Life Insurance Roundup, March 24, 2016

Updated: Life insurance loophole closed for biz owners |

Not only did the small business tax rate get frozen, but a popular life insurance strategy is no longer tax-advantaged.

A loophole in the tax act allowed business owners to transfer their life insurance policies to their corporations in return for tax-free proceeds of the policy’s fair market value (FMV), usually in the form of a note. Then, when the business owner died, the corporation would receive the proceeds of the death benefit – again, essentially tax-free. Private corporations can add the value of the benefit, less the adjusted cost basis, to their capital dividend accounts, and then pay out capital dividends, which aren’t taxable in the hands of shareholders. 

Non-traditional Life Insurance Products with Guarantees: From Variable Annuities to CPPI – Research and Markets | Business Wire

This new book by the best-selling editors of Variable Annuities analyses all investment products with guarantees – such as VAs, index linked products, CPPI-based products – from the perspective of product design, pricing, reserving value management and risk management. It examines issues that are faced by both insurance and mutual fund companies.

Non-traditional Life Insurance Products with Guarantees provides an overview of all of the relevant aspects of these investment and retirement products from an insurer’s and pension plan’s perspective and offers practical and theoretical advice. The editors have brought together a team of authors from the industry, resulting in a practical and essential text for any insurer. 

‘Life insurance is the first product one needs when creating a financial portfolio’ | Business Line

Life insurance protection (term) plans, though cost-effective, have found few takers in recent years. The value proposition is huge, but it is yet to gain popularity among customers. ICICI Prudential has been focusing on this high-value but least-appreciated product to create awareness and educate customers about pure protection products, said Sandeep Batra, Executive Director, ICICI Prudential Life Insurance Company, in an interview with BusinessLine. Excerpts: 

Are Life Insurers Failing Consumers? – Forbes

Life insurance sales are flat, leaving many Americans underinsured and unprotected, and it’s the insurers’ fault, according to a new report by consulting group McKinsey, The Key to Growth in U.S. Life Insurance: Focus on the Customer.

Of mass affluent Americans who are married with children and have investable assets of $250,000 or more, 97% have investment accounts—brokerage accounts, IRAs or 401(k)s—while only 65% have life insurance.

“We still have large pockets of the population, even the wealthy, that don’t have life insurance,” says Giambattista Taglioni, a McKinsey director in New York. There’s a lot of need, and insurers— especially incumbents feeling the heat from FinTech “attackers”–need to invest in online distribution and customer engagement to meet demand, he says. 

Direct Auto & Life Insurance Plans Month-Long Celebration of Customers

Direct Auto & Life Insurance customers should feel the love this April as the company launches its third annual Customer Appreciation Month celebration. The promotion, which is meant to honor the insurance provider’s policyholders, will feature over $15,000 in sweepstakes prizes as well as in-store celebrations throughout its 11-state footprint. 

China Life Insurance 2015 profit rises 7.7 pct, misses estimates | Reuters

China Life Insurance Co Ltd posted a 7.7 percent rise in 2015 net profit, but fell short of expectations.

China’s largest insurer by market value in Asia Pacific said net profit for the year ended Dec. 31 rose to 34.7 billion yuan ($5.3 billion) from 32.2 billion yuan a year earlier.

Analysts on average were expecting the company to post a net profit of 35.7 billion yuan, according to Thomson Reuters data. 

Life Insurance for a Child by Malcolm Berko | Creators Syndicate

Dear Mr. Berko: We are expecting our first child (a son) in about a month, and we’d like to invest about $50 a month in a very conservative mutual fund or stock for his future. A good friend of ours who sells life insurance suggested a $100,000 life insurance policy with a $618 annual premium as a long-term investment.

He says that if these annual payments were to be made for 60 years ($37,080), my son would have insurance of $305,000 and a projected cash surrender value of $140,000. He said it would be a good savings program because the annual dividends would not be taxable and they would compound at an average rate of 4.1 percent in 60 years. That would make a nice savings plan for our son’s retirement. What would you recommend? — BT, Buffalo, N.Y. 

Rising life insurance premiums challenged in court

Insurance companies have the same problem everyone else does — poor return on their investments. With their investment portfolios lagging, insurers are jacking up premiums, a tactic that is not going down well with consumers.

In the latest skirmish, a federal lawsuit filed in Los Angeles says that consumers who bought life insurance from Transamerica decades ago are now being hit with large increases in their premiums, leaving many with little alternative but to cancel the policies they’ve been paying on for years. 

Postal Life Insurance policy rules revised – Times of India

e existing rules regarding the terms and conditions for termination of Whole Life Assurance (WLA)/Convertible Whole Life Assurance (CWLA)-Postal Life Insurance (PLI) policies have been revised. All policy-holders having WLA/CWLA type PLI policies and have paid PLI premiums regularly till the date of last installment and attained the age of 80 years and above, but not surrendered their policies so far, are requested to contact the nearby head post offices with required documents for claiming the final settlement. The press release was issued by the chief postmaster general, AP & Telangana, on Wednesday. 


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