Get Protected : Shattered Dreams Caused By Life Insurance Complacency

by: Derek Rogers

Margaret Donaldson sat in the living room of her smart 3 bedroom home near Fulham Road in London. Her eyes were watery and her hands shook as she finally signed the sale papers of her house; the very house where her life, her dreams and her hopes had taken root.
She remembered when, almost ten years to the day, when she, a receptionist in a small company married Michael, who was the Sales Manager in her company. She remembered their wedding day, the vows, her friends, her relations, everyone. Her honeymoon with life had just begun.
It seemed like only yesterday when Michael had grabbed her in his arms and carried her into this very house. Michael was so charming, so full of fun and energy and there was never a dull moment in Margaret’s life.
Margaret remembered the days when she had brought her two sons, David and Jonathan, into their lives. She remembered the joys of raising her two boys and how Michael helped her in their parental duties every step of the way.
Michael was a good husband and a great father. He spared no expense to ensure that his sons went to the best schools, he worked overtime to repay the mortgage on their modest property. He had done everything in his power and ability to keep his family happy. Margaret had never felt the need to work nor did she develop any new life skills.
And then, out of the blue, Margaret’s life changed forever. Michael was diagnosed with an aggressive type of cancer. The hospital did its best to cure him; they tried chemotherapy, radiation, etc. Nothing helped and within a month, Michael had passed away, leaving his loved ones behind.
And that is when Margaret’s honeymoon with life really ended.
Whenever the bread winner in any family passes away, everything boils down to money. Michael had not protected himself financially and had neither health insurance nor life cover. He'd always believed that he was too young and it would be something he'd get around to. He didn’t leave much behind. The schooling and the living costs ate up his salary and all that was left was the house. The very place where Margaret had lived her life and now she was being forced to sell.
Margaret had to sell the house to pay debts. There were school fees due. Then there was that loan Margaret had taken from a friend to pay the funeral expenses. After that, there were the daily living expenses. And there was no one to provide for the house.
If only Michael had provided for his family by covering himself with a life insurance policy. Things would have been different today. Margaret would not have to sell the house and move to an unfamiliar area to buy a cheaper property. Nor would her sons be exposed to the harsh realities of life at such a tender age.
Her eyes still wet, Margaret signed the sale deed. She had sold the house for just under £300,000. She would now use half this money to buy a small 2-bedroom semi and use the rest to pay the hospital bills and other debts. What little was left was deposited in the bank.
Margaret was starting life all over again. A life where she needed to work, where she needed to pick up new skills and a life that would never be the same again.
That was Margaret’s tragic story. And, for all you know, this could be the story of thousands of Britons.
If you have financial responsibility for others, you need to realise that anything can happen in life and you must be prepared for any eventualities. You owe it to your family, to those left behind, just in case the worst should happen. You need to be protected.
by: Derek Rogers

Mortgage Refinancing

By: Rituraj

You might think that deciding to refinance a mortgage requires only a quick comparison of loan interest rates. Unfortunately, that’s not really true. Refinancing is trickier than that! Fortunately, three useful rules of thumb can often help you make sense of refinancing opportunities.

Rule 1: Don’t Ignore Total Interest Costs

You really want to use refinancing as a way to reduce the total interest cost you pay. While that sounds simple in principle, it is sometimes difficult to do. The interest costs you pay are a function of the interest rate, the loan balance, and the loan term period. When people refinance, they tend to focus solely on the loan interest rate. But they often don’t pay as much attention to the loan term or the loan balance. When you use refinancing—even refinancing at a lower interest rate—to increase your borrowing or to extend the time over which you borrow, you often aren’t saving money.

Rule 2: Trade Expensive Money for Cheap Money

For refinancing to make economic sense, however, you do need to swap higher interest rate debt for lower interest rate debt. This calculation, however, is tricky. To make an apples-to-apples comparison, you must look at the annual percentage rate that will be charged on your new loan—this is the best measure of the new loan’s interest rate cost—and then compare this to the loan interest rate on your old loan. You don’t want to compare interest rates on the two loans nor do you want to compare annual percentage rates on the two loans. Again, just to make this perfectly clear: You want to compare the loan interest rate on the old loan to the annual percentage rate on the new loan. When the annual percentage rate on the new loan is lower than the loan interest rate on the old loan, then you are truly paying a lower interest rate. Comparing annual percentage rates with loan interest rates seems confusing at first. But note that you would pay only interest on your old or current loan, so that’s all you need to look at in terms of its costs. With a new loan, however, you would pay both interest and any origination or closing cost fees. The annual percentage rate wraps the interest rate charges and setup charges, origination charges, and closing cost fees into one interest rate-like number.

Rule 3: Don’t Lengthen the Repayment Period

Be careful that you don’t extend the length of time you borrow by continually refinancing. For example, one common rule of thumb states that every time interest rates drop by two percentage points, you should refinance your mortgage. However, there have been times in recent history when following this rule would have had you refinancing your mortgage every few years. This could mean that you would never get your mortgage paid off.

By: Rituraj