Whole Life’s New Lease: Beating Financial Crisis!

This is NOT your father’s, or your grandfather’s, Whole Life Insurance, says  The Wall Street Journal. The old gray mare of life insurance — whole-life insurance — was “a shining star during the financial crisis.”

“Thanks to conservative investments in bonds, whole life—and its cousin, universal life—delivered positive returns during the financial crisis,” reports the financial news beacon.

But before you ride off with a new policy, realize that whole life is a horse of a different oolor compared to term life insurance. Because it is a permanent, long-term, investment-oriented account,  new buyers will typically face stiff start-up costs and up-front commissions that soak up most of the first-year’s premium, well before the policy’s investment performance gets growing.

Term life is still the “default recommendation” for most consumers, particularly those on tight budgets, remarked James Hunt, an actuary with the Consumer Federation of America.

Under a whole-life or universal-life policy, the insurer deposits your premium, less insurance costs and other expenses, into a “cash value” account. Insurers typically promise minimum interest payments of 3% to 4%.

Could Whole Life Be RIght for You? Read on for more! >>>

Consider Taxes before Forfeiting an Insurance Policy

Is there a good time and a “less than good” time to bid farewell to a life insurance policy that has accumulated cash value?

A recent case covered in the New Jersey press offers an illustrative example.

A  62 year old man had held a whole life insurance policy with a $125,000 death benefit since January of 1992. He had accumulated $14,667 in dividends earning about 5.5 percent, and cash value of $33,736. His  annual premium is $2,416. His wife is 60, and the couple are both healthy and working.

The question?: If he forfeited this policy (to pay off a mortgage), would he owe income taxes?  Should he keep the policy and pay the premium out of the dividends?

While the answer could be complicated depending on the couple’s overall financial picture, a simple answer is as follows:

If a life insurance policy that has accumulated cash value is surrendered, the amount of cash received from the cash value that exceeds the basis (above the premiums paid to date) is taxed as ordinary income. Your insurance company can provide an in-force illustration to determine your basis.

An insurance policy dividend, unlike a stock dividend, is generally considered a return of premium. As such, it is not taxable income unless the total amount of dividends received exceeds the total amount of premiums paid — the basis.

If dividends are left to accumulate and earn interest, the interest credited each year is taxable income.

America’s Best Paying Jobs – If You Can Get Them!

If you’ve landed one of America’s best-paying jobs, you’ll definitely want to look closely at the many posts in Efinancialblog on protecting your income with the right kind of life insurance.

According to the U.S. government’s Occupational Employment and Wage Estimates, based on 2008 data, high income earners span the spectrum, but most of the wealth is concentrated in the health care sector.

The typical surgeon (position # 1) makes an average of $206,770 a year. That puts surgeons above anesthesiologists (position #2) to have the best-paying job in the country.

Orthodontists (#3) average $194,930 in annual pay, while Obstetricians (#4) report in at an average of $192.780.  Also putting their money where the mouth is are Oral and Maxilofacial Surgeons who earn an average $190,420 annually, (#5). Medical Internists are (#6) on the list, earning the most in the state of Wisconsin.

Back to the oral cavity again, Prosthodontists (#7) bring home a whopping $164,810 per year with “All Other” Physician and  Surgeons avergaing $165,000 at the (#8) slot and General Medical Practicioners at (#9).

What are the top paying non-medical jobs in America? Read on! >>>

Life Insurance & Pregancy

“Can you get life insurance while pregnant?” Are there special underwriting factors? What is the best way to get life insurance as a pregnant woman?” You are reading some of the most frequently asked questions in the life insurance field.

The most common answer is this: Typically, the best time to get life insurance is before you give birth to your newborn child. But let’s examine which conditions might be cause for concern?

Are your pregnant now? If you have a normal pregnancy and are otherwise low-risk, you can still get life insurance even while you’re pregnant. Expect the underwriter to order your medical records when you apply for insurance during pregnancy. The process may take a few extra weeks when records are ordered from your doctor’s office.

What is the life insurer looking for at this point? The underwriter wants to see what your weight was before and make sure that you’ve added a healthy amount of baby weight. They also want to make sure you don’t have any complications.

Are there actual medical issues that an insurance underwriter be concerned about with your pregnancy? A few complications may pose a risk.

Read on for the complications that can complicate getting life insurance >>>

When Calculating Life Insurance Need, Answer this Question. Are You Replacing One Income or Two?

When calculating the need for life insurance, the conventional, “inside the box” thinking typically takes into account the need to replace just one income…the income that is lost by the primary income earner who is no longer there to make a financial contribution. But like so many things in life, the most simplistic, top-of-the-head way of thinking about a problem is not always the most useful.

Tragically, when the life of one parent in a young family is lost, a paycheck is only one part of what disappears into the enormous void that is suddenly created. The working partnership that existed between two parents role-playing is forever changed. The multifaceted roles that were performed by both spouses in running a family can hardly be filled by a single parent alone.

In so many cases today, the reality of the situation is that both spouse’s income earning potential is affected when one is lost. As a practical matter, when both parents work, many families will need to take into account two incomes when calculating life insurance need.

Should your life insurance coverage account for just one income? >>>

eHealth Launches New Life Insurance Product Offering

eHealth, parent company of eHealthInsurance, an online source of health insurance for individuals, families, and small businesses, has launched a new life insurance product offering, which allows consumers to research and comparison shop for life insurance.

According to eHealth, the new offering allows consumers to conduct side-by-side comparisons of quotes and life insurance policy benefits. Through a referral partnership with Seattle-based Efinancial, the company was able to launch its life insurance offering with range of products from life insurance providers.

According to eHealth, the new offering allows consumers to conduct side-by-side comparisons of quotes and life insurance policy benefits. Through a referral partnership with Seattle-based Efinancial, the company was able to launch its life insurance offering with range of products from life insurance providers.

The new offering gives consumers access to various life insurance policies including underwritten policies, which require a medical review; guaranteed issue policies, which are available without a medical review or health questionnaire; and issue policies, which can be applied for and approved online in a single online insurance application session by answering a few basic health questions.

In addition, the company also provides phone support, with access to Efinancial’s agents to answer any life insurance policy-related questions.

Suze Orman’s Top Priorities for Financial Planning in 2010

With “Nine Small Financial Steps That Will Pay Off Big in the Future,” financial advisor and  consumer advocate Suze Orman offers readers some valuable advice for 2010.

In a recent article, Orman puts (1) savings, (2) retirement and (3) life insurance among the top priorities for personal financial planning. Orman’s recommendations for savings include admonitions to “save a bit at a time” and exercise more personal financial self discipline. In planning for the future, Orman encourages 401(k) participants to “max out their company match” and to invest in a Roth IRA. She rounds out her 2010 recommendations with a call to create the “most loving documents in existence” — a living trust, a durable power of attorney and a will. She concludes with a recommendation to guarantee “peace of mind” by purchasing a life insurance policy.

Experts note that more one-third of all adults carry no life insurance and the majority of those adults who do carry life insurance rely on more limited group life polices obtained through an employer.

Suze Orman notes, “If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance. Keep it simple and buy term life insurance; it’s good only for a specific number of years and then expires. That’s okay — life insurance wasn’t meant to be permanent; it’s there to protect your family before you’ve had a chance to accumulate enough funds (through investments and savings) to do so.”

She adds, “Most people should get a 20-year level term policy that has a value equal to 25 times the amount of annual income your family needs to live securely.”

To ensure that you are getting the best value when purchasing a life insurance policy, experts say to conduct research and compare life insurance quotes and prices online for different policies. Life insurance costs can vary widely depending on variables such as age, health, and whether or not a person smokes. There are a number online sources that a consumer can consult when considering life insurance: The American Council of Life Insurance (www.acli.com) has a range of information and brochures, and Efinancial.com offers a fast, secure and effective way to compare insurance rates at America’s top companies.