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.

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The Beckett Glaves Funeral Center in Brantford, has become the first funeral home in Canada to offer funeral services on live webcam.  This was the type of funeral Larry Ruidema Zudd’s family chose for him recently.

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

There has been a recent clampdown in places such as Oklahoma on the unscrupulous practices of buyers and intermediaries of life policies sold by seniors; there have been numerous instances where $1million policies have sold for as little as $35,000.

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

The recent recession has led to a U.S. public that is more cautious about its spending habits. In many ways, this is a good thing – people are saving more and spending less. However, the unwanted knock-on effect of this uncertainty about finances is that ownership of life insurance has hit an all time low, according to NYSE: Unum (one of the world’s largest insurers).

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.

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