Life insurance settlement: Are You Sure To Get Your Money?

When it comes to life insurance settlements for seniors and younger people, the life insurance settlement market is mired with controversy. Not only was the life settlement market more than a century in the making, but the market for life settlements would not have originated without a numerous amount of judicial rulings, events and prime individuals.

What is life insurance Settlements?

Life settlements are a vital development in the fact that they have introduced a secondary market for life insurance for seniors and younger people. Policy owners have easy access to fair market value for their policies, as opposed to accepting lower cash surrender value from the issuing company of life insurance settlements. A life insurance settlement is a financial transaction in which a policy owner has possession of any unnecessary or undesired life insurance policy which sells the insurance policy to a third party-seniors and younger people-for more than the cash value presented by the life insurance company. Customarily with life insurance settlement, the seller receives instant cash for the insurance policy from the appropriate purchasing entity. This normally becomes the new insurance policy beneficiary at maturation. Moreover, the seller is responsible for all the premium payments from the purchase of the life insurance settlement until the death of the seller.

The Growing concept of Life Settlements

Life settlements are an option for senior high-net-worth policy owners, usually age 65 or older. Independent research estimates declare that with senior life settlements, approximately 20% of insurance policies have a market value that goes beyond the cash value offered by the insurance carrier. Many policy owners may lack familiarity with senior life settlements, until a suitable financial professional mentions the life insurance settlement option to them. Esteemed proponents such as United States Representative Bill Gradison, Warren Buffet and a number of media sources including Time Magazine, The Economist and The Wall Street Journal brought attention to the concept. With a growing number of reports on senior life settlements, more experts now believe that educating clients about offering life insurance settlements should fall under the fiduciary responsibility of a consummate financial advisor.

How Many Health Insurance Options Do Employees Really Need?

Two health insurance options are usually sufficient for most start-up organizations. Give employees a choice between a health maintenance organization (HMO) and a preferred provider organization (PPO).

Although HMO and PPO monthly premiums are roughly the same, each plan has fundamental

differences that can influence an employee's choice. HMOs have lower out-of-pocket costs and no deductibles as long as you use providers in the HMO network. PPOs have deductibles but offer more flexibility than HMOs, allowing you to choose from a wider selection of doctors and specialists outside of the PPO network.

Allowing employees to choose between an HMO and a PPO gives them the freedom to pick the plan that best suits their needs. It also shows them that you care enough about their individual situations to provide them with two different health insurance options.

Virginia Auto Insurance

If you live in Virginia and you own a car, you need to know more about car insurance policies. There are some laws in this state which will obligate you into getting certain types of coverage and you need to make sure that you obey them if you don’t want to get into legal problems. Before you decide which type of insurance you want to use, there are some facts which you certainly need to know.

Important Details

Most people will get auto insurance polices because this is the law. However, this is not only something which won’t offer you the coverage that you probably need, but it will also make you lose some money. If you didn’t know this until now, the prices of Virginia auto insurance can vary from cheap to extremely expensive. This isn’t a problem if the quality of your coverage increases as you pay more, but it usually doesn’t.

Colorado Auto Insurance

If you live in Colorado and you just bought a new car or you need to get a new insurance policy you should know a few things. Nowadays, insurance premiums can be quite expensive. This wouldn’t be a problem if you receive great services and complete protection, but this isn’t the case. In most situations, Colorado Auto Insurance companies will ask high prices because they want to get high profits. However, there are a few firms which will be able to offer you exactly what you need: complete protection and a reasonable price.

Why Are Prices So High?

There are two main elements which will influence the price of your car insurance. Before we get into that, you need to know that the price can be affordable too and that some of the high prices are high for a reason. However, you also need to learn how to avoid those who ask these quotes without offering you anything special.

Auto Insurance Coverage

When you buy your first car, you might not know what risks you are exposing yourself to. There are many dangers which can have an effect on your car or even on your health. No matter how good a driver you are, you will also be subject to accidents, even if they don’t happen from your fault. Basically, you don’t need to protect yourself from your mistakes, but from other people who might not drive as well as you do. In fact, the law actually forces everyone into getting insurance policies, for their own good.

Cheap Insurance

The cheapest auto insurance coverage policy is the one implemented by the law. However, this doesn’t mean that you will have to get that one. Each state will decide a certain limit for policies, but not because that is what you need for being protected.

Auto Insurance for Teens

Buying a car or simply owning one is quite a responsibility. More and more people are starting to get their first car in their teens and this is no longer a special occurrence. However, they are also the ones most likely to get into accidents and this is why getting insurance for teenagers is much more difficult than what most people expect. The problem is not in getting a policy, but in getting one which is at least affordable if not reasonably priced. Having the right insurance is not only something that you need for your own piece of mind, but it is also required by law.

Why Is Car Insurance For Teenagers So Expensive?

Car insurance companies are always trying to figure out how to make more profit. This doesn’t mean that they will increase their prices all the time, but they are always looking at accident statistics and make sure that the people who they offer policies to pay enough based on the risks that they present.

Proof of Auto Insurance (Required or Not Required?)

Each state now has the law which states that auto insurance policies are mandatory. You can’t get out on the road without assuring that everyone around you is safe. If an accident happens and you are the responsible, you won’t have enough money to pay for the damage from your pocket. This is why you have to get insured and the company will take care of any injury or damage to the other vehicle. Even so, insurance polices can be quite expensive these days and the cheapest place to find them is on the internet.

A few years ago, if you wanted to get the best price on your insurance policy, you would have had to spend a lot of time in traffic, from one company to another. Many offers had to be analyzed and this is quite difficult if each insurance firm offers different terms. Now, you don’t have to go through this ever again.

Low Cost Auto Insurance

Getting into accidents just happens and if you can’t really avoid this from happening you should at least make sure that you are prepared. Besides driving carefully and wearing your seatbelt at all times, you should also be sure to have one of the best insurance policies that you can buy. If you want to get new auto insurance, getting a cheap one should be on top of your priority list. Why is this so important? Insurance companies are obligated by law to offer the services which they claim to offer. Some people think that higher prices automatically means higher protection and this is completely wrong. Coverage is the element which will give you extra safety and the type of policy that you can get is the important factor. When you decide what type of coverage you need, you should start looking into low cost auto insurance.

Why Low Cost Auto Insurance?

The economical crisis has affected everyone in one way or another and it will surely affect more people in the future. You shouldn’t get the minimum plan available on the market, but once you decide what kind of coverage you need, there is no point in paying more than you should. With the help of the right auto insurance comparison website, you won’t have any problem in finding out which is the company that offers the best rates.

Ohio Auto Insurance

Most accidents that happen on the roads each day are not that serious when it comes to personal injury. People usually get out without a scratch, but they are left with damaged cars, some of them even beyond repair. The safety systems included in most new vehicles combined with some basic driving skills will protect us from serious body injuries, but the car will always suffer. If you reside in Ohio, you need to get Ohio Auto Insurance. The right policy will not only make sure that your car will get fixed for free immediately, but it will also cover hospital expenses if they are needed. In fact, you just have to pay the cost of your policy and rest assured that it will take care of you and your family when you are on the road.

Facts About Auto Insurance

Getting Auto Insurance in Ohio is not only something that people do, but it is also a law. Everyone who owns a car and wants to take it on public roads needs to have a valid auto insurance policy.

Getting Auto Insurance with Bad Credit

Anyone who has ever had bad credit knows how difficult it is to get someone to trust you with money. Banks, credit cards, and even auto insurance companies need some sort of proof that although you have had a bad experience dealing with money in the past, you can change. If you want to improve your credit, it takes dedication to develop your self discipline and time to prove your better habits. But why is it that auto insurers give drivers with bad credit a hard time? There is no borrowing of money involved, just an auto insurance policy to provide protection to the driver. Although it may be hard to realize, there are legit reasons why auto insurance companies find drivers who have bad credit a higher risk of filing a claim. When you know why an insurance company finds you to be more of a risk, you can use this knowledge and change those reasons about you to get better insurance coverage.

10 Ways to Save on Auto Insurance

Looking for ways to cut back on living expenses? How about decreasing the amount of money you are spending on auto insurance? If you didn’t think there was any hope in saving money in this area of life, think again. There are quite a few ways to reduce the cost of your auto insurance. Read on for some saving methods:

Tip #1: Shop around
It’s no secret that the company offering the cheapest insurance rates usually wins the customer. Auto insurance companies take this into serious consideration as they make their decision in how much to charge a customer. They know that if you find a cheaper rate for the same coverage, you are most likely going to switch companies. You can use our site by entering in your information and we will provide quotes for insurance coverage from different auto insurers. If you happen to find a cheaper policy elsewhere, go to your current insurer and let them know. They may be willing to match it.

The Art of the Covenant

There are some nasty SOB’s on Wall Street. The nastiest of the lot are the lawyers who draft Covenants into loan agreements. Second to the lawyers are the corporate finance types who know how to use Covenants to their advantage.

Former Treasury Secretary Paulson knows these matters cold. He dreams Covenants. And while he was running Treasury you can bet that he had top-notch lawyers around him 24/7.

Paulson left a stinky Covenant in the Fannie Mae deal. It is stinky because it is has or will blow up very soon. Fannie Mae will soon be running into a limit on its total debt as a result of the Restrictive Covenant.

In my view Hank Paulson is one of the smartest guys on Wall Street. He understood when he put a plan forward to ‘fix’ Fannie Mae that the plan was flawed. That it would, by it’s own constraints, create problems in the first 100 days after the Inauguration. Sort of like a time bomb.

I cannot figure that out. But it was deliberate. Maybe Paulson set this up so the issue of debt limitations on Fannie Mae would come back on the table with a new Administration. Maybe it was one of those nasty things that drafters of Covenants do. Either way it is an in your face for Paulson’s old pal Timmy Geithner.

I will try to explain.

A Covenant is a promise that a company makes when it borrows money. It is part of the broader terms and conditions. Examples would be “We Promise we will do X, or We promise we won’t do Y”. Normally these are expressed with numbers or ratios. “We will not let our debt exceed Z”, “We will not let our equity to fall below A” are examples.

Paulson’s crew drafted a Covenant in the Fannie Mae deal that limited the amount of indebtedness that Fannie could have. Follows is a link to the Fannie Mae page where this came out last night and a cut and past of their discussion of the problem. (Nice that it comes out on Friday night when folks are not looking at this stuff)

http://www.fanniemae.com/ir/monthly/index.jhtml;jsessionid=V02MGNVHMHMLFJ2FECISFGI?s=Monthly+Summary.

On page one of the November report, the sixth footnote on the right hand side reads:

A covenant in the senior preferred stock purchase agreement with the U.S. Treasury Department prohibits Fannie Mae from exceeding 110 percent of its aggregate indebtedness as of June 30,2008, which the company estimated to be $892 Billion. As of November 2008, Fannie Mae estimated that its aggregate indebtedness under the senior preferred stock purchase agreement totaled $885.6 billion.

If you look at the October report you will see that this is the first time that Fannie has made this disclosure in its monthly public filings. Very convenient.

There was a restriction on the Portfolio size of Fannie as well. The Portfolio limits were swept away by FHA earlier last week. Portfolio limits are easy to adjust. Covenants on debt limits are a much more thorny issue. There were two covenant limitations put on Fannie. One to limit growth, the other to limit debt. Two Ways. The lawyers call this belt and suspenders. Two Ways to hold up your pants. Heaven forbid that their pants fall down.

Paulson laid a stinky and the lawyers are probably laughing about it at Harry’s Bar. However, the new administration is not laughing at this. They are going to have to ‘fix’ this problem. It is going to take time, money and legislative effort to do that.

I have stuff that breaks all the time. My problem is that I try to fix things with duct tape and glue. It always breaks again in a few months. The answer is always the same. If something is broken, fix so that it will stay fixed. Paulson put duct tape on our financial problems. We are leaking again already, and it is only ten days since he left Washington. It sure makes me wonder how many other things are going to start leaking in the near future. ‘They’ used a ton of duct tape in the last three months they were in charge.

A Proposal to Stimulate the US Housing Market

In order to stimulate demand for residential housing the United States expands the existing EB-5 visa program to include immigrant investors who purchase a home in the US with a value of not less than $250,000.

The demand for this type of visa from non-residents could be substantial. It could exceed 100,000 per year. The current volume of unsold homes is in the range of 2,000,000. Therefore this proposal will address 5% of the problem per year. This by itself would be a significant source of stability for housing prices. Stability must come before recovery.

The following is a description of the existing EB-5 visa program.

Congress created the EB-5 immigrant investor visa category in the Immigration Act of 1990 in the hopes of attracting foreign capital to the US and creating jobs for American workers in the process.

There are three basic requirements as follows:

• First, the alien must establish a business or invest in an existing business that was created or restructured after November 19,1990
• Second, the alien must have invested $1 million ($500,000 in some cases) in the business
• Third, the business must create full-time employment for at least 10 US workers

This language could easily be amended/expanded to create demand for housing. The framework is there. This proposal re-directs the objectives but not the intent of Congress.

The devil will be in the details. If there was a will in Congress it could be done in a week. These laws already exist. We do not need a new Bill to do this. This proposal only addresses legal immigration.

There is another advantage to this approach. This proposal will not cost us a cent. That would be a first.

Social Security Trust Fund - The Mother of all Bond Portfolios

The G20 will certainly discuss the matter of Reserve Currencies this week in London. There is a lot to discuss on this topic. As of January 09 the US Treasury reports foreign holders of US Treasury securities (excludes Agencies) of a total of $2.399 Trillion. The biggest holders of these securities include:


While those numbers in the aggregate are staggering they are nothing compared to the biggest holder of Treasury Securities. As of January 2009 the Social Security Trust Fund (“SSTF”) held $2.419 Trillion of Treasury Obligations.

Fortunately for Mr. Geithner at Treasury and Mr. Bernanke at the Fed the SSTF is a captive buyer of Government paper. Unlike the Chinese the SSTF does not have the option of diversification. Also unlike the Chinese they can't complain about the risks they are taking while investing such an enormous amount of money in the IOU's of America.

The SSTF provides a significant amount of information regarding their holdings on their web site. For those that love to analyze huge data bases this is a place to spend an afternoon. For those bond traders out there, the information contained in the various reports will surprise you. The SSTF publishes a blotter of all of it's transactions. There are some links at the end the end of this article.

This observer has reviewed the information. It is difficult to draw definitive conclusions, there is just too much to look at. The following are observations based on a review of the data and related information.

*The mission of The SSTF is to invest all of it's excess cash while at the same time maintaining sufficient liquidity to meet its monthly disbursements. The numbers are very big. The April 2009 SS checks will total $55 billion. The SSTF has a big 'cash management' job as their in/out flows are very seasonal.

*The investment activity of the SSTF is governed by a law enacted in 1960. At that time a 'formula' was established to determine the pricing of securities that would be purchased by the SSTF from Treasury. There are two forms of securities, One short term, the other long term. The short term is defined as a maturity of one year or less. All short term securities mature on the next June 30th. The long maturities range from 1-15 years.

*The 1960 law was a reasonable effort to establish rules for these purchases and sales. However it is archaic in 2009. It causes the SSTF to do all manner of things that would seem illogical. One consequence is that there are huge swings in the 'fair value' that is conveyed from the taxpayer to the SSTF each year.

*The pricing formula is simple. The average of all the Treasury coupons for the prior 30 days is established on each June 30th. The rate for all maturities is set at this one average rate. The following is a description and pricing of these new issues. The amounts are in billions.


When the yield curve for 1-15 year maturities is steep the average pricing formula from 1960 produces a significant variance to the results that would have been achieve if 'market' rates had been applied to these investments. The consequence of the formula is to produce interest rates on short maturities much higher than the prevailing market rates. However, the formula also produces a lower than market rate for the all important 15th year maturity.

The ratio of 1-14 maturities to the 15th year is about 12 to 1. Therefore understating the yield on the 15th year portion significantly reduces the cost to Treasury overtime. The following are my calculations of the differences for selected years.


The large variance between the 1960 formula and the results that would have been achieved if market rates were applied sets up an interesting debate. The Grey Panthers want 'market rates' and anyone under 40 wants to keep the old formula. A curious juxtaposition of interests.

*In January of 09 the Fund bought a net of $18 billion of Treasury notes due in five months at a yield of 2 1/8 %. The market yield on that date for this would have been closer to 90 BP's. This one transaction represents a scalp of the Treasury for $90mm. One wonders if anyone is looking at this.

*In 2008 the SSTF bought and sold securities in excess of $2 Trillion. Approximately equal to their portfolio size. This is a surprisingly large number given they are executing the classic buy and hold strategy. A substantial portion of the buying/selling is a result of the requirements of the 1960 rules. The SSTF is stuck with rigid investment guidelines. The rules conflict with their requirement to have funds invested while at the same time managing the monthly cash outlays. This observer is convinced that there is a 'better way'. Cash management techniques have evolved a great deal in the past fifty years.

*There appears to be discretionary activity in managing the portfolio. Choices appear to made in some years and different ones in other years. It begs the question, Why?

In the second half of each year the SSTF redeems certain securities and replaces them with new securities. All of the securities that are bought and sold have maturities of the next June 30th. The result of this buying and selling is not clear. The value of the portfolio as of the next June 30th is not affected by this activity. However, this activity does have an affect on the reported year end number put out by the SSTF. In some years the fund sells high coupon notes and replaces them with low coupon notes. This produces a capital gain which would increase the YE number. In other years they do the reverse.

By my calculation the result of their activity in 08 was a gain of $197mm. Their activity in 07 produced a loss of $117mm. No doubt this is a random event that happens when running such a huge pile of money. They did however choose the bonds to be redeemed deliberately.

*The April 2009 cash outlay for SS will be $55.7 Billion. The average annual rate of increase in the last five years is 6%. That number jumped up in January of 2009 to a YoY increase of 9%. The jump in expenditures means about $150mm a month to the Fund. This sharp increase in 09 is a reflection of America's election cycle.

*The actuarial at the SSTF says that it is “80% probable that assets in the fund will begin to decline later than 2013”. This is not a date when SS is broke. That occurs far into the future. The 2013 date is however significant to the US Treasury. From that point onward the SSTF will not have excess cash to invest. This means that this constant buyer of US debt will go away. The fund currently holds $2.4 Trillion. This means that they have funded 1/3 of all the deficits since 1938. As a buyer of new Treasury issues they will be sorely missed.

The dynamics of the fund are driven by prevailing interest rates, economic activity and the rate of expenditures. In 2009 interest rates are low, economic activity is low and the expenditures are increasing on a cash basis by 9% annually. That 80% probability for 2013 is at risk. Either way 2013 is not very far away.

*The SSTF invests in a strip of Treasury maturities from 1 to 15 years. There is a ratio of the amount of intermediate maturity bonds and the final maturity of the bond. That ratio varies from year to year. In the 1990's that ratio averaged 14%. In 2000 it started to decline. In 2008 it stood at only 8%. This change in investment strategy would seem to be motivated to create duration. The significant change in this ratio suggests that 'human' choices are being made. While extending duration my be a wise choice it is still a choice. On Wall Street they call this a “rate bet”.

*The Fund produced this graph which shows the ratio of those employed and contributing to the fund versus the number who are receiving benefits. That number began a permanent decline in 2007. About the same time that everything else fell apart.



Links of interest:
http://www.ssa.gov/OACT/ProgData/investheld.html
http://www.ssa.gov/cgi-bin/transactions.cgi
http://www.ssa.gov/OACT/ProgData/intrateformula.html

Is it Legal to Drive without Auto Insurance?

Finding the right auto insurance coverage may seem more of a hassle than it’s worth, but trust us. It is 100% necessary to carry adequate auto insurance. Not only is it the law to have auto insurance, but it’s also a wise means of protection for your vehicle and also for your loved ones. Auto insurance gives you the ability to call upon your insurer for financial help when you have been involved in an accident. They will walk you through the correct procedures to get your vehicle repaired and medical bills paid for. Knowingly not carrying the right of coverage is a foolish move on any driver’s part.

It is illegal to operate a vehicle on public roads without carrying adequate auto insurance. Each state within the United States has its own requirements that tell a driver what type of coverage is needed and how much coverage to purchase.