The death of a loved one is a difficult subject for almost everyone. At AccuQuote, we have prepared a very useful checklist of things that need to be done when someone dies, and we hope that you will take the time to read through it now so that if the time comes you will be more prepared. You may also wish to print the page and place it with important papers, such as your life insurance policy, for future reference.

If you own a term life insurance policy this is a great way to protect your family for a specific, but limited, number of years.  But, did you know that these low cost level premiums will increase dramatically when the term ends?

There is a guaranteed feature on your existing term life policy that allows you to easily convert your term policy to a permanent one.  There are no hassles and no medical exams required.

Once the conversion is complete, while your new premium will be higher, it is guaranteed to remain at the same price for the rest of your life!

This option is guaranteed – even if you’ve had a change in health. Making the change is easy. Just contact your agent. Keep in mind that if you are considering converting from term to permanent, you will save money by converting sooner rather than later because premiums go up as you get older.

October 29, 2008

Insurable Interest – what is it and why is it important

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Insurable interest – what is it and why is it important when buying life insurance?  In this podcast, Byron Udell, a leading life insurance and annuity expert, will talk about what’s known in the life insurance industry as “insurable interest” and explain why it’s important when buying a life insurance policy.

Size: 4.7 MB

Length: 5:08

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A lot of people often ask the question, “what is insurable interest and why it’s a must have when buying a life insurance policy?”

For purposes of life insurance policies, everyone is considered to have an insurable interest in their own lives as well as the lives of their spouses and dependents. For life insurance, the insurable interest only needs to exist at the time the policy is purchased.

Business partners may have an insurable interest in each other, and a corporation may have an insurable interest in its employees’ lives, particularly key employees.

However, the insurable interest only needs to exist at the time the policy is purchased. This means that people can sell their life insurance policy to anyone they wish in a “life settlement” transaction.

A life settlement is the sale, assignment, transfer, or bequest of the death benefit or ownership of a life insurance policy by the owner of the policy. Typically, the owner of the policy receives cash (generally an amount greater than the cash surrender value in the policy, but less than the full amount of the death benefit); and the life settlement company becomes the new owner and beneficiary of the policy and is responsible for the payment of all future premiums. Upon the death of the insured, the death benefit is paid to the life settlement company.

Is the economy is taking a toll on your pocketbook? Gas, groceries, healthcare, and just about everything else has gone up in price.  Often times, that life insurance bill comes in and it’s the last thing on your list to pay. Or, it’s not paid at all because it’s just no longer affordable.

If you have a life insurance policy and you feel you can no longer afford it, before you cancel it, carefully consider ALL your options. There may be ways to get your term life insurance rates down without losing the coverage you need.  Keep in mind that if you were to die today without life insurance, the loss of your income would have an even greater affect on your family with the current state of the economy.

Here are some tips to help reduce the economic burden and create affordable life insurance plan that fits within a tight budget:

1. Switch to modal payments – Modal payments are an easy and quick fix. They do a good job of lessening the financial burden of an annual insurance bill and help spread the payment across a period of one year.  If you’re paying annually, contact your insurance agent and ask to switch to a semi-annual, quarterly or monthly payment
2. Reduce the term length - In some cases, it makes sense to replace your policy with a shorter term.  Generally the longer the term, the better, but in times like these, a shorter term with a lower premium is certainly better than dropping coverage altogether!  By reducing the term, you could lower your payment while keeping the same amount of death benefit protection. However, before canceling an existing policy, be sure you qualify for a new one and your health hasn’t changed.
3. Reduce the death benefit – Choosing a lower death benefit is another way to lower your costs.  While I don’t recommend this as a great solution, this too, is a whole lot better than canceling the coverage completely. However if you do choose this option, once your financial situation improves, reapply for additional coverage immediately to ensure your family is adequately protected.

This Q&A is from a recent column that Kiplinger Personal Finance reporter, Kim Lankford, wrote. I wanted to share it with you as I thought it was good information.

Question:          “I read your Don’t Rush to Ditch Your AIG Policy column, where you mentioned that people might have to pay a surrender charge if they switch out of their annuities. But if my annuity doesn’t have a surrender charge, is there any downside to rolling over the money to another company?”

Answer: You’re right to look at the surrender charge first. Depending on the particular annuity, you  might have to pay a fee of up to 10% of your account balance if you switch to another company’s annuity.

But even if you aren’t subject to a surrender charge — if the annuity never had one or if you’ve held it long enough that the charge has disappeared — there still could be a downside to switching companies.

No matter what type of annuity you have, it’s essential to read the contract carefully before making any changes. Some variable annuities, for example, offer guaranteed minimum income benefits — promising returns of 3% or more no matter how your investments perform — which can be particularly valuable in a year like this. But to qualify for this benefit, you may need to take the money in a lifetime income stream rather than a lump sum. If you move the annuity to another insurer, you could lose the minimum benefits that you’ve accrued, leaving you instead with the actual balance of the investments. In a tumultuous market like this, your actual account balance may be much lower than the minimum guarantees, so you could lose a lot of money by switching to a new annuity.

The specific rules can vary from company to company — and even within one insurer (AIG offers many types of annuities). Review your contract carefully and ask a lot of questions before making a change. And also look closely at any new annuity, too. It could have different investments, fees and guarantees, which may not be as good as the one you currently have. If you do switch, make sure that you roll the money directly to the new annuity rather than taking it yourself, so you won’t have to pay any taxes on the exchange.

For more information about the safety of AIG’s annuities and life insurance policies, see What the AIG Bailout Means for You, and the section in Your Financial-Crisis Questions Answered about AIG annuities.

As parents, you do everything you can to show your kids how much you care about them from the day they are born.  Yet, purchasing life insurance is something that is often overlooked.

Life insurance is an obvious “must have” if you’re the breadwinner of the family.  But imagine if your spouse should pass who will take care of the children, drive them to baseball or cook?  Just because you don’t earn a salary doesn’t mean you don’t make a financial contribution to your family.  According to a recent survey, most people value the services of childcare, cleaning, cooking and other important tasks at over $40,000.

You want to make sure even if you’re not around, your family has enough diapers, diplomas, and everything in between.

The average adult American with life insurance coverage has equal to only three times his or her annual salary, which would be gobbled up in a flash by unpaid bills, taxes and other expenses.

Term life insurance is often the best bet for new parents on a budget.  It covers you for a set period of time.  The premiums are relatively low.   On the other hand, permanent life insurance covers your whole life.  However, premiums for permanent life insurance as much as ten times higher than those for term life insurance.

Contrary to what you might think, it’s sometimes cheaper to get your own individual life insurance policy rather than buy into your company’s group plan.  That’s because group plans cover individuals who are older and in poorer health than you, which bumps up the premium each person pays.  Also, the life insurance policy is not portable, meaning if you leave your job, you lose your coverage. Comparing life insurance rates and finding an affordable life insurance plan is easy.

October 22, 2008

Saving Age Could Save You Money

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When asked how old you are, you use your “actual age” to describe your age.  For example, you’re 36 until the day of your 37th birthday.  However, what most people don’t realize is that most life insurance companies will price policies based on your “nearest age”.  In this podcast, Byron Udell, a leading life insurance and annuity expert, will talk about what’s known in the life insurance industry as “saving age” and explain how this technique can be used to save you money in the long term on your life insurance policy.

Size: 4.61 MB

Length: 5:02

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Where do insurance products fit into your retirement plan?  Life insurance is a key element in any sound financial plan. This is the case because if you should die prematurely before having built your retirement nest egg, there is no substitute to replace the income you would have earned during the balance of your career for the benefit of your spouse and children.  The immediate and substantial lump sum your family would receive if you had life insurance would be a critical component to their future. To satisfy this element, most people choose term life insurance because it is extremely inexpensive and is now available with level guaranteed premiums for as long as 30 years.   There are hundreds of carriers that offer term insurance, and the prices can vary greatly, so it pays to compare life insurance quotes of several companies.

If you’re considering an annuity, here are some tips to Maximize Your Annuity Investment:

• Think long term. Find out how long your interest rate is guaranteed. For a good long-term look, contrast the initial rate offered with the rates of existing contracts.
• Beware of hidden fees and expenses. Investigate all fees and expenses attached to the annuity. Pay close attention to the surrender charge. If you plan to retire in seven years, don’t select an annuity with a 10-year surrender period.
• Don’t underestimate safety. Check insurance company ratings online at Standard & Poor’s (www.standardpoor.com) and/or A.M. Best (www.ambest.com).
• It pays to shop. Compare features from different insurers and ask for quotes. Sites such as www.annuitysite.com offer valuable information to help you research your options and make the choices that best fit your needs.

This was a good article that I’d like to share with you from the Wall Street Journal.

It discusses how both candidates agree on changing the law to make the federal estate-tax (death tax) exemption “portable.” This issue is known as portability because the exemption per person — $2 million this year and $3.5 million next year — would become transferable from one spouse to the other, in effect doubling the surviving spouse’s exemption. In essence, that means that spouses would be able to use each other’s estate-tax exemption without first having to set up complex and costly trusts and take other steps that many people now feel obliged to do.

I thought this would be a good time to remind you that there are different types of life insurance policies that can help you with your estate planning needs. While estate taxes may be inevitable, there are ways to conserve – or at least replace – a portion of your estate. One effective tool to help protect your net worth is a survivorship life insurance policy.

If your estate exceeds the exclusion amount, you may have an estate tax liability. This is where you can use a survivorship life insurance policy, also known as second-to-die insurance.  This coverage can insure both you and your spouse under one policy, with the proceeds payable after the second death.