By Michelle Matlock, Life Quotes, Inc.

Everyone knows that a  life insurance policy protects your loved ones if you should die prematurely, but you may not be fully aware of everything a life insurance policy has to offer. There are many ways you can use the proceeds of a life insurance policy, and not all of them are immediately obvious. You may find the following list surprising.

Cash to meet daily living expenses. Life insurance can help maintain household bills such as  your mortgage, utilities and car payment, coupled with groceries and other necessities. Brian Ashe, spokesperson for the LIFE Foundation, says that the general rule of thumb is to purchase a policy with a death benefit that is 10 times your annual income.

“Life insurance has to be sufficient enough to replace 60 to 75 percent of the policyholder’s pre-death income,” says Ashe. “The money has to last the family a long time, or at least until the youngest children become self-sufficient.”

For example, if your income is $100,000 annually, in order to provide income to your family that is equal to the lifestyle they are accustomed to, Ashe suggests purchasing a policy with a $1 million death benefit. Nevertheless, Ashe notes that in recent years, some insurance experts have raised that number to 12 to 15 times the policyholder’s annual income.

“The current interest rate environment is the reason behind the increase,” explains Ashe. “When interest rates are lower, your interest-earning capabilities will also be lower, so you’re going to need more capital. The money generated by the life insurance benefit can only be invested safely in a stock instrument that has a much lower rate of return, so you have to compensate by having a larger pool of money in the death benefit.”

When you purchase a term life insurance policy or a whole life insurance policy, the policy remains contestable for several years following the issue date. In simple terms, if the insurance company receives a claim shortly after the policy was issued, the company has the right to rescind the policy or deny a claim if fraud is suspected.

If you should die while the policy is contestable and under questionable circumstances, the insurance company will thoroughly investigate the claim before they will release any proceeds to your beneficiaries, explains Edward E. Graves, insurance expert and author of “McGill’s Life Insurance.”

An insurance denial based on the contestability clause is far more common than you think.  Even celebrities and the distribution of their life insurance proceeds to loved ones are under the scrutiny of the life insurer if something  happens to them before the contestability period ends.  A good example of this is actor Heath Ledger.

In Ledger’s case, he died of a drug overdose in January 2008—just seven months after he bought the policy. This would be an instant red flag for an insurance company.  His insurance company initially refused payment and claimed his death could have been a suicide, even though it had been ruled accidental. The company eventually settled the case for an undisclosed sum.

Although Ledger insured himself to the hilt with a $10 million policy, his life insurance company tried to toss those proceeds out through the contestability window after his death. As a standard part of any life insurance policy, the two-year contestability clause gives an insurer the right to challenge or even refuse a claim.

The contestability clause provides the insurance company with a window of time where it can dispute the validity of the contract if they suspect fraud, concealment or misrepresentation on the insurance application. If the life insurer has not rescinded or terminated the policy after the contestability period, they cannot rescind the policy or deny a claim.

“They can if they so desire, if they think that the circumstances are such, contest a death benefit up until two years after the issue date,” says Brian Ashe, Treasurer of the Life and Health Insurance Foundation. “Once they get beyond two years they can’t, so the contestability clause and the suicide clause begin all over again when they get a new contract.”

If Ledger’s case had been ruled a suicide, the company would’ve had the right to refuse payment to his beneficiaries because he died within the two-year contestability period. Likewise, if there had been any inaccurate or missing information on his application, the company could have denied payment to his beneficiaries even if the information had no impact on his death.

On the other hand, If Ledger had died after two years of buying that policy, the contestability clause would’ve no longer been in effect and payout would’ve been granted automatically—regardless of the manner of his death or any other issues.

The contestability clause is an often-overlooked part of life insurance, as few buyers would say they expect to die within then next two years. The Ledger case offers an example of why it’s important to understand its potential impact before buying a policy—and to be clear on how this issue is handled by a company and the policy it provides.

It’s worth your time to always ask about contestability clauses before buying a term life insurance policy since every contract and insurance company has different ways of handling the payout period of a death benefit.

“It’s important for customers to understand the contestability clause and what the provisions in the contract are in case the policyholder dies during that period,” says David Theile, Director in Life/Health Product Management at State Farm. “This insures they understand what circumstances might cause a death benefit not to be paid.”

This article was originally published by Life Quotes, Inc.

By Life Quotes, Inc. Staff

Volunteering to help a country that was struck by a major disaster is a noble gesture, but it could also put an individual’s life at risk.

The Centers for Disease Control and Prevention issued a warning against those planning to visit Haiti to join in recovery efforts after the country was struck by a 7.0 magnitude earthquake in January 2010.  Since then, nonessential travel to the nation should be avoided, according to travel warnings as recent as August 2011, issued by the U.S. Department of State Bureau of Consular Affairs.

The earthquake destroyed its capital, Port-au-Prince, and left 315,000 individuals dead. Aftershocks caused further damage. Many members of the international community came together to provide humanitarian aid and take part in relief efforts at hospitals and communication centers only to find that the dangers of traveling to Haiti may not be worth the serious risks involved.

At this time, assistance may do more harm than good, according to warnings from the CDC and U.S. State Department.

Since the earthquake, U.S. citizens have been victims of random violent crimes including murder and kidnapping in Port-au-Prince. There have been reports of U.S. citizens being attacked and robbed after leaving the airport. The Haitian Police and UN Police can only provide limited protections to Americans and other members of the international community because of escalating civil unrest in the Port-au-Prince area.  Even the U.S. Embassy in Haiti has implemented a curfew for their staff members not to travel into certain areas after nightfall.

Last year Haiti was further impacted by a massive cholera outbreak, which dramatically reduced access to adequate medical care at the remaining medical facilities that have been providing treatment after the outbreak.  The State Department reports that U.S. citizens in search of medical care have been forced to pay for medical evacuation to the U.S. because medical facilities have been stressed to the limit.

“Many medical facilities have been operating beyond maximum capacity, and the current sanitation situation poses serious health risks,” the warning says. “The U.S. Embassy’s ability to provide emergency consular services is limited, and the U.S. government has discontinued evacuation assistance.”

The CDC recommends those wanting to help Haiti and other areas struck by natural disasters to consider making a donation to a reputable charitable organization instead.

Individuals who visit an unstable country that poses a serious health risk may want to invest in a life insurance policy to protect the financial well-being of any dependents they would leave behind in the event the unthinkable happens.

This article was originally published by Life Quotes, Inc.

By Michelle Matlock, Life Quotes, Inc.

Although there have been medical advancements that have helped to prolong the lives of HIV patients, finding life insurance coverage for HIV infected individuals continues to be elusive. In recognition of World AIDS Day on December 1, 2011, Life Quotes, Inc. takes a look at life insurance options for those living with HIV.

According to the most recent statistics by The Henry J. Kaiser Family Foundation, the number of new HIV infections in the U.S. reached 56,300 in 2006.  The number of people living with HIV/AIDS was 1.1 million, with 468,000 of those individuals living with AIDS. The U.S. Department of Health and Human Services reported in 2007, that the largest number of new HIV/AIDS diagnoses for persons aged 40 to 44 accounted for 15 percent of all HIV/AIDS diagnoses in that year.

Respectively, the use of antiretroviral (ARV) Therapy or highly active antiretroviral therapy (HAART) such as protease inhibitors with a combination of other HIV drugs have extended the life of those living with HIV by slowing the progression of the disease to full-blown AIDS.  A study by the National AIDS Treatment Advocacy Project in New York and the ATHENA National Observational Cohort Study in February 2010 found that the average life expectancy of people living with HIV has been extended from seven years (before 1995) to 24 years — if they follow the proper drug therapy regimen. This includes those who take their medications on a regular basis and maintain a healthy lifestyle.

If men really are from Mars and women from Venus, then clearly the sexes are galaxies apart in their perspectives about money.

“I’m a big believer in premarital counseling for discussions about money,” says Dr. Joseph Guse, Marriage and Family Therapist, at The Psychology Center, Inc., in Chicago, Ill. “If you don’t share the same philosophy about money, at least you’re going to learn to agree to disagree. It’s a huge mistake to think you can change someone’s view of money.”

“Financial pressures are one of the main stresses couples face today. Having money like a fully funded emergency fund can create a feeling of security and a lack of money may cause fear,” says Brandt Spesshardt, CFP, and Partner at Steward Wealth Strategies.

One partner may have a checking, savings or investment account, but may have neglected to name his or her spouse as the owner or beneficiary. In the event of an unexpected death, or divorce, deciding how life insurance money is distributed could become complicated.

It’s important to plan for the unexpected problems that can occur. For example, what happens when one spouse has a medical condition?

A 2009 study illustrated the the potential for divorce based on money matters.

“If you know there is a health problem going into a marriage, you have probably done some insurance planning,” says Jack Dewald, Immediate Past Chairman of the Life and Health Insurance Foundation for Education (LIFE). “You should take an inventory of that before you take on more financial obligations.”

Creating a household budget and financial plan can help couples get a good grip on expenses. Establishing a set day and time each week to openly discuss finances is a good starting point.

Because two heads are generally better than one, there is an advantage to a husband and wife working together as a team. Couples can create a budget together to meet their financial needs and plan ahead.

“Couples need to have a plan that is mutually agreeable,” advises Spesshardt. “I recommend couples take a financial course together, like Financial Peace University and Crown Financial. There are many great classes at local community colleges as well as at many churches.”

Determining finances as a team better enables a couple to bounce ideas off of each other and brainstorm the most efficient ways to save money. Splitting the workload can be more efficient, making it easier for couples to thoroughly research insurance policies best suited to their needs.

“Couples should make sure they have enough term life insurance to protect their family members that are financially dependent on them. Mortgage payoff, income replacement, future college funding and medical expenses are some of the areas that need to be considered when calculating the amount needed,” says Spesshardt.

How can a couple work together to prevent a breakup over finances?

“It’s something that requires work like every aspect of a marriage,” says Guse. “Have some very open discussions about what the goals are and just the physical act of writing goals down goes a long way to help not pull in two different directions.”

This article was originally published by Life Quotes, Inc.

A history of heart disease won’t necessarily flatline your chances of obtaining life insurance at reasonable rates, insurance experts say, provided you have the condition under control and you’re following doctor’s orders.

Take “Jeff” for instance. Obese and a smoker, he needed a bypass and a couple stents to keep his arteries open. His doctor told him to lose 100 pounds and kick the habit if he wanted to live, relates his insurer, Ryan Pinney, a brokerage director with Pinney Insurance Center Inc. in Roseville, Calif. Jeff lost 140 pounds, stopped smoking and takes his cholesterol medicine faithfully.

“I was able to get him life insurance at a preferred rate,” Pinney says. “He’s healthier now than he was back then.” A preferred rate would cost around $60 for the same policy that would cost $100 at a standard rate, he says.

Dr. Robert Pokorski, chief medical strategist for The Hartford’s Individual Life Division, says in general, life insurance can be offered six months after bypass, angioplasty, or use of stents, usually at a small to moderate additional premium.

To learn more about the national impact of heart disease, the the Centers For Disease Control and Prevention has tracked incidences of heart disease by state.

When it comes to purchasing life insurance, there are a number of policy choices available that can match your needs without hurting your pocketbook.

Life insurance companies price their policies very competitively, so if you do your homework and keep your options open, finding a good deal on a life insurance policy shouldn’t be hard. Here are some common tips you can use to reap savings on life insurance.

Don’t purchase the wrong policy. Choosing the right policy that fits your needs is more important than you might think.

Term life insurance is generally the better bet for people who just want basic insurance protection because the premium is affordable.

“Term insurance is initially the least expensive form of life insurance you can buy,” says Brian Ashe, CLU and spokesperson for the LIFE Foundation. “A young family just starting out can get a lot of term insurance for a relatively low premium.”

But keep in mind, once your term expires you will likely need to look for a new policy. If you purchase a new term life insurance policy, the premium will go up based on your age and health status. For example, if you compare a the cost of a term policy for a 20-year-old male to the cost of a male above age 50, the male over 50 could be paying three to five times more for a term life policy than his younger counterpart.

If you decide that term is the best policy for you, you might want to think about purchasing a policy with a “guaranteed renewal” or “annual renewable” term. This means that the policy automatically renews on it’s own and you won’t be required to take another medical exam. This can be helpful especially if you become ill or find yourself with a pre-existing medical condition during the duration of the term. Still, like most term policies, the premium price goes up every consecutive year during the life of the policy.

Also, consider Return of Premium (ROP) term life insurance. “You pay premiums for 20 or 30 years and if you don’t die by the end of the term your premiums will be refunded,” explains Al Lurty, Senior Vice President and Head of Business Development for ING. “The premiums cost more but in the long run this type of policy can help you save money in addition to providing insurance protecting for you and your family. Premiums can range from one to three times as high.”

Ashe recommends that once young families are able to do so financially, they should convert all or a portion of their term life insurance policy to permanent life insurance.

Alzheimer’s is a progressive disease of the brain that strips its victim of the ability to communicate, perform simple tasks and remember loved ones. It causes behavior problems and eventually renders the victim unable to speak or control movement. It is always fatal with no known cure, according to the Alzheimer’s Association.

Despite the bleak prognosis, it is possible to get life insurance after diagnosis, according to Ryan Pinney, a brokerage director with Pinney Insurance Center Inc. in Roseville, Calif., but it will come at a premium price, depending on the severity.

“From an insurance company’s perspective, we look at the prognosis of the disease and the progression…  A person may have a very mild form of the disease, and with medication can survive many years,” Pinney says.

Alzheimer’s usually strikes the elderly, with 5.1 million Americans age 65 and older who currently have the disease, according to the Alzheimer’s Association. It affects more women than men, only because women live longer and not because gender is a factor, the association says, and the number of people who have Alzheimer’s is expected to grow as the baby boomers age.

It also affects a smaller number of younger people. About 200,000 people in their 30s, 40s and 50s have early-onset Alzheimer’s, which has the same symptoms and prognosis as Alzheimer’s. Mayo Clinic reports that it’s very uncommon for people to develop the disease in their 30s or 40s, and it’s far more common to see it develop in people who are in their 50s. Unlike Alzheimer’s, it often runs in the family and is linked to three genes. Like with Alzheimer’s, doctors diagnose the disease after ruling out other possible medical conditions.

Pinney says anyone with Alzheimer’s will be rated, with no possibility of getting the less expensive preferred plus, preferred or even standard policies. He says those with early-onset Alzheimer’s would have a more difficult time getting insurance than older persons because 30-year-olds have different pricing models.

“A younger client’s typical pricing is not as expensive as that of an older person because they tend to live longer. This is not built into our pricing guidelines,” Pinney explains. “Table ratings take care of this, but at a certain point insurance companies may say it is not worth it to insure that person.”

Pinney says insurance companies have about 12 to 16 tables on which they rate clients before declining them, each of which is a certain percentage more expensive than the standard rate. He says someone with a very mild form of Alzheimer’s that is progressing slowly would be given a Table-2 rating—at the very least. A Table-2 rating would cost 50 to 100 percent more than a standard policy ($150 to $200 compared to $100 per month). If the disease has progressed to the mid-range, the person would be rated at Table 4 to 6, which would cost 200 to 400 percent higher.

“If the disease becomes more severe, the person could be rated at Table 8 or higher, with a 400 percent to 800 percent increase in premiums. Some companies will go as high as Table 16, but most would decline a person at that point,” Pinney says.

He says most insurance companies will wait six months to a year after diagnosis before considering someone and will look at the client’s medical records, including use of medications, when determining their rating.

He says potential clients would be asked medical questions such as whether there is a history of certain medial problems in the family, including Alzheimer’s. Healthy people in their 20s with a family history of early-onset Alzheimer’s would have that information included in their rating.

“They wouldn’t get preferred best, but perhaps preferred or standard,” Pinney says.

Early-onset Alzheimer’s symptoms

In early onset Alzheimer’s symptoms begin to appear before age 60, even as young as 30 or 40. Similar to late-onset Alzheimer’s, these are some of the signs to look for, according to the Cleveland Clinic.

• Memory loss
• Confusion
• Restlessness
• Misplacing things
• Trouble performing familiar tasks
• Change in personality
• Poor or decreased judgment
• Impaired communication
• Inability to follow directions
• Emotional apathy
• Social withdrawal
• Problems with language

This article was originally published by Life Quotes, Inc.

Insurance companies do not discredit the role of a stay-at-home spouse, and you shouldn’t either. Where else can you find one person to do multiple jobs simultaneously—and on call—24 hours a day?

Enter the modern day stay-at-home spouse—this term is no longer limited to just women. What’s more, according to the U.S. Census Bureau, 5.1 million mothers and 158,000 fathers were stay-at-home parents in 2008, with the number of mothers decreasing from 5.3 million in 2008, and fathers increasing from 140,000 in 2008.

But even though a stay-at-home spouse is not the primary breadwinner of the family, they play an invaluable role to the household and should be counted for life insurance. Ryan Pinney, director of Affinity Marketing at Pinney Insurance Center, Inc., says not enough families have life insurance… and this includes non-working spouses.

A recent study by LIMRA showed that only 44 percent of U.S. households own an individual insurance policy, which represents a 50-year low. In addition to this, nearly 30 percent of households have no coverage at all. When so many either do not have life insurance or are falling short of having enough life insurance, it’s comforting to know that there’s something families can do to protect themselves— even if one parent stays home to manage the household.

“The industry has changed how it sees stay-at-home spouses, or non-working spouses, and has recognized the big economic loss if that person were to die,” Pinney says, noting that non-working spouses is a misleading term, considering the work a homemaker really does. “Within the last few years, more and more carriers will allow spouses to get the same coverage as the primary breadwinner up to a certain point. Not every company is on the same page, but many will generally offer up to $1 million in coverage.”

Unfortunately, many stay-at-home spouses still remain without life insurance. Pinney suggests that this may be because their contribution to the family is not as much of a consideration because it’s not tangible income for the family. It is possible that many people only think about insuring their income.

This article was originally published by Life Quotes, Inc.