Life Insurance Isn't Just for the Young

Many people believe that when they reach retirement age, the need for life insurance diminishes. After all, once the kids have left home, the mortgage is paid off and Social Security and pension plans start kicking in, why pay for a life insurance benefit that’s not needed? The fact is, life insurance isn’t just for young families anymore. New economic realities mean a growing number of older Americans may benefit from incorporating life insurance into their retirement strategy.

Here are three reasons today’s retirees or pre-retirees should think twice before cutting back or eliminating their life insurance coverage.

Tougher Financial Times

Americans retiring today face a difficult economic landscape and are retiring with more debt. Nearly 45% of Americans enter retirement with a mortgage, and one in three owe $50,000 or more.1 These statistics are bound to climb, considering 30% of 45‐ to 54‐year‐old boomers currently owe more on their mortgages than their homes are worth.2 Life insurance can help ensure that mortgage payments continue for a surviving spouse, or help beneficiaries pay off an unwelcome debt.

Debt and other factors also are leading more workers to anticipate delaying retirement or working for pay in retirement. According to the Employee Benefit Research Institute, the percentage of workers planning to work for pay in retirement now stands at 74%.3 Almost all retirees who worked in retirement in 2010 name at least one financial reason for doing so, including a decrease in the value of their savings or investments, difficulty making ends meet, or keeping health insurance or other benefits. Another indicator of tight economic times: six in 10 boomers are still providing financial support to their adult children, handing over $3,675 per year, on average.4 Life insurance can provide a financial safety net for surviving spouses who depended on income from a still-working spouse, or it may give adult children the boost they need to become financially independent.

American Life Insurance-one of the Most Trusted Company

American Life Insurance the most trusted company which has a reputation of about 87 years. This company is one of the globally recognized life insurance companies and it has a number of branches all over the world which has a vast customer line following. American Life Insurance gives various tax benefits to all its insurance policy holders and it also takes care of all your life insurance related policies like retirement insurance policy, wealth management policy, medical insurance, health insurance etc.

Life insurance basic terms as you know is an important factor in every person's life and when it comes to life insurance age is not the main criteria when it comes to get your life insured. American Life Insurance also known as AIG insurance company and majority of Americans has insured themselves with this life insurance company. The market value of this company is high and you can find the companies ratings in the financial books due to their vast financial transactions with other financial institutes.

There are two major life insurance policies that this AIG Insurance Company deals with i.e. the Term Life Insurance and Whole Life Insurance. In case of Term Life Insurance the policy taken is for a short period of time and Whole Life Insurance is where you get yourself insured for your whole life.

AIG insurance company is one such life insurance company that charters to the needs of the common person. One of the benefits of getting insured in this life insurance company is that you reap a rich harvest of life insurance benefits on all your life insurance policies which no other life insurance company provides you as this company provides you with the benefits when you are still alive.

This life insurance company in order to increase its relationship with their vast flowing customer's have started life insurance online services which has made it easy and convenient for them to get themselves and their family members insured staying within the very comforts of their own house. AIG Insurance is one of the most sought of companies and it is a tough competitor to other life insurance companies.

Long-term care, life insurance, annuities part of new hybrid policies

Have you neglected planning for long-term care often uncovered by Medicare or health insurance? If so, you have more choices these days.

Straight long-term care insurance could rise in price just when you need it or perhaps, never get used. However, you might be eligible for a life insurance/long-term care policy or a long-term care annuity.

In fact, Palm Beach insurance broker Peter Bono says he is converting clients with certain annuities into these newer offerings. They are attractive, he says, for someone whose annuity had large taxable gains. Reason: Thanks to newer regulations, you generally can tap these new hybrid policies, provided that contracts contain appropriate language, tax-free for long-term care.

In Florida, expect to pay a median of $83,950 annually for a private room in a nursing home, $41,184 for a home health aide; or $31,950 for a private, one-bedroom assisted living facility, according to Genworth Financial.

So how do you know which policy to select?

With a long-term care rider on cash value life insurance, you generally can choose a long-term care benefit that pays benefits for a specific term. Whatever is unused passes to your beneficiary when you die.

With a tax-deferred fixed annuity, you may invest a lump sum with the life insurance company. A certain amount of the cash value may be tapped for long-term care benefits. If you don’t use those benefits, you can either withdraw your funds or obtain periodic income for life.

Benefits on either of these are likely not as comprehensive as straight long-term care insurance. However, experts say the long-term care benefits are apt to be more comprehensive on hybrid life insurance policies than on hybrid annuities.

On the other hand, if you have a pre-existing condition and can’t qualify for long-term care insurance, the underwriting for an annuity/long-term care hybrid likely won’t be as tough, according to Bono.

Life insurance policies, coupled with either long-term care or chronic illness riders, account for 6 percent of the market, says LIMRA in Windsor, Conn. But annuity/long-term hybrids are newer. On an annuity, expect to give up 0.75 percent to 1.25 percent of your interest annually, depending on your age, for a long-term care rider, says Jesse Slome, executive director of the American Association for Long-term Care Insurance in Los Angeles. Life insurance/long-term care costs are priced into your policy premiums and/or benefits.

In either case, you could lose if you withdraw early. Annuities may have both an IRS penalty if you withdraw before age 59½, as well as surrender charges if you withdraw early — often within the first seven years. On a life insurance hybrid, expect at the very least, to lose earned interest upon early withdrawal.

These programs can be attractive if you have lazy money — say $400,000 to $500,000 sitting in a bank account, Slome says. “What you have to do is put in enough now so that in 10, 15 or 20 years, you have meaningful coverage.”

Long-term care life insurance and annuity hybrids are complex, and the benefits may not be enough to fund your care. Inflation may erode the buying power of your long-term care benefit. Consult with your tax adviser. Earnings on your annuity, at least, may be taxed if you don’t use the long-term care benefit. And always check the financial strength of the insurance company you’re considering. The strongest are rated “A plus plus” by A.M. Best.

Let's dispel those life insurance myths

I grant you that life insurance can be complicated, even mystifying. Some current and potential policy owners do their homework and get up to speed at least part of the way.

Others do not. Unfortunately, in too many cases the latter group draws uninformed conclusions about a myriad of life-insurance topics. The more common errors are often widely held. Let's refer to these as life insurance myths, and let's dispel some now.

Myth: You can haggle your way to a better deal.

Reality: There is no such thing in life insurance.

The life-insurance agent represents the insurer and offers what he or she is authorized by the insurer to sell. The provisions of the insurance policy and the price charged (the premium) are set by the insurance company. The agent has no authority to change the price. So, while one can dicker for cars, houses and flea-market items, there is no use in trying to haggle with life insurance.

In fact, life insurance companies have to file their policies and premiums with state regulators. And, for applicants who are similar in terms of age, sex and medical condition, the premium has to be the same. The insurer cannot discriminate in favor of one or another applicant, even if the insurer does a boatload of business with that applicant's agent.

Myth: Insurance is cheaper if bought online.

Reality: There is no Internet discount.

Again, because of the prohibition against discrimination, the policies and premiums offered online are the same as a local agent can offer if licensed with the same insurer. The only difference is that without the agent you do not get expert advice and ongoing, personalized service.

So, while the buyer may be eager to go online to avoid a local agent in order to avoid paying a commission as part of the premium, in fact the commission is already built into the online premium. The insurer simply does not pay commission for an online sale but instead increases its own profits. In the meantime, the buyer has foregone the expertise and guidance of the local agent in favor of an online formula calculation of his or her insurance needs.

The same flaw can be found in the purchase of life insurance from an 800 number. The stranger on the other end does not know the buyer and may have had training for all of two weeks before answering the phone. Maybe more. But the point is that the buyer does not know if the voice really knows his stuff or is just winging it. And the two will probably never speak to each other again.

Myth: You're borrowing your "own money" when borrowing against the cash value of life insurance.

Reality: The cash value belongs to the insurer, is held for only your benefit, and is used as part of the reserve to keep your future policy premiums moderate and to pay the future death benefit. While the borrowed cash is outstanding, the insurer cannot earn sufficient investment return to reach the targeted amount for the death benefit. That's why you're charged interest on the loan; the insurer has to make up for that loss of investment return.

Such life-insurance myths abound. Asking questions of well-trained, seasoned agents will keep you well-informed and less susceptible to misunderstandings.

Buying a property is the top trigger for taking out protection such as life insurance

Getting on the property ladder is the top trigger for clients to take out protection, according to a survey of IFAs .

Scottish Provident's Financial Safety Net report questioned over 900 intermediaries and revealed that 92 per cent of IFAs said purchasing property was a major reason for taking out a new protection policy. The survey also found that having children, at 80 per cent, was the second most common trigger, while almost 57 per cent (three in five) say it is because their client simply wants peace of mind about the future.

Three quarters of IFAs (76 per cent) state life insurance is the most common policy clients ask about without being prompted, with just 10 per cent saying it was unemployment benefit, 9 per cent critical illness and only 5 per cent income protection .

Susan Barclay, head of marketing at Scottish Provident, said: "The research confirms that IFAs' clients are mainly prompted to take out protection products when they experience huge life changes such as buying a property or having children."

Women warned over lack of life insurance

More women than ever claim to be the main breadwinners in their household, but they are failing to protect themselves adequately should they be unable to work, new research has revealed.


As females throughout the world celebrate the 100th anniversary of International Women's Day, research from Bright Grey reveals almost half of working women now describe themselves as the main earners in their family.

But despite the growing importance of the female wage in many households, the survey suggests thatwomen are less likely than men to have financial back-up should they be unable to work or even worse.

Over half of working women admitted that they have no life insurance cover in place, a product aimed at protecting their families financially in the event of their death.

Meanwhile, more than four in five female workers do not hold income protection products, and over three quarters admitted to not holding either a critical illness policy or private medical insurance.

"With women taking more financial decisions, it is vital that they do not leave out having adequate financial protection for themselves and their families when making their choices," said Roger Edwards, proposition director at Bright Grey.

"By buying a protection product that pays out if they are unable to work due to a serious illness or disability, women can ensure they protect both their household income and current lifestyle.

"It is crucial that women in the UK who are increasingly running their household finances are protected."

Whether you're male or female, protecting yourself and your family financially against any unforeseen circumstances should always be at the top of your list of priorities.

Arranginglife insurance is not as time consuming or expensive as you might think, with well known names such as NatWest Life offering competitively priced products.

Post Office Life Insurance starts from £5 a month, while applicants for cover from Tesco Life receive a free £50 gift card.

Online applicants for Barclays Life Insurance get a 10% discount as well as receiving a £15 Marks & Spencer voucher (once the third monthly payment has been made)

Ex-smokers should aim for cheaper life insurance

New research from Sainsburys Finance has revealed that ex-smokers in the UK, which amount to about 3.3 million people, are losing out big savings when taking out life insurance premiums . It was estimated that that ex-smokers are paying out GBP316 million more in total than necessary, due to them forgetting to inform their insurer about having given up on their habit.

Sainsbury’s Finance said that people who have managed to give up their smoking could save up to 46 per cent on their life insurance cover . The findings from the report revealed that the average smoker’s life insurance premium is GBP209.75 per year, as compared to GBP111.88 for a non-smoker, meaning that you can save as much as GBP95 on annual life cover if you qualify as a non-smoker.

For people to be allowed to put themselves down as a non-smoker on life insurance forms, they must have given up smoking at least a year before, as well as avoiding the use of nicotine replacement products since then, otherwise insurers will still charge them more.

Andrew Gray, life insurance product manager at Sainsbury’s Finance, commented "A huge number of people have quit smoking over the past few years and the health benefits of not smoking are now very well-known, although the financial gains are often underestimated."

Life insurance sell off hits profits at AXA

A sharp fall in profits at insurance giant AXA has been blamed on its sale of its life insurance division, AXA Sun Life, to Friends Provident last September. The insurer, which employs about 1,000 staff in the UK, announced underlying earnings of GBP131 million for 2010, down from the GBP235 million reported the previous year.

The GBP2.75 billion AXA Sun Life sell off was part of a restructuring programme, which resulted in four specialist units, personal insurance, commercial insurance, healthcare and wealth management, in an attempt to focus on the demands of both consumers and intermediaries .

AXA has also stated that it expects further rises in premiums for personal insurance products over this year as the market worked towards restoring profitability.

Paul Evans, group chief executive for AXA UK and Ireland, commented "Our priority for 2011 is to focus on delivering great service and valued products to consumers and businesses in those markets where AXA can leverage real competitive advantage."

French-owned AXA said that the operating ratio in 2010 was disappointing, but that greater improvements would come during this year as premium increases applied across personal lines in 2010 took effect. However, they recently warned there would be possible redundancies at their Ipswich office due to the separation of its commercial and personal lines operations.

Should the lowest premium decide which life insurance cover you buy?

Financial planning is not complete without adequate life insurance, most of us would agree. And term insurance at that — particularly if you are earning and have dependents — for it is the most cost-effective option available in the market.

But even the cost of a term cover commensurate with your age and risk profile varies from company to company.

So, should you buy a cover from the company that charges you the least premium for the amount of cover you wish to take?

Experts suggest you look at a number of other factors and not the amount of premium alone.

The most important things to consider are the probability of the claim getting settled in the event of your death, and at the earliest, to avoid financial duress to the loved ones you leave behind. Imagine paying premium diligently for 20 years and then, after your death, the claim being disapproved for one reason or the other. You would also not like it if your family fails to get the sum assured say six months or even a year after your death, would you?.

These two considerations — assurance of the claim being settled and on time — are perhaps what have been driving people to prefer the Life Insurance Corporation (LIC) over the private players.

While such apprehensions may hold in a few cases, a generalisation would be far from accurate.

An analysis of the efficiency of claims settlement of various insurance companies based on the figures submitted by them to the Insurance Regulatory and Development Authority of India (Irda) should be in order.
For the sake of simplicity, we have selected six private life insurance companies and the LIC for comparison.

The private life insurers selected here charge the lowest premium for a term cover of Rs 1 crore, for a 30-year-old male, for 30 years. Note that the premium differs significantly across companies as the age and tenure changes. Hence, in case you want a cover for 20 years or for a lower value, it could just as well be that the cheapest cover is provided by some other insurance company.

Next, we compare their claim settlement ratio and turnaround time for settlement based on the data uploaded on their websites and submitted to Irda for the 2009-10 financial year. Turnaround time is the number of days it takes to settle a claim once all the documents have been submitted to the insurance company. For LIC, the latest such data available is for FY 2008-09, which has been taken.

Please also note that the claim settlement ratio and turnaround time for settlement mentioned in the table are cumulative for all the insurance plans offered by a company and not specific to term plans.

As can be seen, the claim settlement ratio of the cheapest term plan, offered by Aegon Religare, is a poor 48% and it also has the lowest turnaround of 46% within one month.


In comparison, LIC has the best claim settlement ratio of 95%, though its cost of cover is more than three times that of the other insurers.

ICICI Pru’s iProtect plan stands out as one of the cheapest term covers with a respectable settlement ratio of 90% and with 74% of the claims getting settled within one month.

Met Life’s Met Protect plan also compares favourably.

An analysis of the rejected claims reveals that most of them are for policies which are less than two years old. This may be a reason for the low claim settlement ratio of new companies such as Aegon Religare. Whether it improves in future will need watching.

To conclude then, even the private insurance companies have good claim settlement records, even when they are offering the cheapest term plan.
Such analysis should be done periodically to check the consistency and long-term trends before zeroing in on any plan.

Financially Speaking: Life insurance: How much do you need?

No one likes to think about death. Unfortunately, it's going to happen to all of us one of these days.

Life insurance was created to help people protect the financial stability of their families in the event of their premature death. With so many insurance products available today, it's becoming more difficult to determine how much life insurance you need, and which type of insurance is appropriate.

Simple rules of thumb are often used to estimate someone's life insurance need. The income rule calculates your life insurance need at six to eight times your gross annual income. For example, if you earn $60,000 per year, this rule calculates your needed coverage at $360,000 to $480,000.

The income-plus-expense rule calculates your insurance need at five times your gross annual income plus the total of your outstanding debt, plus estimated final expenses and special funding needs such as college expenses. Using this rule, if your income is $60,000 and your combined debt plus funding need totals $150,000, you would need $450,000 of life insurance.

The income replacement method assumes you should purchase enough life insurance to replace the income you could potentially earn throughout your working career, considering future inflation, increases in your earning capacity, and the investment performance of the life insurance proceeds over time.

These rules are overly simplistic, in my opinion, because they fail to consider several important factors:


You may be able to reduce your life insurance need by some or all of the value of your existing investments, although you will need to consider the effect of income taxes and any limitations on the accessibility of those assets. For example, retirement plan assets that might be subject to early withdrawal penalties.
If you are married, have you considered your spouse's future earning capacity after your death? He or she might be able to earn enough to cover your debt payments. Conversely, the death of a parent might create a need to obtain professional household or child care services and that expense should be included in your calculation.
You might have already accumulated a vested pension benefit that is available to your survivors.
Liquidity is a consideration that is frequently overlooked. Although there is no federal estate tax in 2010, it will very likely resume after Dec. 31. The value of real estate or a closely held business could easily take the value of a decedent's estate above the federal or state exclusion. Life insurance can be a cost-effective vehicle to provide your estate with the cash needed to pay the tax and avoid a forced liquidation.
Even if estate taxation is not a problem, life insurance can be used to equalize bequests to your heirs. For example, if one of your two children works in a family business valued at $1 million, you could leave the business to one child and a $1 million life insurance policy to the other.
If there is no one who would be financially harmed by your death, you might not need any life insurance at all.

An experienced independent life insurance agent can help you determine the appropriate amount of life insurance you need and the type of policy to purchase. You should also obtain expert advice regarding ownership and beneficiary designations in order to avoid inadvertently creating a tax problem.

Life insurer Axa sold to Resolution

Life insurance consolidator Resolution Ltd has finalised its takeover of Axa UK Life. Resolution, which also bought up insurance provider Friends Provident last year, is based in the Channel Islands, and is paying up to GBP2.75 billion for the life insurance arm of Axa.

Denis Duverne, deputy chief executive of Axa, commented "This transaction is instrumental in our strategy of further optimising capital allocation within the group while focusing our operations on the higher margin and higher growth segments of the UK life and savings market ."

The acquisition of Axa UK Life by Resolution, which led to the suspension in trading of Resolution's ordinary shares from the London Stock Exchange, has been called a reverse takeover .

There have also been a few changes within the company due to the deal. Although Trevor Matthews will remain as chief executive officer of Friends Provident Holdings, David Hynam has been appointed as executive director of operations for Friends Provident Holdings, and Andy Parsons will become interim finance director. Both Hynam and Parsons previously worked at Axa.

Resolution provided a statement on the moves: "A new organisational structure is being implemented which will broaden the complement of top management in the business."

Life Insurance: Think Before You Sell Your Policy for Cash

It's no wonder why many older adults are considering selling their life-insurance policies to strangers: They're looking to shore up their finances. After all, the economy is slumping and the stock market is in a 10-year funk. The strategy, though, might not make as much sense as it did a few years ago, thanks to a steep decline in the prices investors are willing to pay for policies.

In a so-called life-settlement transaction, an investor buys a stranger's life-insurance policy for a lump sum and continues paying the premiums until the policyholder dies, at which point the investor collects the death benefit. The sooner the insured person dies, the greater the return to the investor.

The cash windfall may sound great. But before making a deal, consult a trusted adviser. There may be better options for any policy you own, and commission-paid brokers may not volunteer these alternatives or even understand them themselves.

There also are taxes to consider. A 2009 Internal Revenue Service ruling raised the tax bill for many who sell their policies.

The life-policy secondary market dates back to the 1980s, when AIDS patients sold their policies to raise cash for medical treatments. In recent years, it has evolved into a place for older adults to unload "permanent" life policies—designed to be in place until the policyholder dies, rather than for a specified number of years—they no longer need or can afford.

Hedge Funds Pile In
The market boomed earlier this decade, as hedge funds eager for offbeat alternative investments piled in. With demand keen, older adults typically netted more than they could by surrendering a policy to the insurer for a lump-sum payment.

But things have changed since the credit crisis of 2008-09, and investor enthusiasm for life settlements has yet to recover. After growing rapidly, the total face value of policies purchased in the secondary market fell to $7 billion in 2009 from $13 billion in 2008, according to industry estimates.

Prices for policies, meanwhile, fell to an average of 13% of the death benefit in 2009 from 21% in 2006, according to a recent report by the U.S. Government Accountability Office.

Various factors, including investors' concern about the reliability of life-expectancy estimates, have contributed to "make this current market a buyer's market," says Doug Head, executive director of Life Insurance Settlement Association, a trade group in Orlando, Fla.

The bottom line: "You should think very carefully before you decide to sell," says Richard Connolly, an insurance agent at Ward & Connolly in Columbus, Ohio. With buyers often making stingy offers, "we believe there is often a strong economic case for policyholders to hold on to their policies, provided they have the wherewithal to keep them in force."

Options for Sellers
There are several alternatives to life settlements. Policyholders can often withdraw or borrow funds from a policy or restructure the coverage to make premiums more affordable, for example. There also are tax-efficient ways to exchange one policy for another one that might better suit your current needs, such as a retirement-income annuity.

With a well-conceived strategy, a policyholder can free up cash while preserving at least some portion of the death benefit for heirs, says Caleb Callahan, vice president of investments at ValMark Securities Inc., an Akron, Ohio, independent broker-dealer that specializes in life insurance.

Which option makes the most sense depends on factors including the policyholder's financial goals and health and whether the policy has "cash value," which is a form of savings that accumulates inside permanent-life policies.

If your policy has built up a lot of cash value and you want to access it, you can take out a loan against it. Under New York Life Insurance Co.'s Access Plus program, for instance, clients who are 65 or older and meet certain health requirements may be able to borrow even more than a policy's cash value. As with other types of loans, borrowers must repay the principal and interest, or heirs will see those amounts deducted from the death benefit.

Instead of taking out a loan, consumers with certain types of policies can withdraw at least a portion of their cash value. Although this approach reduces the ultimate death benefit, says Mr. Connolly, it saves on interest expense.

There are caveats: Under some circumstances, loans or withdrawals can trigger tax bills, says Gary Cotter, a certified financial planner at Cotter Financial LLC in Sun City Center, Fla. Moreover, if you substantially erode your policy's cash value, you may face significantly higher premiums down the road, or your coverage will lapse.

'Accelerated' Benefits
Some policies also allow those with a terminal illness to take at least some of a policy's death benefit tax-free. To qualify for an "accelerated death benefit," a policyholder has to obtain a certification from a physician that his or her health condition could "reasonably be expected to result in death within 24 months," according to the IRS.

If you are too cash-strapped to continue paying premiums, some advisers recommend asking your heirs to cover all or a portion of the cost. Each heir can give you a maximum of $13,000 this year free of gift tax.

Another option: Ask the insurer to scale back the death benefit to a level at which you can afford to make payments. Or keep the same death benefit, but reduce the period for which the coverage will be in force.

Susan Bruno, a certified public accountant at Beacon Wealth Consulting LLC in Rowayton, Conn., recently advised a 78-year-old facing a potential estate-tax bill to hold on to a $3 million universal-life policy rather than sell it to investors for $800,000. She recommended the family pay just enough—$85,000 a year—to fund the policy for the next eight years.

If the policyholder lives longer, the family is likely to face substantially higher premiums. But given the policyholder's health, the heirs are willing to take the risk, Ms. Bruno says.

Those who have paid more in premiums than they have amassed in cash value may want to consider a tax-free exchange of their policy for another type of coverage, such as a combination life-insurance and long-term-care contract or an annuity, says ValMark's Mr. Callahan.

Such a move can net substantial tax benefits. One client of Mr. Cotter's recently swapped a $700,000 policy, which had a cash value of $20,000, for a deferred annuity. The policyholder had paid $100,000 in premiums, which meant there was an $80,000 investment loss. As a result, the annuity can appreciate by $80,000 before tax is owed on withdrawals.

RBC seeks to sell US life insurance arm

Royal Bank of Canada is seeking a buyer for a bulk of its US life-insurance arm a decade after it acquired the unit as part of an ambitious strategy to sell financial services in the world’s largest economy.

The bank has been working with Goldman Sachs for several months on selling the unit, which trades as RBC Insurance but is legally registered as Liberty Life Insurance, according to people familiar with the matter.

RBC, Canada’s largest bank by assets, said on Tuesday that it would not comment on speculation about the future of the insurance unit, based in South Carolina. Goldman Sachs also declined to comment.

Apart from a small travel insurance business, Liberty makes up all of RBC Insurance. The potential sale of the unit was first reported by Bloomberg.

People familiar with the sector said that RBC could struggle to attract interest in the business, as companies that had previously been buyers of individual life insurance businesses were now scaling back in that area.

RBC has said that its focus in the US is on expanding its capital markets and wealth management business. The bank is already among the world’s top 20 money managers and almost three-quarters of its capital markets business is outside Canada.

Gordon Nixon, chief executive, told the Financial Times last year that there was “no hurry because there are going to be lots of opportunities and lots of restructuring in the financial services industry over the next five years.

“So if you do something, you want to make sure it’s very sensible and very strategic.”

RBC bought Liberty in 2000 as part of a drive to expand south of the border across a broad range of activities, including retail banking, wealth management and capital markets.

The US contributed 22 per cent of RBC’s total revenues but less than 3 per cent of net income in the three months to April 30.

Its retail banking operations, centred in the south-eastern US, have been through several restructurings in a bid to staunch losses.

The insurance arm, which has assets of about $4bn and employs some 200 full-time agents, has been too small to make an impact. Revenues totalled $733m in the six months to April 30, up from $549m a year earlier. The unit has gone through several chief executives under RBC’s ownership.

Like Canada’s four other biggest banks, RBC has been relatively unscathed by the financial crisis.

Are Life Insurers Playing Fair?

Every day, it seems, another lawmaker or regulator is calling for a probe of how life insurers pay out death benefits.

One concern: whether beneficiaries understand their options for getting money due when an insured person dies.

Often insurance firms put policy proceeds into interest-bearing accounts and provide what many call "checkbooks" for withdrawals, rather than mailing a lump-sum check. With the checkbook, which is not the same as bank-account checkbook, the beneficiary may withdraw all or part of the money.

The checkbook approach has been around since the 1980s. But a July Bloomberg Markets magazine article put a human face on the subject—the mother of a soldier killed in Afghanistan who feels misled—bringing it widespread attention.

The industry promotes the accounts as a useful service for people too bereft to make quick financial decisions. But regulators are looking at whether insurers should be required to offer consumers a lump-sum check, whether it is appropriate for insurers to profit from the money they hold for beneficiaries and whether insurers adequately disclose that their accounts aren't insured by the Federal Deposit Insurance Corp.

Aviva to sell life insurance via Santander

Aviva, Britain's second-biggest insurer, said the agreement with the Spanish bank gave it access to a 25-m strong customer base.

Santander already sells Aviva's general insurance products and will add its life insurance, critical illness and income protection policies under a five-year scheme starting next June.

Nearly Half The UK's Population Have No Life Insurance

Amongst those who currently have life insurance policies, 53% had no idea how much they would receive if they were to make a claim. This suggests that they don't know whether they have adequate cover in place. It is also highly likely they haven't reviewed their cover recently and so could therefore be paying over the odds.

Richard Morea, Technical Manager at L&C said, "Consumers are clearly burying their heads in the sand and adopting an 'it won't happen to me' stance. We urge people with no cover to take action now to protect their family in the event of the unforeseen happening. Those with cover should understand exactly what it will provide in the event of a claim. If it is sufficient, they should review the cost. L&C's online 1 minute life insurance check calculator will quickly show them if savings can be made. In addition they should review whether their cover is still adequate and if it's not take expert advice'.

For a free life insurance review, speak to one of L&C's expert advisers on 0800 073 1932.

AIG to sell foreign life insurance arm for $15.5bn

AIG, which last week agreed to sell AIA, its Asian life business, to Prudential for $35.5bn, has agreed final terms for the disposal of to sell its overseas life and health insurance arm Alico to MetLife for $15.5bn.

The deal, which was announced yesterday – after weeks of intense negotiations and over a year of talks – will provide AIG $6.8bn in cash, with the remaining $8.7bn coming in MetLife shares and options.

The deal will see AIG ending up with a 20pc stake in MetLife, making it the company's second-biggest shareholder, and giving US taxpayers – who control 80pc of AIG's shares – a stake in a second major US insurer.

The cash will be added to the $25bn cash it will receive on completion of the AIA sale, and means the troubled insurer will be able to significantly pay down the credit line it has with the Federal Reserve Bank of New York.

At the end of December, AIG owed $47.3bn to the US Treasury, and $47.9bn to the new York Fed.

"Both sales give AIG greater flexibility to move forward with our restructuring and rebuilding efforts," said Harvey Golub, AIG's chairman.

Like AIA, which AIG had considered floating in Asia, Alico had been the subject of internal discussions regarding a stock market listing in New York since at least July last year.

The discussions continued in spite of talks with MetLife over Alico, which began in early 2009 under former chairman Ed Liddy's tenure, and restarted in the late summer, by which point Mr Golub and AIG chief executive Bob Benmosche had been appointed.

Mr Benmosche ran MetLife from 1998 until 2006, and was responsible for taking it public in 2000. However, he was not part of the Alico sale talks.

Alico, which began life in Shanghai in 1921, has 20m customers in more than 50 countries, with significant operations in central and eastern Europe as well as Latin America and the Middle East, plus Japan and the UK.

90% of critical illness claims paid out

New figures from the Association of British Insurers (ABI) show over 100 families and individuals a day claiming on their life or critical illness insurance, during 2008.

According to the ABI, the average claim stood at £52,000 or double the average UK annual salary.

In addition, the number of critical illness claims paid out rose to 90% in 2008, compared with 80% in 2005, and for life term assurance, 97% of claims were paid last year.

The ABI believes its new Code of Practice has led to less claims being declined due to non-disclosure and says it is now working with its members to tackle the number of claims declined because they don’t meet the definition of “Total Permanent Disability”.

The ABI’s director general, Nick Starling, comments: “The insurance industry pays out £5.9 million every day in life and critical illness insurance claims, making a real difference to people’s lives at the most difficult of times.

He adds: “The new ABI code is making a dramatic improvement to the number of critical illness claims we pay.”

The ABI has also been working with the Law Commission which is reviewing an aspect of insurance contract law that has resulted in huge numbers of claims being rejected over the years.

Under the Marine Insurance Act 1906, the consumer has a duty of disclosure when completing an insurance proposal form.

Currently policyholders answer the questions asked by their insurance company but are expected to disclose any other facts that may be relevant to the insurer, without necessarily knowing what factors the insurer will take into account when accepting a risk.

Health exclusions should equal premium cuts

LifeSearch is advising consumers to seek premium reductions when health conditions are excluded from their protection insurance.

The price comparison website estimates that one or more illnesses are excluded in around 15% of critical illness and income protection applications.

In such cases, the extent of the policy is reduced but not necessarily the premium.

According to the firm, not every insurer will reduce costs, although some have now taken a stand and agreed to make premium cuts.

The firm urges consumers to remember that if they take out a policy and a significant exclusion, such as Cancer, is added, there are insurers who will treat them fairly.

LifeSearch senior policy adviser, Matt Morris, says: “If they refuse, speak to an independent adviser who can find you an insurer that will.”

He adds: “Remember that the way to avoid exclusions – other than the general ones, such as war and suicide – in the first place is to take out a policy while you are still healthy. Don’t wait until disaster strikes.”

Widow of banker settles life insurance case

The widow of a banker whose employer fired him and then collected on a life insurance policy when he died has settled her lawsuit against the employer for an undisclosed amount.

Irma Johnson sued Amegy Bank after she discovered because of a post office error that the bank received $4.7 million when her husband died of brain cancer in 2008. Dan Johnson had been diagnosed with the terminal cancer before the bank bought policies on him and more than 40 other bankers in 2001, according to her lawsuit.

Amegy fired Dan Johnson a few months after it purchased the policies.

The industry refers to such life insurance as “dead peasant” policies. They provide tax benefits for employers who take out the insurance, and a windfall if the covered employee dies, typically without paying anything to surviving family members.

In her lawsuit, Irma Johnson asked for the net proceeds Amegy received, $3.8 million — the death benefit minus the premiums Amegy paid. Under terms of the settlement Thursday, neither party disclosed its details.

“We settled to the mutual satisfaction of both parties,” Amegy Bank spokeswoman Leigh Akin said.

Johnson's lawyer, Mike Myers of McClanahan Myers Espey, also said only that both sides were satisfied.