International Travel Insurance – Prudent Protection For Journeys Abroad

Travels abroad offer the chance to tour the globe’s most exquisite attractions, become acquainted with different ways of life, and generally broaden one’s own perspective. International travels are always a fresh adventure, but unexpected emergencies or events occurring abroad can be far more disruptive and difficult than the same events might be if they occurred back home. International travel insurance is a wonderful way to attain the type of security and reassurance that comes from knowing that an unforeseen medical situation will not result in financial disaster, and that access to appropriate and necessary medical care will not be restricted.

Tourists embarking on risky or unconventional physical endeavors, such as rock climbing, white water rafting or deep sea diving may find that the medical insurance policy which covers such activities at home will not provide coverage if such sports result in injuries while abroad. Travelers spending time in countries with nationalized health care schemes need to know that the inexpensive or even free medical care offered by those systems will likely be available to citizens only, and foreign visitors may be denied treatment or be asked to pay upfront for services. Hospitals and health care providers in other nations may decline to work with a traveler’s regular home insurance company, and demand payment in advance for necessary treatments. It is also possible that a tourist may face a medical situation so serious that proper treatment is unavailable and they must be transported home, which can be a very expensive proposition. It is quite possible that even when a traveler’s regular medical policy provides for routine health care costs while the insured is traveling, payment for an elaborate evacuation due to medical reasons would be refused. It is unexpected situations like those above which underscore the wisdom of purchasing international travel insurance.

Intended to provide compensation for unexpected healthcare and other expenses to travelers while abroad, international travel insurance can be purchased in various types and levels of coverage, the price of which is determined by a number of factors including the duration, destination and other specifics of the trip involved. Coverage for shorter durations is often available for purchase in conjunction with the making of travel reservations. In the alternative, more extensive coverage of a longer term may also be secured. These types of policies are frequently offered by cruise operators, excursion companies, travel agents and large national general insurance firms.

Policies for international travel insurance can be customized based on the characteristics of the traveler to be covered by the policy. Business travelers, vacation trippers, adventure tourists and students are all specific types of customers for which different kinds of policies are written. Circumstances that may be covered by these types of policies include payment of basic medical expenses incurred, accidental injury or death benefits, and possibly even funeral costs for services performed while still abroad. Medical costs incurred during pregnancy may be included in this type of policy, if the travel happens during the insured’s first trimester, and perhaps beyond, if a customized or expanded policy is purchased.

Life Insurance: How Much and What Type To Own?

Do you need 5 times your income? Or do you need 10 times your income?

In my experience, if you ask stupid questions you tend to get stupid answers.

The real question you should be asking yourself is… If I die tomorrow, what do I want financially for the loved ones I will leave behind?

Will your spouse need an income? How much? For how long?

If so, how much money does it take today to provide that amount of income?

What assets do I have to help offset that number?

Are there any debts that must be paid off?

Will your kids need money to pay for college?

Is there a parent or another family member that depends on you?

Do you want to leave money to your church or Alma Mater?

Once you know the answers to the above questions, work with a qualified, unbiased professional like a Fee-Only Certified Financial Planner who can help you determine the correct amount of life insurance you really need.

Don’t use rules of thumb to plan your financial life! Here’s why:

Let’s assume you die tomorrow, and you need to replace your current income of $50,000 for the next 20 years to allow your husband/wife and kids to keep their same lifestyle without having to struggle. If you used the “rule of thumb” of 10 times your income when you bought your life insurance, your surviving spouse and kids will most likely run out of money in 15 years or less. Feel free to email me and I would be happy to send you the hard data.

What Type of Life Insurance Do You Need?

Let’s start off with the basics. There are two main types of life insurance: Term and Permanent.

Both are conceptually easy to understand. Term Life Insurance covers you for a specified period or term, like 20 years for example. Permanent Life Insurance covers you permanently or for your entire life, or at least it’s supposed to. Permanent Life can have many sub-names like whole life, variable life, universal life or single premium life which all work differently.

When you purchase Term insurance, you are only paying for the cost of insurance which is usually very inexpensive. In a Permanent policy, premiums are usually substantially higher than term. Some of the premium goes towards the cost of insurance and the remainder builds in an account called the “cash value.” Cash values typically grow tax deferred.

You have probably heard all the media “hubbub” about which type of life insurance you should purchase. Radio show pundits and magazine articles tell us to only purchase term, or whole life is a bad investment, or own term and investment the difference.

Are those things really true? Is it really that simple? What’s the truth?

Well, honestly the type of life insurance you should purchase depends on many things. Some people only need term but others may need permanent.

Tell me exactly how long you will need life insurance and when you will die, and I can tell you the correct type you should own. But like most other financial planning decisions, we must make some assumptions or best guesses about the future. But it’s very difficult to know when you are 20, 30 or even 40 what your financial life will really be like at age 60.

Here are some truths:

  1. Most permanent policies are junk! But not all.
  2. Any type of life insurance is usually better than NO life insurance.
  3. Most people should buy life insurance for protection only NOT as an investment.
  4. Most people who end up buying the wrong type of life insurance got their advice from an insurance agent, not an objective financial planner.

This issue is way to complex for me to cover every detail in a blog post. My hope here is to get you to understand the basics so you can go hire a professional to help you that isn’t a financial sales person.

You most likely need Term if:

  • You are just starting out
  • Have no discretionary income and/or low net worth
  • It’s very easy to forecast the length of your insurance need (10 years left on a mortgage for example)
  • Have a very limited amount of savings left over for retirement
  • You simply can’t afford permanent insurance, even it were a good deal

When Permanent Life may be a fit:

  • Very strong, predictable cash flow
  • High income earner
  • You have exhausted all possible retirement savings vehicles (401k, Roth, etc.)
  • Will have Estate Planning liquidity issues
  • It’s very hard to predict the age you will no longer need life insurance
  • You just want your life insurance to be there when you die!
  • You have done your research! Not all life insurance policies are equal!
  • You understand all the workings of the policy (expenses, interest rate, etc)

Why does Permanent Life insurance get such a bad rap? I believe most people fear what they don’t understand. And Permanent insurance can be extremely difficult to understand. Also, most Permanent Life policies have too many internal expenses which can make them a terrible deal. But some companies do a pretty good job of keeping internal costs down, therefore increasing the internal rate or return on your “cash value.”

Here is one concept:

Most term polices never pay a death benefit because people out live them or cancel them. Let’s say you compare 2 options: 1.) invest money in a taxable investment OR 2.) buy permanent life insurance where your policy builds cash value. If the cash value of your life insurance net of expenses could earn more than your investment account net of taxes, then you would have more money inside the cash value. OR vice versa. Sounds simple, right? Not exactly!

You want to make sure you are comparing apples to apples. If the cash value grows at a fixed rate, then compare it to fixed income assets in your investment account. If your investment account is invested in stock mutual funds, compare it to a comparable allocation in Variable Life. This is where the media falls short on helping you understand Permanent life insurance. They try to compare fixed rate cash value insurance to the stock market over the long-term. That’s like comparing a Porsche to a Subaru!

But it’s not all about the cash value rate of return. What about the rate of return on the death benefit? Like I mentioned earlier, this issue is far too complex to cover all the points here!

Here is your take away. Term Insurance is right for many Americans. Some types of Permanent policies may be a fit for others. It just depends on the unique situation of the individual. This can be a very confusing area. Seek out unbiased, objective advice from a Fee-Only Certified Financial Planner. www.jasonWqualls.com

Guaranteed Acceptance Life Insurance

Life insurance is extremely important for everyone. It is one of the most overlooked but nevertheless vital part of a good financial plan. Just like getting car insurance under 25 when you are young, getting this kind of coverage will give you peace of mind. People may not give much thought about it, opting instead to buy a big house, designer clothes and several flashy cars.

However, one should plan ahead and think ahead. This coverage provides financial resource to a spouse and children should the unthinkable happen. Today’s economy is full of ups and downs; it is very uncertain and unpredictable. Finding the best coverage is clearly a must. There are many kinds of coverages, including joint term life insurance and no physical life insurance.

It is true that as the person gets older, it becomes more difficult to get the proper coverage. This is because old people are very vulnerable health-wise and most already have sickness or disabilities. This is where guaranteed coverage comes in. This kind of insurance coverage offers protection for individuals who are considered high-risk. People aged between 50-85 are guaranteed acceptance for this life insurance. There are no health questions to answer and physical exams or medical tests to take. Furthermore, the insurance cannot be canceled as the individuals grow older and the premium does not also increase.

Disadvantages of Guaranteed Acceptance Life Insurance

Guaranteed acceptance life insurance is often thought of as the answer to the needs of most elderly and sick people. However, there is also a downside to it. Insurers are taking bigger risks when they offer this type of insurance so what they do is to limit the benefits that an individual gets. Most companies do not offer more than $20,000. If this does not fit the needs, there is an option to purchase from multiple insurance companies. The bulk of guaranteed life insurance policies are priced in terms of “units”. A unit is equal to $1,000 of life insurance coverage. It is essential to know this so that evaluation of different policies from various companies will become easier and more efficient. Make it a point to request for information through mail. The Internet is notorious for disappearing policies of polices which change at later dates. The benefits for guaranteed acceptance life insurance may also be limited for the first few years of the policy.

Most companies increase the amount of the total benefit if the policy stays active for longer than the period indicated by the company.

How to get Guaranteed Acceptance Life Insurance

1. Determine the type of guaranteed acceptance life insurance you need. Once needs are determined, search for more information online. There are numerous companies that specialize in this type of policy, including ones that specialize in over 70 life insurance.
2. Compare rates. Do not make the mistake of signing up with the first company you see or hear. Shop around. Compare premiums. There might be other companies out there that are offering lower premium rates. Each company uses different internal accounting procedures and profit methodology, the cost for the same insurance coverage may vary from one company to another. Know each company’s rates and always take note of differences with premiums.
3. Ask for more information. If there is something that is unclear about the policy, do not be afraid to ask for someone to explain it to you. Before signing up with any company, it is a must to understand everything so that decisions are made intelligibly. If a suitable policy is found, ask questions about it.
4. Make sure to sign up with a company that is financially solid. Insurance companies are also given a rating by agencies. Make sure to choose one that has a high rating. It is particularly important that the company you sign up with has financial strength. Companies with a rating of “A” are very good choices. Keep in mind that there are certain insurance companies which are in financial trouble and they will often offer their policies at discounted rated so that customers will be enticed. Be aware.
5. Only apply when you are sure that policy meets your needs. Rethink your decision before finally signing up. Remember that insurance is crucial in life. Make sure that the policy meets your needs and that the terms are suitable for you.

Examine the life insurance contract. After application has been processed and approved, a formal life insurance policy will be sent. This policy is a legally binding contract between the individual and the insurance company. Most states in America allow a 30-day period wherein clients can examine the contents of the actual life insurance contract. If you are unhappy or unsatisfied with the policy, the contract may be returned with no further explanation and a refund of the premium payment will be sent.

Estate Planning: Irrevocable Life Insurance Trust Isn’t So Crummey

The tax loophole referred to as “Crummey Power” is named after Clifford Crummey who created a trust in order to transfer his assets with the intention of avoiding estate and inheritance taxes upon his demise. The Internal Revenue Service was not pleased and in 1968, took Crummey to court for what they termed as an illegal tax loophole. Crummey’s victory in court created a precedent making the trust an acceptable tool in estate planning.

WHAT ARE THE BENEFITS OF A LIFE INSURANCE TRUST?

Life Insurance Trusts have benefits while you are alive by allowing you to make premium payments through gifts to the trust. In 2013 and 2014, you can make up to $14,000 gift payments to the trust per beneficiary. Thereafter, the trust makes the payments for the life insurance policy or policies.

HOW THE CRUMMEY POWER WORKS

In order to avoid gift tax, a check for under $14,000 is written to the Life Insurance Trust for each beneficiary as a “gift.” In order to be in compliance with tax code and receive the gift-tax break, each beneficiary must have the right or power to withdraw the gift money.

Thereafter, the trustee creates a “Crummey Letter” which is sent to each of the beneficiaries informing them they have the option to withdraw the money within 30 days. In essence, the power provided in the Crummey Letter grants the beneficiary the power to receive the money and as a result, the beneficiary received the gift.

Essentially, the objective is for the beneficiaries to not withdraw the money in order to make the gift the property of the trust. If the beneficiaries choose not to withdraw the money, a portion of the money will be used to pay the life insurance premiums. Any money left over remains in the Irrevocable Life Insurance Trust (ILIT) and is given to the beneficiaries upon your demise.

At all times, it is imperative to maintain a sufficient amount of money in the ILIT to cover the life insurance premiums. Keep in mind that the settlor must be certain that each of the trust’s beneficiaries will take no action upon receipt of the Crummey Letter by withdrawing any money gifted within the 30-day time frame. Any misunderstandings should be addressed with the client emphasizing the importance of the beneficiaries named in the Living Trust to fully understand the significance of not exercising their right or power to withdraw the money gifted in the ILIT.

DESIGNATING A TRUSTEE WHO UNDERSTANDS DUTIES

Designating a trustee is an important choice. Before selecting a trustee, ensure the trustee understands his or her responsibilities by emphasizing the necessity to notify the beneficiaries with the Crummey Letter each time a gift is made to the trust. Also, emphasize the importance of making the life insurance payments. To ensure the trustee remains objective, the ILIT may have a provision granting the trustee the power to dictate the exact amount each beneficiary is to receive.

If for some reason the trustee fails to perform his or her duties, you still have the option to request that a judge appoint another trustee. Also, legal recourse is available if a trustee fails to perform the duties required by the trust.

CANCELLING THE LIFE INSURANCE POLICY

You reserve the right to cancel the life insurance policy held within the Life Insurance Trust. You may cancel the policy by no longer making gifts to the Life Insurance Trust and allow the policy to lapse. Whatever cash value has been built up in the whole life insurance policy, if any, may be converted to a term life policy.

Therefore, the creation of ILIT for your estate plan is complex and should be handled by an attorney to ensure the maximum benefit of an ILIT is achieved by the insured.

FULL DISCLOSURE

This article only reflects my personal views in my individual capacity. It does not necessarily represent the views of my law firm, and is not sponsored or endorsed by them. The information contained in the article is based solely on opinion, and is provided only for educational purposes and is not intended to provide specific legal advice. No representation is made about the accuracy of the information posted in the article. Articles may or may not be updated and entries may be out-of-date at the time you view them

International Medical Insurance for Individuals and Companies

Health problems are on the rise nowadays due to the excessive stress that people are forced to face. The chances of getting ill may increase when one is traveling abroad in a new climate and environment. Illness abroad can not only be a great mental and emotional strain, it can also drain your pocket. This is the reason why it is necessary to be protected against such circumstances with proper international medical insurance.

Nowadays illnesses are on the rise due to unhealthy lifestyles and increases in stress levels. This is one reason that many people like to take out good health care. Some policies can be expensive and difficult to afford for many individuals and families. However by shopping around you may be surprised how much savings you can make. With a good health insurance plan, you can get proper medical treatment at the right time, which can sometimes mean the difference between life and death.

International medical insurance is of two types – Individual insurance and company/group insurance. While individual insurance is bought privately by people, company insurance is bought by an organization to protect its employees. Such insurance cover while traveling abroad will ensure that you get proper medical attention in a foreign country. Specialist and doctor fees, tests conducted, private hospital rooms etc are the expenses covered by international medical insurance.

There are many insurance companies providing international medical insurance, but you need to shop around before you actually settle on one. You need to ascertain your requirements and choose an insurance company that provides customize insurance policies to meet these requirements. You also have to ascertain that the insurance premiums are affordable and that you are happy with the terms and conditions of the insurance companies in the market.

A little research on the internet will give you a comparative analysis of the rates and policies of different insurance companies. As an alternative you can also take the professional help of insurance brokers who have agencies with a large number of insurance companies. These insurance brokers will be able to help you whether you require individual or group insurance. It is a good idea to use the services of an insurance broker that specializes in this field of insurance and they will analyze your requirements and recommend the right policy for you. Usually using these insurance brokers means a large amount of savings in terms of insurance premiums and your time. Most of these insurance brokers have internet presence and you can contact them through their user friendly websites.