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

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

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

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

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

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

Life insurance comes in many varieties and coverage levels. Being able to add onto your insurance policy is one of the most important options you can have. But remember that adding extras for your life insurance policy will almost assuredly add to your overall monthly premium cost. If you need the extra coverage – and you can afford to do this – the coverage is usually a good value. Some extras that are most popular with policy holders can include some or all of the items listed described below. Life insurance companies offer these extras in an effort to provide the most comprehensive coverage plans for you and your family.

The Waiver of Premium Extra Explained

The waiver of premium option allows you to skip premium payments for a specified time for reasons such as injury of illness. Even though no premium payments are being made, the coverage is still in effect – even for other family members. Another extra along these lines is the critical illness cover which takes effect in the event of a critical illness such as cancer. Part of the maturity amount of the policy is paid out in a lump sum to help with medical services or drug plans.

Add-ons Are Generally Worth the Extra Expense

Another extra you should look at is the accidental death benefit, which provides a large monetary coverage level to beneficiaries in the even of the accidental death of the policy holder. For a very modest rise in premium, coverage of up to a million dollars can be added on to the existing policy benefits. In the case of a terminal illness, the accelerated death benefit extra allows the insured person or their spouse to collect coverage benefits that will aid in the well-being and comfort of the terminally ill person. The amount forwarded will be deducted off the total payable amount upon the death of the insured.

photo credit: VirtualErn

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