During an annual review with a successful client of mine, we discussed the recent changes in his net worth. Like so many people, the recession has hit him hard. He had been investing contributions to his 401(k) plan entirely in the stock of his Fortune 500 employer. That stock value declined by 40% over the past 12 months.

He realized the impact this would have on his family in the event of his premature death. This is not what he had planned for, and it kept him up at night. Read the rest of this entry »

For more than two decades, the cost of term and permanent life insurance has steadily fallen, but the biggest drop has come with term. Stiff competition in the marketplace, the rise of Internet sales, and higher mortality rates have driven term insurance rates down about 75% since 1990, according to Accuquote.

Recently, Dow Jones reported that the rigid credit market has reversed the long downward trend. Companies, we find out, are facing higher costs to access capital and maintain required reserve levels, and are passing that additional cost onto consumers in the form of slightly higher premiums.

Regardless of where the price of life insurance settles, consumers shouldn’t be discouraged from purchasing life insurance because of this news. Read the rest of this entry »

Most people don't think much about insurance after retirement other than auto and homeowners coverage. But the reality is that financial security during retirement includes at least three additional types of insurance. All three protect against running out of money after the ability to earn more has ended. The three are:
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In a recent Washington Post article, Color of Money writer Michelle Singletary, in collaboration with author Kim Lankford, discusses the value of Return of Premium term life insurance (ROP). She goes through some rather complicated mathematical calculations to demonstrate that such policies are a good buy. She may well be right - mathematically. But life insurance is about much more than rates of return of alternative investments on premium differentials. (See what I mean?) Read the rest of this entry »

The reason medical schools require future doctors to study clinically as well as academically is so they can take the book learning and see how it is actually applied at the bedside. Theory is great, but if it doesn't work in practice then it is of limited value. Read the rest of this entry »