Life Insurance Blog | Efinancial

Financial Reform In Plain English

  

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 As the Financial Times put it, “Buried in those 1,300 pages are numerous clauses and sub-clauses, many of which have been largely ignored until now (partly because they strike most non-financiers as pretty dull). Yet, the fine print could turn out to be crucial in the coming years, in terms of shaping how banking is done.”

 Even the subtitle of the bill is lengthy. Namely, to “promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bail-outs, to protect consumers from abusive financial services practices.”

 Congress should be committed to plainly-worded rules and plainly thought-out principles that will ensure we come out of the debate with the kind of easily understandable financial reform that will focus minds and deeds.

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

  

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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!

Life Insurance is More Than Just a Death Benefit

  

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“The recession has been a wake-up call for many Americans, exposing weaknesses in people’s long-term financial plans,” says Northwestern Mutual Vice President, David Simbro. “With life expectancy at an all time high, the average American should be financially prepared to live well beyond traditional retirement age. And the recent hike in unemployment levels has likely left many without their group life insurance. The good news is that, in addition to providing a death benefit, individual life insurance is a flexible asset that can plug existing holes in many financial security plans. This flexibility makes it an attractive tool in both good times and bad.”

Although life insurance is most often purchased to provide a death benefit, many consumers don’t realize that the cash value of a permanent life insurance policy grows tax-deferred over time and is guaranteed to increase in value each year, never going down.

Permanent life insurance is designed to last your entire lifetime, like “owning” the protection, while term insurance is more like “renting” the protection for a limited period of time. You build equity when you “own” your insurance, just as you do when you own a home, and can be certain that the protection will be there when you need it.

The benefits:

Liquidity. Permanent life insurance can act as an alternative when you need access to cash. The cash value that builds each year in your policy can be used in a variety of ways, such as funding an education, starting or expanding a business or providing a supplemental income stream in retirement.
Flexibility. Permanent life insurance can be used to meet your needs as they evolve over your lifetime. To protect a young family, it is there in the event of death. Later in life, the same policy can be used to help pay estate taxes, leave a legacy to those you care about, or help fund an unexpected expense or opportunity.
When assessing the role of life insurance in long-term financial security planning, it’s also wise to consider who you will be working with.  Efinancial custom matches your insurance needs with reputable companies who have a history of strength and stability, such as those with Efinancial’s high insurance financial strength ratings from the four major agencies: Fitch Ratings, Moody’s Investor Services, Standard & Poor’s, and A.M. Best.

Financial security is about more than growing and managing your assets; it’s about growing, managing and protecting your assets. Now is the time for people to look beyond mere investments to be sure they’re adequately managing risk.

Forbes: General Electric Pays Less in Taxes than You Do!

  

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Forbes.com reported that last year,  the GE conglomerate generated $10.3 billion in pretax income but ended up owing nothing to Uncle Sam. In fact, the corporation recorded  a tax benefit of $1.1 billion!

Avoiding taxes is nothing new for General Electric. In 2008, its effective tax rate was 5.3%; in 2007, it was 15%. The marginal U.S. corporate rate is 35%.

How did it happen? And would changing the laws that allow corporations to shift their profits overseas while keeping their losses at home on American shores — for tax purposes, of course —  fill up the federal coffers and reduce America’s debt?

According to Forbes, GE’s tax return is the largest the Internal Revenue Service deals with each year — about 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission  is more than 700 pages long.

Inspecting those documents, you’ll find that GE in effect consists of two divisions: General Electric Capital and everything else. That everything else — the maker of engines, power plants, TV shows and more — would have been taxed at a 22% rate had it been a stand-alone company.

It’s GE Capital that keeps the overall tax bill low. Over the past two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009) and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely.

It’s the tax benefit of overseas operations that is the biggest reason many multinationals end up with lower tax rates than ordinary American citizens. It makes sense that multinationals “put costs in high-tax countries and profits in low-tax countries,” says Scott Hodge, the president of the  Tax Foundation.

“When you add in state taxes, the U.S. has the highest tax burden among industrialized countries,” says Hodge. In contrast, China’s rate is 25%; Ireland’s is just 12.5%.

Corporations are getting smarter — not just about doing more business in low-tax countries but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, such as patents and software.

As a result, figures tax economist Martin Sullivan, companies keep about $28 billion a year out of the U.S. Treasury by engaging in so-called transfer pricing arrangements. In such an arrangement, a tech company, for example, could license an overseas subsidiary’s software to its U.S. parent company in return for handsome royalties (which get taxed at lower overseas rates).

Close that loophole and America’s deficit can start moving in the opposite direction.

Tax Day Freebies!

  

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Tax bite got you down?  Sink your teeth into a free taco from Taco Del Mar on April 15 when you share your name, email, and zip code. You can opt out of getting their newsletter anytime.

Did tax preparation keep you up late?  Get a free cup of coffee to stay alert at Starbucks when you bring in your own reusable mug on April 15.

Whether or not your tax return has a sweet deduction, you can take home two free cupcake bites from Cinnabon from 6 p.m. to 8 p.m. on April 15. While supplies last.

To help put you back in the chips, select Subway restaurants are offering free cookies on April 15. Your local store and mileage may vary.

In the Southeast, select Whole Foods stores are making April 15 a tax-free shopping day. So far stores in AL, GA, NC, SC, and TN are participating. Check Whole Foods website for details on the April 15 event.

For a less taxing deal on life insurance, both this day and all year long, get a free life insurance rate quote from Efinancial.

Happy Tax Day, readers! Now enjoy your just desserts!

Can Soldiers Get Life Insurance in Time of War?

  

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American Optimism Is On the Rise!

  

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Northwestern Mutual’s Optimism Barometer Suggests Americans Have Adjusted to the Near-Term Challenges of the ‘New Normal,’ and are Increasingly Optimistic About their Long-Term Prospects

These results suggest that Americans are, in increasing numbers, accepting the reality of the ‘New Normal’ while also being able to see beyond the immediate challenges of the current economic cycle and remain optimistic about their long-term prospects, said Northwestern Mutual. “We find it encouraging that Americans appear to be widening their time horizons and bringing a long-term approach to how they pursue their goals. It’s something at the very core of what we believe in, and aim to deliver through our process; and it’s a strategy that also has broad applications beyond finances in people’s lives.”

The Optimism Barometer consists of six short questions that take less than a minute to complete. The questions were culled from The American Reality Study, which was commissioned in 2009 by Northwestern Mutual to help provide insight into how Americans are handling the economic, political, and social changes taking place in the United States; and to gain valuable perspectives on the way people view their lives and their future.

In the first quarter of 2009, only 25 percent of Americans scored between 8-10 (out of 10) on the optimism scale. Today, nearly 40 percent (39.7%) scored between 8-10, representing a 60% year-over-year increase in people at the highest end of the scale.

Additionally, it is not only the most optimistic among us that saw increases. Optimism shifted up in all categories, leaving only 2.4 percent of total respondents in the “least optimistic” category (0-4 on the optimism scale) versus 19 percent last year.

Art, Wine, Furniture: Insured Investments You Can Live With!

  

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Each of these tangible investments shares more than investment-grade appreciation in common. The valuables  all must be insured to protect their worth against theft, loss, or damage.

TrustandEstates.com’s Wealth Watch writes: “While neither art nor insurance may be at the top of your to-do list, it’s wise to make sure that you have insured that Babe Ruth autographed baseball, wine collection or Georgia O’Keefe paintings of awe-inspiring value.”

Check that any valuable collectibles are fully covered for crimes, fire, flood, breakage and natural catastrophes, including hurricanes, earthquakes, tornados and wind damage. You also want to make certain they’re covered if they happen to travel anywhere. That way if anything happens to these precious items, you’re a hero.

When there are just a few antiques and other collectibles worth a measly few thousand dollars, they can be covered simply via a rider on a homeowner’s insurance policy. A Civil War memorabilia collection worth $5,000, for example, may cost as little as $21 per year, according to State Farm Insurance Companies.

But a homeowner’s policy may not be appropriate to insure millions of dollars worth of fine art and collectibles. “Specialized insurance may be best. A homeowner’s policy has exclusions and deductibles, warns Janece White, assistant vice president of Chubb Group of Insurance Companies in Warren, N.J. When you have separate coverage, those issues aren’t a concern. Look to Efinancial for  free insurance quotes for everything you’re protecting against loss, including you!