Life Insurance Online Help

Do you need life insurance?

2011-06-28T21:47:00.000-07:00

Who needs life insurance? That’s a stupid question isn’t it? Everyone needs life insurance.

Or do you? And if you do, what’s the most appropriate kind to get? Your Money has some ideas.

The premise behind life insurance is very simple. Something horrible happens to you earlier than expected and, thanks to the premiums you’ve been paying for years, your dependents are covered.

In that respect, it’s an extremely good thing. It could mean, for example, that your partner can keep paying the mortgage and have some financial support if the worst should happen. More importantly, life insurance will help provide financial security for your children by replacing years of future income.

As such, life insurance is particularly important if you’re a single parent.

You’ll notice a theme running through these first few paragraphs – dependents. Because that’s pretty much what life insurance is there for, to provide for those who are dependent on you and your money.

Which inevitably means that if you haven’t got any dependents, then there’s no point in taking out life insurance. It can be a hard concept to grasp. After all, everyone’s life is worth something, surely? Well yes, but if there’s nowhere for the ‘worth’ to go after your untimely death, then there’s absolutely no point in insuring it and paying the premiums is a complete waste of money.

Those of you without dependents can stop reading now – your interest in this article is over.

Those of you with dependents or, crucially, those who think they might have dependents in the future, should stay with it.

Because for you, life insurance is extremely important. And, like any investment, the sooner you start making deposits the better.

Life is expensive these days. And if the main income in your household suddenly vanishes, who’s going to pay for the groceries, the mortgage, university tuition fees, your daughter’s wedding, etc?

All those things which you could assume would be covered by a regular wage are suddenly thrown into doubt.

So where to start? As with any type of insurance, shop around. Visit your independent financial advisor, but don’t be afraid to check out comparison sites on the web as well. There’s a lot of good advice out there, as well as some good deals, so make the most all your available resources.

Life insurance doesn’t have to be for life – at least with the same provider. As the life insurance market changes, some insurance providers will be less well-equipped to meet your needs.

Signing on the dotted line when you buy your policy shouldn’t be the end of the matter. It’s always worth keeping a weather eye on what else is out there.

This is particularly true if you’re still healthy and/or your situation has changed with regard to dependents. Getting married, having children, taking on a mortgage, changing jobs could all require a rethink on the life insurance front, so don’t forget.

And there shouldn’t be any penalties for switching companies; although if you do intend to switch in the future, make sure you check the terms and conditions before taking out the policy.

As the requirements of your dependents decrease, so can the cost of your life insurance if you opt for ‘decreasing’ term insurance. As the mortgage reduces, for example, or even gets paid off completely, there’s less for the insurance to cover, so it makes sense that the premiums come down accordingly.

And don’t cover yourself for any longer than you have to. Once your children are financially independent, your mortgage is paid off and there are no other substantial debts that might affect your surviving partner, then life insurance becomes pretty pointless. It’s certainly worth reviewing your situation once you retire.
Need to know

1) Not everyone needs life insurance.

2) If you don’t have any dependents, having life insurance is a waste of money.

3) If you have dependents, or think you might have in the future, life insurance is essential.

4) If you’re the main earner, or a single parent, then life insurance is very important.

5) Start paying in as soon as you can.

6) Always shop around for the best deal.

7) If your life changes, so should your policy.

8) Getting married, buying a house, getting a new job should all make you rethink your life insurance.

9) Premiums should decrease as your dependents’ needs reduce.

10) Seek professional financial advice if you are unsure.

Is it a good idea to mix insurance with investment?

2011-06-28T21:44:00.000-07:00

As the debate between choosing pure protection and endowment plans continue, we look at whether it makes sense to select an insurance plan with the objective of savings.

The insurance sector in India is growing at a fast clip. However, policyholders often get confused between the concepts of ‘insurance’ and ‘investment’ and cannot differentiate between pure protection or endowment life insurance. Some insights into the different facets of both these instruments should be helpful.

Term insurance or pure protection plans: A term insurance policy offers protection for a pre-determined premium. Generally, the premium is low and quite affordable, but does not have a built-in savings component. It provides coverage for a specific time period. However, the most important benefit of a term policy is that it offers a guaranteed death benefit at a considerable low cost.

Term plans are beneficial when protection needs are high at certain phases in life. For instance, when your family is growing and may be you do not have sufficient funds to pay a large premium.

However, term insurance policy has no cash value, or savings component, and the premiums tend to increase through the years.

The policy provides benefit only upon the death of the insured. In the absence of an eventuality, the premium is not refunded.

Endowment plans: Endowment life insurance plans offer both protection and savings opportunity. Generally, this is chosen to avail of fixed and market-linked variable returns. Hence, the important benefit of a endowment life insurance policy is the cash value benefit. The Indian consumer prefers bundled products to pure protection plans due to a preference for returns from all financial instruments. As per ‘Life 2010’, a study

done by AC Nielsen, 67 per cent respondents bought life insurance to get good returns from it.

Most endowment policies are also eligible for dividends, which are not guaranteed, if and when they are declared by the insurance company. Many companies offer the option to apply current and accumulated dividend values towards payment of all or part of the premiums. If dividend values are sufficient, out-of-pocket premium payments may end or be reduced after several years, yet coverage can continue for life.

So while premiums must be paid under both the term and endowment plans, long-term out-of-pocket cost of permanent life insurance may be lower compared to the total cost for a term policy.

Additionally endowment policies can also eliminate the problem of future insurability.

Cash value life insurance does not expire after a certain period of time. For example, whole life policies which allow for increasing protection through paid up additions thus matching the lifestyle needs of the policyholder.

Also, some policies contain guaranteed purchase options, which allow you to buy additional coverage at specified times and thus it builds cash value.

This amount, part of which is guaranteed under many policies, can be used in the future for any purpose you wish. If you like, you can borrow cash value for a down payment on a home, to help pay for your children’s education or to provide income for your retirement.

Most often, life insurance policy inculcates systematic and disciplined savings behaviour among the consumers to achieve their long term goals unlike any other financial instrument.

To conclude, be it a term or endowment insurance plan, choose a policy according to your objective and which accommodates the premiums and benefits to suit your budget.

5 Signs You Need Life Insurance

2011-06-28T21:42:00.000-07:00

With all the hype about gold, stocks and the economy, you may have forgotten other key aspects of personal finance, like life insurance. For many, or maybe even most of us, life insurance is actually a bigger concern. If you or I died prematurely, how else could we protect our loved ones from financial hardship? Advisors will often tell you if you're short of funds and have to choose between investing and buying life insurance, get the insurance. (Would your death leave loved ones financially stranded? Find out how to ease your mind and keep them protected. Check out Life Insurance: Putting A Price On Peace Of Mind.)

TUTORIAL: Introduction To Insurance

Although most people could use at least some life insurance (if only to cover their own funeral expenses), not everyone absolutely has to have it - like a retired suburban couple with $3,000,000 in savings, no children, no mortgage or other major debt, and no college expenses. If one spouse died, the other would probably be just fine financially.

So how do you know if you're a candidate for life insurance? Here are five signs you need the coverage.

1. You're Married with Kids
If you're hitched and have one or more children, life insurance is crucial. If you or your spouse died, the surviving spouse would need the money to keep up with car payments, buy food and clothes for the kids, save for college and retirement, and cover all the other everyday expenses the deceased person would no longer be around to help with. It's not something anyone likes to think about, but it's good to know money would be less of an issue if something happened to you or your spouse.

You might both want to buy life insurance even if you don't have kids yet or don't ever plan to. The sooner you get the coverage, the cheaper it'll be. Besides, you'd probably want your spouse to be taken care of if you died prematurely, even if there weren't any kids in the picture

2. You're Single but Caring for an Aging Parent
Like couples with children, singles who are the main caretakers of an elderly and/or ill parent would probably feel much better knowing the parent is taken care of financially in the event of the caretaker's premature death. That's especially true if the parent would have no other way to pay for a professional replacement, which is extremely expensive. The services of a licensed home health aide, for example, now cost $19 an hour, on average. So the bill for even just a few daily hours of those services a day could easily surpass $20,000 in the course of a year.

3. You Have a Mortgage
You may have heard of at least one case in which somebody's husband or wife died and they had to sell the house and move because they could no longer afford the mortgage. Life insurance can prevent that by providing cash to keep up with mortgage payments or perhaps even pay off the entire loan in one shot, if the policy is big enough. (Before tapping your home equity, find out what can go wrong. See Reverse Mortgage Pitfalls.)

4. You Own a Business and Have Partners
Business partners should always have life insurance on each other in case one of them dies, which can devastate a business because the deceased partner's daily contribution to its success is lost. Insuring the partners' lives can provide cash to help keep the business running in the event of someone's death.

5. It's Your Only Way to Give to Charity
Some people are well off enough that their death wouldn't cause undue hardship for loved ones, but they don't have anything extra to leave to a charity they want very much to help. They can solve this dilemma by purchasing life insurance and naming the charity as a primary beneficiary of the policy.

The Bottom Line
Don't let the constant barrage of bad economic news and concern about your investments distract you from other important personal finance issues such as life insurance. At this point, getting adequate life insurance might actually be a higher priority for you than investing. Strongly consider purchasing coverage if there's anybody who would suffer financially if you died.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/06/28/investopedia53716.DTL

$1 billion in life insurance unclaimed?

2011-05-31T10:08:00.000-07:00

Calling it a "conservative" estimate, Florida Insurance Commissioner Kevin McCarty says 40 of the largest U.S. life insurance companies may owe policy beneficiaries more than $1 billion.

McCarty made the claim after completing the first stage of an evidentiary hearing today on how life insurers were using the Death Master File, a Social Security Administration list of those who have died.

The nation's largest life insurer, MetLife, was grilled by McCarty, who heard testimony that MetLife has been using the Death Master File since the late 1980s to determine when to halt annuity payments to its clients but did not use the list until 2007 to determine whether an insured had died so his or her beneficiaries could be paid.

How much life insurance do I need?

And the company only began using it in a systematic and comprehensive way toward the end of 2010, according to MetLife representatives who were subpoenaed and testified under oath at today's hearing.

Nationwide Financial senior vice president of life operations Peter Golato testified that his company had run a check of its life insurance policies through the same process it uses for annuities.

''As a result of that scan, we found that approximately 1,000 policies or less than one-tenth of 1% of our book of business matched positive, where the policyholder may have passed away and benefits may be due. While only a tiny fraction of our life business, we have already found more than 70% of these policies' beneficiaries and are in the process of assisting the beneficiaries in making a claim so we can deliver all benefits including interest," he said.

35 insurance investigations

Asked after the meeting the total amount all insurers likely owed, McCarty said it was difficult to determine, but estimated "somewhere north of $1 billion."

At least 35 states have begun investigations into whether life insurance companies have failed to find beneficiaries for life policies and how much has either been kept by insurers or "escheated" -- that is, turned over to the states to try to find the rightful owner -- instead of paid to the beneficiaries.

McCarty described those actions as a "pervasive practice," and promised a "broader investigation looking at the largest insurance companies in America." He said the end result would involve 40 companies representing 92% of all the life insurance and annuities in the country.

'Track down anybody'
Regulators who attended the meeting sounded incredulous that MetLife and other life insurers couldn't track down missing beneficiaries when they didn't come forward. Usually it's the beneficiary's obligation to find the insurance company after an insured person dies. But that could change now that regulators are aware that some insurers have used the Death Master File to figure out when to stop paying on annuities, but not when to make payouts to life insurance beneficiaries. It is a situation McCarty calls "a mismatch."

Faster life insurance payouts on the way

2011-05-31T10:07:00.000-07:00

Life insurance claims will be paid out more quickly after insurers were issued with new guidance over how to process claims.

More than 32,000 life insurance claims are made by families who have lost a loved one every year in the UK, with a typical wait of around four months before the payment is made.

However, under guidelines put forward by the Association of British Insurers (ABI), it is hoped claims will be able to be turned around in just four weeks.

Working with the Law Commission, the trade body has developed a solution to get around the lengthy legal process associated with winding up a deceased person's estate.

The process involves the life insurer asking the claimant to provide evidence that they are the main beneficiary, rather than having to wait for the legal process to prove they are.

At the same time, however, the claimant will also have to complete a declaration agreeing to pay back any money they receive from the policy if the legal process goes on to decide they were not the rightful recipient.

"Dealing with bereavement is hard enough, without the added stress of worrying about money," said Otto Thoresen, the ABI's director general.

"This new life insurance claims process means the time it takes on average to receive a payout will drop from four months to just four weeks.

"We believe that this will go some way to alleviating financial hardship for a deceased person's dependents, especially families on lower incomes who have few other assets available to rely on."

Many people take out life insurance because, if they die, they want their partner, spouse or family to be able to cope financially.

It usually pays out a lump sum after the insured person dies, and can be taken out by one person on their own or jointly with someone else, for example by a couple who are buying a home together with a joint mortgage.

Protecting yourself and your family financially against any unforeseen circumstances should always be at the top of your list of priorities.

Why life insurance should be the first step in financial planning

2011-04-30T06:45:00.000-07:00

In the wake of increasing inflation, shift to nuclear families and change in lifestyle patterns, life insurance assumes vital importance.

It is paramount for every individual to first adequately insure his life for the financial security of his/her dependants and then proceed to address other aspects of financial planning.

Financial planning is a dynamic process that involves charting an individual's financial goals and longterm objectives in conjunction with ways and means of achieving those long-term goals and objectives.

This includes elements of protection, wealth creation, planning for contingencies and emergencies as well as planning for specific milestones in life.
Importantly, an individual's financial plan should be reviewed to be in sync with his different life stages and the various requirements that are specific to a certain stage in life.

Changing circumstances like marriage, purchase of a house, child's education mandate that the financial plan evolves to meet these objectives within the given timeline.

Today, an individual has an array of options to choose from when s/he starts financial planning. It is observed that people tend to focus on the 'wealth creation' aspect of financial planning and the 'protection' element often gets compromised or neglected.

While the loss of life of the family's bread-winner is irreplaceable, being adequately insured guarantees that the dependents are provided with the much-needed funds to be financially independent and largely keeps the family's financial plans on track without having to compromise on their standard of living.
This aspect of protection is unique to life insurance and hence it should be a key ingredient in an individual's financial plan.

As a risk-management tool, the importance of adequate life insurance in an individual's financial plan cannot be over emphasised. The relevance of life insurance as a longterm protection-cum-savings tool also comes from its primary feature of it being a need-based financial instrument that helps one meet every life stage need.

It provides the much needed peace of mind and at times actually stimulates enhanced risktaking ability of the individual. Every individual needs to asses his or her life insurance needs depending on an assortment of factors.

Life insurance requirements need to be scientifically assessed depending on the life stage at which the individual is along with current liabilities, expectation of future liabilities, number of dependents, financial goals, life style etc.

Money Matters: How Much Life Insurance Do You Need?

2011-04-30T06:43:00.000-07:00

Whether you're married or single, a parent, or without children, life insurance can play a key role in your financial plan. But millions of Americans have no life insurance coverage, and many may not have enough.

Appreciating the importance of having adequate life insurance is one step; assessing your own unique needs is another.

As a starting point, determine your net earnings after taxes as well as your routine living expenses. Other factors to include in your calculations are:

Any outstanding debt that you owe, such as a mortgage or education loans
Future college expenses for your children
Funeral and other uninsured medical costs
How much your surviving spouse would need to adequately fund a retirement nest egg

As a general rule, you may want life insurance to cover these expenses. While ensuring the financial security of loved ones is an important use of life insurance, there are other uses. One example is as part of an estate planning strategy designed to pass more wealth to future generations. Another might be to fund a special needs trust to provide continued care to a relative after you are gone.

Once you have an idea of the amount of coverage you need, the next step is to evaluate the type of policy that is appropriate for you. Policies can be term or permanent life. Term life is basic coverage and less expensive. A term policy provides coverage for a predetermined period of time. Premiums can increase at the end of the term and can become extremely expensive. Term policies build no cash value and benefits are only paid if you die.

Permanent life insurance combines a death benefit with a tax-deferred savings component. With permanent life insurance, as long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate for the life of the contract. Part of that premium accrues as a tax-deferred cash value. Borrowing from the value may be permitted.

Reviewing your coverage can be a daunting task. This is an area where a financial advisor can help you assess your need and fit it in with your entire financial plan.

Read more: http://www.wmur.com/money/27707150/detail.html#ixzz1L0uzIrGv

Hope In The Word — Life assurance vs. life insurance

2011-04-30T06:40:00.000-07:00

Many people are thoughtful enough to take out a life insurance policy in order to provide an income or a source of revenue for their loved ones i case of their death.

Life insurance is a wonderful means of providing for those left behind who were dependent on you for all or a part of their living.

But many of these same people who are foresighted enough to take out life insurance to provide for others are shortsighted or careless when it comes to life assurance – or providing for their own soul at death.

While it is honorable and thoughtful to think of the financial security of those who depend on you, it is foolish to neglect your own eternal security. Jesus asked,

“For what shall it profit a man, if he shall gain the whole world, and lose his own soul? Or what shall a man give in exchange for his soul?” —Mark 8:36, 37. It would be a shame for one to provide for others and then themselves be left desolate for eternity.

The fact that one takes out a life insurance policy is an acknowledgment that death can come quickly and unexpectedly, “Whereas ye know not what shall be on the morrow. For what is your life? It is even a vapour, that appeareth for a little time, and then vanisheth away.” — James 4:14. One doesn’t even have to read the Bible to know that this is so, all one has to do is to read the daily newspaper or see the evening news on TV. News stories are filled with people dying unexpectedly at every age, young, old and in-between.

Jesus’ sacrifice on the cross made it possible for each one of us to have life assurance.

“I give unto them eternal life; and they shall never perish.” —John 10:28. And,

“He that heareth my word, and believeth on him that sent me, hath everlasting life, and shall not come into condemnation; but is passed from death unto life.” —John 5:24.

In order to take out a life insurance policy application must be made to an insurance company. The proposed insured must answer questions regarding his or her health.

Many times a physical exam is required. If the company finds a health problem it will charge a higher premium or decline to insure the person for whom the insurance is requested.

Insurance underwriters can be very selective in issuing a life insurance policy – only qualified applicants are approved.

How different this is from life assurance through Jesus Christ. All applicants are accepted by Him! Jesus said, “Him that cometh to me I will in no wise cast out.”—John 6:37.

The Bible assures us that this invitation is open to all, “For God so loved the world that he gave his only begotten Son that whosoever believeth on him should not perish, but have everlasting life.” —John 3:16.

The form of application is simple: “That if thou shalt confess with thy mouth the Lord Jesus, and shalt believe in thine heart that God hath raised him from the dead, thou shalt be saved.”

For with the heart man believeth unto righteousness, and with the mouth confession is made unto salvation. . . for whosoever shall call upon the name of the Lord shall be saved.” —Rom. 10:9,10,13.

Hope in the Word is written by Pastor Roy Delia of New Hope Baptist Church, Ontario. He can be reached in care of the Argus Observer, 1160 S.W. Fourth St., Ontario, OR 97914. The views and opinions expressed in this column are not necessarily those of the Argus Observer

Five Life Insurance Questions You Should Ask

2011-03-31T09:03:00.000-07:00

It's fairly simple; if you die while your policy is active, your family will receive a death benefit, but the many types of term insurance and options can be confusing. Is term life insurance likely to pay off for you? Start by asking yourself the following five questions.

1. What am I trying to accomplish?
Before you buy any kind of life insurance, think about why you're buying it. Are you protecting your family in case of an early death? Have you taken on additional debt that requires you to provide coverage? Are you looking to leave an inheritance to a charity?

Understand that in most cases, term insurance policies do not pay a claim - most people who buy term insurance "outlive" their policy's term. As a result, if you're shopping for insurance to protect financial obligations you may have for a very long time - possibly for the rest of your life - consider exploring another type of policy, called permanent insurance.

If you're in a cash crunch and have immediate obligations to your family, business partners, or lenders, term insurance can provide you with a quick, simple, short-term solution. (For more insight, read Buying Life Insurance: Term Vs. Permanent.)

2. What's available?
Most people will have access to at least one of the two types of term insurance policies: group or individual.

Group - Most companies offer their employees some form of term life insurance as an employee benefit. This is called group term insurance, because you're getting protection as part of a larger group. Usually it's deducted right from your paycheque and the only requirement for coverage is to complete a brief questionnaire with details of your health history. Here are some of the advantages of group term insurance:

It's easy - You can usually sign up for a policy when you take a new job and enroll in your company's benefits program. You may also have an opportunity to sign up during the annual enrollment period at your company when you sign up for other benefits, such as medical, dental, or an employer-sponsored retirement plan. (To learn about these employer plans, see Are You an Active Participant? and Common Questions About Retirement Plans.)
No medical - Most group plans don't require a physical exam. A statement of good health, along with a medical history, is usually all that's required to secure coverage. (To read more, see Steering Clear Of Medical Debt and Health-y Savings Accounts.)
Automatic payments - Through payroll deduction, you'll hardly feel the financial hit of paying premiums every month.

Individual - As its name implies, an individual policy is one in which you apply for coverage on your own. You - or typically a family member - will own the actual policy. In order to obtain an individual policy, you'll probably have to undergo a medical exam of some sort, provide a detailed medical history, and give the insurance company permission to look into your medical records and perform a background check on any driving offenses and criminal activities. This might sound a little invasive, but there are some great benefits to owning an individual life insurance policy.

It's portable - If you take a new job at a different company, you don't have to worry about losing your life insurance protection.
Level premiums - Generally, individual policies can be structured to have level premiums for the duration of the policy; typically this is a 10-, 20- or 30-year period.
Flexibility - If you ever want to upgrade or convert your term policy to a permanent policy, you might have more options available with an individual policy than you would with a group plan.

3. What if I don't die?
Ironically, some people who buy term life insurance get upset when they find out that if they don't die, they don't get anything back.

If this is a concern for you, it's important to get an understanding of what will happen to your policy as you near the end of the term.

Premiums go up - Many term policies offer level premiums for several years (10, 20 and even 30 years, for example). As you approach the end of that term, you may have the option of keeping your policy. If you do, you can expect a hefty jump in your premium.
Might need a new policy - If you are still healthy at this time in your life and you want to keep the coverage, it may be best to apply for a new policy.
Drop in coverage - Perhaps you only wanted your policy to cover you as long as you had a mortgage, or until your children's college education was paid for. If that's the case and you have no other obligations to protect, you might want to let the coverage expire.
Upgrade the policy - Most term policies come with a "conversion privilege." This allows you to essentially trade in your old term policy for a new permanent policy.

4. How can I upgrade this policy?
As mentioned previously, most term policies allow you to convert from a term policy to a permanent one. This is a great feature that provides future flexibility but because some policies have limitations, you should familiarize yourself with the conversion rules of any policy you're considering.

When can I convert?

The conversion privilege might have a time limitation on it, to age 70, for example. Some policies allow conversion during the entire term of the policy.

What can I convert to?

The most generous term policies allow you to convert to any type of permanent policy available, such as whole life, universal life or variable universal life. Some term policies may force you to convert specifically to just one type, and some companies may not offer all types, which can also limit your options down the road. (Keep reading about this in Variable Vs. Variable Universal Life Insurance and What is the difference between term and universal life insurance?)

5. Where do I buy a policy?

Chances are you'll probably hit the major Internet search engines first when looking for information about buying a policy. A number of online distributors can provide you with a term insurance policy. These distributors typically focus on finding the lowest cost policy, given the personal information you provide.

For a more personalized experience, you might consider finding a professional. An insurance agent will help you understand all the different variations of insurance - both term and permanent - and should be able to answer any questions you might have. You can find one by visiting any of the major company websites or combing through your local phone book, but probably the best way to find a representative is to ask around for a referral from a friend or business associate.

Finally, for group coverage, you can check with your employer. If you're self-employed, you may have access to a group plan through a professional association, or you may even be able to put a group plan in place for yourself and your employees.

After going through these five questions, you will be able to decide for yourself if that million-dollar coverage ad is really what you need to provide for you and your family. If it's not, don't be afraid to pass it by - there are hundreds of policies waiting to provide you with the peace of mind you're looking for.

Smart ways to save on insurance

2011-03-31T08:58:00.000-07:00

30/03/2011

Looking for some simple ways to save on your home, contents, car or health insurance? We show you how!

Insurance is a necessary evil in life: it provides you with peace of mind, but it’s really only there to cover you in case something goes wrong.

And insurance premiums can quickly add up. Between home and contents, landlords, car, health and life insurance policies, you can be spending upwards of $5,000 per year to try and keep you and your family protected.

If you’re keen to trim your annual premiums without sacrificing any of your policies, Paul Modra executive manager, product and marketing with Ian Berry Insurance, offers the following tips:

Shop around
Firstly, shop around and compare different insurance policies to find one that suits you and your needs. “It’s not a case of one policy fits all,” Modra says. Make sure you compare apples with apples when you’re evaluating potential policies, such as similar excesses and similar inclusions.

Read the fine print
“Always read the product disclosure statement before purchasing any form of insurance and make sure that you understand exactly what it covers – this can save you big dollars down the track,” Modra says.

Boost your excess
Your excess is the initial amount you’ll have to pay yourself if you make a claim. For instance, on your car insurance policy you might have an excess of $500, which means that if you have an accident, you’ll be required to pay the first $500 towards repairs. “Some insurance providers offer variable excess, and the higher the excess you choose, the lower the premium you’ll pay,” Modra says.

Loyalty discounts
If you can, combine home, contents and car insurance policies with the one insurance provider, as “you may then be eligible for a multi-policy discount,” he says.

Use age to your advantage
“Some insurance providers offer full comprehensive car insurance at a discounted rate for more experienced drivers, generally over the age of 30,” Modra explains. So where possible, make sure you nominate the older drivers on your policy in an effort to reduce your premium.

Be boastful
If you’re a fabulous driver or you’ve never made a claim on your home and contents policy, let it be known! “If you’ve been claim-free for a period of 12 months or more, you may qualify for a no-claim bonus of up to 60% off the base premium,” Modra says.

Why you should buy a variable life insurance plan

2011-03-31T08:54:00.000-07:00

A variable life insurance plan (VLIP) combines investment and insurance, just like a unit-linked insurance plan (ULIP).

Variable life insurance schemes offer flexibility in the proportion of mortality and savings components.

These plans also offer more transparency, simplicity, quick liquidity, guaranteed minimum returns, transparent charges and ample risk cover.

This type of life insurance allows you to participate in several investment options simultaneously targeting your premiums to separate accounts.

Generally, the optional investment funds include stocks, bonds, money market funds, equity funds, or a combination of them all Variable Life Insurance allows you to switch from one sub-account to another.

You can also apply the interest earned on these investments toward the premium, reducing the amount you pay. In a departure from the ULIPs, the returns are declared by insurance companies annually and are not linked to the stock market.

One part of the premium is allocated to buy life insurance.

The balance is invested in bonds or equities. The premium amount cannot be altered in the course of the policy, but the death benefit and savings element can be reviewed and altered as the policyholder's circumstances change.

You can increase your insurance protection and decrease the investment component, or vice versa. Another feature of this plan is that it does not get automatically cancelled if the policyholder fails to pay the premiums as long as the premiums paid till date meet policy requirements.
Under the plans, the premiums paid by the holder, after deduction of charges, will be credited to the account maintained separately for each policyholder.

If all due premiums are paid, the amount held in the policyholder's account will earn an annual interest which will be guaranteed for the entire policy term.

In addition to this guaranteed return, if all due premiums are paid, the individual policyholder's account may earn an additional return depending upon the experience under the plan.

There is an option to pay additional (top-up) premiums without any increase in risk cover to the extent of total basic premiums paid under the policy.

The premiums can be paid regularly at yearly, halfyearly, quarterly or monthly (through ECS mode only) intervals over the term of the policy. The sum assured ranges from 10 to 30 times the annualised premium, depending on age of entry.

Life Insurance for Charitable Gifting

2011-02-28T16:08:00.000-08:00

* The benefits, if any, to be derived in implementing such a concept?
Coming out of this research, we found that life insurance premiums can qualify under the income tax act as a deductible expense once the proceeds of the policy is donated to an organisation established and operated exclusively for charity or for educational purposes and approved by the minister responsible for finance by order. In addition, we also found that under the insurance act 2001, it is possible to name a charitable organisation as the beneficiary of ones policy. So in summary, the concept of Life insurance for Charitable Gifting can be implemented here in Jamaica under our existing laws.

But what really is Life Insurance for Charitable Gifting? Life Insurance for Charitable Gifting is the use of life insurance to make charitable gifts. This can be an effective and cost-efficient means of fulfilling charitable intentions without making a sizable donation while alive. Depending on the type of insurance used and the nature of the gift, charitable donations involving life insurance often can result in income tax deductions for the donor and current as well as future value to the charitable recipient.

It has always been the case where, one could receive a tax credit on their estate by either donating the cash surrender value or the proceeds of a life insurance policy to charity. This was normally done by simply adding the charity as the beneficiary of the policy. However, under this new concept of Life Insurance for Charitable Gifting one can get an immediate tax credit once the donor irrevocably assigns the policy to the charity as provided for under the insurance act 2001 and make the charity the beneficiary of the life insurance policy.

To receive a tax benefit, the money donated must be considered a gift by the Tax Audit and Assessment Department. Gifts generally include; cash, gifts in kind, like stocks and real estate or a right to a future payment, such as proceeds from a life insurance policy.

The donation of the proceeds or cash values from a life insurance policy must be made to authorised charitable and educational organisations as provided for by section 13 (1) (q) of the income tax act. Section 13 (1) (q) of the income tax act states; "the amount of any donations (not exceeding one-twentieth of the statutory income) to any institution or organisation established and operated exclusively for the charitable or educational purposes and approved by the minister responsible for finance by order". While the definition for statutory income under the same act states; "subject to section six, the aggregate amount of income of any person from all sources remaining after allowing the appropriate deductions and exemptions under this act".

So, with this in mind, we now know that a donation can be a present gift that a charity can use now or a deferred gift that is available in the future, usually through a life insurance policy after the donor's death.

So how will this work? Well, according to the Tax Audit and Assessment Department, "if you irrevocably assigned your life insurance policy in full to a charitable organisation approved under section 12 (h) of the Income tax act and the charitable organisation has been designated the beneficiary of the policy. Then under these guidelines, the surrender value and the premium may be deducted for the purpose of ascertaining chargeable income or statutory income.

Where an existing policy has been assigned, the surrender value on assignment may be deducted as a charitable donation restricted to one-twentieth of the contributor's statutory income. Subsequent payment of premiums in respect of existing or new policies would also be awarded the same treatment. Where the premiums and or initial surrender value has been allowed, no additional amount will be allowed on maturity of the policy".

To summarise, when you irrevocably assign an existing life insurance policy to a charity the amount of the donation you make to it generally corresponds to the policy surrender value. The charity will then issue you a tax receipt entitling you to a tax credit for the year in which you make the donation. If you choose to continue paying the policy premiums you will receive an annual tax credit for the premiums paid subject to one-twentieth of statutory income.

If you, however, purchase a new life insurance policy, it comprises no surrender value at the time of purchase, and only the premiums that you will pay entitle you to a tax credit. In such a case:

* At the charity's request and with its written consent you pay the premium to the insurer which will then issue you a receipt. These receipts must be presented when making your claims for tax credits.

Upon your death, the principal insured under the insurance policy will be paid to the charity as a beneficiary. No receipt entitling you to a tax credit will be issued in your name or in the name of your estate, since you will have already received a tax credit on the premiums paid each year.

What benefits are there to be derived from introducing this concept?

To the Donor

a) Significant Tax Savings

Well, let's see how this might work. Let's assume that a client pays $100,000 for insurance premiums for coverage of $1,000,000. Within that year he/she then decides to give that policy to charity. So that upon his/her death, that charitable institution would receive the $1,000,000 sum assured. The policy can then be removed from the client's taxable estate and the premium payments of $100,000 could then be deducted, subject to the limitations of the income tax act.

b) No Gift Tax

Under normal circumstances, when transferring gifts to loved ones, a transfer tax of four per cent is applicable to your estate at current market value. However, because the gift you would be leaving for the charitable organisation would be given to them as beneficiaries on a life insurance policy, you would not be required to pay the four per cent transfer tax, hence no gift tax.

c) Recognition

Most charities will list the client as the donor of the amount of the death benefit, but the client only pays the life insurance premiums. Some charities may even give plaques and scholarships in honour of the donor.

d) Donors Can Make Larger Gifts without Making a Major Cash Outlay upfront.

As stated earlier the only cash outlay required by the client is his/her commitment to the paying of life insurance premiums. However, upon his/her death the charitable organisation will receive the life insurance proceeds and cash value (if any); which in many circumstances constitutes as a major cash outlay.

To the Charities

Charities May Receive Larger Donations Than They Would Otherwise Receive.

* It ensures a stream of cash over the years as plans mature or paid out at different times.

* Cash values/equity can be utilised before policy matures or before death of the donor.

To Insurance Companies

Less policy surrenders: Some one may no longer want his/her policy because of any of these reasons:

* Original reason for purchasing the policy is no longer there

* Beneficiaries are deceased

* Another investment would make more sense at this time

* A reduction in estate size or a change in the tax laws

* The premiums are no longer affordable (here only the cash surrender Value of the policy are donated)

So before surrendering their insurance policies, clients may be encouraged to donate them to charity and receive a tax credit.

Increased Sales: With the idea being marketed heavily amongst the charities to their donors and members. It will provide an opening for insurance advisors to sell more policies.

Not everyone will want to donate their policy to charity, but for those who may wish to do so this added incentive may make it easier for them to donate more. This is in fact, welcomed news for the charities.

Denver Brown is an executive business coach and financial services specialist.

Insurance key to protecting finances

2011-02-28T16:03:00.000-08:00

When we think of what it takes to have a secure financial future, investment accounts usually come first to mind. But those are just one part of the puzzle. Insurance policies can also play a role.

Sure, life insurance can help a loved one when a death eliminates an income, but before that happens, other insurance policies can prevent the pieces from falling apart.

With one in seven drivers uninsured, according to the Insurance Research Council, odds are good that you'll be struck by one. That number is expected to rise as the council says it sees that number go up with high unemployment as more people are unable to afford insurance. Your auto policy should have coverage for you if you are struck by an uninsured driver. But is the coverage enough to replace the damage that could be done?

For example, if you are unable to work for a period of time and lose income, will the coverage provide a payment to you for that? This is especially important for self-employed workers, as not being able to work would harm a business. Your insurance agent should give you a description of how uninsured coverage protects you against lost income. And the agent should help analyze how much coverage is needed. It may be worth it to check with multiple agents to see if they all agree on your situation.

Another policy that can help protect from loss of net worth is property insurance. A slip and fall by a visitor could require a payment from you for medical bills and possibly loss of income. That could force you to take out money from your investments to pay those bills if your property insurance does not have enough coverage.

Homeowners with pools and trampolines especially need extra coverage, as those are life-threatening. Dog owners should also be aware of their coverage, as dog bites account for 1 out of 3 homeowner insurance claims.

When speaking with an agent, also discuss umbrella insurance, which provides extra protection beyond coverage of the auto and home policy. An umbrella can provide protection for $1 million, $2 million or more. You can keep the auto and home coverage lower and supplement with an umbrella that protects against excess claims on either policy.

Beware of having the minimum coverage on your policies as these days medical and lawsuit costs are soaring. The last thing you want is to have built a net worth and then have it taken away because not enough insurance was there to protect against disasters.

Read more: http://www.bnd.com/2011/02/28/1610155/insurance-key-to-protecting-finances.html#ixzz1FIl4VCEU

Take advantage of investment avenues with variable life insurance plan

2011-02-28T16:01:00.000-08:00

A variable life insurance plan (VLIP) combines investment and insurance, just like an unit-linked insurance plan (ULIP). Variable life insurance schemes offer flexibility in the proportion of mortality and savings components.

These plans also offer more transparency, simplicity, quick liquidity, guaranteed minimum returns, transparent charges and ample risk cover. This type of life insurance allows you to participate in several investment options simultaneously targeting your premiums to separate accounts.

Generally, the optional investment funds include stocks, bonds, money market funds, equity funds, or a combination of them all. Variable Life Insurance allows you to switch from one sub-account to another.

You can also apply the interest earned on these investments toward the premium, reducing the amount you pay. In a departure from the ULIPs, the returns are declared by insurance companies annually and are not linked to the stock market.

One part of the premium is allocated to buy life insurance. The balance is invested in bonds or equities. The premium amount cannot be altered in the course of the policy, but the death benefit and savings element can be reviewed and altered as the policyholder's circumstances change.

You can increase your insurance protection and decrease the investment component, or vice versa. Another feature of this plan is that it does not get automatically cancelled if the policyholder fails to pay the premiums as long as the premiums paid till date meet policy requirements. Under the plans, the premiums paid by the holder, after deduction of charges, will be credited to the account maintained separately for each policyholder.

If all due premiums are paid, the amount held in the policyholder's account will earn an annual interest which will be guaranteed for the entire policy term. In addition to this guaranteed return, if all due premiums are paid, the individual policyholder's account may earn an additional return depending upon the experience under the plan.

There is an option to pay additional (top-up) premiums without any increase in risk cover to the extent of total basic premiums paid under the policy. The premiums can be paid regularly at yearly, half-yearly, quarterly or monthly (through ECS mode only) intervals over the term of the policy. The sum assured ranges from 10 to 30 times the annualised premium, depending on age of entry.

There are two types of variable life insurance plans - participating and non-participating. Participating plans offer a guaranteed return, while nonparticipating plans offer an annual bonus at the end of each financial year in addition to guaranteed returns.

The seven biggest life insurance mistakes

2011-01-27T17:26:00.000-08:00

Watch out for these life insurance mistakes.
1. Assuming life insurance is expensive
According to a recent report by Aviva, on average, 61% of families admit they don’t have basic life insurance, with 89% saying they are without critical illness cover, and 89% without income protection.

What’s more, 42% of families admit they’ve been seriously affected by illness and yet still don’t have any cover in place!

But if you care about your family’s well-being and you want to ensure your family won’t lose their home should something happen to you, make sure you have a life insurance policy in place.

If you think you can’t afford it – 19% of people in the survey said they didn’t have cover because they thought it was too expensive – think again. Life insurance can cost from as little as £5 a month, so there’s really no excuse.

2. Believing life insurance never pays out
The Aviva report also revealed that 5% of people believe life insurance never pays out. Again, this is untrue. According to Aviva, 99% of life insurance claims are paid out.

As long as you’ve provided accurate information, there should be no reason why your insurer won’t pay out.

3. Under-insuring your life
Of course, although your insurer should pay out, there's a chance the sum of money your family receives won't be large enough. Judging how much life cover you need can be tricky and what might sound like a lot of money now, may not work out to be much later down the line. As a result, it can be very easy to under-insure your life.

Many of us think we only need to cover our mortgage costs, but if you want to ensure your family would have a reasonable standard of living should the worst happen to you, you should also consider other debts such as household expenses.

For an easy way to work this out, check out this nifty calculator.

Jane Baker explains why life insurance should be your number one financial priority

4. Not updating your details
If your circumstances change – perhaps you’ve increased the size of your mortgage, or had a baby - you need to update your policy and apply for additional cover. If you don't do this, you risk being under-insured. Read Eleven reasons why you need more life insurance for more information.

The same goes for personal details such as your health - in some cases you could see your premiums come down as a result!

In fact, recent research from Sainsbury’s Finance has revealed that around 3.3 million ex-smokers in the UK are collectively paying £316m a year too much for their life insurance premiums because they haven’t told their policy provider they’ve quit.

So if you’ve given up smoking and haven’t used nicotine replacement products in the past 12 months, make sure you tell your provider as you should be classified as a non-smoker and this will lower your premiums.

5. Choosing the wrong type of policy
It’s also pretty easy to choose the wrong type of life insurance policy. Life insurance policies come in all shapes and sizes, leading to confusion.

The most widely used policy is level term assurance. If a claim is made during the term, this plan pays out a cash lump sum to your family (or any other beneficiary you choose). The sum you’re insured for stays the same for the duration of the term.

You could also consider increasing term assurance which provides cover that increases over time to combat the effects of inflation. Although this sounds good, be warned that the premiums will be higher than a level plan due to the cost of inflation-proofing. So you need to assess carefully whether this benefit is worth paying for.

If you’re really worried about money and you need to keep the cost of life insurance to a minimum, you could consider a decreasing term assurance policy instead. This is cheaper because the cover reduces over the term in line with your outstanding mortgage debt. So this type of cover will pay out just enough cash to cover your outstanding mortgage whenever you make the claim.

You can find out more about the different types of policies in Get the right life insurance for you.

It’s also worth noting that choosing a joint policy usually works out to be cheaper than buying two single policies, but isn’t necessarily the best option. A joint policy won’t give either of you as much cover as two single policies would because a joint policy will only pay out once – when one person dies.

Two policies, on the other hand, will pay out twice – when each of you dies – so you’re getting double the protection. And this is particularly important if you have children.

6. Not setting your policy up in trust
If you want to ensure the pay out from your life insurance goes to the right people when you die, make sure you put your policy in trust. Fail to do so and your policy will automatically become part of your estate. This means it will be subject to inheritance tax. However, if it is written in trust, it won’t form part of your estate and is more likely to be exempt from inheritance tax.

7. Failing to shop around
Although I've saved this one until last, one of the biggest mistakes when it comes to life insurance is not shopping around for the best policy. I’ve already explained why the cheapest policy might not be the most suitable, but it’s still important to shop around to ensure you’re getting a good deal. You can easily do this with the lovemoney.com life insurance centre.

Avoid buying a policy from your bank or other mortgage lender because these policies are likely to be more expensive.

As a final point, it’s also worth thinking about taking out critical illness cover as well as income protection insurance for additional protection. You can find out more in Three essential ways to protect your family.

Should You Sell Your Life Insurance Policy?

2011-01-27T17:23:00.000-08:00

Selling a life insurance policy to generate current income has historically been a controversial practice. Investors who buy the policies do not make money until the selling policyholder dies, creating a death-watch dynamic that is morally repugnant to critics. The life settlements industry, as it's now called, accurately notes that such settlements have long been an acceptable estate planning tool. Now, with rising numbers of aging seniors, companies and brokers involved in life settlements are seeking acceptance of selling a life insurance policy as a mainstream retirement tool alongside annuities, long-term care, and other age-related financial products.

"A life settlement, in our view, is a legitimate transaction made in the financial interest of the policyholder," says Michael McRaith, the commissioner of insurance in Illinois and an active regulator in national life settlements issues. There can be valid estate considerations or a change in family circumstances that support the need to sell a life insurance policy, he notes. For example, he said, parents who have had life insurance policies for decades may no longer need or desire to leave death benefits to their grown children. "It might be better for the parents to have access to a cash settlement for that policy," he said.

"The most important concern for a consumer in any insurance transaction is that the consumer make an informed and educated decision," McRaith says. And that decision, he emphasizes, "should be in the best interests of their families and not necessarily in the best interest of the person [or firm] who is involved in the commercial aspect of a life insurance transaction."

Life settlements emerged from obscurity in the wake of the AIDS epidemic. Known then as the viatical settlements business, it layered a money-making objective with a compassionate twist for terminally ill AIDS victims, who could receive income before they died by selling life insurance policies. The investors who became the new beneficiaries of those policies would continue making any premium payments and then collect on the policy when the patient died.

Questions arose about the propriety of inducing AIDS victims to buy life insurance, and there were ghoulish odds posted on the correlation between a patient's blood cell counts and their expected time of death. Later, as improved drug therapies began commuting what had once been an AIDS death sentence, the viaticals business became less attractive to investors as life spans stretched from months into years, and then decades.

More recently, the image of life settlements was hurt by its association with what came to be called "stranger originated life insurance," or STOLI for short. In STOLI transactions, brokers often aggressively hustled older seniors into agreeing, for a fee, to have insurance on their lives purchased by third parties, who would pay the premiums and collect the death benefits. "These abusive STOLI practices essentially promote the wagering on human life, negating the good, social purpose upon which life insurance is based," the American Council of Life Insurers says in explaining its opposition to such "manufactured transaction."

In Illinois, McRaith recalled a full-page ad in The Chicago Tribune inviting people between the ages of 55 and 85 to meet a celebrity and learn about free insurance. Once in the meeting, they were encouraged to participate in a STOLI transaction. While the fee income was appealing to many seniors, McRaith said, there often were adverse financial consequences that were not disclosed, including income tax obligations and the loss of public benefits due to the extra income from their STOLI fees. Life insurers also object to selling policies with a 100-percent certainty of having to pay death benefits. Traditionally, many life insurance policies are dropped before the covered person dies, and life insurance premiums reflect these lapse rates.

Many states have adopted new rules to sharply limit if not end STOLI, McRaith says, including imposing a multi-year holding period before life insurance death benefits can be assigned to a third party. "Most states have some law that would prohibit stranger originated life insurance," he says. "If we knew of it happening in Illinois, it would be a violation of the law."

As the life settlements industry works to position itself as a mainstream option for seniors, the industry's largest and only publicly traded company, Life Partners Holdings, has been drawing unwelcome attention. The Wall Street Journal reported last month that Life Partners consistently understates the remaining life spans of the policyholders, whose policies are being sold to investors. If an investor experiences an extended wait to collect a death benefit, the costs of paying premiums and other expenses erode expected profits. The problem wouldn't affect consumers unless it reduced investor interest, which could reduce demand for policies and cut the prices that consumers receive for selling their policies into the life settlements market. The company reportedly confirmed this week that it is under investigation by the U.S. Securities and Exchange Commission, and the Journal reported that the investigation was linked to the issue of life expectancy calculations.

Beyond individual company business practices, by far the larger issue for life settlements has been the economy. "When the economic meltdown happened, everyone's lines of credit were cancelled, not just in our industry," recalls Scott Page, founder and head of The Lifeline Program, a life settlements company based in suburban Atlanta. "I think the industry is reinventing itself after a very tough 18 months."

Instead of relying on credit, Page says his company and others are using their own funds to purchase policies. "The industry just started recovering in 2010" and is not back to prerecession business levels. But Page says demographics are on his side. "Life settlements are just going to be one more option for seniors considering how they are going to survive in retirement."
For seniors considering selling their life insurance policy into the settlements market, Page offers this advice:

• These are complex transactions. Either use a financial adviser or work with the insurance agent who sold you the policy in the first place.

• You can work directly with a settlements company or through a broker. In either case, insist on total transparency and get several bids for what your policy might fetch. Payments can range from a few percent of a policy's face value to upwards of 30 percent. The key variables are your age and health, the kind of policy you have, the accumulated cash surrender value built up in the policy, and the ongoing premiums due on the policy.

• Transparency should apply to your considerations as well. Talk to all family members who might be affected by the decision. Make sure everyone understands and supports the decision. "We also require any of the current beneficiaries to sign notarized releases," says Page, attesting to their acceptance of a life settlements transaction.

• Understand, or make sure your adviser understands, your state's licensing rules for life settlements providers and how long the provider has been in business. Also, what is the source of funds being used to buy your policy, and who controls those funds? "It is not unreasonable to ask for proof of funds prior to signing an agreement," Page says.

• Policies ranging from $250,000 and higher in death benefits can be of interest to life settlements companies, but the more attractive policies to the industry are the larger ones. Universal life and other whole life policies are normally used. But Page says there is a growing "term to perm" effort to alert consumers that term policies that can be converted into whole life policies may be of interest to life settlements companies.

• A life settlements transaction should take several weeks, at least. Insurance and medical records must be obtained and verified. The process can take longer if a trust or estate is involved, if the consumer is involved in any divorce proceedings, or there are other legal considerations. Consumers' physicians must provide a "sound mind" statement that the consumer is mentally competent to enter into a life settlements transaction, which is especially relevant for older seniors.

• Payment for a life settlements sale should occur in a lump sum. "Be wary of companies that might want to offer you a payment stream," Page says. The gain on the sale—the difference between the payment and the total premiums paid on the policy—is taxed as ordinary income and should generate an IRS Form 1099.

Life Insurance Quotes May Save You Hundreds of Dollars a Month

2011-01-27T17:11:00.000-08:00

During rough economic times like these, life insurance may be one of the first things tossed out of your family’s economic picture along with your Netflix account, Starbucks runs and weekend trips. But instead of ditching your life insurance, which may put your family at risk if the worst were to happen, performing a simple life insurance quote online may save you thousands of dollars a year.

Depending on the level of insurance a person may have, the average American family spends roughly $400 a month, not including car insurance. It’s tempting terminate your coverage (if you can, many firms lock you in for a substantial amount of time) especially if a job is lost or pay is decreased.

“I was going to get rid of my life insurance but after doing some reading online, I saw that wasn’t a good,” says Danielle Johnson, a mother of two in Aurora, IL. “I was spending $200 a month on our insurance and my husband was laid off so I was looking to cut some corners you know? It’s insurance or the house at least that’s what I was thinking.”

Danielle did what most consumers do when they have a question about a product: they head to the internet.

“I just did a search on life insurance quotes and picked a site from State Farm or maybe it was AllState,” said Danielle. I don’t know, but what matters is that I found a cheaper insurance provider. It didn’t save me that much money but it was enough for us to eat. That’s good enough.”

The various charges on life insurance

2010-12-30T18:54:00.000-08:00

In just a few years, the whole area of life insurance has changed. The reason is simple: the arrival of new financial institutions in this sector, offering their products directly over the Internet.
The first consequence of this evolution has involved service fees. Often present, right from the opening of accounts, online banks have in fact used to diminish and even, for some, to make them disappear. Nevertheless, today, insurers on the web and traditional contracts and coexist with very different performances, and costs to present every moment of life insurance.
It keeps, however, affect the good results of the latter which continues even today to be the favorite of the French savings in terms of capital invested before the Livret A.
Mainly five types of fees are found in virtually all life insurance contracts.

<> Costs Life Insurance Investment <>
First of them to be billed, fees. These are indeed due upon signing the contract. They are payable only once and are often confused with fees that have nothing to do since about the payments.
These fees, therefore, are often reduced to a sum not exceeding 50 euros since and to cover administrative costs of registration of the contract. While many institutions have now abandoned these charges by making even one of their business case, for others it is quite possible to negotiate. This is not the case for collective contracts. The latter, concluded between the insurer and an association to which each adheres insured, do indeed any individual negotiation. They are then often at the expense of joining the association.
Other charges very common, reports of payment. Otherwise known as entry fees, they are primarily charged by traditional banks, distributors of life insurance contracts. Indeed, banks and insurers online, in their vast majority, following their appearance in this segment in the early 2000s, abandoned these charges often very expensive, especially for small savers. Their principle is the percentage charge on all payments since the opening of the contract. The capital is well placed systematically amputated. The banks shall, however, regularly, to promotional campaigns to receive payments without deduction for a limited time.

<> The management of pay life insurance <>
Other costs unconditional life insurance, management fees. These relate to the operations performed on the contract, throughout his detention, placement in either euros or MPT funds. Their samples are, in turn, defined within the contract, due in principle annually. The total amount is on average between 0.5 and 2% of the amount of savings. They are often slightly higher in institutions offering contracts online.
They are paid from interest earned on investment for all funds in euros. For any investment in units of account, the calculation is instead on the value of each share or the number of units. They are, thus, higher on the latter.
These management fees may also be multiplied with, following the establishment, implementation management fee of investment funds, not to mention the transaction costs of these funds.
Focused solely on MPT contracts or units of account, the underwriters are liable for costs of arbitration. These concern the transfer of shares from one medium to another. Their calculation is performed on the sums involved in this change and is expressed as a percentage. The costs of arbitration is often the equivalent of 1% of the amounts so tilted.
Several banks offer life insurance contracts apply a flat rate or application of a minimum investment. Others apply, however, a minimum amount of sampling, which can also be capped. Finally, banks and insurers online have often made it a principle to include in their commercial offers, free of a number of arbitrations per year. The best bid is then often a function of the amounts to invest and move from one medium to another.
Finally, last costs traditionally collected, checked off the cost. Although less common, they are however still available and require greater attention following the perspective of saving everyone. Indeed, without consequence for a long-term investment, they are however very disadvantageous for the short term.
Their principle is simple because instead of taking a percentage from each payment, the financial institution determines that the first filings are used to pay fees in advance, may well amount to a package. Often attached to one or two years with regular payments, then this corresponds to dispose, at the end of this period, a zero capital. After this period, payments are then free of any withdrawal. Hence the interest not to enter such contracts for an investment in the long term. To ensure better visibility to the subscriber's contract, the law now requires the insurer to provide, upon signing the contract, a table showing the values of future redemptions after the scheduled deposition.
The costs are particularly numerous on investments in life insurance. Also, it is necessary to take this into account in any comparison to avoid any unpleasant surprises. However, to simplify matters for investors, more and more schools now report their returns net of fees. A good way to know with more precision the exact amount of interest and capital gains that each policyholder can expect ... while keeping in mind that every investment in cross-channel and unit of account, corresponding to stock market investments, remain uncertain about the results to be expected.

The different management options in life insurance contracts

2010-12-30T18:49:00.000-08:00

Life insurance today's in its finest hour and it does not seem ready to stop considering the many benefits it provides to all its holders.
Tax exemption at the end of eight years after the opening date of the contract, no inheritance tax of up to 152,500 euros and feasibility of designating the beneficiaries of his choice, here are some of his qualities, combined with the ability to devote the money paid to the beneficiaries, whether for retirement planning, to bequeath a share or for a specific project.
Life insurance offers several carriers to choose according to your investor profile, between conservative or, conversely, dynamic. To do this type of contract offers three options, regardless of the insurer, the funds in euros particularly safe, or the MPT units accounts for higher profits, but also a substantial risk taking.
Another choice to make when opening a life insurance policy: its management. Indeed, all the banks and insurers offering these contracts also involve them in solutions to manage their money every day, following the wishes of each and time to devote to it.

<> The utility management services to life insurance <>
Management options are used to optimize the life insurance contract. Increasingly regarded as genuine financial services, they offer a wide range of products adapted and often reassuring.
Many banks offer these options for free or by including them in packs to multiple services. From there often resulting costs, either through sampling or packages in each operation.
Primarily, three types of management are offered under different names depending on the well: the free management for managing the contract at will, especially with new online tools, management-led actions to provide automated and secure management that can automatically protect their capital but also its capital gains.
All these forms of management are divided into several functions, using grouped or individually, according to his needs.

<> Management options for a better life's savings <>
Indeed, whatever their management choices, each subscriber can then take advantage of these related services, either by triggering itself, either by switching to automated actions and programmed.
Thus, the first of these management options that are most used, automatic rebalancing. This tool keeps your investor profile, taking into account the changes in selected investments. Data must be entered when subscribing to this option to define the risks and precautions to be taken and that the wishes of protecting savings gained.
Its operation is simple: the composition of the media at a given time is compared to the previously defined risk taking. The account is then adjusted as necessary to correspond exactly to the investment chosen. This includes cross-channel investments or units of account in order to maintain the original profile of the subscriber. The entire process is done automatically, without the insured having to deal with it. This feature also helps protect the interest generated.
For best results with this system, however it is advisable to opt for a rebalancing formula performed each quarter, rather than annually, corresponding to a time when too large to effectively monitor the fluctuations of the exchange.
Another management option, boosting the fund's capital gains in euro. This feature helps protect the capital invested in the euro fund by reinvesting the capital gains generated on the unit-holders in the present contract. This option contracts in MPT. This arbitration is generally done annually. Thus, all risks are transferred exclusively on profits by offering the possibility of better performance. All the money invested is well preserved, amputated fee payment in the event they are charged. The option can, in most insurance be taken out at any time but is, however, often dependent on a minimum amount of transfer. A management option which is also given more often and has even become a must investment in MPT.
For all the investments chosen on dynamic media, each investor can then make the choice, conversely, to secure the capital gains on investments in units of the fund accounts in euros.

<> The incremental investment: the tool for all life insurance <>
Still, everyone is not an investment expert. To better understand the investment in stock market through life insurance, a new tool is proposed for investment in MPT , it is the incremental investment. With a capital invested in funds in euros, the subscriber can then gradually take progressively more aggressive option through arbitration conducted according to a predefined schedule, and payments on life insurance also scheduled. Thus accessible to smaller investors, however, it is recommended only for a vision of long-term investment.
Among the options for managing the most common, there is one last, that of progressive security of savings. These are available automatically to protect their capital gains. This step is often chosen to prepare for retirement, to get the best performance while protecting certain amounts on a regular basis according to a predetermined schedule and ensure an income.
Management options are likely to be made available to purchasers of life insurance policies to guarantee them a good return, without manual intervention on their part. Often billed as the products are fully automated and take account of previously defined criteria. So a good solution to live in serenity its savings while ensuring good returns, securing its capital and a progressive amount of capital gains.

Life insurance, a good way to prepare for the future

2010-12-30T18:48:00.000-08:00

At its creation in the life insurance was a contract whereby an insurance company agreed to pay a sum of money, determined to advance to a designated beneficiary upon subscription, if achieving certain events concerning the insured person, such as a death or disability. If this form of life insurance continues.
At its creation in the life insurance was a contract whereby an insurance company agreed to pay a sum of money, determined to advance to a designated beneficiary upon subscription, if achieving certain events concerning the insured person, such as a death or disability. If this form of life insurance continues to exist today under the name life insurance, a new form of life insurance has been established, opening access to taxation in a particularly advantageous and now require, by the insurer, the release of capital saved by the subscriber and increased by a rate-dependent media on which the funds were invested. Although these two types of contracts are generally two distinct forms, some insurers offer the opportunity to enjoy "mixed", capable of providing, at a time, the guarantees provided by insurance death and those obtained by the life insurance.
Can be used by investors to prepare for retirement, life insurance has a specific legal framework governing all aspects of this investment, this applicant, since the signing of the agreement, a number of references to clearly inform the subscriber. It is thus necessary for the insurer to include in its contract, the particulars necessary for identification of the beneficiary, the exact date when the payment of principal or annuity will be held, and the value of over the contract. If, in many respects, the life insurance contract may resemble other commitments, such as deposit accounts, it should be emphasized that the money remains fully available here, and at any time.
Particularly attractive, life insurance policies also differ from other savings products by tax preferences, leading to a fixed withholding tax of 7.50% Libératoire only where the subscription has lasted a minimum of eight years and more, well Naturally, social contributions, enabling guests to enjoy an investment the most profitable. The possibility of designating a beneficiary appears, too, as a major advantage of these formulas, since it gives the opportunity to the subscriber, to prepare his estate during his lifetime, and it induces, again, preferential taxation for the heirs, this time, while benefiting from a reduction of € 152,500, the tax levied on the excess capital amounting to 20% then after a second reduction of € 4,600 per year minimum. It is also important to remember that the amounts deposited by the purchaser after the age of 70 are, in turn, reinstated the estate of the latter involving the payment of inheritance tax, after deducting an allowance of € 30 500.
Intending to achieve the dual objective of preparing his retirement and organize his estate, life insurance, coupled with a guarantee death, can enjoy the benefits of these devices and thus provides a particularly effective way to prepare its future and that of his relatives.

Insurance Types You May Not Need

2010-11-30T09:43:00.000-08:00

For every fear that people have, there’s an insurance policy to cover it. Worried about being jilted at the altar? There’s a policy for that. Afraid an alien might abduct you? That’s covered too.

Some insurance policies are crucial – auto and property insurance, for example. Others are a sound financial decision, including life, critical illness and disability insurance.

There are some policies, however, many of us can do without, says Tom Drake, a financial analyst and head writer for the Canadian Finance blog. Shopping for a house and car in Edmonton two years ago, he heard every insurance sales pitch in the book, including mortgage life insurance to cover payments if he died.

After running the numbers, Mr. Drake decided a 20-year term-life insurance policy was the most economical way to protect his family from debts and lost income.

“In most cases, these products play on emotions and are either not worth the money or can be better covered by simple term-life insurance,” Mr. Drake says. “Even worse, some of these policies can be difficult to collect on when needed. So stick to the basics and avoid the insurance you can do without.”

Another strategy, he says, is putting the money you would have spent on extra insurance policies into your savings each month, where it can be used if and when you need it, no strings attached.

Here are Mr. Drake’s top seven insurance products you probably don’t need:

Insurance on debts

Mortgage life insurance and credit life insurance cover your debts in the event of your death. However, these products tend to be more expensive than a similar level of term-life coverage, which can be used to pay the bills or anything else your loved ones might need. Unless you have health problems that prevent you from getting adequate term-life insurance, these products are not necessary.

Accidental death insurance

The cause of your death is irrelevant to the amount of lost income or the debts that will need to be paid upon your death, so don’t bother adding this coverage to your life insurance.

Disease-specific insurance

This product pays a lump sum and covers any expense not covered by your benefits, but is a bit of a gamble since you cannot have any pre-existing condition. You’d be much better off with critical illness insurance, which covers a variety of common illnesses.

Rental car insurance

When you rent a car, you’re offered a loss-damage waiver and collision-damage waiver. Before you buy, check with your insurance provider and your credit card company, as you may already have this type of coverage.

Auto glass insurance

For the annual premium, plus deductible, it would cost less to replace your windshield every two years with your own money than to buy this insurance, Mr. Drake says.

Identity theft insurance

This pays a capped amount for any lost wages and expenses you incur while cleaning up identity theft. It does not cover stolen money or fraudulent credit card use – victims need to seek reimbursement for those expenses from their financial institutions.

Child life insurance

This product is offered as a savings vehicle and insurance against early-onset chronic diseases, with a payout in case the unthinkable happens. You would likely be better off with critical illness insurance for your child and a Registered Education Savings Plan.

Have you got enough life insurance?

2010-11-30T09:42:00.001-08:00

Having adequate life insurance in place is of utmost importance should the worst happen. Anyone who has dependants needs to be properly protected; by investing in a life insurance policy, you can help to ensure your family will be taken care of financially. As situations change you need to review your policy, but with so many options it can be confusing to know which policy is best. Here's a guide to help you decide , whatever your time of life.

. Marriage: if you're in your twenties you might think you're too young to worry about insuring your life, but the younger and healthier you are, the cheaper your policy is likely to be. Once you are married and have joint financial responsibilities, you should consider taking out cover to protect your spouse and any children

. Your first home: when you buy your first home with your partner, you should consider taking out a life insurance policy that will cover the cost of the mortgage so your partner is able to continue living in the house. Which? recommends a joint policy which will pay out when the first person dies

. Children: when you have children, Which? recommends taking out individual policies rather than a joint policy. Each of you will need different levels of cover based on your age, fitness and salary, so taking out separate policies can help you get the cheapest deal. By choosing individual policies you also help to ensure your children will be covered; with a joint policy, the surviving partner would be left without cover when the first partner dies

. Health: honesty is always the best policy when it comes to declaring your medical conditions when applying for an insurance policy. If you don't disclose an illness, you could invalidate your cover. With all life insurance policies, you can bundle the product with critical illness cover. This policy pays out if you are diagnosed with a specific condition, or are permanently disabled.

. In trust: life insurance companies usually offer the option of writing your policy "in trust" at no extra cost. This enables the proceeds of your policy to be paid quickly, without waiting for probate, and could also decrease the chances of inheritance tax liability because the payout is likely to be excluded from your estate

Life insurance lures job seekers

2010-11-30T09:40:00.000-08:00

A career in life insurance sales is now considered more attractive to job seekers, but employer inflexibility is holding businesses back from securing talented and eager candidates.

According to recruiting expert Hays, there is a growing interest from candidates, particularly at the entry level, in a career in life insurance.

“Candidate feedback shows that there is now a lot less stigma surrounding a career in life insurance compared to what there once was,” Senior Regional Director Jane McNeill says.

“It seems the downturn took some of the shine off the allure of a trading or other higher-risk finance career,” McNeill says.

However, she says there will continue to be a skills shortage in life insurance unless employers relax their focus on only recruiting candidates with five or more years of experience.

“Most life insurers are now looking for experienced life underwriters, either group or retail, as a result of growth in demand and competition within such products,” McNeill says.

“They want candidates that already understand the subject matter, can make decisions and add value immediately. They want someone who can hit the ground running,” she says.

‘UNWILLINGNESS TO INVEST’
Australia’s current supply of such candidates is disproportional to the demand for experienced life underwriters, according to McNeill.

She says despite this, employers will not consider recruiting and training an entry-level candidate, or employing an underwriter with two to three years experience.

“Such unwillingness to invest in candidates has not only led to a number of candidates being unable to pursue a career in life insurance, but it also has obvious long-term skills shortage ramifications.

Life insurance not an antiquated idea

2010-10-30T23:53:00.000-07:00

Life insurance is as important today for the modern family as it was years ago for the more traditional family. Yet life insurance is among the last things that people buy.

There are so many different types of insurance that the average person is confused as to which type of policy to buy and just how much is needed.

There are lots of formulas for computing the amount necessary. A good starting point is to take 10 years of income and subtract whatever savings are available for the family to live on. Again, this is just a starting point. Other concerns that need to be considered when determining the amount or face value of the policy are educational needs for the children, whether it is for college, vocational or trade school, or perhaps just to supply the funds necessary above and beyond the norm for things like piano lessons, band expenses or dance classes.

The choice as to the type of insurance can also be a confusing issue, but it all comes down to one "rule." Buy as much insurance as you can possibly afford. Since term insurance is the least expensive, the bulk of a family's insurance needs could be supplied by a good, level-premium term policy. Term insurance should be obtained from a quality insurance company, one with a good history of being around through good times and bad.

Look for established companies that have a good reputation and solid principles. Level-premium term policies have a fixed premium for a specific period of time — 10, 20 or 30 years. Thereafter, the policy becomes a yearly renewable term policy with annually increasing premiums. It is important to note, that within a few years of the end of the "level term" period the premiums will become quite expensive and usually the insured can no longer keep paying the premiums. It is expected that by that point in time, the family has been able to save significant sums through alternative savings programs — retirement accounts, mutual funds, or personally owned stocks and bonds. It is also expected that the needs for cash at that point in time can be supplied by the above mentioned savings accounts and the insurance is not as important — the children are grown and the house is paid off.

Some consumers losing life insurance coverage

2010-10-30T23:49:00.000-07:00

By Pete Miller
October 28th, 2010

The current economic downturn may be causing consumers to drop their life insurance coverage, according to recent reports.

The Trends in Life Insurance Ownership study, conducted every six years by LIMRA, found only 44 percent of U.S. households reported having individual life insurance in August.

Today, 30 percent of households – 35 million – have no life insurance coverage, compared with 22 percent of households in 2004. Among households with children under 18, which arguably have the greatest need for life insurance, 11 million have no coverage.

Unlike home insurance and auto insurance, life insurance is not a legal requirement, one reason analysts say many consumers seem to be going without life insurance coverage.

"The need for life insurance is now more than ever before," says Byron Udell, founder and CEO of AccuQuote. "Especially if you have a family to support financially."

Reinstating coverage after defaulting on life insurance payments can also be difficult, as it is not often allowed by insurers. Of the companies that will allow a consumer to resume coverage, most require the insured to pay back the total sum of the missed premiums.

Can Diabetes affect Your Life Insurance?

2010-10-30T23:31:00.000-07:00

Thursday, October 28, 2010
Oliver Pereira

Diabetes is a complicated disease and a serious lifelong condition and is a leading cause of blindness, heart disease and kidney disease. Providing fair and reasonable underwriting terms for people with diabetes can be tricky at the best of times and because of this, it can affect your chances to get life insurance.

Type 2 diabetes is by far the most common form of diabetes In New Zealand about 270,000 people have Type 2 diabetes and about one third of cases of Type 2 diabetes are undiagnosed. The numbers of people developing Type 2 diabetes is rapidly increasing. In some groups of people up to 12% of them will have Type 2 diabetes once they are aged over 40 years.

Type 2 diabetes most often occurs in adulthood usually after the ages of 30 – 40 years. In Type 2 diabetes, either the body doesn’t produce enough insulin, or the cells in the body don’t recognise the insulin that is present. The end result is the same: high levels of glucose in your blood.

Of all the people with diabetes about 10% of them have Type 1 diabetes. In New Zealand about 15,000 people have Type 1 diabetes. Type 1 diabetes most often occurs in childhood, often in children aged 7 – 12 years. However it can occur at any age – from tiny babies to very old people. Most people with Type 1 are producing none of their own insulin.

Because life insurance polices are allowed to charge your premium based upon your health status, getting a good policy can be extremely pricey or not even an option. Having diabetes puts you in an impaired risk category that will often make insurance companies asses this risk very seriously before offering you a policy.

Despite all this, though, there is hope in finding an affordable life insurance policy for yourself or for a loved one. There are many things you can do to make yourself more attractive to the insurance companies. One thing you can do is present yourself as a good risk. As diabetes is often a self-managed disease, you can make sure that you have good habits. This combined with a good blood glucose control and a healthy lifestyle can make you a more attractive candidate to insurers. Similarly, you will want to find an Insurance company that does what is called "clinical underwriting." While the insurance companies usually ask for medical information from the client’s doctor, any additional lifestyle information always helps in the underwriting process. In this process, as they access the risk of selling you a policy, they will consider your overall health and habits.

As with any insurance search, it pays to be persistent; don't take no for an answer and if one Insurance company turns you down, simply approach another one! Take referrals from friends and family and do your best not to be discouraged. Persistence and determination will pay off and remember that even with diabetes, you will be able to find good life insurance. Insurance companies with experience in impaired risk situations will be more likely to help you than ones without; keep in mind that there are many, many people in your particular situation and that affordable life insurance policy are quite possible.

One thing to remember is that the help of a good insurance agent in invaluable in your search for insurance. A good agent will be able to bring your case to the attention of the policy providers who will most likely be able to help you out and can greatly expedite the process. A good agent will also be able to get your case out to a number of places at once; life insurance is something that should not be delayed, and a refusal can take up a few weeks to process.

Even if you or someone in your family has issues with diabetes, this does not mean that life insurance will be impossibility for you. Having Life Insurance is not a luxury and provides security to your family and lifestyle.

Empty Nesters May Still Need To Purchase Life

2010-09-29T01:30:00.000-07:00

Should your empty nester clients get life insurance? Perhaps--if they have a lot of personal and/or business liabilities or concerns about estate taxes. Life insurance also might help those who have lost retirement income or anyone who may be left with an inadequate amount of family income if one spouse dies.

Couples who believe they no longer need life insurance after the youngest child “flies the coop”…could leave the family financially vulnerable, warns Steven Weisbart, Ph.D., financial planner with the Insurance Information Institute, Washington, D.C. “This,” he says, “is especially true in the event the sole income-earning parent dies.”

While LIMRA, Windsor, Conn., lacks data on the number of empty nesters with life insurance, other data indicate empty nesters may be short on coverage.

Married households make up 51 percent of all U.S. households, according to the U.S. Census Bureau. Plus, married households typically have the highest household incomes. This group represents over 80 percent of the top two quintile income groups and 85 percent of the top 5 percent of household incomes.

So there is a better than average chance that your empty nester clients may need some extra life insurance coverage—particularly if their net worth could be hit by pending changes in the estate tax rules in 2011.

Nevertheless, more than half of all married men and women lack life insurance coverage, according to LIMRA. Only 41 percent of married men and 45 percent of married women have permanent life insurance. Just 35 percent of married men and 37 percent of married women have term life insurance.

Adam Sherman, CEO of First Trust Financial Resources, Philadelphia, says the typical empty nester household that buys life insurance has a net worth of at least $500,000. The life insurance may be used to replace lost income in case the husband or wife were to die early. Or, it may be used to provide for their children when they’re gone.

Affluent couples buy life insurance for wealth replacement or to cover future estate taxes. Unless Congress acts in 2010, the federal estate tax was slated to resume on estates valued at just $1 million. But Sherman expects Congress to restore that threshold to between $2 million and $3 million.

The affluent use second-to-die life insurance proceeds to pay estate taxes. The second-to-die policy is put into a life insurance trust to avoid estate taxes. This way, estates pass tax-free to the surviving spouse. But when the second spouse dies, insurance proceeds should cover the estate tax bill.

Using life insurance to cover estate taxes isn’t cheap. Sherman says a 65 year-old in good health would pay annual premiums of about $20,000 per $1 million of permanent insurance coverage.

In addition to high premiums, registered reps need to remind clients that first-year commissions deducted from their premiums can run more than 50 percent. And over the years, trailing commissions and insurance charges also are deducted from the premiums. Plus, state premium taxes are factored into the cost of the life insurance policy.

Sherman says he also sees empty nesters between the ages of 55 and 65 using permanent life insurance as part of their investment portfolios. They can borrow against the cash value tax-free at near-zero interest rates as a source of income.

Shawn Mauser, assistant director of life products at Northwestern Mutual, Milwaukee, says empty nesters in business partnerships often use life insurance in buy-sell agreements.

A buy-sell contract is used for sole proprietorships, partnerships and closed corporations. The business interests of the deceased or disabled are sold via the life insurance proceeds, based on a predetermined formula, to the remaining member or members of the business.

Mauser also says that well-off clients not subject to estate taxes often buy life insurance to replace social security benefits during a so-called “black out period” that occurs when the recipient dies. This generally is the period between when the survivor’s youngest child turns 16 and when the widow or widower turns 60.

He adds that life insurance is often used to offset reduced social security survivor’s benefits. Those benefits may be reduced if the survivor is younger than the 66 to 67-year-old age required to obtain full social security benefits. Further reductions might occur if the social security recipient dies before getting salary increases that might have increased his or her benefits.

Weisbart says advisors may want to conduct an insurance-needs analysis to determine if more coverage is necessary. This examines current and future income and expenses. He recommends term insurance to cover the gaps because it is lower cost than permanent insurance, such as whole life.
http://registeredrep.com/newsletters/insuranceletter/empty_nesters_may_still_need_to_purchase_life_0921/

“In determining how much life insurance to buy, it is important to determine the need to replace ‘hidden’ income that is lost when an income-earning spouse dies,” he says. “Hidden income is money an employer contributes to an employee's 401(k) or similar savings plan, or to pay the premiums for a family's health insurance coverage. These savings plan contributions and subsidized insurance premium payments cost the employer thousands of dollars a year, a financial commitment that, in most instances, reverts to the surviving spouse.”

Cheap Term Life Insurance is a Low Cost way to Plan for Future

2010-09-29T01:21:00.000-07:00

Digital News Report – If you are looking for a cheap life insurance policy you might want to consider a term plan. These are often relatively inexpensive. You set the amount of years that you want to have covered. You might want to ask your financial planner how many years would be optimal and what dollar amount to insure for in a term life insurance policy.

You don’t want to under insure and you don’t want to over insure. If you have a health condition, smoke, or have a dangerous job, you may have a higher monthly payment. Your age is also a factor in your monthly premiums. Life insurance companies can ask for a medical exam, while others offer a no-exam life insurance policy and base it on a short health survey. With any insurance you should always be upfront with answering the questions because if you are found to have told them the wrong information you can lose your benefits.

You can look for a policy that has an Accelerated Death Benefits built into the terms of the term life insurance plan. If you come down with a terminal illness the life insurance policy can help to pay for some of your expenses that aren’t covered by your health insurance. You might not have to pay extra for this until it is activated. So shopping around for your life insurance and getting all the perks at an affordable price should be an important task for anyone that is planning for the years to come.

Term Life Insurance is low cost in comparison to whole life insurance. Whole life insurance is for those that want to set up investments strategies and estate planning usually, while the term life insurance are for those that want the coverage during the time their children are being raised. Once the term is up the coverage ends. If you didn’t die, you don’t get any benefits from your payments. Term life insurance is a lot like car insurance.

With term life insurance quotes, make sure to find out if they are renewable. You may want to renew the policy at the time it is about to expire. Having this option is a good idea, just in case.

Most all insurance agents offer some type of term life insurance policy. You can also find banks and credit unions offering them as well. If you want to further investigate more term life insurance quotes you can search the Internet and find the best selection of term life insurance quotes. After shopping around you will surely find the best term life insurance rate to help protect your family.

By: Victoria Brown

Evaluate life insurance needs

2010-09-29T00:47:00.000-07:00

Years ago, when I first started in this business, there were two primary types of life insur-ance: whole life and term. Whole life was -- you guessed it -- bought primarily to provide benefits for your entire lifetime. Term insurance was purchased for a "term period" normally one to five years.

Over the years there have been so many different types of life insurance that have come to the market that I find many people confused about what they have, and therefore, what they should have.

A few points: First, it is clear that no one life insurance product can satisfy all needs and one does need to reassess their insurance requirements as their situation changes. For most families, the greatest need is when there are dependents and a mortgage. Term insurance is a great solution and can be purchased for as long as 40 years. But, what after that?

Second, there is always a need for liquidity at death, and life insurance is a great tool to provide dollars when they are most needed. Hopefully, most of us will live a long time, but even so, life insurance is a valuable asset. Proof positive is that at every funeral, an inevitable question is whether the deceased had coverage. Also, I have never had a beneficiary complain about having life insurance benefits.

Over the last 20 years, I have seen a lot of folks buy term insurance ,locking in rates for 15, 20 or even 30 years. With the economy being what it is , there is a realization that coverage is likely needed for a longer period of time, perhaps even for the rest of one's life. If so, one is well advised to restructure their coverage now, as health conditions could prevent continuing coverage beyond the term period without a very expensive and ever increasing premium. If you are healthy and need coverage beyond the current term period, you are well advised to buy new coverage right now.

There are a variety of permanent life insurance policies in the market. This includes whole life and variable and universal life. These policies are very sensitive to interest rates and market return. The result is that many policies have underperformed original projections, the result being a lapsing of the policy in the future or higher premium requirements.

Many in U.S. can't afford life insurance

2010-08-31T19:22:00.000-07:00

Thirty percent of U.S. households have no life insurance, and only 44 percent have individual life insurance -- both 50-year lows -- the latest survey from industry tracker Limra found.
In 2009, insurance companies issued 9.4 million individual life insurance policies in the U.S., 1 million fewer than in 2004. During the mid-1980s, roughly twice as many policies were issued compared with today, according to Limra.
The reason for the decline: More than 40 percent of respondents said they have other financial priorities right now.
"People are feeling very pressured and unable to pay all of their bills now," said Catherine Theroux, a Limra spokeswoman. "They're struggling financially, so they're not opting to buy life insurance except in their employer-sponsored program."
Other findings:
1 in 4 rely only on group life insurance through their employer to provide financial protection if a wage-earner dies.
15 percent said one or more of their breadwinners lost their job, so for those in an employer-sponsored life insurance plan, the loss of the job meant a loss of life insurance coverage.
Among households with children under 18, four in 10 said they would immediately have trouble meeting everyday living expenses if a primary wage-earner died today.
-- Francine Knowles

4 Ways Life Insurance Pays -- Even if You Don't Die

2010-08-31T19:18:00.000-07:00

Posted by April Peveteaux
Got life insurance? You probably don't, if the reports from the Wall Street Journal are accurate. Another negative side effect of the unemployment rate, almost a third of Americans are without any kind of life insurance coverage. This is the highest rate in four decades, with 35 million households uninsured.

While cutting back is partially to blame, people who depended on their company to provide life insurance lost that benefit when they received their pink slip. Regardless, it's usually not on the top of the list when you find yourself unemployed. But it should be.

Life insurance may not be something you think about every day, but if you have kids, you have to prepare for the worst. Even if you don't have children, it's a good idea to have some kind of coverage.

Of course a benefit that kicks in after you die can be a hard sell when you're on the unemployment line, but there are ways to make that policy work for you even if you're still kicking.

1. Cash Money
Your life insurance can serve two purposes -- a death benefit and an investment. If you choose whole, universal, or some types of variable life insurance, you have the option to surrender your policy and receive the cash value. A portion of your premiums can be invested into a type of savings account (policy depending), and after interest accrues, it's all yours if you cash out your policy.

2. Loan Collateral
Again, if you purchase whole life insurance, your account can be seen as an investment, and therefore you can use it when you need to get a loan. Some policies allow you to borrow against the cash value of your life insurance, giving you more to work with when you're in a bind.

3. Annual Dividends
If you purchase a participating policy, you're entitled to company profits as if you were a shareholder in the organization. You can either get a cash payment ever year, reinvest in more insurance, or use the dividends to pay those monthly premiums.

4. Getting Rid of That Nagging Feeling
Maybe you had to brake suddenly and narrowly missed a collision on the freeway, or heard a devastating story about a colleague being diagnosed with a terminal disease. Those moments where mortality hits you in the face are panic-inducing, even more so if you go without life insurance. Get that monkey off your back and call an insurance agent today.

Do you have life insurance?

http://thestir.cafemom.com/in_the_news/108752/4_ways_life_insurance_pays

Life Insurance Payouts: Are You Earning Enough on the Money?

2010-08-31T19:14:00.000-07:00

By Jane Bryant Quinn
Did you get a payout from a life insurance policy? Is it sitting in a special checking account provided by the insurance company?

A class action lawsuit, filed recently and amended today, slams the Prudential Insurance Company of America for taking financial advantage of beneficiaries. Pru earns 5 to 6 percent on that money, the complaint says, while crediting the accounts with an interest rate of only 0.5 to 1.2 percent. The families think that all the earnings should belong to them.

Whether Pru owes more money is up to a judge and jury to decide. At present, these accounts provide the same service that you’d get from a bank money market account and are paying about the same amount of interest. They make sense as a way of managing large lump sums, short term.

What I question is whether families are unfairly steered into this insurance-company deal when it might have been better to ask for a check in the mail.

But first, a word about the lawsuit. It got a lot of press because the policies were issued under the Servicemembers’ Group Life Insurance program, available to military men and women and administered by Prudential. Jeffrey M. Lucey, who died in 2004, named his parents, Joyce and Kevin, as beneficiaries of his $250,000 policy. Scott W. Eiswert, who died in 2008, left his wife, Tracy, $400,000. They could choose a lump-sum payout or spread it out over many months. Four other military families have joined the complaint.

Pru, like most insurance companies, automatically put the lump-sum payouts into what’s known as a retained-asset account. It’s a holding pen for cash — for military and nonmilitary families alike. Beneficiaries get checkbooks and can write checks or (”drafts”) on those accounts at any time and for any amount, including the lump sum. The Luceys took out their money gradually, over five years. Ms. Eiswert took hers within eight months.

Retained-asset accounts are invested along with the insurers’ general pool of money. The company fixes your interest rate and can change it at any time.

Currently, Pru pays 0.5 percent. That’s the same as my bank pays on money market accounts of at least $50,000. Some banks and credit unions pay more (yes, I should change my bank). Money market mutual funds yield about 0.2 percent today. So for cash you can tap at any time, the insurance company looks okay. If you die while holding a retained asset account, the interest as well as the principal goes to heirs untaxed.

The advantage of a retained-asset account is that it saves you from thinking about money at an emotionally difficult time. It also saves mistakes. “We don’t think that a check in the mail is the best settlement option for beneficiaries,” says Pru spokesperson Bob DeFillippo. “It might be dropped into a drawer and forgotten, or mislaid.” It’s also convenient for paying current expenses.

On the other hand, you might want that lump sum immediately, to invest in a higher paying certificate of deposit.

The claim form for military policies tells the families that lump sums are paid through retained-asset accounts. It doesn’t mention putting checks directly into the mail. DeFillippo says that Pru will send checks but families have to call and ask about it.

“The client decides on the options,” DeFillippo says. “The Department of Veterans Affairs tells us what to do.” Questions left with the DVA weren’t answered by the time I filed this column. Pru and the department are currently in discussions about handling these accounts.

On nonmilitary payouts, you might or might not be told about direct pay. In the past two years, Pru has disclosed this option when beneficiaries make a claim, but only in a separate brochure. The simple, one-stop and recommended choice is the insurance account.

There are two potential drawbacks to retained-asset accounts compared with bank options. They aren’t insured by the Federal Deposit Insurance Company. If the insurance company failed, you’d be covered for $300,000 in most states ($500,000 in some) by the industry-backed State Guaranty Funds. Bank and credit union accounts are insured for up to $250,000, but you can multiply your coverage by using different types of accounts or dividing your money among different banks.

Also, liability isn’t clear if someone forges your name on the check. In two lawsuits against MetLife, reported by Bloomberg magazine, the insurance company and the bank that administered the accounts pointed fingers at each other and both declined to pay. (Eventually, judges ruled that banks might have liability and the parties settled). If you had your own account, the bank would be liable for cashing a forged check.

Regardless of the new lawsuit’s merits, it’s stirring up some state insurance regulators. Kentucky prohibited insurance companies from putting money into retained-asset accounts automatically. They first have to first disclose the terms and get the beneficiary’s consent. If there’s no reply, the check is mailed out. A number of other states are considering similar proposals.

Retained-asset accounts are a reasonable and convenient choice, and will be better if better disclosed. But don’t leave the money there long. For long-term support, you want the payout invested for higher income and growth.

http://moneywatch.bnet.com/investing/blog/make-money/life-insurance-payouts-are-you-earning-enough-on-the-money/438/n

Care expenses can be met with life insurance

2010-07-31T08:31:00.000-07:00

It's become a well-observed fact that health care costs are rising without any indication of relief in the near future. As people begin to enter their older years, they may wonder if they will have enough money to live comfortably, let alone cover expenses if they need to enter a long-term care facility.

For people with such financial woes, life insurance may provide the assistance and security they need.

Life insurance agent J. Brendan Ryan wrote in an article for the Cincinnati Enquirer about the potential money a life insurance policy may offer.

In his example, Ryan said that a healthy 60-year-old woman may qualify for a $200,000 death benefit by paying $2,700 a year. With a rider she could be able to withdraw $2,000 a month for 100 months by paying just an additional $150 a month. The unused portion of money used could be given to beneficiaries as a tax-free death benefit, he wrote.

This is just one example of how a life insurance policy can provide a person and their loved ones with extra financial support.

How to Find the Best Life Insurance Deals Online

2010-07-31T08:30:00.001-07:00

Less than half the adult population have life insurance and most of those who do have never switched their insurance provider. Follow our top tips on how to find the best life insurance deals online.

Only 30% of people surveyed by Confused.com recently said that they had ever switched life insurance providers with men more likely to switch than women at 35% compared to 29%. "It's worrying that so few people have a life insurance policy, and equally worrying that so few have switched provider,” said Confused.com head of life insurance Matthew Lloyd. “Any change in life circumstances, like getting married, buying a new house, starting a family or even getting divorced should be a trigger for reviewing your life cover and ensuring you have the right level for your needs.”

How do I find the right life insurance policy? Life insurance supports your family or dependants by covering debts and replacing your income if you die or are seriously injured or made ill, so that you can no longer work; the premium you pay monthly or annually provides an agreed amount if you die during the life of the policy. Different policies cover a range of different circumstances including funeral costs, mortgage payments, protection for your family and protection over family inheritance.

What to Look for to Get the Best Life Insurance Deals Important points to consider when comparing different policies are joint life insurance and critical illness cover. Joint life insurance means a pay out from the policy will occur based on the death of the person who dies first, while critical illness cover will work out cheaper if included in a life insurance policy as opposed to opting instead for two separate insurance policies for life insurance and critical illness cover, however be sure to understand whether your insurance covers critical and terminal illness cover. Another thing worth considering is to make sure you buy enough cover to pay-off all of your outstanding debts, such as a mortgage and schooling fees for your children, should you die prematurely.

As with all insurance products if you don’t tell the truth, you could invalidate your cover, too, so be sure to mention any health issues that you may have on your application; be it the occasional bad back to smoking, high blood pressure to cholesterol. Life insurance premiums have been reducing in recent years, too, so it is always worth comparing prices online on a regular basis to ensure that you have the best possible deal in place for protecting your family.

Life insurance plans can bring in extra money for seniors

2010-07-31T08:22:00.000-07:00

A life settlement transaction may yield larger profits than some may think. A recent report released by the U.S. Government Accountability Office found that seniors profited eight times more by selling their life insurance policy than they would have if they surrendered the plan.

Using the study sample, life insurance holders would have received $37.4 million if they had surrendered their policy. However, the plans brought in $269 million from settlements.

The funds received from selling a life insurance plan can bring in extra money an elderly person needs to cover expenses.

Among other findings, the study also revealed that many states are lagging behind in terms of creating rules for the life settlement market.

President of the Life Settlement Institute Brian Smith says that such findings don't surprise him.

"This finding also comes as no surprise to us. We have been working with state legislators and state insurance regulators to adopt consistent model legislation across the country and eliminate such discrepancies," say Smith. "Last year we helped get legislation enacted in several states including New York and California."

How to Buy Insurance Online

2010-06-26T21:55:00.000-07:00

PASADENA, CA -- 06/25/10 -- When shopping for life insurance online, don't trade your personal information for a quote. That's the advice of one industry insider who knows the pitfalls of the Internet insurance game.

"One giant pitfall is that many companies and broker sites require that people enter their names, email addresses and phone numbers to get life insurance quotes," said Richard Reich, President of (www.lifeinsure.com) and 20-year industry veteran. "This leads to your email box filling up and your phone ringing off the hook as multiple agents contact you to buy policies."

Reich's advice includes:

* Make sure the insurance Web site you choose is not from a single insurance company - When you get a quote from a single insurance company, all you are getting is that one insurance company's idea of what you can pay. There is no competitive analysis that you can do with a single quote. Moreover, you could wind up getting inundated with emails and calls from that company to see you about that one policy.

* Check financial ratings and strength - The recent financial crisis hit a great number of the major insurance companies, so don't choose based on reputation alone. Check their financial strength ratings with the consumer advocate sites as well as financial ratings companies like A.M. Best. Many of the ratings of reputable firms may have changed during the recession.

* Be careful of rate quote "Bait and Switch" - Some companies might quote you the best possible quote initially based on incomplete information, and by the time they walk you through the policy, you may wind up with a much higher bill. If your quote does not take into account your height and weight and answers to basic health questions, then it's possible that you have been baited with an artificially low rate.

"Online consumers should always beware of methods designed to get their personal information," Reich added. "Insurance companies do not need your name, email address or phone number to offer you a genuine quote for life insurance, so don't fall for this."

About Richard Reich

Richard Reich attended Penn State University and has been in the life insurance business since 1991. He is licensed to sell life and disability insurance in all 50 states and the District of Columbia.

Rachel Friedman
Rachel@newsandexperts.com

Buying Life Insurance: How Much Is Enough?

2010-06-26T21:54:00.000-07:00

By Kevin M. Reardon, CFP®

Buying life insurance can be a tricky proposition. While virtually everyone realizes that it is a necessity, purchasing the life insurance policy that will work best in your particular situation is not always the easiest thing to do.

Your life insurance needs often depend on a number of factors, including whether you're married, the size of your family, the nature of your financial obligations, your career stage, and your goals.

There are a number of approaches you can use to figure out how much insurance you should have. One method, called the "family needs approach," focuses on the amount of life insurance it would take to allow your family to meet its various financial obligations and expenses in the event of your death.

Family needs approach

With the family needs approach, you divide your family's financial needs into three main categories:

• Immediate needs at death, such as cash needed for estate taxes and settlement costs, credit card and other debts including mortgages (unless you choose to include mortgage payments as part of ongoing family needs), an emergency fund for unexpected costs, and college education expenses.

• Ongoing income needs for expenses related to food, clothing, shelter, and transportation, among other things. These income needs will vary in amount and duration, depending on a number of factors, such as your spouse's age, your children's ages, your surviving spouse's capacity to earn income, your debt (including mortgages), and whether you'll provide funds for your surviving spouse's retirement.

• Special funding needs, such as college funding, charitable bequests, funding a buy/sell agreement, or business succession planning.

Once you determine the total amount of your family's financial needs, you subtract from this total the available assets that your family could use to defray some or all of their expenses. The difference, if any, represents an amount that life insurance proceeds, and the income from future investment of those proceeds, can cover.

For example: John and his wife, Wendy, are estimating the appropriate amount of life insurance to buy on John's life. They first estimate their immediate needs as follows:

• Final medical expenses: $5,000

• Estate settlement costs, including funeral and burial expenses: $37,500

• Debts, including credit cards and mortgages: $317,000

• Emergency fund: $100,000

Subtotal: $459,500

Next, they estimate ongoing income needs, such as:

• Providing for their dependent children's needs for a period of time: $500,000

• Wendy's income needs until her retirement: $450,000

• Wendy's retirement income needs: $380,000

Subtotal: $1,330,000

Adding the sub totals together, John and Wendy estimate that, should John die, their family would need $1,789,500. They then determine that assets available to offset their needs include:

• Bank savings: $40,000

• Investments: $220,000

• Retirement assets: $250,000

• Existing life insurance on John's life: $300,000

Subtotal: $810,000

The difference between their family needs ($1,789,500) and their available assets ($810,000) equals their life insurance need ($979,500).

Review your coverage

Trying to figure out how much life insurance is enough isn't always easy, and that amount will likely change with your changing circumstances. By examining your family's anticipated expenses during various periods after your death, you get a more realistic estimate of your life insurance needs.

Unfortunately, many people underestimate their insurance needs and are underinsured. Often, the purchase of life insurance is based on cost instead of what's needed. By the same token, it's possible to have more insurance than you need. You may have purchased a large policy during a particular point in your life, and then didn't adjust your coverage when your insurance need was reduced.

Both of these circumstances are reasons to review your insurance coverage periodically with your financial professional. Doing so can reveal opportunities to change your levels of coverage to match your current and projected life insurance needs.

Kevin Reardon, CFP® is a financial planner and president of Shakespeare Wealth Management, Inc.® in Brookfield. He is also a member of the National Association of Personal Financial Advisors (NAPFA).

Car Loans and Credit Life Insurance

2010-06-26T21:53:00.001-07:00

by Steve Cypher on Thursday, June 24th, 2010

If you plan on financing your next vehicle with auto loans for bad credit you should know what credit life insurance is and if you really need it.

Where we fit in

If you’re reading this, you may be one of thousands of Americans who find themselves in the position of having to finance their next car with a bad credit auto loan. As part of our business at Auto Credit Express, we have helped thousands of applicants raise their credit scores and reestablish their car credit by filling out our online car loans with bad credit loan application and financing a vehicle with a bad credit car loan through one of our affiliate dealers. By paying off the loan in a timely manner, these buyers have a good chance of starting a new chapter in their lives.

The alternative, buying a vehicle from a Tote the Note, We Finance Everyone car dealer, can be a problem because these dealers don’t report payments to any of the credit bureaus. On the other hand, taking out a loan with a bad credit lender and choosing a vehicle that’s too expensive can also create problems since this can stretch your budget and even result in repossession.

One thing we have learned from experience is that the key to a successful bad credit car loan means focusing on the basics. In this case, it means understanding both the pros and cons of credit life insurance.

Credit life insurance

Although this topic is not as much of a hot button as service contracts, it really should be. Credit life insurance is a form of term life insurance. Term insurance refers to an insurance policy that is in force for a fixed period of time and cannot be renewed. It is also a form of life insurance that builds no cash value.

In addition to being a term life policy, credit life insurance is also what is known as a “decreasing” term policy. This means that the policy is designed to cover the amount of the loan. As the loan is paid off, the loan balance decreases and the amount of life insurance also decreases to match the amount owed on the loan contract.

Is credit life insurance worth the cost?

That is a decision that is entirely up to you. Here are the facts:

Pros:

1. Peace of mind – it will pay off your car if you should die before the loan contract is paid off.
2. The payment is added in and becomes part of your car payment, so there’s no individual insurance premium to pay.
3. Your estate won’t be encumbered with the loan balance or loan payments if you die before the car is paid off.

Cons:

1. Although the cost of credit life insurance is sometimes regulated by the state, it can be much more expensive than taking out a separate term life insurance policy for the loan amount.
2. In addition to paying the insurance premium, you are also paying interest on the insurance premium.
3. If you are single and have no dependents, you probably don’t even need life insurance. Even if you do have a family, they are not required to pay off the loan unless their names are also on the account.
4. Most credit life insurance policies don’t cover pre-existing medical conditions and if you turn 70 during the policy period, coverage often stops at that time.

How to purchase credit life insurance

If you decide to buy credit life insurance, you usually have to do it at the same time you take out your car loan. The monthly premiums are based upon the original loan balance and the cost of the policy is added to the finance contract and the additional amount is added to and becomes part of your monthly car payment.

Beware of scams

In most states, a lender can’t require you to buy credit life insurance in order to be approved for a loan. If the car salesman insists this is the case, check with your state insurance commissioner before signing on the dotted line. In most cases, you are also allowed to cancel the insurance at any time during the term of the contract. Sometimes this results in a lower monthly payment, although in many cases either the amount is refunded to you at the end of the contract in the form of a pro-rated payment or an earlier payoff date.

As we see it

Whether or not you take credit life insurance is a decision that you will have to make. If you have a family and are worried that they might not be able to make payments on your car if you die (and their name also appears on the contract), you might want to look at the costs of term life insurance before you sign on the dotted line for credit life insurance as part of a car loan.

At Auto Credit Express we have helped literally thousands of people with bad, blemished, bruised and tarnished credit buy cars and reestablish their credit at the same time. Our nationwide network of affiliate dealers specializes in bad credit car loans. Our web site can help you determine how much car you can afford and, unlike other sites, our toll free customer service number is listed on every page, in case you have any additional questions.

So why not begin the process right now by filling out our secure online bad credit car loan application to see what we can do for you.

Put life insurance on your kid?

2010-05-30T20:37:00.000-07:00

May is birthday month for both kids in our household -- a curse because of the costs and a blessing because we can be done with it all in one fell swoop.

Birthdays are also a good time to do annual financial checkups. It's not something most want to talk about, but parents need to have some type of life insurance policy to cover the income that is lost with the death of a spouse. It ranks near the top of financial considerations.

There are other policies to think about, like critical illness, which provides a lump-sum payment should you become seriously ill, and disability insurance, should you be unable to work.

Less clear, and much more controversial, is buying insurance against your child's death. Yech!

Mark Halpern, owner of illnessprotection.com,says it's a gruesome subject, but for parents with a family medical history, it can make sense. "Once we get people off the ledge [from the idea they might profit from their child's death], they realize the best time to get insurance is when you're young and healthy," Mr. Halpern says.

"You could get their insurance needs taken care of in 10 years and then they won't have to deal with an insurance advisor in the future."

But he also says a policy for your child ranks down the list of financial priorities -- after contributions to a registered education savings plan, for example.

Steve Krupiez, assistant vice-president of special case markets for Manulife Financial Corp., says insurance policies for children were much more popular 20 or 30 years ago, as a way of saving for a child's education.

Before the RESP was introduced, parents would buy a policy in their child's name and eventually turn it over to them as they reached adulthood. At that point, the policy would have equity in it and the child could withdraw some of that equity for education purposes and face very little tax consequences.

But once the government began providing a 20% grant for every dollar put into an RESP in 1998, the insurance strategy faded.

However, whole life policies that build up equity and are paid off after a number of years, are gaining popularity. For $53 a month, your child would have a $100,000 policy paid up in 10 years with Manulife.

Rates go down in teen years because newborns are actually classified as potential smokers, but that is reversed at age 16 if you prove your child doesn't smoke.

"The story now if you're going to do this is that you're looking for cheap rates forever," says Mr. Krupiez, who agrees that a policy for your child ranks down the list of financial priorities.

Maybe the idea of buying insurance for your child isn't that gruesome, but it's probably not your top priority either.

Should I buy disability income insurance or life insurance?

2010-05-30T20:35:00.000-07:00

The loss of a spouse, particularly the major wage earner, can have a devastating impact on a family's immediate cash-flow needs as well as its individual members' financial goals. Whether you need disability income insurance, life insurance, or any insurance at all, depends on your personal financial situation. Members of the Financial Planning Association of Greater Indiana may be able to help advise you.
A disability or death has a direct impact on the surviving family's current lifestyle and on the lifestyle that was assumed for retirement. The 401(k) balance, pension benefit and Social Security benefit will all be much less than if the primary wage earner had lived through his or her working years.

The details will be different for each family, depending on whether the spouse worked outside the home, if there were children, or other factors.

But generally the loss of either spouse is going to have an economic impact on the family. A stay-at-home mom does not have any income that would need to be replaced, but the surviving spouse would need to pay someone to help care for the children.

Unfortunately, too, many people don't realize the importance of life insurance until it's too late.

However, imagine yourself or your spouse gone tomorrow. How would you answer these questions:

What would the immediate impact on your family be?
Are they counting on your paycheck in the future to cover basic needs and future savings goals?
Could they afford the funeral costs?
Who would pay the home mortgage?
Who would raise the kids?
And what about saving for retirement and college costs?

Life Insurance Quotes Made Easier

2010-05-30T20:34:00.000-07:00

Digital News Report – Many people who want life insurance fail to get it because of the hassles associated with determining whether they qualify and cost uncertainty. Various companies, including MetLife, now have a solution.

A new online assessment tool by Metlife may make that easier. The company says that their calculator provides “clear guidance” for how much life insurance consumers really need. More importantly the new tool will help determine the cost.

The tips will help customers remove the purchase barriers and simplify the purchase process. This will make it easier for the breadwinner to protect his or her family.

About 59 percent of Americans ages 25-44 with household incomes under $100,000 recognize the need for life insurance. About half of those families will inquire about coverage, according to the company.

Consider critical illness insurance

2010-04-26T17:38:00.000-07:00

Dear Mike: I just got life insurance and my agent offered me critical illness insurance as well. I thought it was just an add-on, so I declined. But I’ve been thinking about it since. Is it worth looking into?

A major illness can be a huge emotional burden for you and your family.
Don’t let it become a financial burden, too.
You can protect yourself against the potentially high cost of a serious illness with insurance.
Without this insurance, the odds are against you. Statistics show that at some point in their lives, most Canadians will face a life-threatening illness.
If you are the major income earner in your family, that’s bad financial news.
In fact, a major illness can place a greater burden on your family’s finances than your death.
Critical illness insurance provides a one-time tax-free lump-sum payment if you are diagnosed with an illness covered by the policy.
There are no restrictions on what you can do with the money, so it can be used to cover health-care costs, personal care services, lost income while you are unable to work or for any other purpose.
Of course, you may have other types of insurance to help with the cost of an illness.
Many Canadians have disability insurance policies, for example.
But while disability and critical illness insurance complement each other, your disability policy won’t pay benefits if you are still able to work.
Even if your illness prevents you from working, you might have to wait a number of weeks for your benefits to kick in.
And they may be limited.
Critical illness insurance offers coverage whether you are able to work during or after your serious illness.
Policies vary, but coverage typically includes cancer, heart attack, stroke, multiple sclerosis, kidney failure, blindness, Parkinson’s disease, Alzheimer’s disease and other serious life-altering illnesses.
These plans are offered by life insurance companies, and are generally available to those up to age 65 and in good health. You may be able to renew your policy until age 75 or for your lifetime.
Coverage generally ranges up to $1 million, although it may be possible to buy a larger policy.
The full benefit is available even if you recover from the illness.
But you must usually live for at least 30 days after an illness is diagnosed before the benefits are received.
When buying critical illness insurance, shop carefully. Coverage, exclusions, benefits and prices can vary.
Be sure that you aren’t excluded from coverage because of age or health - particularly by a previous illness.
And don’t look at critical illness insurance on its own. It should be part of an overall insurance plan that includes disability, long-term care and life insurance.
By ensuring you’re well covered, all your family’s financial needs will be met in the event of unexpected circumstances.
Your financial adviser can help determine the level of coverage that you need, and recommend a plan to meet your requirements.

Mike Watkins, CFP, FMA, FCSI, Ch.P., is a financial adviser with Edward Jones and author of the financial planning guide It’s Only Money. To ask a question, e-mail michael.watkins@edwardjones.com

How much life insurance?

2010-04-26T17:35:00.000-07:00

It's hard to decide how much life insurance you need. You can't trust your broker as he'll always try to sell you the biggest policy he thinks you'll buy since he's making commission on it.

Here's how you can get an idea of how much is enough...

A simple calculation

The calculation you use to work out how much life insurance is quite simple. The rule of thumb is 10 times your annual earnings plus your debt.

So say for example you earn R200 000 per year and you have debt totaling R500 000, you would need R2.5-million in cover.

Where the problem comes in

The problem, or rather complication, usually comes in when the broker tries to sell you a policy that has an investment component to it.

For example, he or she will suggest that you include X amount as a savings portion to your policy. So after 20 years (or when the term of your policy ends) you will get the money back.

Beware of this pitfall

However, beware of this: you should rather keep your investments separate from a life policy as the returns are usually below average.

In addition, let's say you accumulate R100 000 savings in the policy, and you die, your heirs will only get back the life component while the insurance company will usually keep the investment proceeds.

Saving on your life insurance

2010-04-26T16:35:00.000-07:00

A new report has revealed a range of ways of keeping down the cost of life insurance . As consumers look for financial savings during these tough economic times, it makes sense to get the best deal possible.

One key piece of advice is to use the Internet, as the online option is often cheaper than the old-fashioned route. You have the benefit of comparison websites for comparing different policies. It is also worth exploring term insurance, as it is the cheapest form of insurance, with the monthly payments depending on the size and length of your mortgage, as well as your age and vices. If you go with an independent financial adviser instead, then cover is usually more expensive.

Another recommended way of keeping costs down is to shop around and switch your insurer as often as required, as paying the same premiums every year doesn’t make financial sense in a competitive market. Insurance providers want your business.

Also be wary of taking out life insurance at the same time as getting a mortgage. Although life insurance is vital, especially if you have a family, it should be researched separately and the policy should be suitable to you and your family’s particular circumstances.

Another way to keep down your premiums is to stop smoking, if you haven’t already, as the charges for term insurance for those who have given up smoking for a year falls significantly. And, if you have given up since taking out your term insurance, it is definitely worth looking for a better deal.

The Right Life Insurance Policy for You

2010-03-26T08:56:00.000-07:00

If you like getting the hard sell from casual acquaintances, distant relatives, old college buddies or parents of your kid’s Little League teammates, here’s some good news: the life insurance industry is building up its sales force.

The Wall Street Journal says many big insurers are adding thousands of agents to pitch investment-style insurance products to customers disenchanted with the stock market.

At one point or another, life insurance is an essential product for just about anyone with a spouse or children. But the market is a minefield, littered with products that are all but impossible to understand. So what’s the best way to tackle it?

First is to decide on your main goal. If you have young children and want to be sure there will be enough money to get them through college if something happens to you, then a simple term policy may be the best choice.

Many term policies offer $250,000 to $500,000 of coverage for a premium of $1,000 to $2,000 a year. If you don’t die within the term, typically 10 or 20 years, your beneficiaries collect nothing. But term is ideal if you believe that after the coverage period ends you’ll have plenty of other assets to keep the family going. It’s easy to shop online and compare one policy to another. Look for a term policy in the BankingMyWay.com Insurance Center.

There also are numerous types of “permanent” insurance that will cover you for life. Different types, such as “whole” and “universal” offer various options, but most have an investment component.

Initially, premiums may be several times higher than a term policy would charge for the same death benefit. But, over time, investment gains can be used to pay the premiums. Permanent policies typically build up value, or equity, that you can draw on in retirement, or take as cash if you cancel the policy.

While permanent policies can suit people who really need lifetime coverage, these policies are so complex and varied it’s difficult to make apples-to-apples comparisons.

Many experts argue that most people are better off getting low-cost term policies and putting the money saved on premiums into more straightforward investments like mutual funds, where the apples-to-apples comparison is easy. This also provides more flexibility, as you can choose among thousands of funds, not just a handful offered by a life insurance firm.

Shopping for a permanent policy generally involves dealing with an agent who earns a commission on the sale, a conflict of interest that can taint the agent’s advice. You could get advice from a fee-only financial adviser, who is paid a flat or hourly rate and has no stake in your decision, but this might be pretty expensive unless it is part of a broader financial plan covering your investments, tax issues and estate planning.

With any permanent-life policy, ask the agent for clear data on the investment component’s track record, and then compare that to a comparable set of low-fee mutual funds. If the agent cannot comply, consider it a red flag.

Also, be sure to find out which elements of the policy are guaranteed and which are not. Is there a chance your premium could go up rather than down? How much “cash value” can you get back if you cancel the policy? How long would you have to continue paying premiums under the worst case?

Shopping for insurance can be mind-numbing, but it doesn’t have to be if you stick to term policies. So, with every permanent policy the agent pitches, ask: “Why wouldn’t I do better buying a term policy and investing separately?”

Comparing Term Life Insurance Rate Should Be Easy

2010-03-26T08:53:00.000-07:00

Do you want affordable but quality life insurance plan? The first thing that you should do is to compare different rates offered by several insurance companies. It is very easy nowadays to know the current term life insurance rate. Almost all insurance companies today are working with one or several online providers that give quotes for consumers like you. So getting term life insurance quote is just a few mouse clicks away. The key to get the best deal is to know how to compare the rates that you can get from an online provider. There are several factors that you should consider like the cost of premiums, amount of death benefits, and the reputation of the insurer.

One of the first things that you need to consider when you get term life insurance quote is the amount of death benefit. You may have different insurance needs compared to other people so you should pay particular attention to the benefits that your family can get from the policy. If you want to get the best term life insurance rate, you need to pull-in quotes from policies with similar amounts of death benefit. This way, you can really make a sound comparison if the cost of the premium that you will pay regularly is favorable. Premiums are based on the benefits or coverage you need and other factors like your age and current health conditions.

It is possible to get discount or very cheap term life insurance quote. But if you will look closely, discount life insurance rate may have smaller benefit or limited coverage. So you really can not compare it with a policy with bigger coverage and death benefit. This type of policy will normally have higher premium rates. To make an informed choice, you should compare several policies of the same class so you can really choose which one among them has the cheapest cost. Getting this kind of data should not be too difficult because as stated earlier, all you need to do is use the online facility of an insurance provider that offer quotes from several insurance companies. Getting insurance rates and quotes online will take a few minutes only. So if you want to have the best insurance policy, you have to take time to research the different offers of several insurance companies.

Of course, when you get life insurance rate, cost and affordability are two things that are foremost in your mind. In fact, these two factors are the chief reasons why you are getting term life insurance quote. However, cost is only one of the factors to consider when you shop for insurance. You should also consider the reputation of the insurance company that you want to deal with. You have to make sure that the insurance company has a clean track record in dealing with consumers. It should be practicing the accepted standards in the industry. Most important of all, you have to make sure that the insurance company is financially sound.

Are you looking for the best and most favorable life insurance rate ? Visit our website today and take advantage of our highly reliable life insurance quote services so you can get the best insurance policy for your family.

Can you afford life insurance (term, whole, variable or universal) and disability insurance?

2010-03-26T08:51:00.000-07:00

Financially squeezed families oftentimes cannot budget for both, yet each is key to a secure financial future. How should you allocate your limited insurance money for the greatest peace of mind?

If, despite your best efforts, you just can't afford both policies, which should you sacrifice?

"It's a very tough decision," says Barry Katz, a fee-only Certified Financial Planner and president of Caratel Financial Services in Fort Lauderdale, Fla.
"If you're 40 years old, absent a family history of early death, statistically you are more likely to become disabled than you are to die," Katz says. "And if someone passes relatively young -- say, 37 to 40 -- the surviving spouse, after a period of mourning, will adjust their lifestyle and get back to work or take a different job.

"Given that, I always allocate more dollars to disability insurance than to life insurance, within the confines of their financial goals, objective and how much money they have to spend."

But Katz cautions cash-strapped consumers not to jettison any insurance policy capriciously.

"The problem with dropping life insurance or disability is there is the risk that you may not be able to get it again in the future," Katz says.
Depending on your circumstances, these five tactics can help you decide how to allocate your limited insurance funds:

1. Spend less and meet your premiums. If you already have disability and life insurance, don't cancel the policy if times get tough. Instead, cut back on discretionary spending such as dining out and vacations in order to keep both policies active.
It can be more costly in the long run to reapply for coverage later, and you would risk a worst-case scenario in the meantime. Remember: Your income may fluctuate, but your need to insure against these risks is unlikely to change.

2. Buy with an eye toward flexibility. If you have not yet purchased life insurance, you may make this tough choice easier in the future by purchasing several smaller term life policies rather than one large policy.
It will likely cost more in upfront fees, but should your income wane, you can drop a couple of the smaller policies and still have some coverage until you can afford to replace them.
"When you're dealing with insurance, it's very difficult to say, 'I'm going to reduce my life insurance cost by $50 a month; just give me that much less,' because you've contracted for a certain level of insurance at a certain premium," Katz says.
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"But if you have $200,000 in term life insurance that happens to be made up of four $50,000 policies, then you might drop one of those policies, whereas if you have a single $200,000 policy and you want to replace it with a $100,000 policy, you may have to reapply and requalify."

3. Scale back your policy. You also can cut costs on a new disability policy by opting for a longer waiting period before benefits begin (industry average is currently 90 days) or choosing to receive benefits for a shorter period of time (such as five years) instead of insuring until you are 65.
The main benefit of this approach is that you'll have some coverage you can afford now rather than having to go without. However, there is a downside -- you may not be able to shorten the waiting period or lengthen the benefit period later should your financial circumstances
Ask your insurance company about such issues before you decide on a policy, as some policies are more flexible than others.

4. Look for help from riders. Rather than choose between disability and life insurance, check first to see if either policy offers a rider -- an addendum that insurers use to expand your coverage -- usually for an additional fee.
"The best bet would be a life insurance policy with a disability rider or a disability policy with a life insurance component," Katz says. "You may be able to do a balancing act where the premium would be less but you do still have both disability and life."
Also, be sure to check with your home insurer to see if it offers a disability rider with your homeowner's policy.
You're not likely to get the same coverage or terms with a rider as you would with a stand-alone term life or disability policy, but it may be a cost-effective alternative to dropping one over the other.

5. Don't overbuy. It may be tempting to buy a lot of coverage -- but it also may be a mistake.
"People think they need a lot more life insurance than they do because they are using (insurance company) calculators that are geared to oversell," says Laurence Kotlikoff, a William Fairfield Warren professor of economics at Boston University who developed the ESPlanner financial planning software.
"Saying that you need 78 (percent) to 85 (percent) or even 100 percent income replacement is completely nuts."

How Do I Find Cheap Life Insurance?

2010-02-25T07:17:00.000-08:00

Life insurance is something that will protect your family even if you pass away. This is important. You don’t want to die only to put your loved ones into serious debt. If you are the breadwinner in your family, it is important that you protect your loved ones by investing in life insurance. This will give your loved ones the time to really recover from this loss without having to worry about money. The following are some places to look for cheap life insurance.

Look Online

The Internet is full of stellar information. By performing a basic search online, you will find a list of companies that offer a range of life insurance plans. Additionally, there are price comparison websites that will help you look at plans side by side. Different life insurance plans offer different terms and rates.
Ask Around

Always ask loved ones where they have their life insurance policies. Knowing which groups loved ones have worked with will give you some inside information about these groups. This is a solid way to find the best life insurance companies around.

You can find out a lot about a group just by talking with them on the phone. If you already have car or health insurance, this company may also offer life insurance at a discounted price to existing policy holders. See if your insurance provider offers such plans and discounts.

Lastly, take the time to call up local companies to see what they have to offer. If they know you are shopping around, they may give you information about discounts and promotions. Cheap life insurnace is out there. You simply need to do the work to find it. Explore your options and really see what groups have to offer before you make a decision. Life insurance helps your loved ones. Thus, you shouldn’t settle for less than the best!

A right type of life insurance policy is an essential investment

2010-02-25T06:51:00.000-08:00

To safeguard your family and dependants regardless of where you live and what your age is. This is not a thing, which you should put on hold. In its place, research, compare and try to find a perfect life insurance policy with the intention that you can be certain that everything will be, dealt with if some unexpected occurs to you. There more than a few reasons why life insurance is so important listed below are a few.

You definitely would like to be certain that your affairs and your family are taken care of even after you breathe your last. You might have a car loan or a home mortgage that needs to be settled up should you depart this life.
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By having a life insurance policy in place, this can be easily dealt with in no time at all. Besides, there are other things to think about, the whole lot from property taxes to funeral. You need not be a burden on your family with massive medical bills or funeral costs. A number of families fall into debt as soon as the sole breadwinner dies all of a sudden. For that reason, if you are insured and posses an active insurance policy, you can be, certain that the whole thing will be looked after in the incident that you expire.

Life insurance is useful given that it denotes you can look after your family even after you breathe your last. For instance, the cash can be used to settle mortgage on your family home, thus saving them their shelter and provide financial support for sometime like paying school fees until they are able to live on themselves. This confirms that some good can really come from this death. If you are a sole wage earner of the family, it will as well confirm that fixed monthly expenditures can be taken care of until they are able to sustain on themselves. You would not like to die and see your family in debt, life insurance will provide you peace of mind and assure you that your family is financially secure even after you are no more.

In fact, life insurance will come to rescue and help your family in the event that you die. This will lend a hand to them to pay for monthly expenses even as they mourn, lay you down, and deal with your leftover debts and assets. By having, an excellent insurance policy in place will confirm that you can in fact lie down in peace knowing that your family is looked well after. This will act as a very crucial financial buffer, which can in fact be important for you and for your family.

Once you have decided to go for a life insurance policy, take time to research and compare several life insurance plans from various companies to make out the perfect plan for your needs. There are now several online resources and websites that offers such services. You can request for various life insurance quotes
from different life insurance companies
to get a best life insurance deal.

Five Little Known Facts of Life Insurance That Can Have Big Implications for Older Americans

2010-01-28T05:49:00.000-08:00

Many older Americans continue to struggle with finances in retirement as a result of the recession. Life insurance in particular can represent a tremendous burden on a retiree's finances, as premiums can rise swiftly and unexpectedly later in life. Senior citizens should educate themselves early about the potential cost of life insurance as they age in order to be properly prepared.

In particular, five specific characteristics of life insurance can significantly increase expenses for those on a fixed income. Senior financial resource Golden Gateway Financial explains these little known facts and possible solutions.

1. Avoid Fast Rising Premiums
Life insurance premiums can rise significantly and suddenly for older Americans, creating challenges for those on a fixed income. Premiums for universal life insurance (also known as flexible premium whole life) rise in cost as the consumer ages because the insurer factors in higher mortality risk. A sample premium table (fig 1.) shows that premium increases usually begin their steep rise around age 70 or 75.

For those on a fixed income this sudden increase can become unaffordable. If the policyholder needs to maintain coverage, one option is to reduce the face amount of the policy. Options for unneeded or unaffordable policies include selling or surrendering the policy.

2. Monitor Term Insurance Increases
Term life insurance has two points at which premiums can take a big jump. The first is at renewal. At the end of most term policies, if the owner cannot or will not convert the policy, then they must either discontinue coverage or undergo a new medical underwriting in order to get a new policy. This will often lead to higher rates.

There are also term policies that begin with level premiums, but then increase dramatically as the insured ages. These sample rates (fig. 2) for a healthy, non-smoking male demonstrate this significant increase.

3. Pursue Payouts from Policies
Most life insurance never pays a death benefit, meaning most policies never realize their original intent. According to the Insurance Studies Institute, this number is as high as 85 percent of all policies. In those cases, policy owners often leave a significant amount of money on the table. For example, in 2005 policy owners stopped paying premiums on 19.8 million policies worth $1.1 trillion (Insurance Information Institute).

Policy owners should monitor their policies closely and be aware of all the life insurance options available to them so as not to leave their money on the table. These can include adjusting beneficiaries, choosing to receive cash value, or selling their policy in a settlement.

4. Avoid Cash Surrender Fees
Be wary of the cash surrender option with a life insurance policy. In many instances, if you choose to access the cash value in your policy, you'll have to pay a surrender fee. These fees vary by insurer, and can be substantial. Seek other options for generating cash from your policy such as life settlement or -- if your policy allows -- taking dividend payments.

5. Be Aware of Policy Maturity
The majority of life insurance policies are only valid through age 95 or 100. If the insured is still alive at that point, then the policy matures and the carrier will pay out the cash value. However, if the senior had previously relied on the cash value to pay for the policy's increasing premiums, then they could be left with little to no benefit at maturity. One way to address this is to inquire about a life extension rider that can extend the maturity date to 120 years of age.

Another option available to those policy owners facing unexpectedly increasing premiums or those who are considering allowing their insurance to lapse is life settlement. Life insurance was classified as an asset by the Supreme Court in 1911, and as such, can be sold just like a house or car. This is useful for those older policy owners seeking to turn an unneeded or expensive policy into cash.

A recent study found that more than 80 percent of older policy owners did not know they could sell their policy for cash. This means that many policy owners simply allowed their policy to lapse or accepted a cash surrender value instead of seeking a more lucrative life settlement.

5 things about life settlements

2010-01-28T05:47:00.000-08:00

1. Your parents may be getting sold on these
In some retirement hot spots, such as South Florida, advertising for "life settlements" is ubiquitous. The pitch? Sell us your permanent (cash-value) life insurance policy and you can have a chunk of the death benefit now. In exchange, the company buying the policy becomes the owner and beneficiary and gets the full payout when you die.

Most settlement firms want policies likely to pay off within 10 years, so the elderly are prime targets. For those who anticipate running out of money, it's an appealing idea.

You'll probably hear this sell more often in the coming years: Wall Street is turning pools of insurance policies into tradable securities (as it did with mortgages), which will increase investor demand.

2. It's hard to know a good deal from a bad one
The life settlement industry is run by small investment firms, and there isn't a central marketplace to solicit bids. So there's no "going rate." A 70-year-old man with high blood pressure and heart disease could get offers from $116,000 to $162,000 for a $1 million policy, reports broker Golden Gateway Financial (compared with about half that if he surrendered it to the insurer). Thus, it pays for anyone considering a settlement to get several bids.

3. Brokers help obscure the process
Since many settlement firms won't deal with consumers directly, shopping around typically means going to one or more brokers. But brokers' fee structures vary widely -- from 1% of the death benefit to 15% of the difference between the offer and the policy's surrender value -- and they're not always transparent. That makes it tricky to compare offers, says Connecticut insurance commissioner Thomas Sullivan. So ask for the offers minus all charges.

4. Your insurer hates them
Insurance companies assume some policyholders will stop paying premiums -- meaning the firms will have to foot only a small surrender value, vs. a big death benefit. Since investors make good on policies that might otherwise lapse, insurers pay more death benefits, which makes them none too happy.
0:00 /3:13Not saving enough to retire

That's led many insurers to sweeten the payout for surrendering. Some even let you partially cash out but keep the policy active at a lesser death benefit. It's worth asking the insurer what it could do for you, and weighing that against settlement offers.

5. There are alternatives
Before taking a settlement, "you have to ask, 'Who will go unprotected if this policy is sold?' " says Steven Weisbart of the Insurance Information Institute. If it's your parents who can't bear the premiums, you may want to help. It'll be worth your investment if you stand to inherit, or if keeping the policy in force means you won't be financially supporting Mom when Dad passes on.

If your folks just need money but still could benefit from the policy, help them consider other options, such as selling their home or taking out a reverse mortgage. To top of page

What Is A Policy Change Clause For Low Cost Life Insurance?

2010-01-28T05:42:00.000-08:00

Life insurance can be one of the best financial tools you have even if it is low cost life insurance. It helps ensure you family’s financial future and can also give you some income under certain conditions, or when it reaches a certain term. It all depends on the clauses that are included in the low cost life insurance policy.

When you first purchase a life insurance policy it is important that you read through all the clauses as these will stipulate the amount, how and who receives your life insurance benefits.

When referring to beneficiary, this is the term that defines who receives the life insurance proceeds when you pass away. This can be your children, relatives, or your spouse and this clause can be modified as needed throughout the years. For instance, you may want to change the beneficiary if you first placed your parents as beneficiaries, but they then pass away, or you can also change it if you have placed your spouse as beneficiary and later you divorce. This is why you should take your life insurance policy out once a year and go over it and make sure everything is in order.

Your insurance provider usually places a policy change clause in any low cost life insurance policy. This gives the provider the right to challenge the validity of the policy during the first two years that the policy is in place. This means they can void the policy if they find that you have concealed any pertinent information.

For instance, if you hid the fact that you were a smoker or a drinker, so that you could get a lower premium, and the provider encounters this then they may decide not to pay a claim if the death occurs within the first two years of the policy.

After this initial two year period passes, then the policy will be enforced and there cannot be a challenge to any of the clauses.

What Is The Difference Between Accidental Death Vs Whole Life Insurance?

2009-12-29T03:54:00.000-08:00

By Lisa Olsen Posted in Life Insurance News
Accidental death, sometimes referred to accidental death and dismemberment insurance is a policy that pays out additional benefits if the policy holder’s cause of death is not a work-related accident.Death in a car accident or a climbing accident would qualify under this policy. Also, a portion of the funds would be paid out to the policy holder if they lost an appendage or one of their senses (sight, hearing) in an accident. This type of insurance is for accidental death only and would not pay a death benefit if the policy holder died from an illness, suicide or natural causes.

There are four types of accidental death insurance; Voluntary, Group Life Supplement, Travel Accident or Business Trip, and Defendants. Voluntary accidental death insurance would be purchased as a single policy. Group Life Supplement would be an additional purchase to supplement an existing policy. Travel Accident or Business Trip insurance is for accidents on trips, whether for business or pleasure. This type of policy would be ideal for someone who travels a lot. A Dependent’s policy could be purchased for any dependent including children and disabled adults.
Whole Life Insurance

Simply a whole life policy covers the whole life of the policy holder. Premiums are typically paid for a certain number of years (ten to twenty) but the insurance remains active for the entire life of the person or until they reach endowment age. The age of endowment is usually 95+ at which point the policy holder can request the cash value of the policy or is can be paid out like an annuity.

Which Is Better

These plans are very different and serve a very different purpose. Businesses will sometimes take out Business Trip Accidental Death on their employees that travel a lot, leaving a portion for the dependents of the policy holder and pocketing the rest. Accidental Death can be added as a supplement to whole life insurance but usually whole life insurance covers unexpected or accident death within the policy itself. However, it does not cover dismemberment like the Accidental Death policies.

Affordable Term Life Insurance Explained

2009-12-29T03:51:00.000-08:00

Ensuring a families financial future is paramount when considering an affordable term life insurance policy and this requires the services of life insurance agents and brokers with knowledge and experience. The loss of the main income earner can destroy a family’s financial picture.

When making a choice between an independent broker or a company life insurance agent, consumers should consider that a life insurance broker will work with a wide range of companies and can compare policies and quotes for consumers, much faster and more efficiently. If consumers must choose to research companies on their own, they must be sure to obtain several quotes for comparison.

They ought to be sure to consider the long-term financial requirements that would need to be met in the case of death. This would mean the replacement of income until the death of a spouse and, or until children are no longer dependent.

When dealing with independent agents and brokers, remember that all states have licensing requirements for these professionals and consumers should be able to verify the existence of such a license in good standing with the state insurance department. Other considerations are the level of experience that might play an important role in the services that an insurance professional provides. Background and education are two important considerations when selecting an agent or broker.

A good resource for finding qualified insurance professionals is the National Association of Insurance and Financial Advisors (NAIFA), which provides a listing of agents. The NAIFA is made up of over 700 state and local associations, which includes 200,000 members.

With a term life insurance policy, the applicant will select the most appropriate period of coverage as well as the amount of coverage. When establishing the amount of a life insurance policy, the goal is to ensure financial independence for those who depend on them now financially. This could mean that the coverage amount represents an aggregate amount of income that would have to be replaced over a given period, or it may be an amount that, if invested, would return a regular income that could sustain a consumer beneficiary.

It is an option to choose their term of the life insurance policy that means that coverage will end on a specific date. The date that the policy terminates may be a time when children become dependent, or when a major debt such as a mortgage is scheduled to be paid off.

Other considerations like a business continuation plan may be a factor for business owners. This is especially true if the business depends greatly on one single individual, or a few select individuals within the firm. If the loss of one of these individuals would cause a great financial hardship for any reason, then a term life insurance policy could be established to support business operations after the loss. Logic would dictate that the term could be set to expire on that person’s retirement date.

Term life insurance quotes are an important financial endeavor. The best life insurance brokers will be informed, educated and will have the ability to formulate a plan for the consumer or firm that will best suit then needs of their dependents in the event of a loss.

What Do Provisions Mean For A Life Insurance Policy?

2009-12-29T03:40:00.000-08:00

By Patrick Cooper Posted in Life Insurance News
Provisions in a life insurance policy are contracted statements that life insurance policies are required to follow. These are legal provisions prepared and stated in your life insurance policy. All life insurance policies have provisions.

Common Provisions

Some of the more common provisions in insurance policies include but are not limited to; a grace period, entire contract clause, incontestable clause, misstatement of age clause, war clause, suicide clause, double indemnity clause, policy change clause, and a payer benefit clause.

The grace period clause is a period of time when changes can be made. This can apply to anything within the insurance policy. The war and suicide clause make special provisions for death by suicide or in wartime. The policy change clause usually states the terms in which a insurance policy can be changed and to what degree.
Importance of Provisions

The provisions aren’t there to make your life harder they in fact make it a little easier. While some of the provisions are in there to protect the interest of the insurance company, many of them are there to protect the policy holder. It is important to know what specific provisions are written into your policy. You can always request that changes be made or extra provisions be placed into the policy before you decide to sign on the dotted line. Insurance companies aren’t always forth coming about certain provisions in their policies but many are open to questions.

Know Your Provisions

It is very easy to incur a penalty to your life insurance policy if you do not know what the specific provisions of your policy are. Read through your policy carefully and ask questions about things that you don’t understand or are unsure about. It is better to ask too many questions than not enough, especially when it comes to your financial future.

Get the Life Insurance Quotes When You Are in Good Health

2009-11-24T17:29:00.000-08:00

There are some frequently asked questions that come up when you are buying. One of the biggest questions that is daunting most of the buyers is what type of should be bought. This is a great question and a very interesting one also. Most agents have to face this question and may also find it difficult to answer sometimes.

Most agents will tell you that the best type of to buy is the one that is in force on the day that you die. We are all aware of the importance of investing, yet most of us are unsure as to what kind of policies should be bought for maximum benefit. We pose this question to our agents or brokers and ask them to explain about the policies which suit us most.

We generally look for benefits like income tax benefits, riders etc. We also want that our policy gives us the best returns at the end of the term or should be easy for claim settlement after the death of the policy holder. Nowadays many policies are also accompanied by medical insurance benefits. There are a number of options in terms of policies that are offered by the various companies.
The most important questions are what kind of policy has to be bought and for how long. Also the cost of the policy is a major factor. You can ask agents to guide you in these matters. Give your personal details and your budget and the life insurance agent will give you the options. Compare the options and decide which one to go for.

If you have any other kind of then it is the wrong kind. Though there are many agents that may disagree to this, but by and large it is true. Most agents will try and match the type of to how long you will need the coverage. If you need the coverage for 20 years, then what you need is a 20 year level term. First, check out the 20 year level term cost and then decide. If the policy does not give you death benefits then obviously you have bought the wrong kind. Period of the policy should be decided after proper consideration.

The term should be fixed in years according to the time when you will need the benefits of the policy. Check out term cost and then decide which one you would like to buy. If the insurance policy that you are going to buy does not give you death benefits then you are surely into the wrong kind of policy. The basic purpose of a policy is to guarantee the future of your family after you are gone. You have to decide for how long you want the life coverage. If you want the coverage for 20 years then go for level term policies and find out the level term cost.

Life Insurance and the Suicide Clause

2009-11-24T17:23:00.001-08:00

Maybe you read about the federal Census worker in Kentucky? Two months ago, they found him hanging from a tree, naked, with his hands bound by duct tape and the word "FED" written on his chest. It looked to all involved as a hate crime of the worst kind.

Digging deeper though, this hate crime might have really been a suicide in disguise. But if that is the case, why would anyone do that? The answer may lie in the printed word. A small contractual provision in every life insurance policy - the suicide clause. Turns out the man had recently purchased a life-insurance policy and made his 20-year-old son the beneficiary. All the facts are not clear, yet. But if this is true, then he evidently knew the policy would NOT pay if his death was determined to be a suicide.

A suicide clause excludes any payment of policy proceeds if death results from suicide within the first two years of the policy’s issuance. At that point, all the insurer is obligated to do is refund premiums paid. By trying to make the death of the Census worker look like a homicide, he may have been trying to skirt the suicide clause and get full payment for his son.

Once the two years pass, the insurance company cannot exclude the payment of the policy proceeds if death was deemed to be suicide. Why do insurers include this suicide clause in their contracts? The answer is really simple. Life insurance works on what is called the law of large numbers. But the mortality costs are based on the predictable pattern of natural death. Suicide is not a natural death and skews the statistics. The pricing of policies change dramatically if suicide is included as a benefit. It is presumed no one would buy a policy with the express intent of committing suicide and then wait two years to perform the act.

Each State regulates life insurance sold in its jurisdiction and has their own set of regulations for various contractual provisions. There is not a uniform insurance code throughout the US. Most carriers would prefer a permanent exclusion for suicide. But state regulation forbids this, usually limiting it to no longer than two years.

Another reason to have this provision is public policy. Society certainly does not want to encourage suicide. If a person could purchase a life insurance policy and soon thereafter, do the deed, despondent parents, bankrupt business owners or anyone who is possibly deep in debt or out of work, could be tempted to “take the easy way out.” Frankly, it is NOT that hard to qualify for insurance. Pay one premium and make someone financially whole - an easy solution, but bad for society in general.
Would it be possible for insurance companies to include the risk of suicide in their pricing? Certainly. All an insurer has to do is revise their mortality costs to include suicide. This would, of course , increase life insurance premiums significantly. Current statistics show approximately 30% of the US population has life insurance coverage. So raising the price would not be received favorably by a population who reluctantly allocates part of their annual income to provide financial security for their family now.

Remember, life insurance is NOT free. It is risk sharing between consenting parties. It is a zero sum game in that, the carrier must collect enough money to pay the benefits from the premiums it collects. So if suicide restrictions were removed, it would increase the probability of an early payout before the insurance company could fully earn enough additional money to cover their administrative expenses and cost of benefits.

If you think about it - Life insurance is really a miracle financial instrument. Where else can you instantly create a substantial lump sum by merely depositing a fractional share of the value to be received? At younger ages, life insurance costs less than 1% of the initial face amount of the policy. Only through risk sharing, made available through insurance companies, can this happen. It is an amazing financial tool.

Life Insurance - A responsibility towards your family

2009-11-24T16:58:00.001-08:00

Life Insurance ensures that your family will receive financial support in your absence. It protects your family any kind of from financial crisis. It also acts as a money-saving scheme.

In the fast paced and very fragile life style and stressed lives we live, insuring life itself has become a necessity so that your family have a financial support if anything unpleasant happens. It is difficult for family members to accept the loss of someone they all loved dearly. However, if the person they have lost is the principal earner or the chief bread winner of the family, monetary problems start haunting the family. Such problems could lead a family into the troubled waters, which everyone tries to prevent from happening. But there is a way to provide for your family and to prevent it from entering into this dark phase of life.

Basically, life insurance is an agreement or contract signed by the owner of the policy and the insurance company. Today, it is seen both as an investment and as an insurance. The life insurance agreement is such that the insuring company acts upon the pre-set sum of payment in event of an untoward occurrence of death of the insured individual. This agreement is backed by the payment made in installments for a pre-set and calculated time frame by the policy owner or policy payer.

As in today there is no shortage of investment options for a person to choose from. Modern day investment options include gold, property, fixed income instruments, mutual funds and also life insurance. When one opts for insurance, it can create a flexible money-saving scheme, which empowers one to accumulate, wealth to buy a new car, get one's children educational solutions, and even retire comfortably.

With different life stages, the financial goals change as well. The investment should offer corresponding benefits as befitting the needs of the new life stage. ICICI Life Insurance plan is the only plan that offer specific products tailor-made for different life stages. On the basis of different life stage, one is under the various corresponding needs. ICICI Life Insurance plans can be categorized into the following types:-

A Education Insurance Plan:- As a parent, this is an important responsibility to ensure that your child gets the best possible education that can be provided. ICICI Life Insurance plans offers a wide portfolio of education insurance plans. This plan ensure that money is made available at the crucial junctures in a child's education-Class X, XII, Graduation and at the time of Post-Graduation, to fund crucial commitments to the child's future.

More importantly, education insurance plans ensure that in the unfortunate event of the death of a parent, the child's education continues unaffected.

B Wealth Creation Plan:- It provides the customer the dual benefit of protection along with the potentially higher returns of market-linked instruments. Wealth creation plans also offer the customer more liquidity options as compared to traditional plans.

C Premium Guarantee Plan:- In the ICICI Life Insurance portfolio, the Premium Guarantee Plan-Investshield cum-investment option for customers who want to enjoy the potentially higher returns over the long term, without taking any market risk.

Life insurance is a life long investment and thus should be made with circumspection and caution and is something which should be taken with morbid sincerity. All the possible options available in the market should be taken into consideration and also the family should also be brought in on this so as to make the most appropriate decision which would help your family in the future and not be source of trouble and stress in the future.

How much insurance do I need?

2009-10-26T03:56:00.001-07:00

What type of insurance is right for me?

There are many factors to consider when determining how much insurance you need. You need to look at variables such as how many children you have, whether they plan to go to college or have special needs. You also need to know how many years are left on your mortgage and how much debt you have. An experienced financial professional can use the answers to these questions and others to help determine how much life insurance you need.

Your next step is to decide which type of coverage best fits your needs: term insurance, which offers a death benefit for a specific period of time, or permanent insurance, which can provide lifetime protection plus the potential to build cash value tax-deferred.

There are no hard and fast rules as to which type of coverage to choose. However, when you're starting out in your career or your children are young, you might find term insurance to be a cost-effective way to cover a short-term need (generally 20 years or less). On the other hand, if you choose a permanent insurance policy, such as whole life or universal life, you can potentially build cash value that you can access during your life on a tax-advantaged basis. Since permanent insurance has a cash value component, the premiums may initially be more costly than those for term insurance.

Which choice is right for you? It depends on a variety of factors, including your cash flow, your investment portfolio and how many years you plan to keep your coverage. Also, you'll need to review your insurance coverage regularly to make sure it still meets your needs and addresses any changes in your situation. A financial adviser can help you make the right selections.

How much insurance do I need?

2009-10-26T03:56:00.000-07:00

Insurance crucial in irrevocable trust

2009-10-26T03:29:00.001-07:00

By J. Brendan Ryan • October 23, 2009
Estate planners often recommend that clients set up an irrevocable trust and direct the trust to buy life insurance on the life of the client or jointly on the lives of the client and spouse.
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Properly arranged, this technique allows the death benefit to be payable at the death of the insured(s) without having the death benefit included in the estate for estate-tax purposes. After all, the trust, not the insured(s), owned the policy all along.

What type of insurance is best for this technique?

Rarely does an adviser recommend term insurance for this technique. While many younger breadwinners are content to use term insurance to protect the kids while they are growing up, even they know that this type of insurance gets too expensive after the initial period of ten or twenty years. And insurance for estate-tax planning probably will not be called upon in most cases until later ages. Likewise, starting a term policy at later ages, even if one is still insurable, is an expensive proposition.

If we eliminate term, we are left with permanent insurance, that is, whole life or universal life.

I almost always recommend universal life (UL) in this setting because its cost and flexibility are very compelling.

But some of the flexibility of the original UL, still available today, can be a downside, related to both the interest credited to the cash value and the monthly charges deducted from the cash value. Since these amounts can change, the trustee must constantly monitor the policy to be sure that the cash value stays strong enough to support the policy. Otherwise premiums will have to be increased.

But the later generation of UL contains what is known as the "secondary guarantee," which solves that problem. It says that, as long as the planned premium is paid as due and no significant changes are made to the policy, the death benefit is guaranteed to be there. Many obtain such coverage through a tax-free (or 1035) exchange rollover of cash value from an older policy. Those trustees often accomplish with the stroke of a pen an increase in coverage, a guarantee that they will never have to pay another premium, and a worry-free guarantee of the full death benefit.

The trade-off for this rock-solid guarantee is that the new policy's cash value is eventually locked up and thus unavailable for loan or withdrawal.

But the cash value in an irrevocable trust is usually not a feature that trustees rely upon. Rarely does the trustee ever make cash distributions before the grantors die and the death benefit paid out.

In the irrevocable-trust setting, the later generation of UL with its secondary guarantee is often the safest, most cost-effective life-insurance policy available.

A Different Type of Life Insurance

2009-10-26T03:26:00.000-07:00

Submitted by Staff on October 25, 2009 - 2:46pm. Business | Insurance
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Making the decision to purchase life insurance is one of the most important decisions of your life. Because the decision is so important, you want to make sure to do your homework. First decide what type of insurance would work best for you. Do you want one that is permanent or one that you can change? Do you mind taking a physical to get insurance or do you want insurance with no medical exam? What is your price range? These are all important decisions to make before you settle into a company and start paying premiums.

When you buy life insurance there are some things to consider. Make sure that the coverage you decide on will cover all your debts. You don't want your family to inherit your financial burdens. Also make sure that the premium will also support your family for some time, especially if you are the primary bread winner.

If you are in good health and you don't want to go to the doctor, then no medical exam life insurance may be the best type of insurance for you. If you do have some serious medical problems then this type of insurance just isn't available in your case.

Once you've decided what type of premium you need and what type of insurance to get, then you just need to shop around online. With this type of insurance there are a lot of companies on the Internet that offer free quotes. Insurance for your life that doesn't require you to get a physical is a different type of insurance because you can get lots of different quotes and only spend a little bit of your time. Time is a commodity that a lot of people don't have, so spend it wisely. You want to get at least three quotes before making a decision.

With no medical exam life insurance, getting this insurance is just a quote away. You can do all the research yourself in a fraction of the time it would take to apply for other types of life insurance. The important thing to remember when getting any type of life insurance is be informed. Protecting your life is an important decision so don't take it lightly. Knowing what's available and how much you can afford are the most important factors. Life insurance is important but it shouldn't take up your life to find the right coverage for your family.

Selling Life Insurance

2009-09-26T15:26:00.000-07:00

When times are tough people often look to the cash value in their life insurance policies as a source of cash. In addition to borrowing the cash value, one strategy that is sometimes recommended is to sell your life insurance policy to a third party. You would get more than the cash value but not as much as the death benefit. Although this might seem like a good way to raise cash, in general this is a strategy that financial planners don’t recommend.

Selling your life insurance to a third party is called a “life settlement.” There are several things to be aware of before jumping into such an arrangement. First of all, in general, the value of the settlement over the amount of your total premiums paid will be taxable as ordinary income. You would owe federal and state tax. That increase in taxable income may affect your eligibility for Medicaid or other government assistance. In addition, you lose a valuable asset that may be very important to your spouse or other beneficiaries at your death.

Investors who buy life settlements are really only interested in policies for individuals over age 65 and in poor health, and this group is particularly vulnerable to aggressive sales tactics. The industry is susceptible to fraud because the expenses of the sale can be high and not readily discernable.

As I said above, an alternative to selling your policy is to take a loan on the cash value. If you don't need the cash value but are having trouble keeping up with the premiums, ask your adult children, if they are the policy beneficiaries, to pay the premiums.

Insurance is too important for a last-minute decision

2009-09-26T15:21:00.000-07:00

By Kathryn Canavan, Special for USA TODAY
Health care insurance and other benefits cost employees thousands of dollars a year — on average about 30% of their total compensation.

But many employees wait until the last minute to make selections, do precious little research and make big mistakes that cost them in multiple ways. Two examples: paying more upfront for benefits they may not need; and making poor decisions that show up when a health or other emergency arises.

The 2010 open enrollment season at workplaces nationwide is ramping up as fall arrives.

Given what's at stake, experts say workers should pledge this time around to make better selections. There's a lot of ground to make up: Only 6% of consumers feel completely prepared to deal with health care costs, according to the Deloitte Center for Health Solutions. And most employees spend 30 minutes or less choosing their health plans, according to Cigna.

"People don't put a lot of thought into enrolling in their plans," Cigna spokesman Joseph Mondy says. "Typically, people spend like half an hour deciding. Compare that to how many hours you agonize before you buy a TV."

Some tips to get the most out of your employee plan:

Don't wait until the last minute

Enroll, and do so on time. Don't assume that you'll be automatically enrolled in the plan you chose last year.

"We have this whole month to review things, and we wait until the night before we have to make the decision to open the booklet," says Lenny Sanicola, an employee benefit specialist with WorldatWork, an association of human resources professionals.

His recommendations: Sift through materials early; discuss plans with family members; make a list of questions; and attend your company's face-to-face meetings. If you don't get the answers you need, go to your human relations officer or supervisor. Understand what you're signing up for and what your out-of-pocket expenses are going to be.

"As you get into the 2010 decision-making, there are fewer simple decisions," says Cigna's chief learning officer Karen Kocher.

Include others in decisions. Family members may think that taking advantage of legal coverage, a pet insurance option or flexible-spending account make sense, even if you don't. Those opinions should matter.

Check eligibility requirements

Before you make a decision to jump to your spouse's plan in this rocky economy, make sure you'll be able to return to your employer's plan if you waive enrollment now and your spouse loses his or her job later.

Also, determine whether your adult children are still eligible or newly eligible for your family plan.

"Eligibility is where people can really get tripped up," says Michelle Connor, a senior benefit consultant at CBIZ Employee Services.

Employees should also realize that companies are auditing to ensure former spouses or unqualified adult children are not lingering on family plans. Don't be surprised if your human resources office suddenly requests your offspring's college schedule.

Think about health coverage costs

The single most important question when choosing any health insurance plan is, "What is my annual liability?" Connor says.

Add likely out-of-pocket costs to the premiums being deducted from your paycheck. When you determine likely out-of-pocket costs, put that amount in a pretax flexible-spending account.

Kocher says employees must understand their needs and the available options: "The absolute best fit will not only get you the best coverage, it will also assure your out-of-pocket costs are minimized."

Mondy says websites can often be go-to places for prescription-price comparisons and, increasingly, for cost-and-quality comparisons of medical professionals.

"Find out all the programs your company offers. You may be pleasantly surprised," he says.

One program many people don't take advantage of: flexible-spending accounts.

"One of the things that scares people about an FSA is the use-it-or-lose-it provision, but you can always run out and buy a whole season's supply of cold and flu medication or a new pair of eyeglasses" at the end of the year to use money in the account, says Ken McDonnell, program director for the Employee Benefit Research Institute.

Consider life, disability insurance

If your age or health make it expensive to get private life insurance, your employer can be a good place for that because it's usually less expensive and requires little or no medical underwriting, says Barry Petruzzi, vice president of group benefits for Guardian Life Insurance Company of America. He says employees can use an online calculator to determine whether they should buy more insurance than an employer already provides for free.

Connor also recommends buying short-term disability insurance "every day and twice on Sunday" because it ensures your paycheck.

She says six out of 10 employees will be on disability at some time during their careers, and most will be on short-term disability.

Pregnancy, for example, falls under short-term disability. She says even the group she calls "the young infallibles" are exposed to plenty of risk of short-term injury from sports and auto accidents.

Educate yourself about investments

Jane White, president of Retirement Solutions of Madison, N.J., says employees need 10 times their final year's salary for a retirement nest egg, so save accordingly.

To do that in the best way, says WorldatWork's Sanicola, employees should take advantage of financial seminars and online tools offered by companies, and keep an eye on investing fees.

If you can afford to contribute enough to your 401(k) or other such plan that's eligible for a company match, do it.

"Your net pay won't go down 6% if you contribute 6%, because you're using pretax money," Sanicola says.

Also, if your company provides its match in company stock, divest out of it as quickly as possible, White says. A diversified portfolio is insurance against losses if your company stumbles and the stock price plummets.

Get and stay healthy

Some employers and insurance companies offer financial incentives to employees who use gyms or attend smoking-cessation programs.

Ask if your employer provides any reimbursements. If they do, make lifestyle changes to take advantage.

Free Life Insurance? Not Really

2009-09-26T05:54:00.000-07:00

By Jeff Brown

It seems like a deal that’s too good to be true: Pay premiums on your term-life insurance policy, then get them all back if you don’t die during the 10, 20 or 30 years you are covered. It’s like getting insurance for free.

But like most too-good-to-be-true deals, this one isn’t quite as good as it appears. Most people can do better with a standard term policy.
So-called return-of-premium options were devised a number of years ago to boost sales of term policies, the simplest and least expensive type of life insurance. With term, the policy holder pays an annual or semiannual premium in exchange for a death benefit for survivors.

But the benefit is paid only if the policy holder dies within the period, or term, covered by the policy. Die later and the survivors get nothing, and the premiums seem to have been wasted.

That encouraged lots of potential customers to opt for variable, universal or whole-life policies that cover the policy holder for life and build up a cash value.

The return-of-premium option on term policies is meant to attract customers who want something to show for years of premium payments if they outlive their policies and their survivors don’t collect a death benefit. The premium is not returned if you die with the policy in effect and a death benefit is paid.

But you have to pay a larger premium to get this option, wiping out much of its value, if not all of it.

Transamerica Life Insurance (Stock Quote: AEG) offers a 40-year-old nonsmoking male a 30-year term policy for $800 a year. An identical policy with the return of principal feature costs $1,335 a year.

With the ROP policy you would get back the $40,050 spent on the premiums over 30 years.But if you took the cheaper policy and invested the $535-per-year savings at 6% a year, it would increase to $40,050 in just less than 29 years, according to the BankingMyWay Savings Goal Calculator.

Chances of averaging 6% over such a long period are pretty good. The Standard & Poor’s 500 returned about 10% a year in the 20th century, and you could invest in that through an index fund like Vanguard 500 Fund (Stock Quote: VFINX), or an exchange-traded fund like the SPDR 500 (Stock Quote: SPY.)

Earn more than 6% and you’d almost certainly be better off investing rather than buying the more expensive policy.

The returned premium is tax free, so a taxable investment would probably have to earn 7% or 8% to provide the same value after taxes were paid. Taxes would not be a factor if you chose a tax-free investment like a Roth IRA.

If you can afford the larger premium it would probably be better to use it for more coverage rather than a return-of-premium option. Use the BankingMyWay Insurance Shopping Tool to find a good policy.

Mutual or publically owned: Which is best insurance company for you?

2009-08-24T05:21:00.000-07:00

By GAIL LIBERMAN
Special to the Daily News

Saturday, August 22, 2009

Are you better off buying life insurance from a "mutual" insurance company or a publicly owned one?

Mutual insurance companies are owned by policyholders. Publicly owned insurance companies are owned by stockholders.

Stock-owned insurance companies showed higher growth rates and better earnings than mutuals at the turn of the decade, according to an August report by Moody's Investors Services.

However, mutual insurance companies experienced less severe credit downgrades than stock-owned companies during the latest recession. Mutuals, the report says, are better capitalized, have a less risky business focus and are not as subject to the investor panics created by newspaper headlines.

"Mutual insurers are typically more focused on life insurance and other protection products, which tend to stay in force for long periods and have a very stable earnings profile with a low degree of risk," the report says.

One great thing about mutual insurance companies is they pay life insurance policyholders dividends, which are excess profits. Dividends are not taxed because the IRS considers them a return of your premiums.

You can reinvest your dividends in the cash value or savings account portion of your policy. Or you can take them in cash. You also can use them to buy more insurance or help pay premiums.

Today, mutual insurance companies are paying dividends of more than 5 percent. The board of trustees of Northwestern Mutual Life Insurance Company, for example, approved an estimated dividend payout of $4.6 billion for participating policy owners in 2009.

You generally buy insurance of mutual insurance companies via their own insurance agents. By contrast, stock-owned insurance may be sold by an agent who deals with a variety of companies.

The downside of mutual insurers: If they do need cash, they don't have as much access to the capital markets as stock-owned companies.

Moody's says stock companies focus on higher-risk and higher-return insurance, like variable annuities and universal variable life insurance. These let you invest in mutual funds for growth.

Insurance offered by stock-owned companies also may come with "aggressive guarantees." Variable annuities, for example, may have guaranteed lifetime withdrawal benefits, and their universal variable life insurance carries no lapse guarantees.

The bottom line:

* Stick with the financially strongest companies, rated A to A++ by A.M. Best.

* Deal with an experienced insurance agent who has an insurance license and is a Certified Financial Planner or Certified Life Underwriter and Chartered Financial Consultant.

* Seek companies that provide good customer service and offer the most benefits at the most attractive price.

* Check claims-paying history by searching the company online. The site www.naic.org also has a database of consumer complaints.

The largest mutual insurance companies include TIAA-CREF Group, New York Life, Northwestern Mutual, Mass Mutual, Pacific Life Insurance Group and State Farm.

The largest stock-owned insurance companies include: Metropolitan Group, Prudential of America, American International Group, Hartford Fire and Casualty Group, John Hancock Group, AEGON USA Group, ING America Insurance Holdings Group, Lincoln National Group and AXA Insurance Group.

Let's make a deal - on your life-insurance policy

2009-08-24T05:20:00.000-07:00

By Robert Powell

MarketWatch (MCT)

BOSTON - Of all the products ever engineered by the financial-services industry for sale to unsuspecting seniors and others, none seem quite as insidious as life settlements.

Life settlements are schemes in which you sell your life-insurance policy to a third party for some cents on the dollar, usually more than the policy's cash value but less than the death benefit. They're appealing to people who are strapped for cash and need the money. Or you might do it because you're unable to keep paying the policy premium. Or because an insurance salesman has convinced you this is a good deal.

But before you let someone you don't know become the owner and beneficiary of your insurance policy, consider the following recent goings-on in the industry.

In July, the Financial Industry Regulatory Authority "reminded" brokerage firms that they must comply with the rules governing variable life policy sales when participating in the life-settlement business. Now what would possess the agency that regulates the brokerage industry to issue such a reminder? Is it because salesmen are following the rules to a T? Highly unlikely, I say.

In fact, in Regulatory Notice 09-42, Finra said it is "concerned about variable life settlements because they involve materially different factors and raise materially different issues than more widely held securities such as stocks or bonds." What's more, Finra said firms' marketing of variable life settlements is directed almost exclusively toward senior investors who, concerned about current economic conditions and retirement, may consider selling their variable life insurance policies without fully appreciating the risks and costs of variable life settlements.

Meanwhile, more states are putting in place laws and regulations designed to protect seniors from unscrupulous life-settlement salesmen. Some, though not all and not nearly enough, states have put in place bonding requirements, licensing provisions, restrictions on policy use in the first five years, and commission constraints, among other actions. Vermont, for instance, will later this year prohibit brokers from earning more than 2 percent of the amount paid by a life-settlement company to the policy owner, according to the Life Insurance Settlement Association, the lobbying group for the life settlement business.

Not surprisingly, about half of the life-settlement firms have stopped doing business in those states that have beefed up their laws and regulations. If what these firms did was so right, why would they stop selling their products in these states?

And then there are the PR campaigns. There's one that purports to educate consumers about life settlements and another aims to recruit salesmen. First the latter: Here's a recent post I chanced upon on one of the social network sites: "Life settlements are a great way to generate capital during these tough economic times," Ellis Largent of Opulen Capital wrote. "Feel free to contact me to see if a life settlement is right for your clients." OK, we'll get right on that one.

And then there's the consumer-focused campaign: "In an effort to better educate seniors on the benefits and important considerations of selling their unwanted or unneeded life-insurance policies through a life-settlement transaction, LifeBack, a direct-to-consumer life-settlement program to launch later this year, has introduced a new guidebook to help consumers objectively evaluate the appropriateness of a life settlement for their retirement needs." The book is called "Is a Life Settlement Right for You?"

If you decide to read the booklet, be sure to read Finra's investor alert on the subject too. You want both sides of the story, eh?

To be sure, there some good stuff to be said about life settlements. Apparently, they make for a good investment. "As investors seek safer, shorter windows for returns, life-settlement securitizations are becoming increasingly popular," according to a Reuters report. The securities, which are backed by life- insurance policies and sold on the asset-backed market, are in demand because they are "solely tied to mortality, a natural-occurring phenomenon," Jan Buckler, an analyst at Dominion Bond Rating Service, is quoted as saying in the report. And Ron D'Vari, chief executive of NewOak Capital is quoted as saying: "Life-settlement securitizations should be attractive to investors as they are uncorrelated to everything else as far as the underlying expected cash flows are concerned."

I guess, but it sure doesn't seem quite right now. I mean, what's next - life-settlement securitization on our pets?

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

Increasingly, seniors realizing nest egg in life insurance policies

2009-08-24T05:17:00.001-07:00

12:00 AM CDT on Monday, August 24, 2009
By BOB MOOS / The Dallas Morning News
bmoos@dallasnews.com

Seniors battered by the tough economy are selling their life insurance policies to replenish their retirement nest eggs.

Unlike younger investors, older adults may not have the time to wait for the market to recover all of their losses, so they're turning to this previously overlooked asset to see whether they should sell it and use the money to pay medical bills or other expenses.

Seniors sold life insurance policies with a face value of $11.8 billion last year, almost double the value of policies sold just two years earlier, according to the U.S. Senate's special committee on aging, which recently held a hearing on such transactions.

A "life settlement," as a sale is called, may be an attractive option for seniors who determine they no longer need their life insurance policy, said Doug Head, executive director of the Life Insurance Settlement Association, an industry group.

Policyholders typically sell their insurance through life settlement brokers to investment companies for lump sums that are usually several times greater than they would receive if they surrendered the policies to the insurance companies, he said.

The new owners pay the remaining premiums on the policies and become the beneficiaries when the original policyholders die.

But a life settlement doesn't always make sense, insurance experts caution, and seniors considering such a sale should consult with an independent financial adviser to figure out whether it's the best move for their particular circumstances.

"If you're thinking about selling your life insurance mostly because you're strapped for cash, there may be other ways to tap the value of your policy without losing your coverage," said Houston lawyer and insurance expert David McDowell.

"You may be able to take out a loan against your policy or receive a partial payout through an accelerated death benefit," he said. "It's worth visiting with your life insurance agent and exploring the options before sacrificing your coverage."

Life settlements are also ripe for questionable business practices, so prospective sellers need to work with licensed brokers screened or monitored by state regulators, said Susan Voss of the National Association of Insurance Commissioners.

Started in AIDS crisis

The life settlement business grew out of the AIDS crisis of the 1980s. In what were called viatical settlements, people living with AIDS sold their unwanted life insurance policies for cash they often used to cover medications or treatments.

As medical breakthroughs extended the lives of many people with AIDS, the industry shifted its focus from the terminally ill and toward seniors in their mid-60s or older, said Scott Gibson of Lewis and Ellis, an actuarial consulting firm in Richardson.

"The best candidates for a life settlement are now people in their 70s or older who have a life insurance policy valued at $500,000 or more that they no longer need, perhaps because their spouses have passed away," Gibson said.

The industry hit a bump earlier this year as capital dried up. But now that investors are returning to the market, buyers' offers for policies have improved, said Russel Dorsett, co-managing director of the Select Life Settlement Corp. in Houston.

Though the amount that seniors receive for their life insurance will vary depending on their age, gender and overall state of health, the average payout today is slightly less than 20 percent of the policy's death benefit, he said.

"That's still three or four times more than they'd get if they simply surrendered their policies to the insurer," Dorsett said.

Bill Clark, managing director of the Clark Financial Group in Frisco, said he sees a number of circumstances in which older policyholders may want to consider a life settlement as part of their retirement and estate planning.

"A policy may not be needed anymore," he said. "The beneficiaries may have become financially independent and aren't counting on the policy's proceeds, or the policyholder determines the estate no longer needs life insurance to pay death taxes."

Complex transaction

As more people become aware of life settlements through financial planners, Clark said, more policyholders will at least check out the price they could get for an asset they once regarded as virtually untouchable until death.

Still, selling a life insurance policy is often a complex transaction involving time and paperwork, so consumers should turn to financial advisers who know the risks, said Ana Smith-Daley, a deputy insurance commissioner for Texas.

"An independent adviser can help you decide whether selling your policy is in your best interest," she said. "If it is, the adviser will probably call on a broker to shop around your policy to determine what kind of price it will fetch."

Seniors also need to understand that their medical records will be examined as part of the sales and that the buyers of their policies will occasionally check on them to determine when to collect the death benefits, she said.

"In this buyers' market, investors are looking for the individuals most likely to die," said Stephan Leimberg, editor of Tools and Techniques of Life Settlement Planning. "They want you old and ripe. That way, they'll pay the fewest premiums and get the best return on their investment."

Smith-Daley said sellers may also pay taxes on the proceeds from a life settlement and lose their eligibility for Medicaid or other government benefits, so anyone contemplating a sale should consult a tax adviser or lawyer.

But even with those considerations, industry officials expect life settlements to exceed $100 billion over the next couple of decades as boomers convert unwanted or unneeded life insurance to cash to bolster their lagging savings.

"Under the right circumstances, it's a viable and valuable option that will only become more popular," Gibson said.

Term life vs. cash value life insurance

2009-07-27T09:53:00.000-07:00

If you're single or have no dependents, you probably need little or no life insurance. With a little planning, you can establish a low-risk savings fund to cover funeral costs, and then invest the money you would have paid in insurance premiums.

If you're single or have no dependents, you probably need little or no life insurance. With a little planning, you can establish a low-risk savings fund to cover funeral costs, and then invest the money you would have paid in insurance premiums.

But if anyone depends on your income stream, you need life insurance to protect it. Aim to replace it, but don't think you need to pay a lot for a policy that will give your family a lotterylike payout if you die.

There are two main types of life insurance: "term" and "cash value."

With term insurance, your premium payments are applied entirely to the cost of the insurance, and coverage can easily be dropped when you no longer have dependents. It's a very simple and effective option.

Cash value insurance, meanwhile, encompasses a wide variety of financial products, such as whole life, universal life and variable life. These combine term life insurance with a long-term, tax-sheltered savings plan.

The most important thing to understand about these policies is that they're designed to be held for life. There are usually significant upfront charges associated with setting up the savings plan, investing the money and paying the agent's commission. Even with these charges, tax-sheltered savings can still catch up to taxed investments and begin delivering a real advantage — but that can take 10 to 20 years.

So never opt for cash value insurance without doing a lot of homework. Don't let an aggressive agent sway you with confusing presentations and emotional arguments. Remember that term life can last as long as you want, via guaranteed renewable policies. If you're attracted to the investment portion of cash value insurance, know that you can always buy less-expensive term insurance and invest the difference on your own.

Don't make the common mistakes of buying more insurance than you need, or the wrong kind of insurance. Look up some prices at www.insure.com.

The Motley Fool

Investing in a sure thing: Life insurance

2009-07-27T09:46:00.001-07:00

by Parker Leavitt
The Arizona Republic

Selling life-insurance policies on the secondary market is an increasingly popular way for investors to capitalize on one of life's surest events: death.

Investors, including some major players on Wall Street, buy the policies in bunches, pay the premiums and collect millions upon the death of the insured.

First introduced in the late 1990s, the life-settlement industry has swelled to at least a $12 billion market, according to Connecticut-based Conning Research & Consulting Inc.

Several large investment firms, including Goldman Sachs, JP Morgan and Wells Fargo, have experimented with life settlements.

Opinions about the business are diverse, but many experts agree the market is beneficial to both the buyer and seller.

The secondary market allows elderly policyholders who may no longer need life insurance to sell the policy for several times more than the insurance company would pay for a cash surrender.

"What the insurance companies will pay you is a lot less than what the policy is worth," said Alan Rosenfield, managing director of Harmony Asset Management LLC in Scottsdale.

Life-settlement buyouts can reach six figures, and some policies have been sold for over $1 million.

"Given a policy's true value in the secondary market, life settlements offer someone considering surrender a sensible and compelling alternative," said Marc Ruskin, a regional vice president for Life Equity LLC.

But a life settlement may not be appropriate for everyone.

Financial planner Stephen Barnes of Phoenix said he advises nearly all of his clients to hold on to their policies.

"The (life-settlement) industry is largely unregulated, the fees and commissions are obscene, and the rates of return on investment aren't what they used to be," he said.

Seniors must also beware of get-rich-quick schemes.

"There's a dark side of this business that taints the entire industry's reputation," Barnes said.

Ruskin agreed that some have tried to abuse the system.

"It was the Wild West about 10 years ago when this all started," he said.

Now, some of the largest life-settlement providers have joined together to form the Life Settlement Institute, an organization devoted to the prevention of fraudulent or dishonest life-settlement transactions.

Despite perception problems and a general lack of public awareness, some firms have enjoyed rapid growth, even during the recession.

Texas-based Life Partners Inc. increased its revenue from $30 million in 2007 to $103 million during its most recent fiscal year.

And although the tight credit market has hurt some life-settlement companies, Life Partners President R. Scott Peden is confident his company will continue to grow.

"Investors are looking at life settlements as an alternative kind of investment," he said.

Rosenfield said the concept is simple.

"The fact is people will die," he said. "That's one of the few things that you know will happen. The only question is when."

Is life insurance important in a recession?

2009-06-21T02:10:00.000-07:00

Author: Tanisha Williams
Detroit is one of the cities that has been hit the hardest in this economic downturn. Detroit has suffered enormous job loss, lay offs and foreclosures. Many people wonder is insurance needed and is it affordable?

Well, the answer is yes. In hard times such as these, it is never smart to stop paying your life insurance premiums or for some not investing in at all. Life insurance offers many options to choose to protect your family.

Mortgage term insurance is the most cost effective way that a person can protect their family. By having this type of insurance in place, will allow for their mortgage to be paid off in full if the breadwinner were to die. Another option is traditional term insurance. This type of insurance can also cover your mortgage, final expenses, spousal and family income support or to ensure that your children will go to college. Term insurance in this economy is very affordable and needed more than ever.

I don't need life insurance, I'm only 35!

2009-06-21T02:09:00.000-07:00

I was visiting my associate the other day and popped my head into her office to ask how her day was going. She had a puzzled look on her face and said, "I've had better days. Have you ever had to deliver on a life insurance claim?" The look on her face was one of complete and utter sadness. She went on to tell me that three years ago she had sat with her client to discuss life insurance. He was a young man with a wife and three children. He really believed that at the age of 35 he was too young to be seriously looking at life insurance. However, my associate saw it differently and continued to educate his wife and him. At the end of their conversation, he and his wife decided to apply for a life insurance policy in the amount of $1.5 million to protect him and his family. Little did they know that in three years time he would be killed quite unexpectedly by a drunk driver heading the wrong direction on the freeway on-ramp. My associate looked at me and said, "I can't believe I have to deliver this check."
Now contrast that story with one of my own. When I first got started in finance, I began as a life agent. I had met a very young couple, had connected with them, and made an appointment to discuss the need for life insurance. In the end we took out policies on both of them. A couple of years went by, and in financial terms, they had progressed rather nicely. They had purchased a second home, which was part of their plan and she was pregnant with their first child. It was a very happy time for them. But with the new mortgage and a baby on the way, they had let their insurance lapse. I made several calls to them to reinstate the insurance however they were all to no avail. Sadly, at the age of 32 and on Thanksgiving Day, Sam (not his real name) was hit head-on while on his motorcycle by an RV traveling in his lane. He was killed instantly -- he never knew what hit him. The saddest part is he and his wife had just celebrated the birth of their first child not more than 60 days before hand. Sam left his wife and son essentially penniless. She had quit her job to raise their boy and Sam, as the primary breadwinner, was no longer there. Their original plan was for her to stay home and raise their boy. However now she was juggling grief, raising their son on her own, and working two days a week to make ends meet.
To finish the story, she sold the second home to cover the costs of burying Sam and providing income so she could stay home and take care of their beloved baby. They were very fortunate in the fact that she was able to sell the home quite quickly -- that would not be the case today.
Life insurance can feel like a catch 22. For some folks they feel that if they get life insurance it means they're going to die and so they don't. But for others who understand the purpose and the need of life insurance, it saves them from a tragic financial nightmare. My associate's surviving family although grieving for the loss of their beloved husband and father, will soon have the financial resources to take care of anything they need, with proper management, for the rest of their lives. My clients on the other hand have to abandon their future plans in order to provide for their family.
None of us are planning on leaving this earth before our time. However for some of us "our time" comes much earlier in life than we would prefer. Preparing for the care of our families in this kind of tragedy is essential to the survival of the family, the fulfillment of life plans such as college educations, paying off the mortgage, and achieving other life goals that were important to the family before the unexpected death.
So I ask you, which family would you rather be in at the time of crisis? The choice is yours.

Why get life insurance?

2009-06-21T02:07:00.000-07:00

Author: Edwin Markar

In this article, I’m going to go over the reasons behind getting life insurance, but will not get into specific types; I’m saving that for upcoming articles deliberately to not steal the shine away from the underlying reason for purchasing it.

Life insurance is primarily purchased to provide those you care about financial protection, should you pass away. Some use it to cover estate taxes or business dealings, but in this particular article, I will focus on ordinary family needs.

It’s common for people to search online for sites that can tell them how much life insurance they need. I can tell you from experience that there is no such rule of thumb (such as replacement of 10 times income) that can fit to your needs and wants. Ask yourself, if you didn’t wake up this morning, would you want your family to continue living in the same house? What is the remaining mortgage on it? Would you like to have money set aside to make sure your kids can attend the University of their choosing? Would you like to replace some of your income? Would you like to cover your burial expense, which could cost around $10,000?

Be honest with yourself when answering these questions, it will help you reach an insurance amount you are comfortable with, and nobody will, or should, judge you for it.

Who is a candidate for life insurance? Anyone who wants to sleep better at night knowing their loved ones won’t suffer financial hardship while grieving the loss of someone they cared about. It makes a bad situation more manageable, and that is the best we can do, since we can’t change reality.

You don’t have to currently have dependants in order to justify owning a life insurance policy. It is, the vast majority of the time, less costly when you get it when you are young, and the premium goes up every year that you put it off, therefore you can lock in low rates while you are young and pay the same locked in premium even as you get older.

Finding the Right Life Insurance Policy

2009-05-24T03:38:00.001-07:00

TheStreet.com rates the financial strength of 900 life insurers nationwide to help consumers find sound companies to do business with. TheStreet.com Ratings has been recognized as the most conservative grader of life insurance financial strength by a leading consumer publication and was singled out as the only ratings agency that doesn’t accept payment from any of the companies it rates.

American Life Insurance Company, a unit of AIG (Stock Quote: AIG), is the largest life insurer in the U.S., with nearly twice as much premium volume as the next largest insurer, Northwestern Mutual. There are many companies in excellent financial shape that you should consider when you’re shopping for life insurance. Go to TheStreet.com to look up your specific company.

Life insurance comes in many flavors, each designed to suit a specific need. For instance, there are policies that will pay off the balance on your mortgage. There are policies that will provide your family with a specified income stream for a fixed number of years after your death. There are policies where the benefit goes up in value as you get older. And there are even policies where the benefit goes down in value as you get older.

When you boil it all down, though, there are really only two fundamental types of life insurance policies: permanent life and term life.

Permanent Life
As the name would suggest, permanent life is a lifetime insurance policy. You might also think of it as life insurance with a savings account built in. With permanent life, a portion of the premiums you pay to the insurance company go toward establishing a “cash value” which can be withdrawn if you cancel the policy or may potentially be used to pay for future premiums on the policy. And unless you exhaust your cash value, your beneficiaries are guaranteed to receive the death benefit when you pass.

So in a way, a permanent life policy is like an investment with a life insurance component. It is particularly useful for individuals who are concerned about their ability to pay premiums in later years or for those lacking the discipline to establish a separate savings plan.

Term Life
Term life, on the other hand, provides insurance coverage for only a specified period of time. The death benefit is only paid if you die during that specified term and have paid the required premiums. At the end of the term, however, the policy expires and you walk away with nothing to show. There is no cash value built up and your insurance coverage ceases to exist unless you purchase another policy.

In other words, term life insurance provides temporary coverage. If you live past the end of the term, you will have made years of premium payments but receive no money in return from the insurer. Of course, if you were to die at the beginning of the term, you would have paid very little in the way of premiums and yet the insurance company would have to pay your beneficiaries the full policy benefit.

At first blush, term life insurance may not sound as appealing as permanent life. That is, until you get to the cost. The premiums for a term life policy can be considerably less expensive than those for a permanent life policy. That’s because with term life, you’re not contributing anything extra to build up a cash value. Instead, you’re only paying for the insurance coverage plus the insurer’s administrative expenses.

When Life Insurance Becomes a Liability

2009-05-24T03:20:00.001-07:00

People who are less wealthy suddenly need a bigger policy to protect their families. People whose policy investments have been battered face unexpected premium increases. And even those who feel adequately insured at affordable prices are worried about their insurers’ ability to meet financial commitments.

In addition to investment losses, premium increases have shocked many people. “This is a real issue for clients who own variable policies,” said Loretta Nolan, president of Loretta Nolan Associates, a certified financial planner in Old Greenwich, Conn.

These policies combine insurance protection with a tax-deferred investment account that helps to pay the premiums. During the bull market, they promised investment returns high enough to limit the size and duration of premium payments. But the marketers didn’t stress the downside: if investment performance falls short, policyholders must spend more on premiums.

And that’s what has happened. Now, policyholders must pay higher premiums, for more years, to maintain their current level of insurance. The alternative is to reduce the coverage, which sometimes leads to a surrender charge.

If you’re in this situation, do a policy stress test, advised Ms. Nolan: ask the insurer to project your future premiums, assuming the policy investments earn a modest 4 percent return. If that shows you can’t afford the premiums, you need to consider alternatives.

If your priority is keeping your insurance, Ms. Nolan suggested replacing some of your variable coverage with a less-expensive term policy. For example, if you have a $500,000 variable policy, you might buy $300,000 of term insurance and trim your variable policy to $200,000, keeping your total premiums affordable. But if you see the variable policy chiefly as an investment loss — and don’t need the insurance — you might want to exchange it for an annuity, said Glenn Daily, a fee-only insurance consultant in Manhattan. The exchange is a tax-free transaction (called a 1035 exchange) that lets you use your loss to offset taxes on future gains. If you lost $30,000 in the variable policy, for example, your first $30,000 of gain in the annuity would be tax-free.

If your net worth has taken a 30 percent hit, advisers say you probably need more insurance to protect your family, at least until your stock portfolio and your home regain value.

Determining how much you need is more an art than a science, said Richard B. Freeman of Round Table Services, a Westport, Conn., wealth management firm. Instead of relying on a software program that would probably recommend more than you would ever buy, he suggested that you think in terms of two lump sums — one to pay off your mortgage and cover your children’s college education and the other to create income for your survivors.

A nonworking spouse needs insurance, too, added Mr. Freeman: “If Mom’s home with the kids, her policy has to do more than hire a nanny and a housekeeper. It should be big enough to let Dad take a job with shorter hours closer to home, so he can have more time with the kids if he’s the surviving parent.”

The cheapest way to increase your coverage is with term insurance, often available in a group plan through your employer. But that is not necessarily the cheapest way to buy it. If you’re healthy, you might get a better deal by shopping for an individual term policy, said Mark Cortazzo, senior partner at Macro Consulting Group, a Parsippany, N.J., financial adviser, especially if you’re a woman in a state with unisex rating for group insurance.

If you’re in poor health, you might want to buy as much group insurance as possible at work. You can usually convert it to an individual policy without evidence of insurability, albeit at a price, when you leave the job, Mr. Cortazzo said.

If you have serious health problems, you should avoid the standard application process for individual coverage because your application will probably be rejected after the medical exam. With each rejection it is harder to find coverage.

Instead, you should enlist a broker who specializes in the high-risk market to present your case informally to insurers. He can make sure you formally apply only to those companies that will accept you. You may soon have more options if insurers with highly publicized financial difficulties relax their underwriting standards to maintain their sales volume, said Wil Heupel, managing principal of Accredited Investors, a Minneapolis financial planning firm.

So how do you avoid buying insurance from a company whose health is worse than your own? Advisers say that if you’re buying more than $3 million in coverage it’s prudent to diversify among several highly rated companies.

“Work with a broker who sells the policies of many carriers,” Mr. Freeman said. An agent represents only one, whose problems he may minimize.

Banks Use Life Insurance to Fund Bonuses

2009-05-24T03:14:00.000-07:00

By ELLEN E. SCHULTZ

Banks are using a little-known tactic to help pay bonuses, deferred pay and pensions they owe executives: They're holding life-insurance policies on hundreds of thousands of their workers, with themselves as the beneficiaries.

Banks took out much of this life insurance during the mortgage bubble, when executives' pay -- and the IOUs for their deferred compensation -- surged, and banking regulators affirmed the use of life insurance as a way to finance executive pay and benefits.

Bank of America Corp. has the most life insurance on employees: $17.3 billion at the end of the first quarter, according to bank filings. Wachovia Corp. has $12 billion, J.P. Morgan Chase & Co. has $11.1 billion and Wells Fargo & Co. has $5.7 billion. (Wells Fargo acquired Wachovia at the end of last year.)

The insurance policies essentially are informal pension funds for executives: Companies deposit money into the contracts, which are like big, nondeductible IRAs, and allocate the cash among investments that grow tax-free. Over time, employers receive tax-free death benefits when employees, former employees and retirees die.

Though not improper, the practice is similar to what is known as "janitors insurance," an insurance-on-employees technique that has long been controversial. Critics say the banks' insurance contracts are a way for companies to create tax breaks for funding executive pensions. And some families have complained that employers shouldn't profit from the deaths of their loved ones.
[life-insurance policies on bank employees]

Efforts to rein in the practice largely have been unsuccessful, including the most recent rules Congress enacted in 2006. The rules limit companies to buying life insurance to just the top third of earners, who must provide consent. But the rules don't apply to life-insurance that employers bought before the August 2006 rules, which cover millions of current and former employees.

Banks are far from alone in buying such company-owned life insurance, or COLI. Thousands of companies do it, including American International Group Inc., Fannie Mae, Freddie Mac, Kimberly-Clark Corp. and Tyson Foods, Inc. But banks have been among the largest players, pumping billions more into new policies since the 2006 rules were put in place.

Last week, the Treasury proposed eliminating companies' ability to deduct interest on loans related to COLI. This would have little impact on banks, which don't borrow money to invest in life insurance. The proposal would also leave untouched the major tax breaks of the practice.

Banks had a total of $122.3 billion in life insurance on employees at the end of 2008, nearly double the $65.8 billion they held at the end of 2004, according to a Wall Street Journal analysis of bank filings. Unlike other companies, banks are required to disclose their total life-insurance holdings in regulatory filings.

In recent years, the Office of the Comptroller of the Currency affirmed that banks can buy life insurance to finance employee benefits. But filings show that executive compensation accounts for most of the benefits.

J.P. Morgan, for instance, had $10 billion in deferred-pay obligations, compared with $1 billion in retiree health obligations at the end of 2008. Offsetting these obligations was $12 billion in bank-owned life insurance, or BOLI. A spokesman for J.P. Morgan confirms the figures.

Citigroup Inc. had $919 million in unfunded retiree-health obligations, $586 million in supplemental executive pension obligations, and roughly $5 billion in deferred compensation. Offsetting these obligations: $4.2 billion in life insurance. A spokesman says Citigroup bought BOLI because it was "an attractive use of capital," and for "the tax-free nature of the death proceeds."

Bank of America doesn't disclose its deferred-compensation obligations, but filings show that at the end of 2008, its retiree health plan had an unfunded obligation of $1.3 billion, and that it owed $1.3 billion in supplemental executive pensions. The bank had a total of $17.1 billion in life insurance, which suggests a substantial deferred-compensation obligation. A BofA spokeswoman declined to comment on the deferred compensation obligation, but in an email said: "Like many companies, Bank of America uses this insurance to help defray the cost of employee benefits."

Companies don't use the policies as piggy banks to pay for compensation and benefits. Rather, they benefit from keeping the money in the contracts: Thanks to accounting rules for life insurance, gains on the investments -- from stocks, hedge funds, bonds and the like -- aren't just tax free, but are reported as income each quarter. Otherwise, companies couldn't add gains from securities as income until they sold them, and they would be taxed.

This income reduces the drag that executive IOUs have on earnings. (Banks owe interest on the deferred pay; and like any other kind of debt, the interest on executive debt lowers earnings.)

Though the investments are illiquid, the banks receive tax-free cash when employees and former employees die. Pacific State Bancorp, of Stockton, Calif., recently reported $2.6 million in income from a death benefit in 2008. The company didn't respond to requests for comment.

A subsidiary of Conseco Inc., Bankers Life & Casualty, which bought life insurance on employees in 2006, received $2.7 million that year from a death benefit, according to filings. A spokesman says the life insurance company bought the insurance "to offset the expense of deferred compensation."

Over the coming decades, banks will receive an estimated $400 billion in death benefits, consultants estimate. The death benefits sometimes are referred to in filings as "mortality dividends" or "yields." Employers track the deaths of former employees by checking Social Security Administration records.

As an incentive to get employees to consent to being covered, some companies offer them a small portion of the death benefit. But the coverage may end when they leave the company.

In December, Irma Johnson accidentally received a check for $1.6 million, from Security Life of Denver Insurance Co., payable to Amegy Bank. According to a lawsuit Mrs. Johnson filed in February in a Houston state court, in 2001 the bank told her husband, Daniel Johnson, a credit risk manager who had survived two brain surgeries, that he was eligible for supplemental life insurance of $150,000, if he signed a consent form authorizing the bank to purchase an insurance policy on his life. Four months later, the bank fired him.

Mr. Johnson died from a brain tumor at age 41 in 2008. His widow and two young children received no life-insurance benefits, which the bank had canceled when Mr. Johnson left. Mrs. Johnson says her husband was cognitively disabled when he signed the consent form.

A spokeswoman for Amegy Bank, a unit of Zions Bancorp, declined to comment on the suit, but said, "Participation in Amegy's BOLI plan was completely voluntary; employees consented to participate."

It's an unavoidable fact of life: Life insurance premiums increase with age.

2009-04-25T03:46:00.000-07:00

And then there's the matter of your health. If you develop certain medical conditions, life insurance suddenly becomes prohibitively expensive, if you can get it at all.

For good reason, then, people seek insurance that can be renewed regardless of any changes in health. That's where a renewable term life insurance policy can be a life-saver (for your survivors, at least).

The most important aspects of term life
Typically, when you buy a term insurance policy, you lock in a particular rate class that's based on your age, smoking habits, and health at the start of the term. When it comes time to renew a term policy, you can't do much about your age. You'll be older, so your rate will be higher. This much is entirely predictable and not worth worrying about or maneuvering to beat. That's where renew ability comes into play.
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Some "renewable" term policies just make it easy to renew, but require a medical exam, leaving you exposed to big problems should health issues surface later. What you want is guaranteed renewability without a medical exam. This is especially true if the policy term won't take you close to retirement age.

Besides that, there are three other key components to consider:

1. The policy term.
2. Guaranteed level premiums.
3. Ability to convert to a cash value policy.

The policy term
Term policies are either annually renewable (one-year term) or cover terms from five to 30 years (e.g., five, 10, 20, 30). Think of annually renewable term as the basic building block on which longer-term policies are built. If you pick a policy term beyond one year, you get two advantages:

* The total multiyear premium cost is spread out evenly over the policy term, rather than increasing each year, as you get older. For this reason, these policies are usually called "level term" policies.
* You can often get a better rate for longer terms, since the insurance company gets better odds that you won't switch policies during the term.

As with everything in life, though, there are trade-offs:

* When you buy a longer-term policy, it may look like you are paying a level premium, but you are really just over-paying in the early years to cover higher costs in later years. Therefore, if you decide to drop the policy before the term is over, you will have overpaid. For a 20-year term policy, for example, you will have grossly overpaid if you drop it after 10 years.
* If you have any outstanding questions about your life insurance needs, it's safer to buy a shorter-term policy until you get these questions squared away. It can be tough to accurately estimate how long you will need life insurance, especially if you expect to see a large inheritance, for example, or think you might be able to retire early.
* As you get older, your income replacement need gets smaller, as there are fewer and fewer years to cover before retirement. Buying shorter-term policies will allow you to reduce the death benefit of your policy accordingly, with each successive term renewal. Reduced death benefits mean reduced premiums.

It's tough to balance all these factors and make a recommendation that fits most individuals. It will always depend on who you are and what you need. In general, though, shorter terms provide more flexibility and the potential for cutting costs at renewal, while longer terms offer a better price for a given level of insurance over a given term, as well as greater predictability in price.

Guaranteed level premiums
Before you purchase a multiyear term policy, be sure that the premium is guaranteed to be level over the entire term. A surprising number of "level term" policies guarantee this for just a portion of the term. After this partial term is over, premiums might increase, although these increases are usually subject to some guaranteed maximum.

Ability to convert to a cash value policy
Getting a "convertible" term policy is generally a good idea. These are priced competitively with similar policies that don't include this provision, so you really have nothing to lose. This feature allows you to convert the policy to an equivalent cash value policy from the same company, without a medical exam, should there be a fundamental change in your health or retirement plans during the policy term.

Life insurance is about your legacy, not your death

2009-04-25T03:39:00.001-07:00

Written by Nolan Baker Mark Clair

I still remember the day it happened. I was up in Grand Rapids, Mich., studying to take the securities exam when I got the call. It was one of my dad’s friends. I was a bit confused as she told me, “It’s about your dad. We have a problem.” Thursday nights were always Dad’s night out for golfing and having fun with “The Boys.” At first, I thought he was in an accident.

It took awhile to sink in that Dad was gone; he had a heart attack and died that night in the garage. My brother Chris tried to save him by performing CPR in the driveway. The ambulance was called but was delayed by a road closed on the way to our house. We cried and cried, but Dad was still gone. It wasn’t until late that night that I stepped outside and saw one bright, shining star and realized my calling in life was to help others. Help them protect what they love and help them live for today while planning for tomorrow.

When someone thinks about life insurance, the first reaction might be, “Yuck!” or “I’ll look at that down the road.” Many times the thoughts of life insurance are negative for a variety of reasons. But we will all die. Set those ideas aside for a moment and consider the idea of life insurance being a powerful tool in the planning toolbox.

The power of insurance is the fact that it allows a policy owner the power to leverage dollars to ensure dreams and goals. Everyone’s wishes are different and unique. For Dad, his wish was that his children had enough money to go to college and provide for his family. For others, it could be family protection, as well as helping a church or a charity.

That’s the power of life insurance: It can ensure that dreams come true in the event of a premature death.

So what’s in it for you? Many would say that if I’m gone who cares, they get what’s left over. Many people plan on spending every dollar, and if the last check bounces, that is the perfect retirement. There is nothing wrong with that. But today, there are opportunities to build a tax-free retirement, provide a tax-free death benefit, and some policies include disability and long-term care insurance.

Imagine never having to worry about long-term care cost or being able to tap into a portion of your money and not worry about taxes. These features, along with many others, can provide substantial living benefits for the policy owner. Yep, all done through life insurance planning.

It was a blessing that Dad planned ahead. Dad, we did it. Rest assured, I have planned for my kids Andrew and Carter and my wife Karen. I have taken the advice of my colleague Mark and implemented a legal plan that matches my financial plan. Thanks, Dad, for thinking about me and helping me get a jumpstart in life. The loss still hurts, but the planning you did has made the journey a little easier.

Take time this week to review what’s important to you. Run a life insurance capital-needs analysis and make sure the numbers match. You may be surprised at the cost savings that is available today or how much additional coverage you can get for the same premium.

What if you’re not healthy enough to qualify? Many people can qualify, even though they think it is out of the question. Different insurance companies specialize in different risks. Some life insurance companies will issue policies on two people if one of them is reasonably healthy. So, if a legacy plan is your goal, it still may be possible to implement a plan.

Taking the Anxiety Out of Life Insurance Planning

2009-04-25T03:36:00.000-07:00

By Kimberly Palmer

Michael Bonevento, a senior financial advisor at Ameriprise Financial Services, Inc.,warns that most Americans are vastly underinsured, which means if disaster strikes, their loved one would be left in financial disarray. He recently spoke with U.S. News about the benefits of taking an unemotional, mathematical approach to help avoid some of the paralysis people tend to feel when talking about life insurance. Excerpts:

What mistakes do people tend to make when it comes to insurance?

What I've come to realize is that the biggest mistake folks make with regard to risk management is that they don't even address the topic. It's very emotional and forces you think about your own mortality and what would happen to your family if something tragic were to occur. Many advisors don't want to approach this topic because they don't want to be labeled an insurance salesperson. Advisors have a fear of wearing that label. And finally, folks don't address it because they realize they haven't done as good a job of insulating their families from tragedy.

How widespread is that problem?

It's an epidemic. I've been in the industry for 15 years and have conducted hundreds of risk management audits. It's extremely rare that I find a client or prospective client who has an adequate amount of insurance. Then, when tragedy strikes, they face financial problems on top of everything else. When September 11 occurred, I was heavily involved as a financial professional. Many folks were grossly underinsured. Had it not been for the steps that the federal government took—returning tax dollars that were previously paid and using the victims' compensation fund—I can tell you the financial position of many of these families would have been very different. It would have been dire.

How can a person figure out how much life insurance he needs?

There are two proven mathematical methodologies that we use. First, human life value. It's the economic loss that a family realizes in the event that the breadwinner were to pass away. Say I make $100,000 a year and I'm 40 and plan to work until I’m 60. Twenty times $100,000 per year is $2 million. I subtract from that taxes and add all of the other benefits that I'm paid, such as contributions to my 401(k) plan, health insurance, vision plans, etc. Then, since any individual has a 3 percent chance of being unemployed, I shrink the amount by 3 percent, and also shrink it by the amount I would consume myself, around 8 percent. Then I calculate the present value of that amount.

The second approach is needs-based. I ask my client, if something were to happen, what would you like to see happen? He might say, "I'd like my mortgage paid off, I want to make sure there's a cash reserve for my family, and I want to make sure college education has been addressed." So we run a present value calculation of the future cost of college.

Typically the human-value number is higher than the needs-based number. I tell my clients, "I don't care where you fall, I just want you to be between those two numbers." Then I know if tragedy strikes their family, they would be well-insulated.

Are those standard calculations that have been around for awhile?

The standard that people usually use is what I think of as an inappropriate rule. That rule of thumb is "six times my earnings." But if you're married and have five small kids, that's probably not enough. If you have no children, then that's probably too much. So I think it should be done unemotionally and mathematically. When you talk to folks about life insurance, they immediately shut down, so I talk to them about "risk management."

Do only married people and people with kids need life insurance?

It's more important to those folks who are married and married with children, or married with children with special needs who may never be able to fend for themselves. However, there are instances where single individuals have insurance, too. One of our clients, a man who was adopted at age 38 by a family without much has insurance so if something happened to him, they would have assets. Another young man, his stepfather is disabled and mother doesn't have a good employee skill set, and he has two younger step-brothers, so he's heavily insured. He wants to make sure they'd be okay financially. So there are instances where single people will have life insurance. If you're single in a high tax bracket, then you could use permanent life insurance to accrue wealth on a tax-deferred basis. But it's very important to people who are married with children.

Financial planning services and investments offered through Ameriprise Financial Services, Inc., Member FINRA and SIPC.

Don't Let Insurance Lapse In Tough Times

2009-03-28T07:02:00.000-07:00

(NAPSI)-In a recent study, 5 percent of consumers said they were planning to cancel or reduce their insurance to help make ends meet. Advisors warn this short-term savings could be disastrous in the long run.

When it comes to protecting your family's financial future, life insurance plays an important role. With the job market rocky at best, if the breadwinner in your family gets laid off, the loss of income will affect the entire family. What would that family do if that person dies? A big fear for many American families is the death of a wage-earner or caregiver, leaving the surviving family members unable to cope financially. Life insurance offers peace of mind through immediate financial protection for dependents.

Life insurance enables individuals and families from all economic brackets to maintain independence in the face of financial catastrophe. It is important during uncertain times that you consult a life insurance agent to make sure your family is protected.

Life insurance premium: If you cannot pay?

2009-03-28T06:59:00.001-07:00

Author: P.V. Subramanyam
When an insurance adviser approaches us, we are normally not in too much of a mood to buy life insurance! However, his persuasion (perhaps our awakening!) makes us buy a life insurance policy. This is not a great product - we hardly get any ``personal satisfaction`` buying this product. We are now motivated enough to make the payment. Sometimes the motivation lags! Or we are not convinced that the life insurance was a necessity…so we become lax.

Unexpected expenses can catch you short at times. There comes a day when the kids need braces, the car needs a new transmission, the wife needs a new car (oops sorry!), the floating rate EMI has increased, the college bills come due or there`s a medical emergency. Sometimes it is the Options trading which has cleaned out your account. Sometimes it is the marginal call from your broker! Out-of-the-ordinary expenses can tip the budget out of balance and leave you searching for ways to keep your income and outgo in sync.

Then your life insurance premium notice arrives. What do you do?

It`s good to know the possible consequences of not making a premium payment on your life insurance policy. The effect depends on the type of policy and coverage you have and the policy terms and conditions. With a term policy, if you stop paying premiums, your coverage lapses.

With endowment policies, many types of contracts allow you to decide to allocate cash value to pay premiums. Depending on the policy and amount of cash value, the result could be a significant reduction in cash value over time, decrease in death benefit and, finally, policy lapse.

Some policies (like Unit linked endowment plans) are designed with flexible premiums, so that policy owners have the option to pay more or less than the recommended premium or to skip premiums from time to time. Even with these policies, however, policy owners should check with their agents before suspending premium payments for extended periods because there must be enough cash value to pay the monthly charges to prevent a policy lapse. Sadly thanks to some aggressive companies and their agents many of us believe that a Unit Linked Endowment policy will be permanently available to you even if you pay premium only for 3 years. This is wrong.

The biggest concern: If you stop paying premiums and let your policy lapse, you would lose valuable protection, possibly leaving your family at financial risk.

Very often, life insurance is the link that can complete your estate if you die prematurely. Death benefit proceeds from a life insurance policy can provide the liquidity to settle final expenses, pay the college fees, pay off debts and - at the very minimum - give surviving family members ``breathing room`` to adjust. (It takes a long time to adjust to the cash flow suspension)

Other concerns: If you want to obtain new coverage later…

You will likely pay more for the same coverage. A key factor in premium rates is your age. The older you are at the time of issue, the higher your rate will be. In short, if you need to buy coverage later, letting your policy lapse now could cost you more money in the long run.

You may not be able to get coverage again …at any price. If you experience health problems, you could become uninsurable. Under your existing coverage, changes in your health do not affect your premium. However, if you let your policy lapse and then apply for new coverage later, your health changes can mean the coverage would cost more (if you are rated as a substandard risk) …or you could be denied altogether.

There could be tax implications if you actually cancel coverage and take the cash value. That`s because any cash value in your policy has accumulated on a tax-deferred basis. However, if you terminate your policy and take the cash value (not the same as policy loans, which are generally not taxable), a portion of the cash value could be considered ordinary income and be taxed at your current tax rate.

Before you decide to skip premiums or let your policy lapse, ask yourself these questions:

Why did I purchase this policy? Was it to help protect my family`s future by replacing my income if I died prematurely? Make sure education funds are available for my children? Retire the mortgage or pay off other debts? If these goals still exist, do you want to jeopardize your life insurance?

Have my needs or situation changed? Have I added to my assets by borrowing more money? Has my spouse quit his / her job? Do I need less coverage? More? If so, you should consider adjusting your coverage. Let your agent know. There are a number of viable options you can pursue that will enable you to keep your protection in force without putting your current finances under undue stress.

What are my alternatives? You have a number. For example, if you are paying an annual premium, perhaps you would find it easier to budget for a quarterly or monthly premium. Or you might consider a monthly bank deduction. The point is that you do have options. Exercise it.

No other financial product delivers the value and advantages of life insurance in the same exact way. If you are unsure about being able to pay a premium, be aware that there are many alternatives to help you keep your life insurance coverage intact, even during demanding financial times.

P.V. Subramanyam is a financial domain trainer

Making the case for life insurance

2009-03-28T05:46:00.001-07:00

Clay Dangerfield
Many people realize the need for life insurance but keep putting it off until it is too late.
You may think that life insurance is confusing, expensive and complicated. You may think you don't know enough to make the right decisions for you and your loved ones. But, postponing this decision leaves you and your family exposed financially.

Assumption No. 1: I will always be able to buy life insurance.

Reality No. 1: You could develop a health condition that makes you uninsurable or could make life insurance too costly for you.

Assumption No. 2: I will get life insurance later, when I am older or have a family.

Reality No. 2: Life insurance is needed at all stages of life. Whether married or single, male or female, with children or without, you may have financial obligations that need to be met. In short, if you have a loan and don't have enough to pay the loan off, then it is wise to carry life insurance. Life insurance provides financial security for you and your loved ones.

Assumption No. 3: My family and I are covered by the group insurance at work.

Reality No. 3: To meet the future needs of your family, you need to have at a minimum seven times your annual income. Most group term insurance amounts offered by employers will not meet this need. And, when you don't work for that employer any longer, you usually lose that coverage. If you develop a health condition between jobs than you could become uninsurable.

Assumption No. 4: Life insurance is too expensive

Reality No. 4: It is too expensive to not have life insurance. Plus, life insurance rates have become more competitive as people are living longer.

Assumption No. 5: My husband has life insurance so I don't need it.

Reality No. 5: Women often live longer than men. There are countless stories of men who had to shoulder the family financial burden along with the emotional burden after their wife passed away.

Assumption No. 6: My family can cover funeral and burial expenses.

Reality No. 6: Burying a spouse or loved one is the most stressful time in a family's life. Having life insurance reduces financial concerns for the family.

Assumption No. 7: I am a stay-at-home mom or dad so I don't need life insurance.

Reality No. 7: Just because you don't bring home an income doesn't mean you should go without life insurance. In fact, if you add up what a stay-at-home mom or dad does, they are worth in dollar figures more than you think. Try telling your boss that you will have to arrive at work late and leave early so that you can get your children to school.

Take the time now to review your needs and provide adequately for yourself and your family.

For more information or to review your current plan, seek an agent who you know and trust.

Clay Dangerfield is married with three children, an Eagle Scout, and a business owner.

Investing in life insurance!

2009-02-22T12:09:00.000-08:00

Despite the highly attractive fixed deposit rates offered till recently or the prices of gold and real estate, life insurance continues to be the preferred option for investment among Indians.

According to the annual Nielsen Life 2008 survey, life insurance has the highest penetration level, followed by bank FDs, gold and property. Clearly, the current turmoil has made it tough for equity markets to compete.

Life insurance also tops the list of future investments, with 30% respondents agreeing to consider it. “In the wake of the global financial meltdown, most investors are looking at options which help them safeguard capital. Life insurance is seen as one such avenue,” says Kalyan Karmakar, associate director, consumer research, Nielsen.

As per the survey, the key triggers for buying life insurance are family protection in case of untimely death, retirement corpus and securing a child's future. Interestingly, tax exemption as a trigger to purchase insurance has dropped significantly, compared with 2004.

Why Life Insurance?

2009-02-22T12:07:00.000-08:00

They say life has four cycles – birth, childhood, youth and old age. This cycle has been same for ages and will remain the same, but something has changed in the past years and will keep on changing with the years to come – lifestyle.

We as a modern society have changed a lot. Technology has taken over us. Gadgets and machines make the most of our lives resulting in sedentary lifestyles. More and more working hours and less time spent in maintaining a healthy lifestyle has lead to increase in a number of critical diseases like heart attack and cancer. Families today are more insecure than they were in yesteryears. In all, life has become complicated.

We cannot avoid the stress we take on everyday basis, but certainly we can do something to ensure that we lead a secured and happy life in case of any mishappening - like taking a Life Insurance Policy.

A life Insurance Policy is one which gives you a certain amount of money (sum assured) along with some benefits, in case of any mishappening like accidents and diseases. It covers you and your family and makes them strong enough to see the bad times with a smiling face. It sees to it that you are OKAY when things around you are NOT OKAY. To see it the other way round, a life insurance policy is not just an investment, it’s an asset which you can cash when the time comes.

Life Insurance policy can be taken in four stages of life. The first one when you are still unmarried; are working and have no direct responsibilities to take care of. The second one is when you get married and have a wife to take care of. The third one, one you have one or two more added to your family. The last one is when you have earned quite a sum and now looks for retirement, say after 30 – 35 years.

Generally, life insurance plans include wealth creation plans, mortgage protection plans, education plans, retirement solutions and general health insurance plans. Choose appropriate life insurance plan as per your age, requirement and income to secure your and your family’s future. Buy a insurance plan which fits your bill, keeping in view not only the present needs but also the future needs. Get yourself insured – today…

ADVICE: Should I Buy Term or Whole Life Insurance?

2009-02-22T11:53:00.000-08:00

Ah, the almost age old question, term versus whole life. What is the right thing to do? Forgive me for being more than just a little opinionated on this subject, but personally I think that is a right for anyone that is on the right side of an argument.

Whole life insurance, a cash value building permanent policy is one of the earliest versions of life insurance. Whole life insurance is sold as a savings plan with life insurance, a retirement plan with life insurance, a loan source with life insurance and I'm sure by some, a fountain of youth with life insurance. Whole life insurance is generally sold by life insurance agents that believe that whole life is not just the best way to buy life insurance, but the only way to buy life insurance.

What they don't tell you, primarily because it would end their career, is that whole life insurance is a horrible savings plan, a worse retirement plan, a silly place to borrow money from and unless it is in fact a fountain of youth, it is grossly overpriced. The cash value that does build in a whole policy doesn't magically appear but rather dribbles in as the leftovers from your huge premium payments after the internal and company charges. You get the honor of earning a little bit of interest on the little bit that is left. A good example is a policy my Dad had with New York Life. His parents started it in 1935. It had a $1000 death benefit. Since 1935 the premium payments paid have totaled $1387 and the cash value in the policy is now $723. Now there's some bang for your buck!

Term insurance on the other hand is essentially pure insurance. There is no cash value. No bells. No whistles. Just a guaranteed level premium for a certain period of time (the term) and a guaranteed level death benefit if you die while the policy is in force. Depending on your age you can get guaranteed terms ranging from 10 years up to 30 years.

Term insurance is a small fraction of the price of whole life insurance and really, from a practical standpoint, more appropriate. The truth is that most, and I am thinking that is 95% or more, of life insurance needs are not permanent needs. We carry life insurance because we have a spouse and children who are dependent on our income. Children, theoretically, reach a point where they are no longer dependent on us. That's a need that goes away. Term insurance! Replacing an income for our spouse is a need that should resolve itself at retirement or sooner if our assets outgrow the need for income replacement. That's a need that goes away. Term insurance.

Although I'm surprised it was never offered along with all the other magic mortgages of previous years, there are no life time mortgages, so life insurance for mortgage protection is a need that goes away. Term insurance. Business partners that carry life insurance as a buy/sell agreement aren't likely to still be business partners to age 100 or beyond. That coupled with the fact that most businesses and the associated value to a deceased partner's family change over time makes the need or at least the size of the need a temporary situation. That's a need that changes or goes away. Term insurance.

Bottom line. When there is a product that is available (term insurance) that meets 95% or more of all life insurance needs and you have people selling whole life insurance and they claim that it is the best thing for all needs, a lot of people are left wondering why. It's called compensation. An agent makes a lot more money selling whole life than term. Yes, I'm saying that whole life is a product that is primarily sold for the benefit of the agent.

Cutting costs: Saving on insurance

2009-01-27T06:24:00.000-08:00

By TEDDYE SNELL

These days, it seems everyone is looking for ways to save money.

Some may cut out entertainment, others may reduce the use of their vehicles.

Others still look for more innovative ways to save money. One way could be to review insurance policies - homeowner or renter, vehicle and life insurance - and shop around for better rates.

According to Chemain Evans, writer for SimpleJoe.com, and expense-tracking Website, by not shopping around, many people end up overpaying for insurance by as much as hundreds of dollars.

"Most of us have a hard time getting excited about shopping for different insurance, but a little time invested can go a long way in saving you money," said Evans. "Of course, the cost of premiums isn't the be-all-end-all; quality of service, quick response to claims, and financial soundness are all important factors to consider."

Shopping for insurance can be time-consuming, but in the end can save a substantial sum. Evans recommends asking friends, checking the Yellow Pages, or calling the state insurance department for recommendations. Insurance information for Oklahoma can be accessed via the Internet at www.naic.org/state_contacts/sid_websites.htm.

"This will give you an idea of price ranges and tell you which companies have the lowest prices," said Evans. "But don't consider price alone. The insurer you select should offer a fair price and deliver the quality of service you would expect if you needed assistance in filing a claim. So talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs. Check the financial ratings of the companies with AM Best or Standard and Poors."

It's also important to compare other insurers against current policies. When comparing companies, have your current policy handing when calling so you can compare apples to apples. If you do find a better policy, make certain it's in effect before dropping the old one.

Bronwyn Duncan had her policies with Progressive - a company that is well-known for it TV ad campaigns featuring lower prices. However, when she shopped around, she found by insuring her home and car with a local agency, she would save hundreds annually.

"With my insurer, if you have both your home - or renter's - insurance and your car insurance listed, if you go three years without a claim, you get 25 percent of your premium back in a lump sum," said Duncan. "I dropped Progressive and am saving over $600 a year in premiums."

Duncan has her insurance with John Rozell, a local agent for American National, and he confirmed the premium bonus.

"We have what's call a cash-back claim fund and you get 25 percent of your annual premiums back if you have no claims in three years," he said. "And that's not handled by a rebate on premiums, it's handed to you in a check. Our customers love it, and I'm really excited, because at the end of this year, I'll qualify for my check from the same fund."

Evans recommends using the same insurer for multiple policies for the same reason.

"Whenever possible, buy your home and auto policies from the same insurer," he said. "Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying different coverages from different companies."

Longevity is also key when saving on premiums. If you've kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. This is why it's important to compare rates against your current policy.

Get more life insurance and avoid buffets

2009-01-27T06:17:00.000-08:00

January 21, 2009
Many people have been accused of bragging about their health problems and their grandchildren in that order. I love to talk about my grandgirls, Gracie and Marie. My medical record is my own personal business. Here is a story that I just have to tell:

While eating breakfast in a hotel dining room in Naples, Fla., I heard a man who looked half my age announce that his cholesterol was 350. His plate was full with at least three servings of scrambled eggs and a mound of bacon. He had a side dish loaded with sausage gravy. Did I mention that it was a free buffet?

The young man was loud enough to be heard five tables away. He laughed his way through the eggs and bacon while proclaiming that he refuses to take cholesterol medications. His grade school-age children and 30-something wife sat the table across from him while he discussed the condition of his arteries with a complete stranger.

I wanted to find a stale, dry, bran muffin and shove it in his mouth. His wife made a big deal about the children eating a non-sugar cereal and going without maple syrup on their waffles because "it wasn't good for them."

FYI -- a person with a cholesterol reading over 200 is considered a potential cardiac high risk. This blood level reading is not the complete story. A trained professional requires more specific readings to properly analyze the danger of heart-related problems.

The loud man was announcing that he plans to use diet and exercise to control his cholesterol. Since this incident occurred at the beginning of January, he resolved to visit the gym more often and lose about 40 pounds. Good for him.

I listened to his bravado and watched his lovely wife cringe at his words. I asked my own dear husband, "What should I do?" The guy was being a jerk and he was letting the entire breakfast crowd get a glimpse of an obnoxious personality.

Here are a few things I wanted to say: "Get a life and stop gloating over an unhealthy lab value;" "Buy yourself more life insurance -- your wife will need it;" "Go outside and start exercising now or I will chase you down with broccoli spears and bananas;" "I'm aiming for your heart with this oatmeal bran cereal that I have loaded in my straw, ready to blow your way;" and "Have you hugged your dietitian today?"

Have you ever met a person like that? They are so ignorant of healthy facts that they embarrass everyone around them. Against my better judgment I left the dining room in silence.

Diet and exercise can help decrease an elevated cholesterol level. The healthy combination of active movement and a healthy weight, all while eating a low-fat meal plan, will reduce the risk of heart disease.

If you know someone who talks a lot about changing health habits but continues to abuse their body in spite of elevated lab values, I know that life is difficult. Get them to eat more fiber; they may have problems with constipation. Also, think about increasing their life insurance policy and avoid breakfast buffets.

How much life insurance is enough?

2009-01-27T06:05:00.001-08:00

By Harry Gross
Dear Harry: We are both 30, and we have a combined income of $90,000. We own our own home with a $200,000 mortgage. Even today, it's worth more than the $250,000 we paid for it. We had a long discussion with a financial planner last week who suggested that we buy enough term insurance to cover the mortgage and a year's salary. He suggested increases when we have children. He also made some very reasonable recommendations regarding our 401(k) plans that we have already adopted. What do you think of the insurance idea? Neither of our employers has life insurance for employees as part of the company-benefits package.

What Harry says: It's a rare occasion when I hear of life-insurance proposals that are less than I think people need, but that's the case here. My suggestion is that you have "first to die" insurance for $500,000. This will give the survivor enough to get a fresh start. I do not like life insurance that is specified for a particular purpose - such as paying off a mortgage. There may be more pressing needs when the death occurs. There is another insurance need that you did not mention: disability-income insurance. At your ages, it is far more likely that one of you will be totally disabled for at least 90 days than that one of you will die. Your employers may very well have taken care of this for you. If not, be sure to get covered for at least two years for at least 60 percent of your salaries. As a matter of making sure you are dealing with secure companies, make certain that the companies you choose are qualified to write the policies you choose on New York residents, as well as on Pennsylvania residents. *

How Much Life Insurance Do You Need?

2009-01-27T05:52:00.000-08:00

By Motley Fool Staff
January 23, 2009

To put it simply, life insurance protects those who depend on your paycheck. If you die prematurely, life insurance provides your dependents with ongoing income to replace yours, until (or unless) they can live comfortably without it. It can also provide a timely emergency fund for medical, legal, and funeral costs should family savings not be adequate to cover them. (After all, that golf-inspired Fairway to Heaven casket ain't cheap.)

Life insurance is not a good way to strike it rich for "pennies on the dollar." It's not the surest way to leave a life of luxury for future generations of your clan. In fact, even though some life insurance policies are combined with a savings plan (in "cash value" policies), the savings plan is essentially independent. The life insurance component of these cash value policies retains its fundamental purpose: income protection for your dependents after you join that great hokey-pokey in the sky.

So, should I get some?
Given this simple definition of life insurance, it should be easy to decide whether you need it. Start by imagining yourself gone tomorrow. (We know, it's morbid, but bear with us.) What would the impact be? And could we have your CDs?

Could your family afford the funeral expenses? Have you left a complicated will, or perhaps no will at all? More importantly, what about your spouse, children, and other dependents? Are they counting on your paycheck in the years ahead to cover basic needs and/or future savings goals? If you are the primary caregiver to dependents, what will it cost to replace you with a paid provider, and for how long?

If you are single, or one half of a two-income, no-dependents household, you probably won't need much life insurance, if any. With a little planning, you can establish a low-risk savings fund to cover funeral costs, and invest the money you would have paid for insurance premiums. You may also want to obtain coverage that will pay the estate taxes on a huge estate so heirs don't have to liquidate assets at unfavorable prices to pay them. If you are right now (or think you will be) a successful investor, then you may be a prime candidate for such life insurance. These issues can get complicated, and may be best left to a discussion with an estate planning attorney.

On the other end of the spectrum, if you are the sole breadwinner for a large family with little savings, you are likely to need substantial life insurance. After basic food and housing is covered, life insurance premiums are likely to be next in line in terms of priority, perhaps even ahead of auto loan and credit card payments, and certainly ahead of retirement savings (not to mention satin Elvis bed sheets and Beanie Undies).

Life insurance for those with health problems

2009-01-11T18:28:00.000-08:00

When applying for life insurance, many companies will require you to take a physical exam and ask you to fill out a questionnaire regarding your lifestyle. Ill health and habits such as smoking often result in higher insurance premiums. If an insurance company feels that you are too great a risk, they may deny you coverage altogether. However, there are many companies who offer policies specifically developed for people with poor health. While the cost for coverage may be higher than many average premiums, it may be worthwhile if you must provide for dependents or funeral costs. Remember, it is always important to be truthful when filling out an insurance application. If you fail to notify your insurance company about a pre-existing condition, they may cancel your policy. For more information, contact an insurance company or agent.

©2006 Crossroads Mobile. All rights reserved.

Top Picks in Life Insurance

2009-01-11T18:15:00.000-08:00

As our focus this week is on Insurance, our top picks from our roundtable discussion on Life Insurance. This sector was hard hit by the financial turbulence of 2008, but the analyst we spoke to did have a few picks in this space:

* “Aflac (AFL) is our top pick. It’s a very solid, protection-focused company. You get a very reliable EPS stream that is not market sensitive, and from a credit perspective they do relatively well. I think I said before that no insurance company is perfect but their more risky exposure is concentrated exposure to bank and financial debt from Europe and Japan.”

* “My top pick is Assurant (AIZ). It’s a specialty insurance company as well. It’s got four or five niche oriented businesses, and no equity sensitivity in their earnings stream either. They’ve benefited in one of their businesses from the housing crisis. It doesn’t seem like anybody in the insurance business should benefit from a crisis, but their specialty property business has tripled in size in about three years owing
to higher mortgage delinquencies and default rates.”

* “Reinsurance Group of America (RGA). It’s a pure play life reinsurance company. It’s not quite as cheap as it was maybe a month or two ago when they raised some equity, but their equity raise was much more about a proactive opportunity to take advantage of some new business opportunities here as a bunch of the primary life insurers are looking for opportunities and ways to relieve capital strain, unlock capital.”

6 Tips to Save on Insurance Costs

2009-01-11T18:12:00.000-08:00

More than other age groups, people over the age of 65 are reluctant to consider changes in their insurance needs, according to a national survey of homeowners by Trusted Choice and the Independent Insurance Agents & Brokers of America.

Overall, nearly 24 percent of Americans have made changes to their auto, home, life, or health insurance coverage in the past year in order to reduce costs; 18 percent have considered such changes in the past few months; and 33 percent would consider insurance cutbacks in 2009. The overwhelming reason for the reductions is the sorry state of the economy.

Compared with those overall responses, however, older consumers were less likely across the board to make reductions. Only 9 percent of respondents ages 65 and older had made insurance reductions in the past year; 12 percent had considered them recently; and only 10 percent said they would consider them in 2009.

According to the 2007 survey of consumer household expenditures by the U.S. Labor Department, average after-tax income of households led by people ages 65 and higher was about $39,180. Of this amount, health insurance spending averaged $2,770, car insurance cost $975, and $329 was spent on life insurance and other types of personal insurance.

There was no breakout for home insurance, but even without that expense, average insurance payments were about $4,700, or more than 10 percent of after-tax income. By comparison, annual household spending on food—including food at home and meals away from home—was only $4,515.

So, while older consumers might be reluctant to reduce their spending on insurance, they should think about whether some wise trims can be made without sacrificing their key insurance safeguards. Here are tips for where to look for auto, home, life, and health insurance savings:

1) Many seniors have older vehicles and do not need expensive low-dollar deductibles for collision and comprehensive coverage. Consider selecting higher deductibles. However, do not scrimp on liability protection or uninsured motorist coverage. More people are dropping their car insurance because of the tough economy, so you need to make sure you're covered should you be in an accident with an uninsured driver.

2) Some insurers have responded to last summer's $4 gasoline by expanding their reduced-driving discounts to better serve people who have cut back on their driving. If you do not drive many miles, you may qualify.

3) When you rent a car, odds are you do not need rental-car insurance and can rely on your existing car insurance policy to protect you. You will, however, be on the hook for the deductible payment should you be in an accident that is your fault.

4) Inflation protection is a must-keep feature of home insurance, but like millions of seniors who have downsized, you may have reduced your possessions. Review whether you still need special riders on jewelry, furs, computers, and other items.

5) Life insurance is designed to help loved ones, providing them money to replace the income lost by your death and helping to conserve assets in your estate should you have enough wealth to trigger estate taxes. As we age, the protective objectives of life insurance diminish and you may not need as large a policy.

6) Substitute generics for brand-name drugs. The U.S. Food and Drug Administration has a tool to identify generic equivalents of brand-name prescription drugs. Use it and see if you can save money

Life Insurance - Do I Need It?

2009-01-11T18:10:00.000-08:00

“I'm a single twenty-something with two properties both of which are mortgaged. One is an interest-only mortgage, the other is a repayment mortgage. I have life insurance policies in place over both properties along with a benefit in work of four times my annual salary should something happen to me. I have no dependants and feel that I am perhaps a little over-insured.

My works policy would cover the cost of both of my properties (or certainly a large part of it even in the current market) and I'm wondering whether I actually need the two other life assurance policies. I have accident, illness and redundancy insurance in place as well.

Is anyone able to help?”

Many people in the UK don’t have nearly enough life insurance to cover their protection needs. That said I think it’s equally important to talk about the possibility of having too much insurance and therefore, paying out for a policy you don’t necessarily need.
When do you need life insurance?

Generally-speaking if you have people in your life who depend on you financially -- whether it’s your partner, your children or someone else -- then it’s a good idea to take out enough life cover to provide for your family’s financial well-being should the worst happen to you. (Take a look at A Fool’s Guide To Life Insurance to figure out how much you need and Eleven Reasons Why You Need More Life Cover for a rundown of all the key life stages when your protection needs might increase.)

But Kinios doesn’t have any financial dependants right now, so this is not a consideration.

Still, before any policies are cancelled, Kinios should think very carefully. There may not necessarily be an obvious need for life cover right now, but that doesn’t mean a requirement for protection won’t arise in the future.

As Fool poster JoeEasedale says:

“It does look as though you have more life insurance than you may need at present. However, a thought for your consideration before you give some up. You will never be able to get life cover as cheap again, in that it costs more, the older we get. Therefore if you think that you may have offspring or a significant other to provide for in the future, keeping on what you have may take on a whole new value.”

(Read JoeEasedale’s full answer and others here.)

I agree with JoeEasedale’s comments. As Kinios is under 30 -- and I assume in good health -- the premiums for these life insurance policies are likely to be relatively cheap. After all younger people are less likely to claim than older people, so the premiums paid will normally be lower, all things being equal.

The Fool’s life insurance search engine shows that someone aged 25, for instance, could buy £100,000 of life cover for less than £6 a month. However, someone buying a life policy aged 40 might pay more than double for the same amount of cover*.

If the premiums are affordable then there’s certainly an argument for keeping the cover in place should Kinios’s need for protection increase in the future.

Kinios should also bear in mind that, while death in service of four times salary provided by the employer is a valuable benefit, the cover it offers will only last as long as Kinios works at the same company. It is possible Kinios may move to a new employer in the future where death in service is no longer part of the remuneration package. So, for this reason, this type of protection should not be relied upon too heavily.

Kinios may also want to speak to an independent financial advisor before cancelling the policy, to get professional advice on these individual circumstances.
Accident, Sickness and Unemployment

Kinios also mentions an accident, sickness and unemployment (ASU) policy. ASU comes under the infamous Payment Protection Insurance (PPI) banner. Regular Fool readers will know PPI has been much-criticized for the poor value it offers policyholders and the difficulty in making successful claims. If you’re not familiar with PPI mis-selling, read this article written by my Foolish friend, Neil Faulkner.

I would suggest Kinios’s main priority is to look at how much the PPI policy costs. Although Kinios doesn’t specifically say, I would guess the PPI plan has been bought alongside the two mortgage loans to cover the monthly repayments if they become unaffordable as a result of an accident, sickness or unemployment. If the policy was sold by the mortgage lender(s) it may well be expensive.

PPI sold by independent insurers -- rather than mortgage lenders -- can often provide a better value deal and this is something Kinios should look into more closely.

Kinios may not have dependants yet but, as a single person, I think it’s crucial some income protection remains in place. Kinios could consider an Income Protection Insurance (IPI) policy or Critical Illness Cover (CIC) as a more comprehensive alternative to the PPI plan. My recent article Why It’s Vital To Protect Your Income outlines the main differences between the two.

That said neither IPI nor CI provide insurance in the event of redundancy, so again, I think it’s a good idea for Kinios to speak to a good independent financial adviser who will make sure all protection needs are adequately covered.

How to choose the right life assurance cover

2009-01-11T18:07:00.000-08:00

While majority of people usually ponder on taking a life insurance cover, there is always an outstanding question which mutely follows unanswered and that is “How much is the value of my life?”
Even though this question has been a head-scratch to many, only few have been candid on discussing it with others, ending up picking an arbitrary value as life insurance cover to replace the income they expect to make between now and retirement. Some have even gone further to buy only enough life insurance to cover your present debts.
However, though you probably can do all of those, calculating a sufficient life insurance cover would require you to do an inventory of all of your finances, and forecast on your commitment to enable your beneficiaries to maintain their lifestyles without you.
When drawing up your financial plan and choosing life assurance products with assistance from your financial adviser, you should work out how much life cover you need.
Usually it is imperative you do this so that your dependants are not left with an income deficit should you die.
The primary purpose of life insurance is to provide risk cover that offers financial protection to a policyholder’s dependants in the event of the policyholder’s death.
One needs to have enough life insurance so that his or her family can continue with their current lifestyle even if the breadwinner passes away.
Like every financial decision, life insurance shouldn’t be arbitrary in that if you under-insure, you risk causing financial hardship to your dependants; if you over-insure, you waste money paying for something you don’t need.
The amount of insurance you need depends on your personal circumstances, which comprises of many variables. Before any commitment, you should assess your life assurance needs with an emphasis of having sufficient life assurance for your family to maintain their standard of living when you die, but not about making your family rich.
Because life assurance comes at a cost, and should be in place to protect and provide for your dependants, if they have grown up and become financially independent, you should reassess your life assurance requirements.
Therefore, the value of a sufficient cover can be almost any number and will depend on personal circumstances, the needs of your family and dependants, and quite simply, how much you can afford in monthly premiums.
Though no universal method has been approved for calculation, pundits say the best way is through a needs-based analysis, which can be broken down into a simple formula: add your short and long-term debts and your family maintenance expenses and subtract your resources from your total expenses to arrive at the right amount of cover.

Short-term need
In this case, short-term needs would include final expenses such as medical, hospital, and funeral expenses, executor fees, probate court costs (if you do not have a will), and any outstanding taxes that would need to be paid if you died with outstanding debts.
This is then followed by calculation of family maintenance expenses including such necessities as childcare, food, clothing, utility bills, entertainment, travel, and transportation. This is done based on a year’s worth of expenses multiplied by the number of years you want to provide this income.
To this, add your long-term debts, which include your mortgage and college tuition. Calculating an education fund would prove a daunting task because you have no idea where your children will be going to college.
However, the best method is to use the present average college cost and the number of years remaining for your children to join college. This should factor in the increased costs of education each year.
Now you’ve a tally of income needs. It would be prudent to take an inventory of resources you have to meet them.
To do this, add all available savings, stocks, bonds, mutual funds, existing life insurance (such as group life through your employer), and social security.
Also add your present salary, and assume five per cent compounded interest each year if you expect salary increases over time. It’s vital to count only liquid assets (those that could be quickly converted to cash).
You shouldn’t count items such as your home or automobile, because selling them for cash when you’re gone would mean changing your family’s lifestyle. To this, add short and long-term debts and family maintenance expenses and subtract resources from total expenses.
The figure you get should represent the sum assured of the life insurance. It is at this time that the affordability of the quoted premium will be emphasised by the prospect
But while doing the math, consider that the future value of money is essential, especially with the eye on the inflationary pressures or what the death benefit will be if the money is invested at a given interest rate.
Experts say an analysis should be done at least once every three years or when there is a major life change.
For example, if you have a new baby, you have to recalculate college education needs and child-care costs. If you own a home, a mortgage is likely your biggest financial burden. Because your mortgage balance decreases with each payment, it’s important to include revised figures in your calculations.

Temporary cover
With this calculation of the human life value, you can assess whether your group life cover offered by the employer is adequate and if insufficient to consider an addition to bridge the gap.
But as the routine goes, a group life cover resembles an apron that is worn only while on duty and is usually replaced with a decent etiquette when on a serious travel outside the office.
This implies that a group life cover acts as a temporary cover when in employment. But with an additional cover, you would be able to enjoy benefits even while outside the employer’s service.

Beyond Simple Life Insurance

2008-12-27T21:36:00.000-08:00

Anna Vander Broek, 12.16.08, 09:35 AM EST

Life insurance gives your family security if you die, but it can also help you while you're still alive.

You're young and invincible. The phrase "life insurance" probably means even less to you than the phrase "saving for retirement."

Even if you're not ready to buy life insurance for yourself (or are happy with the minimal coverage you may be already getting through your employer), it's still good to understand what life insurance is all about. It might be something you're interested in.

First, why would you want life insurance? If you have people who depend on you, such as a spouse or children, life insurance is used as a security measure to make sure they are taken care of if anything were to happen to you. If you're single and without debt, you don't necessarily need life insurance as a protective measure now.
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Life insurance can also be used as an investment opportunity.

It is complicated, but there are basically two different types; term and permanent. Permanent can be broken down into whole, universal and variable insurance.

Term life insurance is pretty much like any other form of insurance. You get exactly what you pay for. Term is probably the type of coverage you're getting from your employer. Since term life insurance is temporary, it's usually inexpensive. If you do have a family, term insurance is important and many will pay for it until their children are out of college (when presumably they can support themselves).

Permanent insurance combines insurance with an investment or savings option. The premium of permanent life insurance is going to be higher than that of term. The additional money is then invested.

How much life insurance do we need?

2008-12-27T21:31:00.000-08:00

"How much life insurance do we need? I make about $100K; my husbank $50K; we have a daughter who is about 1 year old. We have no debt other than our mortgage which is $360K. I have a total of $985K term insurance and he has $600K term insurance but I think I may need more because I make more. Please advise."

Determining the right amount of life insurance depends on a number of factors. If you had no children, or your husband earned enough to support your current lifestyle for himself and your child, there might not be a need for insurance. But in your case the loss of your income would have a major impact on your family. Financial planners usually recommend you have enough life insurance to replace your income until your youngest child is 21. After that your widowed spouse will have only himself to provide for and will have had time to make a career change, if necessary, so that he is ready to do so.

You may qualify for a Social Security Survivor Benefit to replace some of that income. (See the Social Security Administration website to determine the number of quarters of work required for your current age.) Assuming you are age 35 and qualify, your family would receive around $1,760 per month in benefits until your child is 16. You also have not indicated if you have any savings which your spouse could use to supplement his income.

Not all of your income needs replacing, as some is lost to taxes. However you should consider whether you need to cover the non-monetary benefits you may get, such as health insurance and dental insurance. Also decide whether you want insurance to pay off your mortgage or provide for a college education.

Assuming you want to replace 75 percent of your income ($75,000). If you receive Social Security Survivor Benefits (21,000) you will need to replace $54,000 per year for 15 years, and $75,000 for 5 years (between your child's age 17 and 21, when no SSDB is received). With a 4 percent rate of return - about the average inflation rate - you would need a lump sum of $1.5million. Add in your mortgage and a college fund and the amount jumps up to about $1.9million.

This is just a rough estimate and you should consult a financial planner or insurance agent to make a more precise determination for both you and your husband. It is most important not to cancel any current policies before you have put new policies in place and remember that the younger and healthier you are, the less life insurance will cost.

Insurance Sneak Peek 2009

2008-12-27T21:29:00.000-08:00

Brian Zajac, 12.22.08, 06:00 PM EST
After a difficult year, insurers are hoping for a rebound. Bullish and bearish analysts offer their outlook.

It is easy, in hindsight, to see that life insurers were out of favor in 2008. Is this a buying opportunity, or will these stocks continue the downward trend? Liquidity concerns have dampened investment income. Some insurers, faced with investment losses, are trying to raise capital through the Troubled Assets Relief Program. San Francisco analytical research firm StarMine steered us to two highly ranked industry analysts, one a bull, the other a bear, to comment on the outlook for the industry.

StarMine cites Colin Devine, Managing Director for Citigroup Investment Research, as one of the most bullish analysts tracking insurance stocks.

The Watch List

Devine's stock selections have all seen steep declines in the market in 2008, but they fit in with his buying opportunity stance. All trade at less than seven times the next 12-month earnings estimates, according to Thomson IBES consensus figures. He is somewhat cautious about the fundamentals of Lincoln National (nyse: LNC - news - people ) but considers it to be a takeover target.

Picks

Ameriprise Financial (nyse: AMP - news - people )
Manulife Financial (nyse: MFC - news - people )
Lincoln National

Forbes Industry: Insurance
StarMine Industry: Insurance
Analyst Name: Andrew Kligerman
Company: UBS
Outlook: Bearish

UBS Managing Director & Senior Research Analyst Andrew Kligerman is among the most bearish of analysts tracking the insurance industry, according to StarMine.

The Big Trend

It is going to be a binary year, says Kligerman. He explains, "There are going to be big winners and big losers." He adds that we still have not seen the worst out of commercial mortgage-backed securities. The insurers that are most exposed to these investments will feel the pain as investment losses erode capital. Portfolio quality is critical to get insurers through these tough times. Kligerman's stock picks and pans follow this view.

The Misplaced Assumption

Not all life insurers are created equal. That is, they do not manage risk equally. Yet the industry tends to move in unison in the stock market. Life insurers have been hit hard in the market in 2008. Closer detail to each firm's investment portfolio is needed.

The Bold Prediction

From a merger and acquisition standpoint, MetLife (nyse: MET - news - people ) and Prudential (nyse: PRU - news - people ) will have opportunities to take advantage of those insurers in search of capital. Kligerman likes both companies because of their sound capital levels, liquidity and they have diverse and defensive investment portfolios.

The Watch List

Principal Financial Group (nyse: PFG - news - people ) is one stock, in particular, that Kligerman thinks investors should avoid. He says that Principal has some pluses, such as top-notch global asset management and pension businesses, with talented management. His concern is that the company has a higher risk in its investment portfolio. He points out that Principal's commercial mortgage-backed securities and commercial mortgage loan-related investments represent 150% of equity, highest of its peer group, and its corporate bonds are vulnerable to realized losses.

Drinkers face life insurance hike

2008-12-27T21:19:00.000-08:00

Middle class drinkers who consume more than their recommended weekly intake of alcohol face paying higher life insurance premiums.

Very heavy drinkers could be refused life insurance cover completely Photo: IAN JONES

New rules mean even moderate drinkers who consume a little and often - by drinking a glass or two of wine in the evening or with food - could be hit with higher costs.

The changes are likely to hit middle-aged, middle class consumers, particularly women, experts said.

Official guidelines say women should drink no more than 14 units of alcohol a week, and men 21 units – with one unit equivalent to half a pint of beer, a shot of whisky or a small glass of wine.

But the reality shows that many drink far more, with 10 million adults – 20 per cent of men and 30 per cent of women - drinking at a level which is "hazardous" to their health.

Insurers say they are reacting to increases in health-related problems such as cirrhosis of the liver, heart problems and certain cancers.

A woman who drinks 21 units a week, not far above the Government's guidelines, could end up paying an extra £50 a year.

A man drinking 35 units, equivalent to two and a half pints of lager a night, could pay extra premiums of up to £100 a year.

And a man who admitted consuming 50 units a week could see his premiums double from £150 to £300 because his drinking would be categorised as "harmful".

Very heavy drinkers could be refused cover completely.

Most life insurance firms are now checking doctors' notes for signs of alcohol use in order to make sure claimants are not lying about their alcohol use.

Several companies admit refusing to pay out claims if they have evidence that they were drink-related.

Companies including the AA, Norwich Union, Legal and General and Direct Line said they will increase premiums for drinkers.

A spokesman for the AA said: "Heavy drinkers are more likely to suffer from liver disease, high blood pressure and strokes. They are also more likely to have an accident, possibly fall into the road, and they are more likely to be involved in a fight."

Malcolm Tarling of the Association of British Insurers said: "Insurance companies are simply making a normal judgment of risk.'"

Choose a policy that suits your needs

2008-12-27T21:01:00.000-08:00

28 Dec 2008, 0412 hrs IST, Ashish Gupta, ET Bureau
While choosing an insurance policy, the first step is choosing the insurance company. The factors that you need to look at are the promoters,
customer service, performance track record and the product portfolio. The next step is to understand your own financial needs, taking into account the life stage, risk profile, dependants, disposable income and liabilities. This will help you identify your protection and savings needs.

The amount of insurance required is a factor of your future earning capacity, your assets, and your liabilities. Insurance is not static and needs to be reviewed at different stages in life, depending on the changes in those factors. The amount of insurance required changes with factors like income of the family, assets and liabilities of the family, size of the family and the number of dependants in the family, the stage of life of the dependants - birth, education, marriage, and so on.

You need to think through all these to arrive at the suitable option and amount of life insurance cover. You should review your insurance needs at least once in every two years to take into consideration any changes in earning capacity, profile of dependents, cost of living, liabilities like housing loan etc to ensure that the life insurance cover is adequate.

Life insurance policies are long-term contracts. As such, it is important that you make the right choice of plan to meet your requirements . Unit-linked policies have several key advantages such as flexibility, transparency , simplicity, liquidity and efficiency in fund management . These policies are adaptable to the changing needs of the customers over their lifetime.

Participatory policies are less flexible and adaptable. Customers opting for these policies need to be certain of their milestone requirements and will have to time the purchase of their policy accordingly. Besides timing, they may have to buy multiple policies to meet different needs. These policies are restrictive in that they do not provide the option to rebalance the proportion of life insurance and savings within the policy.

Unit-linked plans are more efficient in their charge structure. The high level of disclosures required in these plans is an automatic check against an inefficient charge structure. At the same time, the level of awareness among consumers about the charge structures in life insurance plans is not very high.

The protection should provide for all the liabilities and future earning potential of the person insured. This will, at a minimum, ensure that the lifestyle of the dependants is not significantly altered if anything unfortunate were to happen to the person.

The savings portion should be determined by your financial goals. Life insurance as an investment instrument enjoys several distinct advantages. There is very little or no risk of capital loss, the long-term nature of the contracts ensures that investment horizons are long-term , thus leading to efficient funds management.

The regular nature of saving and the benefits of compounding ensure a substantial corpus over a period of time. The differentiating factors are flexibility, transparency and the customisation possibilities that are available in the product. These aspects are crucial to ensure that the product adapts to the changing financial needs of the customer. The structure of charges is specific to each insurer, which would derive that a seemingly high charge is not necessarily more inefficient than a charge structure that looks low. This is primarily because life insurance contracts are long-term contracts where charges can get levelled out over a period of time.