Life Insurance Roundup, March 29, 2016

New York Life To Hire 3,700 Agents, Advisors This Year – InsuranceNewsNet

While ongoing low interest rates and shareholder pressures challenge the ability of other insurers to invest in their agents, New York Life has increased its agent recruitment target for 2016, firm in its belief that working with an insurance agent is the best way for families and businesses to achieve financial security.  The company intends to hire 3,750 insurance and financial professionals in 2016, with more than half expected to be women or individuals who represent cultural communities. 

Fitch: Fee Income Offsets Low Interest Rates for U.S. Life Insurers | Reuters

U.S. life insurers experienced relatively stable earnings in 2015 with flat pretax operating income growth. Earnings were boosted by higher fee income, which offset modestly lower interest margins, unfavorable mortality and a strong U.S. dollar, according to a Fitch Ratings dashboard summarizing GAAP results for U.S. life insurance companies.

“Protracted low interest rates continued to pressure investment yields and while life insurers have largely offset these pressures with prepayment income and strong performance on alternative investments, Fitch expects these offsetting factors to dwindle in 2016,” said Dafina Dunmore, Director at Fitch. Dunmore added that “low oil and gas prices and structural changes in the energy market led to impairments in 2015, and is expected to accelerate in 2016.”

Average operating return on equity remained relatively flat at 11.9% in 2015 compared with 12.0% in 2014 for Fitch’s rated universe. Fixed annuities contributed to interest margin compression while retirement plans and asset management business lines benefited from increased fee income. 

Budget 2016: Service tax on single premium annuity plan cut – The Economic Times

Budget 2016 proposes to reduce service tax burden on single premium annuity plans. Called the Immediate Annuity plans in the insurance industry, the composition rate of service tax on single premium annuity (insurance) policies is proposed to be reduced from 3.5% to 1.4% of the premium charged. This will be in cases where the amount allocated for investment, or savings on behalf of policy holder is not intimated to the policy holder at the time of providing of service, with effect from 1st April 2016. 

‘Bajaj Allianz Life is pitching for multiple bank partners’ | Business Line

The new bancassurance architecture, which will allow banks to tie up with multiple insurers, will propel the new business premium collection for Bajaj Allianz Life Insurance, says Anuj Agarwal, MD and CEO. In an interview with BusinessLine,  Agarwal explained that the company is focussing on building its own proprietary direct channel and expects it to contribute significantly to the business going forward.

Co-Signing Student Loans? Consider Life Insurance – Forbes

Between October 1 and December 31, 2015, private debt collection companies hired by the Department of Education garnished more than $176 million in wages from defaulted student loan borrowers in order to pay back their debts.

These garnishments were all related to federal student loans which never need a cosigner, but private student loans are co-signed by a parent 90% of the time. What happens if you co-sign your child’s student loan and they are unable to pay? Private student loans do not have the same garnishment powers that federal student loans have, but the lender can still pursue you and even take you to court to try to collect the amount due because you co-signed the loan. 

How Much Life Insurance Do I Need? |

Life insurance is different for everyone because we all have different needs and obligations. In order to determine how much life insurance you will need, you should consider your age, your spouse’s age, how old your kids are, any obligations you may have that you may want covered should anything happen to you, and other expenses your family might need covered after your death. Life insurance should help those you leave behind. 

Father Found Guilty of Killing 3-Month-Old Son for Life Insurance Money

Moussa Sissoko was 22 when he killed his 3-month-old son Shane in 2001. A Montgomery County judge found him guilty of child abuse and murder this week, the Washington Post reports.

Sissoko met Tiffany Paris, Shane’s mom, in 1999 while she was still in high school. When she found out she was pregnant in 2000, he was at college in Florida and asked her to terminate the pregnancy. She did not, and he eventually moved in with her to help raise Shane. According to court records, it was around Shane’s birth that Sissoko got a job at a lock and security company and began pursuing $750,000 life insurance for Shane. He put himself as the sole beneficiary on the policy.

“Any reasonable person is going to ask: ‘Why would you put a $750,000 policy on a newborn infant?'” Judge Michael Mason who ruled alone on the trial asked in court. “It seems to make no sense, just on its face.” Sissoko claimed it was a form of a college savings plan for Shane. 

The Key Differences Between Whole Life Insurance and Fixed Annuities — The Motley Fool

The insurance industry is a difficult one for many investors to understand, and insurance products are often full of complex provisions and complicated jargon. One important thing to understand is that insurance products can differ widely, and you need to make sure you have the right one for your needs. In particular, whole life insurance and fixed annuities are both products that you’d get from an insurance company, but they serve very different purposes. 

Life insurance loophole closed: example |

Last week’s budget nixed the tax advantages of a popular life insurance strategy.

A loophole in the tax act had 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 would then 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.

The 2016 budget proposes to tax the initial transfer from the policyholder to the corporation as full income, says Kim Moody, director, Canadian Tax Advisory at Moodys Gartner Tax Law. 


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