The Land Grab of Internet Access

Households with life insurance hits lowest level in 50 years

By Sandra Block, USA TODAY

The percentage of U.S. households with life insurance coverage is at its lowest in 50 years, leaving millions of families without a safety net, industry experts say.

Only 44% of households have an individual life insurance policy, and 30% have no individual or employer-provided life insurance, according to a recent survey by LIMRA, an industry-sponsored group. Some 11 million households with children younger than 18 — viewed as families with the greatest need for coverage — have no life insurance.

The drop in insurance coverage comes at a time when premiums for term life insurance are significantly lower than they were a decade ago. For example, a 35-year-old healthy man can purchase a $500,000, 20-year term policy for about $25 a month, according to ING, a financial institution that sells life insurance. Behind the decline:

•The economic downturn. More than 40% of families said they haven't purchased life insurance because they have other financial priorities.

At the same time, 40% of families with children under age 18 said they would have immediate trouble paying expenses if the primary breadwinner died.

•Procrastination. Unlike auto and mortgage insurance — which are typically mandatory for home and car owners — life insurance is a voluntary purchase, says Butch Britton, chief executive of ING's US life insurance division. That causes people to put off buying it, he says.

Procrastination can backfire, because young, healthy people can usually get the least expensive premiums, says Amy Danise, managing editor for Insure.com. "A lot of people really overlook the whole need (for insurance) until they have a health condition, and then life insurance prices are out of reach for them," she says.

•Fewer insurance agents. Nearly 80% of families don't have a personal life insurance agent or broker, according to LIMRA. The decline in premiums for term life insurance has made it more difficult for agents who sell the policies to make enough money to cover their expense, Britton says.

In 2010, there were 184,873 "affiliated agents"— insurance agents who primarily or exclusively sell one insurance company's products — down from more than 246,000 two decades ago, according to LIMRA. And life insurance agents who have stayed in the business are increasingly selling permanent life insurance to affluent families. Permanent life insurance has a savings component and doesn't expire, but it is more expensive than term insurance.

Insurance companies are adopting several strategies to reach out to middle-income families who don't have a life insurance agent.

MetLife is aggressively marketing its group life insurance policies to employers, says Todd Katz, executive vice president of insurance products. Employees can typically buy the policies through payroll deduction, sometimes at a lower cost than an individual policy. MetLife is also investing heavily in programs that allow customers to buy insurance policies online or by phone, Katz says.

In addition, websites such as AccuQuote.com allow consumers to shop for insurance online.

But despite the growth of such sites, most insurance is still purchased "face to face from a live person at the kitchen table," says Byron Udell, chief executive of AccuQuote.

And with fewer agents knocking on doors, he says, "there's less of it getting bought."

Taxing times for mutual-fund shareholders

These are taxing times for mutual-fund shareholders, indeed.

Not only are stock-fund investors facing stiff losses from 2008, those in taxable accounts also received a bill from the IRS. That's because their fund managers sold appreciated securities to meet redemptions and rescue performance in last year's meltdown. Investors were left with capital gains taxes to pay -- but nothing to show for it.

Shareholders who reinvest distributions are hit hardest. Owing tax when you haven't sold a single share is one of the rougher edges of fund investing, in good markets or bad.

Individual stockholders don't have that problem; they pay capital gains taxes only when they sell. If fund shareholders could do the same, money siphoned for taxes could instead be invested and grow over time.

What is an ETF?

An ETF is an acronym for Exchange Traded Funds. Quite simply, they are a basket of stocks and bonds but unlike but mutual funds they are traded on exchanges. You have trading abilities with exchange traded funds that you don't have with mutual funds. Typically with mutual funds if you buy or sell you get the end of day price. With exchange traded funds, you get the price at that moment in time if it's a market order, or a price that you specify if you execute a limit order. So basically an exchange traded fund can be treated like a stock.

Weighing a Custodial Account for Your Kid

Parents set up custodial accounts for their children for various reasons – but not always with the purest motives. Grandma gives $10,000 to little Freddie: Set up a custodial account. Parents want a tax shelter for little Jennifer’s college savings fund: Set up a custodial account. A single mom wants to hide cash so she can qualify for financial aid and go back to school: Move the money into her kid’s custodial account and take it back later. You get the idea. However, many parents fail to recognize that custodial accounts have significant legal and tax implications. Here are the five most important things to understand.

1. That Money Isn’t Yours Anymore

When funds are transferred into a minor child’s custodial account at a financial institution or brokerage firm, the funds now irrevocably belong to that child. Although the parent can, and usually does, function as the custodian (manager) of the account, the money can legally be used only for expenditures that benefit that child. In other words, parents are legally forbidden from using custodial account money for expenditures that benefit themselves (like a new car). And you can’t take money from one kid’s custodial account and use it to open up or supplement an account for another kid. Obviously, it can be a fine line between expenditures that benefit the child and those that benefit other family members. And I’ve never personally heard of a parent getting into legal hot water for raiding a custodial account. That said, staying on the right side of the law is the right thing to do.

2. Your Kid Will Gain Control at a Young Age

A minor child’s custodial account must be established under your state’s Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA). Under applicable state law (most states have UTMA regimes these days), your child will gain full legal control over the account once he or she ceases to be a minor. This will happen somewhere between age 18 and 21 (in most states it’s 21). Remember: Nice little kids eventually turn into obnoxious teenagers, and young adults are not necessarily much better. So consider the possibility of future “UGMA or UTMA regret” before taking the irrevocable step of putting money into your child’s custodial account.

3. Your Kid May Have to File Tax Returns and Pay Taxes

Any income from your child’s custodial account belongs to the child. If that income exceeds $950, a separate federal income tax return generally must be filed for the child using Form 1040, 1040A, or 1040EZ. The child will probably owe some tax, and the kiddie tax rules may make it higher (see below). A state income tax return may be required too.

Exception: If all of your child’s income consists of interest, dividends and mutual-fund capital gains distributions, you may qualify to simply include the income on your Form 1040 and pay the resulting extra tax with your return. For details on this simplifying option, see IRS Form 8814 (Parents’ Election to Report Child’s Interest and Dividends).

4. The Kiddie Tax Might Bite

It would be swell if children with substantial custodial accounts were allowed to pay the same tax rates on investment income as other unmarried individuals. If that was allowed to happen, a child’s 2010 ordinary income would typically be taxed at a federal rate of only 10% or 15%, and a 0% rate would typically apply to long-term gains and dividends. Unfortunately, the so-called kiddie tax prevents such happy outcomes. Under the kiddie tax rules, a minor child’s investment income above $1,900 may be taxed at the parent’s higher rates. So the federal rate on a child’s interest income could be as high as 35%, and long-term gains and dividends could be taxed at 15%. The Kiddie Tax is calculated on IRS Form 8615 (Tax for Certain Children Who Have Investment Income of More Than $1,900) or on the aforementioned Form 8814 (when allowed).

Bottom Line: In the good old days, a custodial account could function as an efficient tax shelter because the income was taxed at the child’s low rates. These days, the kiddie tax rules make it difficult for custodial accounts to deliver meaningful tax savings.

5. There Could Be Gift Tax Consequences

This year, you can take advantage of the annual federal gift tax exclusion to move up to $13,000 into a custodial account for each of your children. So can your spouse. You can do the same thing next year, and the year after that, and so on. Gifts up to the $13,000 annual limit don’t reduce your lifetime $1 million federal gift tax exemption. However, if you transfer more than $13,000, you must file a gift tax return on IRS Form 709 (United States Gift (and Generation-Skipping Transfer) Tax Return). You probably won’t actually owe any gift tax (thanks to the $1 million exemption), but you still have to file.

Read more: Custodial Accounts for Your Kids: What to Know - SmartMoney.com http://www.smartmoney.com/personal-finance/taxes/custodial-accounts-for-your-kids-what-to-know/#ixzz179aO1vXC

The Stock Market: Investing or Gambling

Extracted from an article by Shane Ostrom, CFP:

We’ve had 401ks and IRAs for over 30 years now. These investment plans shifted the burden of planning for your comfortable retirement from companies with pension plans to you overnight. Your comfortable retirement completely rides on your shoulders. You would think, given the unconditional necessity that we be successful with our investments, we would put more time and effort into learning how to ensure a satisfying future. Instead, folks have no clue, put no effort into learning, and manage by the seat of the pants. They base their actions on false assumptions: that markets will continue to go up and that they can buy and sell their way to prosperity. They couldn’t be more wrong. It’s possible we could all be successful if we took the task more seriously and planned soundly.

The stock market goes up and down. This is no secret and it’s no surprise. It is the very nature of any market…stocks, bonds, commodities, currency, business cycles, you name it. No one knows when it goes up or down, no one. And yet people, with no plan or knowledge, think they can guess when it goes up or down and base their future financial success on their guesses? Does that max out the ridiculous meter for you as much as it does for me? Folks use this guess work every day thinking that’s how the investment game is played. It’s not a game, it’s the quality of your life in the future and that requires serious plan.

No one will ever guess correctly. We aren’t wired to guess correctly.

We don’t think to invest in markets until they go up. Even then, we don’t invest until stocks have gone up enough to ensure our psyches that it is “safe” to dive in. Positive talk on the street = time to invest. By then it’s too late; the upward cycle is coming to an end. When we feel greedy or we feel we are missing an opportunity that everyone else has jumped on already, we take the plunge. Want to buy gold any one? Here’s a tip to follow, when the people who know nothing about investments or investing start to talk up an investment, RUN AWAY from the investment. The great unwashed masses are always the last to jump on an investment before it pops. By the time it pops, the knowledgeable investors have harvested their profits and left the masses holding the bag. Then the masses blame the market and prosperous people instead of looking in a mirror.

We dump out of the market when things go down. Even then, we don’t dump until it’s gone waaaayyyy down because we aren’t sure at first if it’s just a blip and may go back up. We invested at a high point and we’ve lost value so we are emotionally attached to the investment until we regain some of our value. When value isn’t regained but goes down some more, eventually we can’t take it anymore so we sell.

We invest high and sell low, just the opposite of what we are suppose to do. This rips the guts out of our returns. Then we blame the market. To succeed, you must have a plan that forces you to buy low and stops mindless trading.

http://moaablogs.org/financial/2010/11/%e2%80%9cthe-stock-market%e2%80%99s-not-an-investment-it%e2%80%99s-gambling-%e2%80%9d/

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