Category Property Investment

By Robert D. Cavanaugh, CLU

Most people do not know they can sell an insurance policy. There are companies that will pay you more than the cash value. Even term insurance, which has no cash value, is a candidate for purchase.

This transaction is called a life settlement. Life settlements have been on the scene since 1995; they are not new. While the purchase is facilitated by an insurance company, the buyers typically are pension and institutional funds which hold the policies in their investment portfolios.

Here are three common reasons why a person would sell their insurance policy

1. The policy has outlived its usefulness.

78% of all insurance is purchased for family protection. Families with children insure the breadwinner(s) until they have had the time to build up an estate or an adequate 401(k) plan to provide for the family, pay off a mortgage and educate the children. Most people have been there and done that.

However, later in life these needs may have disappeared. The house is paid for, the kids have been to college and your 401(k) plan has a balance ten times greater than your life insurance face value.

Rather than continue to pay premiums, or surrender it for its cash value, you can sell it for more than the cash value. Buy a boat, take an extended vacation or go down to the dealership and plunk down cash for that car you have always wanted.

2. The policy has a large loan.

There are three common ways a policy can acquire a large loan.

First, at some point you simply took a maximum loan against your policy. It could have been to satisfy an emergency, take advantage of an investment opportunityany number of things. But the loan was never repaid.

Second, you could have taken a modest loan years ago and never paid anything toward the principal. Every year, however, you received a bill for the interest due. If you are like many people, this goes in the round file and you never pay the interest. What happens is that the interest gets added to the loan. So what is originally simple interest turns into compound interest.

Over time, the loan and the unpaid interest can consume the entire cash value. That’s when you get the letter from the insurance company telling you that to keep the policy in force, you need to come up with some astronomical amount of money.

But that’s not the worst of it. When you call your agent to see what your other options might be, he or she informs you that if the policy lapses, there will be a gain (cash value less premiums paid) that the insurance company is required to report to the IRS. Worse yet is the fact that there is no money in the insurance policy to pay the tax (remember it lapsed for lack of premium payment and/or lack of any remaining values). So you are going to have to come up with the tax from someplace else. I don’t think you would consider getting this information one of your better days.

3. You own Universal Life and interest rates have declined.

Getting this news is another bad day at the mail box. This time the letter from the insurance company says that in order to keep the policy in force, you have to come up with more than you could get for your first born.

How this occurs goes back to when you bought your policy. One of the major factors in determining the premium for a given face amount of Universal Life is the interest rate assumption made in the original proposal. Remember the double-digit interest rates? You could have bought your policy during this time frame. Most insurance agents would have suggested using a lower interest rate assumption to be conservative. However, interest rates have declined to even below these play-it-safe assumptions.

The sale of your insurance policy averts all three of these problems. In the first case, you don’t have to pay any more premiums for coverage that is no longer needed. In the second, the problem you have with the loan disappears and is replaced by cash. And in the third, the probable lapse of the policy due to the fact that the premium to maintain the coverage is off the charts is offset by the cash received via a sale.

About the Author: Robert D. Cavanaugh, CLU is a 36-year financial and estate planning veteran and author of the free newsletter, “The Estate Preservation Advisor”. For cutting-edge, easy-to-understand financial planning resources and techniques to increase your income, reduce taxes and preserve your estate and to claim the free video, “How to Sell Your Life Insurance Policy for More than the Cash Value”, go to

theestatepreservationadvisor.com/rd/subscribe.htm

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By Lawrence Reaves

When one or more of the cylinders in your engine misfires, you’ll notice a hard idle, hard start, or hesitation during acceleration. In some cases, you’ll experience all three. While idling, your engine might shudder so violently that it shakes your entire steering column. While driving, you’ll notice a marked lag in performance. These problems will be more pronounced if you turn on your A/C or use any other accessories that add to the load placed upon your engine. The question is, what causes a misfire in the first place?

There are three primary reasons for a misfiring cylinder: insufficient spark, compression, or fuel. The challenge is to determine which factor is to blame.

Insufficient Spark For Ignition

Your engine undergoes a 4-stroke combustion process that results in the energy needed to turn your car’s crankshaft. Air and fuel travel into each cylinder. The intake and exhaust valves close, sealing the combustion chamber. A piston lies at the bottom, and begins to rise, compressing the air-fuel mixture. When the piston reaches the topmost point of its path, a spark plug ignites the mixture and causes a miniature explosion. Vapors expand within the chamber and push the piston downward. This rotates the crankshaft and powers your vehicle.

Note that the process described above requires the spark plug to ignite the compressed air-fuel blend. If this spark is unavailable, or too weak, the mixture cannot be ignited. This causes a misfire.

Insufficient spark can be traced to several possible root causes. For example, the plug may be worn, corroded, or damaged; the plug wire may also be worn, preventing voltage from reaching the spark plug; or the distributor cap may have become cracked or otherwise damaged. Each of these factors will prevent voltage from being delivered to the combustion chamber.

If you intend to fix the problem without the help of a mechanic, you’ll first need to identify which cylinder is misfiring. You can accomplish this by letting your car idle and unhooking the plug wires, one at a time. You’ll notice a change in the idle speed after disengaging each good cylinder. When you unhook a plug wire and notice no change, you’ll have found the misfiring cylinder. Check the plug and the plug wire. You’ll need an ohmmeter to check the plug wire’s resistance.

Compression Leaks In The Engine

Recall that during the 4-stroke combustion process, the air-fuel mixture is compressed by the rising piston. In order for this to occur properly, there should be very little compression leakage from the chamber (a small amount of leakage is normal). If a sizable leak has developed, the air-fuel mix cannot be sufficiently compressed for the ignition stroke.

Once you have identified the misfiring cylinder, perform a compression test (a manual tester costs less than $30 at most auto supply shops). If you discover a leak, the cause will likely be due to a bad exhaust valve. You’ll likely need to have the guide seals replaced. As a side note, if you detect a leak in two neighboring cylinders, the culprit is probably a failing head gasket.

Malfunctioning Fuel Injectors

If you have checked the spark plug, plug wire, distributor cap, and compression, and have been unable to find a problem, the misfire is likely due to insufficient fuel. The best place to begin troubleshooting is with your fuel injection system – specifically, the injector for the misfiring cylinder. Assuming enough fuel is reaching the injector, the most common issue is a blockage in the nozzle. Such blockages are often caused by deposits left behind when you turn off your engine.

Once you have ruled out ignition and compression as possible causes of the misfire, it’s best to have an experienced mechanic check the fuel system. If you can identify a clog in the injector, replace the unit. Otherwise, insufficient fuel could be caused by a failing oxygen sensor, malfunctioning powertrain control module (PCM), or a bad fuel pump. Your mechanic will have the necessary equipment for diagnosing which factor is causing the problem.

About the Author: Find your car parts at

Everdrive

and

used engines

from the leader in parts, http://www.everdrive.com

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By David J. Livingston

If you are looking to get a term life policy, your first step is to get term life insurance quotes, as many of them as possible. Getting the quotes is just the first step. That means your actual shopping i.e. clever shopping involves comparing the various different quotes you get from the different providers on different websites. These days it is easy to get instant term life insurance quotes and compare them in one place with the online services provided by many health care or other websites.

While getting the quotes and looking at them in one place is easy, comparing and choosing is definitely not that easy task. This is because a lower premium or more inclusions or heavy coverage does not indicate the best policy.

Term life policy is a coverage option that insures an individual for a set time period or term. If the policyholder dies while the policy is still in term, the death benefits are paid to the beneficiaries. Otherwise the policy just ceases to exist at the end of the term. Most companies let the policyholder to renew the term without medical examination but after adjusting the term for age. So getting the right company and the right policy at the outset is very important so that you can have stress free life coverage for life.

To compare quotes you need to get many quotes. Few things that you need to consider while getting quotes are

1. Your annual income

2. Outstanding debt

3. Lifestyle expenses

4. Savings and investments

These details help determine the amount of coverage you would need to purchase. Roughly you would need about five to eight times your living needs. Based on this coverage amount required, your age, term of cover and your health the premium will be fixed. So the first thing you would have to compare is the coverage offered in the different quotes.

Some companies may offer low insurance rates but at the same time they will also offer low coverage. So you need to decide on what you are looking to compromise on. Low rate and low coverage is not really a great deal. Next compare the associated term of the policy across the quotes. A short-term policy should have lower insurance rate when compared to the long-term policy. So this would surely affect your premium and if you miss this you might choose a policy for lower premiums just to find out later that you have chosen a short-term policy when you actually needed a longer policy.

Next compare the different conditions and underwriting policies of the different providers. Some might require medical exams; some might have specific policy with regards to the death benefit; some may have a specific way of dealing with accidental death, etc. Make sure you explore what the various inclusions and exclusions of each policy. Then you can compare the costs i.e. the premium that you will be paying the company on the monthly basis or yearly basis. Check to see under what rate class each of the companies has rated you. In one you would be in the preferred class in another you might be in the standard class etc. The rate class determines your premium.

While comparing the quotes you should also check for the reputation of each of the providers. Even if a company offers a higher insurance rate, if it has a better reputation compared to another that offers lower rates, you are better off picking the more reputed one. This is because with reputed companies you have more surety of payouts. Also make sure that the company has no complaints and if there were any look to see how they mitigated those complaints. You can take the assistance of the local Better Business Bureau and the State Department of Insurance in checking the reputation of the companies. At any cost you need a reliable provider. In fact you are entrusting them with the money that your family will need after your time.

About the Author: Article by David Livingston of EQuote.com, a website with the best

low cost life insurance

and

cheap life insurance rates

information in the country.

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