21 Century Insurance

This post will tell you about 21 Century Insurance. In the insurance analysts say a further blow on the economy and a company with a remarkable history, Woodland Hills branch of the 21 Century Insurance decline to 750 jobs over the next 16 months than its predecessor, the newest, Farmers Insurance Group, the business cluster. Farmers Insurance, an additional of (ZFSG) Zurich Financial Services Group, bought 21 Century Insurance titan distress, American International Group, last July 1, 2010 for $ 1.9 billion. Since June 2010, Farmers Group has been looking for opportunities and ways to modernize operations. There were a number of areas where they saw a need to downsize because there were some redundancies.

Fifty-six offices and 979 employees employed in both buildings 21st Century Insurance in Woodland Hills, leases, were notified on 27 August that the company no longer needs its services. Three additional positions will be reduced on 4 September, another item is scheduled for removal on September 30 and 52 employees were scratched before October ends. The reduction would take place slowly, about once a month.

Farmers Insurance will nearly cut his recruitment in Georgia. In all, 1,200 agreements have been marked to cut some before the end of the year, representing 20 percent of the 21 personnel century. However, Century Insurance, 21: e to go elsewhere. Its acquisition has enabled farmer's insurance moves to the direct-to-consumer market, which dreams can help farmers to compete with multi-channel business alternatives, such as Progressive and Allstate. just visit: 21 Century Insurance

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Best Life Insurance Policy

 

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Life Insurance Is Key Component of a Family Financial Plan

NEW YORK, Nov. 10, 2010 /PRNewswire-USNewswire/ -- Life insurance policies offer essential financial protection for families, especially those with school-age children, against a rare but potentially devastating event, the premature death of a household's primary wage-earner. Yet a recent nationwide study found that the number of households covered by individual life insurance has decreased, according to the Insurance Information Institute (I.I.I.).



"You need life insurance coverage if you are the primary wage earner in a household, or if someone relies on you financially," said Michael Barry, the I.I.I.'s vice president, Media Relations. "And the premium payments are reasonable when you consider the level of protection a policyholder's beneficiaries receive."


According to LIMRA, its upcoming 2010 Trends in Life Insurance Ownership study indicates that 11 million U.S. households with children under the age of 18 have no individual life insurance policyholder in the family. LIMRA says in the same report that individual life insurance coverage in the U.S. has hit a 50-year low.

LIMRA does note that one in four U.S. households in 2010 had a wage earner who was covered under a group life insurance policy, often secured through their employer. The economic downturn of 2008 and 2009, however, has had an impact in this area, too, because these wage earners often lose their only life insurance coverage if they become unemployed or have their work hours reduced. 

In the absence of an individual or group life insurance policy, a deceased wage earner's spouse and school-age beneficiaries may need to rely largely on Social Security survivor benefits as their main source of income.

Those in the market for life insurance need to know there are two major types of policies: Term and Permanent. 

    * Term insurance is a form of life insurance that pays out only if the death occurs during the "term" of the policy, which is usually anywhere from one to 30 years. The premium rates for term policies are comparatively less expensive than they used to be, as Americans as a whole live longer and healthier lives.
    * If you are buying a short-term life insurance policy (under 10 years), look for renewal guarantees. A renewal guarantee gives you the right to start a new term after the current one ends. You will pay a higher premium based on your current age, but will not be required to undergo a new health exam nor submit any other "evidence of insurability." Without the renewal guarantee, you would have to start from scratch when applying for a policy and, if your health has deteriorated in the interim, you might end up paying significantly higher premiums or not getting coverage at all.
    * Permanent life insurance encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. Unlike term life, permanent policies remain in force as long as the premium is paid, and some policies accumulate a cash value. The premium rates for whole life policies have generally remained stable in recent years.


"Look for a policy that meets your needs," said Barry. "There are ways to save money when buying life insurance but they don't always involve paying a lower premium immediately."

The I.I.I. offers the following tips to maximize your life insurance dollars when buying a policy:

Before You Buy

1. Assess the quality of the company

An insurance policy is only as good as the company that backs it. You should make sure that the company that issues your policy will be around to service it and eventually to pay the death claim. There are several ratings agencies that assess insurance companies on their ability to remain financially sound over the long term. A rating represents an independent assessment of the insurer's ability to pay its claims on time and meet all its other financial obligations; reviewing these ratings can help you find a financially strong company. It is a good idea to look at at least two of the four leading ratings agencies: A.M. Best, Fitch, Moody's and Standard & Poor's. The I.I.I. also offers guidance on selecting the right life insurance company: How do I pick a life insurance company?

2. Look into group insurance

Consider participating in your employer-sponsored group life insurance program, even if you have to contribute to it financially. Policies available through the workplace often have the advantage of group rates and limited medical underwriting. Employers may subsidize their group insurance costs as well. It is worth exploring what is available to you through the workplace and comparing it to coverage available to you as an individual. In comparing group to individual life insurance, remember that if you have over $50,000 of group life insurance, the Internal Revenue Service (IRS) determines how much it costs to provide the amount over $50,000 and imputes taxable income for that cost. If you are in your fifties or older, or are buying larger amounts of life insurance coverage, it is worth taking these IRS rules into consideration.

3. Buy when you are healthy

Find out which rate class you will be grouped into and, if necessary, consider making some lifestyle changes—not smoking, maintaining a healthy weight and exercising regularly—to qualify for a more favorable rate class. Buy when you are younger and healthier, if possible. Older people and those not in the best of health pay steeply higher rates for life insurance, so buy as early as you can once you have dependents.

WHEN YOU'RE READY TO BUY

1. Don't Shop Around on the Basis of Price Alone:

While life insurance is a very competitive business, and you may find differences of hundreds of dollars in annual premiums among similar companies for the same face-value policy, it is important to consider the additional features that a policy may have as well as the insurer's overall reputation. The guaranteed cash value component of a higher-premium life insurance policy, for instance, may justify the additional expenditure on the policyholder's part. When comparing policies, Internet quotes and online research can be a good place to start. You can also ask an agent or broker to get you a premium estimate for several life insurance companies.

2. Look for premium discounts

Most companies offer rate discounts for specified insurance amounts. For example, you might actually pay a lower rate per dollar of coverage for $250,000 of life insurance than for $200,000, or for $500,000 of life insurance than for $450,000, because a discount kicks in at the higher insurance amount.

3. Beware of "fractional premiums"

Typically, you can pay your annual life insurance premium in a single payment, or in smaller amounts more frequently during the year. Although the latter method might seem easier, some companies add steep charges for paying premiums in installments.

Program gives life insurance to working-poor families

Education has long been recognized as a path toward economic improvement. A global financial services company aims to safeguard academic opportunities for children in low-income families, a U.S.-based global financial services company offers their breadwinners free, 10-year term life insurance policies with a $50,000 face value.

Through a program called LifeBridge, MassMutual Financial Group, of Springfield, Mass., offers the policies to low-income families to pay for their children's education expenses if the family's primary breadwinner were to die. The death benefit can be used to repay student loans.

Since launching LifeBridge in 2002, MassMutual has written more than 11,400 policies worth $575 million for low-income families across the nation, program director Cindie St. George said. She said it intends to award $1 billion in policies.

"In 2002, we realized there are a lot of people who couldn't afford life insurance but needed it," she said. "We wanted to combine our focus on philanthropic service with one of our primary products: life insurance."

The program has paid 13 claims to date, St. George said.

The company partners with local community groups such as churches and charitable organization like United Way to host application drives. The LifeBridge policy requires the insured person to be employed full or part time, with total family income ranging from $10,000 to $40,000.

For families surviving paycheck to paycheck, life insurance has become a low priority on household budgets. According Limra, a global firm that provides research to insurance and financial services companies, ownership of individual life insurance policies in this country has hit a 50-year low.

Only 44 percent of U.S. households have individual life insurance policies. Among households with children under age 18, which arguably have the greatest need for life insurance, 11 million families have no life insurance coverage.

Marvin Feldman, president and CEO of the Arlington, Va.-based Life Foundation, said for children who lose a parent, the LifeBridge insurance policies can make the difference between being able to attend college or not.

Life Foundation is a consumer education, nonprofit organization that educates consumers on the importance of having life and health insurance, but does not sell any products or endorse any companies.

Feldman called the LifeBridge program "unique in the insurance industry," adding that it's "absolutely legitimate, and there is zero cost to the families."

Life Foundation also offers college scholarships called Life Lessons to young adults financially affected by the death of a parent or guardian who did not have life insurance. This year, it awarded 59 scholarships totaling $105,000, Feldman said.

While the Life Foundation scholarship funds only college educations, the MassMutual insurance policy can be used to pay any education expenses including admission to preschool, private schools, trade schools and college, as well as for computers and other tools used for education.

Life insurance– what to buy and avoid

Let’s face it – dealing with life insurance is a drag. Just thinking about it makes you ponder some unpleasant possibilities, and insurance sales pitches are the definition of boring. Plus, who wants to write a check every month for something they hope they never use?

Yes, life insurance is a drag – until it pays off. In truth, insurance is a powerful, essential financial planning tool for most people. A CFP® professional can help assess your insurance needs and recommend policies that meet them. Among the issues to be addressed when considering life insurance:

Do you need life insurance?

Maybe not. If you have no dependents, life insurance is optional.

But if you have a family that counts on your income, life insurance is a must-have. You won’t really understand this until you have children. I remember racing to get a policy signed before the first big trip I took after my first son was born. I didn’t want to get on an airplane until I knew my family’s financial future was protected.

How much insurance do you need?

Your life insurance benefits should replace 100% of your income for at least as long as you plan to work. If you are 30, and expect to retire at 65, you need a policy that will replace 35 years’ worth of earnings. Here’s a simple rule of thumb to calculate the amount of insurance you may need: Take your annual income and multiply it by 18. Example: Let’s say your income is $50,000, multiply that by 18, and you get $900,000. This is a good place to start.

HINT: You may also want to add any significant debts to this number that you would like your family to be able to pay off, i.e. the mortgage balance or the future cost of education. 

What type of policy should you buy?

TERM! Term insurance is simple and straight-forward. You decide on an amount and how long the coverage should last. Typical intervals are 10, 20 or 30 years. Term is the least expensive type of life insurance, especially if you buy it early. The cost of term coverage goes up every year that you wait to purchase a policy.

Ask your agent about a “renewable” term insurance policy. Such a policy may allow you to maintain coverage if you suffer a life-threatening illness when the original policy is coming to an end.

Where should you buy your policy?

It’s easy to purchase insurance online. But because life insurance is such an important financial tool for your family, I think you should sit down with a reputable life insurance professional. Ask your friends, neighbors or co-workers for referrals. Stick with highly rated life insurance companies.

What should you avoid?

Don’t buy “mortgage life insurance.” Such policies protect the mortgage company, not your family.

Never buy “whole life insurance.” Salesmen pitch these policies as an investment, but they are expensive and not efficient for investors. You will do better purchasing inexpensive term insurance and investing what you save in premiums on a good dividend-paying stock index fund, such as the Vanguard Dividend Appreciation Index Fund.

Tax and life insurance

Premiums paid by the policy owner are normally not deductible for federal and state income tax purposes.

Proceeds paid by the insurer upon death of the insured are not included in gross income for federal and state income tax purposes;[6] however, if the proceeds are included in the "estate" of the deceased, it is likely they will be subject to federal and state estate and inheritance tax.

Cash value increases within the policy are not subject to income taxes unless certain events occur. For this reason, insurance policies can be a legal and legitimate tax shelter wherein savings can increase without taxation until the owner withdraws the money from the policy. On flexible-premium policies, large deposits of premium could cause the contract to be considered a "Modified Endowment Contract" by the Internal Revenue Service (IRS), which negates many of the tax advantages associated with life insurance. The insurance company, in most cases, will inform the policy owner of this danger before applying their premium.

The tax ramifications of life insurance are complex. The policy owner would be well advised to carefully consider them. As always, the United States Congress or the state legislatures can change the tax laws at any time.

Taxation of life assurance in the United Kingdom

Premiums are not usually allowable against income tax or corporation tax, however qualifying policies issued prior to 14 March 1984 do still attract LAPR (Life Assurance Premium Relief) at 15% (with the net premium being collected from the policyholder).

Non-investment life policies do not normally attract either income tax or capital gains tax on claim. If the policy has as investment element such as an endowment policy, whole of life policy or an investment bond then the tax treatment is determined by the qualifying status of the policy.

Qualifying status is determined at the outset of the policy if the contract meets certain criteria. Essentially, long term contracts (10 years plus) tend to be qualifying policies and the proceeds are free from income tax and capital gains tax. Single premium contracts and those run for a short term are subject to income tax depending upon your marginal rate in the year you make a gain. All (UK) insurers pay a special rate of corporation tax on the profits from their life book; this is deemed as meeting the lower rate (20% in 2005-06) liability for policyholders. Therefore a policyholder who is a higher rate taxpayer (40% in 2005-06), or becomes one through the transaction, must pay tax on the gain at the difference between the higher and the lower rate. This gain is reduced by applying a calculation called top-slicing based on the number of years the policy has been held. Although this is complicated, the taxation of life assurance based investment contracts may be beneficial compared to alternative equity-based collective investment schemes (unit trusts, investment trusts and OEICs). One feature which especially favors investment bonds is the '5% cumulative allowance' – the ability to draw 5% of the original investment amount each policy year without being subject to any taxation on the amount withdrawn. If not used in one year, the 5% allowance can roll over into future years, subject to a maximum tax deferred withdrawal of 100% of the premiums payable. The withdrawal is deemed by the HMRC (Her Majesty's Revenue and Customs) to be a payment of capital and therefore the tax liability is deferred until maturity or surrender of the policy. This is an especially useful tax planning tool for higher rate taxpayers who expect to become basic rate taxpayers at some predictable point in the future (e.g. retirement), as at this point the deferred tax liability will not result in tax being due.

The proceeds of a life policy will be included in the estate for death duty (in the UK, inheritance tax (IHT)) purposes, except that policies written in trust may fall outside the estate. Trust law and taxation of trusts can be complicated, so any individual intending to use trusts for tax planning would usually seek professional advice from an Independent Financial Adviser (IFA) and/or a solicitor.

 

Types of life insurance

Life insurance may be divided into two basic classes – temporary and permanent or following subclasses - term, universal, whole life and endowment life insurance.

Term Insurance

    Term assurance provides life insurance coverage for a specified term of years in exchange for a specified premium. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.

There are three key factors to be considered in term insurance:

   1. Face amount (protection or death benefit),
   2. Premium to be paid (cost to the insured), and
   3. Length of coverage (term).

Various insurance companies sell term insurance with many different combinations of these three parameters. The face amount can remain constant or decline. The term can be for one or more years. The premium can remain level or increase. Common types of term insurance include Level, Annual Renewable and Mortgage insurance.

Level Term policy has the premium fixed for a period of time longer than a year. These terms are commonly 5, 10, 15, 20, 25, 30 and even 35 years. Level term is often used for long term planning and asset management because premiums remain consistent year to year and can be budgeted long term. At the end of the term, some policies contain a renewal or conversion option. Guaranteed Renewal, the insurance company guarantees it will issue a policy of equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time. Some companies however do not guarantee renewal, and require proof of insurability to mitigate their risk and decline renewing higher risk clients (for instance those that may be terminal). Renewal that requires proof of insurability often includes a conversion options that allows the insured to convert the term program to a permanent one that the insurance company makes available. This can force clients into a more expensive permanent program because of anti selection if they need to continue coverage. Renewal and conversion options can be very important when selecting a program.

Annual renewable term is a one year policy but the insurance company guarantees it will issue a policy of equal or lesser amount without regard to the insurability of the insured and with a premium set for the insured's age at that time.

Another common type of term insurance is mortgage insurance, which is usually a level premium, declining face value policy. The face amount is intended to equal the amount of the mortgage on the policy owner’s residence so the mortgage will be paid if the insured dies.

A policy holder insures his life for a specified term. If he dies before that specified term is up (with the exception of suicide see below), his estate or named beneficiary receives a payout. If he does not die before the term is up, he receives nothing. However, in some European countries (notably Serbia), insurance policy is such that the policy holder receives the amount he has insured himself to, or the amount he has paid to the insurance company in the past years. Suicide used to be excluded from ALL insurance policies however, after a number of court judgments against the industry, payouts do occur on death by suicide (presumably except for in the unlikely case that it can be shown that the suicide was just to benefit from the policy). Generally, if an insured person commits suicide within the first two policy years, the insurer will return the premiums paid. However, a death benefit will usually be paid if the suicide occurs after the two year period.

Whole life coverage

 Whole life insurance provides for a level premium, and a cash value table included in the policy guaranteed by the company. The primary advantages of whole life are guaranteed death benefits, guaranteed cash values, fixed and known annual premiums, and mortality and expense charges will not reduce the cash value shown in the policy. The primary disadvantages of whole life are premium inflexibility, and the internal rate of return in the policy may not be competitive with other savings alternatives. Also, the cash values are generally kept by the insurance company at the time of death, the death benefit only to the beneficiaries. Riders are available that can allow one to increase the death benefit by paying additional premium. The death benefit can also be increased through the use of policy dividends. Dividends cannot be guaranteed and may be higher or lower than historical rates over time. Premiums are much higher than term insurance in the short term, but cumulative premiums are roughly equal if policies are kept in force until average life expectancy.

Cash value can be accessed at any time through policy "loans" and are received "income-tax free". Since these loans decrease the death benefit if not paid back, payback is optional. Cash values support the death benefit so only the death benefit is paid out.

Dividends can be utilized in many ways. First, if Paid up additions is elected, dividend cash values will purchase additional death benefit which will increase the death benefit of the policy to the named beneficiary. Another alternative is to opt in for 'reduced premiums' on some policies. This reduces the owed premiums by the unguaranteed dividends amount. A third option allows the owner to take the dividends as they are paid out. (Although some policies provide other/different/less options than these - it depends on the company for some cases)

Universal life coverage

 

Universal life insurance (UL) is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for greater growth of cash values. There are several types of universal life insurance policies which include "interest sensitive" (also known as "traditional fixed universal life insurance"), variable universal life (VUL), guaranteed death benefit, and equity indexed universal life insurance.

A universal life insurance policy includes a cash values. Premiums increase the cash values, but, the cost of insurance (along with any other charges assessed by the insurance company) reduces cash values. However, with the exception of VUL, interest is credited on cash values at a rate specified by the company and may also increase cash values. With VUL, cash values will ebb and flow relative to the performance of the investment subaccounts the policy owner has chosen. The surrender value of the policy is the amount payable to the policyowner after applicable surrender charges, if any.

Universal life insurance addresses the perceived disadvantages of whole life - namely that premiums and death benefit are fixed. With universal life, both the premiums and death benefit are flexible. Except with regards to guaranteed death benefit universal life, this flexibility comes at a price: reduced guarantees.

Depending on how interest is credited, the internal rate of return can be higher because it moves with prevailing interest rates (interest-sensitive) or the financial markets (Equity Indexed Universal Life and Variable Universal Life). Mortality costs and administrative charges are known. And cash value may be considered more easily attainable because the owner can discontinue premiums if the cash value allows it.

Flexible death benefit means the policy owner can choose to decrease the death benefit. The death benefit could also be increased by the policy owner but that would (typically) require that the insured go through new underwriting. Another example of flexible death benefit is the ability to choose option A or option B death benefits - and to be able to change those options during the life of the insured.

Option A is often referred to as a level death benefit. Generally speaking, the death benefit will remain level for the life of the insured and premiums are expected to be lower than policies with an Option B death benefit.

Option B pays the face amount plus the cash value. If cash values grow over time, so would the death benefit which is payable to the insured's beneficiaries. If cash values decline, the death benefit would also decline. Presumably option B death benefit policies require greater premium than option A policies.

 

Life insurance

Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount (at regular intervals or in lump sums). There may be designs in some countries where bills and death expenses plus catering for after funeral expenses should be included in Policy Premium. In the United States, the predominant form simply specifies a lump sum to be paid on the insured's demise.

The value for the policyholder is derived, not from an actual claim event, rather it is the value derived from the 'peace of mind' experienced by the policyholder, due to the negating of adverse financial consequences caused by the death of the Life Assured.

Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; for example claims relating to suicide, fraud, war, riot and civil commotion.

Life-based contracts tend to fall into two major categories:

    * Protection policies - designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.
    * Investment policies - where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the US anyway) are whole life, universal life and variable life policies.

Parties to contract

 

There is a difference between the insured and the policy owner (policy holder), although the owner and the insured are often the same person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured. The policy owner is the guarantee and he or she will be the person who will pay for the policy. The insured is a participant in the contract, but not necessarily a party to it. However, "insurable interest" is required to limit an unrelated party from taking life insurance on, for example, Jane or Joe.

The beneficiary receives policy proceeds upon the insured's death. The owner designates the beneficiary, but the beneficiary is not a party to the policy. The owner can change the beneficiary unless the policy has an irrevocable beneficiary designation. With an irrevocable beneficiary, that beneficiary must agree to any beneficiary changes, policy assignments, or cash value borrowing.

In cases where the policy owner is not the insured (also referred to as the celui qui vit or CQV), insurance companies have sought to limit policy purchases to those with an "insurable interest" in the CQV. For life insurance policies, close family members and business partners will usually be found to have an insurable interest. The "insurable interest" requirement usually demonstrates that the purchaser will actually suffer some kind of loss if the CQV dies. Such a requirement prevents people from benefiting from the purchase of purely speculative policies on people they expect to die. With no insurable interest requirement, the risk that a purchaser would murder the CQV for insurance proceeds would be great. In at least one case, an insurance company which sold a policy to a purchaser with no insurable interest (who later murdered the CQV for the proceeds), was found liable in court for contributing to the wrongful death of the victim