An Austin judge on Wednesday approved the release of nearly $20 million back to defrauded investors who sunk money into National Life Settlements LLC.
About 320 investors will share $19.8 million, or about 69 percent of the amount they invested in the Houston company, which is accused of selling promissory notes that were purportedly backed by life insurance policies, according to the Texas Securities Commission.
Houston attorney Janet Mortenson, the court-appointed receiver in control of NLS, said checks to investors will be mailed Dec. 17.
A life settlement is the sale of an insurance policy to a third-party in exchange for a one-time cash payment. The purchaser then continues to pay the premiums and becomes the beneficiary of the policy.
Many of the investors were teachers and state of Texas retirees who turned over retirement funds to the company.
An investigation led by the State Securities Board and the Texas Attorney General’s office unveiled that National Life Settlements sold about $30 million in unregistered investments, mostly through insurance agents. The company, which also had offices in Austin and South Texas, marketed their investments as safe products that promised a steady return of 10 percent a year, according to court documents.
Howard Judah Jr., the chief executive officer and chairman of the board of NLS, is a three-time convicted felon whose most recent conviction was in U.S. District Court in New York in 1998 for conspiracy to commit wire fraud, according to the commission. Another principal of NLS, Gregory Jablonski of Castle Rock, Colo., also sold unregistered securities to unsuspecting retirees.
Thursday, December 17, 2009
A.I.G. Said to Plan Hong Kong Listing for Asian Life Insurance Unit
SHANGHAI — American International Group, the troubled insurance giant, has decided to submit plans later this month to raise billions of dollars next year by listing its Asian life insurance unit on the Hong Kong stock exchange, people briefed on the plans said Thursday.
The planned listing of American International Assurance is expected to help A.I.G. repay some of the huge debts it owes the United States government, which took an 80 percent stake in the company following a series of massive bailouts this year.
Analysts say the Hong Kong listing could raise as much as $20 billion, which would make it one of the largest public stock offerings in history.
The decision to submit a plan this month for a public listing was first reported in the Financial Times on Thursday.
A.I.A., which has more than 20 million policy holders in dozens of countries throughout Asia, is considered one of the bright spots in A.I.G.’s troubled portfolio.
This week, A.I.G. agreed to give a stake in the Asian unit to the New York Federal Reserve in exchange for forgiving a $16 billion loan that was threatening to damage A.I.G.’s credit rating.
Earlier this year, A.I.G. tried to auction off its Asian assets, but later scrapped the idea in favor of a public stock offering.
Deutsche Bank and Morgan Stanley have been selected to prepare the public offering, according to people familiar with the deal.
The planned listing of American International Assurance is expected to help A.I.G. repay some of the huge debts it owes the United States government, which took an 80 percent stake in the company following a series of massive bailouts this year.
Analysts say the Hong Kong listing could raise as much as $20 billion, which would make it one of the largest public stock offerings in history.
The decision to submit a plan this month for a public listing was first reported in the Financial Times on Thursday.
A.I.A., which has more than 20 million policy holders in dozens of countries throughout Asia, is considered one of the bright spots in A.I.G.’s troubled portfolio.
This week, A.I.G. agreed to give a stake in the Asian unit to the New York Federal Reserve in exchange for forgiving a $16 billion loan that was threatening to damage A.I.G.’s credit rating.
Earlier this year, A.I.G. tried to auction off its Asian assets, but later scrapped the idea in favor of a public stock offering.
Deutsche Bank and Morgan Stanley have been selected to prepare the public offering, according to people familiar with the deal.
Thursday, August 20, 2009
Life insurance policies offer options
Some people don’t believe in life insurance. Maybe it is because they don’t understand the concept. Life insurance is to replace the earning power or human life value of a person if they experience premature death. In simple terms, it replaces a wage earner’s paycheck for the family if that person dies early in life.Life insurance policies are legal contracts. Policies with cash values have a valuable section inside called non-forfeiture values. These are choices within the life insurance contract. If the policy expires or lapses because of non-payment of premium, the insured may surrender the policy for the cash value, elect to receive a paid up policy for a reduced amount of life insurance, elect to take no action and the policy will automatically become a term-life plan for a certain number of years and days depending on the cash left in the policy.
Never discard or destroy an old life insurance policy until a competent life insurance agent has checked its status. You may be throwing away cash.
Another important and useful section in most life insurance contracts is the settlement options. When the insured dies, a life insurance benefit will be paid. Settlement options offer choices of how the proceeds are to be paid. The insured may select a choice before death or the beneficiary may choose after the insured is deceased. Life insurance proceeds are normally income tax free to the beneficiary.
The settlement options include a lump sum cash payment and an interest-only settlement when proceeds are left with the insurance company. This is normally only for a short time, giving the beneficiary time to make a decision about a permanent settlement option. A third option is a fixed time period option when the insurance company calculates an annuity type payment to pay out all monies by the end of of a certain length of time. The choice must be made before the first payment is made. The fourth option is a fixed dollar amount where beneficiaries will receive the monies until they are paid out. The fifth option is a life income or annuity where equal installments are paid to the beneficiary for life to protect the proceeds for the family in the event of an early death of the beneficiary. A choice can be made to include a guarantee of the payments continuing to a second beneficiary until all proceeds are paid.
Cash in on Your Life
Many seniors are now selling their life-insurance policies to raise cash. In 2006 alone, policies worth $6.1 billion in death benefits changed hands. This trade wouldn't be possible, however, except for one controversial aspect: The party on the other end profits from your death -- and the sooner, the better. When you (or a family member who may actually own the policy on your life) sell the insurance, the buyer becomes the owner and beneficiary. Upon your death, this stranger stops paying premiums and collects the death benefit.
These transactions used to be called viatical settlements. They were especially ghoulish because early investors were generally small companies that offered big discounts from the death benefit to buy policies from AIDS patients, who weren't expected to last long and desperately needed cash for medical bills. (Some investors lost a lot of money when new drug combinations greatly prolonged the life of AIDS sufferers.)
Now these deals are called life settlements and are moving to the financial mainstream. Institutions such as Goldman Sachs, JPMorgan and Credit Suisse, as well as hedge funds and German pension funds, are investing in packages of life settlements because the rate of return is not correlated to the stock market, making life settlements a portfolio diversifier. Even some life-insurance companies, such as Phoenix, are becoming investors.
QUESTIONS TO ASK YOURSELF
Do I still need the insurance? If you're 65 or older, or if you have health issues, you may be unable to replace the insurance (or unable to afford to). So think about why you got the policy in the first place. If you still have a mortgage in retirement or are supporting or educating children or grandchildren, you should probably keep the insurance.
What's the net payout? The key is what you'll keep after taxes. A life settlement is the sale of an asset, a taxable event. The tax specifics are up in the air in Congress and the courts. So most sellers make a three-tiered tax calculation: First, you don't owe taxes on the premiums you've paid through the years (minus any outstanding policy loans). Second, you owe ordinary income taxes on the difference between premiums paid (your basis) and the cash value. Third (and this is the big break), you pay capital gains on the amount by which the payout exceeds the cash value -- which is likely to be most of the haul.
Is there a way to save on the cost of insurance? If you need insurance in old age but can no longer afford it, you may have other options besides a settlement. Universal life, for example, has built-in flexibility in what you pay, says Glenn Daily, a fee-only insurance consultant in New York City. "A lot of people don't understand that they can change their premium," Daily says. If you have ample cash value, you may be able to skip or reduce your premiums for a while without danger that the policy will lapse.
Would a policy loan work instead? Life-settlement brokers focus on two numbers: the amount you'd get if you surrendered the policy to the insurance company and the substantially higher payout from a settlement. But those aren't your only options. If you need cash and want to keep the insurance in effect, you can take a policy loan up to almost the amount of the cash value. You won't get nearly as much as in a life settlement, but your beneficiaries will still get the bulk of the death benefit tax-free when you die (the benefit payment is reduced by the loan principal and accrued interest). There's no tax on loan proceeds and no requirement to repay the money, as long as you don't let the policy lapse.
What about family members? If you are ill and have only a year or so to live, it would be crazy to sell the policy for any amount (or to let a family member with power of attorney do so). Your insurer may offer accelerated death benefits, freeing up the death benefit while you're still alive.
If investors find your policy extremely attractive because your life expectancy is short, it's worth making maximum effort to salvage the policy. "You might want to schedule a meeting with your beneficiaries and say, 'This is what I'm thinking about doing. Here's what it might cost to keep this policy in effect,'" says Adam Hamm, North Dakota's insurance commissioner. Your sons and daughters or other heirs might pitch in to help pay the premiums or lend you the money because they'll end up with a much bigger and tax-free payout if you maintain the coverage.
SMART SHOPPING
If you decide that a life settlement is still your best option, you want to ensure you negotiate the fairest deal. You can get a ballpark estimate by using Norman Hood's free tool at www.policysettlement.com, but that's just a start.
--Get multiple offers. "There are about 60 different life-settlement companies, and they all have unique buying criteria," says Daniel Anderson, chief executive of Madison Brokerage, Morristown, New Jersey. That means the brokers like Anderson who present your information to investors can, and should, drive a hard bargain on your behalf. Your goal is to hold out for the highest percentage of the death benefit and hope that a particular institutional investor is looking for a person like you to round out its diversified pool of death-benefits-to-come.
--Find out how much money each participant in the deal is getting. "In some cases, the brokers are making the same amount as, or more than, the consumer," says Jim Poolman, who helped develop the National Association of Insurance Commissioners' model life-settlements law, which several states have recently passed or are in the process of adopting.
"Consumers have the right to look at their brokers and the people involved and say, 'Maybe I don't want to pay that much,'" says Jack Kelly, director of government relations for the Institutional Life Markets Association. The association requires life-settlement brokers to fill out disclosure forms for consumers before selling policies to its members (which include Goldman Sachs and Credit Suisse). Go to www.lifemarketsassociation.org for a copy.
--Ask specifically how much money each person or company is getting, not just percentages. Sometimes the commission percentage is based on the full death benefit, and sometimes it's based on the purchase price. "Once you get a commission below 10 percent of the purchase price, you're doing OK," says Daily. Ideally, the commission shouldn't be charged against the part of your settlement that is the existing cash value because that's yours to take anyway. Some insurance companies that are getting into the settlement business see it this way; some of the settlement firms do not.
--Ask who will own your policy. The creepiest thing about life settlements is that a stranger will benefit from your death. Fortunately, most investors are now large banks and other institutional investors that own big pools of policies (similar to the way mortgages are traded) and not individuals who are counting the days until you die. Also inquire about how often the life-settlement company will contact you after you sell your policy. You don't need frequent calls asking if you've been in the hospital. An occasional form letter should suffice.
--Ask about privacy. To get a quote, you must authorize the broker to view your medical records. Find out who else will have access and who will have your name after you sell the policy. Hood, the Illinois insurance adviser, says you should insist that the broker withhold your name, address and other identifying information from anything sent to big investors, who should care only about your age, health and the type and cost of the insurance they're being pitched to buy.
--Talk with independent experts. Before accepting an offer, run it by an independent financial adviser whose compensation is not based on whether you sell the policy. Be particularly wary of any insurance salesperson who's pushing hard to have you sell your policy and then buy a new one. "There's the potential to earn two commissions from the sale -- one from the life settlement and another from a life-insurance sale," says John Gannon, senior vice-president of investor education for the Financial Industry Regulatory Authority.
These transactions used to be called viatical settlements. They were especially ghoulish because early investors were generally small companies that offered big discounts from the death benefit to buy policies from AIDS patients, who weren't expected to last long and desperately needed cash for medical bills. (Some investors lost a lot of money when new drug combinations greatly prolonged the life of AIDS sufferers.)
Now these deals are called life settlements and are moving to the financial mainstream. Institutions such as Goldman Sachs, JPMorgan and Credit Suisse, as well as hedge funds and German pension funds, are investing in packages of life settlements because the rate of return is not correlated to the stock market, making life settlements a portfolio diversifier. Even some life-insurance companies, such as Phoenix, are becoming investors.
QUESTIONS TO ASK YOURSELF
Do I still need the insurance? If you're 65 or older, or if you have health issues, you may be unable to replace the insurance (or unable to afford to). So think about why you got the policy in the first place. If you still have a mortgage in retirement or are supporting or educating children or grandchildren, you should probably keep the insurance.
What's the net payout? The key is what you'll keep after taxes. A life settlement is the sale of an asset, a taxable event. The tax specifics are up in the air in Congress and the courts. So most sellers make a three-tiered tax calculation: First, you don't owe taxes on the premiums you've paid through the years (minus any outstanding policy loans). Second, you owe ordinary income taxes on the difference between premiums paid (your basis) and the cash value. Third (and this is the big break), you pay capital gains on the amount by which the payout exceeds the cash value -- which is likely to be most of the haul.
Is there a way to save on the cost of insurance? If you need insurance in old age but can no longer afford it, you may have other options besides a settlement. Universal life, for example, has built-in flexibility in what you pay, says Glenn Daily, a fee-only insurance consultant in New York City. "A lot of people don't understand that they can change their premium," Daily says. If you have ample cash value, you may be able to skip or reduce your premiums for a while without danger that the policy will lapse.
Would a policy loan work instead? Life-settlement brokers focus on two numbers: the amount you'd get if you surrendered the policy to the insurance company and the substantially higher payout from a settlement. But those aren't your only options. If you need cash and want to keep the insurance in effect, you can take a policy loan up to almost the amount of the cash value. You won't get nearly as much as in a life settlement, but your beneficiaries will still get the bulk of the death benefit tax-free when you die (the benefit payment is reduced by the loan principal and accrued interest). There's no tax on loan proceeds and no requirement to repay the money, as long as you don't let the policy lapse.
What about family members? If you are ill and have only a year or so to live, it would be crazy to sell the policy for any amount (or to let a family member with power of attorney do so). Your insurer may offer accelerated death benefits, freeing up the death benefit while you're still alive.
If investors find your policy extremely attractive because your life expectancy is short, it's worth making maximum effort to salvage the policy. "You might want to schedule a meeting with your beneficiaries and say, 'This is what I'm thinking about doing. Here's what it might cost to keep this policy in effect,'" says Adam Hamm, North Dakota's insurance commissioner. Your sons and daughters or other heirs might pitch in to help pay the premiums or lend you the money because they'll end up with a much bigger and tax-free payout if you maintain the coverage.
SMART SHOPPING
If you decide that a life settlement is still your best option, you want to ensure you negotiate the fairest deal. You can get a ballpark estimate by using Norman Hood's free tool at www.policysettlement.com, but that's just a start.
--Get multiple offers. "There are about 60 different life-settlement companies, and they all have unique buying criteria," says Daniel Anderson, chief executive of Madison Brokerage, Morristown, New Jersey. That means the brokers like Anderson who present your information to investors can, and should, drive a hard bargain on your behalf. Your goal is to hold out for the highest percentage of the death benefit and hope that a particular institutional investor is looking for a person like you to round out its diversified pool of death-benefits-to-come.
--Find out how much money each participant in the deal is getting. "In some cases, the brokers are making the same amount as, or more than, the consumer," says Jim Poolman, who helped develop the National Association of Insurance Commissioners' model life-settlements law, which several states have recently passed or are in the process of adopting.
"Consumers have the right to look at their brokers and the people involved and say, 'Maybe I don't want to pay that much,'" says Jack Kelly, director of government relations for the Institutional Life Markets Association. The association requires life-settlement brokers to fill out disclosure forms for consumers before selling policies to its members (which include Goldman Sachs and Credit Suisse). Go to www.lifemarketsassociation.org for a copy.
--Ask specifically how much money each person or company is getting, not just percentages. Sometimes the commission percentage is based on the full death benefit, and sometimes it's based on the purchase price. "Once you get a commission below 10 percent of the purchase price, you're doing OK," says Daily. Ideally, the commission shouldn't be charged against the part of your settlement that is the existing cash value because that's yours to take anyway. Some insurance companies that are getting into the settlement business see it this way; some of the settlement firms do not.
--Ask who will own your policy. The creepiest thing about life settlements is that a stranger will benefit from your death. Fortunately, most investors are now large banks and other institutional investors that own big pools of policies (similar to the way mortgages are traded) and not individuals who are counting the days until you die. Also inquire about how often the life-settlement company will contact you after you sell your policy. You don't need frequent calls asking if you've been in the hospital. An occasional form letter should suffice.
--Ask about privacy. To get a quote, you must authorize the broker to view your medical records. Find out who else will have access and who will have your name after you sell the policy. Hood, the Illinois insurance adviser, says you should insist that the broker withhold your name, address and other identifying information from anything sent to big investors, who should care only about your age, health and the type and cost of the insurance they're being pitched to buy.
--Talk with independent experts. Before accepting an offer, run it by an independent financial adviser whose compensation is not based on whether you sell the policy. Be particularly wary of any insurance salesperson who's pushing hard to have you sell your policy and then buy a new one. "There's the potential to earn two commissions from the sale -- one from the life settlement and another from a life-insurance sale," says John Gannon, senior vice-president of investor education for the Financial Industry Regulatory Authority.
Are Life Insurance Leads really available?
Speak with a life insurance agent and you are sure to hear many different things when it comes to how they are generating leads. Believe it or not, some of them will tell you that life insurance leads are not readily available. While this may be true for them, you don't have to buy into the same propaganda. There are enough life insurance leads to go around, and you can find plenty of them if you know where to look.The way that you generate life insurance leads will determine just how available they are to you. For instance, if you are only cold calling you may get the feeling that there are no leads out there. Remember, cold calling is a game of numbers and chance. The more calls you make the better chance you have of securing a lead. But even then, there is no guarantee.
But what if you decide to purchase life insurance leads? This is when you will really begin to see that leads are available. In fact, they are more than available. You can get all that you want if you are willing to pay for leads.
In short, life insurance leads are definitely available. If you are dedicated to finding them there is nothing that will stop you. Remember to search for leads in a variety of ways. By doing this, while also purchasing life insurance leads, you will always be ahead of the competition.
For a limited time, InsuranceLeads.com is offering 20 free leads worth up to $300 applicable to auto, home, health, life insurance leads.
Tuesday, August 4, 2009
How to Buy Term Life Insurance Leads
Do you want to buy term life insurance leads? Is this something that would catapult your business to the next level? If you answered yes to both of these questions you are well on your way to increasing sales. Of course, you first need to know how to buy these leads. In today’s day and age, buying term life insurance leads is easier than ever before. But of course, this doesn’t mean that you will be able to easily make this happen without the right knowledge.
The easiest way to buy term life insurance leads is online. When you use the internet you can quickly and efficiently buy leads that are of high quality. Sites such as InsuranceLeads.com sells leads to agents just like you. Once you are a member and know how to buy leads, the only thing left is to get started.
Before you begin to buy term life insurance leads you should think about the money you have in your budget. How much you can you spend on term life insurance leads without feeling like you went overboard? Is there a way to get what you want within your budget? Most agents find that buying term life insurance leads is more than affordable if they know how much they can spend.
Are you ready to buy term life insurance leads? This is easy enough the first time around, and things will only get more enjoyable as you continue forward. There is no better time than now to purchase term life insurance leads.
Michael Jackson's life insurance paid out
LOS ANGELES — Court filings state the administrators of Michael Jackson's estate have received the King of Pop's life insurance proceeds.
The records, filed Friday in Los Angeles, are redacted and don't indicate how much the policy paid out. The filings state that money designated for Jackson's three children has been received by a trust being handled by special administrators of the singer's estate.
The filings are meant to augment a petition to give the children a monthly stipend. Another filing indicates Jackson's mother, Katherine, is also eligible for some benefits from the policy.
The administrators are also seeking an allowance for Katherine Jackson, who is now caring for the children.
A court hearing is scheduled Monday on whether the allowances will be granted.
Wednesday, July 15, 2009
China H1 insurance premiums up 6 pct yr/yr
SHANGHAI(Reuters) - China's insurance premiums in the first half of the year grew 6.4 percent on the year to 597.6 billion yuan ($87.47 billion), the official China Securities Journal said on Wednesday, quoting a senior regulatory official.
Chen Wenhui, assistant chairman at the China Insurance Regulatory Commission, said life insurance premiums in the first half of the year rose 3.4 percent from a year earlier to 440.0 billion yuan, while asset insurance premiums gained 15.8 percent to 157.6 billion yuan.
China Pacific Insurance Group Co (601601.SS), the country's third-biggest life insurer, said in a statement that premiums of its life insurance subsidiary reached 35.2 billion yuan in the first half of the year, while premiums from its asset insurance subsidiary were 18.6 billion yuan. ($1=6.832 Yuan) (Reporting by Rujun Shen and Eric Burroughs; Editing by Jonathan Hopfner)
Friday, July 10, 2009
Buying Life Insurance: What Kind and How Much?
Finding the middle ground between being "insurance poor" and unprotected requires assessing real needs and choosing products that are affordable. This article introduces different types of insurance products and the role that they can play in a personal financial plan.
Buying Life Insurance
Conventional wisdom says that life insurance is sold, not purchased. In other words, some people are reluctant to discuss the importance of owning life insurance, and others are simply unaware of the need to have life insurance. Although many large companies provide life insurance as part of their benefits package, this coverage may be insufficient.
Who needs life insurance? If there are individuals who depend on you for financial support, or if you work at home providing your family with such services as child care, cooking, and cleaning, you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple's retirement savings being depleted by unexpected medical expenses. And individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.
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Types of Insurance
Term insurance is the most basic, and generally least expensive, form of life insurance for people under age 50. A term policy is written for a specific period of time, typically 1 to 10 years, and may be renewable at the end of each term. Also, the premiums increase at the end of each term and can become prohibitively expensive for older individuals. A level term policy locks in the annual premium for periods of up to 30 years.
Declining Balance Term insurance, a variation on this theme, is often used as mortgage insurance since it can be written to match the amortization of your mortgage principal. While the premium stays constant over the term, the face value steadily declines. Once the mortgage is paid off, the insurance is no longer needed and the policy expires. Unlike many other policies, term insurance has no cash value. In this sense, it is "pure" insurance without any investment options. Benefits are paid only if you die during the policy's term. After the term ends, your coverage expires unless you choose to renew the policy. When buying term insurance, you might look for a policy that is renewable up to age 70 and convertible to permanent insurance without a medical exam.
Whole Life combines permanent protection with a savings component. As long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate. Part of that premium accrues as cash value. As the policy gains value, you may be able to borrow up to 90% of your policy's cash value tax-free.
Universal Life is similar to whole life with the added benefit of potentially higher earnings on the savings component. Universal life policies are also highly flexible in regard to premiums and face value. Premiums can be increased, decreased or deferred, and cash values can be withdrawn. You may also have the option to change face values. Universal life policies typically offer a guaranteed return on cash value, usually at least 4%. You'll receive an annual statement that details cash value, total protection, earnings, and fees.
Drawbacks to this type of insurance include higher fees and interest rate sensitivity. Universal policies include up-front fees as well as ongoing administrative fees totaling as high as 5% to 7% of your premiums. You may also find your premiums increasing when interest rates decline.
Variable Life generally offers fixed premiums and control over your policy's cash value. Your cash value is invested in your choice of stock, bond, or money market funding options. Cash values and death benefits can rise and fall based on the performance of your investment choices. Although death benefits usually have a floor, there is no guarantee on cash values. Fees for these policies may be higher than for universal life, and investment options can be volatile. On the plus side, capital gains and other investment earnings accrue tax deferred as long as the funds remain invested in the insurance contract.
Universal Variable Life insurance is the most aggressive type of policy. Like variable life, you control your investment in mutual funds. However, there are no guarantees on universal variable policies beyond the original face value death benefit. These policies are probably best suited to affluent buyers who can afford the risks involved.
Key Terms and Definitions
Face Value -- The original death benefit amount.
Convertibility -- Option to convert from one type of policy (term) to another (whole life), usually without a physical examination.
Cash Value -- The savings portion of a policy that can be borrowed against or cashed in.
Premiums -- Monthly, quarterly, or yearly payments required to maintain coverage.
Beneficiary -- The individual(s) or entity (e.g., trust) that is designated as benefit recipient.
Paid Up -- A policy requiring no further premium payments due to prepayment or earnings.
How Much Insurance Do I Need?A popular approach to buying insurance is based on income replacement. In this approach, a formula of between five and ten times your annual salary is often used to calculate how much coverage you need. Another approach is to purchase insurance based on your individual needs and preferences. The first step is to determine your unique income replacement needs.
Currently, a large portion of your income goes to taxes (insurance benefits are generally income tax free) and to support your own lifestyle. Start off by determining your net earnings after taxes. Then add up all your personal expenses such as food, clothing, magazine subscriptions, club memberships, transportation expenses, etc. The remainder represents annual income that your insurance will need to replace. You'll want a death benefit amount which, when invested, will provide income annually to cover this amount. Then, you should add to that the amounts needed to fund one-time expenses such as college tuition for your children or paying down mortgage or debt.
Income replacement for nonworking spouses is an important and often overlooked insurance need. Coverage should provide for your costs for day care, housekeeping, or nursing care. Add to this any net earnings from part-time employment.
Finally, estimate your own "final expenses" such as estate taxes, uninsured medical costs, and funeral costs.
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Other Types of Life Insurance
Survivorship life insurance (also referred to as last-to-die or second-to-die) is a unique type of contract that insures the lives of two people. It pays a death benefit upon the death of the second insured. Therefore, it is typically less expensive than two individual policies. Survivorship life is often used for estate planning, where it may be possible to potentially leverage today's dollars -- via insurance premiums -- into a potentially significant death benefit that can be used to fund estate taxes, create wealth for future generations, or benefit a charity. These policies may be available if one insured is medically "uninsurable."
First-to-die life insurance insures the life of at least two people and pays a benefit upon the death of the first insured. This policy is useful for covering a mortgage or other large debt obligation where there is more than one debtor. In addition, it can be an ideal tool for funding a buy-sell agreement within a closely held business.
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Conclusion
Life insurance is an important component of a sound financial plan. Buying insurance involves asking a variety of personal lifestyle and financial questions. If you are not already working with an insurance professional, you may want to consider the advice of a fee-for-service financial planner who can offer you an objective review of your insurance options. When you decide on what you want, there are many solid insurance companies to choose from. Consult your library or an independent insurance professional for companies with the highest ratings from the four ratings agencies: AM Best, Duff Phelps, Standard & Poor's, and Moody's.
Buying Life Insurance
Conventional wisdom says that life insurance is sold, not purchased. In other words, some people are reluctant to discuss the importance of owning life insurance, and others are simply unaware of the need to have life insurance. Although many large companies provide life insurance as part of their benefits package, this coverage may be insufficient.
Who needs life insurance? If there are individuals who depend on you for financial support, or if you work at home providing your family with such services as child care, cooking, and cleaning, you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple's retirement savings being depleted by unexpected medical expenses. And individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.
Back to top
Types of Insurance
Term insurance is the most basic, and generally least expensive, form of life insurance for people under age 50. A term policy is written for a specific period of time, typically 1 to 10 years, and may be renewable at the end of each term. Also, the premiums increase at the end of each term and can become prohibitively expensive for older individuals. A level term policy locks in the annual premium for periods of up to 30 years.
Declining Balance Term insurance, a variation on this theme, is often used as mortgage insurance since it can be written to match the amortization of your mortgage principal. While the premium stays constant over the term, the face value steadily declines. Once the mortgage is paid off, the insurance is no longer needed and the policy expires. Unlike many other policies, term insurance has no cash value. In this sense, it is "pure" insurance without any investment options. Benefits are paid only if you die during the policy's term. After the term ends, your coverage expires unless you choose to renew the policy. When buying term insurance, you might look for a policy that is renewable up to age 70 and convertible to permanent insurance without a medical exam.
Whole Life combines permanent protection with a savings component. As long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate. Part of that premium accrues as cash value. As the policy gains value, you may be able to borrow up to 90% of your policy's cash value tax-free.
Universal Life is similar to whole life with the added benefit of potentially higher earnings on the savings component. Universal life policies are also highly flexible in regard to premiums and face value. Premiums can be increased, decreased or deferred, and cash values can be withdrawn. You may also have the option to change face values. Universal life policies typically offer a guaranteed return on cash value, usually at least 4%. You'll receive an annual statement that details cash value, total protection, earnings, and fees.
Drawbacks to this type of insurance include higher fees and interest rate sensitivity. Universal policies include up-front fees as well as ongoing administrative fees totaling as high as 5% to 7% of your premiums. You may also find your premiums increasing when interest rates decline.
Variable Life generally offers fixed premiums and control over your policy's cash value. Your cash value is invested in your choice of stock, bond, or money market funding options. Cash values and death benefits can rise and fall based on the performance of your investment choices. Although death benefits usually have a floor, there is no guarantee on cash values. Fees for these policies may be higher than for universal life, and investment options can be volatile. On the plus side, capital gains and other investment earnings accrue tax deferred as long as the funds remain invested in the insurance contract.
Universal Variable Life insurance is the most aggressive type of policy. Like variable life, you control your investment in mutual funds. However, there are no guarantees on universal variable policies beyond the original face value death benefit. These policies are probably best suited to affluent buyers who can afford the risks involved.
Key Terms and Definitions
Face Value -- The original death benefit amount.
Convertibility -- Option to convert from one type of policy (term) to another (whole life), usually without a physical examination.
Cash Value -- The savings portion of a policy that can be borrowed against or cashed in.
Premiums -- Monthly, quarterly, or yearly payments required to maintain coverage.
Beneficiary -- The individual(s) or entity (e.g., trust) that is designated as benefit recipient.
Paid Up -- A policy requiring no further premium payments due to prepayment or earnings.
How Much Insurance Do I Need?A popular approach to buying insurance is based on income replacement. In this approach, a formula of between five and ten times your annual salary is often used to calculate how much coverage you need. Another approach is to purchase insurance based on your individual needs and preferences. The first step is to determine your unique income replacement needs.
Currently, a large portion of your income goes to taxes (insurance benefits are generally income tax free) and to support your own lifestyle. Start off by determining your net earnings after taxes. Then add up all your personal expenses such as food, clothing, magazine subscriptions, club memberships, transportation expenses, etc. The remainder represents annual income that your insurance will need to replace. You'll want a death benefit amount which, when invested, will provide income annually to cover this amount. Then, you should add to that the amounts needed to fund one-time expenses such as college tuition for your children or paying down mortgage or debt.
Income replacement for nonworking spouses is an important and often overlooked insurance need. Coverage should provide for your costs for day care, housekeeping, or nursing care. Add to this any net earnings from part-time employment.
Finally, estimate your own "final expenses" such as estate taxes, uninsured medical costs, and funeral costs.
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Other Types of Life Insurance
Survivorship life insurance (also referred to as last-to-die or second-to-die) is a unique type of contract that insures the lives of two people. It pays a death benefit upon the death of the second insured. Therefore, it is typically less expensive than two individual policies. Survivorship life is often used for estate planning, where it may be possible to potentially leverage today's dollars -- via insurance premiums -- into a potentially significant death benefit that can be used to fund estate taxes, create wealth for future generations, or benefit a charity. These policies may be available if one insured is medically "uninsurable."
First-to-die life insurance insures the life of at least two people and pays a benefit upon the death of the first insured. This policy is useful for covering a mortgage or other large debt obligation where there is more than one debtor. In addition, it can be an ideal tool for funding a buy-sell agreement within a closely held business.
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Conclusion
Life insurance is an important component of a sound financial plan. Buying insurance involves asking a variety of personal lifestyle and financial questions. If you are not already working with an insurance professional, you may want to consider the advice of a fee-for-service financial planner who can offer you an objective review of your insurance options. When you decide on what you want, there are many solid insurance companies to choose from. Consult your library or an independent insurance professional for companies with the highest ratings from the four ratings agencies: AM Best, Duff Phelps, Standard & Poor's, and Moody's.
Wednesday, July 1, 2009
Life insurance cash-out
Many people buy life insurance when they start a family to provide for them in case anything should happen.
Yet some people are still paying premiums when they start collecting Social Security, which may be financial overkill.
Seniors 65 and older with life insurance have several options:
- Continue paying. Death benefits don’t usually have to be reported on federal tax returns and can be used to pay state estate taxes.
n Surrender the policy for its cash value, if any.
- Let the policy lapse.
- Sell the policy in what is called a life settlement.
Through an intermediary, certain whole life policies can be sold to investors, such as hedge funds, said Rob Gatti, CEO of Life Settlement Leads, a company that evaluates policies on behalf of buyers.
“All seniors during these tough economic times should consider a life settlement,” Gatti said.
He noted that payouts usually range from 5% to 30% of the death benefit, plus any cash value, depending on the insured’s age, medical condition and type of policy, as well as other factors.
Traditionally, the market for life settlements has been for policies of $1 million or more.
This summer, Gatti’s company will begin accepting inquiries from people with policies as small as $50,000.
. Peter Traphagen Jr., a certified public accountant in Oradell, N.J., said that, before accepting an offer, you should double check a life settlement’s statistical assumptions.
“You should run your own calculations,” he said.
Unfortunately, he noted, having your own experts evaluate a life settlement for a $50,000 policy would prove costly given what you’re likely to get.
Of course, if you’re fortunate enough to be a healthy senior, it still might be worth it even if you have a modest policy.
Yet some people are still paying premiums when they start collecting Social Security, which may be financial overkill.
Seniors 65 and older with life insurance have several options:
- Continue paying. Death benefits don’t usually have to be reported on federal tax returns and can be used to pay state estate taxes.
n Surrender the policy for its cash value, if any.
- Let the policy lapse.
- Sell the policy in what is called a life settlement.
Through an intermediary, certain whole life policies can be sold to investors, such as hedge funds, said Rob Gatti, CEO of Life Settlement Leads, a company that evaluates policies on behalf of buyers.
“All seniors during these tough economic times should consider a life settlement,” Gatti said.
He noted that payouts usually range from 5% to 30% of the death benefit, plus any cash value, depending on the insured’s age, medical condition and type of policy, as well as other factors.
Traditionally, the market for life settlements has been for policies of $1 million or more.
This summer, Gatti’s company will begin accepting inquiries from people with policies as small as $50,000.
. Peter Traphagen Jr., a certified public accountant in Oradell, N.J., said that, before accepting an offer, you should double check a life settlement’s statistical assumptions.
“You should run your own calculations,” he said.
Unfortunately, he noted, having your own experts evaluate a life settlement for a $50,000 policy would prove costly given what you’re likely to get.
Of course, if you’re fortunate enough to be a healthy senior, it still might be worth it even if you have a modest policy.
Thursday, June 18, 2009
America’s healthcare debate: the fight of your life
In the past five months, President Obama and the Democrats have moved with startling speed and expanded the power of an already out-of-control federal government to heights only dreamed of by the likes of Franklin Roosevelt. Now they are coming after the Holy Grail for socialists – your healthcare. With this power, they will not only secure their absolute control over a massive sector of the economy, but will literally have the power of life and death over millions of Americans.
In order to convince Americans to surrender their liberty on such a massive scale, the collectivists are using the same tactics they have for decades. The method is to create or exploit a “crisis”, which will in turn justify the suspension of constitutional limitations on government. Since last fall, they have used an economic recession – an event which has occurred on average every 5- 1/2 years since 1945 - to manufacture a horrifying crisis requiring the unconstitutional nationalization of banks and automobile manufacturing companies, and an unprecedented increase in government spending.
Now they will stoke the fires of the bogus “healthcare crisis” to justify nationalizing the industry and take away your right to privately contract for your own health care needs. The issue of the high cost of health care has been referred to by socialists as a crisis since the Clinton administration tried to implement socialized medicine under the Hillary Care plan in 1993. What kind of “crisis” lasts for sixteen years?
The collectivists and world-savers told us during the election that there are 45 million Americans without health insurance, although that number seems to have jumped to more than 50 million now that the push is on for a government takeover. What they won’t tell you is that 43% of these uninsured “Americans” are not Americans at all – they are aliens of both legal and illegal status. People who simply do not work make up 26%, and people between the ages of eighteen and twenty-four, who generally do not see the need to pay for health insurance, constitute 29%. Nearly 8% are people in higher income ranges, many of whom may simply choose to pay out of pocket for their medical needs. While some of these groups overlap, it is clear that the actual number of uninsured Americans is less than half what we are told by our rulers in Washington.
They also won’t tell you that government is the reason healthcare costs so much. The government already lays out more than half of all the health care dollars spent in the United States. This money is doled out by an army of bureaucrats who have no incentive to identify fraud and who also have to be paid salaries and benefits at taxpayer expense. This government control of half the health care market results in a gross distortion of the marketplace and causes prices to rise.
Health insurance, on the other hand is not insurance in the traditional sense at all. “Insurance” traditionally means paying a relatively small amount of money to someone, who in turn promises to pay you a very large sum of money if an unlikely event were to happen. For example, you pay an insurer $500 a year for homeowner’s insurance, but in the unlikely event that your house burns down, he will pay you $250,000 to replace it. Traditional health insurance would work the same way, paying relatively small premiums to pay for an unlikely catastrophic illness. Instead we have developed, as a result of government meddling, a system of paying large premiums to an insurer who in turn pays for nearly all of our healthcare costs. Each of these payments has to wind their way through either a private bureaucracy or an incompetent government agency, greatly adding to the cost. Doctors who accept insurance have to hire a staff just to deal with the paperwork – so you have to pay him and his employees.
Life insurance can protect family's future
Fathers in the UK should take out life insurance to provide their families with protection if they suffer a critical illness or pass away, a financial services provider has advised.
Research by Legal & General (L&G) showed that just 63% of fathers have life insurance, 33% possess critical illness cover and 27% have income protection.
Alan Ferguson, protection marketing and channel development director at L&G, said: "Protection insurance can help provide peace of mind that a family could maintain its living standards if dad was critically ill or passed away.
"Given the economic backdrop, now could be a good time to consider how to protect your family against financial hardship."
The study showed that the value of a father to a household has increased since the company last undertook similar research in 2005.
Men now spend 53 hours a week on household chores and childcare compared with 34 hours four years ago, while the value of a dad to a family has increased from £12,738 to £23,000 a year.
Previous research from L&G showed that the value of a mother to a household has increased from £24,440 to £32,000 a year during the same period.
Research by Legal & General (L&G) showed that just 63% of fathers have life insurance, 33% possess critical illness cover and 27% have income protection.
Alan Ferguson, protection marketing and channel development director at L&G, said: "Protection insurance can help provide peace of mind that a family could maintain its living standards if dad was critically ill or passed away.
"Given the economic backdrop, now could be a good time to consider how to protect your family against financial hardship."
The study showed that the value of a father to a household has increased since the company last undertook similar research in 2005.
Men now spend 53 hours a week on household chores and childcare compared with 34 hours four years ago, while the value of a dad to a family has increased from £12,738 to £23,000 a year.
Previous research from L&G showed that the value of a mother to a household has increased from £24,440 to £32,000 a year during the same period.
Korea Life Insurance aids disabled, elderly, kids
Korea Life Insurance’s social contributions are mainly funneled through the Sarangmoa Volunteer Group, which involves 25,000 executives and financial planners.
The organization connects more than 140 volunteer groups from across the country and seeks to form close relationships with organizations for the disabled and the elderly as well as with orphanages. The individual volunteer groups involved with the organization also help children through cultural events.
Local disaster support is another key area for Korea Life Insurance.
The company helps prepare guidelines for local volunteer groups to deliver emergency relief products after natural disasters such as the big fire in Yangyang, the flood in Yeongwol and heavy snow in the Gangwon region.
Korea Life Insurance’s executives are actively involved in philanthropy as well. Each executive participates in at least 20 hours of volunteer work each year, which is equal to at least 1 percent of their annual working hours. They also donate a portion of their salaries to good causes. Additionally, the company matches employee donations.
Korea Life Insurance even has a volunteer activity program for new employees, and it hosts a huge festival every October that allows volunteers to form bonds and exchange ideas and information.
In January of 2006, Korea Life Insurance established the Happy Friends Volunteer Group to help teenagers lead healthy lives, both physically and mentally. More than 400 students from 33 middle schools and high schools in 10 regions have participated in volunteer activities through the program.
The company actively promotes volunteer activities not only in Korea but also in countries across the world. Selected volunteer teams are given the chance to volunteer their time and efforts in places like Kenya, Cambodia, El Salvador, among other countries.
The organization connects more than 140 volunteer groups from across the country and seeks to form close relationships with organizations for the disabled and the elderly as well as with orphanages. The individual volunteer groups involved with the organization also help children through cultural events.
Local disaster support is another key area for Korea Life Insurance.
The company helps prepare guidelines for local volunteer groups to deliver emergency relief products after natural disasters such as the big fire in Yangyang, the flood in Yeongwol and heavy snow in the Gangwon region.
Korea Life Insurance’s executives are actively involved in philanthropy as well. Each executive participates in at least 20 hours of volunteer work each year, which is equal to at least 1 percent of their annual working hours. They also donate a portion of their salaries to good causes. Additionally, the company matches employee donations.
Korea Life Insurance even has a volunteer activity program for new employees, and it hosts a huge festival every October that allows volunteers to form bonds and exchange ideas and information.
In January of 2006, Korea Life Insurance established the Happy Friends Volunteer Group to help teenagers lead healthy lives, both physically and mentally. More than 400 students from 33 middle schools and high schools in 10 regions have participated in volunteer activities through the program.
The company actively promotes volunteer activities not only in Korea but also in countries across the world. Selected volunteer teams are given the chance to volunteer their time and efforts in places like Kenya, Cambodia, El Salvador, among other countries.
Wednesday, June 10, 2009
Reforming health care (Part V): Adjust insurance involvement
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During the recent presidential campaign, one voice had a particularly ironic ring to it: John McCain, the GOP’s Chosen One, claimed "market forces" would solve the problem, ignoring the fact that "market forces" caused the mess in the first place. This man who’s received government-administered care all his life warned of the terrible consequences of allowing bureaucrats to control health care. With no worries about his own access to health care, McCain wants insurance company execs to continue denying care to people who need it while receiving fat bonuses for performing that odious task.
Market forces, indeed!
In the long run, the goal must be universal single-payer coverage. But as much as we want to kick those evil insurance companies out of the health-care picture, it won’t happen overnight. In the first place, it’s just not wise to tell an entire industry to simply fold up its tents and go away quietly. Such a move would create so much chaos that even the recent banking/auto scare would seem like an economic boom in comparison.
Instead, Congress should pass reforms that squeeze so much profit out of insurance involvement that companies voluntarily drop out of that part of the business. That would give them time to adjust their business models and move personnel to other departments, minimizing any resulting layoffs. Insurance businesses have a lot of irons in many different fires (pun definitely intended). They’ll find other ways to use the resources they now focus on the medical industry.
At the same time, Congress must establish a comprehensive government plan that is cheaper than private insurance. Such a policy would be so seductive that people will abandon insurance companies, hastening their decision to bail. You see, millions of people still believe private insurance is superior to government-administered care. That misconception is based on the fact that Medicare has so many holes that force beneficiaries to buy supplemental insurance to cover the gaps that were manufactured by meddling insurance lobbyists in the first place. Talk about a vicious circle!
It’ll take time to lure all those people away from tradition. But when that finally happens, for-profit medical insurance will be history--at last!
Besides the army of lobbyists and lawyers whose sole purpose is to prevent solutions to the health-care crisis, a series of anti-reform commercials is scaring people by citing rare problems from the U.K. But for every single occurrence elsewhere, there are thousands of cases of neglect resulting from bad policies on the part of U.S. insurance companies:
Insurance companies deny coverage of diagnostic tests, often leading to avoidable patient deaths.
Insurance companies deny coverage of medication and treatments, forcing patients to "just live with the pain."
Insurance companies deny effective treatments, calling them "experimental," often leading to avoidable deaths from treatable conditions.
Insurance companies require preapproval in emergency situations, hindering timely care and sometimes leading to avoidable deaths.
Then there are new-employee waiting periods and that infamous pre-existing condition clause. You know: when insurance companies deny medical care to people because they need medical care.
These and other policies are the reason Congress must set strong guidelines for insurance reform, including:
Abolish all waiting periods for coverage and restrictions on pre-existing conditions.
Patients can choose their own doctors and receive care at any accredited medical institution.
Insurance must pay for all preventive care, including regular physicals, vaccines, and diagnostic tests.
Insurance must pay for all necessary medical care, including pain medication and treatments.
All prescription medications must be covered, with no formularies allowed. Only equivalent generic brands can be substituted for a brand-name drug.
Insurance must fully cover so-called "mental" or "psychological" care, with no temporal or monetary limitations attached.
When a person becomes temporarily unemployed, their health insurance premiums would be paid by a government subsidy until they return to work.
If Congress can establish a truly effective government insurance program, in spite of all those lobbyists, then it won’t be too long before every American will be standing in line to get that superior single-payer coverage from Uncle Sam. It not only can happen, it must happen!
Rising life expectancy to help lower insurance premium
Life insurance premium rates are likely to drop over the next few months owing to longer life expectancy, with a new mortality and morbidity table expected to be in place by the fourth quarter of 2009 to replace the current one, which is of 1994-96 vintage.
The new rates will include the claim experience of individual companies and will be based on 2006-08 data.
The Mortality and Morbidity Investigating Centre, an affiliate of the Institute of Actuaries of India, plans to publish the mortality table by October. The institute has been working on the table for the last six months.
Data and statistics are currently being collected from various insurance companies though a handful of large players, including government-owned Life Insurance Corporation of India, are yet to submit data, said IAI President G N Agarwal.
With the risk perception falling, premium rates, which are based on mortality rates, are expected to fall as well. "Over the years, life expectancy has increased, mortality has come down drastically and this gives a room for the rates to drop," said Agarwal, who is the chief actuary of Future Generali India Life Insurance Company, a joint venture between the Future Group and Italy's [ Images ] Generali.
Agarwal said over the last 12 or 15 years, according to data available so far, mortality rates have come down by 25 to 30 per cent in the higher age brackets, which may translate into a reduction of 15 to 20 per cent in certain segments.
While the impact will be felt most on term covers, unit-linked insurance plans are also expected to see an impact, but only on the insurance component. In the case of endowment policies, the impact is likely to be on bonus payments on certain policies, since 8 to 9 per cent of the premium is linked to mortality rates.
"Term and savings-cum-life endowment (policies) are likely to see a reduction in premiums, while on the other side, rates on annuity products may go up. Insurers have already factored in the anticipated improvement in their mortality table," said SBI [ Get Quote ] Life Appointed Actuary Sanjeev Pujari.
The new tables are likely to provide data for various product categories and on the experience of individual insurers, since it would be based on the sex, age and geography, among other factors. At present, the tables only provide the mortality rate per thousand.
For instance, according to the Indian Assured Lives Mortality (1994-96), which has been in effect since January 2005, for people who are 40 years old, the probability of their death is 2.053 per 1,000. For 60 year olds, the probability is 13.073 per 1,000, which results in a higher premium.
The new table is expected to provide additional data by classifying customers into various segments on the basis of economic groups as well, making pricing according to their profile possible.
Pujari added that since the industry was opened in 2000-2001, private insurers have enough experience to contribute to the table.
"Some actuaries have been reducing premium rates for life covers over the last few years as life expectancy has increased. I don't expect the new table to reduce the premium rates drastically," said ICICI [ Get Quote ] Prudential Life Insurance Appointed Actuary Abhijit Chatterji.
However, actuaries said the new table would be predominantly based on LIC [ Get Quote ] data, since private insurers would not have rates for ages beyond a particular limit. Private sector insurance companies have a relatively younger client base and therefore have data for fewer age groups.
Once the tables are finalised, apart from the industry-wide data, Insurance Regulatory and Development Authority has also agreed to allow companies to decide the premium based on their experience, which would be based on their own tables.
Thursday, June 4, 2009
Life, health insurers invest big in tobacco
WASHINGTON (AFP) — Major US, Canadian and British life and health insurance companies have billions of dollars invested in tobacco companies, a study published Wednesday in the New England Journal of Medicine said.
Wesley Boyd, the study's lead author, found that at least 4.4 billion dollars in insurance company funds are invested in companies whose affiliates produce cigarettes, cigars and chewing tobacco.
"Despite calls upon the insurance industry to get out of the tobacco business by physicians and others, insurers continue to put their profits above people's health," said Boyd, a faculty member of Harvard Medical School.
"It's clear their top priority is making money, not safeguarding people's well-being," he wrote.
Tobacco is considered the leading cause of lung cancer and a major risk factor for heart attack, stroke, pulmonary disease and cancer.
According to the World Health Organization, it is a contributing factor in 5.4 million deaths a year.
Researchers first revealed that health and life insurance companies had major investments in tobacco companies in 1995 in an article in the British medical journal Lancet.
"Although investing in tobacco while selling life or health insurance may seem self-defeating, insurance firms have figured out ways to profit from both," Boyd wrote.
"Insurers exclude smokers from coverage or, more commonly, charge them higher premiums. Insurers profit -- and smokers lose -- twice over."
According to the study, US insurer Prudential Financial Inc. has 264.3 million dollars invested among three US tobacco companies, including Reynolds America and Philip Morris.
Canadian insurer Sun Life Financial Inc., which sells life, disability and health insurance, has a stock portfolio with more than one billion dollars in two tobacco companies, including 890 million dollars in Philip Morris.
Prudential Plc, which sells health and disability insurance, has 1.38 billion dollars in two tobacco companies, including British American Tobacco.
The study also details the substantial tobacco investments of the US firms Northwestern Mutual and Massachusetts Mutual Life, and the Scottish firm Standard Life Plc.
More young people need to buy life insurance deals
Increasing numbers of young people need to make sure they have a life insurance policy in place, one insurer has claimed.
According to LifeSearch, a life insurance specialist, its figures for 2008 show 3% of the policies it sold during 2008 were for young people aged 25 and under.
The firm stated that young consumers could take out life insurance, critical illness and income protection, three policies which would be less expensive for young people because of their age and better health.
Matt Morris, a LifeSearch policy adviser, said more effort needs to be made to impress the importance of life insurance on younger people.
He stated: "Many younger people have debts, mortgages and families that need financial protection in the event of the main income provider being unable to work. Often they either buy no financial protection at all or rely on the internet to get the best deal."
Previous research from LifeSearch revealed that the price of life cover has fallen by as much as 40% during the past two years.
Monday, May 11, 2009
Ask The Experts: The 'Real Deal' on Life Insurance
Q. After my brother's death about 11 years ago I bought a whole life policy. When my children were born I also thought it would be good idea to get them some whole life policies too. Now I am thinking that was not such a wise decision. I currently have a $100k policy and pay ~$67/month. My two older children each have $75K and it is costing me ~$32/month for each. Should I keep them??? or cash them out and get a term policy? The surrender value on mine is about $4500 and for my children it is ~ $300 & $600. -Ady, IL
A. Ady - Here's my 'real deal' on life insurance: It exists to protect those who depend on your income or other benefits of your labor. Now, I hope you're not putting the kids to work so young--of course not!--hence, there is no need for them to have life insurance.
Think of it this way, what does your family have to lose financially if they lose you? As a wage-earner (are you sole or primary?) they would lose a lot, hence the need for life insurance to help them maintain a similar quality of life when your paycheck goes away. If your wife works, the same may go for her. However, even if she doesn't work, you would need to get a smaller policy on her as you may need to hire someone (or two or three) to cover the role she plays in the home as caretaker/chauffeur/personal-assistant/home-manager, etc.
The better move to protect your children and their future is to first make sure that you are fully funding your retirement (so they don't have to take care of you in your old age) and that are not in credit card debt and that you have ample emergency savings. Then, consider setting money aside for their education. That's a whole 'nother kind of insurance for their future!
Carmen Wong Ulrich
Stock market insurance
Can you buy an insurance policy that protects you against severe stock market losses? For example, let’s say you buy a lot of Manulife Financial shares (stock symbol MFC) but the prices fall dramatically this summer.
The short answer is no.
But then again, the ‘short’ answer is absolutely if we’re talking a prudent and well-managed hedging strategy.
Instead of signing an insurance contract application and paying premiums, you could pay for a modest position in a highly leveraged inverse Exchange Traded Fund that performs in the opposite direction to the share price for Manulife Financial.
Consider one such inverse ETF, namely the Direxion Financial Bear 3X (FAZ).
FAZ triples the inverse returns on an investment in the Russell 1000 Financials Index, which tracks financial-related securities in the Russell 1000 Index. Of these, about 26% are insurance company equities while the remainder is comprised of banking and other financial services stocks. If the underlying Russell index goes up by 1%, FAZ goes down by about 3%. The same percentages change relationship applies when the index retreats.
The inverse relationship between Manulife’s share price and FAZ’s unit value isn’t as predictable or as severe. This shouldn’t be surprising given that life insurers represent only 3.3% of the underlying Russell 1000 components.
One final word of caution: our thesis is that FAZ is can be used as a kind of insurance against the dramatic loss in price of a financial company stock like Manulife Financial. Prudent investors will only put a very small position in a leveraged inverse ETF like FAZ.
After all, insurance premiums represent a relatively small percentage of our annual financial expenses.
With the share price for Manulife Financial closing up 21% since May 1 and in the midst of the Great Recession, it does seem prudent to consider some form of stock market insurance.
Thursday, April 23, 2009
What Insurance 'Bailout' Means for Your Policy
Richard Fine woke up Thursday morning, sat down to write a check to his insurance company, Genworth Financial, and while listening to the news realized the very company to which he was about to send his money was asking the federal government for a bailout.
"I didn't expect to see my insurance company seeking a bailout. I didn't think insurance companies could fall prey to the same problems as the banks, but I guess we all should have known better after AIG," said Fine, 62, a business owner from Ridgewood, N.J.
Would You Invest Cash in the Bank Bailout?
The Treasury Department announced this week that Genworth, along with some of the country's largest insurers -- Hartford Financial Services Group, Lincoln National Corp, Prudential and Aegon -- would receive assistance through the Troubled Asset Relief Program, the same emergency fund established last year to bail out ailing banks.
Life insurance companies are increasingly in trouble. Their ratings and stock prices have fallen precipitously in recent weeks.
The federal government, the insurance companies, and the state guaranty associations, which serve as safety nets in case an insurance company fails, insist no one should be worried. But for millions of Americans who depend on insurance to take care of their families in case they die, or rely on money they receive from annuities, news of the bailout has them concerned.
"Yes, I'm concerned. Life insurance and long-term care insurance protect you against something going wrong in the future. Long-term care can drain a family's savings. I have a wife and two kids in college and I would just as soon not drain what's left of our equity if I ended up in a hospital," Fine said.
Intervention, the government and the insurers say, is not a bailout for failing companies -- comparable to the assistance banks received last year -- but the newest tool in an arsenal intended to keep the insurers solvent and policy holders protected.
Life Insurance Companies Safe From Financial Crisis
Korea - Life insurance companies around the world are going through difficult times following the onset of the global financial crisis ― AIG, the biggest insurer, practically collapsed. Life insurers here, meanwhile, are relatively better off due to strict regulation of derivate products, according to Korea Life Insurance Association Chairman and CEO Lee Woo-cheol.
``The life insurance industry is facing difficulties as the worsening economy has begun to affect it. They are having problems managing their assets amid interest rate falls, and monthly premium payments are falling. Some subscribers are canceling insurance policies and the solvency margin ratio has fallen. However, they are in much better shape compared with insurers in other countries,'' Lee said in an interview with The Korea Times.
Indeed, figures have worsened for life insurance industry. Their net income for the third quarter of 2008 stood at 761 billion won, plummeting by 948.3 billion won from a year ago. The solvency margin ratio, which represents their fiscal soundness to pay insurance money, fell by 29 percentage points.
However, life insurers here, though small in global scale, have successfully survived, thanks to strict regulation on life insurers' investment in derivative products.
Life Insurance Industry Needs Deregulation
Though regulations on derivative investments helped them withstand the global crisis, the life insurance industry needs deregulation from a broader perspective, according to Lee. This is true when one focuses on the imbalances in the financial industry, especially between insurers and banks.
Life Insurers Contribute to the Community
Life insurance companies around the world are actively engaged in social contribution programs, giving back part of their earnings to the community. Lee explained that life insurers here are running social contribution programs from various spheres, running their own programs as well as participating in joint programs by the industry.
Insurance Essential in Aging Society
Lee said in a country like Korea which is seeing an unprecedented pace of aging, people need insurance policies. ``The population aged 65 or older reached 7.4 percent in 2001, categorizing the country as an aging society. It is expected to become an aged society by 2020 with the ratio reaching 15.1 percent,'' the chairman said.
He pointed out, however, that the state welfare system here is not good enough to guarantee a stable life after retirement. He said that the life insurance industry makes up for the loopholes, providing insurance products such as whole-life, annuity and nursing insurances.
As insurance policies are safety nets for the family economy, the chairman advised people not to cancel policies if they can. ``It is better to keep insurance policies especially when the economy is bad. I think life insurance is the means of practicing love for one's family and respect for life,'' Lee added.
He recommended integrated insurance products, which protect against various risks in life such as disease, injury, and death or disasters at relatively small premiums.
Wednesday, April 22, 2009
Life insurers profit even as sales fall during recession
Since year 2000, the only gain in U.S. life insurance sales was a small blip that lasted 4 quarters after the September 11 terrorist attacks back in 2001.
The life insurance industry has experienced a year-over-year revenue decline in every quarter since the fall of 2002.
Still, the life insurance industry remains highly profitable due to buoyant sales of other products.
Annuities now generate about 38% of total life insurance industry profits, while accident and health insurance sales contribute 26%.
Life insurance sales represent 32% of the industry’s annual cash gains, according to an analysis of U.S. life insurance industry profits for 2006. Miscellaneous financial products bring in another 4% of profits.
Recession Further Depresses Life Insurance Sales
Based on a historical study, the Insurance Information Institute’s presentation entitled Source of U.S. Life Insurance Industry Profits 2006 concludes that during a recession:
Policy loans increase.
Life insurance lapse rates rise.
Because of the severity of the current recession, the above two life insurance trends are expected to accelerate. That is, more consumers will take out loans on their life insurance due to the credit crunch while more policyholders are expected to cancel their life policies because they can’t pay their premiums.
While group life insurance sales contribute only 6% of industry profits, group life revenues will probably shrink further as companies cut back on their head counts.
Group accident and health sales should show a more significant drop, since about 18% of total life insurance industry profits came from these products in the early days of the current recession. Also, claims for disability income benefits typically rise during a recession due to such factors as stress, anxiety and depression. These in turn cut into life insurers’ profits.
Life Insurance Companies Will Remain Profitable
By focusing on annuities and similar pension products, U.S. lifecos are strongly positioned to profit from servicing the retirement needs of 84.2 million American baby boomers age 60 and over.
That 84.2 million number is from the U.S. Census Bureau age data of the United States for 2006, and it shows how powerful a force baby boomer spending is on the profitability of the American life insurance industry.
Profitability should continue to grow, even if life insurance sales diminish over the longer term.
Monday, March 30, 2009
Lloyds Banking Group considers sale of insurance assets
by Gill Montia
Lloyds Banking Group is reported to be considering the sale of part of its insurance business.
The group, which has been created through the merger of Lloyds TSB and HBOS, includes Lloyds TSB’s life insurance arm, Scottish Widows, plus HBOS’s Clerical Medical and Halifax Life.
Bearing in mind the group has already announced plans to make cost savings of over £1.5 billion by 2011, streamlining its life insurance operations could become a priority and according to reports, Deutsche Bank has already been instructed to carry out a review of the insurance assets of the enlarged business.
The sale of such assets could also bolster the group’s balance sheet, although it may not be easy to secure a buyer in today’s market.
High Street rival, Royal Bank of Scotland, has been blowing hot and cold over the sale of its insurance business for months.
The bank reportedly rejected an offer from CVC Capital Partners in December, raising speculation that a sale now would not achieve an acceptable price and that the auction would be abandoned for the second time.
Zurich, Generali, Ping An of China and Warren Buffett’s Berkshire Hathaway have all shown interest at some point but eventually walked away.
Saturday, February 21, 2009
Princeton gives highest awards to top students
by Ruth Stevens
At a reception before the Alumni Day luncheon in Jadwin Gymnasium, President Shirley M. Tilghman (left) and Dean of the Graduate School William Russel (right) congratulated the winners of the University's highest awards for students: (from second from left) Pyne Prize winners Alexander Barnard and Andy Chen; and Jacobus Fellowship recipients Daniel Bouk, Hannah Crawforth, Peter DiMaggio and Jianfeng Lu. (Photo: Denise Applewhite)
Princeton University recognized the winners of the highest honors it awards to students at Alumni Day ceremonies Saturday, Feb. 21.
Seniors Alexander Barnard and Andy Chen shared the University's Moses Taylor Pyne Honor Prize, and graduate students Daniel Bouk, Hannah Crawforth, Peter DiMaggio and Jianfeng Lu were presented as co-winners of the Porter Ogden Jacobus Fellowship at a luncheon in Jadwin Gymnasium.
The Pyne Honor Prize, the highest general distinction conferred on an undergraduate, is awarded to the senior who has most clearly manifested excellent scholarship, strength of character and effective leadership. The Jacobus Fellowship, which supports the final year of graduate study, is awarded to students whose work has displayed the highest scholarly excellence.
The previously announced winners of the top honors for alumni also were honored at the luncheon: Claire Max, a professor of astronomy and astrophysics at the University of California-Santa Cruz, who earned a Ph.D. in astrophysical sciences from Princeton in 1972 and was this year's James Madison Medalist; and 1993 graduate Rajiv Vinnakota, co-founder of the SEED School of Washington, D.C., the nation's first urban public boarding school for disadvantaged students, who was this year's Woodrow Wilson Award winner.
Pyne Prizes
Barnard, who is from Flagstaff, Ariz., is majoring in sociology. In December, he was named the recipient of the 2009 Daniel M. Sachs Class of 1960 Graduating Scholarship. He will use it to pursue a master's degree in development studies at Worcester College at the University of Oxford.
Barnard has done extensive research on social activist movements and has been an activist himself. He is a co-founder and vice president of the Princeton Animal Welfare Society, which promotes veganism and creates awareness about the treatment of animals. He also has been a member of the Princeton Coalition Against Capital Punishment and the Latin American Legal Defense and Education Fund, which helps immigrants.
For the last two years, Barnard has focused his academic research on the "freegan" movement, which promotes efforts to live outside the conventional economy by limiting the consumption of resources. Instead of buying goods, participants procure much of what they need by making items, searching for discarded goods or getting them from communities existing outside of capitalism. Barnard has done more than 200 hours of direct observation fieldwork and has interviewed 15 to 20 highly involved freegans for his senior thesis titled "Pulling Sustainability From the Dumpster: Environmental Ethics, Animal Practices and the Individuals Behind the Freegan Movement."
"His thesis makes a significant contribution to the exploding field of environmental sociology by concretely linking the global animal commodity chain to local consumption practices," said Mitchell Duneier, a professor of sociology, who is Barnard's thesis adviser. "His arduous ethnographic fieldwork illuminates how everyday individual choices about what we eat and throw away are inherently political."
Barnard has been captain of Princeton's mock trial team and has twice received the Shapiro Prize for Academic Excellence. Also a musician, Barnard plays the trumpet and bass guitar, and has served as president and drillmaster of the Princeton University Band.
In recognizing Barnard at the Alumni Day ceremony, Princeton President Shirley M. Tilghman said, "While he does not hesitate to express his views both inside and outside the classroom, it is always in a way that elevates the conversation and leaves no stone -- or, rather, idea -- unturned. As his stellar transcript testifies, he is as much a scholar as an activist, one whose quest for understanding in the service of social change will make him a force to be reckoned with wherever life leads him."
Chen, who is from Los Angeles, is majoring in sociology and pursuing a certificate in East Asian studies. He is writing a senior thesis that explores the impact of economic liberalization on China's urban population. His preparation included traveling to China to conduct interviews, participant observation and archival research. Titled "The Dragon Divided: An Ethnographic Study of Urban Inequalities in Shanghai," his project demonstrates that China's rapid modernization masks serious anxieties and inequities among its middle and lower classes.
Patricia Fernández-Kelly, a senior lecturer in sociology and his thesis adviser, said that during her 30 years as an educator she has "met less than a handful of students more talented, hard working or congenial than Andy Chen. As a freshman at Princeton he was intellectually ambitious. He took part in seminar discussions and often contributed valuable insights that set the tone for the collective exchange. … By the time he wrote his junior paper, it was sheer delight to see how much he had grown in poise and intellectual acuity. Every time I meet with Andy, I marvel at the way he has worked without respite to shape himself into an exceptional human being, a remarkable young scholar and a creative spirit."
Chen has dedicated a significant amount of time to extracurricular activities. As founder and manager of the Student Design Agency, he led a team of 25 designers who have produced more than 500 posters, websites and other graphic materials in the past three years. He also has been a proponent of civil and responsible public discourse, creating the designs for the Princeton-initiated "Own What You Think" campaign against anonymous character assassination allowed by certain websites.
In 2007, he received a Martin Dale Summer Award from Princeton to hone his skills as a yoga teacher in India. He created an online photojournal of his experience and has offered free classes on campus for the University community. He has served as student administrator/webmaster for the Student Volunteers Council and as publicity chair of the Taiwanese American Students Association.
Chen also has been a participant and publicity chair with the Princeton University Gospel Ensemble. In addition he has been a peer academic adviser and a lesbian/gay/bisexual/transgender peer educator. In 2008, he was one of eight students selected to receive Spirit of Princeton awards for their contributions and service to the University.
During the Alumni Day ceremony, Tilghman said, "Andy plans to develop his graphic skills, hitherto completely self-directed, at Yale this fall, laying the groundwork for a career that promises to do for the world what he has done so well for Princeton. Thank you, Andy, for giving visual expression to the things that matter most."
Jacobus Fellowships
Bouk, a doctoral student in the Program in History of Science, earned his bachelor's degree with high honors in computational mathematics from Michigan State University. His research agenda on science in American life focuses on the intersection of three established fields: American history, environmental history and the history of science. His dissertation, "The Science of Life Insurance: Cultures of Science and Commerce in America," probes the pivotal role that science played in building the American life insurance industry and generating knowledge that has influenced understanding of everything from human mortality to racial discrimination to the character of America itself.
Daniel Rodgers, the Henry Charles Lea Professor of History and director of the Davis Center for Historical Studies, described Bouk's transition from mathematics to history. "His retooling was quiet, disciplined and dramatic," he said. "In workshops, in the Davis Center seminars and in job candidates' presentations, it is Dan whose questions will be the most acute and the most illuminating, the ones that stick in one's mind after the session is over."
Rodgers, who is Bouk's dissertation adviser, has called him "the intellectual leader of his graduate student cohort." Bouk served as president of the Graduate History Association from 2006 to 2008 and founded two forums for graduate students -- the Modern America Workshop's Graduate Works-in-Progress initiative and the Study Group for the History of Capitalism.
Crawforth, a Ph.D. candidate in English, came to Princeton as a Procter Visiting Fellow after earning two degrees -- in English and American literature -- at Christ's College at the University of Cambridge. Her dissertation, "'True Expounding': English Etymologies in Renaissance Poetry," is a pioneering exploration of the ways in which Elizabethan and Jacobean understandings of England's Anglo-Saxon linguistic heritage influenced the work of writers such as Edmund Spenser, Ben Jonson and John Milton.
Crawforth has been spending time in the United Kingdom, consulting the manuscript holdings of several libraries for her research. The book that is already beginning to emerge from her dissertation will, she said, "be the first work to consider the literary impact of the new interest in the history of native English words that arose as a result of the Reformation and the influence of continental humanism."
Nigel Smith, professor of English and one of her dissertation advisers, described the project as "an extremely important, field-changing account of the genesis of the poetry in which Shakespeare's generation wrote." Of Crawforth, he said, "She is a future academic of considerable importance, and her demonstrated diligence and acuity is most deserving."
DiMaggio, a doctoral student in chemical engineering, earned his bachelor's degree in chemical engineering, summa cum laude, from the University of Rhode Island. His dissertation, "Discovery Through In Silico Approaches for Mass Spectrometry-Based Proteomics," focuses on the new field of proteomics -- the large-scale study of proteins in a living system.
Proteins are the principal molecular machines in all living systems. The ability to quantitatively analyze their expression levels is very challenging, since the entire complement of proteins produced by an organism is dynamic and changes from cell to cell. DiMaggio seeks to formulate and implement efficient algorithms for peptide and protein identification and quantification using tandem mass spectrometry data. Also, his work in optimal data clustering has important implications for the diagnosis and treatment of disease; he already has developed an algorithm that will enable scientists to target the molecules most likely to be effective in the synthesis of drug-related compounds.
Christodoulos Floudas, the Stephen C. Macaleer '63 Professor in Engineering and Applied Science, who is his dissertation adviser, described his "impeccable theoretical, analytical and computational ability, his great scientific maturity and persistence when attacking even an impossible problem, his naturally inquisitive and independent research mind and his amazing drive for perfection. Pete is clearly an extraordinary researcher with a great future lying ahead."
Lu, a Ph.D. candidate in applied and computational mathematics, earned a bachelor's degree in mathematics at Peking University in China. His dissertation, "Mathematical Analysis and Numerical Algorithms for Density Functional Theory," focuses on a popular framework for studying the electronic structure in fields including chemistry, material science and biology. His work sheds new light on a complex but powerful tool for analyzing the electronic structure of systems of large size.
His insights are so numerous and original that there are plans to turn his dissertation into a book -- something that seldom happens in the field of mathematics. Faculty members in the Program in Applied and Computational Mathematics have described Lu as more of a collaboration partner than a student.
"I have no doubt that with the completion of his thesis, Jianfeng will already have established himself as the leading expert in a promising area at the intersection of applied mathematics, material science and theoretical chemistry… ," said Weinan E, professor of mathematics and applied and computational mathematics, who is his dissertation adviser. "The future of our field depends on having students like him."
Saturday, February 14, 2009
Cancer patients facing costly treatment can benefit from frank talks with doctors
By Francesca Lunzer Kritz
February 16, 2009
"So how much for that surgery to remove my breast and possibly save my life?" Cancer patients seldom ask that or other cost-related treatment questions in an oncologist's office. And, even if they did, many oncologists wouldn't know the answer or would want to separate treatment from expenses.
But a study released earlier this month found that even cancer patients who have health insurance are seeing their expenses mount as deductibles and cost-sharing continue to rise each year. And an earlier study found that about half of all personal bankruptcies are the result of heavy medical debt -- most declared by people with insurance. For those with no insurance, the situation is much more dire.
Such trends are pushing patients, doctors and oncology support staff to talk frankly about costs, make some treatment decisions with expenses in mind and look for government, national and community organizations that may be able to help with some expenses. A Harvard School of Public Health survey two years ago found that 22% of cancer patients with health insurance used up most or all of their savings on cancer-related costs; 5% decided to forgo some care because of costs.
"Recent research shows that the cost of cancer care is increasing at a rate of 15% per year -- nearly three times the rate of increase of overall healthcare costs in the country," says Dr. Richard Schilsky, president of the American Society of Clinical Oncology. "In addition," he says, "the newest cancer drugs can cost thousands of dollars per month of treatment, and many families report problems paying their cancer care bills."
The organization even recently released an online guide to managing cancer expenses. (Go to www.cancer.net and look under "New.") The guide includes a glossary of cost terminology (such as "co-pay" and "out of network care"), recommended cost-related questions (such as "If I cannot afford this treatment plan, can we consider other treatment options that don't cost as much?" and "Are there ways to change my treatment schedule, if necessary, to work around my job or child care?") and links to organizations that may be able to help with expenses. (See resource box for additional links.)
Doctors shy from topic
Neal Meropol, an oncologist at the Fox Chase Cancer Center in Philadelphia who helped produce the online guide, says he'd like to see physicians begin to weave cost into their knowledge of cancer care while in medical school. If that happens, it could be a boon to patients. A survey of just over 160 oncologists, published two years ago in the Journal of Clinical Oncology, found that 31% felt uncomfortable discussing costs with patients. Also, 42% said they always discuss treatment cost, 32% sometimes did and 26% said they rarely or never did.
The growing need for frank conversations about the high cost of cancer care was underscored by the report published in early February by the Kaiser Family Foundation, a nonprofit health research group based in Menlo Park, Calif., and the American Cancer Society. The report found that even cancer patients who have insurance can find themselves bearing costs that are difficult to pay off.
Thomas Olszewski, 62, of Graham, Texas, was treated for prostate cancer in 1999 and needs yearly tests so that any recurrence can be detected early. But his insurance comes with an annual $3,750 deductible, and he still owes $500 from his last checkup. He now has his cancer checkups every other year, instead of annually. "I am afraid to go to the doctor," Olszewski says, "because I never know how much it will cost me."
Schilsky, also an oncologist at the University of Chicago Medical Center, says that, difficult as it is, some patient-doctor conversations should include whether the patient wants to continue care that could be a long shot and leave patients or their families saddled with debt -- particularly when the prognosis is poor and many treatment options have already been exhausted.
"The decision is up to the patient, but the doctor should facilitate that conversation. We treat whole patients, not just an isolated cancer," Schilsky says.
Along those lines, Meropol says a chemotherapy patient recently told him that a prescribed anti-nausea drug was just too expensive. The doctor then prescribed a less expensive but also somewhat less effective drug.
Resources are available
Arash Naeim, head of the geriatric oncology program at UCLA Medical Center, says he hopes that by having the physician bring up cost, patients will feel more comfortable discussing their needs and concerns, and doctors can then refer patients to financial and social work staff to see if resources might be available or if a payment plan can be worked out. Paying at least something regularly shows good faith that could garner added assistance from the billing office.
Jamie Drzewicki, 58, of Pembroke Pines, Fla., who was diagnosed with breast cancer more than two years ago, reached her annual health insurance limit of $100,000 a few months after her diagnosis and ended up owing about $75,000 for her treatment. She paid at least something regularly and, though she still owes $30,000, the hospital recently forgave $40,000 of the debt
Diane Blum, head of CancerCare, a national social service agency that offers counseling and financial assistance for cancer patients, says financial assistance from CancerCare and other agencies can be based on a patient's income as well as availability of funds. Some agencies have funds that cover a particular cancer, but stop giving out money once that allotment is used up. If that's the case, patients can apply to other agencies, and reapply to the closed fund the following year, if necessary, when coffers may have been refilled.
Blum and others also suggest that cancer patients cede the financial quests, at least at first, to a trusted friend or family member as they take in the news about the cancer and begin treatment.
There is no guarantee of assistance, especially now, when so many people are losing their jobs and their insurance and many will likely need help with costs, Blum says. But it can't hurt to try.
Just ask Maria D'Acosta, 59, of Carlsbad and her daughter, Paola Campos-D'Acosta, 30. Campos-D'Acosta left her job with a temporary employment agency in New York City after being diagnosed with breast cancer last summer. She had no insurance when doctors told her she'd need a mastectomy and chemotherapy to treat the Stage 3B cancer, and is now $100,000 in debt.
Help for mom, daughter
Social workers at Harlem Hospital, the city hospital where she had a mastectomy, recommended applying to Medicaid in New York state to cover her bills retroactively, and a friend referred her to the Ralph Lauren Center for Cancer Treatment and Prevention, affiliated with Memorial-Sloan Kettering Medical Center in New York City.
Just before coming to New York to look after her daughter, D'Acosta felt a lump in her own breast and mentioned it to her daughter's doctors. They insisted she have a biopsy, which showed the lump to be malignant. D'Acosta, who closed her interior design business last year, had dropped her insurance some months before, as business dwindled.
Now she too is getting her care at the Ralph Lauren Center for low-income women, where both women pay a $50 co-pay for doctor visits, with costs mounting. Family and friends are helping out.
But one concern they don't have, in a city filled with studios renting at $2,000 or more per month, is how to pay for their living space.
The women have been living in two cozy rooms near New York's famed Penn Station, free of charge, since November. They're at the American Cancer Society's Hope Lodge, where cancer patients referred by their medical team can stay, first come, first served, for as long as treatment is ongoing. In addition to private rooms, the lodge offers communal kitchens, computer rooms, open areas, meditation rooms and even cooked dinners a few times a week.
"The cancer, that's a shock," D'Acosta says, "but we're blessed to be living in this place while we get our care."
Don't assume your income is too high to ask for help, says David Knowlton, a board member of the Healthwell Foundation, based in Gaithersburg, Md., which provides financial assistance for insurance premiums and co-pays for patients with many different conditions. Knowlton says grants might even be made to families with a yearly income of $80,000 or higher, depending on family size and other circumstances.
"This is a tough time for too many people," Knowlton says, "and funds are trying to help as much as they can."
health@latimes.com
Saturday, January 24, 2009
New Tools Help Seniors Gain Their Financial Freedom Using Life Insurance Settlements
Seniors 65+ can now access tools that provide instant estimates of the value of their life insurance, explore the tax implications of selling their policy in a life settlement and connect with authorized purchasers who compete to buy their policy.
San Diego, CA (PRWEB) January 13, 2009 -- Calling it "a win for the consumer", the Life Settlement Network has announced several free and instant on-line tools that provide senior life insurance policyholders direct access to analysis previously unavailable. These new tools provide answers to common life settlement questions such as 'How much is my policy worth?' and 'Am I eligible?' without having to set up a consultation or appointment with a life settlement broker or life insurance agent. By providing a range of likely offers, interested seniors can determine if they have a marketable policy. After discussing their options with a financial advisor, senior policyholders can submit their case confidentially to all authorized funding sources - cutting the costs associated with selling a policy.
"Providing tools that help seniors determine for themselves if they are eligible and what their insurance policy might be worth eliminates the need for costly and time-consuming evaluations and taps into the natural resourcefulness of many of our clients," says the Life Settlement Network managing partner Chris Chidgey. He adds, "Creating efficiencies in this costly process means less compensation for the facilitators of the process and more for the senior - the value for the senior sky-rockets."
It has been estimated the cost of selling a life insurance policy in a life insurance settlement is as high as 50% of the settlement proceeds. In some cases, the policy changes hands multiple times before landing in a portfolio. By enabling seniors to determine for themselves if their policy has any value in the settlement market and what the range of likely values are, interested seniors and their advisors can do much of the qualification on their own. The tools provided are safe, secure and confidential and there is no obligation to accept an offer once a case is submitted.
Seniors 65 and older holding or paying premiums on unwanted, unneeded or under-performing life insurance should determine whether selling their policy in a life insurance settlement is likely to generate more funds than surrendering the policy for the stated cash value. Starting with a free and instant on-line life settlement quote using the life settlement calculator from the Life Settlement Network is a great first step.
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