While it’s possible to get life insurance without a medical exam, let’s deal with four common instances and their tradeoffs. First, understand that in many cases, the “medical exam” is obtaining a urine and blood sample and that’s it. The medical professional even comes to your home. Only at higher amounts of insurance, e.g. $1 million and over, do the exams become more involved and will include an EKG and other tests.
1. Life Insurance ads you see on television. Typically, these policies are very overpriced and that’s how the insurance company can take the risk of insuring someone who is potentially applying from their hospital bed. By charging outrageous premiums and also offering very low levels of insurance (typically a maximum of $50,000 of death benefit), the insurance company reduces its risk. If your health is even mediocre, you can probably get less expensive insurance on your own if you agree to a medical exam.
2. Group life insurance through an association or employer. Typically, if you’re working, the insurance company “bets” that the pool of people are young enough that incidence of poor heath is rare and they can take the risk of insuring large groups without a medical exam. But if the pool of insureds is a retiree group, the insurance company will either charge large premiums and/or issue very small policies to reduce its risk.
3. I know a woman whose religious beliefs precluded getting care from doctors. However, she had a significant estate and leaned of the important role that life insurance plays in estate planning. She refused to have a medical exam from the insurance company appointed doctor. While she could not avoid an exam because of her age (80), she did agree to have an exam from a doctor she knew and in this case, the policy was of significant size and the insurance company permitted the exam by the insured’s chosen physician. This is rare but possible. The insurance company typically wants its contractor to do the exam.
4. Young insureds applying for term insurance are the other category of people where the exam may not be necessary.
Here’s the advice. While it’s possible to get life insurance without a medical exam or an exam on your terms, always ask about the tradeoff. Would the premium be lower if you did get an exam? Can you choose the physician? Could you get more coverage? If for any reason you are uncomfortable with an exam but have interest in life protection, call and we can explain the alternatives available to you.

When interest rates rise, a bond’s market value often goes down. This is because the bond’s rate can be fixed and can’t compete with the rates offered by newer issued bonds. If this situation arises, the bond might sell at a discount. Such declines can be unsettling for owners of bond mutual funds, since the value of the fund can sometimes drop with these rate increases. So where does that leave you, if you are seeking an income stream that keeps pace with prevailing interest rates but without the radical drop in principal? Consider bank-loan mutual funds.
Bank-loan mutual funds typically hold baskets of short-term loans issued by banks and other financial institutions. These loans are often made to companies for financing leveraged buyouts and restructuring activities.
The loans are usually secured by the assets of the borrowing companies. The interest paid on these loans is often tied to a certain benchmark lending rates, such as the London-Interbank Offered Rate (LIBOR) which adjusts every 30 to 60 days. Therefore, as the market rates change, the monthly interest payments to the fund companies can change as well. Because of the changing interest on the underlying business loans, the values of the fund shares tend to be less affected by interest rate fluctuations in the economy.
There are, however, some risks that need to be considered. For example, some bank-loan funds are dominated by non-investment grade quality issues. This means that the underlying loans are made to companies that have lower financial stability. And they may have ratings, such as a BB or lower on the Standard & Poor’s bond-rating scale. The loans to these companies can have a greater risk of default, but as secured loans, they are often given priority for repayment; although the assets collateralized aren’t always enough to completely compensate the loan holders.
Bank loan funds are mutual fund investments that involve risk and are offered by prospectus only. Investment return and principal value will fluctuate so that upon redemption an investor’s shares may be worth more or less than original value. An investor should carefully consider the investment objectives, risks, charges and expenses of a fund prior to investing. The fund prospectus contains this and other information about the investment company. For a copy of the prospectus, you should contact your financial advisor. You should also read the prospectus carefully prior to investing money.

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Here’s a blast from the past: coupon clipping has made a strong comeback. Earlier this month, New York Times business blog, Drilling Down, reported that 3.5 billion coupons were redeemed in 2009, a jump of 700 million over 2008’s redemption numbers. The last big year for coupon exchange was apparently in 1992 when 7.9 billion were redeemed. After that, overall use declined. Issuing coupons was seen as a waste of paper, a wasted corporate expense, and considered socially passé.

Guess there’s nothing like an extended recession to bring back a true blue. Especially when budget strapped customers begin comparing the price of Brand X laundry detergent to Cheer or even worse, Dreft, a $12/bottle baby clothes detergent.

Mathew Tilley, marketing director at one of the biggest coupon processors says, “In a down economy, coupons might make the difference between turning your loyal consumer over to a private-label brand, and keeping them in the fold. In essence, you’ve lowered your price for them in a short period when they needed the help.”

But while coupon clipping may be a golden oldie, it’s got a definite modern day tenor. Sure, there are still those who clip from the Sunday papers but Media Daily News reports that in 2009, the digital coupon business jumped 170% from the previous year. Budget conscious shoppers are looking for, and finding, good online deals.

Coupons.com is an aggregated savings site that allows customers to search out particular coupons to print or download either to a mobile device or customer loyalty card. The site has accumulated some astonishing numbers. “Last year, the Coupons.com network redeemed $858 million in coupons — up from about $320 million in 2008 and about $140 million in 2007, for a total increase of over 500% in just two years. Overall, 45 million consumers used digital coupons in 2009 — up almost 20% from 38 million in 2008. In percentage terms, that represents an increase from about 12% to 14% of the total U.S. population.”

There’s even a site for the seriously-time strapped. In December, CNN Money Reports interviewed Shannon Justice on how she turned her budget needs and past marketing expertise into lean, mean, coupon-hunting machine. Observing that coupon clipping (paper or virtual) is a time suck, Justice created SmartCouponDeals.com. Members pay $5 per month and receive coupon and saving email alerts on customer-designated pharmacy and grocery stores such as Walmart, Kroger, CVS, and Food Lion.

The savings can be quite substantial. One pharmacy sale notification included an alert on Bayer blood glucose monitors. Typically priced at $60, Walgreens offered them at a one-week only sale price of $15. For those watching both budget and medical costs, this alert more than paid for the monthly membership.

Marketing may have once painted coupon clipping as a nostalgic remnant but their multiple benefits for today’s shopper are no laughing matter. Coupon savings give consumers both a sense of budget control and savings savvy – rare ego boosts in these still-tight economic times.

Next week offers the long-awaited red letter day for consumers frustrated by unexpected interest fee spikes, varying penalties, and moveable Whack-A-Mole due dates on their credit card billing statements. Next Monday, the Credit Card Reform Act of 2009 finally takes effect, forcing some consistency on an industry long known for its inconsistencies.

Ten for ‘10

Consumer Reports.org outlined ten critical changes we can now expect on our billing statements and any future credit accounts:

1. Interest rates can’t be raised during the first year of an account;

2. Customers will be notified 45 days in advance of any change in interest rates;

3. Bills can be paid online or over the phone without incurring a processing fee;

4. Customers must be over 60 days late on payments before their interest rate can be raised on balances. if the rate is raised, it will go back to the lower rate if customers make the minimum payment on time for six months in a row;

5. Over-the-limit fees can’t be charged unless cardholders are told that the purchase will put them over their limit and they authorize it to go through anyway;

6. If your card has more than one interest rate on balances, then payments must be applied to the highest interest rate first;

7. Gift cards can’t expire for five years, and issuers can’t charge dormancy fees for unused amounts left on the card;

8. Credit card statements must be mailed out 21 days before they’re due;

9. Individuals under 21 will need a co-signer on their cards unless they can prove that they have the means to make payments on their own;

10. Credit card agreements will have to be posted on the internet.

Many would agree that these are quite reasonable requirements. Unfortunately, industry lobbyists thought otherwise, fighting tooth and nail to sink the bill. When their efforts failed, the credit card companies got busy, FAST. Rates and fees were increased, credit limits were cut, and interest terms were changed from fixed to variable in an attempt to make hay while the sun was still shining. A number of people have already received the, “Accept this rate increase or we will close your account in 30 days,” letter.

And while a consumer-friendly, February 22 is only a few days away, there are still some favorable credit card company loopholes to keep in mind. At this time, there is still no regulation on how high an interest rate can reach on limits or future purchases, nor have small business credit line woes been addressed. Readers, what do you think? Will this reform work or will we just keep getting hit with more inventive fee structures?

If you own a bond mutual fund, most likely it’s an open-end version that holds an
assortment of municipal, government, or corporate notes. The price you paid for your
shares was equal to the value of your portion of the bonds in the portfolio. And at the end of any trading day, you can redeem your shares by selling them back to the fund. But these funds often charge as much as 5.75% for their initial purchase. What if there was a way to buy a similar portfolio at a discount? You could then possibly end up with a higher yield on your investment.

Closed-end funds have a fixed number of shares and trade on the exchanges, just like
stocks. The result, however, is two prices for its shares: a Net Asset Value (NAV) price
and a market price. The NAV is based on the actual value of the bonds in the portfolio,
just like it is for an open-end fund. Conversely, the market price constantly fluctuates throughout the day and depends on changes in investor sentiment.

The NAV of the closed-end fund will vary with daily fluctuations in bond prices, just as the price of a stock fluctuates due to changes in supply and demand. Buyers and sellers might push the market price up or down in an emotional response to a changing NAV. This presents an opportunity for investors, because the market price could possibly be lower than the NAV in some cases. Of course, it can also be higher.

As with all investments, closed-end bond funds do not come without risks. They normally trade below their NAV and there is no guarantee that closed-end funds will trade at or above that level. Some funds are also riskier than others. For example, a given fund may employ leverage to achieve certain objectives, which entails additional risk. While this strategy has the ability to magnify yields, it also exposes the shares to increased volatility and can cut into your return if short-term rates rise quickly. Other funds may purchase foreign securities or low-grade issues, which increases their risk of sustaining losses from default. Therefore, you should not base your buying decision on yield alone. The quality of the issuers in the portfolio is also a major factor to consider, as well as the fund’s historical performance and management philosophy. But closed-end funds can be purchased for the same price as a stock or other individual security, and their greater liquidity and lower price are much more attractive for short-term traders and investors than open-end funds with their high sales charges.

We all know the usual budget derailments like car repairs, Starbucks runs, iPhones, and eating out. But what about those not-so-obvious cash drains like Facebook applications? Not so, you say. They’re just fun time wasters on a great social media site and besides, what else am I going to do since I’m still unemployed?

Ok. I can accept your point. After all, enough people have commented about Facebook providing an unexpected silver lining during some very rough times. So many old friends to find, so much news to catch up on, so many great applications to check out.

And unfortunately, a few new ways to bust the budget.

Frankly, I was a reluctant Facebooker. I had no time and even less interest. But I was told, in no uncertain terms, that if I wanted to keep in touch with my socially hip friends, I had to join. Apparently, email is as passé as a handwritten letter – who knew?

So I sucked it up, created an account, and had some fun.

I didn’t get the Farmville and Mafia Wars hype though, especially when I found out users could buy virtual privileges. It just didn’t make sense to me. If I’m already on a budget for real life items, why would I want to blow money on virtual stuff I can’t even use?

And then there are the tests assessing your 70’s groove thang, sports personality, or doppelganger tendencies. Continue Reading »

Do you own a cash-value life insurance policy? Have you been thinking about donating the policy to your favorite charity? There are two ways to do this—you could gift the policy outright, making the charity the owner and beneficiary, or you could name the charity as the beneficiary when you die. Which choice makes more sense? The answer really depends on a number of factors, including:
• What the charity wants and when it needs the money
• Whether you need a current tax deduction (and are willing to give up control)
• Whether you still want to keep some or most of the benefits of the insurance policy.
If you want or need the federal income-tax deduction, you should make sure that the non-profit is actually a 501(c)(3) entity. Ask the executive director for the organization’s tax status and get them to send you written proof. Then make sure that they want the life insurance policy. In some cases, the organization might simply accept the policy and immediately surrender it to get the cash. In such cases, the charitable gift could end up being much less than what you intended.

Continue Reading »

Few people like talking about it.

Fewer admit doing it.

But as the jobless recovery grinds on, more people find that they have no choice but turn to family members for financial help. A December New York Times/CBS poll revealed that out of the 700+ people surveyed, over half had borrowed money or requested some other assistance from family or friends.

Swallowed pride, eating crow, loss of independence–whatever you want to call it, asking siblings and parents for help is not easy.

After all, it’s one thing for a newly-graduated, 20-something with college loans to move back with Mom and Dad. It’s another when the mid-career, almost 40-something, moves back in. And let’s not forget the unexpected monkey wrench when older parents lose jobs, houses, or suffer medical setbacks.

Borrowing from the family bank often generates queasy feelings for both borrower and lender, regardless of whether the lender is the parent or the child. As one person put it, “It’s a cliché, but when you lend money to a friend, when you lend money to family, it changes things.”

But it doesn’t have to be this way.

In fact, many borrowers have a fierce sense of pride about repayment. Some family members will even insist on drawing up a repayment schedule.

Formal notes are one of the more equitable ways to approach this emotionally fraught situation. For the borrower, a private loan can set a manageable interest rate, create flexible repayment options, and possibly allow future tax deductions. For the lender, there is future interest and principal income, plus an assurance that the loan might actually be repaid.

However, while formal notes can reduce the stress of Family Bank borrowing, Smart Money Magazine adds a final caution. The IRS is particularly vigilant about “interest-free” loans that exceed the $10,000 annual, tax-free gift limit. If you don’t establish an interest rate, they’ll gladly set one for you.

Bottom line: formal notes can make a difference so just make sure your tax accountant ties off any loose ends.

Note:  BudgetTrackers currently have two Lender/Borrower options available. They can either create a loan entry in the “My Bills” section or an “I Owe You” memo that connects both the lender and borrower (as long as both are BudgetTrackers) until the debt is satisfied.

Other resources to check out:

Borrowing from friends and family to buy a house. While this article refers specifically to documenting private mortgages, it has pointers that can help with other family-type loans.

Keep in mind that not everyone is a reliable debtor. If you have one of these in your family, check out this useful article (plus, interesting reader comments) from Money Magazine.