jump to navigation

The wrong people own life insurance January 22, 2012

Posted by forwardfinancialplanning1 in Estate Planning, Life Insurance.
add a comment

There are a lot of things in life that don’t make sense.  Often, one would expect a certain pattern to prevail, when in reality, things are exactly the opposite.  A recent study by the Aite Group entitled “The Elusive Life Insurance Purchaser” identifies one of those anomalies. 

Aite conducted an on-line survey of 1,024 consumers.  Thirty seven percent of the respondents reported having no life insurance while five percent were unsure (….now there’s a group that could benefit from financial planning!!).  Only two age groups reported ownership rates at or above 50 percent —-65 to 69 year olds at 50% and aged 75+ at 62%. 

When considering that the most common and logical reason to own life insurance is to protect those who depend on one’s income, this is surprising .  Clearly, people who have young children should constitute what the marketing world refers to as “the heavy user segment” for life insurance.  Yet, obviously this is not the case.  

And, why such a high rate of ownership in the 75+ segment?  While it’s true that some life insurance is appropriately held by this age group to provide liquidity for handling estate taxes, this is a tiny fraction of the total.  How many families are depending on the regular income of a septegenarian??

Some things in life just don’t make sense!!!


How’s your VUL??? July 25, 2011

Posted by forwardfinancialplanning1 in Investing-General, Life Insurance.
add a comment

Variable Universal Life Insurance policies are often sold based on projections of benefit growth linked to the normally substantial increases that equities often provide (at least over the long term).  However, the past ten years have been anything but “normal” for the stock market.  Many VUL’s were sold over the past ten years assuming that the stock market would grow 6-8%.  However, we’ve seen that the “tech wreck” of 2000-2002 and the financial meltdown of 2007-2009 rendered these projections to be overly optimistic.  This underperformance relative to traditional long term equity returns means that many of these variable universal policies may be seriously underfunded and they will not provide the expected death benefit.  Good ol’ term insurance may be boring, but it will never result in this situation………………………

How’s your financial literacy?? April 25, 2011

Posted by forwardfinancialplanning1 in Annuities, Financial Planning, Life Insurance, Long Term Care Insurance.
add a comment

Here’s yet another on-line survey to test the nation’s financial literacy.  Sponsored by Northwestern Mutual Insurance, it can be found at:  http://financialmattersquiz.com.  As always, they reveal some serious gaps in our population’s general knowledge of financial concepts.  Nonetheless, it’s fun to see how you stack up against the country as a whole.  This one appears to be a bit skewed towards insurance products—not surprising since it’s sponsored by an insurer.  However, it does give us another good opportunity to benchmark our financial savvy.