Survivorship life insurance

Because I have been vocal with my criticism of the inappropriate sale of insurance-based products, some people have concluded that I have a prejudice against insurance and the agents who sell it. Actually, the opposite is true. Insurance can be a valuable tool to help individuals, families and businesses create, protect and distribute wealth.

In its most basic form, the purpose of any type of insurance is to transfer the risk of a negative occurrence from one's self to an insurance company. For example, you don't buy auto insurance because you want to benefit from it. But if you're involved in a collision, your auto insurance policy will pay potentially thousands of dollars to repair or replace your car.

The same risk transfer principle applies to life, health and disability insurance. The death of one partner in a working couple might affect the surviving family's retirement security or jeopardize the remaining parent's ability to pay for the education of children. If your death will cause financial harm to others, you should consider purchasing a life insurance policy whose proceeds can help to replace the loss of your earning capacity. Stay-at-home mothers, who don't earn a salary in the traditional sense, also have a significant economic worth. If a woman dies prematurely, leaving a spouse and small children behind, her husband would have to either quit his job or hire someone to care for the kids. Life insurance proceeds would help to cover the cost.

A survivorship policy is a special type of life insurance that isn't as widely understood as traditional life insurance. Also called "second-to-die" insurance, this type of policy insures two lives in one contract. The death benefit is paid only after the second person dies. For this reason, the cost of a survivorship policy is typically much lower than two separate policies with the same combined benefit.

Why would you use a survivorship policy? These policies have traditionally been used by wealthy families to help pay estate settlement costs and taxes. Although current federal estate tax law allows unlimited death transfers to surviving spouses, assets remaining in the survivor's estate can still be subject to estate taxation at the second death. In 2008, the federal exemption limit is $2 million. After 2010, the exemption is scheduled to return to a reduced level of $1 million unless Congress enacts new legislation. The proceeds from a survivorship policy can be used to pay those costs, keeping the couple's assets intact for their beneficiaries.

Survivorship insurance can be used to create a more substantial inheritance for your heirs. Because of its reasonable cost, a couple without significant wealth can buy a survivorship policy with a larger death benefit than they otherwise might be able to afford.

Parents of a child with special needs due to a physical or mental disability can use survivorship insurance to create a pool of money to care for that child after they are gone. If the child receives government assistance, it's essential to carefully plan for proper ownership and beneficiary designations to avoid inadvertently disqualifying the child's entitlements.

Besides its reasonable cost, one particular advantage of survivorship insurance is that otherwise uninsurable individuals can still qualify. Since the policy only pays a benefit after the second death, the poor health of one party isn't as big a concern to the insurance company as it would be for an individual policy.

Unless the policy has been set up to be paid in full over a specific number of years, it's possible that the survivor will be required to keep paying premiums after the first death. Before purchasing such a policy, be sure the premiums will continue to be affordable regardless who dies first.

These types of policies are often owned by irrevocable life insurance trusts, which are also named as the beneficiary of the policy proceeds; the language of the trust itself specifies the ultimate distribution to your heirs.

Special tax regulations permit the insured individuals to make gifts of cash to the trust, which are used by the trustee to pay the insurance premiums.

As with all types of life insurance, you need to determine an appropriate death benefit , which type of policy best suits your needs, and have a thorough understanding of the costs, guarantees, cash value, and other factors.
source:http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20080413/BIZ/804130315&sfad=1

Five tax-time insurance savings

For many people, the first thought that comes to mind when they think of insurance is costly premiums. But as April 15 approaches, remember that some insurance products come with tax advantages that can save you money.

Consider these five insurance tax reminders by the nonprofit Life and Health Insurance Foundation for Education (LIFE). Some of the benefits include using various types of insurance to pay your estate taxes, helping you accumulate money on a tax-free or tax-deferred basis and even lowering your taxable income.

— Life insurance death-benefit proceeds are generally income-tax free. As long as your beneficiaries are specifically named, they won’t have to pay income taxes on the proceeds they receive from your life insurance policy.

— The premiums you pay for long-term care insurance may be tax deductible. Sixty-five percent of 65-year-olds will require long-term care services at some point in their lives. For the many who will require services for several years or more, the cost can be astronomical, so it often makes sense to consider long-term-care insurance. Depending on your age, adjusted gross income and other medical expenditures, the premiums you pay may be tax deductible on your personal income tax. If you are self-employed, there are even greater tax advantages by paying your insurance premiums through your business.

— Cash values that accumulate in permanent life insurance policies are income tax-free or tax-deferred. The annual gains you earn from traditional investments and savings vehicles must be claimed as income on your tax return. However, the gain in cash value that builds up over time in permanent life insurance policies can be tax-free or tax-deferred, depending on how you withdraw the money later on. What’s more, these gains are not subject to the alternative minimum tax.

Funds accumulated in a deferred annuity are tax-deferred until you withdraw them. An annuity can provide you with a guaranteed lifetime income and thereby deliver some much-needed stability and predictability to your retirement security plan. Moreover, with an annuity all gains are tax-deferred until you retire — at which point you may be in a lower tax bracket than you are currently. The portion of the funds paid out that are made up of previously taxed principal will be received tax-free. If you’ve hit maximum limits in other tax-deferred retirement savings accounts, an annuity can be an attractive option.

— An irrevocable life insurance trust (ILIT) can help minimize estate taxes. While life insurance proceeds at death are almost always free from income tax, they may be subject to estate taxes if they bring your assets over the exemption limit set forth by the IRS. An ILIT immediately removes new life insurance policy proceeds from one’s taxable estate by setting up an independent legal entity that is the owner and beneficiary of the policy. The ownership of an existing policy may also be changed to an ILIT, but the death benefits won’t be tax-free until three years have passed from the date the ownership was transferred to the ILIT.
source:http://www.timesrecordnews.com/news/2008/mar/14/five-tax-time-insurance-savings/

Life Insurance for Children

Some companies sell it. Others hate it. Is it ever smart to buy life insurance on your children's lives?

It's a tricky subject. In a Bankrate article, the chairman of Allianz (NYSE: AZ) Life said that he believes selling life insurance for kids is contemptible. But many other companies offer it.

The other day, on our Insurance discussion board, Community member SlayTheDragon shared a scary account of how his 17-year-old daughter barely survived a car accident. It shook him up enough to wonder, given his family's tight finances, if he should get some insurance on his kids' lives to cover funeral expenses, should it ever come to that.

My take has long been to say no, few people need insurance on their children. Life insurance is meant to protect an income stream that can disappear due to a death. That's why parents should consider carrying it -- because others are depending on their income.

Many good points were made on the board:

1 Kook79 noted that parents might face steep medical bills, too. He also noted that children don't have high mortality rates or any financial issues that need to be resolved upon death. I can't argue with that -- the odds of needing this insurance are extremely low. We should all make sure we're protected against more likely calamities before tackling this grim one.
2 EmbraceableEwe noted: "The true problem is that you have insufficient funds, period -- i.e. for any 'emergency' which comes up." Exactamundo. We all need to have emergency funds available. Learn more about them in our Savings Center.
3 Esbita, who sells insurance, pointed out that riders can be added to parents' policies, providing for children.

There were many good points made, so I encourage you to check out the whole discussion.

My bottom line remains that it's probably best to bypass this insurance. Instead, though, you might take the money you'd have paid in premiums for it and park that in your emergency fund. That's a good way to help your child no matter what happens.
source:http://www.fool.com/personal-finance/insurance/2008/03/14/life-insurance-for-children.aspx

Life insurance is essential for everyone

Life Insurance is a contract for payment of a sum of money to the person assured (or failing him/her, to the person entitled to receive the same) either in case of a death of the person insured or after completing the maturity period of the policy. We must accept that all of us, in different walks of life have many needs to meet, families to be taken care of and dreams to be fulfilled. It is possible that we may be able to fulfil our responsibilities towards these during our lifetime.

But will our families be able to maintain a manageable standard of living in our absence? To ensure that a financial protection plan through life insurance comes handy.

Planned properly, life insurance can also provide for the unusual needs like higher education of children or their marriages. The add on benefits (riders) that come with life insurance at a little extra cost, can also take care, to some extent, of the loss of income due to disability or pay for the medical expenses in case of critical illness and can generate higher benefits in case the person assured dies in an accident. Besides, through life insurance one can also plan for regular income after retirement.

Not expensive
It is wrong to believe that one needs to spend a fortune in premiums to get a good insurance cover. Here is a simple example of the value of the insurance cover one needs to take and how much premium one has to pay: Here is a 30 year old person, drawing a gross salary of Rs 6 lakh per annum (Rs 50,000 per month), and has a family of four (wife who does not work and two kids). His monthly household expenses is around Rs 20,000. If this person meets an untimely death, his family will still need Rs 20,000 a month to meet the expenses.

Assuming that this person had taken a insurance policy worth Rs 25 lakh for a 25 years term by paying an annual premium of around Rs 35,000 or Rs 2,916 per month, his family would get Rs 25 lakh on his death. This money, invested at an interest rate of 9 per cent would yield around Rs 19,000 per month. Thus by paying a premium of around Rs 2,900, this person can easily provide financial independence to his family.

Another pertinent point here is that this person being young will have to pay considerably lower premium than someone at the age of 45. This is the primary reason why we should buy life insurance at an early age.

Savings factor
Life insurance is also a good option for savings though one cannot compare an insurance product with other pure investment schemes for the simple reason that life insurance offers life cover and other products don’t.
One should always keep this in mind before comparing other investment options. In life insurance, unlike non-life products, you get maturity benefits on survival at the end of the term. In other words, if you take a life insurance policy for 20 years and survive the term, the part of the amount invested as premium in the policy will come back to you with added returns. In the unfortunate event of death within the tenure of the policy, the family of the deceased will receive the sum assured.

Now that most insurance companies are offering unit-linked insurance plans, investors can get stock market-linked return with life cover.

Insurance as tax planning
Insurance also serves as an excellent tax saving mechanism as the premium paid for self insurance or for the dependents in the family gets deducted from the taxable income.

The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets. At the peak tax rate of 30 per cent, savings can be substantial.

Planning for old age
Retirement, an age when every individual has almost fulfilled his responsibilities and looks forward to relaxing, can be painful if not planned properly. Have you considered the increasing inflation and taxes?

Will your investment offer you attractive returns under such circumstances? Will it take care of your family after you? An insurance policy will definitely take care of these and a lot more.
source:http://www.deccanherald.com/Content/Feb282008/bannking2008022754589.asp

Reliance Life Insurance launches Reliance Wealth + Health Plan

Life insurance major Reliance Life Insurance has launched the first-of-its-kind Reliance Wealth + Health Plan, a unit linked plan coupled with health benefits.

The launch was announced by Mr. P. Nandagopal, CEO, Reliance Life Insurance. The Reliance Wealth + Health Plan is the first wealth creation product that also offers comprehensive health coverage as a key differentiator in the domestic insurance market.
"The unique proposition of this plan is that it offers complete investment flexibility to grow wealth by investing in different plans and funds and also provides the financial support for managing health expenses. It is in line with our strategy to offer best-in-class products to our customers" said Nandagopal while launching the product.

The plan offers the convenience of cashless payments, cover for the entire family under one plan and the option to increase life cover to provide additional security.

"With annual premium as low as Rs 10,000 to Rs 12,000 per annum, the insured can get health and saving benefits and protect himself/herself against high or unexpected medical bills. The plan provides lumpsum benefit to take care of hospitalization expenses, which include daily hospitalization expenditure, intensive care unit expenses and post-hospitalization spending in the form of recuperation benefits", he said.

The plan offers enhanced health coverage against life threatening illnesses and major surgeries, with all insured having an option to cover themselves against untoward incidents as well. Likewise that the amount towards medical expenses can be availed a number of times in a year and up to 95 per cent of the fund value can be withdrawn during the policy period.

"The policyholder can avail all the benefits with all features of ULIP for maximum flexibility and liquidity, minimizing risk, maximizing returns and averaging cost of units. The plan also contains coverage's with a bouquet of riders available for all lives under the policy and has significantly lower charges and free switches for best risk appetite fund. This is the only plan that provides such additional value with a maturity benefit at the end of the policy term" said Mr Nandagopal.
The product is expected to contribute 35-40% of the total sales of the January-March quarter, 2008.

''We expect a significant business growth on the back of this product, as so far people have not been provided with adequate choice of quality insurance products,'' he added.

source:http://economictimes.indiatimes.com/News/News_By_Industry/Healthcare__Biotech/Reliance_Life_Insurance_launches_Reliance_Wealth__Health_Plan/articleshow/2827464.cms

Making the first move

If you are looking to invest in an individual savings account (ISA) for the first time you have picked the right moment. The options for investing are about to be simplified and expanded.

Until 5 April you can invest £7,000 into an ISA each year, either through regular, usually monthly, savings or an annual lump sum. The returns from this investment, either in the form of income or capital gains, will be tax free.

From 6 April, however, you will be able to invest up to £7,200 each year into an ISA. But if you have not invested for the tax year 2007/08 you still have time to benefit from tax-free savings for this financial year.

Wrapping up your investments
An ISA is not an investment – it is a wrapper that creates a tax-free environment for your investment in stocks and shares, or cash. Again, under current rules, you can invest the whole of your £7,000 ISA allowance into a stocks and shares ISA, called a ‘maxi-ISA’. Or you can split your allowance and invest in two ‘mini-ISAs’, with up to £4,000 in stocks and shares, and £3,000 in cash. Once you have committed yourself to either a maxi or mini ISA you can’t, within that tax year, change your mind.

But this won’t be a concern for much longer because after 6 April the maxi/mini ISA options, which were deemed to be confusing for investors, will be abolished. The choice will be much simpler – you can either invest £7,200 into a stocks and shares ISA or £3,600 into a cash ISA and the remainder (i.e. up to £3,400) into a stocks and shares ISA. You will also be able to re-invest the £3,600 from cash into stocks and shares at a later date if you wish.

To make the definition clearer, however, within a stocks and shares ISA you can hold individual equities, or collective investment products such as unit trusts, investment trusts and open-ended investment companies (OEICs) and life insurance products.

Within a cash ISA you can hold deposit accounts from banks and building societies, national savings products and other cash-based products like money market funds.

There are also eligibility rules to ISA investing. You must be older than 16, although up until age 18 you can only invest in a cash ISA. You must also be a UK resident for tax purposes and you can’t invest in an ISA on behalf of anyone else or own one jointly with anyone else. But each individual can hold one, so couples would be able to invest £14,000 (or £14,400 after 6 April) in a tax-free wrapper each year.

Also under the new rules, if you have money in a child trust fund account, once the child becomes 18 that money can be rolled over into an ISA.

The key attractions
But why invest within an ISA? The real advantage is the tax-free aspect. You will not pay any capital gains tax on your investment as it grows or when you cash it in. There are also income tax benefits, in that money held in a cash ISA benefits from a 20 per cent tax reclaim. If corporate bonds are held with the ISA any interest on those have a 20 per cent tax-reclaim entitlement.

Higher-rate taxpayers benefit by being exempt from paying 32.5 per cent tax on dividends on equity investments within their ISA. While interest paid on cash held temporarily within a stocks and share ISA is taxed at 20 per cent, there is no further
tax payable for high-rate taxpayers, and there is no further liability to income tax on dividends received from your ISA.

The beauty of it all is that your ISA manager, unless they receive income gross of tax, will reclaim the tax savings from HM Revenue and Customs on your behalf. ‘Someone who started subscribing to an ISA when they launched in 1999 will, by next year, have had the opportunity to shelter almost £60,000 in subscriptions from CGT,’ says James Daly, a representative at online broker TD Waterhouse Investor Centre. ‘Though ISAs can reap significant gains for investors, they are also a cost-effective way for long-term savers to maximise returns on smaller contributions.’

He adds, ‘Even if the portfolio is modest today, small sums invested over ten years or more, if invested well, can grow significantly by the time the investor is ready to cash the ISA in. Anyone who is planning to invest more than a few thousand pounds
in the stock market can reasonably expect to make a capital gain in excess of their annual allowances at some time in the future, and by choosing an ISA carefully they can protect their investment from CGT in a cost-effective way.’

So you don’t have to invest the full annual ISA allowance. However, as Daly says, ‘An ISA can be particularly useful for higher-rate taxpayers after income, because it caps the tax on dividends at ten per cent, although it does not eliminate it like it used to, as the ten per cent tax credit on equity dividend payments within an ISA was abolished in 2004.’

Many ways to save
If you are investing for the first time there is a myriad of ways you can start ISA saving, either direct with the ISA provider, which could be a fund management house, bank or building society, or via an independent financial adviser (IFA) or a stockbroker.

Depending on the service you opt for, an IFA or stockbroker will either invest in the things you tell them to but advise you on where and when to do it, or manage your investments for you, in line with your instructions, on a discretionary basis.

You will, of course, have to pay for these extra levels of service and it is worth shopping around for the best deal – and for the IFA or stockbroker with whom you feel you can have a trusted relationship.

‘Novice investors can use a broker who will manage the ISA on their behalf,’ says Daly. ‘They will assist in the fund choices and keep the investor regularly updated on the ISA’s performance. If an investor wishes to manage their own ISA without advice they may want to consider using an online broker, for which the charges tend to be lower. To get the most from regular smaller investments, the charges to manage and trade within an ISA must be low.’

Generally speaking, a stockbroker will not offer cash ISAs. ‘Private client stockbrokers should be one of the first ports of call for direct investment into the stock market,’ says Derek Gawne, business development director at stockbroker WH Ireland, which has branches throughout the UK.

He adds, ‘As for whom should use stockbrokers, it depends on the risk profile of the individual and what they are looking for. Clients can have as much or as little involvement as they want. They can be an execution-only client, where they give instructions and choose their own investments, or they can have full discretionary status, where we do it all for them. Or there are the advisory services in between.’

There are also online stockbrokers whose transaction costs are lower, but where the stockbroker is literally just transacting your instructions and there is no advice. Gawne concedes that because the bulk of his business is advising investors, the charges
are not as cheap as for transaction-only brokers.

‘We believe we are adding value
for the charges,’ he says. ‘We charge
a percentage of the value of each transaction based on what has been agreed with the client. We believe it
is the relationship that matters, and the individual client has a client adviser here who would be their
main contact.’

A broad spread
The key aspect of any investment is
to diversify – to spread your assets across a range of different investments. In that way, you have a chance of offsetting losses from one sort of investment against gains in another.

Once you are invested in an ISA, your money is not locked away: you can withdraw it at any time. But you must bear in mind that if you do, you use up the respective tax-free portion of your annual ISA allowance for that year.

ISAs have to be top of your list as an investor. If you have a lot to invest it makes sense to invest in ISAs first off to get the tax-free savings. If you have a little to invest the same argument stands. You may want to be saving for the short or long term, but you can access your money from an ISA so they can suit savings for the proverbial rainy day, school fees or special holidays, or for the longest holiday of all – retirement.
source:http://www.whatinvestment.co.uk/saving-money/saving-and-banking/306816/making-the-first-move.thtml

Life Insurance Rate Quote – How Yours Will Be Determined

In order to get a life insurance rate quote, you must first determine what kind of life insurance policy you want to purchase. There are two basic kinds of life insurance policies – term life insurance policies, and whole life insurance policies.

Term life insurance policies offer life insurance coverage for a “term.” This means, your life insurance coverage will last for a certain period of time. Most term life insurance policies offer coverage anywhere from five to thirty years. How long your term life insurance policy lasts is up to you.

Term life insurance policies appeal to people because of the lower life insurance rate quote. Term life insurance policies are usually less expensive than whole life insurance policies, because term life insurance policies don’t offer, or require, the components that whole life insurance policies do. When you purchase a term life insurance policy, you’re purchasing pure life insurance.

In contrast to term life insurance policies, whole life insurance policies offer life insurance coverage for the rest of your life. They also provide a required savings component along with the whole life insurance policy.

Some people are attracted to this savings component because it allows the whole life insurance policy to accumulate a cash value. The policyholders can use that cash value in certain times, such as times of financial stress, or times when they want to put the accumulated cash toward their policy premiums.

When you begin your search for a life insurance rate quote, take note that your life insurance rate quote will most likely reflect the type of life insurance policy you decide to purchase.

You’ll usually pay less for a term life insurance policy, and get simply the life insurance coverage you want. You’ll usually pay more for a whole life insurance policy, but get extras you might need. Consider the life insurance rate quote based on the coverage, and extras, you want with your policy.

Source:http://www.bestsyndication.com/?q=20080213_how_are_life_insurance_rates_determined.htm

Investing to save tax

Advisor: While it would be difficult for anyone to single out one single instrument that is best for everyone across the board, you must appreciate that the list of eligible instruments is kept wide enough to cater to different classes of investors by the income tax authorities.

For instance, someone who is risk-averse can opt for life insurance or five-year deposit with a bank. For someone keen on saving tax, even on income arising out of the instrument would prefer PF or PPF. Then, for the young and high net worth, with a good risk appetite can go for ELSS.

Investor: Tell me more about ELSS.

Advisor: ELSS is abbreviation for Equity-Linked Saving Scheme. This is one of several schemes by the mutual funds and is popular among high net worth tax payers because of their unique features Investor: What are these unique features?

Advisor: As the name suggests, this is a scheme which predominately invests in equity shares of companies. Under the regulations, the scheme has to invest 80 per cent of its corpus in the equity shares and the balance 20 per cent can be invested in other instruments like bonds, debentures, government securities and others.

Investor: This implies that by putting my money in ELSS, I am participating in the stock markets and therefore, exposing myself to risky investment.

Advisor: Yes, you are. But the advantage here is that there is no direct participation in the stock markets or in a particular stock. So, you have a basket of stocks that have been selected by professionals.

Since these professionals or fund managers, as they are known have access to elaborate research facilities and insights into the functioning of the companies and consequently, you get the benefit of those skills which go into systematic stock selection.

Investor: Are there any other benefits?

Advisor: The other benefits come on the taxation front. If you are making an investment in of Rs 1 lakh you will be entitled for a deduction equal to Rs 1 lakh from your gross total income under section 80C.

In other words, someone who is in the highest income bracket of 34 per cent (30 per cent + 10 per cent +3 per cent), investing Rs 1 lakh in ELSS reduces the tax liability by Rs 34,000.

Effectively, it means that you would have invested only Rs 66,000 because you are getting a benefit of Rs 34,000 on Rs 1 lakh. Assuming the mutual fund declares a dividend of 9 per cent, your return on Rs 66,000 would work to 13.63 per cent (9,000/66,000 × 100).

Investor: What else?

Advisor: This is not all. This dividend of Rs 9,000 on your own Rs 66,000 is totally exempt in your hands under section 10(35). In effect it is tax free return in your hands.

Investor: What are the other tax implications?

Advisor: There is yet another bonanza from ELSS awaiting you and that is: whatever capital gain that you will make on this investment after a lock in period of three years is also totally exempt from tax in your hands under section 10(38).

Investor: That is great news

Advisor: Yes. This is what makes ELSS the most attractive investment for those who have the appetite for moderate risk. However, before you rush, do select a good fund house based on its reputation and track record.

source:http://www.business-standard.com/common/news_article.php?autono=312368&leftnm=2&subLeft=0&chkFlg=

ESTATE PLANNING column: Two ways to sell life insurance policies

Q: I have a couple of paid life insurance policies that have a significant cash value. I was thinking about cashing the policy, but a friend suggested that I sell them. Is it possible to sell a life insurance policy?

A: There are a couple of ways to dispose of a life insurance policy. The most common is to surrender the policy to the company and receive the cash value.

Another option, which will grant you access to the cash value without disposing of the policy, is to take a loan from the policy. You can borrow the cash value or a portion of it and still retain the policy. The death benefit will be reduced and you may have to make payments on the policy, but the face value of the insurance proceeds should remain.

Under certain circumstances, life insurance policies can be sold. There are companies in the marketplace which can assist you with the sale.

Generally, the sale of a life insurance policy falls into one of two categories: life settlements and viatical settlements.

Life settlements involve the selling of a life insurance policy on the life of a healthy individual, usually over the age of 65. If you choose to investigate life settlements, don't be surprised if the cash offer is less than you might expect. The life expectancy of the insured will determine the policy's value. In other words, the longer you are expected to live, the less someone will likely be willing to pay you for the policy.

Viatical settlements are similar to life settlements, only they involve chronically or terminally ill individuals. Viatical comes from the Latin word "viatic," which means really creepy guy hoping you will die soon. Just kidding.

Viatical settlements usually result in a higher sales price, since your life expectancy is limited and the investor will recover his investment sooner.

Death is usually expected within two years. Viatical settlements were the big thing years ago as the AIDS epidemic ravaged society. However, with the invention of new treatments, investors soon found themselves owning life insurance policies on the lives of people who outlived expectations.

I suggest that if you are serious about cashing out of your life insurance, you contact your agent and discuss your options. You likely are going to get the hard sell and probably have to look at a bunch of graphs, but you are also going to get answers from someone in the business who really understands life insurance. Your agent might be able to get you some cash and leave in place a policy that will meet your needs.

If after talking to your life insurance agent you still want to pursue selling the policy, contact your attorney and accountant. Your decision to sell should not be taken lightly, and you should be fully informed before doing so.

Opinions expressed solely are those of the writer. Christopher W. Yugo is a member of the Indiana Bar and a vice president and senior trust Officer for First National Bank's Trust Department. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN, 46321. Yugo’s information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant or estate-planning specialist.

source:http://www.thetimesonline.com/articles/2008/02/03/business/business/doc612d46c98d0d0041862573e1006c8fff.txt

Life insurance sector shrugs off volatile equity markets and rising interest rates

The latest Ernst & Young Insurance index shows that life insurance confidence remained at the maximum level in the fourth quarter of 2007. This strong confidence was measured despite slower premium and investment income growth. Even so, despite the tapering off in growth, both categories of income remain nevertheless, strong.

This is the 18th quarterly survey conducted to measure confidence in the life insurance industry. Life insurance confidence leads that of the banking industry (96 points), and investment management confidence (98 index points).

Comments Tim Rutherford (Pictured right), insurance industry spokesperson at Ernst & Young; ‘The perception of an industry under siege has passed. Life insurers fared well in 2007, and we expect the reporting season for the year to be solid. The interim results for the half-year to June were already buoyant, and indications are that operations were generally in better shape in the second half of 2007 for most life insurers.’

Continues Tim Rutherford, ‘ Investment income remained strong in the fourth quarter. This is despite more volatile equity markets, and is reflective of strong investment income stemming from commercial and retail property rentals, higher interest income earnings, and other realisations on investments.’

‘However’, cautions Rutherford, ‘ Life insurers are not expecting the strong investment returns to hold into 2008. The outlook is that investment income will contract in the first quarter of the year, and although they have proved to be pessimistic about investment income earnings, it is most likely that investment income growth will at least taper sharply downwards in the quarters ahead.’
Also supporting higher confidence is:

* an improvement in lapse rates,
* continued improvements in efficiencies,
* a stemming in outflows from the life book, and
* improving risk profitability business.

Comments Tim Rutherford again, ‘ Operationally, the life insurers have been working at improving their processes and ways of conducting business. This has happened over a number of years, and is an ongoing exercise. I think we are starting to see the benefits from those projects paying off."

"Life insurers have not been alone as far as restructuring their businesses, but they probably felt the pressure more readily than most other industries. A few years back, they faced a contracting life book, squeezed profitability on the remaining business, and increasing costs of doing business.’

Continues Rutherford, ‘ It appears that the life book is at the very least not contracting any longer, with growth in inflows exceeding that of outflows for the last three quarters. Whilst it is too early to draw any definite conclusions, it appears that the life book is at least holding stable, after contracting considerably in 2003 and 2004, and more moderately into 2005 and 2006.’

Other findings include a fall in the lapse rate. The overall trend is one of improvement made in reducing lapse rates. Says Rutherford again, ‘ This is one of the areas where life insurers have placed a lot of emphasis on improving. In the past, rising premium income was often offset by sharply increasing lapse rates. Considerable effort has been made to ensure that a larger portion of new premium income was retained by reducing lapses post the sale.

Efficiencies have consistently improved over the last few years, despite higher employee numbers. Rutherford points out that it has been necessary to grow employee numbers to cope with higher capacity requirements.

However, he adds that unlike the banking and investment management sectors, employee growth trends at life insurers have been more erratic. This is most probably due to the aforementioned restructuring of business processes and operations that the industry has experienced.

Concludes Rutherford; ‘In line with the other financial services sectors, life insurance industry confidence remains high. In fact, life insurance confidence is the highest of all the financial services sectors. Life insurers are not as prone to interest rate increases and volatile equity markets as immediately as their banking and investment management peers, respectively are."

"However, slower consumer expenditure is likely to ultimately impact the retail side of their business, particularly in new market segments, where life insurers are playing more and more. For the moment, however, they are benefiting from business restructuring and process re-design. Despite slower profits and premium growth, both remain at high levels.‘
sourcehttp://www.itinews.co.za/companyview.aspx?cocategoryid=89&companyid=21727&itemid=05318001-1E07-416D-88AB-C624CBC66031

Credit Cards May Help With 'Life Events'

The two banks, along with some others, are more than happy to help defray some of the cost of your wedding, having a baby, moving, retiring, losing your job, or even a nasty divorce.

Yep, this is your chance to take advantage of one of these banks, just as they did when you were one hour late in making a credit card payment.Now before you ask my editors when they last had me take a drug test, what I am telling you is absolutely true.

But, before you even think about picking up the phone and signing up, you MUST DO EVERYTHING I TELL YOU. Banks and credit card companies that offer debt cancellation or debt deferment plans will make tons of money off you if you fail to dot one "i."

Now, once in a while I like to play with fire. If you don't have the stomach for it, just enjoy reading this column without taking any action. Live vicariously.

And before taking action, there are two musts. First you need to have, and be VERY familiar, with online banking to keep instantaneous track of your account and be able to make immediate payments. Second, you must READ EVERY WORD in the credit card company's offer. Yes, that includes all the fine print.

So far, these plans have pretty much flown under the public radar. They were originally geared mostly to provide a sort of insurance in case of death, disability, identity theft, and involuntary loss of your job.

My focus is on the more recent features. Neither Consumer Reports editor Charles Fields, nor Justin McHenry, research director of IndexCredit Cards.com, had heard of the "life event" features.

They both cautioned consumers not to take these plans for death and disability benefits because the cost tends to outweigh the benefit. And McHenry, while intrigued with my experience, warned that it's not for average consumers who aren't willing to keep close track of their finances.

To explain how it works, I will tell you my experience. About two weeks before my October wedding, while checking on the status of my Bank of America credit card, the service representative suggested I enroll in its Credit Protection Plus plan.

I asked why I should be interested, as I already have life insurance. She said the plan has many other features, including paying benefits if I get married. Those were the magic words.

So let me get this straight, I said. If I enroll in this plan tonight, and I get married in the next two weeks, Bank of America will make three of my minimum payments on my credit card? And all it costs me is a one-time fee of 95 cents for each $100 of my balance? Yes, she replied.

And, I asked, I can then cancel and not have to pay another fee. Yes, she replied. The fee, if I don't cancel, would then be tacked onto my bill each month, increasing my balance.

Since I was carrying a high-balance, low-interest introductory loan (the maximum the policy covers is $25,000), I quickly calculated that the bank would be paying me about $500 a month in return for less than $250 from me.

I told her to sign me up. I then checked with Chase, where I also have a sizable low-interest credit card loan (did I mention I like to play with fire?), and was told they have a similar, but less generous plan. Chase would waive up to five months of minimum payments, saving me substantial interest, in return for my taking out its plan at 89 cents per $100. Sign me up, I said.

After our wedding, I immediately notified both banks that I wanted to trigger the benefits. They both promised to send me a packet and told me I would have to get proof of marriage.

I mailed the applications and marriage certificates to both banks and waited, while my stomach turned a little as I wondered if I had done something stupid. It would not be the first time.

I consoled myself knowing I would at least get a column out of the experience. I had some doubts, though, that the bean counters in our Chicago headquarters would approve my expenses if I included the payments I had made to purchase the plans.

The first things to appear on my online bank statements were, of course, the charges from the two plans.

source:http://www.courant.com/business/hc-watchdog0127.artjan27,0,2336411.column

Life insurance most important policy for consumers

Prudential has conducted research that reveals people would sooner relinquish non-essential goods/services such as mobile phone contracts before surrendering their payment protection or life insurance policies.

Recent fears regarding the credit crunch and rising energy and foods costs has led to people looking for ways to cut back, especially given the new worries about the prospect of a recession in the US.

According to seven out of ten of those surveyed, the first thing to go would be television subscriptions, followed by mobile phone contracts.

Only one in ten would give up their life insurance policy due to a tighter personal budget.

Over a third of respondents cited life insurance as their most important policy.

The second most important policy, ranked highest by a fifth of people, was income protection.

Sammy Rubin, PruProtect’s chief executive officer, explained that as the credit crunch continues and financial turbulence ensues some people will want to reduce their outgoings and look for areas to cut back on.

source:http://www.insurancedaily.co.uk/2008/01/22/life-insurance-most-important-policy-for-consumers/

The Convenience of the Online Life Insurance Quote

If you are the breadwinner in the family or not one thing that you should be thinking about is a life insurance policy. What would happen to your family if you were to leave this world? How would your family survive. You need to make this one of your main priorities. Today with the internet access if is quite easy to find a policy online that will meet all of your needs. Online life insurance quotes are right at your fingertips, so take advantage of the opportunity.

If you were to shop around for a life insurance agent to have he or she help you find what you need, you may get pressured into something that you don't really need or want. With online life insurance quotes, there is no pressure. Shop at your convenience, with no pressure and no underwriter pushing you into something that you don't want.

Get Your Quote Online

Before you start looking for your online insurance quote, you need to get your information in order and there are some things that you need to think about before starting. There are a lot of companies out there that will help you find what they think that you need. Now some of these companies are good at figuring out what you need, by the way that you answer there questions. But there are a lot of companies who will just about sell you anything, whether you need it or not.

Assess Your Current Situation

One of the first things that you need to do before going online looking for coverage is to make an assessment of your finances are what your present situation is. One thing that you must realize is, even though you know that you need to get your family some assurance for yourself, it does mean that you have the spare income to make the payments. For people who are on a tight budget, the best policy for you would probably be a term life insurance policy. What you don't want to do is to get some policy that the price of the premium is to high. You don't want the insurance bill to just pile up on your desk and you know that you can't afford the policy, even though you know you need it. Term life insurance is the cheapest policy around. But make sure that is the one for you. Read the other articles that I have explaining what the differences are.

Don't become miserable after you purchase the policy because the premium is to big. Make sure you evaluate you situation before starting. Consider this before you start your search for online life insurance quote. The purpose of the policy is to get coverage for your family after your death. Know how much money they are going to need to life the life that they currently live. Make sure that you know this information. Bills, mortgage, rent, etc. should all be added up to determine this amount. In fact this should be the basis when asking for a quote online. How much does my family need to live comfortably after I have left this world.

Source:http://ezinearticles.com/?The-Convenience-of-the-Online-Life-Insurance-Quote&id=836029

Insurance rates yet to catch up with reform

Just 32 homeowner's insurance companies have lowered their premiums to the standard imposed by the Florida Legislature last spring.

A presentation made to the Senate Banking and Insurance Committee by the Florida Office of Insurance Regulation shows those rates apply to 17.6 percent of the market -- or about 717,706 homeowners' policies. Those rates were cut by an average of nearly 22 percent, but exclude several companies -- including State Farm, the state's second-largest insurer behind the state-run Citizens Property Insurance Corp.

The report said no rate increases have been approved.

However, 24 companies still have final rate cuts pending, 31 have been disapproved or received notice of intent to disapprove and five have withdrawn their requests.

Some of the rejected insurers plan to refile. Others asked for an administrative hearing.

The companies with pending filings insure nearly 46 percent of the market, or 1.89 million policies, and proposed an average rate decrease of 11.1 percent. The companies with rejected filings cover 32.5 percent of the market, or 1.33 million policies, and requested an average 12.8 percent increase.

source:http://www.bizjournals.com/tampabay/stories/2008/01/07/daily36.html

New rules aim to cut rejected insurance claims

Fewer insurance claims will be turned down from now on, after the insurance industry signed up to new rules.

Trade body the Association of British Insurers (ABI) said people would benefit from a new industry commitment to pay out on protection policies even where medical information has not been disclosed, unless the claimant deliberately withheld it.

Thousands of claims on critical illness, income protection and life insurance policies are rejected every year because holders have failed to give relevant medical information.

The ABI said, from now on, in cases where such information has inadvertently not been provided, insurers would pay out a "fair sum, reflecting risk and premiums paid".

In a small number of exceptional cases, premiums will be refunded if the insurer decides it would not have taken on the policy had it known the full facts.

Stephen Haddrill, the ABI's director-general, said: "Customers want to know that their insurance claim will always be assessed fairly and paid without fuss.

"The industry wants customers to be able to take out insurance with confidence.

"Today, insurers have signed up to ensuring both of these happen; the number of protection claims that are turned down will fall."

The new rules follow improvements in application forms and communications with customers, designed to cut the number of claims rejected due to "non-disclosure".

source:http://uk.reuters.com/article/personalFinanceNews/idUKHIL96088820080110

Which insurance product should you buy?

The life insurance industry has come a long way since 2000, when private companies were allowed in. Today, there are over 500 products (over 3,000 with customisation options), and 16 companies to choose from. So how do you pick the one that suits you best?

Typically, your needs would be any or all of protection, wealth accumulation, wealth maintenance and retirement. A few basic products meet these needs.

Pure Term Insurance. In this, an amount is paid out in the event of the death of the insured within a specific term, say 20 years. This is the most basic and cheapest life insurance.

Endowment Insurance. In this, an amount is paid out in the event of the death of the insured within a specific term, say 20 years. If the insured survives the policy term, an amount is also paid to him.

Whole Life Insurance. This is similar to endowment, except that the term is whole life.

Riders. These are options that can be taken along with the product you buy and provide protection against additional contingencies such as disability or dreaded diseases for a nominal extra charge.

So, how can these products help you plan for your needs?

Protection needs include protection against death, disability, and dreaded diseases. Products that are suitable for this need are term or whole life insurance with riders like critical illness, waiver of premium (WOP) or accidental death benefit (ADB). Wealth accumulation needs include saving for children's education, marriage and/or getting them settled. It also includes saving for one's retirement. Suitable products in this category are endowment, money back and whole-life plans.

Wealth maintenance need arises when you have accumulated some money and want to protect and grow it in a tax-favoured manner. Short-pay endowments, pensions, single premium policies or dump-ins cater to such a need.

Retirement need arises when an individual reaches a stage in life when he does not anticipate future inflows, but has to provide for a regular inflow out of the funds he has accumulated, without any worry. You could consider single pay/short pay pensions or immediate annuities for this. A flexible unit-linked endowment, structured with regular partial withdrawals could also be suitable.

Once you understand your need and the suitable products on offer, you have to decide whether to buy a unit-linked or a traditional policy. Traditional plans would generally have guarantees over the long term and, hence, are unique among financial products. Instead of working with projections or illustrations, you would have assured cash flows in your financial plan. Unit-linked plans are also an effective mechanism to plan for your financial freedom as they give you the option to decide where you want to invest your moneyequity or debt. However, they usually do not have any significant guarantee.

So, once you have decided on the need, the product and the mechanism, ensure the following before you sign on the dotted line:

1. Understand clearly how the suggested product fits your need.

2. Understand which part of the amount is guaranteed and which is not. This is required to be illustrated as per the regulator.

3. Do not accept illustrations based on historical returns of a fund; they do not guarantee future returns. The regulator has prescribed that the illustrations be shown at 6 per cent and 10 per cent annual rate of return and though, in reality, the return could be much more than this, it is best to use these figures as guides for your financial plan.

A.R. Rahman is one of my favourite composers because he knows when to use Daler Mehndi and when to use Yesudas. He goes by the need of the song and hence the melody has longevity. So, don't buy a cover because your neighbour, whose needs are different from yours, has bought it. Buy only according to your own need.

Source:http://inhome.rediff.com/money/2008/jan/03insure.htm

Life Insurance’s Split Annuities

Life insurance is not only a protection for your loved ones but also an investment. Annuities provide you with the possibility to obtain a source of income from a life insurance special contract by paying an insurance premium or premiums. That way within a single insurance policy the insurer protects himself by getting a possible source of funds in the event problems arise and his or her loved ones in case he or she dies.

A good example of a life insurance annuity contract uses would be: the taker pays a premium of $20,000 and in return at a certain date starts receiving $300 each month until he or she dies, $2000 for 15 years or death benefits if the insured dies prior the term of the annuity ends. Annuities have two well differenced time periods: the first period where the insured pays the premium or premiums and the second one when the insurance company pays out the agreed amounts.

What Is An Annuity?

An annuity is an agreement by means of which you receive cash payments from the insurance company or tax-deferred retirement income apart from the insurance payment in case of death that your loved ones will receive. There are different types of annuities each one with its particularities. These contracts can adapt to your personal situation thanks to the aforementioned differences.

For instance, if you are interested in investing you will be purchasing tax-deferred annuities that will mature with time. But if you are close to the time on your life when you are thinking about retirement you may be interested in obtaining a regular and secure income and thus opt for immediate annuities rather than tax-deferred annuities. As you can see, annuities are quite flexible and cover many different situations. There are also college annuities, charitable annuities, and the ones we are interested in: split annuities.

What Is a SPLIT Annuity

Split annuities combine immediate annuities with deferred annuities. This combination provides a bit of the benefits of both types and thus is useful for those who are interested in investing but still want to secure their future with a source of regular income at the time of retirement. Therefore with a split annuity you get an immediate and regular stream of cash for a period of time chosen by you which is the payment of principal plus interests of a portion of the premium paid. The rest of the money grows by accumulating the interests till it eventually reaches the original amount.

Example Of a SPLIT Annuity

Here is an example of what a split annuity can provide to you. Let’s say you contribute with $200,000 to a split annuity that is divided evenly: 50% to each portion of the annuity. The half that is deferred will accumulate interests that add up to the principal every year. The other half starts providing you an immediate income that consists on the principal plus an interest rate. Let’s say the immediate part period equals 10 years, you will receive almost $1420 a month (minus taxes). When the period ends, the other half will be close to reaching the original amount of the split annuity and you could start again.

source:http://www.americanchronicle.com/articles/viewArticle.asp?articleID=47895

The Best Way To Find Low Cost Insurance Is Online

Low cost insurance can be found with a specialist website and they can get you several quotes so you are able to take your time and look over them. There are many different types of insurance suitable for all occasions from insuring your life against death and giving your loved ones financial security to making sure you would be able to continue paying your mortgage if you were to lose your job with mortgage insurance.

Whichever type of insurance cover you want to take there will be terms and conditions and even exclusions in the policy which could mean additional costs or reasons which could stop you from making a claim on the insurance cover. You have to be very careful when it comes to payment protection as there are many exclusions in a policy so it is essential you do go over the policy with a fine tooth comb.


A specialist will be able to search the whole of the insurance marketplace for the lowest quotes for the type of cover you wish to take so that you can be assured you have got the best deal but they will need some information from you.

For example if you want home contents insurance you will have to carefully work out how much cover you wish to take as the repayments for the cover will reflect this.

However you do not want to be under insured, you should count everything in your home including clothing, electrical equipment and any other item of value you would need to replace.

The ranges of insurance cover policies are huge, you can take out an insurance policy to give your family financial security if you were to die, insure your pet or your income with payment protection. Whichever type of cover you are looking for you can get cheap insurance by going with a specialist website for your quotes.

source:http://www.bestsyndication.com/?q=010308_free_online_insurance_quote.htm

SBI looking for JV partner for non-life insurance biz

State Bank (Q, N,C,F)* of India is planning to enter into a joint venture for its proposed foray into non-life insurance segment, reports Economic Times.

The bank has already invited expression of interest for this.

The joint venture partner is expected to bring in non-life insurance experience in developed and developing markets, relevant knowledge of product development, risk management and other systems, technology and underwriting best practices.

The group is already present in life insurance in partnership with French firm Cardif SA.

SBI is having a total business of more than USD 178 billion and operates through around 14,000 branches. It also has subsidiaries in mutual fund and merchant banking in the country.

source:http://www.myiris.com/newsCentre/newsPopup.php?fileR=20080104155403148&dir=2008/01/04&secID=livenews

Insurers prosper, but face New Year’s challenges

Giving back to the economy

According to the Vietnam Insurance Association, the insurance market grew very fast last year. The total non-life insurance premium in the January-September period increased 30% over the same period 2006 (VND8.35 trillion), the highest level in five years. The total life insurance premium in this period grew by 12% year on year (VND9.5 trillion), the highest in three years.

In 2007, insurers offered several new services, including high-quality health insurance, credit insurance, liability insurance for businesspeople, pension insurance, etc. Presently, there are 720 non-life and 130 life insurance products offered in Vietnam.

Local insurers also provide many more added value services to their clients, for example free-of-charge rescue service, free vehicle repair service, free treatment service at reputed hospitals, etc.

This year, many insurance companies increased their capital to expand operations into other fields of business, for example banking, securities and finance. They now have over VND15 trillion total. The Vietnam Insurance Group (Bao Viet) has the highest, VND6.8 trillion.

Firms have invested nearly VND40 trillion ($2.5 billion) into the economy, of which, nearly 90% was buying government bonds and depositing in banks.

International competition

Phung Dac Loc, General Secretary of the Vietnam Insurance Association, said local insurers will have favorable conditions to develop in 2008 but they will face their toughest challenge so far. As of January 1, 2008, under WTO commitments, foreign insurers are allowed to provide compulsory insurance services like liability insurance for vehicle owners, explosion and fire insurance, etc.

Another difficulty is they have to reassess management and business operations to meet new regulations. For example, non-life insurance companies must increase their legal capital to VND300 billion; VND600 billion for life-insurance firms. They also have to use managers who meet certain conditions in terms of experience, training, etc.

The opening of the insurance market to foreign firms will make competition fiercer, Loc emphasized.

He said local insurers have never paid much attention to training. Big companies have set up their own training centers to educate employees; they also periodically send their managers abroad for additional training. Moreover, they apply modern technologies and have fewer procedural necessities for compensation.

source:http://english.vietnamnet.vn/reports/2008/01/762566/

Why buy disability insurance?

New York - If you don't have dependents, you probably don't need life insurance. The other side of that coin, however, is that if you do have dependents, you do need life insurance to protect them in case anything happens to you. But almost as important, you need disability insurance if you become ill or injured.

According to the Insurance Information Institute, 43% of all people now aged 40 will suffer some long-term disability by age 65. Insuring yourself against such an event guarantees a future income of about 60% of your salary at the time you take out the policy if you use an employer-subsidised plan, or up to 80% if you buy a costlier private disability income policy.

Here, with research from the Motley Fool, are some of the advantages of going with the private policy:

Tax break

If you become disabled, the benefits you receive will be tax-free, as long as you paid the insurance premiums with after-tax money. (Benefits from employer-paid policies are subject to income tax.)

Not tied to your job

The policy won't be tied to your current job. This is key for people with entrepreneurial ambitions, since finding affordable disability insurance once you become self-employed can be very difficult.

Specialist protection

If you are a highly skilled, highly paid specialist - say a surgeon or a NASA scientist - you would be wise to seek disability insurance that locks in your income level. This more expensive class of policies is called own-occupation coverage as opposed to the more common and less expensive any-occupation option.

No cancelatoin of policy

Be sure the policy cannot be canceled. This guarantees that policy premiums cannot be altered as long as you pay them on time. Avoid "guaranteed renewable" and "return of premium" policies because they don't lock in premium costs.

No limited benefit term

Don't buy an accident-only policy or a policy with a limited benefit term (five or 10 years are common). Such policies are cheaper, but they do not cover the whole of your working life (that is, until age 65).

Protection from inflation

If you can afford it, a cost-of-living rider will protect your future benefits from the inflation. You might also want to increase your protected income level as your career advances.

Waiting period

The waiting period, before payments kick in, is akin to a car-insurance deductible. The more emergency savings you have, the longer you can wait for disability income and the lower your premiums will be.

Keep your eyes open

Watch for clauses that exclude pre-existing medical conditions or risky hobbies.

Go independent

And remember: buying long-term disability insurance has so many potential pitfalls that if you do decide to use a private policy, be safe and work with an independent insurance agent.


source:http://www.fin24.co.za/articles/default/display_article.aspx?ArticleId=1518-1786_2246374