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Critical Illness Insurance Do you really need it? Or is it a waste of time?

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Critical Illness Insurance Do you really need it? Or is it a waste of time?

GREAT NEWS! There’s now a one in five chance of you winning the lottery before you retire.

Getting excited? Think it’s just a matter of time before you win? Think again, it’s not going to happen – but it got you thinking!

Now think of the same odds but this time about bad news. There is a 1 in 5 chance for men and a 1 in 6 chance for women that a long-term critical illness will prevent them from working. Sorry – this time it’s true.

Insurance cannot change those odds but it can alleviate the potential financial wreckage caused by being unable to work through long-term illness and still having a family and home to support.

Convention declares that every good family man should have life insurance. It’s easily understood, it’s accepted and your next door neighbour has it too. But what about it’s close cousin critical illness insurance? You’ll have to walk several streets to find someone who has it. Given the odds, why? After all it pays out a tax-free lump sum immediately an insured critical illness is diagnosed.

The usual reason given is its expense. Yes it is more expensive than life insurance but after all it’s providing cover for a greater risk. You’re much more likely to experience a critical illness than die before your normal retirement age. Indeed, the average age for a claim is 47. So clearly there is much more to the public’s resistance.

Not underst anding the risks or “head in the s and syndrome” are certainly major factors. After all a lzheimer’s disease, bacterial meningitis, brain tumours and leukaemia plus the long list of other illnesses typically covered by critical illness insurance, are not matters we care to think of nor know much about.

Could there be another reason? Well there have been repeated newspaper articles about people who claim on their critical illness policy only to have it turned down on an apparent technicality – the inference being that the insurance company cannot be trusted. Indeed, St andard Life freely admits that it turns down around 20 % of critical illness claims.

The truth is that behind every story of rejection there’s a harrowing story of illness, distress and sorrow – and potential copy for the journalist. But that in itself, is not evidence that the insurance company is guilty of devious behaviour.

Yes insurance companies do make mistakes, but more often than not the claim was invalid from the outset. There are two main causes. Firstly, the policyholder is claiming for an illness that is not one of the critical illnesses scheduled in the policy documentation. Regrettable, but it’s a fact that if the illness is not listed it isn’t insured and the policy won’t pay out.

The moral is to closely compare the illnesses covered by competing insurance companies and buy the one with the most extensive coverage of illnesses. If you don’t, sods law will prevail …….

The second major reason for refusal is a failure to disclose all relevant matters on the original application form. For example, if the applicant fails to disclose in response to the insurance company’s questions that his father a died of a heart attack aged 50 or that he is having medical tests for headaches, then the insurance company will wrongly assess the risks it is being invited to insure. Had the insurance company known this extra information they might have increased the premium, or asked the applicant to go for a medical examination, or waited for the outcome of tests, or even refused to provide cover. By failing to disclose, the applicant has effectively obtained cover on false pretences or at least on inaccurate information.

Thereby lies the second moral. Always provide the truth and the full truth on your application form. Anything remotely relevant to your medical condition must be disclosed.

All this points to the need for professional insurance advice. Critical Illness policies do vary and it can take an experienced eye to evaluate the best policy for your circumstances and pocket. This doesn’t mean that you have to miss out on the discounted premiums available online – but do thoroughly talk it through with one of their telephone based advisers and do make sure you read the schedule of claimable illnesses when it arrives in the post.

Then sit back knowing you’ve taken another important step to protect your family’s finances. Lets all hope that you’re one of the majority who are happy never to claim.

It’s now time to concentrate on enjoying life.

Why I Love Term Life Insurance

I love term life insurance because it helps to secure my future in case something happens to me. It will protect my loved ones from financial disaster should I die.

I love term life insurance because I can get it at a fixed rate and is renewal when the term expires. Term life insurance is least expensive to obtain, so it fits better into my budget. My term life will help to replace my income should I decease. It will help to pay off a number of things so as not to be a burden on my family. It will take care of my debt, medical care, student loans, end of life expenses such as funeral costs and my mortgage.

If I bought a term policy for one year and I am told that I am going to die within one year, the death benefit is paid. No death benefit is paid if I were to die one day after the term should end. It is not likely that I will ever chose one year policies unless the doctor said I had less than one year to live.

At terms end, I can renew my life insurance or convert it to a permanent type life insurance.

In the Spotlight: Disability Statistics

How secure will Social Security help you be if you are unable to work? It is emotionally difficult to prepare for the possibility that you may suffer a disability as a result of an accident or illness, but it is financially imperative to plan. Your quality of life tomorrow may depend on your efforts today.

The Latest Figures

The Social Security Administration (SSA, 2010) estimates that three in ten of today’s 20-year-olds will suffer a disability before reaching age 67.1 In another sobering statistic, the SSA reports that 69% of the private sector workforce has no long-term disability insurance.2 Essentially, seven out of ten workers would have to rely on their own personal savings, limited state-run insurance, and Social Security for replacement income in the event they could not work because of a disability. In 2009, the estimated average monthly Social Security benefit for all disabled workers was $1,006.3 Over the course of a year, that totals approximately $12,072, and for many workers and their families, that is significantly less than their annual expenses.

Men vs. Women

Throughout history, men have generally earned more than women. The SSA reports (2010) that as of the year 2007, the average salary for women was 78% of the average for men.4 This disparity affects women in two ways. Because disability benefits are based on earnings, the benefits for disabled male workers are typically higher than those of disabled female workers. However, the spousal benefit for widows is generally higher than that of widowers for the same reason—the median income of men is higher than that of women. These demographic trends are important to consider for families planning their financial security.

Supplemental Income Sources

In addition to Social Security and personal savings, there are additional options for workers and their families. Personal disability income insurance is a viable option for workers looking to manage the risk of losing their income. It offers coverage beyond workers compensation, which is state-run insurance that replaces a percentage of an employee’s income only for injuries that occur on the job or illnesses that are work-related.

Disability income insurance policies vary, but here are some key questions to ask:

  • Are you covered for both accidents and illness?
  • Does the policy define disability as the inability to perform your own job or any gainful employment?
  • How long must you wait before benefits begin?
  • How long will benefits last?
  • Does the policy offer cost-of-living adjustments?
  • Are benefits available for total and/or partial disability?
  • What percentage of income will the policy replace?

Disability income insurance policies contain, exclusions, limitations, reductions of benefits and terms for keeping them in force.  Speak with your representative for costs and complete details.

If you lack insurance against disability, or are underinsured, you are possibly exposing yourself to serious financial risk. Avoid becoming another statistic—plan your future today.

1The Social Security Administration, “Social Security Protection If You Become Disabled,”

www.ssa.gov/dibplan/index.htm.

2The Social Security Administration, “Social Security Basic Facts,” www.ssa.gov/pressoffice/basicfact.htm.

3The Social Security Administration, “2009 Social Security Changes,” www.ssa.gov/pressoffice/factsheets/colafacts2009.htm.

4The Social Security Administration, “Social Security Is Important to Women,” www.ssa.gov/pressoffice/factsheets/women.htm.

Copyright ã 2010 Liberty Publishing, Inc. All rights reserved.

L0410101948(exp0511)(All States)(DC)

This article appears courtesy of Karl Susman. Karl Susman is a representative of the New Engl and Life Insurance Company. He focuses on meeting the individual insurance and financial services needs of people on the West Coast. You can reach Karl at the office at (424) 785-4337. New Engl and Life Insurance Company, 501 Boylston Street, Boston, MA 02116

Seven Steps to a Sound Financial Future

Today, many people find themselves bombarded by a constant stream of financial news from television, radio, and the Internet. Yet, does all this “information age” data really help you manage your finances any better than in the past? The truth often is that the “old-fashioned” practices, such as periodic financial reviews, lead to greater success in the long run. Why not spend a few hours reviewing your finances? The changes you make today could result in increased savings. Consider these seven steps:

Analyze your cash flow. When your income is greater than your expenses, the excess is called a positive cash flow. When your expenses exceed your income, the shortfall is termed a negative cash flow. A positive cash flow means that you may have funds you can set aside as savings. A negative cash flow can indicate that it may be a good idea to reorganize your budget to minimize any unnecessary expenses.

Develop a program for special goals. For every financial and retirement goal you establish, identify a projected cost, a time horizon (how long it will take to reach the goal), and a funding method (such as through savings, liquidating assets, or taking a loan). Consider your goals in terms of a “hierarchy of importance.” The bottom—or “foundation” tier—should include emergency funds to cover at least three months’ worth of living expenses. The middle tier should include such essentials as your children’s education. On the top tier, place the “nice-to-haves,” such as a new car, home renovation, or vacation.

Boost your retirement savings. Employer-sponsored pensions and Social Security may not provide sufficient income to maintain your existing lifestyle when you retire. Thus, it is essential to identify your retirement needs and plan a disciplined savings program for the future. Maximize your contributions to retirement accounts, and if possible, make “catch-up” contributions.

Taxpayers, who are 50 years old, or older, are allowed to make additional contributions to their retirement plans. Traditional Individual Retirement Account (IRA) and eligible Roth IRA holders can save an extra $1,000 a year in 2010. Those with eligible 401(k), 403(b), or 457 plans can save an additional $5,500 in 2010.

Minimize income taxes. Why give Uncle Sam any more of your money than is necessary? It is in your interest to take advantage of all income tax deductions to which you are entitled. Consider exploring any possible ways of reducing your income taxes. For instance, under appropriate circumstances, losses or expenses from prior years may be carried over to the next tax year. A qualified tax professional can help you implement a tax strategy that meets your needs.

Beat inflation. Your income and retirement savings must keep pace with inflation in order to maintain your buying power. This means that if the inflation rate is currently 3%, you need to achieve at least a 3% annual increase in income just to break even. If your long-term savings plan fails to keep pace with inflation, you may be unable to maintain your current st andard of living.

Manage unexpected risks. As you undoubtedly know, life can sometimes throw you a “curve ball.” Without warning, a disability or untimely death can cause financial hardship for your family. Adequate insurance is an important foundation for your financial program—it offers the protection you need to help cover potential risks and liabilities.

Consult a financial professional. In today’s complex financial world, everyone needs help in making informed decisions. A qualified financial professional can help ensure that your financial affairs are consistent with your current needs and long-term goals.

Reviews can help bring focus to your overall financial picture. In the future, you will have the opportunity to alter your programs due to changing goals and circumstances. By faithfully tracking your progress, you will be in a better position to build financial security and realize the retirement of your dreams.

Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this article is not intended to— and cannot—be used by anyone to avoid IRS penalties. This article supports the promotion and marketing of insurance and/or other financial products and services. You should seek advice based on your particular circumstances from an independent tax advisor.

MetLife, its affiliates, agents, and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult with and rely on your own independent legal and tax advisers regarding your particular set of facts and circumstances.

Copyright © 2010 Liberty Publishing, Inc. All Rights Reserved.

L0910131535(exp1211)(All States)(DC)

This article appears courtesy of Karl Susman. Karl Susman is a representative of the New Engl and Life Insurance Company. He focuses on meeting the individual insurance and financial services needs of people on the West Coast. You can reach Karl at the office at (424) 785-4337. New Engl and Life Insurance Company, 501 Boylston Street, Boston, MA 02116

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