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Using Effect of Deductions to Measure Insurance Policies

“Effect of Deductions” is a column found in insurance policies with cash values. What exactly is “Effect of Deductions”? It can be summed up in an equation:

Value of Premium Paid – Total Cash Value = Effect of Deductions

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TM Legacy Plus Revision

That was quick – mere weeks after Aviva launched its whole life policy, Tokio Marine has announced revisions to its flagship policy – TM Legacy Plus.

The biggest change would probably be the upgrade in the Minimum Benefit, or Minimum Protection Value, which I have touched on before. The MB factor used to be 2.5 for people 24 years and below, meaning a $100,000 policy will cover the person for $250,000. It was 2.0 for someone between 25 to 29, 1.8 between 30 – 34 and decreases for people in older age groups.

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Unhealthy People and Insurance

Risk Underwriting I am in what I call “Underwriting Hell”.

Underwriting in the context of insurance refers to the process where insurers assess the risk of an individual applying to take up insurance cover by looking at his medical history and health condition. Unhealthy people will naturally complicate the process, leading to a lot of added paperwork, trouble and complexities.

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Minimum Protection Value: MyLifeChoice vs TM Legacy Plus vs VivoLife

While whole life policies can be a relatively pricey way to obtain insurance coverage, there are some people who may be more inclined towards such policies. I will always point out the alternative strategy of buying term and investing the rest, highlighting the pros and cons of both strategies. A small allocation to a whole life policy and heavier emphasis on term coverage can often be a good way to deal with one’s insurance coverage.

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