Term Life Insurance - Buy Term and Invest the Difference!

The phrase "BUY TERM AND INVEST THE DIFFERENCE" evolves around the concept of term life policy which is a basic protection policy and the endowment/ whole life policy which has protection and investment/saving features. To put it simply, the phrase means that instead of taking up the endowment/whole life policy, an individual should buy a term policy for protection and the difference between the premiums of the two policies is to be invested by the individual himself to earn some dividend on the investment.

To agree with the phrase "Buy Term and Invest the Difference", one need to have the conviction and will-power to invest the difference in the premium in an investment vehicle that can pay a return higher than that declared by an insurance company. Unfortunately, most of us do not have the capability to achieve the desired return over time. At times, one is lucky to reap a good return from the equity market but this is all short-lived when the downturn occurs, all gains will be wiped out and may even heavy losses.

However, investment-linked life insurance have been pioneered and offered for sale by insurance companies around the world as one way where it is possible to have both protection and investment at the same time. In the United States of America, investment-linked life insurance is known as "variable life insurance". It was pioneered by the Equitable Life Assurance Society and was offered for sale in 1976. This type of product is recommended if one agrees with the phrase "Buy Term and Invest the Difference".

Investment-linked life insurance policies offer more flexibility to the policy owners and they can choose when to top up or how much, or on what portion of their policy that is linked directly to investment performance. Considering the wide range of investment tools available, investment-linked insurance products may be linked to stocks and shares, property or real estate, cash deposits, fixed income securities, government bonds, corporate bonds, unit trusts, investment trusts, other life insurance and annuities. Investment-linked funds have been created to suit the client's various investment objectives, risk-reward profiles and investment preferences.

With several insurers offering a variety of investment-linked insurance products, it is now possible for an insurance policy holder to enjoy protection and at the same time to invest solely in one fund or a combination of funds, subject to certain limitations, such as a minimum of 20% of his investment in each fund selected. An insurance policy holder may switch his investment between funds when his investment objectives change.

As an example, an Income Fund which is managed by a company's in-house fixed-income investment team comprising individuals with more than 20 years of experience in the financial sector. This fund is suitable for policy owners seeking stability of principal and a higher return compared to bank deposits but with acceptable risk to capital invested. The fund is principally invested in fixed-income securities, treasury products, money market instruments, collective investment schemes, and any other permissible instruments or investments prescribed by the relevant regulatory bodies to provide a steady return to policy owners through accumulation of capital over the long-term.

Without the existence of investment-linked products, one may disagree with the phrase and may not "buy term and invest the difference" but instead to take up a traditional participating life insurance product that provides life protection with an element for investment. The premium may be higher but it leads to wealth creation for the future.

YS Koh is an independent Certified Financial Planner and a licensed financial investment broker by practice. She writes often and provides insights and viewpoints for her blog "Life Insurance Information Portal" (http://get-term-life-insurance-info.blogspot .com)

This Life Insurance Information Portal is designed to provide you with unbiased information and useful tips, free from http://www.get-term-life-insurance.info

---

The Life Insurance Plan Online

Thank goodness the internet age has arrived helping us to... Read More

State Farm Auto Insurance ? Heres A Few Factors That Determine Your Rate

There are many factors that affect the insurance rate you... Read More

Why Bother With Farmers Auto Insurance?

Farmers auto insurance is a very large insurance company that... Read More

Everybody Wants The Best Term Life Insurance Quote

The information you need about the best term life insurance... Read More

Finding California High Risk Truck Insurance

California high risk truck insuranceIf your are in need of... Read More

Seven Steps to Filing Your Car Insurance Claim

Having even a teeny-tiny car accident can be one of... Read More

Why Buy Life Insurance?

Love. Yes, that's right. Love for your spouse, children, family,... Read More

Life Insurance Without Life Value: Why Young People Are Snubbing Financial Advice

This article is written by a 27 year old female... Read More

Japanese Overseas Travel Insurance

If you are an expatriate planning on long-term residence in... Read More

Gain An Advantage Over Your Competition By Controlling The Cost Of Your Health Insurance

As many of us expect, the New Year will bring... Read More

Health Savings Account (HSA): What Happens to it When I Retire?

The Health Savings Account (HSA) is a great tool that... Read More

Cheap Health Insurance - Health Insurance for The Self Employed

If you're self employed, you may think of health insurance... Read More

A Guide to Insuring Your Sailing Dinghy

If you've just bought a dinghy or are thinking about... Read More

California Catering Truck Insurance

Catering truck insuranceNot many agents/brokers write catering truck insurance as... Read More

Buy Life Insurance Online and Save

There are many ways to research and buy a life... Read More

Life Insurance ? Do You Need It?

Many people are skittish about life insurance, because they feel... Read More

Indemnity Insurance For Landlords

As a property owner it is essential to protect yourself... Read More

Photography Insurance-Insurance for the Photographer

Part and parcel of establishing your own photographic business is... Read More

Choosing Long-Term Care Insurance

A little over sixty percent of the folks who reach... Read More

What is Car Insurance?

Car Insurance is compulsory in the UK. You are required... Read More

The Need For Life Insurance

A person needs to reexamine their life insurance needs every... Read More

How Do I Lower My Auto Insurance Premiums?

It seems as though the price of everything is on... Read More

Health Insurance Quotes Online - Tips On Finding a Good Provider

Since 2001, major health insurance providers have been allowing consumers... Read More

Why Dont Insurance Companies Reward Us for Being Healthy?

Insurance is always a gamble, a bet actually.You are betting... Read More

If You Rent A Home, Protect It By Buying Renters Insurance

Renters insurance is often overlooked by people who are renting... Read More

Flat Insurance in the UK

What are the factors involved in flat insurance? Do I... Read More

Is Life Insurance Comparison Really Necessary?

When you want to purchase a life insurance policy, you... Read More

Affordable Health Insurance - Health Insurance For The Self Employed

One of the things that is important to consider when... Read More

Canadian Funeral Insurance: Our Final Gift to Those We Love

Most of us don't like thinking about our own funerals,... Read More

What Are The Differences Between A Cancellation Notice And Non-renewal Notice?

OK, you take that stroll down to the mailbox excitedly... Read More

What is Home Insurance?

Home Insurance is designed to provide you with financial protection... Read More

Useful Tips on Reducing Insurance Costs

Most people want lower insurance costs but are often too... Read More

Choosing the Best Life Insurance Option for You

Life insurance in the UK is becoming more and more... Read More