more in the long-term.

These are the two extremes. There are hybrid products that combine term and cash value characteristics. Just like a condominium is a hybrid between renting and owning.

That’s everything I know about insurance.

What should you do? Is term or cash value right for you? Just like renting vs. buying this decision depends on your circumstances and your goals. A seasoned insurance professional representing one or more top companies can help you sort this out for yourself.

In college and living off campus: Should I get renters insurance? – Part 1

When you head off to college for the first time, you’ll be taking all sorts of valuable items with you. The Insurance Journal estimates that the average college student takes anywhere from $5,000-$10,000 worth of personal property with him. That laptop you’ll be using to take notes and write papers, your iPod, sound system and the bike you’ll use to get around campus are all susceptible to damage and theft. While you might think your possessions are safe in the house or apartment you’re renting, there are limitless unforeseeable scenarios that can play out. The worst part is, neither your landlord nor his homeowner’s insurance are under any obligation to reimburse you for any damage to your property. All it takes is one busted pipe when you’re in class, and you come home to a soggy and useless computer.

The good news is that you can get renter’s insurance that will either replace your property, or reimburse you for the cost of it. In fact, renter’s insurance is often one of the most affordable policies available. You’ll likely wind up paying less for renter’s insurance than you would for car insurance. Of course, one of the biggest factors in determining the cost of renter’s insurance is exactly what you want to insure. Luckily, the average college student has fewer possessions than say, your average married couple. This means you may wind up paying as low as $30-$50 per month for your renter’s insurance.

So what does renter’s insurance cover? There are seventeen scenarios under which your property will be protected. These include:

Fire or lightning. It happens, just look at Southern California.

Windstorm or hail.


Riot or civil commotion. These do occasionally happen in college towns.

Falling aircraft. Rare, yet sadly, not unheard of.

Smoke damage.


Theft. There is a certain unscrupulous segment of the population that targets college students.

Damage by glass.

Volcanic eruption. Yikes.

Falling objects. This includes trees, which do occasionally fall over on houses.

Ice, snow or sleet causing a roof to collapse.

Water related damage from home utilities. Most often, this implies a broken pipe.

Electrical surge damage.

One of the main things to consider in all this is that your house or apartment may be in less than stellar condition. Some landlords who market to college students depend upon the navet of their target demographic. Not every student will think to inspect leaky pipes under the sink, or inquire about the condition of a house’s wiring. Nor should you have to. You should, however, consider the almost marginal cost of renter’s insurance compared to the security it can provide you.

So who should get renter’s insurance while in college and living off campus? I would recommend it to every student who owns anything more than a computer and an iPod. You’re going to have roommates, after all, and odd things beyond your control do tend to happen when you have roommates. However, if you pool your resources, you can easily split the cost of your renter’s insurances among yourselves, and enjoy some peace of mind. Chances are, it’ll be less than the cost of that satellite TV subscription you were going to buy.

7 Reasons Why Would I Get Renters Insurance?

The renter insurance is one of the best supporting documents for the renter. The renter policy gives broad coverage to ensure against the personal property of the renter only. The renter act always insist renter to have renter insurance policy because the renter insurance will protect the household goods. You must have to purchase the renter insurance to protect your belongings because the landlord policy could not cover your belonging. It will only cover the damage of the building.

There are six main reason to purchase the renter policy are:

1. The renters insurance can give protection of personal belongings and can minimize the economic burden of restoring or changing of your personal goods in case of any natural disaster or calamities or any other reason. The renter insurance policies give medical expenses, living wages and provide the liability coverage. I think it is the best policy for the renter to protect their belongings.

2. The average renter Renters passes through various types of threats in a year for their personal belongings. There are 17 threats for renter some of are under control for human beings. The number of threats includes Hurricanes, Katrina, Fire, thefts and sabotage etc.

3. Looking to the present condition it is essential for renter to have coverage against all the threats for their personal belongings because landlord policy could not cover all the threats. It only covers the damage of the house. So in such cases Renter policy can help you to give protection against your belongings. The renter policy covers furniture, electronics item like TV, computer, stereo and many more things.

4. The renter policy also cover third party coverage incase the person injured at the time of natural calamities at your floor or due to any falling object on the person etc. The renter policy can give enough protection against such third person injury.

5. The renter policy is not much expensive. There are many company provides renter policy at the discount rate. You must have to review all the policy and get the best one.

6. If you want to move from your present rental place to another place. The renter policy can arrange for the payment for your optional living arrangements.

7. There are several companies declared special scheme like incase if you buy an auto policy you can get more discount on your renter’s policy vis-à-vis in many state. I think it is advantageous one must get discount on the renter policy.

The renter policy is one of the important policies, which can save renter from 17 different threats. It is advisable that every renter must have the renter insurance policy to avoid any economic burden on the family.