Thrifty Spending Issue 80

FEATURE ARTICLE:   Evaluating life insurance needs.

Because life insurance typically becomes more expensive as we age, many people may believe they can’t afford to purchase coverage later in life. However, considering that life insurance is significantly less expensive today than it was a decade ago, you might be able to purchase new coverage and pay premiums comparable to those that were available when you were 10 years younger.

It’s a good idea to review your life insurance situation on a regular basis. Here are some reasons why your coverage may need to evolve to keep pace with your life.

Life Changes

If your income and/or net worth have increased significantly since you purchased your policy, ask yourself whether your current coverage would enable your survivors to maintain their current standard of living. Major life events such as birth, marriage, death, and divorce may also affect the amount of coverage you need.


Because of inflation, a policy purchased years ago may no longer offer the same level of protection. For example, a 3% inflation rate can cut the purchasing power of a death benefit in half in about 24 years, based on the Rule of 72 (72 ÷ 3 = 24 years).

Estate Conservation

One popular reason for owning life insurance is to provide liquid funds to help heirs pay estate taxes and any other debts. Considering that the estate tax has changed several times over the past decade, it’s a good idea to review your coverage in light of current estate tax laws and your net worth.

As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable.

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

This material was written and prepared by Emerald. © 2011 Emerald Connect, Inc.

MONEY SAVING TIP:  Save with a purpose.

Don’t save in pursuit of a general desire to “get ahead” or to “have something to show for your years of work” or to “do the responsible thing.” Save in pursuit of a particular change that you want to make to enhance your enjoyment of life.

Reporters often begin their newspaper and magazine articles with anecdotes. Why? Because the specifics of a story possess an emotional pull that abstractions do not. If you save “to be responsible,” you will not save. If you save because you want to attend a family reunion, and saving is the way to get there, you will.

Many people look askance at those who don’t want to make contributions to buy a gift for the boss’s birthday because the amount of money involved is small relative to what must be saved to finance a retirement. It is better to save for lots of little things over the course of a lifetime, just as you spend for lots of little things. To make saving matter, direct your mental energies to the small things that saving can do for you at all stages of life instead of the big dramatic thing (financing an old-age retirement) that it will do for you only once near the end of your active years.

DID YOU KNOW…you can ask for a ‘good-will deletion’?

If you only have one or two bad marks on your credit record, you may be able to get them expunged, says John Ulzheimer, president of consumer education for, based in Costa Mesa, Calif.

Say you’ve paid late, but have an otherwise spotless credit history. You can ask your lender for a “good-will deletion,” he says. “It doesn’t mean it is wrong or was reported incorrectly. Essentially, what you’re doing is asking the creditor to cut you some slack.”

The good news: “You’ll be surprised how many times they will,” says Ulzheimer.

The bad news: “If you’re habitually late, it won’t work,” he says. This is strictly for folks who err rarely.

As for whom to ask, start with customer service. But you may have to go up the ladder. And make your request as soon after the error as you can. “The sooner, the better,” he says.

But it can make a difference in your credit score. “If you have two or three bad things on (your) credit report, and you get one or two removed through good-will deletion, you will be surprised how quickly your score will go up,” Ulzheimer says.