A Gift Of Love

If I were forced to make a list of the different financial products that people generally hate to buy, life insurance would most likely top the list. Because when you purchase life insurance, you’re admitting your mortality. And while admitting your mortality is arguably a healthy thing to do, it certainly isn’t a fun thing to do.

Life insurance can be challenging for consumers because it deals with two polar opposite concepts: practicality and love. Let’s start with the prickly part first, and then we’ll tackle the fuzzy stuff.
Practically speaking, when you die, your income dies, too. In fact, if I were forced to disclose the worst aspect of dying, from a financial perspective, I would point to the death of a person’s income.

For most people, life insurance should be used to replace the disappearing income. Your lifestyle, your expenses and your goals are all based on your income. If you die, your income dies, and your survivors’ lifestyles, expenses and goals die. A death isn’t a blip on the screen that results in quick financial adjustments by the survivors. A death, when not supported by the proper amount of life insurance, rips people from their homes, routines and dreams.

Still with me? Good. A very important question needs to be answered. How much life insurance should a person have? Well, a lot more than you think, and a lot more than you want to buy. Despite the innate laziness of “rules of thumb,” they are often reasonable and appropriate. In the life insurance world, the rule of thumb is to have 10 times your income in life insurance coverage. For instance, if you make $50,000 per year, then you should have approximately $500,000 in life insurance.

This amount of life insurance would allow your survivors to re-create a vast majority of your net income, for quite some time, until they find a new normal. Without a doubt, the most important aspect of life insurance is having the right face amount. Unfortunately and fortunately, I’ve been there to pick up the financial pieces, several times, after the death of someone. Sadly, hundreds of thousands of dollars don’t help much if the situation calls for hundreds of thousands of dollars more.

It’s worth noting that there’s an old-school approach that primarily relies on life insurance to pay off debts (usually the mortgage). But I’ve found that this strategy is shortsighted and outdated. While the elimination of a person’s largest monthly obligation, via a life insurance death benefit, is prudent, it can still create major short- and long-term cash flow issues. I like to think of it this way: If you kill the egg-laying chickens, then you will run out of eggs. In other words, if you use a bunch of money that could otherwise be used to create an income, then you lose the ability to create money forever.

Now for love. I told you that life insurance is also about love — although it’s a sad day when you start taking love advice from a financial columnist. Life insurance is love personified. A person who buys the proper amount of life insurance is securing the future of his/her survivors.

I once heard love described as staring at two peaches and taking time to figure out which peach is the best, because that’s the one you plan on giving to your significant other. That’s life insurance. You are taking the time and money to provide the best possible outcome for your loved ones, even though you won’t be there to enjoy it with them. The opposite of love is leaving their future to chance with an uninspired “good luck with that.”

Take some time to walk yourself through the financial lives of your loved ones, in the event of your passing. And if that doesn’t inspire you to act and buy the proper amount of life insurance, at least buy them a few egg-laying chickens.

AIA Good Offer Gone Bad

The Ministry of Health (MOH) has asked insurer AIA not to reduce the payout to policyholders when they switch to a different plan. Its response comes after The Straits Times alerted MOH about the affected policyholders.

A spokesman for MOH said it has directed AIA to review cases "where policyholders have seen their coverage compromised" to ensure that they meet the regulations and conditions of Integrated Shield Plans. These are medical insurance plans whose premiums can be paid for with Medisave. AIA told The Straits Times that fewer than 20 people are affected.

One of them is Madam Esther Sim, who has been going for dialysis treatments since March last year. Her original medical insurance plan helped pay for 90 per cent of her treatment cost.
 Background Story

 

AIA told Madam Esther Sim that she will be covered under another insurance plan and that her existing plan would be discontinued. Her premiums will go up by about $300 a year to $1,119, but the benefits are better.

However, the claimable amount is pegged at 100 per cent for treatment cost incurred at public institutions, but only 70 per cent at private facilities under her new policy. Her original policy did not discriminate between the two.

Previously, her co-payment was 10 per cent. Now, it is 37 per cent (30 per cent + 10 per cent of 70 per cent).

Takaful Ikhlas Growth 2013

Islamic insurance provider Takaful Ikhlas Sdn Bhd expects to close its financial books for the year ending March 31 with a 20% year-on-year growth in assets.

“The takaful insurance industry is expected to grow due to good domestic demand. We still have time to close our books but for the financial year 2013-2014 (FY14), I think it should be about 20% growth,” Takaful Ikhlas president and CEO Ab Latiff Abu  Bakar told The Malaysian Reserve in Kuala Lumpur yesterday.

The takaful operator had reported a net earned contribution of RM653.8 million for FY13 and a profit of RM10.1 million, according to the company’s financial report.

Takaful Ikhlas is the underwriter for the scheme. “Takaful Ikhlas currently in third position in the sector and has a market share of 12%,” Ab Latiff said.

In the takaful insurance segment in Malaysia, apart from Takaful Ikhlas, there are other players like AIA AFG Takaful Bhd, AmFamily Takaful Bhd, Etiqa Takaful Bhd, Great Eastern Takaful Sdn Bhd and others. The insurance and takaful sector in the country has been growing and is expected to remain stable in 2014 amid domestic demand.

Both conventional and takaful operators are coming out with new products. According to a report from Ernst & Young, Malaysia is known to be the world’s largest family takaful market and is expected to continue to take the lead in the Asean takaful industry.

Overcoming Negativity In Office

We know it sucks, but all that whingeing and whining can take a serious toll on how you feel and how productive you are at work. And while the end of holidays can leave us feeling a little down, there are some people who love to bring the negative vibes to work all year round.

Here are some of the most common negative workplace personalities and some tips on how to effectively deal with them.

The Bad News Bears
These guys revel in the negative. They can't wait to tell you about a mistake your colleague made, that the boss is furious or a client is annoyed. These venting sessions are unproductive and incredibly draining on you. Plus they're just bloody annoying.

Solution:
If there's a real issue here, deal with it, then walk away. Help them to find a suitable solution to the problem. Even just point them in the right direction. Mostly these guys just want to have a good old whinge, in which case, exit the conversation gracefully (and quickly). Quick getaway phrases such as "I have an urgent email/phone call I need to attend to" or "I have a looming deadline" are good ones to use.

2. The Gossip Mongers

Some people love to gossip. Let them know you’re not interested in silly gossip. It's just like high school, except everyone's wearing suits.In a corporate environment, it can often seem like the rumours never stop. Someone's going to be fired, hired, promoted or made redundant. Gossipers love stirring the rumour pot and creating worst-case scenario situations.

Solution:
Gossipers don't care about facts. So the next time you hear someone pedalling an outrageous rumour, push them for real answers: "That sounds pretty ridiculous. Is that really true? Who did you hear that from?" They'll back down and realise pretty quickly that you're not one to engage in frivolous chatter. Another strategy is to play dumb - if you seem disinterested or have no information to offer them, they'll move on. "I heard Sam's looking for a new job and the boss just found out. What do you think will happen?". Just shrug and say, "I'm not sure, I can't help you with that one. Sorry".
If they push you for more, don't be afraid to establish your personal boundaries. "I don't really like to talk office politics, plus it's not really any of my business".

The Drama Queens (or Kings)
These spotlight-lovers love the drama and attention, and can be the most draining on their co-workers.  Everything bad always happens to them (and only them), they supposedly work harder and longer than anyone else and are assigned the most tedious jobs. They're always trying to one-up any story you tell: "You think that was a bad client? Last week, I had to drive two hours to a client's house just to bring him work samples!" The drama queen believes he or she is the only one to ever experience tedious events, and feels they're worthy of a wrath-laden rant.

Solution:
These guys are offering you bait. So don't bite. The more you react to their drama ("Oh my god, that sounds awful") the more you feed the beast. Ignore their rants and go on about your day. Your message - "I'm not interested" - will eventually be received.

4. The Chicken Littles

These guys always think the sky is falling. If you share some good news ("We landed that client!" or "We beat the competition", they'll respond with and unnecessarily pessimistic comment. "I've heard that client is a real pain" or "Yeah, but they'll just beat us again next quarter").

Solution:
Don't try to fight the negativity. It's not worth your time. Find a friendly colleague to celebrate with.

The Victims
Victims blame others for everything. "The boss is out to get me!". "I missed that deadline because someone in admin didn't get my paperwork in on time". They constantly complain about everything that's happening in their lives and never take responsibility for their actions. They believe the world is out to get them. And boy, they love to talk about it.

Solution:
Let the person know that you work better in a positive environment. Make it about you, not them.
"That's not great. But tell me about something that's been going well for your lately".
You can also ask them what they could have done to avoid the situation - "That sucks. How do you reckon you can avoid that next time?"

Group Insurance - Major Fault-line

Many individuals sign up for group and spousal coverage through their employer’s benefit provider for the convenience, not often weighing their options or speaking to an advisor about their options.

And while group life insurance is a simple way to pay for coverage, and often the easiest way to guarantee it, it may not be the most cost effective way to obtain needed insurance coverage.

During a recent review for a healthy 50 year old male, currently paying ~$3,200 annually for approximately $1,000,000 of life insurance through a work group plan, we found a term life insurance policy that would cover him for 15 years (through the end of his employment) would cost approximately $750. Not only is the savings on the current year nearly $2,500, but the cost of the personal policy is locked in as opposed to the workplace policy, and it is guaranteed whether he works for the same employer or not over that 15 year period.

Move up http://i.forbesimg.com t Move down

 

Why is group life insurance an expensive way to obtain life insurance?

Pricing negligence. Employer group policies start out very cheap at younger ages. By starting low and maintaining a low rate over a number of years, the power of complacency sets in with many buyers. Employees may know the price has risen, but likely has their coverage need, and they don’t often do the work to compare the cost to a personal plan.

Increasing claims. Group coverage is based on the health of the group, or actuarial data on the age bands that comprise the group. We all know as we age there are more deaths, and so the amount will increase over time.

Anti-selection. As we age, a higher percentage of people also develop health problems or continue with dangerous habits that place them in higher risk categories that may not allow them to purchase individual health policies. Since these individuals are more likely to stay with the more expensive group coverage, the cost of the group life insurance reflects the inclusion of these individuals with higher premiums.

The underwriting process when applying for individual insurance outside of your employer gives the insurer data to properly price your individual policy. According to Maurer, “At ages 40 and older everyone should evaluate the costs – healthier clients not only can pay less right away, but over 10, 15, or 30 years individual coverage can provide thousands of dollars in savings by going through underwriting.”

Even if you are young, you may benefit from locking in personal coverage since rates will rise eventually. Personal insurance policies, as well as those for spouses, will be there whether or not you’re at the same employer (or employed), or if you no longer qualify for coverage. Keep that in mind before signing up for additional coverage through your employer.

AXA - Top Insurer

France’s AXA S.A. remained at the top of the list of global insurers in terms of net premiums written in 2012, based on figures released Monday by rating agency A.M. Best.


AXA, with $106.4 billion in net premiums written, was followed by UnitedHealth Group Inc., which ranked No. 2 in 2011 as well as 2012.

Allianz moved up to the No. 3 spot from fourth in 2011, with its net premiums written growing 4% to $88.2 billion in 2012.

“Allianz’s core market remains Europe, which in 2012 generated about 60$ of property/casualty consolidated gross premiums and 75% of life/health statutory premiums,” A.M. Best noted. The insurer’s operating profit also increased 20.8% to $13 billion in 2012, it added.

Italy's Assicurazioni Generali S.p.A. was fourth in 2012, followed by Japan’s National Mutual Insurance Federation of Agricultural Cooperatives.

Rose

The first day of school our professor introduced himself and challenged us to get to know someone we didn't already know. I stood up to look around when a gentle hand touched my shoulder.

I turned round to find a wrinkled, little old lady beaming up at me with a smile that lit up her entire being.

She said, "Hi handsome. My name is Rose.  I'm eighty-seven years old. Can I give you a hug?"

I laughed and enthusiastically responded, "Of course you may!" and she gave me a giant squeeze. "Why are you in college at such a young, innocent age?" I asked.

She jokingly replied, "I'm here to meet a rich husband, get married, and have a couple of kids..."

"No seriously," I asked. I was curious what may have motivated her to be taking on this challenge at her age.

"I always dreamed of having a college education and now I'm getting one!" she told me.

After class we walked to the student union building and shared a chocolate milkshake.  We became instant friends. Every day for the next three months we would leave class together and talk nonstop. I was always mesmerized listening to this "time machine" as she shared her wisdom and experience with me.

Over the course of the year, Rose became a campus icon and she easily made friends wherever she went.  She loved to dress up and she reveled in the attention bestowed upon her from the other students. She was living it up.

At the end of the semester we invited Rose to speak at our football banquet.  I'll never forget what she taught us. She was introduced and stepped up to the podium. As she began to deliver her prepared speech, she dropped her three by five cards on the floor. 

 

Frustrated and a little embarrassed she leaned into the microphone and simply said, "I'm sorry I'm so jittery. I gave up beer for Lent and this  whiskey is killing me! I'll never get my speech back in order so let me just tell you what I know."

As we laughed she cleared her throat and began, "We do not stop playing because we are old; we grow old because we stop playing.

There are only four secrets to staying young, being happy, and achieving success. You have to laugh and find humor every day. You've got to have a dream. When you lose your dreams, you die.

We have so many people walking around who are dead and don't even know it!

There is a huge difference between growing older and growing up.

If you are nineteen years old and lie in bed for one full year and don't do one productive thing, you will turn twenty years old. If I am eighty-seven years old and stay in bed for a year and never do anything I will turn eighty-eight.

Anybody can grow older. That doesn't take any talent or ability. The idea is to grow up by always finding opportunity in change. Have no regrets.

The elderly usually don't have regrets for what we did, but rather for things we did not do. The only people who fear death are those with  regrets."

She concluded her speech by courageously singing "The Rose."

She challenged each of us to study the lyrics and live them out in our daily lives.

At the year's end Rose finished the college degree she had begun all those years ago.

One week after graduation Rose died peacefully in her sleep.

Monsieur, posted Apr 10, 2007