Archive for the 'Financial Services' Category

By Joe R. Maldonado

Shopping for a life insurance policy is overwhelming, so knowing the equity indexed universal life insurance pros and cons will help you make a sound decision. These policies havent been around too long, but they offer the highlights from the fixed whole life policies and the variable life insurance. This type of life insurance is permanent, and as long as you keep up on your payments there is a permanent death benefit. A great benefit is the reserve fund. This can be used later in life (when the premiums are likely to be higher) to help offset payments.

How does Equity Indexed Universal Life Insurance (EIUL) Work?

Every time you pay your premium it gets invested by the insurance company into their general account. Then they take the money from their general account and invest it in stocks with options. You would get something like a certificate of deposit at this time. If all goes well, you get a part of the profits. Even if the stocks fall, you can still count on the minimum credit rating.

What about Taxes?

When it comes to taxes, most of the time Congress looks favorably on life insurance policies. You dont get to deduct your paid premiums, but the growth on the cash value of your policy will remain tax free. Also, as long as your policy is open you can have access to the cash value of your policy any time you wish, tax free. If you are below age 59 you will not get the 10% penalty which is usually placed on any withdrawal profits. Furthermore, if your policy is in effect you will not have to deal with capital gains tax or even income tax on the withdrawal proceeds. People who arent able to receive other types of retirement accounts or benefits love EIUL policies.

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The Pros:

Great tax incentives

Cash value may be used without restrictions

In the event of the policyholders death, the beneficiary receives a tax-free cash death benefit

The cash value will usually retain protection by creditors (this depends upon the state in which you live)

Cash value does not count when your family is attempting to receive any type of financial aid

You would be guaranteed a minimum credit rating

The Cons:

Compared to other savings policies, equity indexed universal life insurance policies have a bit of a high fee base. You pay commissions upfront, so you may be paying for several years before you get to the point where you are breaking even as far as the cash value matching what youve paid.

You have to really put a lot of funds into these.

If you dont put enough funds in, you wont have enough cash value to keep your policy going in the later years of your life. Then you will end up having to figure out if you want to let the policy go, or pay the premiums to keep it going.

You must weigh out the equity indexed universal life insurance pros and cons to determine whether this will be the best choice for you and your family as far as the long term.

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By Jay Peters

Your credit score is a reflection of how potential lenders view your credit-worthiness. Earn a high score, and you will enjoy low interest rates. Suffer from a low score, and you will have trouble even getting a loan or home mortgage.

You are probably tired of hearing about the same old ways of raising your credit (or FICO) score: pay your bills on time, and get negative information removed from your credit report. In this article, we will share a little known secret for building your credit score.

The method we will discuss is lowering your “debt-to-credit ratio.” This ratio is a comparison of the amount of debt you are carrying to the available credit you have been extended. For example, if you have $10,000 in unsecured revolving credit accounts (like charge cards), and you are currently $2,500 in debt, then your debt-to-credit ratio is 25%.

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Here’s the secret: If you think you have excellent credit because you pay off all your bills in full every month, you are wrong! Think about it. Your lenders want you to carry some amount of debt – they make their money by charging you interest on the balance in your account. If you pay off 100% of your balance every month, your lenders are not realizing any revenue from your account.

Maintaining the proper debt-to-credit ratio will boost your credit score. If your ratio is too high (you owe a lot), you are not a good credit risk. If you ratio is too low (you pay off your entire balance every month), you a not a profitable customer for the lender.

Most Americans have a debt-to-credit ratio that is too high. How can you bring it down, without sacrificing everything you like in life? The answer lies not in lowering your debt, but in raising your high credit limit! You will probably have trouble opening new credit card accounts to raise your credit limit, but there is another solution: sub-prime merchandise cards. These are cards attached to a line of credit that allow you to buy products from a specific vendor (usually the one that sold you the card). They are not VISA or MasterCards, so you won’t be able to buy groceries and fill up the gas tank with them, but they will raise your high credit limit.

Here is how a sub-prime merchandise card works. You are required to put down a deposit on whatever you buy with the card, and then finance the rest. For example, let’s say you buy $1,000 of merchandise. You pay a deposit of $300, and finance the remaining $700. The sub-prime card company reports this to the reporting bureaus, and your high credit limit is raised by $1,000 overnight. The key to this strategy is to make sure that the sub-prime merchandise card you select guarantees that it does report to the credit bureaus (not all do).

Your new, lower debt-to-credit ratio will signal your credit worthiness to lenders, and soon your credit score will rise, and you will start receiving pre-approved credit offers in the mail.

About the Author: To learn the inside secrets to building your credit fast, visit the author’s website: The Credit Secrets Bible


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