End-of-Life Decisions: Life Insurance Comes Before a Will

What came first, the chicken or the egg? That’s a “how life begins” question, and a puzzling one at that.  The questions that arise when it comes to understanding, and carrying out, individual “end-of-life” decisions can also seem puzzling. One common question is this: Which comes first, a will or a life insurance policy?

The answer is that the beneficiary designations you make in a life insurance policy will supersede a will.  It’s important to talk to your life insurance representative if you want to review or amend any of the end of life provisions you have established.

Questions often come up concerning the difference between a will, a power of attorney, a health-care proxy and a living will.

A will determines what happens to your assets after you die.  A power of attorney, in part, authorizes someone to take care of your bills. A health-care proxy appoints someone to make medical decisions and a living will states what decisions you do and don’t want that person to make.

All of these documents are important.  Do you have them all in place?

Here’s a question that’s not so difficult.  Where’s the best place to shop for life insurance online?  That’s an easy one. Compare life insurance rates by clicking, picking and sticking with us!

Can Soldiers Get Life Insurance in Time of War?

Among the most important priorities of financial planning for members of the U.S. Military, perhaps none is more serious than life insurance.  Every year, hundreds of Soldiers, Sailors, Airmen and Marines die in service to our country. While some of them will make the ultimate sacrifice on the field of battle, others will lose their lives while living a unique life as a service member. These men and women will leave behind their beloved family and friends.

Learn Why Private Life Insurance Is Essential Before Leaving the Service! >>>

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! >>>

Economics Bestseller “Super Freakonomics” Answers “Why Suicide Bombers Should Buy Life Insurance?” (Hint: To make it harder to datamine them!)

The New York Times’ runaway bestseller, “Freakonomics,” was a worldwide sensation that sold more than four million copies in 35 languages and changed the way we think about number-crunching and socio-economics.

Now, the distinguished writing team of  University of Chicago economist Steven D. Levitt and journalist Stephen J. Dubner has released “Super Freaknonmics: Why Suicide Bombers Should Buy Life Insurance.” The mix of sharp thinking and great storytelling uses the same no holds barred, street-smart approach to exploring societies ills, asking (and answering) questions like” “What’s the best mathematical way to catch a terrorist?” “What do hurricanes, heart attacks and highway deaths have in common?” Or, “Why are doctors so bad at washing their hands?”

Illustrating the statistical science of datamining, the authors showcase research on how economists use information to both unearth and debunk startling trends in society. They examine whether TV has caused a rise in crime? Or whether hospital emergency rooms can do more harm than good for the average patent? Or whether  eating Kangaroo save the planet?  One such case study looks at the efforts to identity terrorists from a databased standpoint by looking at personal financial trends, including life insurance, to tell them apart!

Spoiler Alert: Read Why Suicide Bombers Should Buy Life Insurance >>>

Which Type of Life Insurance is Best?

Understanding the comparative benefits of life insurance isn’t nearly as complex as some insurance agencies would have you believe. Especially since you can count the main differences between one type of insurance and another on one hand.  Let’s see which type gets a thumb’s up!

Type One: Term Life Insurance

Term life insurance is the simplest, most common, and for most people, the most practical type of life insurance.  The way Term Life works is simple:  you purchase coverage for a specific period of time (or “term,” usually 20 or 30 years).  If you die during the specified period of time, your beneficiaries receive the value of your policy.  If not, the contract becomes worthless. The premiums are usually lower than other  types of life insurance because they have no cash value. When the term elapses, so do the payments. You don’t get your term life insurance premiums back.  Term life is likely the best choice for probably 95% of all Americans due to its simplicity and low cost of coverage.

Read more about the 4 Types of Life Insurance >>

Doing a Life Insurance Needs Analysis

How much life insurance is enough life insurance for you and your family? Just pay a visit to Efinancial.com to calculate  the sum on one of our handy Life Insurance Calculators. To determine how much insurance you need, our calculators perform an instant life insurance needs analysis.  Here’s a step by step guide on how we do it so you can calculate how much insurance you  need right off the top of your head.

Figure the…

1. Total annual needed by your spouse and children in the event of your death.
2. Number of years you would like to provide this income to your spouse or children.
3. Your gross income annually.
4. Your date of birth.
5. Your spouse’s gross income.
6. Would you like to pay off any outstanding debt? For example, mortgage, loans, credit cards, college. If so, enter the debt amount.
7. Burial expenses. That can include funeral, probate, and any other legal matters.
8. Total amount of your existing life insurance.
9. Interest rate assumption. This assumes the interest death benefit proceeds are invested.
10. Press Total.

Calculating How Much Life Insurance You Need

A friend recently related a story of how a man and his wife had bought and re-bought new life insurance policies several times over the past 5-10 years. As their income increased and their responsibilities grew, they had steadily outgrown their coverage.  It’s a common occurrence and easy-to-understand.

While a standard rule of thumb is to lock in a term policy for 8x or 10x your annual salary, the actual coverage amount that is right for your family depends entirely on your personal situation. If you want your life insurance policy to provide support for your family for an extended period of time, you’ll obviously need more coverage. If you’re comfortable with your insurance policy being a short-term stopgap, you can get away with less.

Efinancial offers an online life insurance calculator that allows you to enter data on anticipated one-time expenses, ongoing living expenses, years of need, and any special savings goals you may have. Just a few seconds is all it takes to “crunch the numbers” and give you a cushion to fall back on.  In addition, Efinancial also offers Insurance Calculators to determine your Net Worth, estimate the Cost of Raising Children, or calcuating an Annuity.  Just scroll down the Efinancial home page to find these handy and informative Insurance Calculator choices.
Learn how to calculate your life insurance needs

Five Ways to Recoup Lossesh

With retirement cushions beginning to look more like throw pillows –  many families are wondering: “How can we recoup some of our losses?”

Bloomberg commentator John F. Wasik spelled out five ways any household  can save and use their money prudently even in a bad year.

One, keep investing, but do it in yoursellf!  Continue to contribute to your 401(k) plan. Keep in mind that taking your employer’s matching contribution, if you have one, is still a 100 percent initial return on investment. If you don’t feel comfortable investing, save up cash and put it in money-market funds, I-bonds or certificates of deposit.

Two, appeal your property taxes. Do this every year by reviewing your home’s assessed valuation. If it’s too high compared with similar properties, talk to your local assessor or appeal it on the county level. If you win the argument, you can usually freeze or lower your real-estate tax bill.

Shop Around for Insurance
Three, yes, shop around for insurance. Everything from increasing your deductible, or out-of-pocket expense, to lowering premiums across the board on life, health, homeowner’s and other policies. [Efinancial can help in this department. - Ed.]
Learn more insurance and investment tips

The Motley Fool’s Question of the Week: Life Insurance – Do I Need It?

The Motley Fool’s U.K. bulletin board has asked plenty of brain teasing questions over the years. But this week’s installment takes the cake for pure common sense: Life Insurance – do I need it?

A single woman who has mortgage insurance protection writes: “I’m a single twenty-something with two properties, both of which are mortgaged. One is an interest-only mortgage, the other is a repayment mortgage. I have life insurance policies in place over both properties along with a benefit in work of four times my annual salary should something happen to me. I have no dependants and feel that I am perhaps a little over-insured. Ahh, so the question  may not be so simple. is this person over-insured?

When do you need life insurance?

The Motley Foll has always been famous for cutting to the quick. In this case, the answer to “Do I need life insurance?” is straightforward. Generally-speaking if you have people in your life who depend on you financially — whether it’s your partner, your children or someone else — then it’s a good idea to take out enough life cover to provide for your family’s financial well-being should the worst happen to you.

Read more about why life insurance is necessary

Next Page »