Jul
31
2008
America is nervous about its banks after hearing the recent news about IndyMac Bancorp, the third-largest bank in U.S. history to fail.
I recently read this article and thought I’d share it with you. It has a lot of good information in it about how to tell if your bank is week or strong, what is protected at your bank under FDIC and what you should do to make sure your investments are protected.
Jul
30
2008
If your life insurance policy lapsed, you may or may not be able to reinstate it depending on the life insurance company’s policy. Some life insurance contracts will let you reinstate a lapsed policy within a certain time frame. However, you must prove insurability, pay all overdue premiums (plus interest) and pay off any outstanding policy loans.
Jul
29
2008
A life insurance policy illustration is not part of the life insurance policy and is NOT a legal document. Legal obligations are spelled out in the policy contract. A policy illustration is ONLY a tool to help you understand how a policy works.
Basically, a policy illustration is designed to show the financial projections for each year you own the policy. This includes, but isn’t limited to:
Your actual costs and benefits could be higher or lower than the illustration. Why? Because they depend on the financial future of the insurance company. If the figures are guaranteed, the insurance company will honor them. Ask your agent which are guaranteed and which are not.
Jul
25
2008
A recent revenue ruling has been issued by the Internal Revenue Service addressing the tax exempt treatment of life insurance policy proceeds on “key-man” policies of Subchapter S-Corporations; medical and/or otherwise.
Revenue Ruling 2008-42 concludes that premiums paid by the S-Corporation on an employer-owned life insurance contract, of which it is directly or indirectly a beneficiary, do not reduce the S-Corporation’s AAA. Further, the benefits received because of the death of the insured from an employer-owned life insurance contract that meets an exception under Code Sec. 101(j)(2) do not increase its AAA.
Assessment
What does this mean? Basically, life insurance proceeds on key-man policies in an S-Corporation are essentially trapped in the corporation. Any distribution of that cash to surviving S-Corporation shareholders – or to the estate of the deceased shareholder – triggers a taxable event.
It is therefore vital for any business with a life policy paid by the business, or other S-corporation, to discuss the tax policy and estate planning particulars with your accountant.
Jul
24
2008
To help Americans better plan for their healthcare costs in retirement, Fidelity Investments estimates that a 65-year old couple in 2008 will need $85,000 to insure against long-term care expenses.
In just 10 years, approximately 50 million Americans will be over the age of 65. More than half of these individuals will require at least one year of long-term care, and 20 percent will require more than five years of care before they die. With the average cost of a one-year stay in a private room in a nursing home estimated at more than $76,000, not preparing for these potential costs can result in personal and financial burdens for family members.
In fact, between 75 and 80 percent of all long-term care given in the United States is provided by a family member. New Fidelity research finds that currently there are 29 million Americans providing informal long-term care to family members, and spending an average 34 hours per week providing this care, nearly equivalent to a full work week.
Jul
23
2008
We all can agree on one thing. If you’re a safe driver, shouldn’t you pay less for your car insurance? Well Progressive thinks so.
They recently introduced an optional car insurance program that offers lower rates on vehicles that are driven in less risky ways. The behavior-based insurance program, called MyRate, gives drivers a customized rate based on how, how much, and when their car is driven.
The catch? Drivers who choose to sign up for MyRate receive a small wireless device that plugs into a port in their car. The MyRate device allows Progressive to see how, how much, and when the car is being driven. Cars driven less often, in less risky ways and at less risky times of day can receive a lower premium.
Is this going too far? What are your thoughts?
Jul
22
2008
If a financial advisor can’t do better than an index fund, why bother? But how do you know you’ll get value for the fee?
The advisor’s fee should pay for itself. You should get better performance plus financial planning. Financial Advantage Inc provides these tips:
Jul
21
2008
A recent study by Hewitt Associates indicates that longer life spans, lower salaries and conservative saving habit are key factors in a gap between how much women need for retirement and their actual saving behaviors.
The study, which examined the projected retirement levels of nearly 2 million employees at 72 large U.S. companies, found that both men and women are on track to replace 85 percent of pay at retirement, assuming average mortality rate. However, women, on average, need to replace nearly 130 percent of their final pay at retirement-7 percentage points more than men. When factoring in differences in longevity, that disparity jumps to 10 percentage points. In other words, the average woman will need to save 2 percent of pay more per year than the average man, over 30 years, to achieve the same standard of living.
What are you doing to plan your retirement?
Jul
18
2008
A.M. Best Company recently relaunched its Consumer Information Center. The center has a series of feature articles, friendly tips and engaging videos to help insurance buyers make informed decisions.
The first feature explains why car insurance costs so much. You might be surprised to find out that the state where you live can make a big difference in how much you pay. A companion feature offers five easy tips to save money on car insurance. For example, don’t pay your premium bill in installments.
Jul
17
2008
Yesterday we looked at the difference between term and permanent insurance. Today we’re going to examine the most common type of permanent insurance.
Whole life insurance is a type of permanent life 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 life insurance rate (or premium) for this type of policy remains the same throughout the life of the insured. During the early years of the life insurance policy, premiums are much higher than those of a term life insurance policy. As a result, and by design, these life insurance policies develop cash values which can be accessed by the owner of the policy through surrenders or policy loans.
Cash values in whole life insurance policies typically include two components:
Universal life insurance differs from whole life insurance in that this type of life insurance policy distinguishes and itemizes the protection element (death benefit), the expense element, and the cash value element. By separating the three elements, the insurance company can build more flexibility into the life insurance policy. This flexibility allows (within certain guidelines) the life insurance policy owner to modify the face amount or the premium in response to changing needs and circumstances.
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