Life insurance has surrender charges.

Most people purchase life insurance so that the loved ones they live behind will not suffer financially. I believe that life insurance is a way to create family wealth. When a family receives a life insurance settlement that is substantial it can generate a whole new life style for the family. The choice of the kind of policy is not as important as the amount of the death benefit. The key is to make sure that whatever policy you purchase is in force at the time of death of the insured.

People who purchase life insurance have to make sure that they are getting what they are told they are getting. What do I mean? When I talk to people about policies that they have purchased they seem to think that it really makes a difference if their policy builds cash value. They also think that the interest rate will be whatever the agent says it is at the time of sale. Then they think it is some kind of investment. Oh, I also here people say that they would like to borrow from the policy if they need the money.

Agents have to let people know that life insurance is not an investment. Insurance agents have to sell the product that the company they are with encourage them to sell. How much would they sell if the clients they serve knew that these policies have surrender charges. So you cannot get your money out as easy as the agent may tell you.

Mutual Fund Commissions

Financial advisors make money off of mutual funds in a few different ways. There are three basic types:

A shares
B shares
C shares
No Load Funds

Examples:

$100,000 invested into a mutual fund that has a front load or A share will net an advisor about $5000 bucks. If the A share has an upfront load or sales charge of 5%. Oh by the way the $5,000 is deducted from your $100,000. You invest $95,000.

$100,000 invested into a B share pays about the same to an advisor. The difference is 100% of your money is invested upfront. You invest $100,000. Here is the catch there is a 6 year surrender charge on your money. You take it out you get charged! The surrender charge schedule looks like this. 6%, 5%, 4%, 3%, 2%, 1%.

C shares are bad all the way around because the advisor gets a low pay out, about 1% and the client gets a 2% surrender charge and a 1% asset mange fee each year.

These funds are called loaded funds. No load funds are less expensive but the management fees are pretty high. They are still less expensive than the loaded funds. The advisor gets no pay from the no load funds. Which means if you need help with your investment you get an 800 number and customer service people to talk to. They are usually pretty knowledgable.

People have been trained to buy mutual funds because they are diversified. Yeah right! They go down just as fast as stocks in a really bad market. So you just have to know the incesntive behind the sale of a fund. Always ask the advisor how much they get paid on the fund before you purchase it. Make sure they tell you about the 12-B 1 fees they receive.

WYIDE

Missing Regulation