The ancient Chinese saying “at home, rely on your parents; outside, rely on your friends” may lose its cultural significance in the United States, where Chinese-Americans rely more on themselves. In America, insurance is an essential way to ensure financial security and protection. Finding insurance that not only provides value and growth but also covers major illnesses and long-term care is critical.
With so many insurance options available, how can Chinese-Americans choose the right insurance that fits their needs?
"Maximizing Benefits During Life" - Understanding Index Universal Life Insurance
In 1994, when the US bond market crisis broke out, the benchmark interest rate was locked in at 1.5% for 12 months, and investors were almost wiped out. This is when people realize how important a secure investment is. As a result, “only earn not lose” index universal insuranceWas born under such circumstances.
Although the exponential universal insurance has not appeared for a long time, the advantages are extremely obvious:
1). Some IUL can be combined with long-term care and serious illness insurance.
In America, long-term care is a very expensive procedure, and many people have to give up work to take care of the sick at home on meagre government subsidies. But some IUL can be purchased with long-term care insurance., then there is no need to worry about this aspect of the problem, because the insurance company will pay for the care you need. Early claims may be made when the insured is unable to perform two of the tasks of daily living: bathing, bowel and bladder control, dressing, eating, using the toilet and moving up and down, or when cognitive function is impaired. In addition, policyholders can also choose if they choose, once the patient is diagnosed with major diseases such as heart disease and myocardial infarction, stroke, cancer, vital organ transplantation, blindness and other major diseases, they can get claims in advance and use the claim money for treatment.Purchase with Critical Illness Insurance.
Here are the types of care covered by different insurance companies:
It should be noted that in the case of foreigners (travel visa B1 B2), some companies can also buy index universal insurance. After purchase, the insurance can be used for later death claims, and it can also be used to increase the investment of funds. There’s just no way to add long-term care and critical illness insurance.
2). Index Universal Insurance (IUL) Low Risk, High Return
The floating / investment universal insurance developed in the 1980s brought high returns, but it had one fatal drawback: it was not guaranteed. In the event of a crisis, investors are likely to lose all their money and must pay to maintain the normal continuation of the policy. However, the index universal insurance developed in the late 1990s is different, it can provide investors with a minimum of 0% protection while obtaining returns, even in the case of poor market conditions.
Why Can Indexed Universal Insurance (IUL) Be Designed for Minimum Coverage?Simply put, the premiums paid by the policyholder every month are automatically converted into “cash value” after deducting the cost of insurance. Insurance companies use this amount of money to do what they want to do, but the rules of the game with the customer are based on the Annual Point to Point floating rate. Peer-to-peer returns each year) give a return. Because the cash value is not used to buy index funds, it does not matter to the client if the index falls. Of course, if the insurance company wants to invest in other places, it will also be undertaken by the insurance company alone, and naturally it has nothing to do with the customer. But Indexed Universal Insurance (IUL) also has a limitation thatAnnual returns are capped, and the cap varies depending on the insurer, with some companies around 10 to 13 percent and others between 8 and 9 percent.
Here are the eight index universal insurance companies that are more commonly used (Allamerican Life, Nationwide Life, Pacific Life, Amea, Allianz, Global Atlantic Financial Group, National Life, Prudential), all using S & P’s annual point-to-point index accounts:
Since The National Association of Insurance Commissioners, In September 2015, the National Insurance Institute (NAIC) stipulated that insurance trial sheets must be tested using the long-term conservative calculation method of the S & P 500 for the past 65 years, so different companies’ bottom and back covers correspond to different 65-year average returns. For example, Allstate Life has a minimum of 0.75% and a maximum of 12%, so the 65-year average is 7.0%.
In contrast, if the bottom and cap are relatively low, the 65-year average is also relatively low. For example, Allianz’s base is 0%, the ceiling is 10.75%, and the 65-year annual average rate is 6.6%.
While the National Association of Insurance Commissioners (NAIC) gives consumers a conservative and safe figure using a 65-year rate of return, the actual rate of return in recent years is also detailed by individual insurers in their products. For example, the average returns over the past 25 years, 20 years, 15 years, 10 years, and 5 years are 7.91%, 8.05%, 8.22%, 9.41%, and 9.65%, respectively.
Using the return rate of National Life’s actual 20Year Review Profile as an example, its Benchmark IUL margin is 0.75% and the upper limit is 12%.
In 2002, it fell by -23.37% relative to 2001, but due to the minimum guarantee of 0.75%, so the investor got a return of 0.75% instead of -23.37%.
But when the market rebounded, it rebounded 26.38% in 2003, so investors got a return of 12%.
The next four years the market is value-added, so the policy return is also 8.99%, 4.69%, 11.65%, and 3.65% compound interest return.
3). Capital Gains Exemption for Indexed Universal Insurance (IUL)
The policyholder will not pay capital gains tax on the increase in the cash value of the policy, which means that the policyholder can treat the IUL as a retirement plan account with lifetime protection. Except in one case, the policyholder withdraws all the cash value at one time and abandons the policy.
4) Cash Value is Widely Used
As premiums increase, so does the cash value of the policy. In addition to the above investments, the investor can also borrow money from the insurance company at a very low interest rate based on the cash value of the policy (such as working capital for the business, college tuition for the children, etc.)Returning the money after the danger period will not have any effect on the policy.
5). Policy contributions and policy collection are very flexible
Indexed universal insurance (IUL) is very flexible when it comes to paying premiums. As long as the policy is still in force, the amount and timing of premiums can be adjusted at any time. It is suitable for non-wage earners whose income is not so fixed.
In addition, indexed universal insurance is also very flexible from the policy, there are no additional restrictions, compared to 401K or IRA retirement accounts must wait until the age of 59 and a half years to pay out, if early withdrawal will be subject to penalties.
In America, it is crucial to have a broker who is experienced in this area. The broker can find the most suitable and the best price for you.