There’s trouble in equine paradise. A national company that arranged insurance for jockeys in Montana has dropped all four of the state’s race tracks for next year, which has the tracks scrambling to find another carrier willing to write a policy. This is not just another case of coverage phobia; it’s an impending cultural crisis. If a man can’t bet on a horserace in Montana then there is truly nothing sacred remaining in this country, with the possible exception of the war in Iraq.

Apparently the Missoula Fairgrounds has had quite a few jockey injuries and claims in the past five years. The Fairgrounds Director fears that even if an insurance company will write a policy, the cost could be too high – up to $10,000 a day, compared with $2,000 a race day this year, according to some estimates he received from a California firm – which nonetheless was unwilling to arrange insurance for Missoula. The same firm estimated that the per-accident deductible could be $15,000 to $20,000, compared with $10,000 this past summer.

The news comes just as Gov. Brian Schweitzer has included $350,000 in his proposed budget for the next two years to bolster horse racing in Montana for the short term. That’s an impressive commitment to the Track from the state’s chief executive, and indicative of how important the sport is to those who recognize its cultural importance.

Earlier this year, during discussions about whether Missoula should have horse racing in 2006, some people suggested the county shouldn’t have to pay for jockey insurance at all, and that jockeys should line up their own coverage. Those people have forgotten the days when horse thieves were criminals of the worst order and General John Pope of the Union Army issued a directive to his troops in 1862 that began, “From Headquarters: In the Saddle.”

Before I can answer the question of whether you should consider universal life insurance over whole life insurance, I would need to know the purpose for buying life insurance. Is it for income protection, financial planning, retirement?

Until we evaluate what the purpose of the insurance is, we can’t really say one should be consider over another. So, let’s look at the differences between the two. This may help you decide which is best for you.

WHOLE LIFE INSURANCE – Whole Life Insurance is a form of permanent insurance, and is designed to remain in effect throughout one’s lifetime. It is well suited to needs that do not diminish over time, such as paying estate settlement costs and taxes. Generally, the premiums for this type of policy remain the same throughout the life of the insured. During the early years of the policy, premiums are much higher than those of term insurance policies. As a result, and by design, these policies develop cash values which can be accessed by the owner of the policy through surrenders or policy loans.

Cash values in whole life policies typically include two components. Each policy has a guaranteed cash value, which typically grows based on a pre-determined schedule during the life of the policy and which “endows” or equals the death benefit upon maturity of the policy (typically at age 100). In addition, most whole life policies have a non-guaranteed cash value element, typically made up of “dividends” or “excess interest” which can enhance the value of the policy over time.

UNIVERSAL LIFE INSURANCE – Universal Life Insurance differs from Whole Life in that these policies distinguish and itemize the protection element, the expense element, and the cash value element. By separating the three elements, the insurance company can build more flexibility into the policy. This flexibility allows (within certain guidelines) the policy owner to modify the face amount or the premium in response to changing needs and circumstances.

Here’s how these policies work: Premiums are credited to the policy as they are paid. Most plans deduct certain administrative charges from the premium before crediting the balance to the policy value as net premiums. Each month, the insurance company deducts certain amounts from the policy value to cover the costs of mortality (death benefits), as well as for any riders and/or supplemental benefits. Also, each month, interest is credited to the policy based upon the cash value in the policy and based on a current declared interest rate as determined by the insurance company. This rate can and will change periodically.

Most policies also have a decreasing surrender charge which is deducted from the cash value if the policy is surrendered. This feature allows the insurance company to recover certain expenses which are associated with the issue of the policy. The surrender value is the cash value less any applicable surrender charge.

Insurance companies have periodically been provided with the opportunity to throw up their hands and declare certain situations uninsurable. After 9/11, terrorism was put in that category and the insurance companies sought underwriting assistance from the federal government, which has a history of supporting their demands. Federally insured crop and flood damage are prime examples of long-time federal programs that have let private property and casualty insurers off the hook.

In Florida, hurricanes have become the new uninsurable risk. With last year’s departure of Nationwide Insurance, eleven major insurance firms have bailed out of Florida since Katrina. Adding speculative fuel to the fire, The Federal Emergency Management Agency (FEMA) estimates that a quarter of the coastal dwellings will be destroyed over the next 50 years. This from an administration that refuses to discuss the existence of global warming. This sort of flag waving has led to major property insurance increases all the way north to Cape Cod.

Ed Liddy, the CEO of Allstate, is working to build support for a federal disaster insurance program, a proposal that has recently been endorsed by State Farm and a few other industry members. In the meanwhile, State Farm is one of the few companies still operating in the Florida; covers about 20% of the households in the state; and sought an average rate increase of 80%. Nature rewarded them with a relatively calm hurricane season this year.

If hurricanes in Florida become uninsurable, what about wildfires in the West? Floods in Washington State? Tornadoes in Texas, Kansas and Indiana? Blizzards in the Northeast? Aren’t natural disasters part of the property and casualty business? Or is it possible that unlike the current crop of federally employed meteorologists, insurance companies have decided that hurricanes are man-made disasters?

Term life insurance is, by definition, temporary life insruance insurance. Each year, a premium is paid to cover the risk of death during that year. Term life insurance has no cash value. The only way to collect anything is to die during the term. If death occurs, the beneficiary generally collects the face amount (death benefit) of the life insurance policy, free of income tax.

There are several different types of term life insurance, including return of premium, level premium term life insurance and annually renewable term life insurance.

When considering buying life insurance, make sure you evaluate your life insurance needs.

The thousands of homeowners who lost their homes in hurricane Katrina have also, for the most part, lost the argument that it was the storm and associated winds that destroyed their houses and not the flooding that ensued. The result has been many homeowners who thought they had appropriate storm coverage with no money to rebuild their homes.

Recently, some of the New Orleans homes drowned by the flooding that followed Hurricane Katrina have been damaged by a second calamity – fire. Both Louisiana investigators and insurance companies are starting to look into the blazes with reports circulating that some of the fires may have been set by people who had no flood insurance but are desperate for financial support to rebuild and want to collect on their property/casualty insurance.

“I can tell you we are aware of those kinds of allegations and we have seen claims where we view the fire as suspicious,” said Allstate spokesman Bill Mellander. From State Farm’s Morris Anderson comes this comment: “There has been an increase, or spike, in the number of claims in fire losses compared to what we would normally see.”

“The rash of fires is concerning because we have a lot of homes that did not have insurance or had the wrong insurance,” according to Lt. Allen Carpenter, director of the fraud investigation unit for the Louisiana State Police. One arrest has been made in suburban Jefferson Parish, where a 26-year-old man was charged with setting fire to his parent’s damaged house.

“Every fire is investigated,” says a New Orleans Fire Department spokesman. “If something looks suspicious, if the fire has several points of origin, if there appears to be a propellant, it’s going to get extra attention.”

Although most evidence of nicotine or continine is excreted or removed from your system within 1-2 days (usually all signs are gone within 7 days except from your hair – they don’t test your hair). If the insurance nicotine test comes back positive for smoking the smoker life insurance company can either reject your application, offer you a revised rate for smoking, and/or notify the Medical Information Bureau to keep on file.

P.S. – You do have an alternative – You can get term life insurance with no medical exam required. There’s no physical exam, and no blood test to take.

Auto insurance policies come to an end in two ways: either the insurer chooses not to renew the policy or you choose not to renew – or neglect to make the payments. Nonrenewal means that the current insurance company has chosen not to renew the insurance policy when the policy time period has run. Usually the company makes this choice simply because too many claims have been filed or too many moving violations have been reported. The insurer is required to send a notice of nonrenewal – usually thirty days – with the reason to drop your policy.

If you don’t pay your car insurance premium on time, the auto insurance company has the option cancel the policy. Your policy can also be canceled if you have provided false information that pertains to your risk level as an insured party. And in some states, an insurer can cancel your policy at any time after due notification because they have found you to be a non-desirable driver; usually for a combination of the reasons sited above.

In most states insurers are required to mail out a letter advising the policyholder that they are in arrears on their monthly insurance payments and provide a limited amount of time to bring the account to current status. Usually this period is ten days to two weeks. After the insurance company receives the payment, if it is prior to the cancellation date, most will send letters of reinstatement. There is usually a late fee involved and, if your insurance was suspended, additional funds to cover any gaps in coverage.

Generally, no, you don’t have to pay tax on a term life insurance death benefit. However, if the life insurance death benefit is $50,000 and you receive $50,100 the $100.00 is taxable interest and you should include it on your tax return.

If the life insurance death benefit paid to you is not greater than the amount of the life insurance death benefit payable at death then it is not taxable and you should not include it on your tax return. In other words if the life insurance death benefit is $50,000 and you receive $50,000 there is no taxable interest to include on your tax return.

If you’ve ever wondered why there’s no debate over auto repair costs or even whether a car has been totaled in an accident, look no further than the insurance industry’s exemption from federal antitrust control. Auto insurance companies are in a position to control their costs in fulfilling their coverage obligations. They don’t see auto repair shops as providing a service to you, the insured, but rather to your insurance company.

For example, every insurance policy has language that sets out the insurers’ requirements to use usual and customary rates or prevailing competitive prices to pay service providers. What does that mean? It means that prevailing rates are what the industry says they are. Rare is the insurance company that solicits information on labor rates from shops. The usual and customary rate is set by the insurer, not the repair shop.

Then there is the issue of the quality of replacement parts. Apparently there is now a business structure through which insurers can source and purchase aftermarket parts directly from the manufacturer, who ships them straight to the auto shop. This removes the decision making process from the professional contracted for the repairs, and in most cases probably excludes the possibility of using parts from the original source as replacements.

So that’s why the body shop where your car was towed prices everything by the book. There is a book, and it was written by the insurance companies. Ever notice how the quote goes to the insurance company and there’s an extra one printed out for you? It’s an example of the antitrust laws keeping costs artificially LOW.

Unfortunately, there isn’t a central database where you could type in someone’s social security number to find out if he/she had a life insurance policy. The only way to find out is to contact life insurance companies, but that could be impossible considering there are thousands of them.

If your loved one had a life insurance agent, I’d try giving them a call first. Otherwise, it’s a wise idea to look through his/her checkbook to see if any premiums were made out to a life insurance company. Usually premiums are annually, semi-annually or quarterly.

For more on how to find out if your deceased loved one had a policy, check out this post.