Bonds and annuities both are great investment vehicles to safeguard the future that offer steady income stream and tax advantages. But there are certain points regarding risk and return that make them different from each other. Their difference can be understood on the three different basis.
On the basis of return:
Bonds are issued by governments, bank and corporation. There is an inverse relation between bonds and interest rates. Bonds go down when interest rates are up and go up when interest rates are low. The bond owner receives scheduled interest payments. However, terms of the bonds decide that how often he or she is going to receive those payments. Issuer will return the original cost of the bond to you when the bond reaches its maturity. And if you die before the bond reaches its maturity stage, the face value of the bond is delivered to your beneficiaries.
On the contrary, annuities are issued by insurance companies and can be sold by brokers. Fixed annuities have set rate of interest that doesn’t change and indexed annuities have rate of interest which varies with the market. You are guaranteed to receive minimum interest rates, regardless of the market rates. If you die, your beneficiaries receive remainder of the annuity.
Annuities and bonds, both are tax-deferred.
On the basis of risk:
There are always risks involved with bonds. Although, government bonds have lower risk than the bank or corporation bonds. There is no guarantee that how much you are going to receive if you sell bonds before maturity. You may lose if you sell them and the value of loss cannot be predicted.
On the contrary, there is a penalty if you sell the annuity before its maturity. This is a big disadvantage with annuity as bonds can be sold anytime without penalty. This penalty is called surrender charge. It is forgiven after a certain time period but resets if you add more money to the annuity.
On the basis of guaranteed income:
A big disadvantage with bonds is that you don’t receive any more interest payments after the date of maturity and in order to receive income for life, you have to invest in other financial service or bond.
While in the case of annuities, you receive income for life. You can reinvest your money at any point in order to receive income. Hence, you cannot outlive an annuity.
Conclusion is that the annuities are preferred when you want guaranteed income and bonds are preferred when you know you can sell it before maturity. Although, you may lose money if you sell bonds before its maturity.
In order to get cheap auto insurance, you would have to do a little more research than usual and also make sure that you invest a lot in the time and the preparation that you do before getting auto insurance. This would help you in getting better bargains and also stay wary of any kind of traps that can ruin your chances of getting a good auto insurance. You can get auto insurance through the internet, phone or even through the insurance agents. This would be really helpful for you in getting the most out of insurance plans and also stay aware of all your rights and responsibilities. Here are the steps that you would need to follow for the same.
- Prepare in advance- remember, that you can’t simply go to an insurance agent, get an insurance cover, ask for it to be registered and get a full-fledged auto insurance. You have to work really hard in order to make sure that you are able to find the best options for yourself. Being prepared in advance would make insurance shopping much easier and you would like the fact that you got an insurance without petty hassles. You must already have insurance declaration document and the model, make and year of the vehicle as well as the vehicle identification number. Also be aware of the security features in the car and the annual mileage that it provides to the people. Any past accidents must also be reported. Licensing information is also to be arranged for before you can apply for an insurance policy.
- Check for the credibility of the insurance provider- always make sure that you check the credibility of the insurance provider. This would help you in ensuring that you only go to good insurance agencies and do not fall a trap to policies with cheaper premiums and minimum benefits. Your friends, family and colleagues must already have their own auto insurance. Look for the clues of credibility in this company as well. This is of great help at the time of making claims and it would certainly be helping you a lot in achieving your goals.
- Refresh your needs- you might likely be having an auto insurance policy already. Check for the benefits you wanted and those that you received when you got an insurance last time. This would help you in getting a great insurance policy that is based on your needs and demands.
The cost of Medigap insurance may vary widely from company to company and from state to state. The coverage limits have been decided by the federal government already. Therefore, whatever plan you are getting from one company would be exactly the same as the plan that you are getting from some other company based in another state. Therefore, you have to make sure that you don’t worry about the plans that you getting, but the price that you have to pay for getting a plan.
The cost of Medigap keeps on fluctuating because of three reasons. The first reason is that every insurance company has a different method of valuating their policies and calculating the premium on these policies. Therefore, every company would be quoting a different price for the same plan. The second price changing fact is the state regulations. In general, the prices would see a vast difference from one state to the other, depending upon the state insurance regulations. A third factor is the price ladder. In general, the prices for the insurance companies are bound to increase over time and this is generally enough to hurt the financial backup of an individual. If you are living in New England area, your prices would be rising at a higher rate than Louisiana. So this is how these three factors govern how much you would be spending on your healthcare insurance.
As the plans are all the same, the companies have to work really hard to ensure that they are able to retain their customers. Therefore, they need to work really hard in deciding their prices. Still, you would never be able to find one reliable source that can tell you about the exact price that you would have to pay for a certain plan. If you are living in California and are a healthy male with no previous serious illness history, you could be charged $270 for enrollment in Medigap Plan J. However, if you are in Maine, the same plan may cost you $220 as a premium. Similarly, one company might be quoting $230 as a premium while the other may be asking for $250. This is quite a common happening with the Medigap insurance policy.
Before you chose a specific plan on the basis of the price, you need to focus on two things. First, you need to get value for your money. If there is no significant value generation, then a cheap policy would do nothing good for you. Second, you have to think about the price ladder. This is one of the most confusing factors in Medigap insurance. A policy that may seem very costly today might move very gradually on the price ladder and you might not experience a significant rise in the price. On the other hand, a policy that seems very cheap on Day 1 of the Medigap policy, can cost significantly higher on Day 90. As the price changes are quite sudden, your finances might not get the time to recover.
The companies would look into many factors before they quote a price for your Medigap insurance policy. These factors include the location, health status, age, gender, marital status and smoking status among others. Basically, the company would be looking for every single factor that could be determining your level of susceptibility for a disease. The more prone to diseases you are, the higher premium you would be paying. In general, lifestyle factors are the most decisive when it comes to the cost of Medigap plans. If you live in a rural area and don’t smoke, you would be paying a lesser premium than someone who smokes and lives in a busy city.
You would be finding no-age rated policies that would be computing the price without taking your age into account. Therefore, they generally have a lower premium. The Issue-age-rated policies would be taking your age as their main calculating factor. The age at the time of taking the policy is generally considered by the insurance company. However, age would not play a significant role after that. Your premiums would be increasing on the basis of inflation and not your age. The third kind of calculation is called the attained-age rated premium. This type of a calculation would be taking your age into consideration every year and this factor would be deciding the subsequent enhancement in your premium payment. This type of policies are always the highest priced. Therefore, people who take Medigap coverage later in life are recommended such a policy.
Knowing these small facts about the cost of Medigap policies would help you in determining the right choice for yourself. Remember, there would be no difference in coverage. Therefore, it will become easier for you to choose a specific plan from a company by getting their price quotations.
With health insurance, the first thing that comes to our mind is the price. Health insurance is getting costlier by the day and it becomes really difficult for an average homeowner to make sure that things are going in the right direction. We are often left with no choice but to buy very costly health insurance that drain our pockets completely. Therefore, it is essential for you to understand some basic facts about health insurance. If you go wrong with your judgment, you would probably end up with something miserable.
The customers must be able to choose between cheap health insurance plans and proper coverage insurance plans. Often, the deductibles and co-payments get so high that your insurance cover is also not able to maintain your financial security. Therefore, your first step in buying health insurance must be to check out the total coverage that you are getting. Not taking care of these factors would mean a bad health insurance which you would not be able to recover from. Now, you can also take advantage of the affordable care act. This would help you in getting some more affordable insurance plans so that there can be no issues regarding money with the lower income groups as well.
There is still a lot of confusion regarding the plans that the consumers are getting. Not everyone is aware of the advantages of these plans and this can definitely make them suffer in the long run. In order to get these plans and coverage for yourself, you need to first make sure that you pay attention to rules related to these plans in your state. There are many programs being run by the federal government as well as the state government that can help you in getting better health insurance over the years. As soon as you get to know about the plans, consider the options that you would be getting. This may include the coverage options, the hospitals and service providers etc. You must also know your rights to healthcare before you start with anything.
Some programs of this nature are:
- Major Risk Medical Insurance Program (MRMIP) – This program provides limited health benefits to the people. This is especially meant to provide relief to people who did not qualify for a traditional insurance due to a medical condition.
- Healthy Families Program- This program includes dental and vision care along with other types of general health care coverage.
Golden Rules For Investing In Stock Markets
Investing in the stock market is not an easy task. If you want your money to be safe and give high returns, then it is better for you to understand that you will only benefit from your investment when you follow a few simple rules. What are these rules? Let’s check out.
Rule #1- Avoid following any advice that does not come from an expert
It does not really matter what stocks are your friends and family investing in. Every investor has a different portfolio and it need not match with anyone close to them. Your objectives can definitely be different than your neighbor. Therefore, whenever anyone advises you to buy a particular stock, consult an expert. If he says yes, go ahead. If not, just look for the right opportunity.
Rule #2- Make research a habit
No matter how much you invest and how much you don’t, you must always make research a habit. The more you keep track of the company and the market, the more informed decisions you will make. You would definitely be on the safer side in a volatile market in this case. Do not overdo your research, but make sure that all the right information keeps flowing your way.
Rule #3- Don’t invest in a business you don’t understand
This is one of the biggest mistakes that most of the investors commit. If you do not have any idea what the business is about, you would likely be investing in complete darkness. If you do not know anything about the technology business, don’t invest anything just because the whole market is moving this way. Take your time and stick to what you know. If you would still like to invest in a new business, then make sure that you give yourself plenty of time to research properly about this business and the most profitable opportunities here.
Rule #4- Don’t be reckless
Don’t think that finding out a good stock to invest in would do all the business for you. You will have to maintain a very disciplined approach towards investments. The more regular and strategic approach you use, the better returns you would get. Don’t try to be very reckless with your investments. You will have to find one or two good stocks and stick to them. If you try spending your money on any stock that is doing well today and don’t pay attention to its future prospects, you are likely to lose your principal.
Getting sick is unavoidable no matter how careful you are with your health. When you get older, you will experience various ailments which can cripple you until your last breath. Medicare supplement insurance
should be given top priority while you are still young and able so that when you are down with flu or bedridden, your insurer will shoulder the medical and recovery costs. Today, millions of Americans have benefitted from the Medigap and they are satisfied with the services because all medical expenses are reimbursed by the insurer.
Before you can take advantage of a Medicare supplement insurance plan, you need to enroll in Medicare A and B that starts six months before you turn 65. Don’t fret because getting a Medigap plan does not require you to undergo medical screening. However, if you apply for the open enrollment you will need to undergo a screening process and get clearance from your doctor. When you pay to have Medicare supplement insurance, you have to realize that you cannot get your payment back once you have signed up and it is only applicable to a single applicant. But don’t worry; you can renew your policy even if you are suffering from a dreaded disease.
Medigap assures policy holders wide coverage that is unheard of from its Medicare counterpart. If you travel abroad and get sick, the insurer will shoulder your health care costs which is worth your investment. Under the Medicare supplement insurance policy, you have to apply for Part A and B of the Medicare and start paying your monthly premium to the insurance company. Part A covers all aspects of in-patient medical services, home and hospice care, and nursing facility care. Part B covers outpatient medical treatment, laboratory tests, immunization, medical exams and health screenings. If you have taken advantage of a Medicare Advantage Plan, you have the option to continue or you may stop paying its premium so you can start paying your Medigap plan.
If you are planning on having cosmetic surgery or orthodontic treatment, Medigap does not cover them. Forget about any illusions of going under the knife because your insurer will not cover your breast enhancement, facelift and long-term treatment. It also won’t pay for a private caregiver; or shoulder the cost of hearing aids or contact lenses. Although there are limitations with Medicare supplement insurance, it is highly recommended because of the number of features which cannot be found from original Medicare. If you choose to enjoy all features of Medigap, you can also enroll for Part D, which covers all types of prescription drugs, but make sure that you are not a member of a group health plan, which is common in companies.
What does it mean to be over-insured?
Self assurance is a much desired feeling in today’s risky world. One always tends to fear what will happen next, in case he or she dies. This worry for the welfare of your family usually results in an insurance policy sooner or later. You get into the trap of investing some money in monthly premiums and eventually end up having good life insurance policy which will never prove to be useful. Obviously, this is a result of the insecurity of your uncertain life.
You probably became the holder of an insurance policy for the sake of your children’s future. You bought the insurance years back for your small children so that they will be well provided for in case you die. Now, those days are long gone and your children are grown up, well-educated and living happy lives. Most likely, some would say hopefully, they are no longer dependants and all your insurance money went waste. Feeling over insured, you might want to drop the insurance policy. Do not worry! There are ways available for you to turn that insurance policy into a good investment.
If your insurance policy is for whole life coverage, it has been generating cash value from the investments over the years. Some of this generated amount gets tax exemptions and thus you can use it to your advantage.
Furthermore, your retirement plans can also be made much better with such whole life policies. Usually whole life policies purchased years ago are completed and their premium investments are already paid up. If you have such a policy written on your life then the rest of the money can be accessed for the benefit of your family upon your death. This money being held with the insurance company for years will grow due to the added dividends, increasing the sum of money in the policy with the passage of time.
However, one should not deliberately take out insurance policies as a steady form of investing for it may prove to be foolish. The kind of policy you are investing in really matters. A lot of times, short term policies which demand a monthly premium and expire after a few years prove to be a bad investment. It is always wise to consult an expert or an insurance consultant before investing.
Life insurance is designed to protect the financial security of a beneficiary upon the death of the insured. It is one way of providing a specific amount of money to the beneficiary after the death of the insured. Basically, the insured will be taking out a life insurance policy while they are still alive and pay the premiums. If the insurer dies, the beneficiary will obtain all the benefits from the life insurance. It is true that most life insurance generally provides the same thing, but there are significant differences that you need to understand. Here are the four major types of life insurance.
- Term Life Insurance, as the name implies, is purchased within a specific time frame or term. This is the original form of life insurance, and it is the least expensive way of getting life insurance. The term varies depending on the policies of the issuing company. It may be in a span of 20 years, or it may also be as little as 1 year. During the term, you will be paying a fixed rate of payments. If the insurance member does not die during the term, they will choose whether to forgo on the insurance or they will continue to pay for it for a different rate. If the insurance member dies during the term, the benefits will be given to the beneficiary.
- Whole life insurance is considered as the most popular type of life insurance. Basically, the payment of premiums will depend on the policy holder. Unlike term life insurance, whole life insurance does not have any terms or time frame in the payment of the premiums. You can pay for as long as you want and you can even cash out the insurance if you want to. There will be a cash value based on the total amount of premiums paid to the insurer and the benefits will be paid to the survivor when the policyholder dies.
- Universal life insurance is the most flexible type of life insurance. The premium cost varies depending on the policy cost. If the premium payments are higher compared to the policy cost, the excess will be debited the account of the policy holder. It means that if the insured pays their next premium, it will be lower because of the excess payments of the previous premium. This is a good choice for people with complicated financial situations.
- Variable Universal life insurance has a combination of the flexibility of universal life insurance and the ability to invest on separate accounts. The values vary because it is invested in stocks or the bond market. Essentially, the value of the policy will be determined by the performance of the different investments.
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