The Economics of Life Insurance!
Posted by: BeamaLife Editor on 26 Jan, 2010
The economics of life insurance relate to human life value, which in turn pertains to human capital. Human capital is a person’s income potential over their lifetime as well as additional factors such as fringe benefits, monthly expenses, and savings growth rate. The human life value concept is the primary reason for insurance and the basis of the ‘survivorship need’.
The ultimate goal is to maintain your assets and pass them on to your family in the event of premature death or even if you live your full life. You want your family to receive the full value of your working life if you were to die prematurely. Also, you don’t want the government to end up as the biggest heir to your estate, if you die wealthy. Upon your death, tax on your assets is inevitable if you fall in the estate tax bracket. But understanding the economics of life insurance will allow you to cover what is due by creating a source of funds to pay estate tax liabilities through affordable premium payments in the form of a gift to an Irrevocable Life Insurance Trust. Furthermore, the death benefit from your life insurance policy to your loved ones has no federal estate tax, no state inheritance, and no federal or income state tax consequences if life insurance policy is structure in a correct manner.
The economics of life insurance also concerns tax-deferred growth. By law, the cash value growth inside a permanent life insurance policy is tax deferred. This makes a permanent life insurance policy especially whole life insurance a tremendous savings vehicle and provides great value for any individual with tax concerns. Lastly, the growing cash value inside a whole life insurance policy is increasingly used to fund children’s education, retirement savings and wealth creation purposes.
Do Your Retirement Plans Include NOT Retiring?
Posted by: BeamaLife Editor on 14 Jan, 2010
If you’re like many Americans, your plans for retirement include not retiring – at least not for a few more years. Sun Life Financial recently released what it calls its “Unretirement Index,” which found that 65% of working Americans not expect to be working at least one year longer than they had previously planned. That number is up 11% from where it was at the end of 2008, which goes to show that the lingering recession and its aftereffects are hitting hard, not only with those who have lost their jobs, but with everyone.
Sun Life’s report, which was detailed in the December issue of “Employee Benefits Adviser,” was compared with similar findings by Prudential Financial and by Vanguard. Both company’s findings showed the same trend: more workers thinking that retirement would have to wait at least a year longer than they had previously considered.
The Sun Life survey went further, finding that a larger percentage of workers expected to continue working full time or part time well into what would have normally been considered their “retirement years” – age 67 and beyond. And only 40% of the workers surveyed felt that they would have enough money to cover “basic living expenses.”
We all know that this recession won’t last forever. Housing prices will rise, and unemployment will get back down to 5% or 6%. But now that the U.S. Senate has passed its landmark version of the health care reform bill, we’ll have to wait and see what affect that will have on the current economy. I hate to use the phrase “perfect storm,” but with banks failing left and right, with more and more Americans out of work, it certainly doesn’t seem like the right time to implement a major program that everyone agrees will cost our government and us taxpayers more money.
Regardless of what’s happening in the broader economy, your retirement savings plans are still, for the most part, in your hands. You have lots of tools at your disposal, so take the time now to make sure that you’re using all of them. If you have a 401(k) or 403(b), put as much as you can into it. If you have whole life insurance, make sure you keep up the premium payments and keep that cash value building. If you can put money into a traditional or Roth IRA, by all means, put as much as you can into it.
And if, like so many of our clients, you are a medical professional, or you own your own business, or you’re an independent contractor, you KNOW that your success is in your hands. You’ve worked hard over the years to establish yourself, to build a reliable income stream, and to chart your own course for the future. Take the steps you need to now to make sure that your business is protected and your retirement is plan with retirement planning guide. It’s the best retirement plan you’ll ever have!
New Year, New Ways to Save Money on Life Insurance
Posted by: BeamaLife Editor on 11 Jan, 2010
It’s a new year, and that’s the time when many people make resolutions to change their lives for the better in the coming months. Many of the changes you might be considering can also be ways to save money on your life insurance. Of course, there are the usual ways that most people would think of, like quitting smoking, or cutting back on drinking alcohol, or losing a few pounds.
But here’s one you may not have considered: going vegetarian. With all the talk about what’s happened to the American diet over the years, it isn’t a surprise to anyone that there are many health benefits to being a vegetarian. But here are a few facts:
- Vegetarians are half as likely to develop heart disease as meat eaters
- Vegetarians have just 40% of the cancer rate of meat eaters
- Meat eaters are nine times more likely to be obese than vegetarians
When an insurance company evaluates your risk, which most of them do through a medical examination, there are a number of ways in which being a vegetarian will result in your being a lower risk, and therefore having lower life insurance rate and premiums.
- Your cholesterol levels will be lower
- Your blood pressure will be lower
- Your risk for diabetes will be lower
- Your risk for heart disease will be lower
At this time there’s no “official” life insurance premium discount offered to vegetarians, like there is for people who don’t smoke. But the health benefits are so clear that your acceptance is guaranteed to have fewer problems than you’d have as a meat eater.
Life insurance companies believe that it would be hard to verify that someone really was a vegetarian, or if they were just trying to get a discount they didn’t deserve. Well, unless someone lights up a cigarette in the middle of a medical exam, it’s hard to prove that they’re a smoker, too. So I think this is something that will change in the years ahead.
But even without an official discount, the benefits of being a vegetarian will lead you to a healthier life, and that means more time to enjoy all of the things that make your life worth living. Best wishes for a healthy and happy 2010 from all of us at BeamaLife! Please call (877) 972-3262 to speak with life insurance specialist or complete life insurance quote request form now.
Will 2010 Be a Good Year For Your Employee Benefits?
Posted by: BeamaLife Editor on 4 Jan, 2010
In the December issue of Employee Benefits Advisor magazine, a survey of 4,500 employers found that 2010 will be a good year for your employee benefits in lots of ways. Most employers remain committed to keeping their benefits plans robust, offering medical and dental, vision, life insurance, short and long term disability insurance.
Here are the highlights you should know about:
- 82% of employers plan to keep their contributions levels the same for employee medical insurance in 2010. With premium increases in the double digits, this is definitely good news for employees.
- 97% of employers do not plan to make any changes to their dental coverage in 2010. Dental premiums are not rising as fast as those for medical insurance, but this also great news for employees.
- Very few employers plan to add vision coverage this coming year, while a small percentage are actually considering dropping the coverage to save money. If you have health insurance, you probably have some vision insurance as well. I suggest employers make vision coverage voluntary – make it available for employees who want to pay for the benefit themselves.
- 90% of survey respondents indicated that they offer life insurance, and another 8% said that they intend to add life insurance in 2010. This is great news, as the number of Americans with adequate life insurance is really quite low. As I’ve written before, however, if your employer offers voluntary group life insurance, it may actually be less expensive to buy the same amount on your own. Get the term insurance or whole life insurance you need, and be smart about how much you pay for it!
- 90% of employers that currently provide long term disability insurance coverage are planning to keep it in 2010, but only 4% of companies that don’t offer it now are planning to add it. Whether your company offers it now or not, you should have right amount of disability insurance coverage. Please call (877) 972-3262 to speak with disability specialist about supplement coverage if you have disability from work or new your own coverage if you don’t have any protection.
- Short Term Disability is the least likely to be added in 2010. Most disabilities are short term – less than 90 days in duration. But that’s enough time to ruin your finances. Protect yourself, even if your employer is already providing you with some short term disability.
The majority of Americans get the majority of their some financial services through their employers, so it’s great that companies are still willing and able to fulfill that role. My advice is that what your employer offers should be your starting place – not the end of your financial planning journey.
