Joint Life Insurance: Policies Built for 2

Married couples looking for a way to lower the cost of life insurance or to make sure their estate is protected from taxes when they die may want to consider joint life insurance.

Not as common as individual life insurance, joint policies are designed to enable two people, typically spouses, to share in one life insurance plan. Joint life insurance comes in two flavors: first-to-die, which pays out to the surviving spouse after the first dies; and second-to-die, or survivorship, which pays a death benefit to the heirs after both spouses are gone.

"First-to-die and second-to-die generally have different purposes," says Steven Brostoff, a spokesman for the Washington, D.C.-based trade association the American Council of Life Insurers. "Second-to-die can be used to help pay estate taxes and/or to provide a financial legacy to children, while first-to-die is more suited for young couples with children -- to replace lost income or services provided by the deceased parent."

Consumers may purchase a joint policy either as term life insurance, covering only a set number of years; or permanent life insurance, protecting one or both spouses for an entire lifetime. The most common way joint life insurance is sold is as permanent universal life, with a "cash value" savings component that grows, say insurance experts. "About 80% is in a version of universal life," says Kevin Finneran, a vice president with New York-based insurer MetLife.

Second-to-Die Protects Your Heirs
Second-to-die, or survivorship, life insurance is offered by a handful of insurers and is typically geared toward affluent people concerned about the potential for hefty estate taxes on what they leave behind. For 2013, the estate-tax exemption will be $5.25 million for individuals and $10.5 million for married couples, which means an estate has to be worth more than the threshold for the tax to kick in.

"Because estate taxes are only applicable to a small percentage of (very wealthy) people that die each year, those policies are very large," says Elaine Tumicki, corporate vice president of product research for LIMRA, an insurance and financial services trade group based in Windsor, Conn. The policies make up "a relatively small piece of the insurance market," she adds.

It's not unreasonable to estimate that a $1 million joint survivorship policy would be 20% cheaper than two $500,000 individual life policies, Finneran notes. Premiums and savings will vary based on the insurer and the age and health of the persons being insured.

Besides being economical, another benefit of a second-to-die policy is that it provides a level of protection to those whose health might bar them from getting their own individual life insurance policy. "It can be a way for a person who would not qualify for a single life policy to get some coverage, assuming the other spouse is insurable," Finneran says.

First-to-Die Helps Maintain a Lifestyle
First-to-die joint life insurance is less common than second-to-die, but it is sold by some better-known insurers. For example, State Farm offers a joint universal life policy in which the death benefit is paid when the first spouse dies. Coverage starts at $100,000 and is available for people ranging in age from 20 to 85.

A first-to-die policy may be the right product for married people who want a surviving spouse to be able to maintain a certain lifestyle but wants to pay less than the cost of two individual polices.
"It's only paying out once, so naturally it will be less than two payouts" and that makes the cost lower, says Brostoff, of the American Council of Life Insurers.

But don't expect a first-to-die policy to be substantially cheaper than two individual policies. There isn't enough of a market yet for this particular type of joint life insurance to drive premiums drastically lower, says Finneran. Plus, since there is only one payout, there may be a need for the surviving spouse to spend money on new coverage after the other dies.

Divorce Can Break Up the Joint
Whenever anyone considers a first-to-die or survivorship policy, one of those "let's not go there" but must-be-addressed questions is: What happens if there's a divorce?

In the event that the two members of a covered couple decide to go their separate ways, these insurance plans can come with optional riders or clauses that provide for the right to split the policy into two individual ones. Keep in mind that there can be restrictions on when the policy may be split, says Finneran, of MetLife. In some cases, a couple must be divorced for a certain length of time before the right to split the policy can be exercised.

Experts advise couples shopping for joint life insurance not to sign up for any policy before making sure a divorce clause is included. If it's not, find a different policy. You want a joint life policy that will allow you to disengage, says Tumicki, of LIMRA.

"Getting divorced is a very difficult question the couple needs to resolve before they purchase the (joint life insurance) policy," Brostoff adds. "Even though you don't want to think about it, it does happen."

Oceanside Selected as the 2013 Life Time Tri Championship Event

Life Time (NYSE: LTM), the Healthy Way of Life Company, today unveiled that the 2013 Life Time Tri championship event will be held on Sunday, October 20, 2013 in Oceanside, Calif. In its inaugural year, Life Time Tri Oceanside is expected to host more than 1,500 of triathletes as the final of 12 Life Time Tri events across the country.

“Oceanside is recognized worldwide as a sought-after triathlon destination,” said Kimo Seymour, vice president, Life Time Athletic Events. “Nestled between San Diego and Los Angeles, Oceanside is a challenging, scenic course—a truly unique experience for triathletes of all abilities—and the perfect conclusion to our 2013 Life Time Tri schedule.”

Life Time Tri Oceanside will start with a 1.5-kilometer swim in the waters of Oceanside Harbor, which has an average water temperature of 63-65 degrees in late October. Athletes will enjoy an ocean front transition before starting a 40-kilometer bike course along the San Luis Rey Mission Expressway. The 10-kilometer run course follows white, sandy beaches allowing for a spectator-fueled finish adjacent at the historic Oceanside Pier. To keep Life Time Tri Oceanside accessible to athletes with a concentration on short course format, as well as beginner athletes, the event also will feature a shorter sprint distance race.

“We are honored that Oceanside has been chosen from among some of the country’s most spectacular destinations to host Life Time Tri’s championship event,” said Leslee Gaul, chief executive officer and president, Visit Oceanside. “With its accessibility to major west coast markets, stunning beauty and tourism infrastructure, Oceanside will resonate with both athletes and spectators alike.”

Along with professional athletes from around the world, Life Time Tri events attract more than 25,000 elite and age group athletes each season. Professional and elite triathletes will compete in international-distance and relay team competitions on courses. To keep Life Time Tri races accessible to athletes of all ages, kids events are available in select markets.

To register for any of the Life Time Tri events, visit lifetimetri.com, the official website of Life Time Tri. You also can stay updated with the latest information from Life Time Tri on Twitter by following @LifeTimeTri and by liking the Life Time Tri Facebook page.

Life insurers eye Asia deals to boost profit - Moody's

European and U.S. life insurers will seek takeovers in booming Asia and put more money into riskier assets this year to bolster flagging profits, Moody's said on Monday.

The outlook for developed world life insurers is negative, Moody's said in its annual overview of the sector, with investment income under pressure from rock-bottom rates, and sales wilting as stagnant economies force consumers to retrench.

Life insurers will likely respond by buying up rivals in faster-growing emerging markets, and by increasing their investment in riskier assets that yield higher returns, Moody's said.

Recent emerging market acquisitions by European insurers include Prudential (LSE: PRU.L - news) 's takeover of Thailand's Thanachart Life in November (Xetra: A0Z24E - news) last year, and Zurich Insurance Group's purchase of Santander (Madrid: SAN.MC - news) 's Latin American insurance unit in 2011.
Insurers seeking to boost their investment returns could put more money into equities, infrastructure or direct commercial loans.

Sovereign and corporate bonds, traditionally seen as low risk, accounted for 62 percent of European life insurers' investment portfolios at the end of 2011, according to Moody's.

Central banks in the United States and Europe slashed interest rates close to zero to prop up the economy in the wake of the 2008 banking crisis, dragging down bond yields, and eating into insurers' investment income.

Life insurers in Germany and France, whose best-selling products are savings policies that offer customers guaranteed minimum returns, have been hardest hit. Many are cutting their guarantees and trying to sell more alternative products where investment risk is borne by the customer.

U.S. and European life insurers face a further threat this year from potential sovereign debt crises, amid lingering worries over the creditworthiness of peripheral euro zone countries, Moody's said.

Last year, Moody's downgraded the credit rating of Spanish and Italian insurers, and also changed the outlook for pan-European players Allianz, Axa (Paris: FR0000120628 - news) and Aviva (LSE: AV.L - news) to negative, reflecting their heavy exposure to bonds issued by critically-indebted euro zone nations.

Life cover cost could rise 20 pc to pay for tax changes

Life insurance premiums are set to rise as the insurance industry adjusts to a heavier tax regime.

The tax rules were reviewed after the Government become concerned that a shift in people's policy preferences had left life insurers undertaxed.

According to one industry operator, premiums need to rise by about $150 million to accommodate tax and other changes.

By the time grandfathering provisions come off in three years' time, he estimates premiums will be 15 to 20 per cent higher from when the changes took place in mid-2010.

Deloitte tax expert Greg Haddon says the old tax rules treated all life insurance policies as "whole of life", which had a large savings component.

That meant policies were largely taxed as an investment rather than income.

Over the last 20 years, however, most policy-holders have shifted toward yearly renewable policies, which are cheaper but don't make a payout on retirement.

Life insurers acknowledge the changes are fair but say they cannot absorb the full tax bill.

Milton Jennings, chief executive of Fidelity Life, said the tax changes had come at a time when low interest rates were eroding their investment income.

There was also "quite fierce competition in the life insurance market so you're not seeing rates going up too much".

"People have had about half the increases already and there's probably another half to go."

Haddon said insurers had a five-year adjustment period, which kept policies held before the changes temporarily at their old tax rates.

So "while they'll be paying more tax, they'll certainly be paying more tax in three years' time", he said.

Insurance company Tower agreed life insurance premiums needed to eventually rise 15 per cent but said they had to also reflect the market.

It had increased premiums for new policies 7 per cent in 2010 and another 3 per cent the following year.

"We'll be reviewing older policies towards the end of the grandfathering period, with a view to adjusting premiums as necessary," a spokesperson said.

Life insurance had changed markedly from the days of the once-popular whole-of-life policies, which were taken out by young workers or by their parents when they were born, Haddon said.

"You paid a very small premium each month and part of that premium went towards a savings so that by the time you retired there was a surrender value that you could get back."

Whole-of-life made sense when interest rates were low but were eroded by rising inflation, said Fidelity's Jennings.

The one permanent exception from the new tax rules is "level term" policies, which keep premiums static for an agreed term of sometimes 50 years.

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Jennings said level-term contracts were "golden" and holders should hang on to them.

"The sad thing is, I see people cancelling these contracts and going back to YRTs (yearly renewable term policies) to get it cheaper, but that's just absolute madness."

In 2008 Treasury estimated the extra tax take from the changes would be a net $9m by 2012.

The IRD says that figure would apply to 2013 because the changes were made later than expected.

Pro-life protesters march on US court

Tens of thousands of pro-life supporters have converged on the US Supreme Court to protest its landmark decision 40 years ago this week that legalised abortion in America.

Organisers of the annual March for Life on the National Mall in Washington on Friday expected a record crowd surpassing last year's turnout of 400,000, even with sub-freezing temperatures.

Cheering on the demonstrators from the Vatican was Pope Benedict XVI, who sent his best wishes via Twitter.

'I join all those marching for life from afar, and pray that political leaders will protect the unborn and promote a culture of life,' the pontiff tweeted on his Pontifex account.

Tuesday was the 40th anniversary of the Roe versus Wade decision in which the highest court in the land ruled that abortion was a strictly private matter between a woman and her doctor.

The 1973 decision is seen by the pro-choice camp as a breakthrough for women, but the pro-life movement - with support from the Roman Catholic and conservative Evangelical churches - sees itself as rapidly gaining ground.

'Being pro-life is the new normal... Americans are becoming more pro-life,' Jeanne Monahan, 40, the youthful new leader of March for Life after last year's death of its 88-year-old founder Nellie Gray, told the crowd.

In a Gallup poll last year, 50 per cent of respondents identified themselves as pro-life - in contrast to 41 per cent who were pro-choice, down from 56 per cent in 1995.

Fitch Affirms Minnesota Life's IFS Rating at 'AA-'; Outlook Stable

Fitch Ratings has affirmed the Insurer Financial Strength (IFS) ratings of Minnesota Life Insurance Company (Minnesota Life) and its subsidiary, Securian Life Insurance Company at 'AA-'. Fitch has also affirmed the rating on Minnesota Life's surplus notes at 'A'. The Rating Outlook is Stable.

The rating affirmation reflects Minnesota Life's strong balance sheet fundamentals and conservative risk profile. The ratings also consider the company's moderately weak earnings relative to similarly rated peers, as well as macroeconomic challenges and a strong competitive environment in its core markets, within which the company often faces insurers with greater scale and resources.

Minnesota Life's strong balance sheet fundamentals reflect the company's solid capitalization, low operating leverage, and low financial leverage. The company's risk-adjusted capitalization, which is a key factor supporting the company's ratings, remained strong and stable in 2012. The company reported a risk-based capital (RBC) ratio of 518% of the company action level at Dec. 31, 2011, and Fitch expects the company to report and RBC ratio in excess of 500% for Dec. 31, 2012.

In addition to the company's strong risk-adjusted capitalization, Minnesota Life's solid balance sheet fundamentals are supported by its low statutory operating leverage of 4.6x as measured by adjusted liabilities to total adjusted capital, as well as low financial leverage of approximately 5% on a GAAP basis.

Fitch notes that Minnesota Life's liquidity profile continues to be very favorable. The company's results benefit from its large, investment-grade, publicly traded bond portfolio and stable liability structure.

Minnesota Life's conservative risk profile reflects balanced, diversified sources of revenue that serve to moderate earnings volatility, although growth in fee income related to capital market performance could add further volatility in the future. While the company's product lines have produced below average combined profitability relative to similarly rated peers, Fitch acknowledges that the company's products are reflective of management's mutual insurance company philosophy. Fitch also takes a favorable view of Minnesota Life's high quality career agency distribution channel and strong technology-based service platform, which Fitch considers to be beneficial to its group life and retirement services product lines.

Fitch expects Minnesota Life's near-term operating profitability to moderate somewhat, as recently favorable mortality experience reverts to historical averages. Over the course of 2013, Fitch anticipates the company's profitability as measured by GAAP-based return on equity to be between 6% and 7%, which is within current rating expectations. In addition, Fitch believes that intense market competition will continue to challenge the company in its efforts to generate profitable top line growth over the next year, and low interest rates will likely pressure spread income.

Minnesota Life, the primary operating subsidiary of Securian Financial Group, is headquartered in St. Paul, Minnesota and reported total admitted assets of approximately $28.1 billion and capital and surplus of $2.1 billion at Sept. 30, 2012.

Sun Life Financial named as one of the 2013 Global 100 Most Sustainable Corporations in the World

For the third year in a row, Sun Life Financial is the only North American insurance company named among the Global 100 Most Sustainable Corporations in the World for 2013.

Sun Life is one of 10 Canadian companies across all industry sectors to make the Global 100, and this is the seventh year that the company has appeared on the list.

"At Sun Life, sustainability means having the ability to assure our customers, employees, distributors, shareholders and communities that we are in business for the long term," said Mary De Paoli, EVP, Public & Corporate Affairs and Chief Marketing Officer, Sun Life Financial. "It is embedded in our decisions and processes, and demonstrates to our customers that we are focused on keeping our promises and living up to our mission of helping customers achieve lifetime financial security."

"Sun Life is proud to be among the Global 100, which validates the work we are doing to make life brighter for generations to come," De Paoli said. "People are increasingly seeking to work for and do business with companies that are aligned with their values, and Sun Life's inclusion in the Global 100 affirms to our stakeholders that we are focused on the issues that matter to them."

In the last year, Sun Life has been reducing energy consumption in its offices and data centre; building on its long-standing leadership in the Canadian financial services industry by continuing to invest in clean and renewable energy projects; strengthening reporting of its broader sustainability performance; and joining networks of like-minded organizations focused on advancing sustainability goals.

The Global 100 list was announced today by Corporate Knights magazine at the World Economic Forum in Davos, Switzerland . Recently recognized as the world's most credible corporate sustainability ranking by Rate the Raters, the list consists of the 100 top-performing companies worldwide on a range of sector-specific sustainability metrics.

Other recognition
In addition to its Global 100 ranking, Sun Life is ranked first out of 244 companies in the Globe and Mail's eleventh annual review of corporate governance practices in Canada . Sun Life is also on the Corporate Knights' 2012 Best 50 Corporate Citizens in Canada list, as well as the FTSE4Good and the Dow Jones Sustainability North America indexes. Sun Life is the "Most Trusted Life Insurance Company" in Canada , according to the 2012 Reader's Digest Trusted Brand consumer survey.