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How Will The Coronavirus Affect The Life Insurance Industry? Here Are The Facts.

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Written by Anthony Martin

The fluid situation of the coronavirus epidemic has virtually every business wondering what tomorrow looks like.

The life insurance industry is no different.

In fact, life insurance companies are uniquely exposed to severe adverse effects from the Covid-19 virus.

We spoke to industry executives both at the carrier and agency level to get a better understanding of the situation. For a variety of reasons, we omitted their names and company affiliations.

When it comes to the coronavirus and life insurance, here are the facts.

Table Of Contents

How Are Life Insurance Companies Responding To Covid-19?

Life insurance companies are in the business of assessing risk. As such, they are closing monitoring the coronavirus situation so they can take necessary action.

In fact, some carriers are already starting to act, and more will likely follow.

Here’s what life insurance companies have done and what could be done to combat this unusual threat.

Coronavirus exclusions

Some insurance carriers have begun adding exclusion riders on newly issued policies. Basically, this means they issue the life insurance contract, but they include dialogue that specifically voids them of liability if the cause of death has any relation to the Covid-19 virus.

An exclusion rider would read something like:

This Insurance does not cover any claim in any way caused by or resulting from:

  • Coronavirus disease (COVID-19)
  • Severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2)
  • Any mutation or variation of SARS-CoV-2

An exclusion rider such as this could become an industry standard if the morbidity rate causes carriers to experience detrimental financial losses due to an unexpected and unsustainable claims rate.

Potential halt on new business

Another action that carriers are considering is a putting forth a temporary hiatus on new business.

If this happens, the insurance company(s) would simply stop accepting new applications. Since the virus is causing of a temporary mortality rate significantly higher than the mean, this would prevent them from creating a block of business that would result in a loss with the potential to jeopardize the profitability of an entire line of business.

A new application hiatus could apply to all lines of life business or to specific products. In reality, a carrier would likely target specific life products that are most likely to have a consumer base most venerable to death from the virus.

For example, elderly citizens who have pre-existing conditions such as COPD, heart disease, or kidney disease are significantly more likely to die from the virus. If a carrier has a product line that attracts applicants who have said conditions, they may choose to limit sales from that particular product due to the substantially increased risk. Whereas, other product lines without said applicants will still be available since the consumer base doesn’t necessarily pose an unusual risk outside of the norm.

As of now, we aren’t aware of any carrier that has taken this action, but some executives at major life insurance carriers have said it’s an action they’ll consider if the death rate exceeds certain thresholds.

If this were to happen, the hiatus would likely only last until a vaccine was developed. At that point, the mortality rate of the general public would fall in line with standard CSO models, and it would no longer be an increased risk to accept new applicants.

Travel restrictions

For decades, life insurance companies have had underwriting rules regarding foreign travel.

There are certain regions of the world they know are extremely dangerous and as such don’t want to insure someone who intents to travel there (i.e. Syria or Iraq) in the near future.

Insurance carriers are now withdrawing/delaying applications where applicants expect to travel outside of the USA to places such as China.

If you have plans to travel abroad, you will likely find great difficulty getting a new life insurance application approved (especially if you destination is a hotbed for the virus).

On the flip side, if you have recently traveled from an affected area, expect to wait at least 30 days before carriers will consider your application.

Can You Still Get Life Insurance During The Covid-19 Virus Epidemic?

Yes you can get life insurance during this epidemic. Like normal, your health and lifestyle will determine your eligibility.

Life insurance rates are still the same even during this tumultuous time. Don’t expect to pay higher than normal premiums due to the coronavirus.

Can You Get A New Life Insurance Policy If You Have Coronavirus?

If you currently have the coronavirus you cannot qualify for a new life insurance policy with any company.

The only exception to this rule would be if you bought a guaranteed acceptance policy. Guaranteed acceptance is a life insurance policy with no medical or lifestyle underwriting.

However, those policies all have a 2-3 year waiting period before you’re insured. So if you were recently diagnosed with Covid-19 and want to get life insurance to ensure your family gets a check in the event you passed away, a guaranteed issue policy won’t help you.

So why can’t you get a new policy when you have the virus?

On every life insurance application there will be a question that reads something along the lines of:

In the last 12 months, have you had or been advised to have by a physician any surgery, diagnostic test, hospitalization, treatment or other procedure that has not been done or for which results are not known?

A yes answer to this question is always a decline. Again, every single application no matter what company you consider or what type of policy you look at will have this sort of question.

What a question like this is basically asking is if you have any upcoming surgeries or medical treatments that haven’t yet been completed.

If you have the coronavirus your doctor will absolutely order you to either be hospitalized or to undergo at home treatment or both. Either way, it would require you to say yes to that question.

What if you lied on the application and said no the health questions, will the policy payout?

No it won’t.

Let’s just say you are diagnosed with coronavirus and you apply for life insurance. On the application, you say No to the question about pending hospitalizations or other medical treatments.

After your policy is issued, you pass away (for any reason) within the first two years of the policy.

All life insurance contracts (there are no exceptions to this rule) have what’s called the contestability clause. It gives the insurance company the right to investigate all claims that occur within the first two years (some states it’s only 1 year) of the policy.

Essentially, the life insurance company will order a copy of all your medical records to validate that you didn’t misrepresent your health when you applied for the insurance. If they find no evidence of misrepresentation, the claim will be paid in full.

However, if they do find something in your medical records that had they (the insurance company) known at time of application that would have caused them to never issue the policy, they will deny the claim. In this scenario, they will rescind the policy which basically means it never existed in the first place. They would merely send you back all your premiums and void the contract.

So if you’re diagnosed with coronavirus and you lie on a life insurance application and you die shortly thereafter, the insurance company will get your medical records. They will see your diagnosis, and, on that basis, they’ll deny your claim because you should have answered the health questions differently which would have caused them to never issue the policy in the first place.

Will Existing Life Insurance Policies Payout If You Die From The Coronavirus?

Yes any existing life insurance policy will not be affected by a death from the coronavirus.

Since you took out the policy before this epidemic, you can feel completely comfortable that if you die you’ll have a valid claim that will be paid.

Also, life insurance companies have reserves in place to cover unexpected claims due to a pandemic or other unusual societal circumstance.

Actuaries plan for situations like this.

Can You Get Life Insurance If You Had The Coronavirus?

If you previously contracted the Covid-19 virus and have since fully recovered, you will likely have no issue obtaining a new life insurance policy.

The only way a bout with the virus would cause an issue would be if you were hospitalized. Many life insurance applications ask a question such as “In the last 12 months, have you been confined to a hospital?”.

If a question like that appears on an application, it will typically result in a decline if you said yes.

In the end, if you beat the Covid virus, you should have no issue getting approved for a new life insurance policy.

Click here for Original Article

Ash Exantus aka Ash Cash is one of the nation’s top personal finance experts. Dubbed as the Hip-Hop Financial Motivator, he uses a culturally responsive approach in teaching financial literacy. He is also a speaker, and bestselling author of six books. Ash has established himself as a thought leader and trusted voice with Corporate America, Colleges, Churches, and Community based organizations. Ash is best known for helping people maximize their full potentials by giving them the inspiration, tools, and resources needed to live their best lives. For more info on Ash please visit www.IamAshCash.com

Personal Finances

5 things to know before child tax credit checks arrive this month

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If you’ve got kids and file taxes, chances are your bank account is getting a little boost later this month. As parents probably know by now, the Biden Administration’s American Rescue Plan calls for monthly payments to parents beginning on July 15th.

For this year only, the child tax credit has increased from $2,000 per child to $3,000 per child. Parents of children under age 6 would be eligible for an even larger $3,600 total credit. The plan also includes $3,000 benefits to the parents of 17-year-olds who meet plan qualifications. Previously, children had to be 16 or younger.

Up to half of that credit will be distributed over the final six months of this year, meaning a typical parent of one kid over 6 can expect a $250 payment later this month as the first of six installments of the advanced payment of $1,500. There are also phase-outs on the increased benefits based on income. Use the calculator at the bottom of this article to see how much you should expect on your first check.

Even if you already know where you fall on that calculation, there are still some considerations worth your attention.

Your child tax credit checks probably won’t be checks

As with stimulus payments, the vast majority of eligible Americans won’t have to deposit a check to get their advanced credit. The IRS says direct deposits will be made into the bank account currently on file with the agency. Only those who are not enrolled for direct deposit will get a physical check.

If you’ve already filed your taxes for 2020, there’s nothing for you to do but wait for your payout.

“The IRS encourages people without current bank account information to use the tool to update their information so they can get the payments sooner,” the IRS urged in an online update about the payments.

The agency has launched a payment management portal that allows filers to change their banking information.

You can get a CTC check even if you don’t owe taxes

In past years the child tax credit was partially refundable, meaning you weren’t eligible for the full credit if you didn’t owe any taxes. That’s not the case this year, where the more generous benefits are designed to bridge the gap for lower income families.

In fact, the IRS has set up a portal just to collect the needed information from non-filers who are eligible for the funds. You don’t even need to have a permanent address. Also, credit is not considered income, so the IRS said the check “will not affect your access to government benefits like SSI, SNAP, TANF or WIC.”

The childcare tax credit sure sounds the same as the CTC but it isn’t

The $1.9 trillion American Rescue Plan signed in March also boosted the benefits for people who employ childcare so that they can get to work. Like the child tax credit, this is a previously existing benefit, with improved benefits in 2021.

This year, those who qualify can claim certain expenses of up to $8,000 for one eligible child, or $16,000 for two or more eligible dependents. Both amounts are more than twice that of prior limits. As with the child tax credit, the benefit phases out at higher incomes. Unlike the CTC, these payments cannot be taken in advance, and will only be reflected after setting up your taxes for the year.

There’s still time to opt-out of monthly CTC checks

The checks going out this month are advance payments on the 2021 credit, meaning you are being given part of next year’s refund now. Any cash you take won’t then be applied at tax-filing time, as the full refund had in previous years. That means you’ll get a lower refund or owe a bit more next spring than you would if you opted out of the monthly checks.

For those who feel a big payout next year is preferable to smaller checks in 2021, the IRS has created an opt-out portal. As of last week, it’s too late to sign up to skip the July payment. If you want to bypass the final five advanced payments, you need to do so by August 2nd.

Watch out for your rising income

Use the calculator below to estimate how much you might receive in child tax credit periodic payments beginning on July 15.

For most, the credit is based on your 2020 tax information. If you experienced unemployment last year, or saw a big raise in 2021, you could potentially see your salary move above credit phase-out levels in 2021, meaning you are getting advanced payments that you won’t actually be owed when taxes are filed next year. In theory, this could leave some credit recipients needing to pay back some of the money next year. <iframe width=”560″ height=”315″ src=”https://www.youtube.com/embed/g-On15fnshk” title=”YouTube video player” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture” allowfullscreen></iframe>

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Personal Finances

How the New President Will Impact Your Pockets

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It’s Official like a referee with a whistle that there is going to be a new commander in chief in town. As Americans await the change in administration on January 20, 2021 from Donald J Trump to Joe Biden, many are wondering what this change is going to mean for their bottom line.

Being aware of the changes that could come ensures that you can leverage them or plan for any potential hits. Below are a few proposals the President-Elect campaigned on that could potentially affect you and your finance. Ready? Let’s dig into it!

Biden’s Income Taxes Plans

As POTUS, Biden hopes to make many changes to the income tax system, focusing on making it more progressive (the more you earn, the more taxes you pay as a percentage of your income). The Tax Policy Center has further stated that Biden’s proposal will increase taxes by $2.41 trillion within the next decade.

If his policies take effect as pre-planned, in 2022:

  • Households earning between about $50,000 and 90,000 will receive an average tax cut of around $6,700.
  • Higher-income households ($330,000–790,000) will be hit with an average tax increase of $98,000.
  • The top 1% of earners (over $790,000) will also pay an average tax increase of $265,000.

Biden’s Proposals – What We Know

Many of Joe Biden’s income tax reforms are aimed at families; therefore, several single individuals and couples without kids on both the lower and middle-income ranges won’t enjoy all the benefits of these changes.

Child Tax Credit would increase from the current maximum limit of $2,000 to $3,000 for each eligible child under age 17. Biden’s plans also propose an additional $600 bonus credit for under 6 kids and make the credit fully refundable.

His proposals would also increase the Child and Dependent Care Tax Credit to assist families with expenses such as daycare. The current max credit limit is $3,000 ($6,000 for multiple dependents) for qualifying expenses. Senator Biden will raise this limit to $8,000 ($16,000 for multiple dependents) and also increase the maximum reimbursement rate – up to 50% of your qualifying expenses as against the current 35%.

Biden proposes to revive the First-Time Homebuyers Tax Credit, now referred to as the First Down Payment Tax Credit. It was designed during the Great Recession to encourage individuals to purchase homes again. According to his plan, eligible first-time homebuyers will be given up to $15,000 in tax benefits when they buy a home.

On the flip side of these tax benefits, as we mentioned earlier, are tax increases that are aimed at higher-income earners. Here are just a few:

  • For households earning over $400,000, tax rates would rise from 37% to 39.6%.
  • Long-term capital gains and qualifying dividends of households earning over $1 million would be taxed at the normal income tax rate of 39.6%, as against the current 20%.

The Facts

Always ensure that you leverage all your qualifying tax credits and deductions. When it’s time to file your taxes, these new changes (if they take effect) can become confusing. If you have a less complicated tax situation and feel comfortable working with a tax software, then go ahead and get yourself a concise software. However, if you feel that you’re going to take a hit (tax-wise) or you’re being too cautious not to mess anything up with your taxes, then solicit the help of a tax Endorsed Local Provider.

 

Biden’s Student Loan Forgiveness Plans

Millions of Americans are stuck in the over $1.5 trillion student loan crisis, which has become a huge burden. The Corona Virus outbreak has equally done more harm than good. Biden, during his campaign, like many other presidential aspirants, made promises on student loan forgiveness. And since his election, Biden has reiterated his commitment to cancel some student loan debt, but how and how much remains unclear.

 

Biden’s Proposal – What We Know

The President-Elect was a supporter of legislation passed in Parliament earlier in 2020 that proposed student loan forgiveness ($10,000 per borrower) as a section of a COVID-19 relief bill. However, this bill wasn’t backed by the Republican-controlled Senate.

Some Democrat leaders are pushing Biden to revoke congressional recommendations by writing an executive order that’ll cancel up to $50,000 per borrower, though not everyone is confident that the president has such powers to execute this. (Well, the Supreme Court can clarify this further.)

 

The Facts

The government already has in place multiple student loan forgiveness schemes (The Teacher Loan Forgiveness program, The Public Service Loan Forgiveness program, etc.), and none are all good at actual loan forgiveness. This is largely due to the tough requirements. Furthermore, there isn’t any way to know what Biden’s student loan forgiveness proposal will be, whether it’ll become a reality, what the requirements will be, and how effective the program will be.

So, ensure that you have the right plan to tackle your student loan debt – this is the most effective way!

 

Biden’s Social Security and Retirement Accounts Plans

Any new president will certainly have policies to change Social Security, and the President-Elect isn’t any different. He’s also proposing a few tweaks to 401(K) plans.

Biden’s Proposals – What We Know

Social Security is in peril. The trust funds supporting the program are expected to dry out within the next 15 years. In such a scenario, beneficiaries would only be entitled to 80% of what they’re owed. Biden seeks to fix this and include a few extras too:

Minimum benefit: The average monthly benefit is about $1,400; however, not everyone gets that much. A lot of people receive much less. According to Biden’s proposal, Social Security beneficiaries who’ve worked for a minimum of 30 years will receive a minimum annual benefit of 125% of the poverty level—relatively $15,950 for a single individual.

Increased benefit for older beneficiaries: He also wants to increase beneficiaries’ benefits once they’ve gotten Social Security for at least 20 years. This is aimed at ensuring that long-time retirees can retain more of their savings. He didn’t mention the amount of this increment.

Allow surviving spouses to reap more benefits: Social Security benefits are split into half for couples receiving the benefits when a spouse becomes deceased. Biden’s proposal would let the surviving spouse retain a significant proportion of the benefits, ultimately raising their benefits by 20%.

Of course, all these have to be paid for with taxes! Biden would impose a Social Security payroll tax of 12.4% on earned incomes over $400,000, divided between the employer and employee. Currently, there’s no payroll tax for incomes over $137,700, and for now, individuals earning between $137,700 and $400,000 aren’t taxed.

The Facts

Just remember: Never allow an administrative change in the White House to push you to make a significant mistake with your retirement savings plan. Don’t rely on Social Security for your retirement. Plan and invest like it doesn’t exist because it might not. Additionally, you can fair better building wealth via your tax-advantaged retirement savings plans than any government ever could. And speaking of retirement plans, the President-Elect has a few changes for those as well, including proposing a flat tax credit for contributions to a 401(k) instead of the current tax deduction.

 

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Personal Finances

Importance Of Different Streams of Income 

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Importance Of Different Streams of Income 

by: Rosalyn L

Making money is more important. The way of the world today, you would be unwise to not have money set aside in case of an emergency.

First, multiple streams of income provide a safety net for you. If you only work a 9-to-5, you are dependent on that income alone. So what happens if you become ill? What do you do if you get laid off or fired? How will you bounce back from losing your job?

If you only relied on that one source of income, you may soon realize that you either:

Need to get a new job fast, or
You may get into debt while trying to get yourself afloat.
But if you have multiple streams of income, you can support yourself financially for at least a little while, and it gives you the opportunity to grow those avenues to earn even more money should you wish.

Putting all of your eggs in one basket is never a good thing, and the same goes for trusting your 9-to-5 to always be available to you. Multiple streams of income provide a safety net should you ever find yourself without a stable job or income.

What would you do if you knew you weren’t worried about money?

  • Would you take more vacations?
  • Start a new passion-based business?
  • Or maybe you’d invest in a few up and coming businesses.

Having options is a big deal, especially when it comes to money. Having multiple streams of income means you can do more with your money and spend less time worrying about it. And that is the ultimate reason why it’s important to have them!

Are you ready to create multiple streams of income?

Another reason having different streams of income is Making vs Spending. Think about it; you are spending your time working on them. That, in return, means you’re less likely to spend money.

When you’re busy with a business or side hustle, you don’t have time to shop mindlessly online or spend a lot of money. Instead, your focus is on your hustle. Which means that you can save even more money in the long run, just by having an extra stream of income, even if you don’t make much from it!

Most importantly…

Having multiple streams of income isn’t all about the money. In fact, sometimes people start a side hustle, small business, or freelance because it’s fun and a creative outlet! If your 9-to-5 pays well and isn’t terrible, but isn’t fulfilling you and what you want out of your life, create a new stream of income!

Think about all the changes that extra streams of income can do for your financial situation. If your day job pays for your bills, you can then use your other income to save, invest, and more. You’re able to make decisions that affect your now and your future.

Starting is your best choice!

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