Ideas, tips and news about life insurance and the uses of life insurance

From a Scripps Howard news article today about life insurance ownership and using gifts. It says in part: “Planning for ownership of life insurance is important in attempting to eliminate or minimize taxes on the estate of the insured person. Such planning primarily involves lifetime gifts of the ownership of life insurance policies in order to remove the death proceeds from the insured’s gross estate for federal estate tax purposes.”

I recommend reading this article.

There’s an interesting article at Indystar.com regarding whether one should have mortgage life insurance.

The article states in part: “Simply put, if dying puts a hardship on your family because of your debt, reduction of income or lack of assets, insurance is needed. Most families probably would experience all three hardships. Therefore, proper planning for those events is the foundation of anyone’s financial plan. Paying off the mortgage is just one way insurance proceeds can be used. Now let’s answer the question that may be on everyone’s mind: “Should I sign up for the plan that is attached to my mortgage?”

Though it is easy to sign up, you need to read the proposal thoroughly before making your decision. It also is recommended that you take the time to review the costs versus setting up your own personal insurance plan.

These days, life insurance can be more flexible and less costly than the mortgage insurance plans that are being offered. The term insurance marketplace has many options you can use to design your own plan to retire the mortgage if something were to happen to you or your spouse.

In a nutshell, before you check that box that would provide mortgage insurance to pay off your house if you die, do some research. You may find the costs and flexibility of your own personal plan to be more appealing than other alternatives.”

I agree with this article. It’s important to take care of one’s family financial obligations and in case of death with adequate life insurance. It’s not just the mortgage but also making sure that there’s enough cash to create enough principal to invest and replace one’s income.

You can get some help by following this link, “How much life insurance should I have?” Also, it’s very likely that you can get life insurance less expensively or with a better design (mortgage life insurance decreases along with the mortgage) by checking life insurance quotes.

There was a recent article on Business Week Online with the above title. Unlike a lot of articles I see about insurance there was a lot to agree with here. There were two key areas that concern the area of life insurance.

First: Mortgage insurance or mortgage life insurance. From the article: “Mortgage Insurance Many new home owners will receive an offer for mortgage insurance right after the ink dries on the closing papers. The offers say a certain loan amount will be protected “in case of an unexpected tragedy.” It’s essentially a life insurance policy that pays the mortgage if you die. So the value of the insurance itself could go down as your mortgage is paid off…….”

My comments: First of all it’s a good idea to have life insurance to insure against your debts and obligations and for most people their mortgage is their largest debt. The problem with “mortgage life insurance” as is described in the article is that it reduces in benefit as the mortgage goes down. Today if you want a 20 or 30 year term life insurance policy you can get a level benefit, without decreases, usually at a lower price than the mortgage life insurance.

The second area to comment on is credit life insurance. Here’s what the article said: “Credit Life and Disability: When you buy or lease a car, the dealership will try to sell you this needless policy to make a few extra bucks. Again, this is basically a life insurance policy that will pay off your monthly car loan if you die or become disabled. “Credit insurance is a rip off……..”

My comments: Again, this is correct. Get your life insurance at low cost in your own policy. These credit life policies are very high priced. One possible exception is if you’re completely uninsurable because of medical history and the credit life is issued without any medical questions on a guaranteed basis, then you might consider it.

In most cases, by going to an online life insurance quotes site you can search the market for term life insurance on your own and get quotes right there. On the lifeinsure.com site this process is also anonymous until (or if) you decide to purchase.