One in three people die without leaving a will, usually in the mistaken belief that things will ‘sort themselves out’ if the unthinkable happened– especially if their lives appear to be fairly straightforward; maybe they have a spouse, kids and a house for example. However a recent case in the UK showed that this is definitely not necessarily the case, should you die intestate and without any significant life insurance.

Family left in Financial Difficulty when Husband died leaving no will or Life Insurance

Mandy Tenant a mom of three, found this out the hard way. Her husband Adam died suddenly without a will and had not taken out life insurance. With regard to strict intestate laws in Britain the estate was divided up between Mandy and her three young children, much being tied up in a trust fund for her kids. This meant that Mrs. Tenant was left financially insecure with no way to pay the mortgage, leaving the family in danger of losing their family home.

Mom told – if you want to keep your house then you will have to ‘Sue’ your children
On seeking legal advice she was told, by law firm Irwin Mitchell that the only way forward would be to sue her own children to gain control of the assets.  A representative at Irwin Mitchell said “This whole situation could have been avoided with a valid will leaving his wife in control of the whole estate”. Plus, If Mr. Tenant had taken out proper life insurance cover this would have allowed his wife to pay off the mortgage, on his death. Without either a will or life cover Mrs. Tenant, came to realize that, in this unfortunate situation, intestacy does not recognize partners.

Intestacy Laws do not always make sense

Intestacy laws in the US vary from state to state – in Alberta for instance, which gives unmarried couples the same rights as married, a surviving spouse may learn that she or he is entitled to no part of the deceased husband/wife’s estate. In fact it could happen that the entire estate has been given over to an ‘ex’ partner in preference to the existing spouse or even the deceased person’s children and parents.

Protect your Loved Ones by Taking out Life Insurance

As well as taking out a will – a necessary if unpalatable chore – the importance of making sure you have enough life cover is essential. By taking out enough life insurance to cover the cost of your mortgage you can at least rest assured that, whatever else happens, your family will not end up losing not only you but their family home.

 photo credit: smemon87

Source Telegraph.co.uk ‘No will? You’ll have to sue your children’ 13 August 2010

The original ‘baby boomers’ are now entering retirement, and much has been said about their lifestyles and approach to finances over the years. But recently attention has now turned to the so-called younger ‘baby boomers’ in their late forties.

The recent recession has apparently caused many of this newer generation to become far more worried than their predecessors about their financial stability in later life. A recent study called ‘Reclaiming the Futures’ by Allianz Life Insurance Company of North America studied the attitudes of Americans aged 44-74, and found that, though a small majority (54%) felt that they were unprepared for retirement ,many showed an increased awareness about the necessity of having to plan for their financial futures.

New Baby Boomers more likely to buy Life Insurance Products to Fund Retirement

47% of the younger generation surveyed – compared with just 35% of the older people questioned, stated that they wished to attain greater security and financial stability, and 41% as opposed to just 30% of their older counterparts said they wished to reduce financial ‘vulnerability’.

84% of respondents said that financial planning was more important than it had been pre recession.”The economic downturn has woke up many Americans to the challenges of retirement income but this younger boomer segment seems to have taken the lesson even more seriously” according to Gary G Bhojwani, president of Allianz Life. He also stated that “security and guarantees with retirement income are now very important to Americans.” Also, the younger boomer generation is also more comfortable with the idea of working with financial professionals – at 47%, 20% higher than the total overall of the group studied.

Agreed Annuities and Mutual Funds most Popular

Income products such as those with agreed annuities figured high in the opinions of the young baby boomers – and of those that own annuities around 80% considered themselves happy with them, with mutual funds the next highest at 63%.

Allianz Life Insurance Company has been in operation since 1896 and the company specializes in life insurance and mutual funds .

Source: InsuranceNews.net

 photo credit: Will Merydith

The American Government regularly issues a US State Department’s travel warning list, a list which life insurance companies and brokers use in order to work out the level of life insurance premiums they should offer to people working in these areas – or, indeed – whether or not they are willing to offer them life coverage at all.

Examples of countries on the list are: Somalia, Iraq and Haiti. In these countries, workers, including those volunteering in the aftermath of disasters and those working for construction companies, are likely to struggle to get life insurance. In Somalia crew members or divers who are there in order to profiteer are very unlikely to obtain life insurance.

Whether working for aid organizations, construction companies or adventuring in Somalia, the one thing all these employees have in common is that life insurance is a headache to find either for themselves or by employers on their behalf.

Aid workers Struggle to get Life Insurance

According to Ryan Pinney of Pinney Insurance Center, California “The more unstable and dangerous a country is and the more likely something bad will happen, the less likely you are to get insurance, not even from Lloyds of London which provides specialty insurance if you can pay the price”.

Members of the Red Cross and Peace Corps have to find life insurance for themselves because, as Pinney states “neither agency provides it for their volunteers” and, it could cost “24 to 50 per cent more for a policy because of the danger.”

31 Countries are Considered ‘Unstable’

According to the State Department’s web site a travel warning is issued when “long term protracted conditions make a country dangerous or unstable” and thereby “lead the State Department to recommend that Americans avoid or consider the risk of travel to that country.”

There are currently 31 countries on the list and reasons for being on the list vary from war to physical instability to terrorism or to the type of rebel violence recently witnessed in Mexico. People travelling to, or working in these countries face a daily high risk of being kidnapped, injured or killed and life insurance companies can feel that the costs of insuring anyone working in these conditions is prohibitive .

Government provides Life Insurance for the Military

The military obtain life insurance through the US government and many private insurance companies are willing to insure servicemen too, but the majority of life insurance companies will not provide insurance for contractors or volunteers working in war zones.

Source: SSCI-Iraq.com

 photo credit: timsnell

According to  recent figures produced by ACLI – The American Council of Life Insurers- around 75 million American families rely upon life insurance products for security in retirement and for other pressing financial requirements in the future.

ACLI, as well as the Association for Advanced Life Underwriting (AALU), GAMA International, The National Association of Insurance and Financial Advisors (NAIFA) and the National Association of Independent Life Brokerage Agencies (NAILBA) have written a letter to congress in the light of concerns about government proposals to change the rules regarding the tax code – rules which may affect current benefits on the kinds of private financial products offered by life insurance companies.

Congress is planning Changes to the Tax Code in order to Reduce National Debt

The reason behind the proposed changes is part of the government’s urgent goal of reducing the national debt.

In the letter ACLI state that while they appreciate that “The huge national debt is a crisis that must be addressed” their (the government’s) plans to replace this crisis with “a new crisis that damages the financial protection and retirement plans of millions of Americans would be misguided.”

And

“As changes are considered to the tax code … the vital role life insurers’ products play in the lives of 75 million American families must be recognized.”

Life Insurance Protects Against the Risks of Death of Wage Earners

Life insurance has long been recognized as providing an essential public service, protecting American families from the early death of a breadwinner, as well as providing a security net for the longer term – as people live longer, or need financial support through illness or disability. ACLI has stated that rather than undermining the public’s efforts to provide for themselves via private means, the “use of safe and secure financial products like those offered by life insurers…should be encouraged”.

A Change in the tax code could discourage rather than encourage members of the American public to “explore private retirement income options, whether individually or through the workplace”

Changing the Tax Code Unfair on Individuals who have acted prudently

The letter to congress also points out that changing the system now would be especially unfair on the millions of Americans who took “thoughtful and reasonable steps to protect their families. Years of personal sacrifice and careful financial planning could be undermined by such an abrupt change.”

What the government plans to do still remains to be seen – but what is certain is that the Life Insurance industry are prepared to do whatever it takes to persuade the American Government to call a halt to plans to change the tax code as regards life insurance products.

Source: Insurance news.net, targeted news service Nov 15

photo credit: Alex E. Proimos

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

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

No ‘One size fits all’ Life Insurance Policy

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

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

How to calculate life insurance requirements

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

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

Source: Stephen Smith, Delmarvanow.com

 photo credit: SMJJP