NEW YORK, July 22 /PRNewswire/ — A recent report, Benefits & Behavior: Spotlight on Group Disability and Critical Illness – Awareness & Opportunity, from The Guardian Life Insurance Company of America (Guardian), one of the largest mutual life insurers and a leading provider of employee benefits, reveals that women were more likely than men to give a loan to family members in need of financial assistance because of medical distress.

  --  Despite longer life-spans and consequently the need to save more for
      retirement, 55% of women reported that they gave loans to friends or
      family members who were in medical distress compared to 34% of men.

Guardian conducted the survey to gain insight about how illnesses and the current economy have affected employee benefit decisions, particularly voluntary benefits (employee-paid), and employee understanding of key protection products. The full report can be accessed by visiting Guardian’s new dedicated employee benefits website, which provides research, industry trends, and educational resources at www.aboutemployeebenefits.com.

A Thin Line between Altruism and Anguish

“Government and retirement industry studies have made it clear that women tend to outlive men and therefore should probably be saving for a longer retirement,” Said Barry Petruzzi, 2nd VP, Group Benefits, Guardian. “If women are loaning an amount that they can afford to give, then it is an altruistic gesture to help friends and family. But, if they give more than they can afford, it can cause financial difficulties for themselves as well as possibly impact their retirement plans.”

“A solid financial protection package that includes life, disability, and critical illness insurance can help ensure that a person doesn’t have to borrow money in the first place – what’s more, some products can actually help a person compensate friends and families for the assistance they provide,” added Petruzzi. “For example, people often use the lump-sum they receive from critical illness policies to help compensate caregivers and family members who take an extended period of time off from work to help them during recovery.”

Guardian also offers a spousal benefit on its group disability income insurance that assists with expenses associated with the disability of a spouse. The partner still at work receives extra money to help with expenses that medical insurance doesn’t cover.

Expect the Unexpected

“There were many unanticipated findings in this survey,” said Elena Wu, Group Marketing Officer, Guardian. “Most surprising was the fact that personal experiences with a major illness did not seem to impact interest in purchasing voluntary disability, life, or critical illness insurance.”

  --  Most full-time employees (68%) have been or have a relative or friend
      that has been disabled, seriously ill or too sick to work.

Wu added, “We were expecting to see that employees who had first-hand knowledge of the trials and tribulations of an illness would be the first in line to buy protection. But you can’t assume that just because someone had a premature death or major illness in their close circle, they will run out to buy insurance. People are savvy and they know on some level that they need the protection, but they are often overwhelmed with too much information or confused by a lack of relevant information. Working with a financial advisor or benefits specialist can help employees make better decisions.”

Popularity Contest

Although personal experience doesn’t always translate into a greater inclination to purchase coverage, the report also revealed that more than 41% of full-time employees said they would consider paying in full to obtain certain benefits not currently offered by their employer, if the employer were to make those available.

When asked which benefit they would consider on a voluntary basis, employees chose the following (ranked in order of preference):

  --  Disability -- 58%
  --  Critical Illness -- 56%
  --  Dental -- 55%
  --  Life -- 52%
  --  Vision -- 48%

Petruzzi explained, "Intuitively, you would think that dental would rank at the top because it has a greater penetration and is a high-use and very popular benefit. In contrast, disability and critical illness are only used if an employee experiences a major illness, but they were statistically tied with dental insurance."

“The significant interest in critical illness and disability income insurance is likely because there are still many employers that do not offer these coverages. With employers’ budgets remaining tight, it’s good news that employees would welcome the opportunity to obtain critical illness and disability income insurance – even if it means paying most, if not all, of the cost out of their own wallet,” summarized Petruzzi.

Guardian recently enhanced its voluntary disability offering by lowering premiums, increasing coverage and simplifying its enrollment process. Additionally, under the company’s Disability Choice voluntary plan employees are able to increase coverage each year through an annual step-up option. The option allows employees to adjust their insurance amount as their needs and salary change.

Reading, Writing, and Voluntary Benefits

Voluntary benefits give employees more responsibility for their employee benefit decisions, but Guardian research reveals that many employees admit that they don’t understand differences between insurance products.

  --  More than a third (38%) of employees state that they don't know the
      difference between critical illness and disability insurance;
  --  More than a third (38%) say that they don't know the difference
      between critical illness and medical insurance;
  --  More than two-fifths (43%) say they don't know the difference between
      critical illness and long-term care insurance;
  --  More than half (57%) don't know the difference between critical
      illness insurance and accelerated death benefits on life insurance.

“We fielded these questions about employee understanding of the difference between coverage types in a 2008 survey, and the results are consistent with our current findings,” said Wu. “This shows that despite industry efforts to educate consumers there is still a significant knowledge gap. The information transformation won’t happen overnight. As an industry, we have to devote more resources to consumer education if we intend to move the needle in helping employees to better understand their employee benefits.”

About the Survey

Benefits & Behavior: Spotlight on Group Disability and Critical Illness – Awareness & Opportunity presents the findings of a telephone survey conducted among a national probability sample of 1,015 adults comprising 504 men and 511 women, 18 years of age and older, living in private households in the continental United States. The interviews were conducted by the Opinion Research Corporation of Princeton, N.J. from February 4-7, 2010.

Source: The Guardian Life Insurance Company of America

DETROIT — Insurance companies can use a person’s credit report to determine rates, the Michigan Supreme Court said Thursday in declaring that state regulators exceeded their authority when they banned the practice as discriminatory.

The decision ends a legal battle between insurance companies and Gov. Jennifer Granholm’s administration that has reached three courts since 2005.

The industry says people with strong credit reports make fewer claims and deserve lower rates than people with weak credit reports. The Supreme Court, in a 4-3 ruling, said Michigan law allows companies to offer people with good credit lower rates.

“It is difficult to see how offering discounts to some insureds on the basis of good insurance scores is inconsistent with the (law’s) general purpose of availability and affordability of insurance for all consumers,” Justice Maura Corrigan wrote in the majority opinion.

Corrigan and fellow conservatives Stephen Markman and Robert Young Jr. were joined by Justice Elizabeth Weaver.

Insurance companies have been allowed to use credit reports for home and car rates while the dispute was tied up in the courts.

“This decision is a win for Michigan policy holders,” said Peter Kuhnmuench, director of the Insurance Institute of Michigan, which represents 39 companies. “Insurance carriers will continue to be able to offer discounts to policy holders who are less likely to have a claim.”

Democratic Party Chairman Mark Brewer signaled he would make the case a campaign issue for Young, a Republican who is seeking re-election. He didn’t, however, criticize Weaver by name. She has run as a Republican in the past but is seeking another term as an independent.

“Voters are tired of being put on the back burner so insurance companies can make a heftier profit,” Brewer said.

Chief Justice Marilyn Kelly and justices Diane Hathaway and Michael Cavanagh said they would have upheld the actions of Michigan insurance regulators.

“I would … hold that the uncertainty surrounding the accuracy of credit reports is evidence per se that a classification system based on those reports is unreasonable,” Kelly wrote.

-By ED WHITE (AP) – Jul 8, 2010 The Associated Press

IRVINE, Calif., June 29 /PRNewswire/ — Expiring tax provisions, or “sunsets,” have long been a feature of Uncle Sam’s tax code, but they usually involve relatively minor provisions. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) depart dramatically from this pattern. All tax provisions sunset by the end of 2010 – and, for many investors, parting will be such sweet sorrow.

Collectively, EGTRRA and JGTRRA reduced tax rates on ordinary income, long-term capital gains, and qualified dividends; mitigated marriage penalties; expanded the child tax credit and the child and dependent care tax credit; and phased out limitations on itemized deductions and the phase-out of personal exemptions. With the sunset of these provisions, individual income tax rates in 2011 will revert to higher, pre-2001 levels. During the presidential campaign, President Obama said that he would make the 2001 tax cuts permanent for low- and middle-income taxpayers, and that wealthy Americans would pay more. Currently, it’s expected that for individuals earning more than $200,000 or couples making more than $250,000, rates will indeed revert to pre-2001 levels.

A consortium of advisors who are representatives of and offer securities through Securities America Inc. (www.securitiesamerica.com) offer these suggestions for how investors and their advisors can adjust to a new tax landscape:

#1. Catch the early bird special. In anticipation of higher tax rates, if your portfolio includes appreciated assets, this year might be a good time to take some gains off the table at the maximum capital gains rate of 15 percent, rather than the 20 percent currently slated for 2011. Investors in the 15 percent tax bracket or lower have no gains due on appreciated assets in 2010, but will face a 10 percent tax in 2011.

“In many cases, I’m recommending investors sell appreciated assets now because they will never see capital gains rates as low in their lifetime,” says Don Patrick, CPP®, managing director of Atlanta-based Integrated Financial Group (www.Integrated-Financial-Group.com). “Investors might also consider accelerating the sale of a home or business to avoid higher tax rates down the road.” Patrick notes that unlike when investors use tax loss harvesting to book a capital loss at the end of the year, there’s no wash sale rule that precludes them from buying a security right back when they sell it and register a gain.

#2. Diversify retirement savings from a tax standpoint. Having taxable and non-taxable pots to draw from makes sense in an uncertain tax environment. The good news, says Jim Coleman (founder of Coleman Financial Advisory Group in Waterbury, Connecticut – www.ColemanAdvisoryGroup.com), is that the lifting of the $100,000 income limit for converting a traditional IRA to a Roth IRA makes diversifying possible for all taxpayers. Today, anyone–regardless of their income–can convert retirement assets from a traditional IRA to a Roth. According to Coleman, a Roth offers three major benefits: Tax-free growth that is especially attractive considering income tax rates are likely to go up in the future; tax diversification that provides flexibility in retirement income distribution planning; and no required distribution at age 70-1/2 that helps transform your retirement savings into a financial legacy.

“Obviously, converting retirement assets to a Roth would result in reportable income and trigger additional income tax – and it may be difficult to consider paying income tax on a large IRA,” Coleman notes. “However, it’s important to realize that you don’t need to convert the entire account. While investors who converted in 2010 can spread taxes due over 2011 and 2012, those in the higher tax brackets may be better off having paid all those taxes in 2010. In promoting the extra time to pay, Uncle Sam fails to mention that the top tax bracket will increase to 39.6 percent from 35 percent in 2011. Either way, if the nation is indeed entering a long period of rising income tax rates, paying a conversion tax bill may seem like a bargain in retrospect.”

#3. Use fraud losses. Because the Roth conversion is an ordinary income taxable event, taxes due can be offset by major losses due to fraud which are booked as an ordinary income loss as opposed to a capital loss, says Arthur Cooper, CFP®, managing partner of Cooper McManus, a wealth management firm located in Orange County, California (www.CooperMcmanus.com). “If you have the misfortune to take a straight fraud and theft deduction, you can convert the same amount from a traditional IRA into a Roth IRA conversion and end up with zero tax on that conversion,” says Cooper. “The strategy is a way of making lemonade out of a very sour lemon.”

Cooper notes it’s also possible to go back a few years for loss carry forwards to add to write-offs of ordinary income. “When you go back and zero-out tax liability, you save that 10-15 percent on a good chunk of the dollars,” he explains. “Plus, when you do a Roth IRA conversion, you convert taxable dollars into a future non-taxable income stream, so the effective tax savings is even more impactful than just zeroing out your tax liability.”

#4. Rethink some standard financial planning advice. While he traditionally spends time with high level executives discussing the benefits of deferring some salary, Mike Flower (partner at Financial Principles located in Fairfield, New Jersey – www.FinancialPrinciples.com) is advising high wage-earners who have the flexibility to receive ordinary income this year instead of in a later year when tax rates may be higher. “Executives might decide to exercise their non-qualified stock options,” he notes. In another departure, if future income tax rates truly skyrocket, Flower says tax qualified plans may lose some of their appeal. “You still want to contribute to your workplace plan, certainly enough to qualify for any available company match, but with the question of whether you truly will be in a lower tax bracket in retirement, you might also consider funding accounts outside the tax-deferred arena for some diversity,” he explains. “If your company’s retirement plan offers a Roth option, you might consider that so you have a pool of money to pull from in retirement where you will not owe taxes on distributions.”

Finally, while financial advisors traditionally encourage clients to make charitable contributions before the end of year, Flower says if you are considering a substantial charitable donation, you might be better off from a tax standpoint to spread it out or defer it to the future to gain a greater tax deduction.

#5. Understand your father’s dividends will cost you more. Currently, the maximum tax rate on qualified dividends is 15 percent, but that will revert to regular income tax rates in 2011. “Although President Obama has proposed a tax of 20 percent for both capital gains and dividends in 2011, if the reclassification of dividends lapses at the end of 2010, next year the top dividend rate could revert to 39.6 percent. Still others talk about a tripling of the current 15 percent rate,” explains Clyde Wyatt, CLU, CFS, a director at Dallas-based Navigation Financial (www.NavigationFinancial.com). “Whatever happens, the increase in tax on qualified dividends obviously makes dividend paying stocks less attractive in a retirement income stream.”

In addition, starting in 2013, the Healthcare and Education Reconciliation Act of 2010 will levy a new 3.8 percent Medicare tax on investment income for individuals earning more than $200,000 or couples earning $250,000. Notably, the 3.8 percent surtax does not apply to distributions from IRAs and other qualified retirement plans like 401(k)s, 403(b)s and 457 plans, or Roth IRAs.

Continues Wyatt, “Because income from tax exempt and tax deferred vehicles like municipal bonds, tax deferred non-qualified annuities, life insurance, and non-qualified deferred compensation do not count as investment income, investments in these vehicles should become more favorable relative to investments producing income subject to the tax.”

The net effect of the capital gain tax increase and Medicare tax will be a 23.8 percent tax rate for higher earners–the highest rate for long-term capital gains since 1997, says John Jenkins, AEP®, EA, CFP®, president and CEO of San Diego-based Asset Preservation Strategies (www.Asset-Preservation.com). “Once these higher rates kick in, high wage-earners may try to defer income in an effort to stay below the highest tax thresholds. We’ll also be considering some advanced planning strategies to offset tax liability through the use of Section 42 tax credits (low income housing tax credits) and also oil and gas investments.”

In Jenkins’ view, it’s ironic that the economic impact of these tax increases will be felt by the very investors who could help promote long-term economic growth. “In 2007, taxpayers with incomes greater than $200,000 reported 47 percent of all interest income, 60 percent of all dividends and 84 percent of all capital gains,” he notes. “And the Joint Committee on Taxation estimates the new Medicare tax on investments will cost high-earning taxpayers an additional $30 billion annually. Further, because the modified adjusted gross income threshold at which this Medicare tax will apply will not be indexed for inflation, going forward an increasing number of taxpayers will be snared by this tax provision.”

Bottom line? The tax code is in a state of flux. In addition to these changes, the federal estate tax has already expired. If Congress doesn’t act, estate taxes will be reinstated in 2011 at a rate of 55 percent for estates valued at more than $1 million. While portfolios have to be re-examined in light of this change and the anticipated sunsets, planning can be done only on the basis of educated assumptions. Accordingly, it’s important to stay in close touch with your financial advisor so you can prepare for major changes and take advantage of any emerging opportunities.

Click to view a table that compares what income tax will look like in 2011 (after the sunset at end of 2010) with what the tax picture is today and could remain if we see a permanent extension of the 2001 and 2003: http://www.taxpolicycenter.org/taxtopics/2011_continue_2001cuts.cfm

Web site: www.coopermcmanus.com

Source: Cooper McManus

BLOOMINGTON, Ill., June 15 /PRNewswire/ — After increasing in April, Americans’ level of confidence in their overall financial security held steady in June, as the COUNTRY Financial Security Index® ticked down just one-tenth of a point to 64.8. A more optimistic near-term view of Americans’ finances was offset by continued uncertainty about longer range issues.

While the overall COUNTRY Index remained stable, the short-term component — an indicator of immediate financial concerns — increased for the second consecutive month, jumping another five points to 17. This momentum was driven by improved ratings of overall financial security and an increase in the number of Americans able to set aside money for savings and investments within the past two months. Forty-one percent currently rate their financial security favorably, up two points from April and up six points from the beginning of the year. Forty-six percent were able to save, up one point from April and three points from February.

“As we reach the middle of the year, it is clear Americans are still uneasy about their finances as the unpredictable economic situation continues,” says Keith Brannan, vice president of Financial Security Planning for COUNTRY Financial. “It is encouraging, however, to see that sentiments about short-term finances are heading in the right direction. We hope people understand that making the right financial decisions now can help them in the long-term.”

Long-term goals remain on shaky ground

In contrast to short-term sentiments, confidence about long-term finances have yet to show significant signs of recovery. The number of Americans confident they will have enough money for a comfortable retirement dipped one point to 56 percent. Confidence in the ability to have enough resources to send children to college increased one point to 62 percent in June, but remains significantly lower than pre-recession readings.

Gen Y grows more optimistic about money matters

In comparison to other generations, the 18-29 age group has grown significantly more confident about their finances in the last few months.

  --  Forty-four percent were able to set aside money for savings or
      investments, an 11-point jump from April.
  --  Those rating their overall financial security as excellent or good
      increased six points to 39 percent.
  --  Those confident in their ability to pay debts as they come due climbed
      five points to 68 percent.

“It’s good news that younger Americans have been able to save and invest more recently,” adds Brannan. “As this generation has witnessed tremendous economic upheaval so early in their adult lives, they have the potential to learn a valuable lesson in money management that can stay with them as they move through different stages in life.”

Individuals can learn more and compare their own results with the national COUNTRY Financial Security Index. The next COUNTRY Financial Security Index will be released August 17, 2010 and subsequently every other month.

The COUNTRY Financial Security Index

The COUNTRY Financial Security Index® is a bi-monthly measure of Americans’ sentiments toward their overall financial security. It is an aggregate of various factors comprising financial security including savings and investments, financial planning, retirement, education and asset protection.

The COUNTRY Index was created by COUNTRY Financial and is compiled by Rasmussen Reports, LLC, an independent research firm, based on a national telephone survey of at least 3,000 Americans.

The margin of sampling error for a survey based on this many interviews is approximately +/- 2 percentage points with a 95 percent level of confidence.

About COUNTRY

COUNTRY Financial (http://www.countryfinancial.com/) serves about one million households and businesses throughout the United States. It offers a full range of financial products and services from auto, home and life insurance to retirement planning services, investment management and annuities.

Source: COUNTRY Financial

NEW YORK, May 26 /PRNewswire/ — GfK Financial Services, a division of GfK Custom Research North America, today announced highlights from a new OmniWeb survey that reveals almost half of Americans (42%) prefer the government take a less significant role in the financial services industry. Comparatively, only 26% of respondents say they’d like to see more government involvement.

Political Lines Blurring… Blue States Align with Red

Surprisingly, “blue states” are in agreement with their Republican counterparts when it comes to government involvement in the financial services industry. In fact, more respondents on the predominately Democratic West coast report they would prefer to see a lighter federal hand in Wall Street affairs (46%) than their “red state” neighbors in the Midwest (44%) and the South (41%). Additionally, over one third (36%) of Americans who live in the Northeast also prefer less government involvement. To compare, 28% of respondents in the Northeast say they’d actually like to see more of a federal presence as well as 27% in the West, 25% in the Midwest and 23% in the South.

Across the Demographics… Americans Want Less

More men (46%) than women (39%) say they prefer less government involvement in the financial services industry. Additionally, while respondents across all age groups agreed they’d like to see less of Uncle Sam on Wall Street, Americans 65 and older were more likely to prefer less government involvement (54%) than younger generations (34% among 18-to 24-year-olds). Results also show that households with the highest reported annual income ($75,000 plus) actually prefer more government involvement (38%) than any other income segment (25% among households that make less than $20,000 annually).

“With the slow economic recovery, the sheen is off the federal stimulus packages,” explains Douglas Cottings, Managing Director of GfK Financial Services. “Americans are growing weary and earning back their trust in Wall Street and Washington is still a major sticking point. To help turn the tide, it’s critical for financial companies to refocus their time and resources on first repairing the damage to their reputation in order to win back consumer confidence.”

Additional survey findings will be released at the Life Insurance and Market Research Association (LIMRA) Marketing and Research Conference in Orlando, Florida as part of the June 4th presentation, “Winners and Losers: Recession Impact on Perceptions of Companies.”

About GfK Financial Services

A division of GfK Custom Research North America, GfK Financial Services is a leading provider of market research to the global financial services industry. With focused expertise in traditional and non-traditional financial service industries, clients of GfK Financial Services include retail and commercial banks, credit card companies, investment banks, brokerage and securities firms, property and casualty insurers, life and health insurers, asset managers, consumer finance companies and other diversified financial institutions, as well as their trade and professional associations. By qualifying and quantifying what the stakeholders of their clients need and value, GfK Financial Services partners with financial institutions to rethink assumptions and identify strategies for business improvement.

About GfK Custom Research North America

Headquartered in New York, GfK Custom Research North America is part of the GfK Group. The GfK Group offers the fundamental knowledge that industry, retailers, services companies and the media need to make market decisions. It delivers a comprehensive range of information and consultancy services in three business sectors Custom Research, Retail and Technology and Media. The no. 4 market research organization worldwide operates in more than 100 countries and employs over 10,000 staff. In 2009, the GfK Group’s sales amounted to EUR 1.16 billion. For more information, visit www.gfkamerica.com. Follow us at www.gfkinsights4u.com or on Twitter @gfkamerica.

Source: GfK Financial Services

LAS VEGAS, May 10 /PRNewswire/ — MoneyShow.com, the largest multimedia investment education destination for investors, traders, and financial advisors, announced today the results of the latest MoneyShow.com Investors’ Sentiment Indicator at The MoneyShow in Las Vegas, Nevada. The results revealed that amid the current market fluctuations, over 47% of investors remain bullish about the market, predicting the S&P 500 to increase between now and the end of the year – 13% of which believe it will rise more than 10%. However, 54% believe we are in a bear market rally and stocks will make new lows.

In line with other major economic indicators, 74% of investors polled reported they expect the Federal Reserve to either keep short-term interest rates the same or lower them during the remainder of 2010. While the Federal Reserve rates are expected to remain low, the majority of investors, about 55%, expect an increase in inflation for the rest of the year.

More than 60% of investors predict the housing market to bottom and the recession to end after 2010. The majority of respondents also expected the markets to worsen (54%) for the remainder of 2010. Precious metals, small-or mid-cap US stocks, and large-cap US stocks are the asset classes investors anticipate performing best for the remainder of the year, with approximately 66% of investors expecting those categories to remain strong.

The MoneyShow.com Investors’ Sentiment Indicator polled 892 investors from its subscriber list between May 4, 2010 and May 7, 2010.

The complete findings of the Investors’ Sentiment Indicator will be available on the Investors channel on MoneyShow.com.

About MoneyShow.com

MoneyShow.com is a free multimedia online community featuring commentary, videos, Webcasts, and blogs from the same experts who appear at MoneyShow live events, as well as other leading thinkers in the investing and trading worlds. It provides 24-hour access to powerful, profitable, and actionable advice directly “from the experts” offering hundreds of hours of education designed for investors, traders, and financial advisors; and allows easy access by topic, expert, and/or company so investors and traders can tailor the information to their needs. Please visit www.MoneyShow.com.

Source: MoneyShow.com

American’s today are bogged down with more than just their everyday finances; they are also bogged down with paperwork that accompanies these financial contracts. According to a survey conducted by Consumer Reports, “nearly one-quarter had either lost or forgotten about critical paperwork.” This trend is costing many Americans money, 16 percent had lost money or incurred a charge because of the poor organization of their paperwork.

Below is a list released by Consumer Reports outlining what documents you should keep and for how long.

Documents that you have no long-term need to keep include:

• –  Bank records. Keep deposit and ATM receipts until you reconcile them

with your monthly statements.

• Credit card bills. You don’t need to keep them after you’ve paid them

unless they support a deduction you’ll be taking on your taxes, such

as for a charitable donation (in which case you should file the bill

with your current-year tax records). If an item you’ve charged is

under warranty, keep the bill until the warranty expires.

• Investment statements. You can shred your monthly and quarterly

statements from brokerage, 401(k), IRA, Keogh, and other investment

accounts as new ones arrive. But hold on to annual statements until

you sell the investments.

What to keep for a longer period:

Documents relating to investment purchases, loans, and other items that expire can be stored in an out-of the way file cabinet. But try to go through them once a year and toss out papers below including:

• Household furnishings paperwork. Keep receipts, warranties, and

instruction booklets for major appliances and electronics.

• Loan documents. Keep closing documents for mortgage, vehicle, student,

and other loans in a safe-deposit box. You can get rid of them after

the loan is paid off.

• Savings bonds. Hold these in a secure place until you cash them in. Or

you can convert them to electronic form using the Treasury’s

SmartExchange program, at www.treasurydirect.gov.

What to never toss:

Hold on to essential records such as birth or death certificates, marriage licenses, and divorce decrees. Social Security cards and military discharge papers should be kept in a safe-deposit box. Other documents to hold on to forever:

• Defined-benefit pension documents. Keep pension-plan documents from

your current and former employers. Store them in your file cabinet.

• Estate planning documents. Keep copies of wills, trusts, and powers of

attorney in your safe-deposit box. You should also make sure your

attorney and your executor have copies.

• Life insurance policies. For permanent life insurance — policies that

have a cash value or investment component — keep documents and a list

of the companies that issued them and their phone numbers in your

safe-deposit box.

http://www.consumerreports.org

~ Tax season is the perfect time to organize your records.

Once upon a time in a magical kingdom called the US of A, “financing” meant providing funds for a project.  Nowadays, when we “finance” a project, we actually mean that we’re getting someone else to temporarily provide funds for a project of ours—we’re taking out a loan.  The practice of financing (in the latter sense) took America by storm in the last couple of decades, in every setting from premium financing to purchasing widescreen TVs on payment plans.  But it appears that this fad may be fizzling because lenders are tightening up their purse strings in the wake of the credit crisis.

How does this affect insurance shoppers and their premium financing?  Because some individuals pay insurance premiums with borrowed money, it’s useful to understand the present scarcity of borrowed money: loans are still to be had, but lenders are discriminating between risky and sound investments more than before.  If they deem you unlikely to repay your loan, you may face a much higher interest rate, much smaller credit, or a complete denial.

What does a lender examine in order to evaluate the risk of issuing you a loan?  It’s all a question of how likely you are to repay the loan and its interest.  Specific factors of concern are:

• What is your current income?
• Do you have collateral?
• What is your credit history?

During the last decade, though, we saw myriad loans issued without verification of income or collateral and a great neglect for the borrower’s credit history.  We saw cars and appliances sold with “no payments until [some future year]”.  Why were businesses so free with their credit?  Well, the nature of banking hasn’t changed: lenders make their profit solely from interest on the loans they issue, so when one or two institutions begin offering loans at very low interest rates, the rest of the industry has to offer competitive rates just to keep doing business.  Ordinarily, the free market finds the appropriate interest rate and every lender adheres rather closely to it, else goes out of business.  But if even just a couple of institutions have an indulgent agenda and government sponsorship, then they can remain in business without abiding by free market principles.  And when that happens, the competing lending organizations must match their lending interest rates or else lose their business.

The result is that the entire financial industry transacts with rates that the free market cannot support.  Loans get issued in amounts and with interest rates that never should have been.  And lots of borrowers will never repay the loans they extracted.  This culminates in the credit crisis we witnessed and the crash of the financial industry.

Substantial reorganization across the financial industry (entailing the replacement of much directing personnel) has directed lenders’ focus to more vigorously scrutinizing their loan applicants.  If you represent a sound financial investment (one highly likely to repay his or her loan) you can still obtain the credit you want; if not, then you may not find a willing lender.