There are basically two types of life insurance policy available known as ‘whole life’ and ‘term’. Whole life policies are there to provide benefits to the owners throughout their entire lives, whereas ‘term’ policies are taken out to provide coverage for a set period of years.

Life insurance needs should be re-assessed at regular intervals to ensure the policy or policies taken out are still adequate for their purpose. Policies taken out 10 -15 years ago may have outlived their use, lapsed, or premiums may have gone up due to underperformance in a volatile market place. Examples of underperformers include many of the ‘permanent’ life policies available over recent years –‘whole life’, ‘universal’ and ‘variable’ life policies which are linked to interest rates, which can go up as well as down.

No ‘One size fits all’ Life Insurance Policy

There is no ‘one size fits all’ insurance policy out there and it may be a case of combining different types of life coverage in order to ensure future financial needs will be met. Many people decide to re-assess their requirements for life insurance after experiencing a big life change which affects their finances – such as having a baby, or taking out a mortgage. The implication of leaving behind dependents or partners who may be left with big financial commitments motivates many to plan a financial future which includes life cover.

As well as meeting the needs of their beneficiaries in their ongoing lives, another common reason to take out coverage could be simply to cover short term funeral costs (costs which are rising every year).

How to calculate life insurance requirements

An appraisal is needed as to how any current policies are performing, and an honest calculation of their projected value going forward is needed. You may find that there are better products out there in the marketplace to suit you. Restructuring may seem like a hassle, but lower administrative fees and the fact that insurance companies have re-designed their cost structures mean that changing policies is not the financial headache it used to be.

Alternatively – you may discover through the process of re-evaluation that your life coverage is just fine, thank you – but taking stock of finances in an uncertain economic climate has to be a good thing.

Source: Stephen Smith, Delmarvanow.com

 photo credit: SMJJP

For most of us our home is the single largest investment we will ever have which is why we need a safety net for our partners and children who also depend on this investment. Mortgage life insurance is a life insurance policy which is designed to pay off the balance of the mortgage should the policy-holder die before the loan is paid off.

However recent figures from a survey undertaken by Sainsbury’s Life Insurance reveal that in the UK millions of borrowers (with billions of dollars worth of home loan debt between them) have failed to take out mortgage protection. In fact a staggering 43% of British mortgagees have no life cover. The recent recession has meant that UK borrowers, struggling to keep up with mounting debts, have cut back on life insurance cover.

A recent survey has shown that nearly a third of 35 to 44 year olds have no life insurance cover protecting their mortgage payments, and 34% of 45 to 54 year olds are in a similar situation. This means that many people with children are unprotected, as well as younger mortgage holders.

According to Lucy Hunter, at Sainsbury’s Life Insurance ‘Life insurance provides financial cover should the unthinkable happen, enabling people to be secure in the knowledge that their dependents could receive a cash lump sum if they were to die.”

This is particularly important for home owners who need to have the reassurance that, should the unthinkable happen, their families would be covered and able to continue living in the family home without the burden of financial responsibility – life insurance is basically ensuring financial security for the future.

Source: The Insurance Blogger.com November 2010.

photo credit: fourbyfourblazer

Business owners have different needs when it comes to taking out life insurance which differs from individuals who are employed. Life insurance is there to help look after loved ones, should the unthinkable happen. But if you own a business and die unexpectedly then you need a life insurance plan which will not only keep your family provided with an income, but also to ensure that the business can continue as usual.

Which Type of Life Insurance Would Best Suit you as a Business Owner?

When taking out life insurance as a business owner there are some things which should be considered such as whether to take out term or permanent insurance. Term life insurance is a relatively simple idea – you decide on the level of cash payment which would be paid out upon the event of your death, and also on the term of the coverage e.g. $400,000 over 25 years. This can be a good way of making sure a mortgage balance would be repaid for instance.

This might also be a good type of life insurance for a business owner with a partner who is planning on retiring at a fixed date. For a couple running a business together they could agree that if either one dies before their planned retirement date, the partner left behind would be able to purchase their deceased partner’s share in the company. Term policies could be taken out making either partner the beneficiary.

This could be a good option to cover the business – but the problem with term insurance is that once the qualifying period runs out – say, after 20 years, then the company would no longer be covered. And, as the business gets older, so do the owners, which means taking out term insurance later on will be more costly. When term insurance ends without the policy owner having died, there will be no cash payment.

Would Permanent Life Insurance be a Better Option for Business Owners?

Permanent life insurance policies include both insurance as well as some investment, or ‘cash value’. The premiums pay, not only for your life insurance coverage, but some is used for investment purposes. The upside of this is that – when the term of the insurance ends, you will still have the investment element to call upon. Plus, permanent life insurance continues for the whole of a person’s life – and so may be more attractive to those wanting coverage for longer.

Plus an additional benefit to a business owner is that the investment component of the policy can be borrowed against and used to further the company – or the policy owner can use the funds to repay premiums.

Life Insurance for Key Employees

Life insurance can also be taken out by business owners on key employees to cover them in the event of their death – should that employee die the insurance would cover them for the loss of income entailed and help fund them in finding a replacement.

Life insurance for a business is often in place for buying out the remaining partners in the event of the premature death of one of the owners. The insurance can cover all the key members of the business. Before deciding which type of insurance to buy – business owners should get in touch with a financial advisor who can help identify the pros and cons of the various life insurance policies on offer.

Source: Karin Price Muewller at Entrepreneur.com

photo credit: Greg317

According to the Population Reference Bureau[1] the number of single moms in the US has risen dramatically over the last 40 years. In 2009 a massive 18.1 million children were categorized as living in single-mother households (a single mother household is one in which a family is headed by a female with no spouse present). Although children brought up in single-parent households can and do succeed many are hampered by poverty, and have an increased risk of dropping out of school or becoming teen parents.

Majority of Single Mothers have no Life Insurance

Having sole responsibility for the children means single mothers must consider the welfare of the kids in the event of their death – a necessary (albeit unpleasant) task you might think, but worryingly estimates show that almost four in ten single parents do not have any life insurance cover – and those who do have often not arranged enough.

Single moms must make life insurance a priority so that their children do not suffer financially as well as emotionally should the unthinkable happen– their Life Cover must ensure sufficient resources for children to live on as well as perhaps the opportunity to go to college later on. Life insurance which would pay out on the death of the policy holder (term insurance) might be a good option to consider, however it’s worth discussing possibilities with a good insurance agent who will be able to give an expert opinion on the best low-cost life insurance policies for those on a low income.

Obama aims to get Single Moms back to school

In an attempt to lift single mothers out of poverty Barack Obama is attempting to make prospects better for single moms who want to return to study but are hampered by lack of finances. Grants are available to enable single mothers to get a second chance at education – education which can only benefit both their families and their future employers.

The Scholarships for Moms program has increased funding via Pell Grants ,which have been around for some time – the maximum amount of aid has been increased to over $5000 –$1000 more than previously. Also importantly the range of study options for which funding is available has increased to cover part-time and distance study, thereby making it far easier for a single mother to access learning whilst working or caring for children. A further $10,000 worth of financial aid via a Scholarship is available for some single mothers – in order to qualify you must be female and have a child.

The Obama Scholarships give single moms a real chance at improving prospects both for themselves and their children – but they must also consider how important life insurance is to their offspring’s potential happiness and security.

photo credit: meemal

According to a recent Times report, the amount of money life insurance companies withheld from beneficiaries more than doubled over the last ten years. The Times analysed data compiled by the National Association of Insurance Commissioners, for this conclusion. Last year alone more than 5,000 life policy holders were denied their claims – and the main reason cited was ‘flawed applications’.

Life insurance companies do pay the majority of claims, and paid out $38 billion pounds on individual life policy death benefits last year, but a recent case involving American General has shown that Life Insurers are not always playing fair when it comes to refusing to pay out.

American Life Cancelled Life Policy and Withheld Monies from ‘Exemplary’ Life Policy Holders

Sheila Weissberger became a widow in 2005, after her husband Ian died of Lou Gehrig’s disease. American Life was the Weissbergers’ life insurer and – according to their advertizing -the protector of ‘the hopes and dreams of American families’. Upon the death of Mr Weissberger, they cancelled Mr Weissburger’s life policy and much to her astonishment refused to pay Mrs Weissberger the expected $250,000 payout.

American life confirmed the premiums were fully paid up, no fraud was suspected and nobody could doubt that Sheila Weissberger was the rightful sole beneficiary – plus, Mr Weissberger’s illness was not diagnosed for several months after taking out the life policy. In fact it might seem as if the Weissbergers were exemplary life policy holders.

Refused Payout to Widow on basis Life Application was ‘Incomplete’

The reason for this decision was, according to American Life, that the life policy application was in their opinion incomplete. They stated that Mr Weissberger had failed to declare on the form that he had a bipolar disorder and pulmonary disease – conditions he did not actually have, according to his doctors.

Due to their decision Mrs Weissberger, 62, said “I lost my house. I lost everything” “It was very, very devastating”. American General has now reached a confidential financial settlement with Mrs Weissberger, but she will not likely to ever forget this period in her life.

Most Common Reason for Withholding Payouts is ‘Flawed Applications’

Life insurers can refuse to payout on policies for legitimate reasons such as foul play, unpaid premiums and suicide, but the most common reason for disputing claims is ‘material misrepresentation’. This means failure to disclose information deemed important when assessing risk – this clause can allow life insurance companies to totally rescind live cover.

The majority of American states have banned limitless rescissions in order to stop life insurers abusing the system, but Californian and other areas, life insurance companies can rescind life policies in the two years following the signing of a policy.

Source: Latimes.com November 2010

photo credit: StuartWebster, tibchris