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The death of a child isn’t something parents want to think about. But life insurance isn’t necessarily all about death. Child life insurance is about the future and preparation. Taking steps today can help create a better tomorrow. And as parents or grandparents, our chief concern is making the future better for our children.
How Does Child Life Insurance Help a Child?
Right now, when a child is young, strong, and healthy, life insurance is obtainable at a minimum cost. But if a child develops a problem like a chronic disease, life insurance can be almost impossible to obtain. So signing up for a low premium term life insurance policy now, with a guaranteed periodic purchase option, will make it possible for them to have life insurance as adults.
Another possibility for them is to purchase a whole life insurance policy, which will last for the rest of their lives. Their age and health status won’t make any difference, nor will it matter if they serve in the military or have dangerous occupation hazards.
Such child life insurance is perfect for planning for the future because of the cash value the plan would accumulate. As an adult, they could borrow against this value or stop the policy and withdraw the money (to pay for college or any number of things).
Who Can Purchase a Child Life Insurance Policy?
Parents, grandparents, and legal guardians can all purchase child life insurance policies. New parents often have heavy financial burdens during the first few years of a child’s life, and buying insurance is difficult. So grandparents (who might be more financially stable) purchase insurance for their grandchildren.
When Does Coverage Start for a Child Life Insurance Policy?
When you start a life insurance policy for a child, the coverage begins immediately. There are no necessary medical exams to go through,just a few health related questions on the application is generally enough to get a child qualified.
The rates for child life insurance vary. Whole life rates stay the same. Term life rates depend on the policy, how old the child is, and several other factors. Policy renewal agreements can vary also, so make sure it’s spelled out before signing up for term policies. Some times you can purchase a term policy and then switch it to whole life at the end of the policy’s period.
Child life insurance policies can last as long as you wish to sign for. Again, whole life policies for children don’t ever end, while term policies are defined before you purchase it.
Who Receives the Benefits?
In child life insurance policies, the parents or legal guardians are the beneficiaries. But the one who benefits the most is the child. He or she benefits from the security of a life insurance policy that will continue even if he or she is diagnosed with a life threatening disease. Secure your children’s future now with child life insurance. It’s good for them, it’s good for you
Talk to your Insurance Agent to ensure Child Life Insurance is right for you!
American International Group and the Treasury said they will sell around $9 billion in AIG stock, suggesting the government’s exit from its crisis-era investment will be slower and less profitable than originally thought.
The offering is less than half of what had been contemplated earlier this year. When Wall Street banks offered their services to manage the sale in January, there was talk of an offering of more than $20 billion.
One angry shareholder made his displeasure clear at AIG‘s annual meeting on Wednesday.
“I think the directors have mismanaged this. You’re now selling stock at one half of what it sold for a few months ago,” said Kenneth Steiner, who holds 600 shares of AIG. “What happened here is a real shame and real tragedy. It’s only being made worse now by this dilutive offering.”
Still, most of the shareholders who spoke at the meeting offered praise for the board’s work and for Chief Executive Robert Benmosche in particular. Benmosche, the former MetLife CEO who took over AIG in the midst of the crisis, stopped the company’s fire-sale breakup, energized the staff and restructured the company. He did much of it while undergoing treatment for cancer.
The question now is whether the government can still make money on AIG‘s restructuring.
At one point earlier this year, the Treasury was sitting on a paper profit north of $27 billion. There was talk of a blockbuster stock offering in May, a second one later in the year and perhaps a third in early 2012 to get the government out of one of its riskiest investments.
In the meantime, AIG ran into asbestos problems at its property insurer Chartis, short sellers piled into the small number of shares still publicly traded and in four months the company shed more than a third of its value.
The Treasury would have to raise just over $47.5 billion from AIG share sales to break even, a taller task that might require more patience and more share sales than anticipated.
AIG shares closed up 3.5 percent at $30.65 on the New York Stock Exchange, their best day in nearly two months. Over that span the stock closed lower about three-quarters of the time.
Up or down, though, when AIG was rescued in September 2008 few expected it would even exist today. The company received $182 billion in bailouts and managed to restructure while preserving two core insurance businesses.
One of the few analysts still covering the stock said the shares were worth buying despite major headline risks.
“We still believe a high degree of execution risk remains, and while we would not rule out the need for future capital raises, we think the shares are undervalued versus peers and historical valuations,” Standard & Poor’s equity analyst Cathy Seifert said in a note.
AIG trades at about 0.65 times its book value, whereas other property insurers trade at an average multiple of 0.97, and other life insurers average 0.91, according to Thomson Reuters data.
Taking a loss on AIG would be a black eye for the Treasury, but the government is under pressure to exit its crisis-era investments in private companies. A looming presidential election only adds to that pressure.
The government turned a profit of $12 billion on its investment in Citigroup Inc but took a loss on its first sale of shares in automaker General Motors Co. The government is expected to begin selling off its stake in Ally Financial Inc later this year.
AIG is sending two teams to begin meeting with investors on Wednesday, a source familiar with the situation said, and Benmosche will personally be meeting with multiple banks.
AIG said last Friday it needed to raise $3 billion in the stock offering, which would imply a price of around $30 a share. But one investor said on Wednesday the offering was more likely to price at a discount to where the shares are now.
The prospectus filed on Wednesday said the Treasury would sell 200 million shares and AIG would sell 100 million. The Treasury has an option to sell an additional 45 million shares to cover excess demand.
Assuming the Treasury sells 200 million shares, the government stake in AIG would fall to 77 percent from the current 92 percent.
More than 900 investor victims in an allegedly fraudulent New Braunfels insurance group might share an initial $7.7 million payment, a court-appointed receiver recommended this week.
The amount accounts for about 10 percent of the money backers paid into Retirement Value LLC. Travis County state District Judge Stephen Yelenosky shut down the company last May after a request from the State Securities Board and Texas Attorney Generalâ€™s Office. The state accused the firm of securities fraud and deceptive practices in selling life-settlement investments.
The receiver, Dallas-based K&L Gates LLP attorney Eduardo Espinosa, said the distribution is the first of several he expects over time. In addition to underestimating the life expectancy of life insurance policy holders, the company also â€œfailed to maintain meaningful or appropriate financial records,” Espinosa said.
The fund collected more than $77 million from investors in just 10 months in 2009 and 2010.
Espinosa also recommended maintaining life insurance policies acquired by Retirement Value, which in effect means investors will have to wait longer to recover principals. He said, however, that strategy will provide the best possible return.
If you’re thinking about dropping your life insurance premiums to save a few bucks, you’re not alone. According to a 2010 report from life insurance research group LIMRA, 35 million U.S. households have no life insurance coverage, an increase of 11 million households since 2004. More than 40% of Americans say fiscal pressures are one reason life insurance isn’t a priority.
The problem with letting go of your life insurance to save money is that in the event of a disaster, it could wind up costing your family thousands they may not be able to afford. Even when you’re ready to get your insurance back, there’s a good chance you’ll pay substantially higher premiums if your health or age has significantly changed.
Industry experts say that for those facing hard economic times, dropping coverage isn’t the only option. Here are a few alternatives to dumping your insurance.
Use Cash Value
Consumers with cash value policies might not need to worry about skipping premium payments, says Tommy Smoot, second vice president of life product development for The Guardian Life Insurance Company of America in New York.
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“With (cash value) insurance, if you’re in a situation where you can’t pay your premium, you can actually tap into those values as a way to pay,” he says. “It’s called an automatic premium loan feature.”
How long policyholders can use cash value reserves to pay their life insurance premiums depends on how long they’ve owned the policy andÂ the reserveÂ they’ve built up, Smoot says. However, there is a catch. Automatic premium loans can prevent a policy lapse, but you’ll also get charged interest. For whole-life holders just looking for a small fiscal boost, Smoot recommends using policy dividends to temporarily lower premiums.
Drop the Riders
One of the fastest ways to lower your life insurance premiums on permanent and term policies is to drop policy riders. Dumping pricey add-ons such as waiver of premium or accidental death and dismemberment riders can substantially lower your premiums. But the amount varies between companies and policies, says William Rowan, president of the term life insurance rating site eTermLifeInsurance.net.
“You have to work with an insurance agent if you’re thinking about dropping riders,” says Rowan, adding that some companies allow policyholders to drop certain riders. Other companies won’t let you have certain riders back without additional medical underwriting.
Before letting go of riders, RowanÂ says policyholdersÂ should ask their provider how much the move could lower premiums and how easy it would be to add riders back on later.
Accelerate Your Benefits
If chronic illness or disability caused your financial hardship, you could be eligible to access your benefits early. Known as an accelerated death benefit, the feature is standard on certain life insurance policies and available as an additional rider on others, says Smoot. Consumers only pay if they actually use it.
“With an (accelerated death benefit) the carrier is paying the premium, so the value of the policy continues to grow,” says Smoot.
To collect benefits early, Smoot saysÂ policyholders will have to prove they are seriously ill or disabled and should discuss the monetary ramifications of pulling benefits early with their financial planner.
Get Temporary Coverage
If a pricey individual policy is putting you in a financial crunch, investigate other options.
“Temporary coverage through a plan offered at your work is better than no coverage at all,” says Andrew Hutchison, vice president of product development for Mutual of Omaha. He adds that “most policies (permanent and term) have reinstatement provisions, so you can get your (old) policy back later.”
After a plan lapses, Hutchison says policyholders generally have approximately three years to reinstate it, provided they can pay all back premiums on the policy and their health hasn’t significantly changed.
Lower Your Benefit
“If you have a 20-year policy for $500,000, you will always have the option of reducing the base amount of $250,000 and effectively cut your premiums in half,”Â says Rowan. “When you’re back on your feet, assuming your health doesn’t change, you can always apply for more insurance.”
LoweringÂ your benefit can helpÂ you get through a tough time, but it could cost more in the end. Once a policyholderÂ is prepared to raise his or herÂ benefit, Rowan says thatÂ he or sheÂ might have to go through medical underwriting again. If the person’s health or lifestyle changed during the interim, premiums could increase.
Switch From Perm to Term
Instead of going without insurance, Hutchison says cash value policyholders can trade a permanent policy for a cheaper term one.
“If you have a permanent policy, you can always surrender it for cash value,” says Hutchison.
Hutchison warns that surrendering a policy means that policyholders can only pull the current cash value of the account minus any loans or outstanding premiums. Money pulled out of a permanent policy can also have tax consequences. While most of the money you pull out will simply be premiums you paid into the policy, any funds above that amount — for example, if your policy has performed particularly well — will be taxable income.
It seems that very few business owners realize that applying for an SBA or business loan often requires that a life insurance be in place before the loan can be approved. Once that need is recognized, the process can either be fast and painless or grueling and, at times, even impossible. We hope some of the tips below will help you avoid potential mistakes business owners make in the process of applying for the needed life insurance.
First thing first, what plan do you need? Most lenders only require that you get a 10 year term life insurance plan. Meaning that the insurance only has to have rates guaranteed for 10 years (as opposed to 15, 20 or 30 years) and does not need to be convertible. Premium wise, that is a good thing as a ten year term is cheaper than the longer plans or a whole life.
Some may wonder if they should use their present life insurance as collateral for their SBA loan or business loan. Although the lender may not care if you do that, your beneficiaries may not feel the same way. Keep in mind that, if you decide to collateralize your present insurance policy, the lender has full control of the policy and becomes the first to decide what happens to the money paid if you die. Rather, we do recommend that you take out a policy specifically for your business loan. Besides, if you do get a life insurance policy specifically for the loan, you may be able to claim the policy as a business expense on your taxe return (consult your accountant to make sure).
Once you decide to apply for a loan specific life insurance policy, which way should you go, exam or no exam? That question really depends on many factors. Primarily, you need to consider your present or past health history. If you are in great health, then many options are open to you. If you do have some minor or major health issues, then the process may or may not be more complicated. Keep in mind that, when your health is not 100% or close to it, the process of underwriting may take on average 6 weeks (as long as 4+ months sometimes). You may wonder why it takes so long. Well, more often than not, the insurance company will request medical records. And needed medical records can bring everything to a halt. Most medical offices are not in a hurry to process the medical record request and if your Dr. is not in a hurry to send the insurance company your medical records, then underwriting cannot proceed. That is besides the fact that the Dr’s office has just been paid as much as $300+ for your records. Now, there may be ways to accelerate the process. And if you do have medical issues and need the life insurance coverage fast, we highly recommend that you select an insurance consultant that has the needed experience to get things done as fast as possible.
What if you have no medical issues? It would seem that, if you are healthy, the response should be very fast and the rates very low. Well, that is a possibility but not always the case. Remember, if you want some of the lowest insurance rates available, you still need to get a medical exam. We strongly do not recommend that you follow the exam route. Why? Simply because we have seen instances where a healthy, young individual took the exam only to find out that he had a medical issue. The problem was not necessary that he ended up getting higher rates. The problem was that he was declined! Once declined by an insurance company that requested an exam, getting a policy somewhere else (and fast) becomes extremely difficult. When we spoke to his wife, we told her that it was not his fault but he had followed the wrong process. What else should he have done? When you have to cover a business loan or SBA loan, you need the coverage ASAP and with as little risk of decline as possible. What we recommend is that you first secure a NO Exam Life insurance for the amount needed for the loan. I know rates can be higher and amounts available can be lower (some companies only offer up to $250,000 without an exam) but that is still the best way to get what you need fast and with less risk of a decline. By the way, it is possible to get as much as $1,000,000+ in no exam life insurance by using multiple companies. We have never seen that it is a problem. The insurance companies just need to know what you are doing.
How about the assignment? That is or should be the easiest part. If you are working with an insurance consultant who is familiar with assignment forms then he/she should know what questions to ask the lender and the insurance company and coordinate the right forms to the lender. You may still need to get involved to make sure that the lender has received the right forms as, at times, the lender will only want to work with you and not the lief insurance consultant.
Your loan is now approved, the life insurance is in place and all assignment forms have been processed. Now you can breath again and start working on what is really important to you – YOUR BUSINESS! What can possibly be next. Well, if you are like most people, you will want to see if you can get rid of the more expensive no exam life insurance plan(s) and get lower rates with a new policy. Less worry and no hurry usually means better rates. At this point, and when you can, we recommend that you re-shop the no exam life insurance plan you secured for your business loan or SBA Loan and, if needed, do a new SBA Loan life insurance plan that requires an exam. Once you have secured new, lower priced life insurance, you should be able to easily cancel the old (higher priced) policy(ies) and assign the new policy to the lender. Of course, If you originally secured a life policy with an exam and received very low rates, then you are all set and no need to re-shop. If you secured the life insurance policy with an exam but your health was not so great, and the rates you received seemed high, then we suggest that you re-shop the insurance plan about once every 18 months. With impaired health life insurance many factors can influence future premium changes and I would not want you to miss out on potential savings. I could get into more details on impaired health life insurance but that is for another article.
To recap, when you apply for your business or SBA Loan, make sure to ask if a life insurance policy will be needed. The point is, the sooner you start looking, the better. Next, apply for a no exam life insurance. Then, get all assignment forms in place. Last, once the loan is all set, re-shop for your life insurance as needed.