Month: March 2015

Common Life Insurance Mistakes

Common Life Insurance Mistakes

People obtain life insurance to replace their primary source of income in case the unthinkable happens to the primary source of income in the family. It’s a kind of safety net that the policy holder wants to have for their beneficiaries. Unfortunately, some people unwittingly commit errors when getting a policy. Here are a few common life insurance mistakes you should be aware of.

Increasing Rates

For the initial coverage period, which typically lasts 10 to 15 years, the premium on a term-life policy remains fixed. After this period however, the insurance company will send you an invoice stating a premium which is much larger than what you’re already paying. This may come as a shock. Even more so if you didn’t read the fine print in your original life insurance contract or if you haven’t reviewed your life insurance policy recently.

When this happens, you can submit an updated medical history and negotiate for a lower rate. Alternatively, you can opt out and just cancel the policy.

Not Updating Beneficiaries

Among the most common life insurance mistakes is not updating beneficiary designations. This is the form you submit to let insurance companies know who gets the proceeds of the policy. Not everyone knows that this can and should be amended based on life changes.

Beneficiaries should be updated in case you get a divorce, your original beneficiary dies or you get married. Essentially, any significant changes in your life should be followed by an update in your beneficiaries. This is to avoid legal problems after you pass away.

Going for the Cheapest Policy

Insurance policies can get quite expensive which is why some might be tempted by the cheapest policy available. What most don’t realize is that the cheapest policies are often the most restrictive. Read between the lines and you’ll find out that not all policies are created equal.

For instance, some term life insurance policies can be converted to a permanent policy while many cannot. Some policies have better conversion privileges than others so make sure to understand exactly what’s included in your term life insurance policy.

Single People Don’t Need It

If you’re single and think you don’t need insurance, think again. The simple truth is that even those without a family still have expenses after death. Many single people commit the mistake of not having life insurance coverage and not reviewing their options. Single people still need to be covered if at least to pay for their final expenses and any personal debt they may carry. This is particularly true if someone else has co-signed for debts including school debts, car loans, etc.

Borrowing from the Policy

Tax-free loans and withdrawals can be borrowed against your policy. It’s a great benefit that produces good results as long as it’s done properly. When your policy runs out of money however, everything you’ve taken out becomes taxable.

When this happens, you can continue making premium payments to maintain your policy. The takeaway here is to manage your policy’s cash value. Consult with a tax advisor to get advice on how to avoid tax liability and costly life insurance mistakes.

Group Insurance

Getting insurance from professional organizations isn’t necessarily a bad thing. However, you should know that there is a hidden cost to going this route. Maintaining the policy often requires your continued participation in the group which may itself require annual dues.

One more thing is that membership fees may go up. In effect, the cost of maintaining the policy goes up even though the premium remains the same. This is one of the life insurance mistakes that end up costing people more.

Forgetting Estate Tax

For policy owners who are also the insured, the proceeds are considered part of the taxable estate. If this amount exceeds the tax-free amount and it’s left to a charity or anyone that’s not your spouse, it is subject to estate tax.

To avoid this tax on the proceeds, you can assign the family member who will receive the proceeds as the policy owner. Use your yearly gift tax exclusion as a way for the policy owner to pay for the premiums.

Getting life insurance should be a well-thought process. This is why it’s important to compare as many quotes as possible. To avoid the most common life insurance mistakes, read the fine print and be sure you understand the terms. Making an informed decision is still the best way to get the right policy for you. If you need further assistance in selecting the right life insurance policy for you, contact us today.

Myth Busting: What You Should Know about Vaccinations

Myth Busting: What You Should Know about Vaccinations

If you’re like the majority of parents, you’ve probably had your kids vaccinated according to your doctor’s recommendations and your state’s requirements for specific vaccines for schoolchildren. However, according to recent vaccine data obtained by USA Today, nearly one in seven public and private schools have measles vaccination rates below 90 percent.

In some states—such as Arizona and California—vaccination rates at some schools drop below 50 percent. Health officials have speculated that misinformation is the problem, leading to a minority of parents that believe the health risks of vaccination outweigh the benefits. If you’ve been tempted to joint them, consider these busted myths first.

MYTH: Vaccines are dangerous.

MYTH: Vaccines are dangerous.

FACT: No medication is 100 percent risk-free, and neither are vaccines. However, most vaccination side effects are mild (such as redness and swelling at the injection site), and are far less unpleasant than the symptoms caused by vaccine-preventable diseases. Severe allergic reactions to vaccination are extremely rare.

While some anti-vaccination groups insist that the diphtheria/tetanus/pertussis (DTP) vaccine can cause brain damage and sudden infant death syndrome, research has not proven a DTP/SIDS link. And according to the Centers for Disease Control and Prevention and other research organizations such as the Institute of Medicine, any concern that the ingredients used in vaccines can lead to autism is unfounded.

MYTH: A few unvaccinated kids won’t cause a problem.

FACT: Immunizations protect the children who get them from contracting specific diseases. However, the presence of unvaccinated children and adults increase the total disease risks within a community. They can contract the infection and pass it along to other unimmunized individuals—including kids who are behind on their vaccination schedules and those who cannot be vaccinated because of medical problems. Pregnant women and babies are also at greater risk.

MYTH: We’ve wiped out many of these diseases in the U.S. so there’s no point in vaccinating against them.

FACT: If the recent “Disneyland Measles Outbreak” has proven anything, it’s that you never know when a previously eradicated disease is going to crop up again. History has shown that a decrease in vaccination rates always leads to an increase in disease rates. Until we’re able to eliminate diseases like diphtheria, polio and measles from the entire planet, immunization of our children will continue to be necessary.

MYTH: You don’t need vaccines if you practice good nutrition.

FACT: While feeding your child a nutritious diet may make it more difficult for her to catch the common cold, eating well will not provide disease-specific protection. The only way to get that is to challenge your child’s immune system with a specific virus in the form of a vaccine. This will stimulate it to produce the appropriate antibodies. Not all the kale, quinoa and vitamin C in the world can do that.

Of course, kids with certain health problems may legitimately have a reason to skip certain vaccines. The easiest way to determine if your child is in a high-risk group is to ask his physician. In general, immune deficiencies, seizure disorders, neurological problems, certain food allergies and drug sensitivities will require additional evaluation before you settle on an immunization plan.