Money is tight for many people. I’ve talked about how to save money on term life insurance, but if you’re looking for ways to save money on your other insurance policies, here are some good tips:

o        Raise your deductible – Raising your deductible from $500 to $1000 may reduce your annual premium by up to 25%.

o        Insure your car and home with the same carrier - If you insure your car and home with the same carrier there are “bundle” discounts that could be as much as 15%.

o        Add an alarm system – Insurance companies value the protection of burglar and fire alarms-especially when connected to police and fire departments-and could reward you by reducing your premiums by up to 20%.

o        Compare Prices – To make sure you have the right amount of homeowners insurance, compare quotes to find the coverage you need at the lowest price.

Most US states allow driving at age 16, 16 1/2, or somewhere in between. A new Insurance Institute for Highway Safety report focuses on the costs in terms of lives of allowing kids to get their license sooner than later.

The message is that licensing at later ages would substantially reduce crashes involving teen drivers. The same conclusion has been reached in other countries. Teens in Great Britain and most Australian states can’t get their licenses until they turn 17, for example.
The question that many people have is whether the risk associated with beginning drivers stems from their youth and immaturity or their inexperience behind the wheel. If it’s mainly immaturity, then it would pay to put raise the age of drivers. But if the problem is mostly inexperience, raising the driving age would simply put off the toll of beginners’ crashes. It’s hard to separate these two factors.
Canadian researchers tried to untangle the influence of age and experience on crashes involving beginners by dividing drivers 16, 17, and 18 years old according to whether they had been driving less than a year or more than a year. The main finding, reported in 1992, is that 16 year-olds, especially girls this age, had higher rates of injury crashes than older teenagers who also were new to the road.

A review of 11 studies published since 1990 also separates the relative contributions of driver age and inexperience to beginners’ crashes. The upshot of this Institute study is that new drivers who are 16 years old have higher crash rates than older teenagers who also are new drivers. For more information go to www.iihs.org

Mullin TBG, a leading executive benefits firm, provides these five common financial mistakes executive baby boomers make. I thought the information was beneficial and I wanted to share it with you.

One thing they left off is that you can use the benefits from a life insurance policy to pay estate taxes. 

1.  Going it alone sans professional financial advice. To cut costs and reduce their financial obligations, more companies have chosen to either freeze or terminate their defined benefit plans and offer defined contribution programs instead.  Executives no longer able to rely on guaranteed retirement income have to take charge of savings through self-directed plans. To compensate for the loss of expert oversight of their retirement accounts, many executives should turn to online financial planning tools and/or professional financial advisors to help them assess their risk tolerance, recommend asset allocations, and establish short- and long-term goals.

2. Timing the Market. With decades of retirement to look forward to in most cases, executives should continue focusing on the long-term impact of their asset allocation strategy and keep their short-term investments on track to withstand market fluctuations as much as possible.

Often, however, executives attempt to time the market by reacting to every market swing as it happens. This is a recipe for disaster, especially considering the volatility of the Dow recently – up 300 points one day, down 300 points the next.  This can prove devastating to one’s portfolio.

3.  Giving too little consideration to tax consequences of big distributions. Tax planning is an oft-overlooked element of investment strategy development. Planning for future benefit payments to cover such foreseeable expenses as college tuition, retirement living and health care is smart – knowing the tax effects of each distribution is smarter.  The consequences of taking benefit payments while still employed can differ greatly from those received during retirement, as do those paid out in a lump sum versus installments over a predetermined number of years.  Differences in tax rates and tax brackets must be examined as well as tactics for minimizing impacts to the overall investment portfolio.

4.  Disregarding annuities entirely.  With the future of company pensions and Social Security murky at best, baby boomers ought to consider diversifying into other financial vehicles that provide a steady stream of retirement income.  Although annuities have gotten a bad rap in the past for being associated with scams and having high fees, new products are being introduced that are more palatable to investors looking to reduce their risk of outliving their retirement assets.  Some of the more attractive features of these offerings being marketed today include reduced or no surrender charges, a guaranteed floor that allows the investor to participate in the upside of the market, and the flexibility to convert the annuity to long-term care dollars.

5.  Underestimating medical expenses not covered by Medicare. While the term “golden years” would suggest a time of relative ease, it takes a lot of planning and ongoing attention to managing one’s financial and overall well-being for retirement to ultimately be a rewarding experience.  Underestimating medical expenses not covered by Medicare, not figuring in the cost of inflation, or neglecting long-term care needs are just some of the retirement planning pitfalls that could seriously compromise the longevity of a nest egg.

I think it’s often good to illustrate how life insurance has helped a real person.  It makes it hit home.  To see more real life stories like this one check out the LIFE Foundation.

Mark and Kathy Custead enjoyed a comfortable, middle-class lifestyle, but their financial obligations were considerable. So with their agent’s help, they completed a life insurance needs analysis, which showed that both needed to substantially increase their coverage. They each made life insurance purchases, something neither had done since their first child was born 17 years earlier. That spring, Mark was diagnosed with pancreatic cancer and died five weeks later. Proceeds from his term life insurance helped to pay funeral expenses, medical bills and credit card debt, and have allowed Kathy to set aside money for the kids’ college costs.

Be sure to check out this video featuring Mark and Kathy’s story.

Things that affect your life insurance rate

Description:

Before you can purchase life insurance coverage you must qualify by meeting specific requirements. The process is known as risk-classification or underwriting. The underwriting process helps the insurer determine the rate you will pay, based on the level of risk you pose. But there are things that could affect your rate that you may not even know about. Byron Udell, founder and CEO of AccuQuote, outlines things that can affect your rate and provides tips to ensure you get the best rate available to your health and lifestyle profile.

Size: 5.27MB

Length: 5:45

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So, you’ve completed a term life insurance application and medical exam. Now what?  This is where the life insurance company will begin to underwrite your case. It’s simply an evaluation of your case.

What’s involved?  An “underwriter” will review the answers you provided on your application and the results of your medical exam in order to determine what kind of “risk” you pose to them. Once all required information has been received, the insurance company will make a decision regarding whether, and at what life insurance rate, you qualify for.

Underwriting attempts to classify risks based upon the likelihood of death in order to charge people accordingly to the potential risk. This not only protects the life insurer, but also those that are least likely to die get the most affordable life insurance rate. It only makes sense that a person with a past history of a serious illness is going to be charged a much higher premium than the healthy person. If you were the healthy person with the least likelihood to die would you want to pay the same amount as the person who had a serious illness? I know I wouldn’t.

We love when people on our team are recognized for being at the top of their game. Recently, our VP of marketing and business development, Sean Cheyney, was interviewed by one of the most well respected luminaries in the interactive advertising community. If you’re interested in hearing what makes our head of marketing, and fellow blogger on this blog, tick then click here to listen to his recent 30 minute interview.

http://personallifemedia.com/podcasts/232-dishymix/episodes/13608-sean-cheyney-21st-century-marketer

Here are some bullet points from an article in Kiplinger’s Personal Finance, which does a great job summing up why you shouldn’t be afraid of buying or keeping an AIG life insurance policy.

• AIG’s insurance subsidiaries do have assets available to pay claims, and there are several layers of protection for policyholders.
• The state insurance departments set strict capital requirements to make sure insurers can pay claims. As a result, those subsidiaries are not suffering from the same financial troubles as other parts of the company.
• The insurance subsidiaries are solvent and able to pay their obligations
• it will likely be the insurance subsidiaries —or their valuable blocks of business and high-quality assets — that will be sold in an attempt to return the AIG parent to a more stable financial position.  If this happens, then the insurance benefits should continue to be paid by the new insurer without any disruption.
• If the insurance subsidiaries did end up having financial troubles, which is VERY unlikely to happen, then the insurance department in the company’s home state (New York for many of AIG’s insurance subsidiaries) would try to rehabilitate the company. If that didn’t work and the company became insolvent, then the state guaranty associations would protect policyholders by continuing the insurance policies and paying claims, up to certain limits.
• The maximum limits on protection vary based on the policyholder’s state, but every guaranty association must provide coverage for at least $300,000 in life insurance death benefits (per insured life), $100,000 in cash surrender or withdrawal value for life insurance.
• If a financially strong insurer ends up buying AIG’s insurance subsidiaries, your claims could be paid seamlessly.

If you’re still thinking about switching to another company that isn’t in financial trouble, be careful: If you’ve held a life insurance policy with AIG for several years, buying new coverage now could be a lot more expensive because you’re older.

If you hold a life insurance policy or are considering purchasing one from American General Life or US Life of NY (both AIG subsidiaries), you probably have some questions or concerns about your existing or pending AIG life insurance policy since the Federal Reserve announced it is taking over AIG in an $85 billion rescue plan.  Here are several really great articles that do a fine job assessing the situation and what it means for policyholders.

• SmartMoney.com – AIG’s Fallout – What Policyholders Can Expect
• Reuters – Factbox – Potential Outcomes for AIG Policyholders
• Bankrate – Got an AIG policy? Don’t worry!

Also, here is a video that gives some advice to AIG policy holders

Advice to AIG Policy Holders

I have been busy fielding a lot of questions in the last couple of days.  Many people are concerned about their AIG Life Insurance Policies and for good reason.  AIG’s seemingly quick decline has really shown just how volatile the market is.  But as I stated in a previous post, your AIG Life Insurance Policy is very safe.  Here is a great article on CNNMoney.com that answers many of the concerns that you may have.

5 Questions: Why AIG matters to you