Life Insurance Lowdown

Are you in the federal service and nearing retirement age? If yes, have you considered how to factor life insurance into your retirement planning efforts? If not, it probably is time to begin thinking about it. Here are a few things on the Federal Employees’ Group Life Insurance program that I found while surfing.

One of the most common questions people ask is how much FEGLI coverage they are allowed to keep in retirement. According to experts, the amount of basic FEGLI you will carry into retirement is based on your salary on the day you retire. You are eligible to continue basic insurance or have it reinstated if you meet certain requirements. Govexec.com reports:

If you are eligible to continue or have reinstated basic insurance, you also are eligible to continue or reinstate optional insurance, as long as you meet the requirements listed above. Your optional insurance initially will be the same value as you had on the last day of employment.

Read more: Life Insurance Options

Insurance giant Met Life is probably contemplating moving quite a few of its employees back to Manhattan, five years after it announced it was relocating them to Queens. Met Life is expected to sign a deal to move most of its 1,700 New York employees from Long Island City to Midtown. Ny1.com reports:

In 2001, the city gave the company millions in tax breaks to keep it in the city after it threatened to move to New Jersey. The city had hoped to create an affordable business district in Queens as an alternative to Manhattan.

Read more: Met Life Insurance Company Plans To Move Back To Manhattan

The Guardian Life Insurance Company of America recently introduced the Guardian Gold Series — a new generation of life insurance for three generations of people. This new set of policies is expected to meet the needs of just about everyone from parents who want to fund their kids’ education in college and university to youngsters who want to begin on a strong financial foundation early in life. There are also policies for seniors who wish to leave a legacy for their heirs. The company claims that these new policies have been designed to work very efficiently at different stages of life for a variety of economic situations.

That remains to be seen. But what interested me was a policy that goes by the name of Whole Life Paid-Up at age 121. Interesting isn’t it? And the best thing is that it aims to address the needs of people who are living longer than ever before. This policy is issued through age 90 and offers security and tax advantages to the policyholder. This can be an especially good option for early Baby Boomers who may not be able to afford other more costly and unviable options. The L121 policy was designed to be affordable, also giving it great appeal for younger individuals who wish to begin developing their long-term goals and need a plan that suits their goals and budgets.

Then there is an all-purpose policy called Whole Life Paid-Up at age 99. This is for people who may not be young, and are not yet of retirement age. If you take an L99 policy, you’ll be able to maximize long-term performance and get significantly high cash values after 20 years or more. The best thing about the plan is its flexibility. With this policy, you can build and conserve wealth for business continuation plans, estate planning, or even supplement your retirement income.

For those who desire quick cash accumulation, whether it’s accessing cash values to cover the cost of tuition, mortgages, college loans, or other expenses, Whole Life Paid-Up at age 95 maximizes cash values in the early years. Business owners can leverage the value of this asset on the balance sheet, or use it to insure key executives.

I know this is the last thing on your mind — that is if you haven’t thought of it at all — when contemplating marriage. Thinking how marriage could affect your insurance is definitely not at the to of your list when you are taking your wedding vows. Well, maybe once the dust has settled, you could examine your policy because insurance needs to be a priority. There are the basics like name and address changes that need to be considered. In addition, you also need to take some more steps to ensure that your insurance is marriage-ready.

One of the first things you must do is update all policies to add the new spouse. In case you feel your present policy is not good enough, go ahead and purchase another one. For instance, you may want to broaden your life insurance to include your spouse and to raise the policy value. You may need to change beneficiaries on existing life and annuity policies. While in most states, your spouse is automatically your beneficiary it is still best to change.

While there are many people who will vouch for a term life insurance over a whole life policy, there are others who beg to differ. According to them, a term life policy is like renting a home — in the beginning, renting is much cheaper, but in the long run buying is cheaper. Pensacolanewsjournal.com reports:

Term programs really only have one advantage over cash value policies. That advantage is the price. Term insurance is typically much cheaper than whole life insurance, a permanent-level insurance protection from policy issue date to the death of the insured…However, with term insurance, after the term is over, expect the price to increase significantly.

Read more: Select life insurance that fits your needs

Look at the paradox here: Today, it is becoming increasingly difficult to keep yourself healthy thanks to the rising cost of health care and of health insurance policies as well. However, life insurance has become cheaper than ever before. And most insurance firms are not sure how long this downfall will continue! Just look at these figures: In 1990, a healthy 40-year-old man would have paid $1,405 a year for $500,000 in insurance for a 20-year period. That same policy now costs less than $400!

If you are healthy, you could save money by replacing the older insurance with a new 10-year term policy for $525 a year or a new 20-year term policy for about $1,000 a year. The savings are even higher for policies for $1 million or $2 million in coverage. However, about 24 million U.S. households have no life insurance, according to recent research. Consumers cite a number of reasons for not taking insurance including plain laziness, confusion and concerns about cost. And nearly 20 percent say it is ‘unpleasant to think about dying’!

Did you know that there are nearly 68 million Americans without life insurance coverage. A bigger problem is that those who do have insurance are often grossly underinsured, setting their families up for financial disaster if tragedy were to strike. Hispanicbusiness.com reports:

"If you don’t own life insurance or haven’t recently reviewed your coverage, September is the ideal time to set aside excuses, stop procrastinating and meet with an expert to determine if your family is adequately protected,” said Sigi Pazos, spokesperson for Life and Health Insurance Foundation for Education (LIFE) . “Remember, life insurance isn’t really for you — it’s for those who depend on you. Having the right amount and type of life insurance in place guarantees your loved ones will be ok financially, no matter what tomorrow brings.”

Read more: September’s Life Insurance Awareness Month Calls Attention to the Need for Financial Protection

This is a really shocking tale of greed. But it is more a story of how, despite rules and regulations, a determined thief can steal. Recently, Bobbi Jo Fritz, 48, of Pigeon admitted she took nearly $1 million from senior citizens’ life insurance accounts. She pleaded guilty to four felony counts of uttering and publishing checks for more than $20,000 and one count of embezzlement of more than $20,000. So how did she manage to siphon off so much money?

Fritz took the money from the life insurance policies of five Huron County senior citizens over the past 10 years while she was employed at Armbruster Farm Bureau Insurance Agency, authorities said. She changed the victims’ addresses on the accounts, then had checks sent to a post office box she had set up. Mlive.com reports:

Farm Bureau Insurance was unaware of the missing money until August 2005, when a family member of one of the victims noticed changes made to the victim’s life insurance account.

Read more: Woman admits taking money from life insurance policies

A question: How many of you knew that September was designated Life Insurance Awareness Month (LIAM)? Let’s be honest… you didn’t — am I right? Honestly, I feel this is where the problem lies — I mean there are so many uninsured people in the country today that it has become a matter of national importance. And yet, the people planning this awareness month did little to remind us about the fact that THIS was the month! No, I’m not splitting hair. Yes, there is quite a bit of information out there about life insurance and the need to get it. In a country like America where everything is large sized, it is necessary to create hype and a noise to get attention — at least that’s my opinion.

So, fine, we are into the month now and what’s there in store for us? According to recent reports, more than 100 of the nation’s leading insurance companies and industry groups are throwing their support behind an educational campaign. The nonprofit Life and Health Insurance Foundation for Education (LIFE) is coordinating this campaign, which will focus on coverage needs.

LIFE has roped in Olympic gold medallist and sports commentator Scott Hamilton, a cancer survivor whose mother died when he was just a teenager, to be this year’s spokesman. I guess they couldn’t have gotten a better spokesperson than Scott who has lived through some really difficult situations and, hence is perfect to speak about understanding your needs and planning for the eventualities of life.

However, they may need to do more than just creating awareness about the need for life insurance. Getting Americans to take action is a challenge — people have just too many reasons to NOT take life insurance including an unwillingness to think of mortality. I’ll keep you updated about the programs planned for this event and if you do know something, please do pass it on to me.

There are myriad reasons for you to get life insurance and yet the number of people without insurance is appalling. Why? Because of some false beliefs… we need to address these issues so that you make an informed choice. Theopenpress.com reports:

You feel there’s no need or reason to have it. Sometimes this is true. You’re 20 years old and single. Maybe not today. But let’s say you have a family or loved ones that would be hurt financially if your income wasn’t there. In that case you would agree that you do need it and want to have life insurance.

Read more: Reasons to get (or not to get) life insurance