Archive for October, 2012

Business Start-up Finance: Estimating Your Start Up Costs

Wednesday, October 10th, 2012

In addition to providing enough money to pay your family living expenses for three-six months, you will need money to pay for a variety of one-time expenditures necessary to set up your business. Let’s take a look at typical expense categories required in setting up a new business.

Office Space

As locating one’s business at home becomes more acceptable, larger numbers of new businesses are able to save a major start-up expenses – rent. Renting an outside office, retail store, or warehouse space results in some significant startup expenses. Included among these are:

– Rent deposits, usually at least one full month’s rent, which can range from $300 to over $1000.

– Utility deposits, averaging $100 per utility.

– Insurance, costing from $500 to $2000 per year — E.g., retail stores must often have plate glass insurance in addition to general business insurance.

– Phone line installation, starting at $85 per line, without any inside wire location work included.

– Redecorating & renovation, which you sometimes can negotiate with the landlord to include in your base rent. You usually must sign a multi-year lease to receive this however. This expense runs from $100 (you do the painting) to several thousand if you must build walls and add doors and windows.

– Furnishings are needed whether you locate your office at home or in outside space. Most offices will require at a minimum a desk, chair, lamp, file cabinet and a bookcase or bookshelves. Additionally, you may wish to have a separate computer table.


Wise use of electronic equipment can allow you to run your one-person business as professionally as your larger competitors. This is one category of expenditure where it pays to shop as the prices are continually dropping.

– Telephones. Can be found in discount stores and catalogs, as well as direct from the phone companies. Plan on spending $30.00 for a reliable one-line phone and $60.00 for a good two-line phone.

– Telefax. Increasingly just having a phone is not enough. Your customers expect to be able to send you something immediately by fax. Coated paper faxes run about $125.00 and plain paper faxes cost around $300.00

– Computer. Take your pick! What a variety is available today. Learn what the main computer words mean and how a particular feature affects speed or ease of use. Then go around to both computer and discount stores to compare. And don’t forget online sellers such as Dell and Gateway, both of which make excellent computers.

– Copiers. Rarely needed by a new business and really an expensive luxury because of their tendency to break down. Rebuilt copiers with high-speed features can be bought for under $2,000.00.


At a minimum your business will require one telephone line and a telephone to
attach to it. You may be able to get by for some time with your existing residential phone line, thereby avoiding a connect charge. If, however, one line is not enough to take all of the calls or if you wish a second line to transmit and receive telefaxes, it will cost you a minimum of $80 to connect the line. Any inside installation is extra. Local phone companies bill their inside installation time at $60/hour.

Consider also your needs for: phone message handling, calls made outside of your office and paging. Voicemail may be sufficient to handle calls when you are not in. Special phone features, such as call waiting, call forwarding or caller ID carry installation charges of $30 – $40 apiece. Keep an eye open for occasional deals that combine features for one,
low cost.

Cellular phones often run over $100 to buy and set-up and pagers often require a $200 deposit.

Licenses, Fees and Permits

Common start-up costs in this category include: assumed name registration fees, ranging from $30 to $50, incorporation fees of $100 and up, business licenses starting at $30, health permits sometimes cost several hundred dollars, and state-issued licenses, such as cosmetology licenses, can cost up to $1000 or more per year.


If you are starting a typical home-based service business, your renter’s or homeowners insurance may cover your business equipment, supplies and inventory. But it may not, so be cautious and call your insurance agent before you open for business to check the policy coverage. Often a small additional fee, known as a rider, will increase your home insurance to cover
equipment such as a business computer, telephone and fax machine. If you need a rider, figure on adding $50 to your start-up costs.


To promote a professional, established image for your business, have well-designed and printed letterhead, envelopes and business cards done. Quick printers and office supply warehouse stores, such as Office Max and Office Depot, offer very attractive prices on packages. For example, Office Max in Chicago offers 500 letterhead, 500 envelopes, 500 business cards
and 200 invoices for $49.95.

Professional Fees

If you are considering incorporating your business, need contract forms setup, will deal with import/export, want to set up distributors or require any other legal guidance, you had better budget 5-7 hours of a lawyers time. Good business attorneys charge between $125 and $175 per hour, so you would need to set aside $500 to $1000 in start-up investment for legal help.

If you are going to open a retail store, a wholesale company or a manufacturing company you would be wise to consult an accountant before you launch. Budget $500- $1000 in start-up investment to cover accountant’s fees.

Summing It Up

When you total up all of the categories of start-up expense, you may be amazed at the total. If you include a computer, start-up costs can easily run over $5000, without any cash contribution toward your personal living expenses. Advance planning is the key, because you should try to avoid borrowing the money to pay start-up costs. You will need to borrow later to stay in business. Borrowing before you start puts you in the credit hole before you have started to market your company.

Guide to Arizona auto insurance

Wednesday, October 10th, 2012

On average, Americans spend approximately $900 per year in insurance premiums. One of the most expensive states in the country, Arizona currently ranks 14th in insurance premium costs, with the average annual expenditure around $930. It seems rather steep, but compared with the top three: New Jersey, Washington D.C, and New York, which all boast annual premiums well over $1000, Arizona amounts to a small bargain. Furthermore, several carriers do not offer insurance to Arizona drivers at all, despite what one British gecko advertises.

When establishing rates, the insurer’s primary goals revolve around generating enough revenue to pay operating costs and client claims. One vital method for accomplishing this is to assess risk to every potential customer; thereby charging higher premiums for higher-risk drivers (typically teenagers, unmarried young males, and senior citizens.) A second consideration is the inherent need to remain competitive in a consistently-expanding field.

In addition to the perceived risk of the driver, the type of vehicle plays a crucial role in assessing premium costs. Quite simply, some vehicles have a certain, shall we say, predisposition, to being driven in a manner that does not promote a sense of calm within other drivers. Furthermore, miles driven are taken into consideration; for example, someone who commutes 100 miles to work daily will incur higher rates than one who drives ten.

Like every other state, Arizona has specific requirements surrounding the limits and liabilities of automobile insurance. Currently, the minimum personal liability limits are $15,000 per person and $30,000 per accident; while the minimum liability for property damage is $10,000. Unfortunately, however, as these are the minimums as stated by law, oftentimes in the case of a serious accident, these amounts are insufficient and the party at fault is often subject to additional litigation.

Other financial factors to consider include coverage amounts and deductibles for comprehensive and collision, whether towing and/or roadside assistance is desired, and personal medical coverage. Comprehensive claims revolve around acts of God, vandalism, animal-caused accidents, and theft. Collisions, on the other hand, involve another motorist, a rollover accident, or collisions with other non-animal objects (i.e. vegetable or mineral.) Uninsured and under-insured motorist coverage is also vital to protect oneself from those who have not read this article. Arizona has a special class of comprehensive insurance for glass reimbursement due to a high volume and frequency of construction debris and rocks being forcibly hurled toward one’s head. Most popular in this category is the zero deductible provision; one which I have used quite often.

Of course, the best strategy is to meet with one’s insurance carrier and explore the options together.

Windshield Repair versus Replacement

Wednesday, October 10th, 2012

Ah, the bane of most vehicle owners existence is the windshield – it seems like no matter how hard you try, you will inevitably get a chip or crack in a nice fresh windshield. Everyone has heard of repairing windshields, but when is that a viable option and when is it necessary to replace the windshield instead of simply having it repaired?

Windshield repair is done by thoroughly cleaning the damaged area of all dirt and moisture. Then, a strong resin is injected into the damaged area of the windshield.

The resin bonds with the windshield glass and halts the damage from getting any worse. In most cases, the damage is not completely invisible, but rather a slight scarring can be seen in the glass and if you focus on the area, there will be a slight distortion. The key to having a repair done is to have it done quickly, soon after the chip or crack occurs in your windshield.

Failure to fix your windshield crack or chip promptly will likely result in the chip or crack extending across the entire windshield or filling with dirt and moisture, making it too difficult to repair and thusly requiring a replacement.

If you notice a small chip or crack in your windshield that looks like a bull’s-eye, or a small crack and it is not located directly in the field of the driver’s vision, then it’s likely possible to have the chip repaired instead of replacing your whole windshield.

Most insurance companies will waive the deductible on your auto glass insurance coverage to have the windshield repaired instead of replacing it. A quality auto glass repair shop will ask you a variety of questions about the chip or crack to determine if it can be repaired or not.

It’s important to remember that windshield repair is structurally sound, and is an environmentally safe process; however it will not return your windshield to its former pre-chipped condition. There will be some slight scarring and distortion where the windshield repair was done, so if the chip or break is in your field of vision, it is not recommended to repair it, but rather replace the windshield.

Thus, only some types of breaks and chips can be repaired – long, spidery cracks in your windshield can not be repaired and you will have to replace the windshield. However, small chips and some small cracks can be repaired, which is why it is so important to have your windshield crack or chip repaired as soon as possible, to avoid spreading of the damage and resulting in the need for windshield replacement.

If you need to have your windshield replaced, find a quality auto glass replacement shop in Houston to do the work. You are not required to use the glass replacement shop that your insurance company prefers in most places.

When your windshield has been replaced, find out how long your vehicle needs to remain stationary to allow the adhesive to cure properly – this can be as short as one hour or as long as eight, depending on the humidity, temperature and weather conditions.

Most auto glass repair and replacement shops offer both in house and mobile services, however if the weather is poor, common sense says that in house replacement or repair is best.

Most auto glass insurance policies will cover windshield repair with no deductible being required by you. This helps to offset the cost to the insurance company of paying for a windshield to be replaced.

Breaks in a windshield can often be repaired because they are made with laminated glass, to prevent shattering. However, most side windows are not made with laminated glass and should be replaced if damaged instead of repaired.

Catching a break or chip in your windshield quickly is important – if you don’t have it replaced soon, the crack or chip will grow and extend across your entire windshield, rendering it impossible to fix and replacement becomes necessary.

Check with your insurance company to see if repairs are covered for your windshield and how much it will cost you to replace your windshield (your deductible amount).

Compare the cost of the deductible plus your premiums to determine if replacing your windshield through your insurance policy is worth the rise in premiums or not. Some windshields can cost thousands of dollars to replace, while others are only a couple of hundred.

Auto glass: How to replace auto glass

Wednesday, October 10th, 2012

Cracked windscreens are common and most drivers feel the need to replace it before the problem worsens. Is auto glass replacement the kind of job a regular handyman could tackle successfully? Before you attempt to do it yourself, consider what might be involved. When you have a cracked or smashed car window, whether it be the result of accident or vandalism, you are looking at a task that is not for the inexperienced. Repairing or replacing auto glass is not your regular five-minute car maintenance job, but is one of those that will take a measure of know-how, not to mention specific tools.

Unless you happen to be a mechanic of sorts, don’t even attempt to replace your own auto glass. If your windscreen needs replaced, this is a job that will need tools the ordinary car driver doesn’t possess. If it happens to be one of the door windows that needs replacement, this will require removing door panels, uncoupling the mechanics that hold the glass and replacing everything again. Replacing auto glass is basically a car job that should just not be tackled by most people. Most good car insurance policies include auto glass insurance to cover both cracks and breakages. There seems to be little need to think about tackling a job of work that may or may not succeed, when there are people who are experts, ready to do the job in a fraction of the time and at reasonable cost.

Consider what is involved in replacing auto glass on a car door before making a move. You will need to clear out the rails where some of the broken glass is still lodged. Next, you have to clear up all the broken glass from inside the car. Next you have to remove the door panel on the inside, unscrew the mechanics holding the glass and clean out the broken glass within. Then you have to put the new glass in place, secure it and replace the door panel. Not easy is it? What is the message? For most people, the message is, leave it to the experts. Replacing auto glass is not like changing a tire. The time you will spend, the irritation you will feel and the strong possibility that you will not make a successful job should be enough to tell you to leave well alone.

You can make life easy for yourself, by making sure you have auto glass coverage included in your car insurance policy. When the time comes to repair cracked glass or replace glass that is broken, simply call the experts and relax with a nice cup of coffee while you watch him do what he does best.

Cigar smokers see the best life insurance rates drift away

Wednesday, October 10th, 2012

Cigar smoking is an expensive habit, and we don’t mean the cost of premium cigars. Based on medical evidence, life insurers judge cigar smoking to be a habit that lowers life expectancy. So, if you often smoke cigars, cigarettes or a pipe, or chew tobacco — even if you’re otherwise healthy — you’re going to be placed in a smoker risk category and pay higher life insurance rates.

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If you think cigar smokers shouldn’t be grouped with cigarette smokers, consider this: It is not unusual for some premium cigars to contain the tobacco equivalent of an entire pack of cigarettes, according to the U.S. Department of Health and Human Services (HHS).

And that leads to major health problems. According to the National Cancer Institute, scientific evidence has shown that cancers of the oral cavity (lip, tongue, mouth, and throat), larynx, lung and esophagus are associated with cigar smoking. Furthermore, evidence strongly suggests a link between cigar smoking and cancer of the pancreas. In addition, daily cigar smokers, particularly those who inhale, are at increased risk for developing heart and lung disease.

But what if you occasionally enjoy a cigar at a wedding but don’t consider yourself to be a smoker? Many life insurancecompanies will allow the “celebratory” or “occasional” cigar smoker to still qualify for non-smoking rates. Some insurers define “occasional” by allowing you to smoke a number of cigars per year (generally 12 or less) whereas others go by a level of cotinine, the major metabolite of nicotine, in the urine. Of course, the urine sample you provide for your life insurance exam must be nicotine-free, too.

For example, New York Life differentiates between the regular and occasional cigar smoker based on answers given on the life insurance application regarding frequency of use and based on urine sample results. If you’re a regular cigar smoker, you’ll be grouped in with all the other smokers at the higher rates.

Most life insurers will put occasional cigar smokers into a “nonsmoking standard” or perhaps even “nonsmoking preferred” rate class. You won’t be able to qualify for the absolute best “super preferred” rates. For an explanation of classifications, see how life insurers view you: Underwriting categories.

Standing out in the industry is Prudential, which will bestow a “nonsmoking standard plus” rate (that’s a rate between preferred and standard) on regular cigar smokers, pipe smokers and tobacco chewers.

For some insurers, a policy declination based on cigars may depend on policy type. For example, some insurers won’t take cigar smokers for term life policies but will offer them universal policies. With term life rates so low, they can’t afford the possible risk.

No fibbing allowed
There can be severe consequences if your life insurer catches on to regular smoking that you’ve lied about. Companies are fairly strict on contesting claims on nicotine use. For example, if you make it past your urinalysis and secure a policy but then die of a heart attack, and it comes to light that you were a regular smoker, your life insurance claim could be denied.

Or, say you applied for a policy a year ago and were offered smoker rates that you didn’t take. Don’t try to apply with a different company and lie to get nonsmoker rates; your previous medical exam results will sit in a database operated by MIB Group for seven years. When the insurer checks your new application against the MIB database, that old history will come to light. For more on MIB, see what your health, life and disability insurers know about you.

It’s better to tell the truth and pay the extra premium than put your policy at risk.

Get yourself reclassified

If you purchased a life insurance policy under a smoker rating and have quit for years, you may be able to get reclassified and lower your premiums. Insurers will vary on their rules for how long you must be smoke-free, so contact your life insurer to find out if you qualify for a reevaluation.

Common questions about life insurance

Wednesday, October 10th, 2012

You’ll likely have a lot of questions as you shop for life insurance quotes — not only about what you’re buying, but also about what can happen after your purchase. Here are common questions about life insurance.

Can I have more than one life insurance policy?
Yes, you can have multiple policies from the same or different life insurance companies. For example, you could have a permanent life insurance policy and also a term life policy for a short-term need. But if you apply for more insurance coverage than your situation indicates you need, the insurance companies will likely ask why.

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How do I calculate how much life insurance I need?’s Life Insurance Needs Estimator Tool makes that easy.

What happens if I don’t pay the required premiums?
Typically, you will have a 30- or 31-day grace period. If you pay within this time period, your policy will continue in force. If you don’t pay within the grace period, your policy may lapse, depending on the type of policy you purchased. With a permanent policy, however, your life insurer may use your cash value, if available, to cover premium payments.

If you are unable to pay because you have become disabled, and you elected a “waiver of premium” provision or rider on your policy, you do not have to pay premiums for the duration of your disability. Universal life insurance policies generally offer policyholders increased flexibility in premium payments that may be important when your cash flow is variable.

What if my policy lapses?
A policy (other than universal life insurance) lapses when you fail to pay your life insurance premium by the end of the grace period. If you have a permanent life insurance policy and enough cash value in it, you may borrow from the policy to pay the premium. If you have a term life policy and don’t pay your premium within the grace period, your policy will lapse and simply end.

Do I need life insurance if I’m a young single person?
An advantage to buying life insurance when you’re young and healthy is you’ll be able to find low cost life insurance. If you have dependents in the future, you will have locked in the lowest rates and you will have guaranteed your “insurability,” meaning you won’t have to worry about higher rates as you age and possibly experience declining health.

Are there cases in which I don’t have to take a medical exam to buy life insurance?
Group policies generally don’t require medical exams, unless you have to prove your “insurability” in order to buy a large group life amount. Most group life insurance enrollments are held annually through your employer.

“Simplified issue” policies require that you answer some medical history questions but don’t require an exam.

“Guaranteed issue” policies require no medical exam or medical questions, but you will pay significantly more in premiums than you would with an underwritten policy, even if you’ve had some health issues.

What do insurance companies look for in the medical exams?
The medical exam generally collects your height, weight, blood pressure, urine sample and blood sample. These results, along with your age, gender, family health history and answers to health questions, will determine what rate class you fit in. Your agent or insurance company should explain what criteria determine the class into which you fall.

If you don’t qualify for the preferred rate today, you might be able to improve your rate category if certain health factors improve. For example, say a 35-year old woman buys a life insurance policy. She is 50 pounds overweight, has high blood pressure and is trying to quit smoking. Two years later, her policy is still in force and she has lost 50 pounds, her blood pressure is normal and she has been nicotine-free for a year. She could talk with her agent about possibly getting a re-evaluation of her rates.

If the medical evaluation showed a new health condition for which she would be classified into an even higher rate category, she would remain at her current rate.

The insurance company will not reclassify you into a higher rate bracket during a re-evaluation.

Can I buy a policy on someone else?
Yes, but only if you have an “insurable interest” in that person. This usually means a spouse, domestic partner or live-in companion, or a business partner.

Can I buy a policy on someone else without them knowing about it?
Although there are certain exceptions in some states (a husband or wife, for example, may be able to purchase insurance on his or her spouse), the answer to the question generally is “no.” You cannot take out an insurance policy on someone else’s life without his or her knowledge and consent.

Can I name anyone I want as my beneficiary?
Yes, you own the policy and you can name whoever you want as the beneficiary. While many people choose only their spouse, it is possible to name more than one person as a beneficiary. For example, if you have a $100,000 individual life insurance policy, you could name your spouse and four children to share in the policy equally at $20,000 each.

Do life insurance policies ever cancel each other out? If I have a credit life policy and a whole life policy, will one not pay out?
No. Upon your death (assuming you have paid all the necessary premiums), both policies will pay out to the beneficiaries named.

How life insurance rates are determined

Wednesday, October 10th, 2012

When you’re getting life insurance quotes, your premiums will be set in part by your “risk class,” which is defined by an insurer’s “underwriting guidelines.” (Your policy amount and length are the other pricing factors.) The better your risk class, the lower your premiums will be.

Your ability to find affordable life insurance will be based on your life expectancy and risk factors. Underwriters will look at your income and lifestyle, medical history and overall health, your family’s medical history and any hazardous recreational sports or occupations.

Illnesses suffered by your family members after age 60 shouldn’t affect your premiums.

Some life insurers are more “aggressive” in determining your risk class, and may put you in a more preferred class (meaning lower premiums) than another company would. For example, someone with a history of high blood pressure who’s on medication for it might land in a “preferred class” with one life insurer and a “standard class” with another. Shopping around for quotes from multiple companies will really pay off, no matter what your health status.

Generally life insurance companies use these classes:

Preferred Plus No Nicotine (sometimes called Preferred Best or Super Preferred)
Preferred No Nicotine
Preferred Nicotine
Standard No Nicotine
Standard Nicotine
Life insurance rates and classifications
Predicting which class you probably fall into is important for receiving an accurate life insurance quote, especially when you’re shopping online. It may be tempting to select the “preferred plus” class for yourself in order to see the lowest rates, but don’t set yourself up for disappointment if you don’t receive that rating.

Conditions that could possibly make you “uninsurable”
Abdominal aortic aneurysm (within past 6 months)

Alcoholism treatment (past 2 years, using or used in the last year)

Alzheimer’s disease/dementia (at any time)

Bankruptcy (not discharged)

Cancer treated with chemotherapy or radiation therapy (present)

Cirrhosis of the liver (at any time)

Illegal drug use other than marijuana (within 3 years)

DUI/DWI (several, within 5 years)

Gastric/intestinal bypass (within 1 year)

Heart attack (within 6 months)

Heart bypass surgery (within 3 months)

HIV positive (at any time)

Kidney failure/disease, on dialysis (present)

Lung disorder, on oxygen (present)

Mental disorder requiring hospitalization (within 1 year)

Organ transplant pending or received (within 1 year)

Probation/parole (currently serving)

Pregnancy with complications (currently)

Suicide attempt (within 2 years)

Stroke (within 1 year)

Valve replacement (within 1 year)

Source: Genworth Financial Life Insurance Underwriting Guide
Life insurance companies generally require that you undergo a medical exam and allow them to request your medical records.

They’ll also want to know if you use nicotine. Keep in mind that nicotine usage does not only refer to cigarette smoking, but also to nicotine patches, nicotine gum and smokeless tobacco — anything that puts nicotine into your bloodstream. Occasional cigar smoking does not count if you smoke 12 or less per year.

While every life insurance company has its own guidelines for requirements for the above classes, here are some predictors:

Preferred Plus, No Nicotine

It’s possible to be in good health and still not qualify for Preferred Plus. This category carries very stringent health qualifications and is reserved for folks who are expected to live the longest.

Here is the ideal candidate for the Preferred Plus No Nicotine class:

You are the ideal weight for your height, with a Body Mass Index (BMI) of roughly 25 or less.
You have an excellent health history with no serious or chronic illnesses or ailments.
Your immediate family has no history of cardiovascular disease or internal cancer before the age of 60.
You’ve never smoked, or if you have you’ve quit for at least five years.
You don’t participate in high-risk recreational or occupational activities such as hang gliding, rock climbing, motorized racing, offshore drilling, mining, etc.
Your recent financial standing is excellent with no bankruptcy in the last few years.
You have a healthy LDL cholesterol level (about 220 or less) and LDL/HDL ratio (about 5.0 or less).
You have good average blood pressure readings of 140/85 or less.
You have a very clean driving record with no more than one or two moving violations in the last three years and no DUIs or reckless-driving convictions in the last 5 or more years
You’ve never required treatment for drug or alcohol abuse.
If you can’t meet all the above requirements, don’t worry. Most folks can’t, and there are still plenty of good life insurance rates out there.

While life insurers each produce their own lists of “allowable” conditions, one well-known life insurer that we looked at allows these conditions in rate classes below Preferred Plus:

Preferred, No Nicotine

Elevated blood pressure of about 145/90 or less
LDL Cholesterol of 260 and LDL/HDL ratio of 5.5
Select, No Nicotine

Elevated blood pressure of about 150/92 or less
LDL Cholesterol of 270 and LDL/HDL ratio of 6.5
Standard, No Nicotine

Elevated blood pressure of about 150/95 or less
LDL Cholesterol of 300 and LDL/HDL ratio of 7.9
Asthma acceptable
Depression acceptable
Knowing that these factors affect your life insurance rates will reduce surprises in your insurance shopping experience. Also, a good insurance agent will know which companies have better pricing for certain medical conditions, such as high blood pressure. If you still fall into a pricier category than you anticipated, you can buy a policy and then ask the life insurance company to re-examine your rate if your health has improved for at least one full year.

Good fat: How being overweight can work to your advantage

Wednesday, October 10th, 2012

If obesity is so bad, why do fat heart patients survive longer than their normal-weight counterparts?

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Although obesity has been linked to a variety of health problems, such as hypertension, diabetes mellitus, renal disease, stroke and heart disease, a growing body of research is finding that obese people with those diseases actually live longer than normal-weight patients who are similarly afflicted.

It’s called the “obesity paradox,” and while it has some doctors scratching their heads, experts point out that the paradox doesn’t mean folks with heart problems should let themselves get fat. Instead, they say, the studies show it’s time to approach the problem of obesity from a different angle.

Traditionally, obese people with health problems have been assumed to have lower life expectancy, which leads to dramatically higher life insurance quotes.

Thin people don’t do so well after heart attacks
A 2010 study by the University of Rochester School of Medicine and Dentistry found that among patients who had already suffered a heart attack, non-obese people had a 76 percent increased risk of dying suddenly from cardiac causes than obese patients.

Dr. Ilan Goldenberg, a research associate professor who worked on the study, says the research focused on patients — from slender to obese — who had heart attacks resulting in reduced blood-pumping capability.

“In this specific population, we have identified a ‘paradoxical’ effect of obesity that results in patients with higher body mass index [in the obese range] having a lower risk of sudden cardiac death,” he says. “Patients who are overweight have a better outcome, possibly due to the fact that they are able to handle the heart failure symptoms better than patients who have a normal weight.”

The same unexpected result occurred when doctors looked at the effects of cigarette smoking, Goldenberg says. Smoking increases the risk for a first heart attack in young patients but seems to reduce the risk of subsequent heart attacks. Yet smoking, like obesity, is used as trigger for high life insurance rates.

Dr. George Griffing, a professor of medicine at St. Louis University, says medical trials looking at patients with congestive heart failure also found that obesity didn’t worsen the condition and that obese patients with congestive heart failure lived longer than their slimmer counterparts with the disease.

What’s up with this?
Griffing said there could be several reasons why obese heart patients do better than slimmer patients.

One theory is that when obese patients get to a hospital they are often treated more aggressively than normal-weight heart patients because doctors think there is a greater urgency in their situations. Griffing says it may also be that obese people show signs of heart trouble sooner and thus seek treatment sooner. And finally, it could be that fat tissue secretes a kind of protective hormone.

Goldenberg and fellow researcher Eric Hansen say it could be that an obese person’s body is already accustomed to surviving difficult conditions because obese people often don’t eat right or exercise, and many also smoke.

“Perhaps [obese patients] are better equipped, from a genetic standpoint, to live with heart failure,” Hansen said in a statement released with the March 2010 study.

Goldenberg notes that researchers at Rochester did not look at whether the heart attack patients in the study ever did any exercise. He said the patients’ lack of exercise and their unhealthy habits may have been what brought on their heart attack in the first place. And staying fat after the heart attack, while improving their chances when compared to thinner patients, wouldn’t be as good for them as starting to do some exercise and intentionally losing weight.

“Probably their risk will be reduced,” he says.

Calculating your body fat
Your body mass index (BMI) is a measure of body fat based on height and weight. There are a number of online BMI calculators, including one from the National Institutes of Health (NIH). According to the NIH, a normal weight is from 18.5 to 24.9 BMI. A BMI between 25 and 29.9 is considered overweight, and anything over 30 is considered obese.

Many Americans score in the higher range. The Centers for Disease Control call obesity an epidemic in the United States, with two-thirds of Americans considered obese or overweight.

And with thousands of doctors around the country urging their patients to lose weight due of a high BMI, Griffing, the editor-in-chief for internal medicine at eMedicine, is urging doctors to screen their patients another way. Griffing says the obesity paradox exists because body mass index is not the best method for determining which patients have the kind of “bad” fat that worsens a cardiac condition.

“I have patients who are 500 pounds and they have normal blood pressure,” he says. “BMI is based on height and weight and it’s not a good way of looking at metabolically dangerous obesity. Not all fat is bad fat. The bad fat is the excess fat that gets stored around your organs, and BMI doesn’t necessary tell you how much of that you have.”

Griffing advocates using abdominal height as a way of determining how much “bad fat” — the kind that is tucked into body fissures and crowds vital organs — a person has. Abdominal height is simply a measurement of how high a patient’s stomach sticks up in the air when they are laying flat on an examination table.

Abdominal height is better than other measurements — including BMI, skin-fold thickness and waist-hip ratios — because it measures intra-abdominal fat and signals a number of potential problems, from heart disease to impotence to liver and pulmonary problems, Griffing says.

“When your patient’s belly enters your office before they do, think about getting out that ruler and measuring abdominal height,” Griffing advises. “Unfortunately, for many of my patients that ruler has to be a yardstick.”

More research needed
Goldenberg says he thinks the study of 1,231 patients he worked on with medical students Hansen and Bonnie Choy needs more investigation.

“Why do obese heart failure patients see a risk advantage? Why do normal weight patients have a significantly different risk profile than those who are slightly overweight? These are important questions that may have treatment implications in the future,” Goldenberg says.

How to use your insurance to help your adult children

Wednesday, October 10th, 2012

If you are trying to help your adult children find their financial footing during the current recession, you’re not alone.

A study recently presented at a meeting of the Population Association of America found that most young adults today are getting a monetary boost from Mom and Dad. According to the study, 62 percent of young adults receive help, and it’s not just pocket change. The average amount of assistance was $12,185. The money goes for such things as college tuition, vehicle expenses and rent.

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The need for young adults to lean on their parents is understandable. A recent study by the Pew Research Center found that only about 54 percent of people between ages 18 and 24 are employed. Those who are working full time have experienced a greater drop in weekly earnings — 6 percent — than any other age group in the past four years.

Your children may be hurting financially, but there’s no reason to place your own finances in jeopardy in order to come to their aid. There are a variety of ways to use insurance policies to help them achieve financial security.

1. Create a legacy through life insurance
“Most people think life insurance is for straight death benefit protection,” says Kristen Komer, a spokesperson for MetLife. “But life insurance is a great financial solution for those who want to leave a legacy.”

Life insurance benefits are tax-exempt, which makes this a good way to transfer wealth from one generation to another.

2. Use a life insurance policy’s cash value to provide funds
A typical permanent life insurance policy has a cash value account that grows over time. If you have such a policy, you can tap into its cash value.

According to the Pew Research Center, 39 percent of young adults ages 18 to 34 remain at home with their parents or have temporarily returned because of the tough economy. Komer says borrowing against your life insurance policy’s cash value can be one way to help children pay off loans, buy a home or start a business. That can move them into independent living.

Marvin Feldman, president and CEO of the nonprofit Life and Health Insurance Foundation for Education (LIFE) in Arlington, Va., notes that while using a permanent life policy’s cash value can be a great gift to children, parents should avoid putting themselves in financial jeopardy.

“The first thing they need to do is consider their own financial situation,” he says. Consider whether you might need that cash value yourself.

3. Buy life insurance for your child
The main reason to buy life insurance is to replace a wage earner’s income. Although it often is dismissed as unnecessary, buying a permanent life insurance policy for a young child can be beneficial, says Komer. “It’s a great first start to getting them some financial security, something you should think about right away.”

For example, Komer says a $20,000 policy purchased at birth may accumulate as much as $4,000 in cash value by age 18. With annual premiums often less than $200, this can be a vehicle for helping a child get cash for college or other needs.

There’s a downside to borrowing against the cash value of such a policy. Not only can it reduce the amount of cash available in the future, but depending on the specific provisions of the plan, it also can reduce the death benefit.

If you are planning the gift of a life insurance policy, consider life insurance companies that offer guaranteed coverage riders that allow your children to increase their coverage level in the future without having to go through the underwriting process. This means they’ll be able to buy more coverage in the future regardless of health conditions.

4. Keep an adult child on your health insurance plan
Health insurance doesn’t come cheap. The Kaiser Family Foundation found the average annual cost in 2010 for single coverage on the individual market was $2,580. For that price, many young adults see health insurance as a luxury.

However, thanks to a recent change in the law, you can help them get the coverage they need. Under the Affordable Care Act, young adults up to age 26 can remain on a parent’s health insurance plan. The provision applies regardless of a young adult’s residence, marital status or income.

5. Let your adult child stay on your auto insurance policy
Auto insurance is a major expense for young adults, and as long as your child is still living at home, he or she probably can remain on your policy.

Insurance rates for young drivers normally are high because of their greater risk for having auto accidents. It’s usually cheaper to keep a teen on the family policy rather than putting him on his own policy.

Shop around to determine which alternative is less expensive.

Marty Draper, head of personal lines for Farmers Insurance, reminds you to consider your own liability before adding a child’s name to an auto insurance policy. Depending on the laws in your state as well as how the policy is set up, everyone named on the policy potentially could be liable for damages if your child causes an accident and is sued.

“Parents and the adult child need to work closely with their agent to understand the specifics of their jurisdiction and how their policy works,” says Draper. For example, parents might be on the hook for damages if their child has lower limits on the policy than they do.

“The key for consumers is if you are going to add a kid to your policy, even an adult child, you need to make sure you have the proper [liability] limits,” says Edie Mermelstein, a Southern California attorney who handles insurance and consumer issues.

6. Purchase long-term care insurance
Feldman says if you purchase long-term care (LTC) insurance for yourself, it will provide peace of mind for your children. It also may save them money.

“It relieves the family members from making certain difficult decisions about care,” he says. “It provides a tremendous amount of freedom.”

Without LTC insurance, children may have to bear the burden of paying for your care themselves. They may have to select a less-than-appropriate level of care because they can’t afford anything more intensive.

Another benefit of LTC insurance is that it can shield your estate from costly medical expenses, leaving more for your children to inherit.

10 ways to save money on life insurance

Wednesday, October 10th, 2012

Just as there are different life insurance plans to meet your needs, there are different ways to save money on life insurance.

Most importantly, comparison shop for life insurance quotes. There are hundreds of insurance companies offering a wide variety of plans and prices. Comparison shopping can save you big bucks. In addition, here are 10 more ways you can save money on your next life insurance purchase.

1. Consider term life insurance
Some financial planners advocate permanent life insurance policies with cash value components because the policies force you to save money. Others recommend you buy term life insurance for the cheaper premium and invest the difference.

But cash value in life insurance should not be considered a traditional investment. Any withdrawals or loans not repaid will reduce your death benefit. Also, if you take a partial withdrawal from the cash value of your policy in an amount greater than your total premiums, the withdrawal in excess of your total premiums is considered taxable income.

Furthermore, the difference in premiums between term vs. permanent life insurance is not just a matter of a few dollars per year. According to the Society of Actuaries, premiums for whole life can be five to 10 times higher than the same amount of level term life, depending on the kind of level term being compared. For example, if you’re comparing the premiums of 30-year level term it will be a smaller multiple, while premiums on a 10-year term policy could be a larger multiple.

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Every time you renew term life insurance, your premiums will increase. Renewing a short term life insurance policy over and over isn’t a wise use of money. Instead, buy a longer term life insurance policy, or buy whole life insurance if you definitely want to leave money to your heirs.

People with a short-term need generally include those who want life insurance to cover a specific debt — like paying off a mortgage.

2. Seek out low-load life insurance policies
“No-load” or “low-load” permanent life insurance policies have fewer expenses built into them, such as agent commissions and fees, than other life insurance policies. For variable life insurance, these lower expenses mean a higher percentage of your premium goes to work for you right away, allowing you to build your cash value faster.

Not many companies sell no-load or low-load policies. No-load policies can be purchased mainly through financial advisors who charge flat fees rather than collecting commissions from insurance companies. Those that sell no-load policies include Ameritas Advisor Services and TIAA-CREF. Also, these policies may not be available in all states.

3. Don’t buy a guaranteed issue policy if you’re healthy
With some guaranteed issue policies, you could end up paying more in premiums after only a few years than your beneficiaries might ever receive from the death benefit.

“Guaranteed issue” life insurance policies require no medical exam but may ask a few basic medical questions. Guaranteed issue policies are riskier for the insurer and are, therefore, more expensive than fully underwritten insurance policies.

Guaranteed policies are generally purchased by people who have difficulty obtaining life insurance due to medical problems. If you have some medical problems you’re still likely to get better life insurance rates by opting for an underwritten policy, for which you take a medical exam.

The high premiums, combined with a low face amount for the death benefit, can make guaranteed issue life insurance a less desirable option. With some of these policies, you could end up paying more in premiums after only a few years than your beneficiaries might ever receive from the death benefit.

4. Research life insurance quotes online first
While not all online life insurance quoting services will give you the rock-bottom price for term life insurance, they can still be a useful source of information about prices. Just remember, the more personal information you give, the more accurate your life insurance quotes will be. Your “lowest quote” should be used as a baseline for shopping around.

5. Improve your health
Health problems make it hard to buy life insurance. High blood pressure, diabetes and heart disease are among those conditions that can make life insurance companies pump up your rate. Here are the most expensive medical conditions for life insurance shoppers.

If you have a pre-existing medical condition that could lead to higher rates, you’ll make your underwriters happier and probably get yourself lower life insurance premiums by showing your insurer a history of improving your health.

Then there are rates for smokers and other nicotine users. There’s no escaping a high life insurance price, but shopping around is wise. Some insurance companies will consider you a “nonsmoker” only if you’ve never smoked. Others require you to be “nicotine-free” anywhere from six months to five years to obtain a non-nicotine rate.

If you smoke marijuana, pipes or cigars, but not cigarettes, you still should admit to being a smoker on the policy application.

Insurance companies may request urine or saliva tests to check for the presence of nicotine. If you chew tobacco, you might end up paying smoker rates for your life insurance policy.

Don’t bother trying to hide smoking from life insurance companies.

Another major health factor is weight. If you’re healthy but somewhat overweight, you will likely be quoted higher rates too.

If you have a pre-existing medical condition that could lead to higher rates, you’ll make your underwriters happier and probably get yourself lower life insurance premiums by showing your insurer a history of improving your health, taking your medications regularly and acting responsibly about your health.

6. Buy only what you need
Nailing down a formula for how much life insurance is an imprecise science. You should ask yourself how much money it will take to maintain your family’s lifestyle if you were to die. Do you have money earmarked for your children’s education?

Here’s how to do a needs analysis for life insurance.

Reexamine your policy whenever you have a major life change.

Experts advise that you do an analysis annually or at least once every three years. Also, you should always reexamine your policy whenever you have a major life change. For example, if you have a new baby, you have to recalculate college education needs and child-care costs. If you own a home, a mortgage is likely your biggest financial burden. Because your mortgage balance decreases with each payment, it’s important to include those revised figures in your calculations.

7. If you need more life insurance, consider a rider as opposed to a new policy
Just because your needs change doesn’t mean you should run out and buy a new life insurance policy. In many cases, a rider adding extra coverage to an in-force whole life insurance policy can let you expand your coverage without sacrificing your built-up cash value. Ask your agent if there’s a charge for adding a rider.

8. Buy as life insurance soon as the need exists
An advantage to buying life insurance as soon as possible is that your premiums are lower. As you age, life insurance gets more expensive. Many term policies give you the option to renew your coverage at the end of the term without undergoing another medical exam.

You also can lock in premiums by buying a “level premium” policy, which means for a specific time period, say 5, 10 or 20 years, your premium rate stays the same.

9. Pay your life insurance bill annually
Avoid “fractional premium” charges by paying your bill annually.

Once you’ve found the best insurance policy for your needs, find out if you can save money by paying annually. Some insurers charge fees for monthly billing.

In general, the fewer payments you make over the course of the year (known as fractional premiums), the less you’ll pay overall. Also, some insurers charge less if they can transfer the premium payments directly from your checking account.

10. Ask for a rate reevaluation if your health improves
It’s possible to save money even after you’ve bought life insurance. Just because you’ve been put in a relatively expensive rate class doesn’t mean you’re out of luck forever.

If you’re paying higher premiums because of a specific health condition, ask your insurance company if you can apply for a rate reconsideration if your health has improved and you’ve sustained better health for at least a year.

Here’s how to request a life insurance rate reevaluation.

If you’ve established a history of lowering your blood pressure, cholesterol, or any other controllable rate-increasing factors, many insurance companies will reevaluate your premiums if asked.