Home refinancing is generally the cheapest form of financing available to home owners. But the term “refinancing” has been used quite loosely in sales and marketing speak, leading to certain misconceptions as to what it really is. This article explains what “refinancing” is in the true sense of the word, and discusses related products such as renovation loans and top-up loans.
Mortgage refinancing is the rearrangement of a previous loan to a new loan with different features, including new maturity dates, interest rates or monthly payments. Where there is no existing mortgage loan, refinancing can also mean re-mortgaging of a property that is free of encumbrances.
Imagine that you, as your family’s primary breadwinner, are no longer around to provide for your loved ones. It goes without saying that your family’s lives and livelihood would be affected drastically. The situation gets worse if you had left behind housing loan, car loan or credit card balances. Your dependents may not be able to hold on to the assets you had left behind, and late payment interest charges could accrue to nightmarish amounts.
It is for this reason that many people purchase life insurance policies. However, adequate protection only happens if you had bought the right policies! One can easily end up under-insured or over-insured (still better than uninsured though). More commonly, many people end up paying too much in premiums for the amount of cover they are getting.
For your benefit, we listed down 7 of the most common mistakes people make with life insurance. Once you know this, you can avoid these newbie mistakes and purchase life insurance policies the smart way (and get you in the ‘sufficiently insured’ category).
1. Not understanding the difference between the 5 basic types of life insurances
There are 5 flavors of life insurance most commonly found today:
Each of them offer different components (insured amount, savings and dividends component, cash value, units etc.) and very different premiums payable. Buying the wrong plan for the wrong purpose is a sure way of over paying for features you may not want / need.
If you do not already know the differences, start by reading this article. In fact, this is the MOST IMPORTANT step to avoid mistakes. Learning these differences is the best thing you can do for yourself when it comes to buying life insurance.
Don’t wait. Start here.