Unfortunately during tough economic times life insurance is considered a luxury that many people will go without.  With the economy stabilizing in recent times, many people have renewed their life insurance.  This corresponds with life insurance rates rising over the next several years.

A number of big life insurance companies invested in the real estate financial market and suffered large losses.  Many of these life insurance companies had to rely on bail out packages from the government when the economy was at its worst.  However many of the companies have repaid as well.  The stabilization of the country and insurance companies eventually will make its way to consumers and result in life insurance rates that are higher.  Many experts think life insurance rates could start in increasing in late 2010.  some analysts think insurance companies won’t adjust their life insurance rates until they see how the health reform changes that have recently been passed will affect consumers, which could delay substantial increases from occurring until 2014.

Well my first question is what to you mean by someone close to you?  Are you talking about a co-worker, acquaintance, friend or relative?  Whoever this person is, my first suggestion is that you distance yourself, at least in terms of your finances, with this person.

The reason for this is because when you are trying to save and invest for your retirement, your starting point shouldn’t be life insurance.  In terms of your options, life insurance should be way down on your priority list, if at all.

That doesn’t mean life insurance is unnecessary.  If there are people in your life depending on your income such as children, a wife, or other family members, you need to ensure that in the event that you should die an untimely death that they will be well taken care of.

However the kind of policy for providing that kind of assurance is term life insurance.  You pay a premium annually and an insurance company promises they will pay your beneficiary a death benefit in the event of your death.  A term life insurance policy is ideal when it comes to basic insurance protection because it gives you a big bang for your bucks or the most in death benefits for the amount you pay in premiums.  This frees up more money to do other things such as save for your retirement.

When you have life insurance with cash value, by contrast, only part of the premium will go toward paying for the death benefit, with the rest going into the investment or cash value part of the policy.  Depending on what kind of cash value type policy, could be something close to having a savings account where you receive interest to a more mutual fund-like investment.

This approach, the way I see it, does have several drawbacks.  Because only a portion of your money is going towards the death benefit more money will need to be shelled out in order to get an equivalent benefit that you would get with term life insurance.  Expenses associated with investing via life insurance tend to also be higher than costs paid for retirement investments not involving a life insurance policy. Generally higher costs result in lower returns.

Also, hybrid investment-insurance policies tend to be hard to assess and complicated.  Finally, the tax advantages that often highly tour about  these types of investments is often overstated in my opinion.

If life insurance is not the best solution, what’s the best way to get started on saving for your retirement?

Fortunately, several retirement investment and saving vehicles are available that offer tax benefits that are more straightforward, and more convenient and more cost-effective as well.

If you have a retirement savings plan through work, like a 401(k) that should be a top priority.  401(k) plans offer sever important advantages.  First there is the federal contribution ceilings which are relatively generous- $16,500 and for people who are 50 years or older an additional $5,500 (although lower limits can be set by specific plans).  Also, your pre-tax dollars along with the investment earnings generated, will not be taxed until they are withdrawn.  Many employers offer matching funds.  The typical amount is fifty cents for every dollar you contribute from 6% of your salary.  It basically amounts to you getting paid an extra amount to save for your retirement.

If you don’t have a 401(k) plan available to you, or you have contributed the maximum but still can save more, a ROTH IRA or traditional IRA is something you may want to consider.  They do have lower contribution limits: $5,000 per year and for those older than 50 an additional $1,000.  However if you do meet the eligibility requirements, an IRA can be a great way of building up a nest egg for retirement, particularly if you get an early start while you are still young, make maximum contributions over many years, and also stick with low cost investments.

If you happen to exhaust all of these possibilities you can then move into tax-efficient investments that are part of taxable accounts, like tax-managed funds, ETFs and index funds.

One final thing when it comes to your life insurance policy.  Be sure that your beneficiaries will be prepared for dealing with the payout on your policy upon your death.

This is always wise.  However it’s even more relevant currently given that the attorney general from New York State last week announced his office will be conducting an investigation of the industry industry to determine whether or not beneficiaries on policies for nonmilitary federal employees and military members have been put at a disadvantage by having their death benefit proceeds put into low yielding accounts.

At this point is isn’t clear whether or not insurers have done anything that is actually wrong.  However no matter what the outcome is eventually from this investigation, the broader lesson for now at least is making sure your beneficiaries know how to properly handle insurance policy proceeds, particularly since the amount of money is more than what many people ever see in their entire lives, in order to make sure they will be able to maximize any benefits they receive from a payout.

The smaller a business is, the more that management integrity comes into play. This is usually the business owner, the single driving force of the person. He or she is who the lender will be looking at as the essential way that a business will have the ability to repay their loan as well as the interest. But what if the business owner dies?

In order to protect against the business owner’s potential death resulting in a company not being able to repay a loan or portions of it, there are many lenders who will require the business to have life insurance. It’s a logical and simple concept. In the event the business owner should die, life insurance proceeds are used to pay a portion or all of the business’ outstanding debt.

It would seem logical that premiums for these types of insurance policies should be deductible business expenses. However, courts consistently have said that life insurance premiums for securing business debts aren’t deductible. In a key court case it was reasoned that if the owner does live and pays off the loan, the policy becomes a personal asset to the owner. If it’s the corporation that owns a life insurance policy, the same logic applies. Once the debt is paid off, the insurance policy becomes one of the corporation’s general assets. There is one consolation. When a death benefit is received, the proceeds are one hundred percent income tax free. However, when it comes to estate tax proceeds from life insurance are taxable.

Tax Tips For Owners of Closely-Held Businesses

When it comes to nonqualified deferred compensation (NDC) plans in terms of how they affect family-owned businesses, from a tax perspective they can be either an absolute disaster or great. Joe Owner, for example, is going to receive $350,000 in $50,000 increments over the course of seven years. The amount is often based on the average salary of Joe’s over his last two years employed with the company multiplied by 2.5. Payments will generally start at the time that Joe reaches a certain retirement age or he becomes disabled or dies. If Joe dies the payments that are remaining will go to his beneficiaries.

How is an NDC plan taxed? Nothing is taxed until payments are made. The company will then get a tax deduction as they make the payments. Joe will pay tax as he receives the payments. If the company’s tax bracket is higher than Joe’s, then this can be a great deal. However, if Joe’s tax bracket is high and he happens to die before receiving all the payments, the company’s tax consequences do not change. However the payments that Joe’s family receive get taxed twice: for income tax just as they would have been if Joe was alive, and the second tax is for estate tax. The result is if Joe’s estate tax bracket is 50% and his children happen to be the 40% income tax bracket, after taxes the $100,000 will be reduced to around $30,000.

Instead of setting up an NDC plan, a death benefit only (DBO) plan is a better choice. The main difference between the two plans is that the DBO doesn’t start paying until Joe dies. Estate taxes do not apply to DBO plan payments. The DBO payments due also reduce your business’ value which reduces the estate tax further. Take note that not all rules are covered here.

In simple terms there are no legal limits in terms of the number of life insurance policies an individual can own or how many from each type. There isn’t any existing legislation that restricts how many life insurance products or polices an individual can buy or own.

The ability that individuals have to own multiple life insurance policies makes it possible for individuals who have limited financial means to purchase additional life insurance policies or coverage as their financial abilities increase. For individuals who may not be able to afford the premium initially on the life insurance policy that has the death benefit most appropriate for their needs, they can purchase one that is more affordable instead. Then over time, as the individual has more money available to spend on life insurance due to earning more money or eliminating debt, they can buy a new life insurance policy that has a death benefit that when combined with their earlier purchase will add up to the appropriate death benefit for their particular situation.

There aren’t any laws that prohibit an individual from buying more than one life insurance policy. However there could be some complications in trying to buy multiple policies at the exact same life. Applicant information on a life insurance policy gets sent to an organization called Medical Information Bureau (MIB). In addition all insurance carriers will research all new customer files before they issue new policies. MIB provides data such dates for earlier life insurance applications, the policy face amounts, a customer’s underwriting class, and whether a policy was either issue or declined. If an individual tries to buy multiple life insurance policies at the exact same time, or within a short span of time, concerns could be raised by the insurance carrier’s underwriting department. That could result in delays or sometimes even a rejection.

In addition to not having any legislation prohibiting or restricting how many life insurance polices an individual can buy or own, there isn’t any legislation in terms of where one can buy a policy or from which companies. Because most insurance gets regulated on the state level, there really isn’t any way that state courts can control an individual’s insurance coverage. No matter where the headquarters of an insurance carrier are located, they can obtain a license quite easily to advertise and sell their insurance products in many states. These cross-border capabilities makes it a lot easier for individuals to buy life insurance that matches their individual needs as well as their financial abilities most appropriately.

There are no laws that restrict the death benefit amount that a beneficiary can obtain either. The value placed on an individual’s life is subject to opinion. The life insurance industry does have several accepted methods to use to help determine appropriate levels of coverage. However, although there isn’t any legislation prohibiting extremely large death benefits, many insurance companies do have internal policies that address very high death benefit amounts. Individuals who apply for life insurance policies with death benefits that are consider higher than what a particular insurance company considers ordinary and normally might need to provide a more detailed explanation or additional documentation for that type of request.

Another benefit of being able to purchase multiple life insurance policies is that it gives an individual the opportunity to address unforeseen financial liabilities or obligations that could develop in the future. Adding a child to the family, for example, will create new financial liabilities and responsibilities for the parents. Because of the flexibility that exists with insurance, the parents can easily buy additional coverage in order to adequate protect their new family addition.

Purchasing multiple life insurance policies is also a strategy used by individuals with enough financial means to do so in order to take capitalize on some sophisticated financial concepts. Purchasing a permanent as well as term life insurance policy simultaneously can give an individual sufficient protection for their financial liabilities that over time will decline. At the same time this ensures they will continue to have coverage.

You should always name actual family members as your beneficiaries rather than just allowing the proceeds from your life insurance policy to end up in your estate. A major advantage to death benefits on a life insurance policy is usually they get paid out to beneficiaries very quickly. Normally beneficiaries will be paid within 60 days of filing their claim. This avoids having to go through a lengthy probate court process along with your other assets that are part of your estate.

You can change your beneficiaries on your life insurance policy whenever you want to. However if there are important life changes such as divorce or death of your beneficiary, you do need to make sure you actually do remember to change your beneficiary. It’s possible for your survivors to challenge your named beneficiary. However the process is an expensive and lengthy one.

If you were thinking about getting life insurance, then the email you received from Oklahoma City-based Global Life and Accident Insurance might have caught your eye. With just a few clicks and no significant questions asked or medical exam required, you could cross get life insurance off your list, have provided your family with protection, and just made this week’s stupid investment.

Calling it a stupid investment is to highlight conditions and concerns that a security may not be the best choice for an average consumer out there. Legally and technically speaking, insurance is not an investment. However, many consumers do use insurance as an investment. It does involve the outlay of capital and the expectation of some form of return, which is financial protection for one’s family.

The Global Life policy, which was featured in several different places including the email that was blasted to American Online subscribers by the millions because the insurer is actually an AOL partner, demonstrates why even a simple term insurance policy can potentially be a poor choice for many consumers.

One of the major problems is this is a very simple insurance policy. In fact it’s about as easy as it gets in terms of what is available in the marketplace. All you need to do is click your mouse a few times and you instantly are covered, with hardly any questions asked at all.

The policy for term life insurance that Global Life is selling is very bare bones. There is no accumulation of cash value. That is one of the major reasons why it technically isn’t an investment. The policy is a straight forward type of protection: pay a premium and if you die your beneficiary gets paid. No medical exam is required and the company won’t reject you if you pay the first month premium of $1, and then the premium after that based on your state residence, age and other characteristics.

Having straight forward term coverage does have appeal. Without any investment or savings features to drive the cost of the policy up, your protection will remain intact as long as you keep your policy current by paying the premiums.

However, if you dig deeper into the policy you will discover that some of the fine print is not so appealing after all.

Whenever you purchase a life insurance policy that is one size for all, where an insurance company agrees to cover anyone who clicks on their email, or calls their telephone line, or answers their marketing pitch, the policy is going to be a high cost one. The actuarial assumptions and underwriting are that this isn’t the type of coverage you would agree to if you could enjoy significant savings elsewhere. Therefore the policy is priced and you are treated as though you have substantial health risks.

The policy offered by Global Life is term coverage. When you turn 80 years old the term ends. So if you live past the age of 80 your beneficiaries will get absolutely nothing. This differs from a policy that remains in place indefinitely for as long as the premiums are paid. What this also means is the death benefit is not guaranteed.

The policy in fact every month becomes less valuable but you still have to pay for the premium. The coverage offered by Global might be beneficial for a person who is in their fifties, however the closer an individual comes to reaching age 80, the odds of receiving a payout become less and less likely. Many individuals at that point will allow the policy to lapse.

None of these facts are mentioned in any of the paperwork. If you attempt to ask Global Life any questions about things such as the term’s length or cash value, you will probably discover just like I did when I tried to contact them, that the operators at the processing center will tell you that you need to call their customer service number for answers.

Then there is the issue of pricing.

Small dollar insurance coverage has a tendency to be expensive. Many insurance companies won’t issue policies with less than $50,000 of coverage. Oftentimes consumers will discover that they will be a lot better off buying double the protection. That is because the difference in cost between a $50,000 policy and a $100,000 policy are often fairly insignificant.

The coverage for the Global Life policy for a non-smoker male that was 50 years old had a monthly cost of $56.49. There are other insurance policies that I found with a cost of $48-$50 a month. The cost of buying insurance somewhere else would cost only about $100 a year. The $1 discount in the first month made up about half of the difference. Over time the difference would add up. Some inexpensive policies, more importantly, had cash value that built up which would guarantee a payout. That is the big difference.

The moral to our story is that purchasing life insurance is not a quick fix solution. Before buying any life insurance you need to read the terms of service very carefully. Purchasing life insurance should never be an impulse buy. Getting a free premium for a quarter or month should never get consumers to take their eyes off the higher lifetime costs of that insurance.

So before buying any life insurance be sure to check out all your available options. If it turns out that the broad sales pitch that you hear in a tv ad or get in an email is still the best option for you, when you finish your research the offer will still be available for you to take advantage of.

It concerns insurability and premium costs. When it comes to insurance, you will have to pay more for your policy the less healthy and older you are. This is basically common sense if you stop and think about it. For example, if a twenty year old would like to purchase a term policy for 30 years, the insurance company realizes that the policy is going to expire when the individual is only 50 years old. Statistically speaking the chances of the individual dying during the term is very low. If you compare that scenario with a 45 year old who wants to purchase a 30 year term policy, the insured individual is going to be 75 when the policy expires. There is a higher chance that this individual will die during the policy term, therefore the insurance company will charge a much higher premium because they have to assume a much higher risk.

The same scenario is true when it comes to the state of your health. When you are 25 years old you may be in great shape and not have any major medical conditions. Therefore an insurance company will be more willing to insure you because you because you haven’t developed major health issues yet. In ten to twenty years, you may end up developing health issues that potentially could render you uninsurable. What happens if you wait a couple years until you end up getting married or having children and then discover you are unable to provide them with the protection that they need due to the fact that you developed a health issue that you can’t control?

Here’s A Look at the Numbers

You may be wondering what the different in premium costs are for healthy individuals as they get older. Using quotes from a number of insurance companies here are some average numbers for a $500,000 30 year term policy with a non-smoking preferred status.

25 years old $525/year or $15,750 total cost
30 years old $550/year or $16,500 total cost
40 years old $810/year or $24,300 total cost
45 years old $1,420/year or $42,600 total cost

Between the ages of 25 and 30, there isn’t a big difference in how much the policy costs. However, if you wait 10 years and buy a policy at the age of 40, the cost is 47% higher and will cost you almost an additional $8,000 over the term of the policy. If you wait another five years, the premium cost is almost double and will cost you an additional $18,000. These numbers help illustrate how important it is to not wait to buy term life insurance. The earlier you can purchase your policy the more money you will save.

So should a 30 year old single individual rush out to purchase life insurance? Maybe. You need to take a good look at what your lifestyle and individual situation is to try and determine whether life insurance is something you are going to need sometime in your future. If you enjoy being single and don’t plan on ever getting married or having a family then you might not need to purchase life insurance. However, if you are 30 years old and in a serious relationship and hoping to settle down finally and possibly in a couple years have a family, then you should start to look at what your options are. Waiting just five years to buy life insurance, as you have seen, can really make a huge difference in the amount you will pay ultimately. Even if you pay for life insurance coverage for a few years without being married or having children, you could still end up saving yourself thousands of dollars. Don’t forget our worst case scenario. You could develop a health issue later on while you are waiting and then all of a sudden you won’t be able to obtain any life insurance or will have to pay such high premiums that it won’t be affordable to you.

What you need to do is analyze your situation to see if buying life insurance right now makes sense for you. If you happen to be in a committed relationship with marriage as a distinct possibility, the sooner you obtain coverage the less you will need to pay. On the other hand if getting married or having children isn’t on the horizon for you, then you may not need to get life insurance right now. You may have other ways you want to spend your money. It all depends on what your individual circumstances are.

When you are single, don’t allow life insurance to interfere with other financial goals that you have. If you are weighed down with debt, have large student loans to pay off, or need cash for other important things you may need to reconsider life insurance at this time. If it will take you longer to pay your high interest debt off, saving money on life insurance right now may not be worth it.

What’s the point if you don’t have any kids or aren’t married? Who would you be leaving your money to? When it comes to life insurance one of the great things is you can generally change your beneficiary any time. So initially if you aren’t married you can name someone else other than a spouse or child as your beneficiary. It could be your parents or brother or sister. You could even name your favorite charity as your beneficiary. That way if the worse case scenario happens and you should die before getting married or having children at least you know your money will be going to a good cause or to someone you care about. Then if you do happen to have children or get married you can just change your beneficiary on your life insurance policy.

Buying life insurance at a young age doesn’t make sense for every single individual. However, you should really consider the increased premium and total costs on a policy when you wait several years. There will be situations where it makes sense to buy a policy and there will be other situations where the savings still aren’t worth it due to other financial obligations or your personal situation. Just remember, when it comes to financial planning life insurance is a very key component so you should seriously consider it. Remember that in our example the policy was just simple $500,00 term insurance for someone who had excellent health. Other scenarios where there are health issues or higher coverage could potentially make the cost differences even more substantial when waiting only a couple years. In some cases you could save tens of thousands of dollars by buying a policy right away instead of waiting.

If you happen to be someone you has children and/or marriage on your future horizon, it might be a good idea for you to run a few quotes so you have a good idea of the type of savings you could enjoy from purchasing a life insurance policy early. You could discover that you wouldn’t save much from purchasing early or you could end up saving thousands of dollars. No mater what your numbers look like, taking a proactive approach is always a very good idea.

Life insurance applications generally have medical questions in either Part A or Part I of the application. These questions are usually answered either by you online or by your insurance agent with you present. Part B or Part II consists of a medical form that a physician or paramedical completes.

After your life insurance company or agent receives your application they will call a paramedical service specializing in mobile exams. They will provide the paramedical service with the insurance company name, the insurance amount being applied for, as well as information about you. A majority of paramedical professionals keep themselves current on underwriting requirements of the various insurers.

What is Involved in a Medical Exam
Most medical exams can be conducted in your office or home. A majority of paramedicals do carry supplies with them such as centrifuges needed for taking a blood sample. Some insurance companies may require the attending physician statement, or APS, to come from your personal physician. However a medical exam for life insurance cannot be conducted by your own personal doctor.

A paramedical will contact you in order to schedule an appointment. If you are unable to get an appointment schedule, there is often the option of visiting an insurer specified clinic. A medical exam is not something that is option. If you don’t have one conducted your application for life insurance will not be processed. The examining physician or paramedical is paid directly by the insurance company. You won’t be financially responsibly for either the medical exam or any necessary lab work that is conducted.

For a basic medical exam, a paramedical takes your medical history, weight and height measurements, pulse and blood pressure, and urine and blood samples. Depending on your insurance company, policy amount and your age there could be additional tests that are required.

MetLife, for example, for applicants that are 50 years old or older applying for $1 million or more in coverage orders the in-home EKG. For applications who are at least 70 years old applying for policies of $2 million or more, MetLife will forgo an exam by a paramedical and require that the exam be conducted by a MetLife selected M.D. The physicians asks the same questions that a paramedical would and gathers information on your pulse, blood pressure, weight and height. They also conduct a short medical exam.

A treadmill test could also be required the older you are and the higher the face amounts on the policy are. MetLife requires applicants who are 50 years or older applying for over $10 of life insurance to take a treadmill test. It’s also required for applicants at least 76 years old who are applying for at least $5 million of life insurance.

If you apply for a policy with a very low face value you may not even need to have a paramedical exam conducted. If you are 40 years old and apply for life insurance with a face value of $50,000, MetLife doesn’t required any specific measurements or tests. In certain circumstances MetLife will only request what is called the simple paramed exam that includes urine and blood work along with some basic measurements. It doesn’t include a list of paramedical questions. Test guideline vary depending on the life insurance company.

What are Life Insurance Companies Looking For?
What life insurance companies want to know is if there are any health conditions that you have that could potentially shorten your life, which increases the risk for the insurance company. When urine and blood samples are collected, they are tested for various things including antigens and antibodies to HIV; kidney or liver disorder; cholesterol and other lipids; diabetes; hepatitis antibodies; prostate specific antigens along with immune disorders. In terms of your urine sample, a routine analysis will be conducted, and screenings will be done for cocaine as well as other drugs and medications.

Blood can get drawn through either a needle or finger prick.

The results from your medical exam are sent directly over to the home office of your life insurance company and is reviewed by the underwriter. Usually you can request in a writing that you would like to have a copy of your exam results. Some insurance companies automatically send lab work results to you. If there is anything in the lab result that concerns you, you will need to consult with your personal physician.

An underwriter from your insurance company will review your application for life insurance along with the medical exam results. The underwriter will then determine your insurance rating. This sets the cost for your premium. If the underwriter has any further questions regarding your health, additional medical tests or information may be requested. If you unknowingly were terminally or chronically ill, which is an extremely rare event, your application for life insurance would be declined. At that point you would need to find life insurance that was guaranteed issue or a high risk insurance carrier.

If you are a smoker your life insurance premium cost will be higher due to the higher mortality rate for smokers. If there is any nicotine found in your test results, the insurance company will consider you to be a smoker. Even nicotine delivered via a transdermal patch can be detected by the test.

After Your Test Results
If the results from your medical exam correlates with the classification that was used with the premium rate quoted to you originally you won’t have any problems getting that same rate. If any medical problems are detected, a higher premium policy may be offered to you.

Risk ratings come in two types. There are flat ratings, or also known as temporary flat extras. There are also table ratings. In order to rate various health conditions, underwriters use an underwriting manual that is very tightly defined.

An underwriter, for example, may apply the flat rating in the short term for an individual who recently had surgery. A person that has high blood pressure, on the other hand, would probably get the table rating. Premiums are increased by set amounts when a table rating is used. In depends on your age and medical condition. If you don’t agree with your rating you can contact your agent. Your agent can challenge the rating. You may have to provide additional medical tests in order to prove that you are qualified to receive a better rating.

Your test results, even if you decide against the policy, becomes part of your individual record with the database of MIB Group, the clearing house for medical information shared by insurers. The information is stored for a period of seven years following your application for a critical illness, long term care, disability income, health or life insurance policy.

Around 470 insurance companies jointly own MIB Group. You need to keep n mind that if you shop around for life insurance that your medical information will be at the disposal of all the insurers. The database of MIB doesn’t contain your actual medical records. Instead it stores codes that present different medical tests and condition, hobbies that are hazardous or bad driving records.

If you would like to review your file with MIB or dispute any information that is contained within it, a free report can be obtained each year from MIB Group’s website.

Avoiding Insurance Medical Exams
Medical exams for life insurance are very routine. However if you want to avoid having to get a medical exam what you can do is purchase a policy that is a simplified issue one. These will only require you to answer a few basic medical questions. Or you can get a policy called the guaranteed issue. It doesn’t require medical questions or an exam. However, you should keep in mind that if your health is good or even if you do have some health issues, your rate will most likely be better if you purchase a policy that is underwritten. This will require you to undergo a medical exam. Policy rates for guaranteed issue and simplified issue insurance assume that you are a high risk applicant.

Tips For Better Exam Results
Many medical conditions cannot be covered up or masked. However here a few recommendations to help you get the best possible test result.

The night before taking your medical exam make sure to get plenty of rest

Don’t drink any alcohol at lest eight hours prior to taking your exam

Don’t drink soda, tea, coffee or other types of caffeinated drinks for one hour at least before taking your exam

Within 24 hours of taking your exam avoid engaging in any strenuous physical activities.

When it comes to life insurance, relying too much on what is provided by your employer may be detrimental and not sufficient to meet your individual and family needs. There are several reasons why the life insurance that is issued by your employer may not meet all of your needs.

Minimal Coverage Amounts
When it comes to employer-sponsored life insurance policies, the amount of coverage will vary from employer to employer. Many of these types of life insurance policies will only provide minimal coverage for their employees. The reason why this is the case is because employers many have many employees they need to cover and still keep their premium costs low. Many employees receiving life insurance coverage through their employer will discover that the payout they will receive is much less than if they purchase a life insurance policy on their own.

Not Tailored For Individual Needs

Life insurance polices that are issued by an employer may also be insufficient because they are geared towards large groups of individuals rather than meeting individual needs. A recipient of a life insurance policy from an employer doesn’t have as many choices for selecting the life insurance policy that will suit them and their needs best because the insurance policy is a large scale one rather than a single policy that is designed for one person.

Termination of Life Insurance Benefits
Another issue that some individuals may face that have employer-sponsored life insurance is that in the future the policy could end up ceasing to exist. The employee may leave the company to work for a different employer or the current employer could terminate the life insurance plan. If a life insurance policy is ended this could be detrimental for individuals who don’t have any backup policy in place or who are unable to get a new insurance policy quickly.

Availability of Insurance Funds
With employer-sponsored life insurance, it usually takes approximately 30 days following the individual’s death for the beneficiary to receive the death benefit. Life insurance that is offered through private companies generally pay out a lot faster than 30 days.

Those are several reasons why the life insurance that is provided through your employer may be insufficient for your individual needs. To prevent these types of issues from occurring, it’s a good idea to consider reviewing some potential alternatives instead of relying solely on your life insurance policy issued by your employer. This will help you determine if all of your individual and family needs are covered in terms of having adequate coverage and a life insurance policy that will protect you and your family in the future.

There is one method of charitable giving that offers individuals the opportunity to do much more for charitable organizations than people may think is possible, even for individuals with limited resources. This method is using life insurance as a way to give to charity. This method is simple, effective and beneficial to the charity as well as the donor.

To start the process all you need to do is apply for an insurance policy and then pay the premiums. You don’t have to set a trust fund up with all of the expenses that are associated with unless that’s something you would like to do. Gifting insurance doesn’t require the same constant attention that some other forms of investment do. There are several ways you can set up charitable gifts by using life insurance.

In the event that you should die or become disabled, life insurance can become a self-completing gift.

A bequest can be given on your death. The life insurance proceeds will be paid to your charity without any federal estate tax owed, whether you own the policy or the charity does.

Another way is to own the life insurance policy and name your favorite charity as the beneficiary on the policy. If you are concerned that the circumstances in your family could change, you can also name your charity as a contingent or revocable beneficiary. This still gives you control and flexibility. The proceeds from the policy will pass free of estate as well as gift taxes.

You can also give your favorite charity an existing insurance policy that you already own. Perhaps you own several difference life insurance policy. Each one could have been purchased during different phases in yor life in order to satisfy specific needs at the time, such as for your children’s education or a mortgage. Some of your needs might not be relevant anymore. You can give the policy to your favorite charity. You will be able to take a charitable donation deduction on your income taxes in the amount of the fair market value of the insurance policy at the time you transferred the policy to the charity. Any future premiums that you pay can are also deductible.

Another way of donating to a charity is to donate your insurance policy dividends if you receive them in cash. This is an economical and very easy way to make a charitable donation and get a deduction on your income taxes.

There are several reasons why using ife insurance for charitable giving is beneficial.

As long as the insurance premiums are paid, the death benefit is guaranteed, ensuring that your favorite charity will be paid. The amount the charity will be received is a fixed amount.

Using life insurance for gifting also means that you can give a larger amount than otherwise would be possible through installment payments. An individual can pay the premium cost, which is a relatively inexpensive annual expense and give their charity a much larger benefit in return. A larger gift can be given without diluting or compromising control of investments or a family business. Also assets that are designated for the family’s benefit can remain intact.

Gifting a life insurance policy is also a self-completing gift. What this means is if you become disabled or die the gift can still remain in place. Some insurance policies will waive the premium rider when an individual becomes disabled. Also upon your death, even if there has been just one premium payment made, the charitable organization will still get the full gift. Death benefit proceeds that the charity receives also are not subject to transfer costs, brokerage fees, administrative and probate costs. They also are not subject to estate or federal incmes taxes.

Giving a charity a large gift through life insurance, due to its contractual nature, cannot be effectively challenged by any unhappy heirs. There are no statutes limiting or prohibing gifts made through life insurance even when made within a short time of the donor’s death.

Substantial gifts made through the use of life insurance can also be kept private and confidential if you so choose. They are not part of your probate estate so there is no public record.

If you have been looking for a way to give back to your favoriate charitable organizations, life insurance is one of the most beneficial and affordable ways that you can do so.