Advantage of Homeowner’s Insurance Policy
September 2nd, 2008 | by admin |The beauty of a homeowner's insurance policy is that it is totally transparent. The premiums paid by the policyholder are unbundled, which means the purchaser can see how much goes for the death benefit and how much to the cash value. The process works this way. The premiums are placed in a separate account - called a side-fund - which is invested in short-term securities yielding much more than the old bonds in the company's general account. Each month the company deducts an amount from the policyholder's side-fund equal to the premium payable on a yearly, renewable term policy for the coverage the buyer has chosen.
