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

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

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

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

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

Unfortunately, however, married couples neglect to consider negative outcomes. As Carole Peck, president of Carole Peck Financial Center puts it “Couples often overlook the financial ramifications of their split, or assume lawyers will hammer things out to everyone’s satisfactions.”

Female Spouse often Loses out Financially in Divorce

Very often it is the female partner who gets to keep the family home in the event of a divorce, in order to carry on looking after the children in familiar surroundings.

In exchange the main wage earner, (usually, but not always), the male spouse, tends to keep control of IRAs and other long term financial assets; and while he continues to reap the rewards from their previously joint financial portfolios the family home may start to seem  less of an asset and more of an intolerable financial burden.

Even with decent alimony and child support there may well not be sufficient funds to keep up with mortgage payments, property taxes and home repairs. And if payments cease due to the illness or bereavement of an ex-spouse the family face eviction.

Life Insurance can Provide Financial Stability in the Event of Divorce

Ellie DeLano writes a blog – the ‘Divorce Diaries’ about her personal journey through the divorce process and urges women to think about the importance of life insurance in the event of divorce . The spouse considered to be the most financially well-off (usually the male) should be encouraged to take out a life insurance policy which includes the children as beneficiaries, until they can be considered independent.

In her case she was lucky – a divorced friend had urged her many years previously to have it written into the parenting agreement that Peter, her husband, be “required to name me as beneficiary on his life insurance, until the children are no longer my dependents.” Now that the couple are divorcing Ellie is thankful for this timely advice.

As she says, “If I were to die unexpectedly, Peter would have more than enough money to buy and keep a roof over the kid’s heads, feed them and even probably send them to college. If the situation were reversed, I’d be in serious trouble. We’d lose the house without his support check, and life would certainly be much harder than I complain about now.”

Life Insurance could be a Lifeline – so it Pays to be Practical

In her ‘Divorce Diaries’ Ellie advises even the most happily married to plan for any contingency:  “Don’t sell yourself short just to seem like the ‘nicer’ person.”

We all enter into our marriage contracts thinking it will last forever- but it is imperative to use your ‘practical head’ when planning the future. Setting up adequate life insurance has to be a priority when it comes to safeguarding a future for you and your children – something which you may be very thankful for one day.

Source: mainstreet.com posted 02 December 2010

Divorce Diaries, posted in WomansDay.com Editors on 29 December 2010

photo credit: epSos.de

The need for parents to consider taking out life insurance has been highlighted recently. LIFE (Life and Health Insurance Foundation for Education) recently awarded $105,000 worth of Scholarships to students who could not afford to pay for college because a parent had died.

Parents who die without Life Insurance Scupper College Plans for Children

LIFE reported on the case of Esther Kim who was only 16 when her dad died of cancer – he didn’t have any life insurance, which left her and her family financially insecure. Esther had always been a straight ‘A’ student and had always planned to go to College, but the bereavement looked set to put her plans on hold, since she, along with her mom had to work flat out in order to keep the family going.

Luckily for Esther she now has the chance to start a course at Oglethorpe University. She has achieved this by using money she saved herself, as well as a student loan and a scholarship worth $10,000 from the not for profit organization LIFE.

Parents have to Consider Children’s Future should they Die Prematurely

Mr Marvin H Feldman, President and CEO of LIFE Foundation stated “ When parents die prematurely without adequate life insurance, the people who depend on them most – their children – often face difficult financial realities that can force their dreams of a higher education and a better life to be put on hold.” “We are proud to be able to help deserving young people like Esther and our other scholarship recipients to reach their college goals, and we hope their stories will remind all parents to protect the financial well-being of their loved ones through proper financial planning.”

The LIFE Lessons Scholarship Program offers scholarships to students who are unable to afford a college education due to a parent dying with negligible or no life insurance. During the last year 59 American students received awards from the Foundation – in order to qualify students had to make a video, or write about the financial consequences of losing their mom or dad.

The judges included members of the LIFE Board, as well as Life Insurance company executives, from some of the top US Life Insurance companies. One of the scholarships was awarded as a result of an online vote – Mashell Ewing was the winner, for describing how difficult her financial circumstances had become since the death of her single mom.

Single Parents need to Consider Life Insurance as a Priority

Mashell’s mom died suddenly of a heart attack having made no provision for life insurance. Since then Mashel l and her brother both had to work long hours just to pay the rent and care for their younger sister. Despite this Mashell managed to secure a place at the University of California, Berkeley and so determined was she, she took out loans to help pay for college fees. The extra $5000 dollars awarded to her last year by LIFE will help her achieve her plan to graduate this May.

The LIFE foundation was set up in 1994 with the aim of educating the public about life, health, disability, and long-term care insurance.

Source: lifehappens.org/content

photo credit: ralph and jenny

This was illustrated recently in a high profile celebrity divorce case where the life policy owner – film star Dennis Hopper, was locked in an acrimonious divorce with his estranged fifth wife Victoria Duffy-Hopper. Hopper attempted to change the beneficiary of his life policy mid divorce so that his wife and young daughter would not receive an insurance payout in the event of his death. However the judge decided he would have to wait until the divorce came to trial before any names could be changed. Hopper died before the divorce came through and his estranged partner received the life insurance payout.

Rules Prevent Life Policy Holders from Impulsiveness

The rules regarding when changes can be made to an estate plan vary from state to state. In California, for instance, no changes can be made for a set period of time after a divorce is filed. What this seems to imply is that a person holding a life insurance policy might be better off making any necessary changes before filing the divorce papers.

The reasons for preventing those going through a divorce from making big changes such as changing beneficiaries of wills or life insurance policies is to allow them a ‘cooling off’ period; it has happened that soon to be divorced couples reunite and, if a spouse then dies without having changed their will or life policy back, they leave their bereaved partner with nothing.

Source

The Probate Lawyer Blog[1], June 2010; also featured in Forbes Magazine [2]

photo credit: ljv

There are lots of great deals on the market currently if you are looking for term life insurance and critical illness cover. Term life insurance is cheaper than whole life insurance because it only covers you for an agreed term, whereas whole life insurance provides coverage for life. Plus, you do not get any return on investment with term life – but can reap good dividends with whole life coverage.

Critical Illness Cover is a Welcome Boost to a Life Insurance Policy

Term life insurance can be boosted by adding on critical illness cover to it and many life insurers can offer this benefit at a very cost effective rate. Critical illness insurance means you are insured against the main critical medical conditions and illnesses including cancer, heart attacks and kidney failure – insurers will publish a comprehensive list of illnesses they cover.

Make sure to carefully check out exactly what is covered, since you could get a nasty shock if it later turns out that e.g. the loss of one limb is not considered ‘critical’ by the insurer, whereas losing two e.g. legs is. Similarly, some insurance companies will only cover you for certain types of cancers – so check the terms very carefully. And speak to an advisor before taking out critical illness protection.

Take the time to Check Terms and Conditions of Life Policies

Many of the term life insurance policies being offered seem like really good deals – the policy premiums often look like excellent value as far as the policy cover amount. For example, a 40 year old non-smoker could arrange a $1 million dollar term policy to run over 30 years, and only pay around $2,500 per annum for it.

Use a top Rated Company

But –make sure you are buying a policy from a trusted and known source. If you don’t you run the risk of being shortchanged in the event of a claim. The best way to check out which life companies are reliable is via a broker or the internet.  Make sure you check out whether the life insurer is financially stable, too by looking up its rating on Standard & Poor’s or AM Best – and go with an insurer that has an A rating or better.

Use ‘Execution Only’ Brokers for Cheaper Life Insurance Deals

Also it’s worth noting that life insurance prices change on a daily basis – so it’s a case of ‘best buy brokers’ rather than ‘best buy insurers.’ Brokers take on the job of finding the lowest priced insurance companies – but – some brokers receive extremely large commissions from the insurance providers and this can have a big impact on how much you end up paying. The best way of getting round this is to utilize ‘execution only’ brokers – they give you the commission, and charge a small fee in return.

Other things to check are that life premiums are ‘guaranteed’ rather than ‘reviewable’ so that know exactly where you are when it comes to monthly payments. The most important thing to remember when you are trying to get the cheapest life insurance and critical illness deals is that it pays to get advice.

Source: Amy Perry, Allvoices.com Jan 2011, and MoneySavingExpert.com Oct 2010

photo credit: allaboutgeorge

Limited Pay Policies Up By 152%

As Michael Ferik, Senior VP for independent life cover at Guardian Life, speaking at Guardian Whole Life International Forum on October 5 stated “This finding underscores a pronounced desire among Millenials and Gen Xers for financial security at an early age.” This research seems to be corroborated by the fact that sales of ‘limited pay’ life policies at Guardian life – policies which can be paid off over a shorter term, were up by a massive 152% year on year to June this year.

Young Life Policy Buyers Plan their Financial Futures

According to the Guardian survey, 74% of those aged 40 and under stated that they wanted to be more financially stable sooner rather than later, with 76% or respondents saying it was very important for them to be debt free in the near future. In contrast, those aged 40 or older attached less importance to having financial stability or leaving debts behind at 69% and 68% respectively. Mr Ferik believes this could be down to the heavy burden of student debt which younger people have had to deal with which has been reflected in a “desire to be debt free” rather than the more typical baby boomers who have more of a “live for today” attitude.

Protecting Families Number One Reason for Buying Life Insurance

The main reason given by the under 40′s for purchasing life insurance was to protect their families (72%) Those aged over 40 also gave this reason with 79% giving it as the driving motivation. Both age groups also counted the cash payout as the second biggest reason for taking out life coverage.

The results seem to indicate that younger buyers see whole life insurance as less of an ‘insurance product’ but rather as one of a number of assets which can be used to build a stable financial future. According to Ferik “They see whole life’s benefits for meeting unanticipated financial needs that arrive while still alive as better than borrowing from a 401K plan or – for now at least – betting on the stock market.”

Source: Insurancenewsnet.com

photo credit: faungg

A recent report shows there is a substantial gap between the amount of life insurance taken out by men and women who are married with children under 18. The research was carried out by MetLife in its annual ‘Study of Employee Benefit Trends‘ and it shows that working married men take out far more cover than their partners. Working dads take out an average of five times their earnings in life cover, while moms take out on average just three times their annual income.

The report was based on 382 interviews with working parents at companies who had at least two employees and was completed over the last quarter of 2009.

The Gap in Life Coverage is a ‘Worrying Trend’

According to Bill Rackzo vice president of US Business at MetLife this is a worrying trend since “Life Insurance can provide a family with substantial peace of mind. It is important to not only have coverage but to make sure coverage amounts are adequate. That is why it is concerning to see the income of working mothers is not as adequately protected as that of fathers.”

The gap in life coverage amounts is surprising given the survey also showed that both working moms and dads say they are concerned about not having enough life coverage, with six out of ten saying they felt ‘very’ concerned. So why are women not taking out enough life insurance? MetLife believes the reason may be down to poor communications from their employers about benefits – only 26% of working moms thought they were receiving adequate information compared to 46% of working dads.

Working Parents Need to Look Realistically at their Life Insurance Needs

Also, according to Steven Weisbart, PH.d., CLU, Vice President and Chief Economist at the Insurance Information Institute, many people “overlook important expenses that life insurance can help cover. The death of a parent may not only terminate an income source but also a family’s source of health insurance, tuition assistance and other financial benefits.” Dr Weisbart recommends that working parents should get financial advice from life insurance professionals in order to assess their needs. At present only half as many women as men seek this type of assistance.

Workplace a Good Option When Taking out Life Insurance

When assessing life insurance it pays to look to your workplace since you may be able to get beneficial group rates  – it’s easy to set up and it’s also straightforward, with the deductions being made direct from pay. Many employers offer employees the option of supplementing the insurance at good rates. Also, importantly, couples should discuss their options together in order to come to a decision on their life insurance needs.

Source: Insurance News Net

photo credit: World Economic Forum

Larry Rudd, a soldier from Brantford, was killed by a roadside bomb in Afghanistan last year and his funeral service was streamed live from Brantford to his colleagues in Afghanistan and to relatives in British Columbia and Holland who watched the service on their computers at home.

Facebook for Funerals

The new technology has been touted as ‘Facebook for funerals,’ meaning that footage from the webcam can also be watched the next day, which was a help to Larry Rudd’s relatives in B.C since some of them lost visuals of the funeral during the service.

Life Insurance is an Option worth considering when it comes to funeral costs

For those left behind, having to arrange a funeral service for a loved one, online service or not, is one of life’s less pleasant tasks. Having the additional burden of wondering how to cover the expenses of funerals is even worse; which is why many people choose to take out life insurance which has the option to pay cash to the bereaved to cover funeral costs (sometimes cash can be paid directly to the funeral directors).

Parents of Baby Boomers would “Turn in their Graves”

The idea of online funerals doesn’t appeal to everyone, admits Glaves – “The big fear is those crazies on the internet – that mom or dad will end up in their casket on You Tube.” There is also the fact that some funeral homes are attempting to make profits by charging as much as $500 for the extra service (the Beckett Glaves Funeral Center provides the webcam for free).

When you consider that the average cost of a funeral in the US is $6500, according to the National Funeral Directors Association, it becomes apparent that dying is expensive for those left behind; this is worth remembering when taking out Life Insurance and planning ahead is the key.

Take up of Online Funerals is Rising

Around 80% of people are apparently signing up for the ‘sympathy cast’ according to Glaves, and those that decide against the service are usually baby boomers arranging funerals for parents. “They’re saying I would like to do this for me but mom would hate it.” Glaves admitted that his father, who was funeral director before him, ‘would have been horrified.’”

But, according to Paul Generowicz, owner of Sympathynet.com, the technology has been a ‘godsend’ for friends and relatives who cannot physically attend funerals – for instance because they live too far away or are confined to bed (or even prison). This is something Larry Rudd’s mother, reiterated: Zuidema Rudd said that broadcasting her son’s funeral was a comfort and that “it brought our family together without them having to come here.”

Source

Susan Pigg, The Star.com August 2010

photo credit: The National Guard

Despite this there is, according to Kim Holland, the insurance commissioner of Oklahoma “a legitimate purpose in viaticals and life settlements.”  The sale of a policy whereby the seller is not expected to live more than two years is known as a Viatical and these payments are not subject to income taxes. Life settlements on the other hand are made on policies surrendered where the owner has a longer life expectancy, and are subject to taxation.

Jonathan Pond, a financial advisor from Newton, Massachusetts agrees that cashing in a life insurance policy sometimes makes sense and states “If you really need the cash then it’s certainly worthwhile to consider”.

Substantial number of Seniors Seek to Cash in Life Policies

The trade in selling viatical policies emerged in the 80’s as individuals with AIDs, for whom death suddenly loomed large cashed in their policies to get quick access to finance either because they had lost their jobs or had to pay huge medical bills. Since then another group of people have taken their place – people approaching their seventies who wish to surrender or sell their life insurance policies for reasons such as needing money for long term health care, for vacations or just cash to make ends meet. Alternatively, some older people find that they have amply provided for themselves and their spouse via other investments and have no need of the policy any longer.

Seek Financial Advice before Cashing in a Life Policy

Although Jonathan Pond believes that cashing in a life policy can be a valid way of raising money he urges his clients to try other routes first. Typical life policies will reserve some of their value as a death benefit even after it has been surrendered. And the policy owner may be disappointed with the amount after tax is applied. The amount they get depends on a number of factors, including their age, sex, health, and life expectancy, the type of policy it is, and the cash value of the policy.

Those selling Life Insurance Policies should shop around

Gloria Grening Volk has written a book entitled “Cash for the Final Days” (Bialkin Books 1997) and she says selling a policy should be looked upon in the same way as selling a house – “Don’t go with the first one that makes you an offer.” Matthew J Gaul, deputy superintendant for life insurance at the New York State Insurance Department agrees that sales were “something where consumers really need to price comparison shop among different providers.”

Source: Charles Delafuente “When Life Insurance is More Valuable as Cash”, NY Times Mar 3 2010

photo credit: Hakan Dahlstrom

Genetics and Life Insurance

Earlier this year Australian Life Insurance company NIB offered its customers half price DNA tests. The cut price tests – down to $500 from $999 were offered to 5000 of their policy holders. The firm responsible for carrying out the tests is Californian based firm Navigenics.

NIB insists that the offer was simply an altruistic attempt to help customers get a better understanding of their health risks; in fact their chief executive, Mark Fitzgibbon says that he has had the test himself and has “found it to be an invaluable experience.”

DNA Tests have Financial Implications for Life Insurance

Fitzgibbon’s statement may be genuine but,  for some, the issue of life insurers encouraging customers to undergo genetic testing has privacy and financial implications. Once someone has taken a DNA test, they could be forced to declare the results to a life insurance company; If the results of the tests are less than satisfactory the life insurance company could raise their premiums – and if potential policy holders fail to declare having taken the tests their policy could later be rendered invalid.

Life Insurance and Genetic Discrimination

The fact is: There have been a number of cases whereby individuals have been refused life coverage due to their DNA profiles. Kristine Barlow Stewart, an academic and board member of the Australian Government’s Human Genetics Advisory Committee has done research into this so-called ‘genetic discrimination’ and finds the Life Insurer’s offer concerning. She has stated that “the move has raised red flags for me.”

Reliability of DNA Tests Questioned

Apart from the implications for life insurance policies, some academics and researchers are questioning the reliability of the data produced by firms like Navigenics, since many discrepancies have been found between gene scans of the different companies carrying them out.

NIB however insists that the results of the tests are private between Navigenics and the policy holders, even though the small print states that “you may be required to disclose genetic test results, including any underlying health risks and conditions which the tests reveal, to life insurance or superannuation providers.”

USA and UK have Voluntary Agreement regarding Use of Genetic Information

The US, like the UK, has at present an unofficial voluntary agreement banning the use of genetic information for underwriting life insurance policies. The Genetics Information Discrimination Act 2008 bans the use of genetic information for both health insurance companies and in the workplace. Life Insurers are, however watching with interest how things develop for NIB, and future pairings between the booming consumer genomics and life insurance companies cannot be entirely ruled out.

Source

New Scientist (Feb 2010) , Pharmacogenomics Reporter(Mar 2010)

photo credit: net_efekt

This is unfortunate because as Debbie Cecil, director of life products at Unum says “Life Insurance is one of the building blocks of a solid financial plan.” But due to the economy “many people are just turning away from pursuing this type of coverage.”

U.S. Public has put Life Insurance on the Back Burner

Also, according to financial services consulting and research firm LIMRA the reason more than 40% of Americans have not bought a life insurance policy  is that other priorities such as paying off debt or saving for retirement have become top of the list. This is why 11 million fewer American households are covered by life insurance than six years ago.

Life Insurance Awareness Month Promotes Importance of Life Coverage

Life Insurance Awareness Month is the invention of LIFE (Life and Health Insurance Foundation for Education), a not-for-profit organization. The organization is joined each September by 100 of the world’s leading insurers and industry groups with the aim of raising awareness about the importance of life insurance. LIFE urges the public to think of the future in terms of how their family would cope financially if it were suddenly bereaved  - how much of a struggle it would be dealing with the everyday costs of living, as well as education and paying the mortgage?

LIFE is joined by Actress Leslie Bibb

In order to get us thinking about the future LIFE has enlisted a celebrity help in the shape of Leslie Bibb, who has appeared in films such as Iron Man 2, Confessions of a Shopaholic and The Ballad of Ricky Bobby. Leslie was only three years old when her father, aged 39, died in an accident at work, leaving her mother with four young children to bring up on her own. Leslie believes that it was her father’s life insurance that enabled the family to survive. “My father died at a young age, but he loved his family enough to expect the unexpected” said Leslie.

The government is also keen to encourage people to include life coverage in their finances: Leslie’s story will be broadcast for the rest of the year via public service announcements on TV and Radio in a bid to remind all of us about the importance of taking stock of our life insurance needs.

photo credit: pshegubj

Life insurance for older people is getting more affordable

Sakhan Dosova has never thought about life insurance, but for many seniors in the West life insurance is becoming more affordable – living to the age of 130 is obviously far from the norm but many more of us are living into our 80s due to better health care and diet.

For people buying a senior-oriented life insurance there are various ways to help get a better deal: Firstly, get a medical check-up – if you can prove you are still fit and healthy you are likely to get a better deal on life insurance. And if, like Sakhan Dosova’s descendants, you can prove that your predecessors were particularly long-lived this could also help lower your premiums.

Seniors have different life insurance needs than younger people

Many Life insurance companies specialize in providing life insurance for retirement. Insurance needs for this age group differ from those of younger people – the mortgage may well be paid off, and the car. Plus, seniors generally have a steady income available upon which to live; in this situation there may be no need to take out insurance for investment purposes. However, taking out a life insurance policy can still be a good tax-free option to help pay for funeral expenses or medical care for a surviving spouse, especially ‘term’ insurance, whereby the policy has no cash value but simply pays out upon death.

In regards to Sakhan Dosova, the government of Kazakhstan wants more checks to be made before officially declaring her the oldest woman in the world:  If the claims are true, and Sakhan Dosova was born in 1879 as she states, she would share the same birth year as Einstein and Stalin.  She is no doubt very old, but as officials point out, birth records in Kazakhstan are notoriously unreliable.

The Kazakhstani government is still recovering from the ridicule poured on it in the aftermath of Sacha Baron Cohen’s film ‘Borat’ and have stated “for the sake of our country we want to make sure her claim is correct.”

photo credit: Ernst Vikne

A recent study suggests that poverty contributes to decreased life expectancy. This makes a life insurance policy all the more vital to families with limited incomes.

It may not come as a complete surprise to be told that well-off people tend to live longer than poor; unemployment, poor diet, and lack of leisure time play a part in increasing stress and decreasing quality of life for low earners. What is startling however is just how big a life expectancy gap there may be between the two groups.

Income Inequality Results in a Life Expectancy Differences

Researchers at Statistics Canada recently attempted to analyze the effect  poverty vs. affluence or ‘income disparity’ has on life expectancy. The findings, based on data gathered in Canada, were published recently in the journal Health Reports and make for disquieting reading: Figures show that on average only 54% of men from the lowest income group (bottom 10%) have a life expectancy of 75 years of age, compared with 74% of top earners. For women, 69.4.% of the least well-off can be expected to reach the age of 75, as opposed to 84.4% of the wealthiest women.

Life Insurance often not a Priority for those on a Low Income

Falling into the poverty trap also brings other complications – due to a lack of funds less affluent people often fail to take out adequate life insurance – insurance which would help family enormously in the event of their death. However there are lots of cheap life insurance deals on the market (most are available through low-cost, term life insurance) which low earners can take advantage of to help safeguard their future.

Life Insurance is a good Option for those on a Limited Income

While the super wealthy usually have numerous investments and portfolios to protect their futures people in low income brackets still need to plan ahead – and taking out a life insurance policy is a good tax efficient option. The sooner life insurance is set up, the better the rates on the premiums – since the older a person is the higher risk they will be to an insurer.

It’s also important to remember that no matter how much a person earns, lifestyle choices also play a big part in determining how healthy they stay and how long they will live – making the decision to give up smoking for instance will not only put more money in the pocket but significantly reduce the cost of life insurance.

Source

Andre Picard in ‘Globe and Mail’ Nov 2009

photo credit: woodleywonderworks

A diagram showing the inner workings of an artery

The rising epidemic in obesity and diabetes in the U.S. is frustrating heart experts in their attempts to reduce heart disease. The message about living a healthy lifestyle and keeping weight down just doesn’t seem to be getting through. It is hoped, however, that looking at our health from a different perspective – in terms of our ‘vascular age’ we might be motivated to make the necessary lifestyle changes to cut our future risk of heart problems.

“There’s a saying that ‘you’re as old as your arteries,’ meaning that the state of your arteries is more important than your actual age in the evolution of heart disease and stroke,” Says Geetha Raghuveer, associate professor of pediatrics at the University of Missouri Kansas City School of Medicine. “We found that the state of the arteries in [some] children is more typical of a 45-year-old than of someone their own age.”

How is vascular age calculated?

By taking into account such things as age, sex, cholesterol, blood pressure, whether or not you smoke, as well as any instances of stroke, heart failure or arterial disease, a health professional can tell us the ‘real’ age of our arteries. A 35-year-old might turn out to have the blood vessels of an average 80-year-old — a real shock to the system.

A look at the risk of heart disease based on vascular age

Could my vascular age affect my life insurance?

Your ‘vascular age,’ along with other indicators could well have a bearing on the cost of life insurance you can get.  The estimated age of your blood vessels, if significantly higher than your real age will indicate to a life insurer that you are more likely to die younger, from heart complications. Life insurance companies cannot ignore this kind of information when assessing your premiums.

Make lifestyle changes to lower your vascular age

By changing your habits and lifestyle you can rapidly improve the health of your arteries. By adopting a healthy lifestyle not only will your life expectancy increase, but your risk to a life insurance company will decrease. You may even end up having a vascular age which is significantly lower than your real age, which will make you an even better bet when it comes to taking our life assurance.

photo credit: perpetualplum

It’s no surprise that in today’s difficult economy, many people are finding it hard to make room in their budgets for the basic essentials in life. This is no different for business owners trying to do the right thing and maintain their health and life insurance plans for their employees. Life insurance and health plans are costing more and more each year with many plans becoming simply too costly to keep for many smaller businesses. When it comes down to a matter of dollars and cents, many business owners are faced with the decision of cutting life and health insurance coverage for their employees instead of laying off some of those employees to keep costs down.

Economy, Rising Life Insurance Premiums Squeeze Employers’ Bottom Lines

The hard economic conditions that many businesses face now are directly related to stagnating sales and industry slumps that affect a business’s bottom line and operating costs on a weekly basis. The only way that many businesses – especially smaller ones with 2-30 employees – can handle the matter, is to really take a long, hard look at what’s important.

Providing excellent health and life insurance for employees is costly, but cutting the work force may be just as costly in the long run. Many employers are opting to reduce the level of coverage in their plans in order to keep costs down and keep more employees working. Costs for life and health insurance are outpacing many other costs of doing business and it’s affecting these smaller businesses the hardest. Many companies renewing business policies are reporting cost increases of 12-15 percent with some plans costing 30-40 percent more, based on health and demographic figures.

Employers Cutting Losses by Cutting Life Insurance Benefits

In an effort to cut their losses, many employers are cutting their own contributions to employee plans by raising deductibles, cutting benefits and increasing the employee share of the plan cost premiums. This takes the burden off of the employer to provide a high level of coverage, while encouraging the employee to take more responsibility for their own health care. By having each employee become more responsible for their own share of the health plan support, the company can keep health care costs down to a more manageable level.

photo credit: clementine gallot

We’ve all heard the main and obvious reasons to quit smoking. Heart disease and cancer are two of the biggest killers of people in our time and two of the most preventable as well. World Health Organization studies indicate that if left unchecked, smoking could easily wipe out more than a billion people in this century. If the Titanic sank with all hands every 24 minutes for the next 100 years, that would be close to the number of deaths from smoking.

Three quarters of smokers today are trying to kick the habit which is up 32 percent from twenty years ago. The reasons for quitting have only gotten more prevalent as health issues have connected cigarette smoking to everything from diabetes to blindness and everything in between. It’s not just about heart disease, stroke and cancer anymore. Now, the health issues associated with smoking can even harm your children and those around you. Here are a few other quality of life issues associated with smoking that you may not know about.

Smoking and Life Insurance Premiums

Smoking not only affects your health and quality of life, but it also affects your finances.  Take the example of a 56-year-old smoker shopping for a 15-year term life insurance policy. The cheapest policy on the market for a preferred smoker’s term life policy is $3555 annually from Transamerica and Western Reserve. In fact, preferred smoker’s life insurance rates could run as high as $4865 annually.

So how much would a similar policy for a non-smoker cost? $1160. That’s right – a smoker’s policy is as much as five times the average non-smoker’s policy. Try smoking that.

Smoking and the Mind

Smoking cigarettes may actually work to cloud the mind, in middle aged subjects. Nicotine has been associated, in recent studies, with memory problems and a decrease in reasoning abilities. This risk is apparently lessened in those subjects who’ve quit smoking long ago. This is important because other studies have shown that people who develop mild cognitive problems in midlife are more prone to developing conditions of dementia in their later years.

Smoking and Your Vision

Several studies have also found a definite link between smoking and degenerative eye disease. Age-related macular degeneration, which can cause permanently-blurred vision or blindness, is one of the chief eye conditions caused by smoking cigarettes. A 2005 study presented in the journal Eye reported that active smokers are three times more likely to develop eye disease compared to those who have never smoked.
photo credit: P/UL

Massachusetts Mutual Life Insurance Company’s LifeBridge program is a philanthropic program intended to help provide education to children of working parents. Since 2002, MassMutual has been offering free ten-year, $50,000 term life insurance policies to eligible families. In order to qualify, says MassMutual, a family must be in a good health and earn between $10,000 to $40,000 a year.

Any benefits paid through LifeBridge are distributed into a trust, which pays for the educational expenses of your child. Should your income go above the income limit after you qualify for LifeBridge, the life policy will still remain in effect and the only exclusion is in the event of suicide within the first two years of the policy.

Whether you’re a full-time or part-timer working parent, you may be eligible, but you should first check with MassMutual. Since the program started about 9,500 free policies have been issued totaling about $450 million in coverage. Since its inception, the LifeBridge program has paid on six claims through the program.

photo credit: atennies94

Divorce is a difficult time for all parties involved, and as you gather together and divvy up what’s left in the wake of your separation, life insurance is something that will become an inevitable issue. Before proceeding with divorce papers, it is important to reassess life insurance coverage levels, whether it can help to protect income received from child support payments or save money by changing the term of coverage.

One way to save money on life insurance is to purchase term life insurance instead of a whole life policy because of its impermanence. Term life policies allow for flexibility once the dust clears and enables both parties involved to move on with their lives.

Divorce and Ownership of a Term Life Policy

During a divorce, the owner of the policy has the ability to change the beneficiary at any time without any notification and take out cash values in the policy if they are available. This makes things difficult if there is a conflict or any sort of disagreement during the divorce. The duration of the policy may be held until the child reaches an age of maturity and all child support payments have been settled.

The type of life insurance coverage that is chosen during divorce is just as important as the people involved. For families across the nation, reassessing life insurance policies during divorce allows everyone to benefit, even if it may be a difficult and painful process for the entire family.

photo credit: Editor B

Even though the recent tough economic times have made it hard for most Americans to think well about their financial situations, they haven’t put aside their life insurance plans. Many policies are now cheaper than they’ve ever been and many investment losses in portfolios can be written off.

Even though many people buy life insurance in connection with major life events such as births or marriage, many people don’t take the time to evaluate their policies on an annual basis. Because of this, people are paying more for life insurance plans than the same or similar plans that are currently available on the market.For example: Norman Melnick, one of the creators of the Magic Marker, was overpaying his life insurance coverage by over $4,000 a year. Over ten years, Mr. Melnick would have saved $54,336 in premiums to receive the same exact coverage!

Getting Cheaper All the Time

Life insurance policies purchased before 2001 were most likely based on mortality numbers from the 1980s. Plans that have been purchased since 2001 make use of the more relevant 2000 census figures which reveals a dramatic increase in life expectancy which reduces the cost of life insurance premiums.

Because people are living longer, life insurance companies are finding it easier to insure their customers, and passing on those savings to their policyholders. By evaluating your life insurance policy and the premiums you’re paying now, you may find that you can actually pay much less for the same policy coverage today.

If you look over the life insurance policies that you have in your portfolio and find that the premiums you’re paying are far too high – compared to those paid by friends and family for the same coverage – then perhaps you should have a look at the new plans available. If you can save any money at all on your life insurance, you can put these savings into other investments and not be any worse off at all. Be sure to have your accountant or financial advisor look over your life insurance plans to see if a newer policy could save you money.

photo credit: TheTruthAbout…

Having your own business can be a complex series of ups and downs and provide you with a wide range of emotional situations. This becomes even more of a dynamic when you have a partner in the business. You have to be aware of what would happen if one of the key members of your staff (including you or your partner) were taken out of the picture.

Key person life insurance can provide coverage that will ensure protection for any business, regardless of size or complexity. Taking away key personnel from a small business can be every bit as devastating as a large corporation losing lead persons. Having a key person life insurance policy in place will allow for an infusion of cash in the event that the key person, covered under the policy, dies.

With key person coverage, the day-to-day operations of the business will be minimally impacted by the sudden loss of this person’s expertise and experience. The business can then use this money to immediately replace the key person to allow the business to run efficiently again as soon as possible. This makes excellent business sense, especially for those businesses that have stocks and shares and that have to answer to others for even the smallest cost overruns. By losing a key person, many businesses will find it difficult to maintain profit levels while that person is replaced.

Another Reason for Key Person Coverage

Another reason many business partners have key person life insurance in place is so that when they pass on, their shares in the business can either be bought by the other owner or passed on to their heirs. In this way, your heirs will not have to participate in a business that may or may not welcome their participation. A key person life insurance policy will make sure that there are funds in the company to allow for buying out partner shares in the business, if necessary or desired.

photo credit: “T” altered art

Whether you’ve just gotten married, thinking of starting a family or planning for your retirement – you’ve probably given a thought or two to purchasing life insurance. In order to financially protect those we love, it becomes clear that buying life insurance is the best way to prepare for the inevitable. Whether you want to take care of your funeral expenses, pay off the balance of your mortgage or plan for the financial security of your spouse and family, having a good life insurance policy in place will provide much more than just peace of mind.

Best Ways to Save on Life Insurance

Some things to keep in mind when buying life insurance can include the amount of coverage you need. Most industry representatives suggest purchasing five times your annual salary in life insurance. This will help to cover many costs of your estate and ensure that your family maintains their level of financial security.

Buying more insurance coverage than you need, will only result in a higher premium, which may or may not be a problem for you. If you’re in good physical shape, avoid guaranteed issue policies. Because they don’t require a medical exam, they cost more. If you’re healthy you’ll get a better rate if you choose a policy that requires a medical exam.

Of course, if you’re trying to save on your policy then be sure to look into term insurance plans first. Offering the best coverage for the money, term policies won’t allow you to build up any cash value – but many experts suggest buying term insurance and investing the difference. One of the best ways to save on life insurance costs is to purchase a joint policy for you and your partner. Many companies will lower the premium by up to 15% for a joint policy compared to two individual ones.

photo credit: Tanya Ryno

Investors, who once upon a time thought paying higher prices for whole life insurance was frivolous, are now thankful that they listened to their investment counsel. While the cost of whole life insurance policies hasn’t come down, the stability that they offer has only increased in value.

Though whole life insurance may not give as high a return on investment over the short term – like technology stocks – whole life insurance is proving to be the golden nugget in many investors’ portfolios. Designed to be more of a cash reserve that builds up over time against the death benefit, a whole life policy allows for policy owners to borrow against the accumulated cash value for things like medical expenses or college tuition. The policies are tax-deferred and upon maturity of the contract, the cash value usually equals whatever the death benefit would have been.

Whole Life Provides Stability – But at a Price

Another plus is that the cash value as well as the death benefit of the whole life insurance policy is fully exempt from the demands of creditors, bankruptcy proceedings and other legal garnishment schemes.

Variable insurance policies are linked to the stock market and when stocks take a hit (as they did recently) so do the values of these insurance products. Though these variable policies looked good on paper when they were bought back in the early 90s, owners are finding that they’re taking quite a hit now and even having to come up with additional premiums just to keep them active.

Converting between variable and universal or whole policies is possible at a later date but the older the policyholder, the higher the cost of converting that policy over to whole life insurance. In many cases, the cost of converting the policy is three to four times the cost of the variable policy. Insurance companies are customizing many of their policy plans to have some form of product that will help to pay for nursing home care. Some policies even have aspects of both term and whole life insurance in one plan.

In tough times when stocks and some bonds have negative returns, a whole life insurance policy is actually starting to look like a good, stable and lucrative option for those who are willing to pay more in premiums.

photo credit: ArtemFinland

There’s no getting around the fact that the current economic conditions are getting on peoples’ nerves. The stress factors that many people have to deal with are rising rapidly as life insurance and other financial matters grind away at the thoughts and worries of everyone. There’s a definite link between financial pressures and personal stress and for many people that means not being able to deal properly with the everyday matters of life such as friends and family. Unfortunately, having a good life insurance plan usually doesn’t mean it’ll help you live a better life while you’re here. That’s why it’s important to keep your quality of life in the upper reaches by dealing properly with stress levels.

The simple truth is that 44% of all employees in America are living from one paycheck to the next with 60% of all employees – even the more successful ones – worried about their financial future and whether or not they’ll continue to be able to make ends meet. It’s very important that you don’t allow financial worries to begin to take a toll on your personal health. Stress has a very subtle way of grinding away at a person a little more every day until only the raw nerve ends are showing. Increased stress levels can also mean increased health costs to people who have a hard time dealing with the stress brought on by uncertain financial times.

Tips for Reducing Financial Stress in Your Life

If you find yourself grinding your teeth and hyperventilating you don’t have to be a genius to realize that you’re probably under stress. Here are a few tips to help you recover your bearings.

• Get up and walk around and let new surroundings help to clear your head.
• Don’t try and be a stress superhero; take a five-minute rest from stress to recompose yourself.
• Recognize when you’re body is being put under stress and get relief by turning your thoughts to a positive trajectory.
• Be proactive in the early stages of stress before it becomes overwhelming and harder to manage.

Job pressures, family obligations and other personal commitments will all contribute to your levels of stress so be ready to defuse potential stressors when you can. Something as simple as walking around the office can help you deal with the stress brought on by factors such as your current financial portfolio.

Life Insurance as a Financial De-Stressor

Life insurance helps quell financial stress, particularly if you’re worried about your family should something unfortunate occur. If you choose a whole life insurance plan, you can be sure that your coverage will last for the entirety of your life. If you choose a term life insurance option, you’ll at least have the comfort of a set period of time for coverage – and many term life insurance policies give you the option to renew your policy at expiration.

Whatever steps you take to take away the financial stress, a few minutes of relaxation and introspection can help turn even the most doomsday of thoughts towards optimism and hope. The world financial situation may be stressful now, but wait around a few years and things will turn around.

photo credit: gingerpig2000

This will probably come as a surprise to many of you, but life insurance plays a huge part in the assets value of nearly every bank doing business today. The banks buy so much cash value life insurance that this type of asset has earned its own name: “Bank Owned Life Insurance.” Bank-owned life insurance (or BOLI, for short) represents a huge chunk of the assets base of almost every major bank in America. Banks own so much of this type of asset that they can almost be considered as life insurance companies unto themselves.

The Federal Deposit Insurance Corporation (FDIC) states that BOLI is an essential cornerstone of the nation’s banking and financial systems. At the end of 2007, over four thousand of the country’s banks owned BOLI, with the value well up over 120 billion dollars! Even more astounding is the fact that the total death benefit value to the bank is five times that amount!

BOLI Makes Sense to Banks

The life insurance that banks purchase for their employees is held as Tier One Capital, which is their most valuable asset. This capital is the foundation of a bank’s reserve fund and helps to determine the bank’s worth and ability to lend funds to the public. One of the main reasons that banks purchase life insurance in this massive manner is because life insurers are generally much more stable than banks, because they are not as highly leveraged. Life insurance account balances also grow tax-deferred making even more capital for the bank to be able to use. When a bank employee dies, the benefit from that policy comes into the bank tax-free, raising the bank’s tier one capital even higher.

During the Great Depression, when thousands of banks closed their doors permanently, cash value life and annuity providers remained 99.9% stable. The truth is that banks own far more value in BOLI than they do in cash, fixed assets and real estate combined.

photo credit: Orin Optiglot

Life insurance companies are finding it hard to keep up with real estate investment losses and costly retirement contracts in the midst of the current economic hurricane. With the prospect of even more credit rating cuts for the balance of the year, companies are faced with little choice but to find more capital sources from an unforgiving marketplace.

Federal Government, TARP, and Life Insurance Companies

Under the federal government’s TARP system (Troubled Asset Relief Program), only those insurance companies affiliated with banks or under the umbrella of thrift organizations can qualify for financial assistance. That only takes into account about half the insurers in the country with the other half preparing to scramble for funds wherever they can get them. Because of the market’s perception of financial weakness that may be construed when a company asks for aid, many have simply refused to go that route – for now.

One of the nation’s largest insurers, MetLife, is rumored to be heading for federal aid, though their spokesman declined to comment on the rumor. Not because it needs the bailout money, but rather to prepare itself for the many smaller companies that it will try to buy up when the opportunity presents itself. Economists feel that opportunity is rapidly approaching. With a sale of its stock recently raising over $2 billion, the company is poised to buy up the assets of troubled and weakened institutions that may become available over the coming months.

A New Insurance World may be Dawning

The life insurance landscape is most likely going to change dramatically over the next several months, as more and more smaller companies either apply and receive federal aid or don’t. The ones that are still in financial trouble over the coming months will find themselves either the victim of consumer non-confidence or being gobbled up by the huge insurance sharks that will be circling in the insurance waters.

With many insurance companies holding mortgage-backed securities in their investment portfolios, the troubles being felt in the stock market are rattling the financial foundations for them as well.

photo credit: Mike Licht, NotionsCapital.com

Most of us know enough to have auto insurance when we do any amount of driving in our car. And having homeowner insurance when you own your own home just makes perfect sense. Then why do many of us put such a low priority on getting any sort of life insurance – especially when we’re younger? The answer usually lies in what’s called ‘the probability factor’ and it keeps a lot of people away from getting the life insurance they should have. What it means is that most people – and especially when you’re talking about younger people – tend to believe that any sort of accident, even one causing death, will only happen to the other guy.

Because people are generally optimistic about their lives, the idea that any sort of accident could happen to them is usually the furthest thing from their mind. Death is what happens to old people, they think but of course, that’s not the case and in fact, many automobile accidents causing death happen to younger people every day.

Group Coverage Isn’t Always Best

Having life insurance – especially when you’re young and starting out with a new family – is simply one of the most responsible purchases you can make for taking care of your family. If you stop to think about what would happen to your family if you were suddenly taken out of the picture, you’d know how hard it will be, not only emotionally but financially as well.

Group Coverage vs Personally Owned Coverage

You may not need millions and millions of dollars worth of coverage, but you should at least acknowledge that if the need is there, you should have enough for your family to be comfortable after you’re gone. Many people have group insurance coverage at their workplace, but what they have to remember is that if they change employers, the coverage generally doesn’t follow them to their next employer. And if you do want to continue the coverage to another employer, it’s usually very costly to do so. Having ‘personally owned’ coverage is usually the best option if you know you may be switching employers over the next few years. That way, you can simply take your coverage to wherever you go to work next, knowing that you and your family are covered.

photo credit: Akuppa

photo credit: bluemodern

One of the hardest decisions to make when trying to purchase a life insurance policy is the amount of coverage you should have. You want to make sure that your family is well taken care of after you’re gone and not having to scrape by – because you didn’t choose a large enough life insurance policy in the first place. Having a plan in place that will allow them to vacation on the French Riviera every year isn’t necessary – though it is possible to have such a plan set up. You basically just want enough of a plan in place to keep them comfortable and not having to worry about their futures after you’re gone.

Hopefully, your estate will have far more investments in it besides a good life insurance policy. You need to have your other financial investments in place to make sure that the life insurance policy isn’t your family’s sole source of income from your estate. Of course, if you’re not married and have no family, your life insurance policy will be tailored completely differently. You may opt to have a smaller policy to take care of a relative or even a special pet – that part is entirely up to yourself.

Too Much or Not Enough?

If you over insure, you’ll probably be throwing money away on the unlikely chance of an early death. That is, unless you’re working in an industry where there are more workplace hazards than normal, such as a mining operation or working at a job in a volatile country. But if you under insure, you will always be worrying about whether it’ll be enough for your family once you’re gone.

Imagine yourself out of the financial picture of your family. If it doesn’t seem like your family will get by with the level of life insurance you chose, raise it until you’d be comfortable stepping out of the picture. The key is to balance what you can realistically afford to pay for now, to get the highest amount of coverage for later.

The last thing you want to have to think about when you’re deciding on your life insurance planning and who will benefit after you’re gone, is whether or not your children with special needs will be taken care of properly. Because of their special needs they will have specific financial needs, including medical treatments for possibly their entire adult lives. Children with special needs are still entitled to a good quality of life and the life insurance plan you choose to take care of them should reflect this as well.

You want to have a plan in place that will ensure that not only the financial aspects of their lives will be maintained, but also their physical and social ones as well. It’s very important that the life insurance plan – and benefits – you have in place, outlives your children. In this way, they will not be wanting for financial help throughout their entire adult lives.

Using Estate Planning and Trustees to Ensure Your Child’s Future

Through the use of special trustee plans and other legal methods, your life insurance plan can be set up so that your children with disabilities or other special needs can be well taken care of long after you’re gone. This is done in a variety of ways including talking matters over with a special needs planning group which you can contact through your local mental health departments, or directly with your life insurance broker. In this way you can begin to lay out a plan to ensure that your special needs children are going to be cared for when you are no longer around to do it. By having a trustee appointed to ensure that your last wishes are followed and with a sound financial plan in place, your children should be taken care of for as long as they need to be.

By working closely with your life insurance company, you can set up a special needs plan that will take into account all the aspects of the special care that your child may need in the coming years. Some things to keep in mind when setting up this type of plan can include:

• Proceeds from your insurance plan are generally not subject to probate fees and are usually available almost immediately after the parents’ death
• You need to make sure that the plan takes into account a full lifetime of support for your child including special medical needs that may arise
• The amount of financial benefits in your plan must outlive your child to ensure the quality of life is maintained for their entire adult life

photo credit: Ambism

While at the present time it’s possible to purchase life insurance across state lines, it may soon be a regular occurrence to be able to pick and choose the best – or the cheapest – health insurance plans across state lines, as well. A health insurance policy in Pennsylvania costs $1,500 annually while the same policy costs $4,000 in New Jersey because of that state’s government regulations.

In his political campaign and debates, Senator John McCain has come out in favor of allowing consumers to have access to more affordable health insurance choices that better suit their needs. He plans to do this by allowing insurance companies to market their health insurance plans across state lines. This would do away with the control that each state has over its own health insurance industry by having a federally-regulated industry that would be better able to meet the health insurance needs of the country’s consumers.

While the implementation of health insurance plans is directly affected by economic rises and falls, the life insurance industry remains fairly static, unaffected by such economic conditions. Being able to purchase a life insurance policy from an insurance company in another state, allows consumers to have the ability to choose the best overall policy plan for their circumstance. It also allows them to find the best available price for that customized life insurance plan.

If Life Insurance is Any Indication: State Lines may Reduce Premiums

Being able to search out and buy the best health insurance plan for you and your family will allow every consumer to have the widest possible range of choices when it comes to customized insurance policies. Consumers can shop anywhere in the country for the best mortgage plans, saving themselves many thousands of dollars simply by shopping around. Why not do the same thing with health insurance? Many legislators feel that this health insurance deregulation will end up simply being a ‘race to the bottom’ with some unscrupulous health insurance companies simply offering the lowest prices regardless of adequate coverage.

photo credit: JOE M500

Selling your insurance policy to a third party has become very popular over the last few years as hard economic times force many people to look at their financial plans in a new light.  Many senior citizens are also finding themselves holding onto insurance policies that they can not afford to keep paying any longer or that they simply no longer need.  This sector of the population is especially targeted by salespeople looking to market life settlements.  Life settlement companies take over payments on the policy and become entitled to receive the death benefit when you die.  Policy holders generally receive 10 to 80 percent of the face value of their settlements, which allows them to pay for unforeseen medical attention, pay off bills or take that special vacation of a lifetime.

It’s only in the last twenty years or so that policy holders have had any sort of choice at all about what to do with their insurance policies.  Before that time, they could only surrender the policy to their insurance company for the cash value, or let the policy lapse and potentially lose all their payments and the policy.  Selling a policy to a life settlement company allows the policy holder to tap into the value of their policies for emergency infusions of cash.  This has proven to be very beneficial for those policy holders going through extreme medical treatments such as cancer or AIDS and who find themselves in dire need of cash for hospital stays and expensive medications.

Approach the Sale of Your Life Insurance with Caution

As with any form of financial plan that sometimes seems too good to be true, selling your insurance policy to a life settlement company has its own set of risks.  Make sure that the life settlement company you’re dealing with is properly licensed with the state you’re in.  Also check for any sort of consumer complaints filed with the state board regulating insurance companies.  Shop around for the best price for your policy.  There is a wide range that companies are willing to pay for your policy so shop around and find the one that suits you best.  Because your old policy that you sell will still be in force until you die, it may be hard for you to get another insurance policy so be sure to look into this before you turn your policy over to a settlement company.