Change in Procedure Is Good News for Beneficiaries
Nationwide Financial Services Inc. and several other major insurance companies, including MetLife, Prudential Financial and Manulife Financial’s John Hancock division, committed to changing practices after an investigation established that many insurance policy beneficiaries did not receive the death benefits they were owed. And this will come as welcome news to individuals who have or are considering life insurance.
Nationwide and other major insurers agreed to change the way they previously identified deceased policy holders and to actively seek out beneficiaries who, because of a long-standing insurance industry practice, failed to receive death benefits. Nationwide also paid $7.2 million to the insurance departments of seven states participating in the investigation.
A death benefit is the amount a life insurance company pays a policy holder’s beneficiary upon the policy holder’s death. In the past, most life insurance policies made it clear that beneficiaries are responsible for notifying the insurer when an insured person dies. However, many beneficiaries didn’t realize this. As a result, thousands of people did not receive benefits.
A task force led by Florida Insurance Commissioner Kevin McCarty found that a number of life insurance companies failed to pay out more than $1 billion in death benefits as a result of the procedure that required a policy holder’s beneficiaries to file a claim after his or her death.
Nationwide, as well as other major insurance companies, will now check their lists of policyholders against the U.S. government’s death database and have committed to tracking down beneficiaries of customers who have died. From the end of 2011 to mid-October 2012, Nationwide had identified 4,747 unclaimed death benefits and paid out $144 million to beneficiaries.
Individuals with life insurance policies – or those contemplating the purchase of policies – can now be certain that their beneficiaries will receive the death benefits they are entitled to … whether or not they file a claim.
Boomers Want to Be Boss Before Finally Retiring
It’s never too late to pave the path you want for yourself – and many baby boomers are taking this to heart when it comes to working beyond retirement.
In fact, 54% of workers plan to work beyond age 65, according to the recent 13th Annual Transamerica Retirement Survey – but many won’t be in their old jobs. An increasing number of boomers are planning to become small-business owners before turning the page to retirement.
Whether it’s starting freelance consulting work, opening a specialty business or buying a franchise, taking on a new challenge seems to be on a lot of boomers’ minds.
There are a number of attractive reasons boomers want to become small-business owners, including being one’s own boss, making more money, and having a sense of personal accomplishment and pride.
But, while the benefits go on and on, there’s a list of things to consider before jumping the gun and starting up a business at this stage of one’s life. And experts warn boomers to think long and hard about these key issues before making their stop on the road to retirement:
- Personal finances. Finding a balance between saving for retirement and investing in a business can be tricky.
- Financing your small business. Positive cash flow is critical for success.
- Have a plan. Set goals and follow up with a plan to achieve them.
- Remember you will retire eventually. Develop a sound succession plan to ensure the continued success of your business.
Resolution Woes? Get Inspired Here
Each new year means making a list of the same old resolutions. And never looking at the list again. Perhaps considering traditions in other countries may help inspire you to follow through on some of those oh-so-familiar resolutions.
Want to increase face-to-face interactions and get to know your neighbors better? Do what they do in Scotland. Shortly after midnight, neighbors visit each other and pass on well wishes in a tradition called “first footing.” The Scots also celebrate the new year with Hogmanay, a time of midnight games, food and general merriment.
The Japanese can inspire you to keep your house organized, finances balanced and relationships stable. New year’s traditions in this country include making sure their homes are clean and debts paid. Most important, they forgive old grievances and start fresh in the new year.
In the Netherlands, purging the old and getting ready for the new happens in the streets. People burn old Christmas trees to show they are getting rid of the old.
You could get rid of your old ways too; try keeping your resolutions this year.
Start 2013 Off Right With a Health Insurance Checkup
Why not start off this new year with a health insurance checkup?
Over the past few years, there have been significant changes in our approach to health care. The Patient Protection and Affordable Care Act (ACA) was passed into law in 2010, and some provisions have already been implemented, but there are many ACA changes still to take effect.
Most important, the majority of Americans will be required to have some form of health insurance by January 1, 2014.
You may want to start now to investigate your options and become aware of the ACA provisions that are relevant to you and your family. (For example, one key provision may make it easier to obtain coverage with pre-existing conditions.)
So step one in your review is to examine the impact of the ACA. Set up a time to consult with your insurance professional, who can help guide you through the complexities, or research the ACA yourself at www.healthcare.gov/law/features.
As part of your review, you may also want to revisit your health insurance plan. If your marital status has changed or your family has expanded, you should look closely at the benefits and make changes as required.
Also ensure your insurance company or employer has your updated information on file (including your new address, if you’ve moved).
While the ACA changes the approach to health care, it’s clear there’s a place for individual responsibility. Start the new year off right and make sure your health insurance plan still works for you.
The ACA Gears up for Major Changes in 2014
The health care landscape changed for Americans with the signing into law of the Patient Protection and Affordable Care Act (ACA). When it was introduced in 2010, the ACA brought with it a new approach to health care and a commitment to affordable health care for everyone.
Over the past three years a number of important initiatives have been taken. For example, people with pre-existing conditions, who previously had found it very difficult to obtain coverage if they had cardiovascular disease, diabetes or many other chronic illnesses, now have access to coverage through temporary Pre-Existing Condition Insurance Plans (PCIP). In 2014, these programs will end, as those suffering chronic conditions will be guaranteed coverage in the open insurance market.
Actions undertaken in 2012 include
- In August of last year, more than 12 billion Americans received insurance premium rebates of approximately $150 per family.
- A new user-friendly form was introduced, making it easier for consumers to compare co-pays and out-of-pocket costs for different insurance plans.
For 2013, the Act is implementing
- Improved coverage for preventive care through the provision of extra funds to Medicaid programs that support preventive care programs at minimal cost. This took effect on January 1, 2013.
- Also effective January 1, the government is funding an increase to primary care doctors, who will now receive no less than 100% of Medicaid rates for primary care services.
- The Children’s Health Insurance Program (CHIP) will provide states with two additional years of funding for coverage of children who are not eligible for Medicaid, effective October 1, 2013.
In 2014, several major changes will be implemented, including the requirement that most Americans will have to have health insurance or pay a tax penalty. The act allows for health care exchanges that offer affordable private insurance coverage to individuals and small businesses, expanding everyone’s options.
Annuities May Offer Tax Advantages over Cash Equivalents
When looking at lower risk/return investment options, such as cash equivalents and fixed annuities, you will need to consider the tax implications. If taxes are a concern, a fixed annuity may be a better option than a cash equivalent. Here’s why:
Earnings on cash equivalents, such as money market accounts and certificates of deposit (CDs), are taxable in the year the interest is earned. And that’s the case even if you don’t withdraw the money.
With fixed annuities, earnings accumulate tax-deferred. They are not treated as taxable income until they are withdrawn, giving you some control over when you pay taxes.
In addition, fixed annuities may help reduce the taxes you pay on other income, such as Social Security benefits. How? By leaving your money in a fixed annuity, you may be able to reduce your taxable income to a level below the point where you would otherwise start to owe taxes on these benefits.
On your death, an annuity’s death benefit will be paid directly to your named beneficiary, avoiding the costs and delays associated with probate, while a CD may be subject to probate unless you specify otherwise by making the account payable on death.
Whatever your choice, you will incur taxes – remember, earnings inside a fixed annuity are subject to income tax when paid out, while the earnings in a CD have already been taxed when earned – but when saving for the long term, it helps to have the power of tax deferral on your side.
The tax and legal information in this article is merely a summary of our understanding and interpretation of some of the current laws and regulations and is not exhaustive.
Choosing Between CDs and Fixed Annuities
If you’re considering where to put your hard-earned savings, you may find yourself torn between a certificate of deposit (CD) and a deferred fixed annuity. Of course, the best choice depends on your individual financial situation, but as you debate the issue, you may want to keep the following factors in mind.
First, let’s review the similarities and differences of CDs and deferred fixed annuities: Both are savings vehicles used to accumulate wealth, and both are considered low-risk investments, but each product has its unique characteristics.
CDs are generally issued by banks and, in most cases, are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $100,000 per depositor. Deferred fixed annuities, on the other hand, are issued by insurance companies, and they are not insured by the FDIC. Instead, they are backed by the financial strength of the issuing insurance company. So, if you’re considering an annuity, you’ll need to do your homework to ensure that the issuing insurance company is financially sound.
For short-term goals, such as a down payment on a home, a CD may be a better choice than an annuity, because CD maturity periods can be as short as one month or as long as several years. However, a deferred fixed annuity might be more appropriate for a longer-term goal.
When a CD reaches maturity, you can take the lump sum value in cash, renew it or consider other investment options (including a deferred fixed annuity). With a deferred fixed annuity, you have more options: When the investment period expires, you can withdraw your money in a lump sum or choose an income stream for a specified period (even life).
These are just a few factors to consider; your insurance professional can go into more depth on each option and help you decide which is best for your individual situation.
Recipe: Cucumber Pork
A fresh and tasty dish after holiday excesses!
- 3 tablespoons vegetable oil
- 1 clove garlic, minced
- 1/4 teaspoon crushed red pepper flakes, or to taste
- 1 teaspoon salt
- 2 green onions, white parts cut into 1/4-inch lengths
- 3/4-pound pork sirloin cutlets cut into 1/4-inch strips
- 16 snow peas
- 1 tablespoon sugar
- 1 tablespoon cider vinegar
- 2 tablespoons beef broth
- 1 large cucumber, peeled, seeded and cut into 2-inch strips
Heat the oil in a skillet or wok over medium-high heat.
Add garlic, red pepper flakes and salt. Cook for 30 seconds, then add green onions, pork and snow peas.
Cook for 5 minutes, while stirring, until the pork is no longer pink. Combine the sugar, vinegar and broth and add to the mixture in the skillet along with the cucumber.
Toss and cook until ingredients are heated through, but don’t overcook. Serve over rice.