Insurance Centre

The Internet has lots of information about the benefits of life insurance, but few websites tell how much life insurance actually costs. Each year, however, Insure.com surveys 25 leading insurance companies–those with A.M. Best Company ratings of A++ or A+, called “Superior,” and those with ratings of A or A-, considered “Excellent”–to find the lowest rates available for level term life insurance by age and gender. The latest survey was taken on November 12, 2007 and published on the website three days later. The results were positive for consumers: The price of life insurance continues to decline.

Part of the reason for the decline is competition. Websites that offer price comparisons are causing insurance companies to lower their prices to compete. It is a variation on the theme of the “when banks compete, you win.” When insurance companies compete, you win, too. The Internet has also helped by automating–and thus lowering the cost of-the application process.

Another reason prices are falling is the declining death rate. The age-adjusted death rate in 2004 was 800.8 deaths per 100,000 people, a decrease of 3.8 percent from the 2003 rate and a the lowest recorded U.S. figure. Fewer deaths mean the insurance companies pay fewer death benefits. This reduces costs and gives the insurance companies more time to earn more income from the premiums paid into the system. Some of the extra income goes to the bottom line, enhancing profits, but some income is plowed back into operations, allowing the companies to lower their rates.

The Insure.com survey included 10-, 20-, and 30-year level term life insurance policies with three popular death benefits: $250,000, $500,000, and $1,000,000. The survey assumes the consumer is in ideal health, meets stringent guidelines for height-to-weight ratios, and does not partake of any risky activities, such as skydiving, motorcycle racing, or mountain climbing. To keep the survey simple, it focused on rates in just one state: California.

The survey found that lowest annual rate for a 10-year level term policy worth $250,000 was $108. The lowest rate for a 20-year, $250,000 policy was $153 a year. Those rates were available to both men and women aged 30 and 35. The lowest annual rate for a 30-year, $250,000 policy was $228. That rate was available to 30-year-old men and women. At 35, the rate rose slightly for both genders, to $250 a year.

Term life insurance rates increase with age. They also go up depending on other factors, such as death rates at certain ages. Because women encounter breast and cervical cancer at relatively early ages, they actually pay more than men do for 30-year policies at age 40. Women pay $355 a year for a 30-year, $250,000 policy, while men pay $335 a year. Men and women age 40 pay the same for 10-year policies ($130 a year) and 20-year policies ($203 a year).

The actuarial tables begin to turn at age 45. Women no longer pay more than men do for any policy. However, men pay more than women do for 20- and 30-year term policies: $340 and $520 a year for men, compared to $318 and $428 a year for women. Men and women both pay $183 a year for 10-year term policy worth $250,000.

The pattern holds at age 50: Men and women pay the same for a 10-year policy ($263 a year), but men pay more than women do for a 20-year policy ($510 a year compared to $370 a year) and for a 30-year policy ($768 a year compared to $585 a year).

Men and women no longer pay the same for any term policies, beginning at age 55. The lowest rate for men for a 10-year, $250,000 policy is $403 a year. For women, it is $345 a year. The lowest rate men can get for a 20-year policy is $773 a year, while women can get the same policy for $580 a year. Age 55 is the last year in the survey that men or women can qualify for a 30-year term policy. The lowest rate for men was $1,550 a year; the lowest rate for women was $1,080.

The purpose of the death benefit is to replace the lost income of a deceased family member. The amount of the death benefit should equal the deceased person’s annual income for a period of years, giving the family time to adjust to the changes. Experts differ on how long that period should be. Some say as little as three years, others say as much as 10 years. If the breadwinner contributes $50,000 a year, then a $250,000 death benefit would cover five years of lost income. To cover 10 years of lost income, the death benefit would need to be $500,000. To compensate for 10 years lost of an annual $100,000 income, the policy would have to pay $1 million.

As death benefits increase, so do rates, of course. The gap between men and women increase for the larger amounts, as well. This is because differences in mortality rates that are statistically insignificant at $250,000 begin to have an impact at the $500,000 level. Rates are not the same for 30-year-old men and women seeking a 30-year term policy worth $500,000. The lowest rate for men is $395 a year. Women can get the same policy for 18% less, or $325 a year. The difference between the genders increases–not just in dollar amount, but in percentage–at the $1 million level. 30-year-old men must pay $710 a year for a $1 million, 30-year term policy. Women the same age pay 21% less, or $565 a year, for the same policy.

Although the survey was based on individuals in ideal health, the increases in life expectancy and ongoing competition among insurers mean good deals are available for almost everyone.

While most people think of nonprofit organizations, or NPOs, as charity groups, it is actually even simpler than that. NPOs do not distribute their earnings or surplus funds to shareholders or owners; instead, the money is given back to the cause pursued by the organization. Thus, besides charities, this definition also can apply to trade unions, advocacy groups, churches, and even public arts promotion teams.

Because nonprofits operate by donating their funds back to their cause, it is important to first create a mission statement if you are planning on starting this type of organization. You should think about how you want the NPO to benefit your clientele or community, as well as what values you want your organization to embody. This can help you stay on track with your goals.

Once you decide on your cause, there are several different levels on nonprofits for which you can apply. First, you may just want to have an informal charity group led by you and a group of friends. This does not typically require legal paperwork to create because it function more like social/volunteer group rather than its own legal entity.

However, if you want to achieve true, legal not-for-profit standing, you should consider incorporating your organization. Incorporation allows your nonprofit group to have its own bank account and property. This also frees you from liability and insures that the NPO will continue after your death. To incorporate, you must fill out specific paperwork and file it with your designated state office.

Next, many NPOs can apply for tax exemption, as well as tax-deductible status. To become tax-exempt, you typically must be a corporation or another such group with legal standing. You should file for tax exemption with the IRS. The most common IRS tax-exempt designation is 501(c)(3).

Tax-deductible status means that people who donate to your NPO can have tax deductions for their charity. This can be very helpful for an NPO because it makes donations much more appealing. To earn tax-deductible status, you must apply to the IRS.

As for directing your nonprofit in the way you want, you should set up a board of directors who are dedicated to fulfilling the mission statement of the organization. Additionally, you should consider setting up specific programs that help you meet your goals in serving the community or other group that benefits from your work. Lastly, you will have the actual staff that completes the day-to-day tasks of the organization.

If you are thinking of starting a not-for-profit organization, you should speak to a lawyer to help you file for incorporation or other legal statuses.

Basics

Your debt to income ratio is a basic measure that mortgage lenders use. It involves:

Total monthly debt load Total pretax income Overall ability to pay Total Monthly Debt Load Your total monthly debt load that a lender will analyze includes: Credit cards Student loans Car payments Department store cards Other monthly debt payments Your mortgage payment This is the sum total of your usual monthly debt payments. In some cases a lender may ignore a debt totally. This is the case, for example, if you have a $500 a month car payment but there are only two more months left on the loan. The lender may choose to ignore this $500 per month debt load because they know if will go away shortly.

Lenders should be able to figure out the monthly debt balances and when they expire from your credit report, although you should also disclose relevant items to them in your mortgage application.

Lenders will also factor in the expense of the new mortgage your are applying for. This includes the mortgage payment, property taxes, home owner association dues, hazard insurance, and any other property related expenses.

Total Pretax Income The lender will add up all your pretax income, which may include:

Base salary Sales commissions Bonuses Overtime Rental income Interest income Other income All of this income is added together to figure out your pretax income. They may take an average of your past year’s monthly earnings. Temporary jobs or seasonal work may not be added into this total because it is not considered regular work or income.

Total Overall Ability To Pay The lender will compare the borrower’s total overall monthly debt load with their monthly pretax income.

If a borrower’s pretax income is $10,000 and their monthly debt payments are $4,000 then the borrower has a debt/income ratio of 40%. This is acceptable to many lenders.

New Opportunities Many lenders will now allow a total debt burden of as much as 55% of the borrower’s income.

This allows more people to be able to buy a property. Lenders may compensate themselves for the additional risk of this type of loan with a higher than normal interest rate.

Your business like other small business might find itself in need of quick, short-term financing for an emergency. You might obtain this with an emergency small business loan but many times this method can be more of a hassle than its worth. Finding business financing for short term financing emergencies is different than long-term business financing.

A good business plan will include a provision for emergency cash flow needs. For example, a line of credit is a great way to deal with any short-term cash flow emergencies you might find yourself facing. A cash reserve, is great way to accommodate such emergencies but not always something you can manage, especially if your business is new. And that’s generally when these short-term financial emergencies occur – in young businesses.

If you find yourself in a financial emergency with your business and you don’t have a backup plan in place, the first place to go is the bank you normally deal with. Banks aren’t good at dealing with emergency situations and the idea that you are currently facing a cash flow crisis they are going to be even less interested in lending you money.

Government loans aren’t really designed for short-term cash flow emergencies. Getting approval is long and tedious, and enough to make you want to pull your hair out. So although a business financing option for the long haul not a great option for the short term.

There are all kinds of payday loan companies that are now offering business financing which has really changed the way we do business. Payday loans for business are as quick as they are for individuals. It’s certainly an option for you to consider. However, while considering make sure the repayment schedule is actually going to work for you.

Another option for short-term business financing might be friends and family. This is also an option that’s often overlooked. Maybe there’s someone that really believes in your business over and above everyone else, or perhaps there’s one person that’s in a better position financially. So if you are in need of some quick cash flow don’t discount this option.

Online remortgage programs and re-finance programs are everywhere. You should consider that these might be of benefit to you. Again with business financing for emergency situations where you need the cash quickly they may or may not be a good option depending on the speed the lender processes claims.

When it comes to business financing and short-term financial emergencies we recommend you have a funding source in place before you find yourself in such a bind.

You can make these and other ordinary, personal expenses tax deductible.

How would you like to get paid $11 for every 25 miles you drive?

How would you like to write off half the cost of restaurant meals with friends?

How about writing off a vacation at the beach with the family?

You have to make these personal expenses into business expenses. The easiest way to do this is to start a part time, home based business.

Your business will have expenses. Rent, or mortgage payments, salaries, auto, travel expenses, etc. It is no different from other businesses in this regard.

The IRS has special rules for writing off business expenses. They can be deducted from the business income first, before any taxes are paid on the income. The business only pays taxes on any income that is left after all expenses are paid.

These rules apply to your part time business as well. Most businesses start small; Dell computer started in a dorm room, Apple computer in a garage, Snapple Beverages in a Brooklyn apartment, etc.

You have to give your previously personal expenses a business purpose, so that they become business expenses.

Instead of giving your children allowances, you give them a pay check!

I have employed my boys to distribute flyers throughout our housing development, soliciting people who might want to sell their homes.

As long as their compensation is reasonable and they are paid via company check you can now deduct their salaries as business expenses. The fact that you require them to put the money toward their college savings or their wedding is no one’s business but yours.

If you are driving to the mall, stop off at the local diner to stash some of your business cards in their business card holders atop the cigarette machine in the lobby. That is a legitimate marketing expense and makes you eligible for that driving allowance of 44 cents per mile.

While at the diner, you meet with a couple of friends who are also interested in your business or its products. As long as you correctly document the meeting, 50% of the cost can be written off as a business expense.

In all likelihood, your business will show a loss as the income in the early years will probably not be enough to support all of the write offs.

The law allows this loss to be written off against past, future or current income from other sources, say your regular job income!

The loss reduces your salary or self employment income, thereby reducing your taxes for the year.

This strategy can result in saving $2-$3-$6,000 per year or more for the average family!

Your CPA has probably not told you about this strategy, either because he/she is not versed in them or because you did not ask. It is also difficult to sit and counsel you when you show up in his office at 5:30PM, April 14 with a shoe box full of coffee stained receipts to have your taxes done.

Home based business deductions are a specialty and not every CPA is up on them.

However, you will need the guidance and support of an accountant or CPA that is knowledgeable in this area to make sure you take all of the hundreds of possible deductions you are allowed as a small home based business.

Also, you will have to be shown how to document these expenses correctly, if not, you may end up in trouble with the IRS.

To sum up, you need to have a home based business and you need to have the guidance and support of a qualified professional to help you correctly document your expenses.

Once in place, you will be able to slash your taxes by thousands of dollars each year by converting once non-deductible personal expenses into tax deductible business expenses.

Oh, yeah, that vacation at the beach? Why do you think they plan seminars and conferences at resorts? Generally speaking, as long as you spend more days on business than on pleasure, the trip is deductible! Enjoy!