What Is Life Insurance?Life insurance is a written contract between the insurance company and the insured (policy owner). The insurance company agrees to pay a specified amount of money upon the insured’s death. Some policies will also pay a specified benefit in instances of critical illness or terminal illness. During the lifetime of the policy, a premium payment (s) is made by the insured to the insurance company to maintain coverage.Why Should I Have Life Insurance?There are many reasons to have life insurance, but perhaps the three most common reasons are to replace lost income of the insured, pay off a mortgage and pay other bills such as funeral expenses or medical expenses. The funds that your beneficiary receives are usually tax-free and are a very important financial resource. In fact, the tax-free benefit may keep children and spouses from having to liquidate assets at below-market value dollars.What Are The Different Types Of Life Insurance?There are four major forms of life insurance:Term insurance, which is the simplest and most inexpensive type of coverage, is purchased for a specific period of time. There is no cash value or investment feature. When the policy terminates, you will be required to medically re-qualify to secure the best rates.Whole Life insurance has level premiums with both an insurance and investment component. This type of policy accumulates cash value each year which can be used in a variety of ways, such as reducing the premium, increasing the death benefit or withdrawing or borrowing the funds, subject to policy rules and limitations.Universal Life Insurance, like Whole Life insurance, includes an investment component. It combines a term life insurance policy with a tax-deferred interest investment account. Premiums and cash value accumulation is usually lower than a Whole Life policy. However, there is added flexibility regarding altering premium payments and the face amount of coverage.Variable Life Insurance is a permanent life insurance policy with various investment options. Most Variable policies offer numerous “sub-accounts” to the policy owner. The “sub-accounts” consist of many diversifies types of investments including fixed and variable funds. Cash value, like other policies accumulates on a tax-deferred basis.What Are The Different Types Of Term Insurance?There are three main types of term insurance.Renewable term insurance continues in-force for a specified time period…usually in 1, 5 or 10 year increments. After each period of coverage, the policy renews without the insured having to prove insurability. Premiums increase with each renewal, so the longer coverage is in effect, the higher premiums will become.Level term insurance is perhaps the most popular type of term insurance. This type of policy provides a fixed amount of coverage over a pre-specified period of time. The most common level term policies provide coverage for 5, 10, 15 or 20 years. Premiums can also be guaranteed not to increase for the duration of the contract.Decreasing term insurance is most often used to provide mortgage protection. Premiums remain fairly level but the death benefit gradually reduces. Once popular, this type of coverage is rarely used since “guaranteed level term” insurance is generally a much more affordable option.How Much Coverage Should I Have?While it may be impossible to replace the lost income of an insured, an ample amount of life insurance will certainly make a big difference, and provide badly-needed income when finances are strained. A simple method is to calculate 10-12 times your adjusted gross income for a quick calculation. Of course, affordability must also be considered in determining how much life insurance to purchase.How Do I Know Which Company To Choose?The most important factor to consider is the “rating” of the company. Only companies rated “A” by A.M. Best Company should be considered. Any other company may not be as financially stable as the “A” rated companies. There are various other financial ratings available such as “Standard & Poor’s” and “Weiss.” A local experienced insurance broker will be able to research this information for you.Should My Spouse Have Life Insurance?If both spouses are working outside of the home, then insurance should be strongly considered since it is important to protect the earning capacity of each spouse. Naturally, the amount of income will help determine the amount of insurance needed. If one spouse is not a wage-earner, the needed amount of coverage will be reduced, but still necessary because of other expenses.When Can I Cancel My Policy?Actually, you can cancel a policy at any time. You are never obligated to pay a premium if you do not want the coverage. However, keep in mind that if you cancel a policy and want to reinstate or reissue a policy at a later date, you may have to answer medical questions or provide evidence of insurability.
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Obtaining Startup Business Loans
If you have tried or asked around, you already know that obtaining startup business loans is no easy task. Bankers are justifiably wary of lending to a startup as most startups fail within a few years. Moreover, the business does not have a balance sheet yet or a credit history. As such, a creditor will have to base the lending decision on the entrepreneur’s personal credit history and the business plan presented.Also, there are a few loans meant for startups by members of minority groups and women. Do check and see if your business will qualify for these loans, as they are easier to obtain. Of course, you need to get a certification stating that the business is a startup by a woman or a minority group member.Even if you do not belong to this special category and have a less than enviable credit history, you can avail of a bad credit startup loan. Such loans are priced higher, that is, the interest rate you have to pay on the startup business loans will be higher. Additionally, you will need to take extra pains to convince potential creditors of the financial viability of your business idea.Another option before a startup is contacting the small business administration for procuring credit business loans. It is easier to get the loans through this organization. However, you still need to do your homework properly. Get all your papers in order and have an excellent business plan ready with projected earnings and profits clearly stated. In case your startup is a few years old, you also need to bring the balance sheets of the last three years. If your business has its own ID, take it along to the creditors when you go to negotiate your loan. It will give your startup more credibility in the eyes of the banker and creditor.For those who are unable to obtain small business loans, the option of approaching venture capitalists or angel investors always exists. However, this equity route has certain drawbacks as the entrepreneur has to consult their fellow partners before making major decisions. Besides, future profits need to be shared – something that will reduce the entrepreneur’s share of profits.Another solution is to approach a leasing finance company to help you purchase the equipment you need to run your startup. Since such loans are considered secure – the finance company will have a lien on the equipment – the loans are easier to obtain. Moreover, the interest burden is lower, in tune with the lower risk to the lender.Whether you decide to go in for a bank loan or a leasing finance or use the funds provided by the venture capitalist, you need to convince the financier of the viability of your business model. For this you need to study the potential market carefully and ensure that you are meeting a felt need. Investors will also want to check out your commitment levels to the startup. If they feel that you will not put in your best efforts, they will certainly not part with their cash. So, do make sure that you are able to convince creditors on these issues when applying for startup business loans.
Important Facts About Business Loans That You Should Know
A business loan is normally said to be a loan acquired for purposes of fostering the growth of a particular business. The owner of the business or a group of people manning a particular business can acquire a business loan in order to sort out the financial difficulties surrounding their firm. Some firms have been rescued from accelerated downfall by loans, while others have been plunged into more chaos by some business loans. If you have prospects of acquiring a business loan, the following facts about loans will be of great benefit to you.To start with, almost all business finances are secured. As a matter of fact, there is barely any business loan that is unsecured. This means that you will need to have collateral before you can be allowed to borrow funds from any financial lending institution. Collateral refers to the assets or asset whose value is equivalent to the amount of money that has been borrowed. In most cases, collateral corresponds to the total amount of money that has been borrowed plus a certain amount of interest as determined by the financial lending institution involved. It is important to understand that the lender is more interested in recovering the money than anything else.Before acquiring any business loan, you need to have proof of being able to generate income over a certain period of time. In most cases, financial lending institutions are interested in the monthly income of any business. Bank statements may be used to ascertain the average monthly income that a particular business is able to generate. Using this information, the financial lender can determine the average monthly instalment that your small company will need to be remitted to the bank. If the installment is beyond the capacity of your business’ monthly income, your application for the loan will not be accepted.In most cases, loans are acquired for purposes of fostering the growth of a particular business. As such, they are only acquired in special cases. It is advisable to invite a qualified team of experts is supposed to be organized before such loans can be acquired. The team of business experts will assess the ability of your firm to acquire a loan and pay it back within a certain period of time as determined by the lender. If the team of business experts recommends the suspension of the loan, then your business is not good enough to facilitate the repayment of the loan. Only business firms which have their own experts may not need to hire or invite experts from outside.Depending on how small a business is; loans may take several forms. In most cases, this depends on the purpose for borrowing money from a financial lending institution rather than the actual name of the loan. Based on this, even logbook loans may sometimes be considered as business loans even though they are not regarded as being such. Such loans are secured against the car belonging to the borrower.