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Daniel T. Murray Blog: family

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Policies for children represent a small fraction of the life insurance market, but they made the news this week after a court hearing for a Georgia man accused of killing his young son by leaving him in a hot car.

Testimony and court documents revealed that Justin Ross Harris and his wife had two life insurance policies for 22-month-old Cooper Harris, one for $2,000 and one for $25,000.

Prosecutors have portrayed the 33-year-old Harris as an unhappy husband who was exchanging nude photos with several women. Defense attorneys say the death was a tragic accident. Harris remains in jail charged with murder and child cruelty.

The insurance policies were mentioned among numerous details from the evidence against Harris and weren't singled out by prosecutors in their arguments.

Still, the case has drawn attention to policies that families sometimes purchase for children. Here are five things to know about the children's life insurance market.

— HOW DO THE POLICIES FOR CHILDREN WORK? The policies are typically purchased by parents, grandparents or anyone directly related to the child, according to Steve Weisbart, chief economist for the Insurance Information Institute.

Premiums paid into the policies vary according to the terms. Generally, the higher the death benefit — what's paid out to beneficiaries if the insured person dies — the greater the premium. Insurers require that anyone buying the policy have an "insurable interest" in the person covered, meaning the buyer wants the person covered to actually live.

— INSURERS ATTACH CONDITIONS TO THE DEATH BENEFIT. Insurers require documentation of how a covered individual dies, and the policies will not pay out if the beneficiary is convicted of murdering the person covered.

— POLICIES CAN BE SAVINGS DEVICES. Life insurance policies typically have a cash value while the covered person is still living, with the amount based on premiums that have been paid over time. Often, a parent or grandparent buys a policy with the intention of giving the child the option later in life of using the policy as a cash source.

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Posted 1:53 PM  View Comments


If you're co-signing big student loans for your child, you may want to buy a life insurance policy while you're at it.

While no one wants to imagine the death of their child, taking out insurance on your son or daughter -- or asking them to purchase their own plan -- will protect you from being hit with mountains of debt should tragedy strike.

And the policies are pretty cheap. A basic plan with up to $250,000 in coverage can cost as little as $15 a month for a young, healthy college student or recent graduate. That's a whole lot less than the loan payments you could be stuck with -- which average more than $200 a month.

Such a move would have been life altering to Steve and Darnelle Mason, who lost their daughter Lisa five years ago.

Trying to pay back the $100,000 in private student loans they co-signed for their daughter has been a financial nightmare.

"I absolutely wish we had [a life insurance] policy," said Steve Mason. "We would not have struggled financially for the past four years with these private student loans, and our credit would not have been ruined."

Federal student loans are forgiven by the lender when a borrower dies, but private lenders aren't required to provide any such relief.

That's one reason it's important to get as much federal aid as possible before turning to private lenders. And for parents, it means not co-signing on a loan unless you have the means to repay it.

Another reason for caution: student loans can rarely be discharged in bankruptcy.

But for many parents, getting their child a good college education is non-negotiable -- and that's when life insurance can provide a little peace of mind, says Eleanor Blayney, a certified financial planner and consumer advocate for CFP Board.

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903 pet owners were surveyed and 44 percent say they have made formal or informal plans for their pets’ future care.

For one-fifth of those owners, according to the survey, “Pet heirs: Financial planning with pets in mind,” those plans are financial.

Pricing a pet’s life
The pet industry has more than tripled in 20 years from $17 billion in 1994 to an estimated $59 billion in 2014, according to the American Pet Products Association. The pet owners who took Securian’s survey in May 2014 provide evidence of that growth. When asked how much they would spend to save a pet’s life:
· 16 percent say they would spend $10,000 or more.
· 29 percent would spend $2,000 to $5,000.

Cost of care
When asked about ongoing maintenance and veterinary costs, respondents in the Securian survey indicated their expenses can be substantial:
· Nearly 60 percent spend up to $1,000 a year on food, grooming, toys, etc.
· Three-fourths spend up to $1,000 a year on veterinary bills.
· 18 percent say their largest single pet related expense was $2,000 or more.

These costs add up to many thousands of dollars over the years, especially for long-lived pets.

“If the owner suddenly dies or becomes disabled, the person who inherits the pet may not be financially prepared for the added expense of ongoing care or life-saving procedures,” said Michelle Hall, manager, Market Research, Securian Financial Group. “Our survey shows a significant percentage of pet owners make financial plans to ensure their pets will always be well cared for.”

Life insurance, annuities and cash
Nearly one-fifth of all respondents in Securian’s survey say they have financially planned ahead for their pets’ future care. When those respondents were asked to select all that apply:
· 38 percent said they added the pet’s future caregiver as a beneficiary to a life insurance policy.
· 35 percent added more coverage to their life policies.
· 13 percent purchased annuities naming the pet’s caregiver as the beneficiary.

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Posted 10:41 AM  View Comments


A new study shows Americans have even less insurance since the recession, leaving their families vulnerable.

Life insurance is usually last on the list of important-but-necessary items people want to spend money on, because, let’s face it, no one wants to dwell on the circumstances in which it could come in handy. Now, in the wake of the Great Recession, people have even less insurance than before, which leaves families unprepared to cope with potential tragedy.

The gap between the amount of life insurance Americans actually have and the amount they think they need has now widened to about $320,000, according to a recent survey of 1,004 respondents by New York Life Insurance. Respondents on average said they needed about $540,000 worth of insurance, but they only had $220,000 last year.

Similarly, between 2004 and 2010, the number of people with life insurance dropped from 78 percent to 70 percent, says Bob Kerzner, CEO and president of LIMRA, a financial services industry group. “So three in 10 households in the United States have absolutely no life insurance whatsoever,” he says. He attributes the large drop partly to the recession and the fact people don’t – or at least think they don’t – have the money to afford a life insurance policy.

Kerzner says people tend to think that life insurance is about three times more expensive than it actually is. “There’s the perception that it costs more than it does, so they think it won’t fit into their budget, even when it might,” he adds. LIMRA surveys have also found that about half of households say they believe they don’t currently have enough life insurance.

Millennials, who are now in their 20s and early 30s, are particularly likely to be underinsured. A LIMRA survey released last month found that if the primary breadwinner were to die, six in 10 Gen X and Gen Y Americans​ said their households would suffer financially, versus just over one-third of baby boomers. The survey, based on 6,000 respondents, found that Gen Y is also less likely to have life insurance compared to older generations. Just one-third have individual life insurance policies, compared to about half of baby boomers.

“Young people in general tend to assume they’re absolutely invulnerable,” says Steven Weisbart​, chief economist for the Insurance Information Institute. But young adulthood is also an ideal time to lock in low rates on policies, he adds. “When you’re young, it’s really cheap … This is a good time to buy,” he says.

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Posted 1:42 PM  View Comments


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