Saturday, 19 October 2013

Does an Endowment Policy Work in the Current Financial Climate?


Does an Endowment Policy Work in the Current Financial Climate?

From Editor: This is a guest post from James of endowmentpolicies.org

Does-an-Endowment-Policy-work-in-the-current-financial-climateIn the early 1980s and through to the 1990s endowment policies were extremely popular, so much so that they were the first policy on offer to many people who were trying to buy a house or wanted to invest in life insurance. They were extremely attractive, and offered investors the chance to invest their money, whilst ensuring that they would both pay off their mortgage, or other investments, and end up with an extra lump sum at the end of the investment period. This offer was extremely appealing to many people, but by the late 1990s people began to realise that an endowment policy was never going to be as successful as originally thought.

Is an endowment policy a good idea?

With the financial climate as it is, and the concern people have over keeping or investing their money, the question has to be asked, could an endowment policy be a strong investment opportunity today? With revised outlooks for the investment, and with strong advice over what may actually happen, then it could easily be argued that having an endowment policy or endowment mortgage would be an advantage to some people. The opportunity that an endowment mortgage offers you is the chance to pay off the interest of your mortgage, whilst at the same time hoping that your payments not only cover this but also the payment of the loan over the span of the agreement. Once the term has been completed the endowment policy should end up being paid off, alongside the interest, with a lump sum of money repaid to the investor. There is no doubt that as an investment opportunity, something like this could be extremely popular today.

Are there alternative ways to purchase an endowment?

With that in mind, there is an opportunity that could be appealing to investors. After the collapse of the endowment market in the late 1990s many people were urgently looking to sell or trade their endowment policy. This means that through certain means, you can purchase traded endowment policies which does not have the same length of term to run, and one that could even mature within a few years. If you were willing to take the risk, you could end up with a traded endowment policy that matured within five years, and offered you a strong return on your investment. It might be worth investigating whether a new endowment is a good investment at the moment, due to the length they usually continue for, but with investment opportunities limited, the attraction of the policy, if it works, is undeniable.

Don’t forget your added bonus

The added bonus of this kind of investment is the attachment of life insurance. Whilst it is a small addition, the security that this also offers can make endowment policies attractive to many different people, and it also means that you do not have to worry about finding an insurance provider. As long as you continue the payments for the policy, and complete it, your life insurance is secure. In the current financial climate, insurance repayments can be extremely expensive, so having this weight off your mind can also be seen as a strong addition to the endowment.

It is clear that there are some benefits in finding an endowment mortgage or policy in the current financial climate, but there are risks attached. As with any investment, you need to make sure that you get the right advice before you decided to commit. As savings these days are so poorly provided for, then an endowment could really benefit you, but only if they provide what they promise. Like any investment you need to track you repayments, track the progress of the investment, and make sure you are getting the returns you want. If you do, then why not invest in this kind of policy, it could really pay off, and a lump sum of money is attractive to all of us.




Insurance: A Guide

"Remember kids, I have life insurance" - Adam Savage

This is a guest article from Tatyana Levin

These days one must be financially savvy. Money is not easy to come by and should be managed carefully. With the availability of tools that make it easy to keep track of current events, the stock market, and even your own money, it would be almost a crime to not utilize these tools to make the best and most informed financial decisions. Unfortunately, the more there is, the more there is to keep track of. This applies both to tracking tools and money (the small curse within the comfort of having money to keep track of).

 The savvier ones of us dabble in investments, and the savviest make their living that way. The key is that they know what to invest in. Not magically, of course; investors do a significant amount of research to learn how to optimize their portfolios, but they have the understanding.

A grossly overlooked investment is insurance. This may be because is not typically referred to as an investment with the exception of whole life insurance that has a specific investment component within it. Webster’s defines the word “invest” as a commitment of money for a return and “insurance” as a guarantee. This makes insurance the safest type of investment, because your returns are guaranteed.  But returns are not always financial in the case of insurance. They can be, if there is an unforeseen accident, but the most certain return is the feeling of security.

Now there are many different types of insurance, and what you need depends on your current situation. Obviously you only need auto insurance, found using auto insurance leads if you have a car, and you only need renter’s insurance if you rent and have possessions that you would need insured. Insurance is for those who have something to lose. With an attachment to something, either emotional of physical (or dependence, not like physically being glued to your car), comes the fear that it will be damaged or ruined in some way. For example, if your house caught on fire, you would be devastated. What would add insult to injury is not having a way to recover from this horrible disaster.

 These types of examples are not unique to this article. That is the way that insurance is sold. As they say that clichés are clichés for a reason, insurance is promoted this way for a reason.  The foundation of the concept of insurance is uncertainty, and it is the same uncertainty that is conjured up when investing.

The main difference between insurance and investment is that not having insurance creates a feeling of uncertainty while investments by nature are uncertain. Therefore, investing in insurance creates security and is the only secure investment that exists (and is legal). Getting insurance should be one of the easier financial tasks if you apply all the resources available with technological advances like smart phones.

About the Author: This article was written by Tatyana Levin, a copywriter for InsuranceFiles.com

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