Life insurance benefits

SANDRA LOWE SANCHEZ / SAN ANTONIO BUSINESS JOURNAL

With the stock market in turmoil, Frank Woodruff, CEO of Sapient Financial Group, finds himself fielding calls from clients worried about their investments daily. Those who have whole life insurance in their mix are relieved that they purchased the high-priced product.

Now clients that shunned whole life years ago because other products offered better returns are looking at the product as stable and predictable — although costs haven’t come down.

“Whole life insurance is an incredibly solid investment,” says Woodruff. “But, back in the ’90s, when the tech stocks were going through the roof, whole life was the whipping boy, because it wasn’t providing as high of a return on investment as some of the riskier investments. Now, whole life is the ‘golden nugget,’” he adds.

Whole life is an insurance policy designed to be a cash reserve that builds up against the death benefit. Policy owners can even borrow against the cash value to help with temporary needs — such as college expenses. The policy’s cash value increases regardless of the performance of the insurance company. The policy also credits interest to the cash value of the account — sometimes resulting in dividends paid to the policy owner. Whole life insurance policies are tax-deferred, and upon maturity of the whole-life policy contract (usually at age 95 or 100), the cash value equals the death benefit.

A little bit about life insurance

Term life insurance is the original form of life insurance and is considered to be pure insurance protection because it builds no cash value. This is in contrast to permanent life insurance such as whole life, universal life and variable universal life which do build a cash value.

Term life insurance provides coverage for a limited period of time. After that period, the policy can be dropped or the insured can pay annually increasing premiums to continue the coverage. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is often the most inexpensive way to purchase a substantial amount of coverage at the lowest possible premium. The premium can be fixed for a period of up to 30 years.

Because term insurance is a pure death benefit, its primary use is to provide for covering financial responsibilities of the insured. Such responsibilities may include, but are not limited to, mortgages, consumer debt, dependent care and college education for dependents, and funeral costs.

term and investing the difference is a concept involving term life insurance and investment strategies that provide individuals an alternative to permanent life insurance. Generally speaking, term insurance premiums are considerably less expensive in the short term than permanent life insurance for an individual for the same benefit amount. Permanent programs are more expensive because they typically combine some form of cash accumulation with the insurance program as a single package. Consumers making use of the "buy term invest the difference" concept, separate their investments from their insurance by setting aside money every month equal to the premium that a permanent plan would require, then use a portion of this money for the term premium and place the rest in a tax-deferred investment vehicle.

A NON-tobacco using 40-year-old male, in good health, can purchase $250,000 of term insurance for a 30 year term at about $35 per month, while a 30-year-old male in the same category can buy the coverage for about $23 per month. Yet, according to LIMRA International, 44 percent of American households either don't own life insurance and believe they should, or own life insurance and think they need more coverage.

Term life insurance is the most affordable way to protect you and your family from a premature death.

Alan Jenkins is an insurance professional with Montgomery Agency Inc. For more informaiton, visit www.montgomeryagency.us.

Investors find insurance policies ‘safe'

After gold, life insurance policies are the second most “safe” investment avenues to investors in the country in the present financial condition, according to a recent survey by AC Nielson and Max New York Life.

Out of 1,000 respondents (unit-linked policy and other life insurance policyholders of various insurers) surveyed across six centres in the country between October 20 and 31, 59 per cent of ULIP holders said gold was a “safe bet” for investment, while 53 per cent said they considered life insurance products to be safe.

The same outlook was shared by other traditional insurance policyholders with 58 per cent and 56 per cent voting for gold and life insurance policies, respectively. Fixed deposits, mutual funds, National Savings Certificates and Public Provident Funds were the other safe investment areas, in order of preference.

Are you too risky for insurance?

While 49 per cent of the policyholders said they are holding on to their previous investments, 33 per cent of respondents said they are investing in life insurance and 22 per cent said they are investing in other safer options now.

Ten per cent of respondents said they have decreased investments in equity while an equal number said they withdrew savings from banks. Three per cent of respondents said they increased equity investment in recent times.

Across centres, around 90 per cent of the respondents claimed to have been affected by the financial crisis in some form or the other.

Almost 50 per cent of the respondents believed that it would take not more than six months for the financial crisis to end.

Stay current on insurance needs

Scott Flake

You probably don’t spend a lot of time pondering insurance.

And yet, you should think about it. By taking the steps necessary to meet all your key insurance needs, you can help protect your income, your family and your long-term financial goals.

In creating a comprehensive insurance strategy, you need to keep one key point in mind: your protection needs will evolve over time.

Consequently, at different stages of life, you’ll need to evaluate your insurance coverage to make sure it’s appropriate and sufficient.

When should you first start thinking about insurance? Do you even need to worry about it if you’re first starting out in your career, you’re single and you have no dependents?

Actually, you might have more to protect than you thought.

Do you own a house? Do you have a student loan? A car loan? A balance on your credit cards?

If you have any or all of these expenses, then you could face serious problems if something happened to your income. And the fact is that, at every stage of your working life, you are much more likely to become disabled than you are to die.

If a serious injury or lengthy illness prevents you from working, how will you make your house, car and other payments?

Disability insurance can help. If your employer offers disability coverage as a low-cost benefit, take it.

However, you may have to supplement this coverage with an individual policy.

Now, let’s fast-forward a few years in your life cycle. If you get married and have children, you should absolutely consider life insurance.

The amount of insurance you require should be based on several factors: your income, your spouse’s income, the size of your mortgage, how many children you have and anticipated college costs.

During your early working years, you may be able to get by with relatively inexpensive term insurance.

As you move into your middle years, though, you might want to explore some type of permanent life insurance.

Once you approach retirement age, you’ll also want to consider long-term care insurance.

A year’s stay in a nursing home can cost $50,000 — and in some major metropolitan areas, it can cost twice that much, according to the Health Insurance Association of America.

Medicare may only pay a fraction of these costs, so if you want to maintain your financial independence and avoid burdening your family, you might want to purchase a long-term care insurance policy.

Finally, during your retirement years, you could use life insurance as an estate-planning tool.

An attorney experienced in estate planning can advise you on the potential uses of life insurance in trusts or other arrangements.

As you can see, meeting your insurance needs is a dynamic process.

That’s why you may want to periodically review your insurance situation with an investment professional who has the tools and experience to recommend the right moves to make — at the right time in your life.

Scott Flake is a licensed financial adviser with Edward Jones. He hosts a weekly informal investment discussion at 10 a.m. on Tuesdays at 411 S. Beeline Highway, Suite B. For more information, call him at (928) 468-1470.

Eleven Reasons Why You Need More Life Insurance

Jane Baker
As you reach different stages in your life, the need for insurance will change. Here’s how to make sure you always have enough protection.

Do you have enough life insurance? The chances are, you probably don’t. After all there’s a major shortfall in the amount of cover we need and the amount we’ve
actually got. In fact, the gap between the two literally runs to trillions (£2.3 trillion to be precise!*).

Even if you think you’ve got enough life insurance now, you’ll probably need more later on. Remember if you don’t update your policy as key events happen in your life, you risk being seriously under-insured.

Here are eleven key times in your life when you need to thinking about buying life cover:

You buy your first home with a partner
I think many of you are pretty switched on to the need to buy life cover when you first take out a mortgage. If you’re buying a home with someone else you need enough protection in place to make sure he or she won’t be saddled with the entire mortgage debt if the worst happens to you.

You have other debts – and dependents
So you’ve got your mortgage covered, but what about other debts such as personal loans and credit card balances? Make sure you take out enough insurance to cover these too, because these debts may have to be paid out of your estate. You don’t want to leave your debts behind for your family to deal with.

You get married or enter into a civil partnership
Not only are you sharing each other lives, but you’re probably sharing your finances now too. You and your partner are bound to rely on some of each other’s salary to pay your living expenses. That means you'll each need enough life insurance to cover the cost of your contributions to the home.

You start a family
Bringing up a child can cost a small fortune and it can be a pretty big drain on both parents’ income. If one income is lost, you’ll need enough protection in place so the surviving partner can continue to support the family financially.

You become a stay-at-home parent
You might think there’s no need to buy life insurance for a parent who has given up work to bring up a child. But you would be wrong. When you set up a policy, think about covering the costs of childcare and running the home in the absence of the stay-at-home parent. These expenses can run far higher than you might expect, so having extra protection to cover them can be really valuable.

You have more children
Quite simply remember to keep stepping up the amount of protection you have as your family grows.

You move to a bigger house
Bigger homes normally mean bigger mortgages, so make a point of increasing your life cover when you move to a larger property.

Your salary increases
You’ve just had a big pay rise. Congratulations! This could be your ticket to a larger home in a more affluent area or private education for your children. In other words, if you’re starting to enjoy a more affluent lifestyle, think about upgrading your life insurance policy to help your family support it if you’re no longer around.

You change your job
If you’re lucky your employer may offer death in service benefits. This could provide a valuable cash lump sum of say, three or four times your salary. Although that sounds pretty generous, death in service may not be enough to cover all your protection needs on its own.

Don’t forget death in service benefits can’t be adapted to suit your changing circumstances.

And most importantly, you’ll lose the cover when you leave your job, unless it’s available in your new position.

You reach retirement
Once you stop working the time has come to start thinking about your inheritance tax (IHT) liability. If the value of your estate is likely to exceed £312,000 (based on current rates) your family will face an IHT bill. But you can buy a life insurance policy specifically to cover these costs. IHT planning can be very complex so make sure you seek some expert help from an adviser who specialises in this area.

You rely on someone else to support you
If someone else supports you financially or provides care for you, think about taking out a life policy to insure their life. Suppose one of your children looks after you when you become older. If the worst was to happen to them, where would this leave you?

You can, in theory, insure anyone else** – as long as there is an ‘insurable interest'. In other words, you must have a genuine reason for insuring their life, and there’s evidence their death would have a negative impact on you financially.

But don’t be over-insured
Although life changes can bring greater protection needs, they won’t necessarily all apply to you. Let’s say there’s no-one in your life who depends on you financially. In that case you probably won’t need life cover at all.

Use the table in this article to help you work out how much life cover you should have overall.

Remember you can easily cancel policies you don’t need later on. For example, once you’re completely debt-free and your children have flown the nest, your protection needs should reduce. So don’t pay for something you don’t really need.

* Swiss Re Term & Health Watch Report 2008

How to read an insurance policy: the known loss doctrine, part 2

I am making time to post again at the inspiration of Michael Aylward, a partner at Morrison Mahoney specializing in insurance coverage issues. I met Michael years ago when we represented codefendants in a rather silly copyright violation case. Since then I have relied on his excellent articles on allocation issues; been riveted (no, I'm not kidding) by his talks at seminars on insurance coverage; and imposed upon him for advice both legal and practical which he has always graciously given.


In my last post I discussed the known loss doctrine. One question that frequently comes up with respect to that doctrine is whether there is coverage when the insured knew of the facts that created tort liability before the policy period, but did not subjectively know that such facts could actually lead to liability.


The United States Court of Appeals for the First Circuit explored this issue under Massachusetts law in United States Liab. Ins. Co. v. Selman, 70 F.3d 684 (1995). In that case the insured was a landlord who was informed prior to the policy period that his apartment had lead paint in it and his tenant's child had lead paint poisoning. The court held that the lead paint injury was not a known loss because discovery had shown that the insured had not made a subjective connection between the lead paint in his building and the underlying plaintiff's future medical risks.

In my next post I'll discuss how the known loss doctrine should affect an insured's decision about reporting to its insurer a potential claim.

Certificates of Insurance - Worthless Paper?

A certificate of insurance is, perhaps, the most misunderstood document in the insurance world – even more misunderstood than the insurance policy the certificates are designed to represent!

The certificate of insurance…
…does not prove amounts of coverage available
…does not indicate the coverage in the policy
…does not prove policy conditions
…does not ensure additional insured status
…does not ensure notice of cancellation

A certificate of insurance is proof that an insurance policy was in existence on the day the certificate was issued. While the certificate will indicate that certain coverages are contained in the policies, coverage is solely determined by the insurance policy language – not certificate language.

The preamble to the certificate states:

“This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend, or alter the coverage afforded by the policies below.”

In other words, it does not matter what is on this certificate. The coverage in the policy is the coverage in the policy. If the certificate indicates that there is an additional insured but the policy has not been amended, there is no additional insured.

The header for the coverage description section has a further disclaimer:

“The policies of insurance listed below have been issued to the insured named above for the policy period indicated. Notwithstanding any requirement, term of condition of any contract or other document with respect to which this certificate may be issued or may pertain. The insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such.”

In fact, the above header language means that it doesn’t matter what other documents exist (leases, purchase and sales agreements, contracts) the insurance in the policy is what is in force.

On the back of the certificate form used by 99% of insurance agents is the following:

"IMPORTANT If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s).

"If SUBROGATION IS WAVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s)."

So, saying that a company is an additional insured on the certificate does not make it so. Further, statements about subrogation of claims are also not binding.

The last part of the back page shows the following:

"DISCLAIMER The Certificate of Insurance on the reverse side of this form does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder, nor does it affirmatively or negatively amend, extend or alter the coverage afforded by the policies listed thereon."

The disclaimer attempts to remove all responsibilities of the issuing insurance agent. The language appears to try to eliminate any perception of authority.

Is the Certificate of insurance really worthless? No. It does show that a policy is in place. Certainly, agents try to be accurate in the descriptions of coverage indicated on certificates. However, you cannot use a certificate to prove coverage if the policy does not support the coverage described.

All that said, I still suggest my clients obtain certificates. In some cases it will save you premium at the time of a payroll audit as insurers accept certificates as proof of subcontractor coverage.

I have prepared a single page document that you can use to inform your vendors and contractors of your certificate requirement. Have your attorney review the document before you use it.

The form can be downloaded here as a .doc file for easy editing.

Whole life insurance: Best protector of life

To provide financial security to the family members, many people in India are taking insurance policies which are very beneficial. At first, these policies were offered only by the LIC (Life Insurance Corporation of India). Later, numerous private companies entered in this field to provide services to the Indians with various types of policies.

From then, the insurance field has been developing rapidly. In India, there are different types of insurance policies are available like vehicle, death, accident, life, health, house and business etc. Among these policies, Whole life insurance is the one which helps the family members to balance the financial situations after the death of policy holder. We can also say it as a permanent coverage for whole life of a particular person, who takes this policy.
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This is a contract between the insurance company and the policy owner regarding the benefits and particular amount of money offers by the company after the death of policy holder. The owner can take policy in his own name or on the life of a person but he needs to have some financial interest in the life to be insured. This means that owner and insured can be same entities as well as different entities. Up on the insured's death or up to completion of the contract time, the owner has to pay money in the form of instalment basis which is known as insurance premiums. Most of the companies are offering 3, 6, 9 and 12 moths premium policies. The owner can select the best one depending on his financial position. Some of the insurance companies are offering interest rates on the premium amounts to the whole life insurance policy holders.


The owner, who has taken the whole life insurance policy can enjoy with many of its benefits. To solve temporary financial needs, the policy holder (read owner) can apply for a loan from any bank and money lenders in India as long as the policy is active. He can cash by surrendering the policy. One of the main advantages of this policy is it helps the users to get exemptions in their tax payments. The family members can get insured amount in an easy way after the death of insurer just by claiming to the insurance company. The insurance plan for whole life acts like an investment as the policy holders can get the insured amount with other benefits after completing the policy time.

If you decide to take a whole life insurance policy, you should take right steps before going to take a policy. Some of the insurance agents will try to mislead you by giving wrong information. So, it is highly advisable to you not to trust anyone. The first thing to do is comparing life insurance plans that are offered by the different insurance companies.

There are many ways to compare life insurance plans of all the companies. One is you can take the advice of your friends, family members, colleagues and relatives. The second one is to get information from books and newspapers. One more way is Just to visit all the India insurance companies websites over the Internet to find out the best one which is beneficial for you. This is the right place to compare life insurance plans of India.

Without going for different types of policies, you go for one policy which is really helpful to your family members after any accidental happening. Before taking the whole life plan, you should clear all your debts to pay the premiums in right time. Select the best insurance company which offers more benefits and interest rates on taking policies. To make a clear way to get insurance amount for a particular person after your death, mention his/her name clearly on the contract. You should have a clear idea of your policy time and premiums.

Just by taking some precautions, you can take whole life insurance policy with more benefits from a good company.

Life Insurance Myths and Facts

by MyFOXColorado.com
DENVER - You can probably save money if you make sure that you are well-informed about your life insurance policies.

You'll find some common myths about life insurance below, courtesy of Allstate insurance. Insurance expert Steve Cocker appeared on Good Day Colorado with anchor Shaul Turner.

· Myth: I am single. Most single people don’t have a pressing need for life insurance because no one depends on them financially. However, there are exceptions -- for instance, if you’re providing financial support for aging parents or siblings.

· Myth: I don’t work. Stay-at-home parents often make significant financial contributions to a family’s budget by providing such things as childcare, transportation and housekeeping services that could add up to $40,000 a year according to The Life and Health Insurance Foundation for Education (LIFE). Could a single surviving spouse afford to pay for these services on his or her own?

· Myth: Group life provides all the coverage I need. Group life insurance is a great component of a life insurance program. However, the coverage offered is not always enough to take care of your beneficiaries and usually offers limited coverage options. Group policies are generally non-transferable once you leave your current job.

· Myth: A permanent policy is better than a term policy. The kind of coverage that’s right for you depends on your unique circumstances and financial goals. A term policy generally offers the greatest coverage for the lowest initial premium and is a great solution for people with temporary needs. A permanent policy may work best if you anticipate a need for long-term protection.

· Myth: I have a term policy but can’t convert to a permanent policy. Not all term policies are the same. Some may have certain provisions as standard features, including convertibility. This feature allows you to convert your term policy to a permanent policy without submitting evidence of insurability. The amount of time that you have to convert varies. The key is to check on your provisions and make the move to permanent coverage when you can if that’s what you need.

Are you too risky for insurance?

Have you ever applied for a life insurance policy and had your proposal turned down by the insurance company?

Incredible as it may sound to some, particularly given the aggressive sales pitch adopted by many players in recent times, insurance companies do reject applications they think are too risky.

And how do insurers decide who gets a cover and who doesn’t? Well, based on a process called risk-classification or underwriting.

An insurance company’s performance is judged among other things by its claim ratio — the lower the ratio, the better is the performance. To achieve this, the companies follow a stringent underwriting process.

The insurer’s underwriters identify and calculate the risk of loss from policyholders, establish appropriate premium rates, and write policies that cover this risk.

Each insurance company uses its own set of underwriting guidelines for determining whether or not the company should accept a proposal.

In life insurance, this decision process sometimes requires medical evidence of the applicants. The applicant may be required to provide the following information (for life insurance) to enable underwriters assess mortality risks and determine appropriate premiums:

Age
Gender
Height and weight
Health history (often family health history)
The purpose of the insurance (estate planning, business or family protection, etc)
Marital status and number of dependants such as children
The amount of insurance the applicant already has, and any additional cover he proposes to buy
Occupation (some are hazardous, and increase the risk)
Income (to determine suitability)
Smoking or tobacco use (smokers typically have shorter lives)
Alcohol (excessive drinking reduces life expectancy, too)

Each insurer sets its own underwriting standards of what is acceptable, insurable risk. Then each application for insurance is reviewed to determine if the individual meets those standards.

There are four common categories:

Preferred: If you are a better-than-average risk (i.e. in good health, with no dangerous occupation or health history) you may be charged the preferred or lowest rate.

Standard: If you are considered an average or typical risk, you will be charged the standard rate.

Rated: If you pose an above-average risk (say you have high blood pressure, smoke, or engage in skydiving every weekend), you may be classified as an increased risk and charged a higher premium.

Declined: If you are rated as uninsurable (perhaps due to a serious illness), you may be denied coverage entirely.

Life insurance for a young military family

Question: I am the 22 year-old mother of a 6 month-old daughter. I am currently unemployed while I take classes to complete my college education and my Husband is deployed with the National Guard overseas. I am concerned about my family's financial future if anything should happen to either myself or my husband. I would like more information about various life insurance options. What kinds are there? What is the difference between the types? How do I pick what one is right for my family? Are there any books or online resources with accurate and easy to understand information? Thank you for your time and help. Sincerely, Jodi, JonesboroAR

Answer: This is a fittiing question for Veterans Day. First of all, since your husband is on active duty with the military you should be automatically covered for $400,000 in life insurance benefits through Servicemembers' & Veterans' Group Life Insurance. Here's what the handbook says: "Members on active duty, active duty for training or inactive duty for training and members of the Ready Reserve or National Guard are automatically covered for $400,000, the maximum amount of coverage."

He can also purchase up to $100,000 of SGLI coverage for you, in increments of $10,000.

The policy offered by the government is a "term" life insurance policy. Term life insurance is a pure death benefit. It doesn't pay dividends and there isn't any cash savings attached to the policy.

The section of the U.S. Department of Veteran's Affairs website that describes the life insurance benefit offers good information, including details on the policy, a calculator for figuring out how much life insurance you should carry, a life insurance glossary, and a description of the basic types of life insurance.

The differences between life policies matter a lot if you and your husband decide your family needs more life insurance--especially adding more coverage for you in case something happened to you.

Life insurance comes in two basic flavors. The first I've already mentioned, term insurance. Term insurance is a simple product, easy to understand, and it allows for competitive comparison-shopping for the best mix of price and coverage. You'll want a low cost, plain vanilla policy from a blue chip, financially strong life insurance company. Term insurance is ideal for most families with insurance needs, like you.

Cash value is the other major kind of insurance. Cash value insurance always comes with a tax sheltered savings component as well as a life insurance policy. Cash value life insurance can be complicated. There are all kinds of policies, from whole-life, universal-life, variable-life, variable-universal life, and so forth. Depending on the type of cash value policy, the insurance company may invest the savings for you or you may choose from a menu of investment options. The premium may be stable for the life of the policy or you may vary your payments. In general these policies are expensive.
11/11/08 by Chris Farrell

Younger generation should be more aware of the benefits of insurance

The younger generation has been advised to take out insurance policies as more people cut back on life insurance as a bid to save money during the financial economic crisis, it has been revealed.

According to a study conducted by Fairinvestment.co.uk, 24 per cent of those who participated admitted to not having life insurance, medical insurance, home insurance, payment protection insurance or do not take out travel insurance when going on holiday.

Spokesperson Rachael Stiles, of the website found the situation quite “concerning.”

She said: "As budgets get tighter, I can understand why Brits are cutting back, but insurance should be one area that is sustained.”

The study found that the older generation tend to take out life insurance policies more than the younger generation. Only 10 per cent of those aged 19-21 invested in a life insurance policy while 53 per cent of 51-55 year olds had taken out life insurance policy.

“When it comes to life insurance, young people should be more aware as you never know what is around the corner. And, if you are the main bread-winner and have a mortgage or rent to pay and something happened to you, your partner or loved ones would be left to foot the bill, whereas a life insurance policy could cover such expenses.

A 25 year old male can get a policy for as little as £6 a month, making it an affordable expense," she added.

Preventing Employee Theft

There are four parts to employee theft prevention:

-Hire only honest people
-Create an environment that doesn't tolerate dishonesty
-Build systems that enable detection
-Buy employee dishonesty insurance

The first seems silly. However, most embezzlers have some history of dishonesty. Criminal background checks, drug testing, and resume/reference confirmations all help weed out bad apples. Repeated interviews as well as spending leisure time with key applicants also helps.

Your company culture should be one of absolute honesty. Lies and fibs cannot be tolerated. Stealing in any form should lead to dismissal. Falsifying expense accounts is theft and should be punished. Of course, the leaders of the company must lead by example. As soon as the boss is seen copying fliers promoting his kid's lawn care business, all credibility is out the door.

Checks and balances in inventory and cash handling procedures is a key prevention technique. Having systems where those who write checks don't balance the bank accounts is a perfect example. Spot checks of cashier drawers. Marking incoming checks "for deposit only" in the mail room or as soon as the check is presented. Video surveillance is a proven deterrent.

If all else fails, you must have insurance coverage to protect the organization from a devastating financial hit. Talk with your insurance agent about coverage. Pick an amount of insurance that you feel comfortable with and double it. The insurance is usually not that expensive.