Universal Life Insurances Can Be Popular – But Is It For You?

Of all the different types of policies, the universal life insurance seems to be the most favorite among today’s policyholders. It is a much later innovation, conceived to meet a modern need. However, it does not mean that the earlier policies have all become redundant. No, even term life, the original life insurance policy, has quite a big following even today and so have the whole life policies. Nonetheless, people seem to prefer universal life because it combines the low cost protection of the term life with the saving elements of a whole life to provide a perfect solution to modern insurance need.I am sure you are aware that the term life is the original type of insurance policy. Indeed, life insurance may have actually started in the form of burial clubs and artisans’ guilds in the Middle Ages, but the term insurance that we know of today is a much refined version. It is a pure life insurance policy valid a temporary period only. You can buy one for a period of 1/5/10/15/20/25/30 years. Since these policies do not accrue any cash value, you can have a large coverage at a very reasonable rate.However, on the con side, unless you die within the valid period, the term insurance policies offer no return. The whole life policies were next conceived as its antidote. They had saving element incorporated in them. However, such policies were little too expensive and premium payment mode was little too rigid. The universal policies came next. It became instant hit because it offered more flexibility when it comes to cost and coverage.Indeed, if you want to take advantage of the market without loosing the security of the life policy, there can be nothing better than a universal life. Following are some of its salient points:• It is a permanent policy valid for the life of the insured and so whenever the insured dies, his beneficiary is sure to get the benefit.
• These policies are slightly overpriced and amount paid above the cost of insurance is credited to a cash value account.
• Interest too is credited to the account. It may either be determined by the insurer or pegged to financial indexes such as stock, bond etc.
• If you fail to pay the premium, the amount will be debited from this account, thus keeping policy in force in spite of occasional lapses.Today we also have variable universal insurance, which allows the cash value to be directed to a number of separate accounts that operate like a mutual fund. However, since these policies are equity based, they can offer higher return, but if the market goes down, they offer greater risk too. If you are buying the policy solely for insurance purpose, such a policy may not be a very good idea because the death benefit will be paid as long as you have enough cash value to pay the costs of insurance in the policy.However, it is not for me to tell you what type of policy to buy. Receive different categories of life insurance quote on line and then decide. All said and done, I cannot stop myself from adding that, for life insurance purpose, you will do well if you buy only a term life insurance. It is true that a term life does not offer cash value, but its rates are so low that only a financial fool will expect it from the policy. Instead, the financial advisers say that one should buy a low cost term life for insurance purpose and then invest the difference in separate fund.However, not every type of term insurance is cheap. The term life insurance no medical exam policy for example is so expensive that the concept of investing the difference cannot be applicable here; in fact, the price structure of such a policy does not leave any difference to invest. Sometimes they are as expensive as a universal life policy is. Yet, such policies are no less popular because they too have some unique advantages.No medical policies provide instant coverage. You apply today and if you qualify, your family will start being covered by the policy from tomorrow and that too for the full amount. Of course, just as every other case, suicide within first two years is always excluder from its purview; otherwise, every other type of death in included under this policy. You may wonder why this policy is so expensive. Actually, without the medical test, the carriers can never work out the exact cost of insurance and so they charge more. Remember, they are here to do business, not for charity.

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Market Value of Effective Management Practices

We all know that stock markets respond in an irrational way dependent on the availability of information, and several key criteria related to the company. Innovation, consumer appetite for new products or new uses of products, and leadership changes are the typical price influences that the market experiences, outside of global economic and political stability. It is the information that is readily available. Private companies on the other hand have a different perspective. Ask a private capital company what they look for in an investment and the best ones will tell you it’s about passion and a sustainable management process.These two items together create the magic that produces innovation, consumer attraction and strong leadership in a sustainable way. Lose either and you fall victim to individual heroics that may or may not produce that for which the public markets deem worthy of paying a premium. What are management practices exactly? They are the behaviours that company managers exhibit when executing the company’s management processes. More specifically, they are behaviours that:
Illicit creativity
Align and motivate teams and individuals
Provide candid and productive feedback in all directions
Create vision and excitement, and
Produce a steady flow of change that results in consistent and dramatic performance improvement over long time horizons
Management processes include strategic planning processes, annual objectives-setting processes, performance management processes, process improvement processes, and employee and customer feedback and communication processes. A company that can consistently find innovative ideas, create an appetite in the market, and execute on the market demand on a repetitive basis shows signs of having a strong set of management processes that are practiced very effectively. Think Apple in recent years, who made a killing on iPads and iPhones in the wake of a terrible recession. A company that produces one great innovation and then struggles to find more is likely suffering from poor management practices. All new ideas or projects are relying on individual heroics, and any weakness in its execution should be a sign that there are weaknesses among the management.Think Blackberry in recent years, and their poorly received Playbook and Blackberry Torch. Which one would you rather invest in? When the market values innovation, consumer appetite and company leadership, what they are really valuing are the signs and symptoms of effective management practices. Why not go straight to the source and make sure the fundamentals are in tact before you invest in the symptoms? Over the last 6 years I have assessed the management practices of various companies in multiple different fields, from consumer goods to financial services and beyond. By addressing and improving a few key management practices, my clients have earned significant premiums on their valuations. It is possible to measure the effectiveness of a company’s management practices, and that research should weigh heavily on an analysts estimates of a company’s value.The best way to learn about a company’s management practices is to find out from their customers and employees. A fractured company, with poor feedback from customers and employees is a sign of a company with fractured management practices. Perhaps there is lack of clarity in the organization’s strategy. Maybe the employees don’t know how they fit into the big picture. Maybe there are pervasively inefficient business processes. Or perhaps there is a severe fear of giving performance feedback that is based objectively on tangible results. All of these root causes lead to limited innovation and poor understanding of customer appetite.Your Best Stock Bet- The best bet from my perspective is to put your money in on the companies that meet any of the following characteristics:
A low stock price, and new leadership that has a track record of great management practice
An IPO in which the prospectus or your own knowledge of the company shows clear indication that there are robust management processes in place, and skilled practitioners of those processes within the management ranks
An undervalued company that has strong management processes, and is investing in upgrading its management’s execution of those processes
Companies that you might want to divest of or avoid are ones that:
Have stale management processes that are not being practiced in a way that produces creativity and excitement
Use their management processes to hold the company and its employees hostage
Are bringing in leadership that have demonstrated a greater interest in personal celebrity than in sustainable management practice
Have low employee engagement and customer feedback scores
How to Influence the Management Practices of Your Company- Many organizations have management processes in place that are quite robust. Where they fall down is in how they are practiced. This is because how these processes are practiced are often left to individual interpretation, which is limited to the individual’s experience and biases. Some managers are excellent individually, and demonstrate awesome management practice. Others are learning as they go, emulating the leaders they want to be, and hoping they are being taught the right stuff. Some are even paying large premiums to get an MBA, which invariably doesn’t actually teach them the process skills of management such as gaining consensus, managing people, and making efficient multi-disciplinary decisions.The secret to organizational value is to have management practices that are consistently high across a large number of managers. Leadership has an interesting position in the equation. In a company that has and practices robust management processes effectively, leaders can be created. What the market values when they see a change in leadership is the leader’s ability to implement and execute an effective set of management processes.For those of you who are leaders, this means spending your own time learning the best practices, experimenting with them on an ongoing basis, and mastering them over time. For managers, it also means working in an organization where the leader values the investment in creating effective managers. These practices can be learned with an executive coach who has explicit experience in the development and application of management practices. No matter how you get there, the best chance you have at increasing a company’s valuation and stock price sustainably is if you take a look deep inside the guts of the company at its management processes and practices.