But wait!

Do you really want to pay top dollar for that car—knowing it will lose a chunk of its resale value the minute it leaves the dealer? Have you stopped to look at your options? Did you consider, for instance, buying the same car from someone who’s had it three months but wants $10,000 less for it because he’s been transferred to China?

As a general rule, would you rather pay less than more?

Like cars, mutual funds have price tags attached. And, in a similar way, you can pay much less than the fair market value when you buy. You get to judge the mood of the market and figure out whether selling conditions are favourable and today’s low prices can help you make a high profit. You’re the one who determines whether this is the time for that “buy low, sell high” strategy everyone recommends.

Another way you could say it is that mutual funds have been driven off the lot. They’re still made up of profit-companies or “equities,” but the price of the funds investing in them has come down recently. Many investors who don’t understand the market panicked when that happened, pulled their money out and left town. But, as huge as that mistake was for them, it means great news for you. Bottom line, if a mutual fund was a vehicle, it means that the sleek Hummer or BMW they were driving can be yours now — for a fraction of its true price!

World-class mutual funds give you part-ownership of various companies in a range of industry sectors or even countries. Continuing with the auto analogy, you might say you’re buying an assortment of expensive vehicles you can drive to your heart’s content. Not just that, but—because you got them at such a discount—you anticipate something not normally seen in the auto industry: being able to watch the price of your purchases go up as all those underlying companies keep earning profits.

With prices lower than they’ve been in a long time and earnings starting to surge this calendar year already, smart investors see this as the perfect time to “buy low.” They realize Beamers are on sale, with price-tags we won’t likely see again.

Not everyone sees it that way though. In fact, most people want the same car you want, but the media has messed them up emotionally. Believe it or not, some people are worried that the price is too low! It makes no sense when you put it into words, but it’s true. To stay with the car-lot idea, some people are actually waiting for BMW to raise the price before they’ll be ready to buy.

And there you have it. A lot of people with little chance of seeing their money grow.

As for you and me though, we’re in luck. The guys that drove our cars off the lot are headed for China!

It’s an idea worth considering, since you have nothing to lose and a LOT to gain.

If the agent you talk to knows his stuff, he’ll want to see all every life insurance policy you have. He knows that consolidating multiple plans is a great way to reduce your cost. (He also knows that if he improves the value you’re getting, he stands a good chance of becoming your preferred agent!)

So what different types of life insurance will he ask about? Most people carry any combination of life insurance policies, mortgage insurance, loan insurance, line of credit insurance … even insurance on their credit card balances. The bad news is that each policy likely has its own annual fee. It may be hidden, but it leaves your pocket every month just the same. And since a traditional life insurance fee is $85 or more per year, paying more than one of them can be hard on the budget.

So when a prospective agent wants you to dig up all those insurance policies, it shows he’s looking out for your best interests. He knows what he’s doing if he wants to eliminate extra fees.

Your agent also knows something about bulk food principles—or should, since life insurance works the same way. When you buy small amounts of pre-packaged oatmeal (work with me here), you end up paying more… for less. But when you head over to that canister aisle where you scoop the grains into a bag yourself, you pay less… and get more. And it’s the same with insurance. While coverage on a person’s life doesn’t come in canisters, it comes in something we call “bands.” The higher the band you buy from (or the greater the quantity), the cheaper your price per thousand.

So you start by eliminating extra fees. And then you get the best price by “buying bulk.” But that’s not all. Your agent will also want to help you save money by considering the type of insurance you have and whether it fits your needs.

When Moira (not her real name) showed me her insurance plans, we talked about her family’s need for insurance. Her sons are in their mid-teen years and, although they need mom fully insured now, in the near future they won’t. When they’ve reached their mid-twenties, Moira believes the boys will have good careers and maybe even families of their own. So in just 10 years, everything will have changed and Moira won’t need the coverage she needs now.

We came to the conclusion that her previous 25-year term insurance wasn’t the best option. Although it  guaranteed her a great price for 25 years, it was more expensive than the alternative and she couldn’t afford to protect her sons properly right now. By switching to 10-year term insurance instead, the problem solved itself. Instead of $308,000 insurance, Moira now has $600,000 coverage during these critical years. It’s better for the boys, and Moira likes having a lower monthly premium!

So there you have it. Getting a second opinion is a really good idea, maybe even something you’ll want to do this week. Because, just imagine:  What if you could reduce your annual fees and get more for less? Or know for sure that the plan you have is the very best insurance for your family? What if someone took the time to explain your present plan—and your options?

Would it be worth a phone call?

When you purchased your home, you took out mortgage insurance on it as well. You did that because you understood the insurance will protect your family by paying off the home when you’re not there to pay the mortgage any more. You did the responsible thing, making sure your family will always have a home to live in.
And that’s a good thing.

Many homeowners, though, are surprised to discover there’s more than one type of mortgage insurance available. There’s the kind your bank or realtor sells: insurance on your life covering the amount borrowed. Or there’s the insurance you own yourself – life insurance – which is insurance on your life covering the amount borrowed. Same purpose, but different plans with very different features.
And those features impact you and your family.

When you get mortgage insurance through the bank, the bank owns the policy you pay for and in fact, has become your beneficiary. You pay for the plan, but have no control over it.
Think about how this works: You’ll make your monthly payments (a.k.a. “premiums”). Your payment may increase every fifth year on renewal. Meanwhile, the value of insurance protection (money paid out upon death) decreases the same as your mortgage does … meaning you could pay increasing fees for depreciating value. Not only that, but you may be turned down for that insurance coverage at any 5-year renewal point, depending on changes in your health and whether you still meet bank requirements.

But suppose you stay insured and keep paying your premiums … what then? At the end of the day, your bank ends up receiving the insurance proceeds.

You might be thinking it doesn’t really matter who the proceeds go to, as long as your family ends up owning the home. If that’s your first thought, you might want to keep reading.

For the same or less money each month, you should be able to purchase as much – or more – life insurance from a life insurance company. And that’s all it takes to satisfy your bank. Basically, their main objective is to make sure the loan is covered and you are under no obligation to take the insurance offered by your branch.
So you sit down with a life insurance agent and work out the details. And now you own the policy yourself, which makes for significant differences. You chose a policy that suits your budget and lifestyle, first of all. Perhaps you wanted a plan that never costs more than it does now, for instance, or maybe you opted for one that increases every 10 or every 20 years. The main thing is that you chose the right plan for yourself.
For another thing, most individually-owned policies will insure you until age 80 at least—no matter how your health may have changed between now and then. You don’t need to re-qualify medically.
And another thing – would you rather leave your family more … or less?

If your mortgage when you bought your home was $300,000, so was your mortgage insurance. But in our first example with the bank owning the policy, your “face amount” decreases with time as your mortgage is paid down. Insurance value = balance owed. In the second example though, with you owning your policy, you can have the same face amount ($300,000) for as long as you’re insured. And your beneficiaries will be left with not just a home, but with any extra life insurance money too!

And that brings us to the last point. You as the policy-owner can name your own beneficiary / beneficiaries. You have control over who ends up receiving the money. And, on the same subject, it’s important for you to know that – unlike the rest of your “estate” – insurance money will flow straight through to your beneficiaries without being taxed.
At the end of the day, your beneficiaries will thank you.