The Life Insurance Business in 1868

The world of 1868, when the Metropolitan Life Insurance Company was born, was very different from the world we know today. There were no telephones in those days and no electric lights. The country had not yet been spanned by a transcontinental railroad. Records were kept in handwritten ledgers, and business letters were penned in longhand. The entire population of the United States was only about 37,000,000. The flag then carried 37 stars. 

Canada at that time contained only 3,500,000 people. She had only one year earlier (1867) achieved Dominion status in the British Empire. The two countries, although their frontiers were expanding, were still largely rural. At the census of 1870, the American population living on farms and in country villages numbered about 30,000,000. Persons engaged in agriculture, forestry, and animal husbandry constituted half the total working population. 

The War of the States, to be sure, was over, but the struggle had left in its wake a variety of national problems— not only political but also economic and social. The Nation was still feeling most of these with full force. For instance, greenbacks were still in circulation, and specie payment was not to be resumed until 11 years later. With the emancipation of the slaves, the labor problem reached a new phase. The Government of a now united Nation was anxious to offer its citizens fields for expansion, and through the Homestead Acts and subsequent land grants made thousands of farm acres available to pioneers. 

To others more enterprising, new territories offered opportunity to exploit the resources of great plains and mountains. The primary need of the country was adequate transportation facilities, which were considered a key to further economic progress. However, all signs pointed to a great expansion ahead. The actual issues of the war itself had, for the most part, been settled. The country could now go forward to the fruitful destiny which its rich natural resources and its vigorous people promised. 

Industry, commerce, and finance felt the new stimulus to surge forward. The business depression which immediately followed the close of the war proved short and was succeeded by a distinct upturn. By 1868 there was in progress a business revival which was to last five years. The Metropolitan was thus launched on a rising economic tide. Immigrants in large numbers were encouraged to come to add the work of their hands to the building of the country. 

They made up a new working population, which took root, for the most part, in the cities. Crossroads were becoming towns almost overnight. Towns were swiftly growing into cities. A deeper sense of permanence colored the thoughts of the American people, who began to think in terms of a future, a home, family security. The United States was rapidly coming of age. 

The class of wage earners was growing rapidly, a circumstance which, as we shall see, proved to be a determining factor in the development of the Metropolitan. As inventions multiplied and factories grew, women and children were employed in greater numbers. The acceleration of industry and of urban life accentuated the economic insecurity which many felt in their new environment. 

City dwellers became conscious of the hazards of long working days, child labor, and industrial accidents. Mines and railroads and machines were being developed with consequent risk to human life. Health conditions in our cities were far from good. To provide a measure of security for this increasing urban population, life insurance and private health insurance companies came into being. 

The war decade of the 1860s gave opportunity for the great expansion of the life insurance and individual health insurance business. As a result, more than 100 companies were functioning by 1868. The New England Mutual and The Mutual Life Insurance Company of New York had already been in operation for 25 years. 

In fact, when the Metropolitan appeared on the scene, there were already in existence organizations with such familiar names as the New York Life, the Equitable Life of New York, the Mutual Benefit of New Jersey, the John Hancock, the Aetna, and the Connecticut Mutual. By present standards none of these companies was large, yet in their day they were important economic enterprises. At the end of 1868 the largest of these, The Mutual Life of New York, had gross assets of more than $30,000,000 and insurance in force amounting to nearly $200,000,000.

I Don't Need Life Insurance - I'm Going to Live Forever!

Have you ever watched that 70’s TV series "Greatest American Hero"? It’s about a guy who has a super hero suit delivered from aliens which allows him to fly and have other useful super hero powers. This had a great theme tune with the chorus line ringing out "I'm gonna live forever...I'm gonna learn how to fly -high!" 

This song captures how many of us feel when we are younger but the truth is that as time goes by the we realize that our time on earth is limited. I think only realised I was mortal when I turned 25. It wasn’t like a light bulb went on it was more a dawning sense of reality. Some of my friends are still risking their necks bungee jumping and white water rafting but I stopped thrill seeking when the impending sense of doom joined me at 25. Now, you may believe that you will get another chance at life and return in some other corporeal form but as far as I’m concerned I can't remember that I had a past life so I like to work on the presumption that I only get one shot. 

What happens if I die? I don’t really like to dwell on is as I think that that I am pretty lucky in life. I’ve never had broken a bone or a cavity and I for the most part have had good health. National statistics tell me that I have a good chance of turning 80 years old. Some internet site like the "Death Clock" tell me that I may live to be 103. Trouble is I now have a home and mortgage, children who need me and I now know that I can’t live forever. In some cultures the concept of life insurance is quite foreign. In Polynesian culture past and present children will be looked after by extended family with no questions asked. Our Western family structure isn’t so flexible and while I like to think that my children would not go uncared for if I was to die without life insurance they could be put at a disadvantage. So life insurance is the solution I have opted for. 

In shopping for life insurance you need to decide on the right amount of cover. It is about as important as deciding to get insurance in the first place. If you don’t provide enough cover then the beneficiaries may not have enough to live comfortably. On the flip side providing too much cover can end up being expensive for you month to month. 

HOW MUCH COVER? The Quick Answer. 
If you are looking for quick answers, don’t have a lot of time and are not worried about details. Some like to use the rule that the sum of cover should be 10 times your annual income. This is supposed to leave enough for your family to be comfortable. However this doesn’t account for debts that you might have, inheritance taxes and other costs. 

So, if you are serious about providing the right amount of cover then you will need to sit down and look at some figures. 

The Serious Answer. 
To work out a figure for cover it shouldn't take too long. You will need to consider the points below. 

1. How much will your funeral cost? 
You don’t have to make full arrangements but you should consider providing a sum to cover the costs of your funeral. A guide to funeral costs can be found online at WhatPrice.co.uk. 

2. Debts 
Do you have a loan, mortgage or big bills? You also can consider inheritance tax which will impact the final sum which your beneficiaries receive. If you are unmarried and have an estate more than £275,000 inheritance tax is very steep. 

3. Living 
How much per month will your beneficiaries need to get by? You can consider how much income a working partner could contribute and put this against the monthly costs of running the house hold. If you have savings you may want keep these to cover unexpected bills or repairs to the estate. 

Have a think about how long your beneficiaries will need support for? The term/length of your life insurance policy will affect what your premium will be. If you have small children you might want to support them until they have completed school or higher education. or if you have a non working partner then providing support for them for as long as they might need it. 

4. Assets 
If you have assets in your name will you sell them to raise cash for the your surviving family or is it better to hang on to them? 

If you consider the points above you will go a long way to providing the right amount of cover and hopefully not be landed with a very expensive premium.

How to Determine Human Life Value?

Human Life Value is calculated to determine the optimum quantity of life insurance that is needed to an earning person. This HLV is determined by three factors i.e. your age, current and future expenses and current and future income. Simply put, this is the present value of an individual’s future earnings. 

An individual should calculate his Human Life Value so that he can invest accordingly in the insurance plans. These plans may give his family adequate finances and security in the event of his death. 

The main purpose of life insurance policy is to compensate a financial loss on the occurrence of unanticipated death. So HLV is calculated at the time of purchasing an insurance plan for an earning person. Because if a person dies at the beginning of the policy, claim amount i.e. equal to Human Life Value should be able to give financial support to dependent members during his remaining future earning period. For calculating HLV some factors are required:- 

The expected net monthly financial loss to the dependents on the death of the insured person. 

The expected future earning period of the insured person when he takes the Insurance policy. 

The expected Interest rate at which the HLV amount can be invested. 

For calculating the net value expected monthly financial loss to the dependent member, the gross monthly income of an insured person is deducted from his earning expenses such as income tax, professional tax or other job expenses, his personal share given to the family and many more. 

The expected future earning period can be ascertained easily in case of employee group. The expected Interest rate can be calculated through prevailing investment or bank agencies. It is preferable to calculate HLV through HLV chart. 

To sum up, Human Life Value is essential before purchasing any insurance policy. Because it may help you to get right compensation and right insurance cover for your loved ones.

The Fundamentals of Life Insurance – A Caring and Smart Financial Decision

Life insurance is unique among financial instruments. It is one of, if not the only financial instrument that is based on caring and love. Even though there can be personal advantages to having life insurance, the real impetus is love for those one cares most about – to make sure they are taken care of. So, applaud yourself for taking the time to learn about this subject (and please follow up with action whether through us or the organization of your choice.)

Interestingly, while one is taking care of the financial needs and wants of a spouse or the next generations, life insurance can also develop and build one’s personal financial goals while living. For example, because you have sufficient life insurance, you might be able to use more of your assets to enjoy life in retirement. Why is that? Because if you know you have sufficient life insurance you won’t feel that you are lowering the inheritance by spending some of your principal. You may actually “pay down principal” to some degree to yourself, especially if you have lifetime permanent life insurance as a backup.

There are various types of life insurance but they all have some common attributes. You pay an insurance company what are called premiums. At your death, the life insurance company pays an amount to the people you named in your policy, called beneficiaries. Also it’s interesting that if you named a beneficiary(ies) they’d receive the insurance amount free of income tax.

Some types of life insurance have cash benefits available while you’re living. In these types, a portion of your premium goes into a cash reserve and builds on a tax deferred basis. You can access this money, called cash value. Some people use it to help education costs, enhance retirement cash flow or for any reason. Two of the most common types of “permanent life insurance” are called whole life insurance and universal life insurance.

Survivorship Life Insurance

An Estate Planning Solution and Estate Planning Tool

Survivorship Life Insurance, also known as Joint and Survivor Insurance or second to die life insurance, are insurance policies that insure the lives of two people, typically a husband and a wife.

The death benefit is not paid to the beneficiary until the death of the second insured. These survivorship life insurance policies are generally available as either whole or universal life policies, and second to die life insurance often provides more affordable life insurance than two separate policies. 

The reason a survivorship life insurance policy doesn't pay until the second person dies is that it is designed to pay or assist paying for estate taxes. Estate taxes can be delayed until both spouses die thus the design of these special insurance policies.

The Strategy

Survivorship insurance can be a "discounted dollars" strategy. What that means is that one can use this policy to pay pennies on the dollar now in order to have 100 cent dollars when they�re needed to help pay estate taxes. This is a good analogy for any permanent life policy. For example, if you deposited $10,000 per year in a survivorship life insurance policy for $1,000,000 of insurance you are in effect paying 1% a year for 100% later. If the premium is guaranteed and you and your spouse live for 30 years, you would have paid in 30 cents for every dollar. What makes this even more interesting as a strategy is that if you set it up with third party ownership in an insurance trust (or with children as owners) the $1,000,000 could be set up to be both income tax free and not subject to estate taxes. Your attorney can assist you with the trust and ownership part of the strategy. Our job (and expertise) is to find you the most cost-effective policy.

Joint Survivorship life insurance policies are effective tools often used by wealthy individuals in estate planning. By removing the proceeds of a life insurance policy through the use of gifting and placing policies in third party ownership such as a trust or in the name of children, a joint and survivor policy can be used to pay for estate taxes. Careful planning by your tax and legal counsel, coupled with a properly structured second to die life insurance policy, can help you preserve your net worth for your heirs.

Insurance for Special Needs Children

We have had a fair number of couples requesting survivorship life insurance to make sure funds are available for a child with special needs for their care and financial security after the death of both parents. It is also important if you use this planning methodology to get individual life insurance to insure each parent’s income as well. The parents should also look into individual disability insurance (see www.protectyourincome.com ). We have worked with other parents to help in this planning. Feel free to contact us to discuss options.

Insurance Quotes on Second to Die Policies

If you want the most competitive insurance quotes on second to die policies, Life Insure.com has access to the leading and most competitive joint and survivorship life policies available. 

Whole Life Insurance

What it is. How it works.

Whole life is a type of permanent life insurance. It’s called permanent because a whole life policy provides life-long protection and is guaranteed to do so by the insurance company. With whole life, you pay a fixed premium for life, instead of the increasing premiums found on renewable term life insurance policies.

Since the word “term” in term life insurance means a period of time, one could say that the term for whole life insurance is the term of all of your life. It is not technically called lifetime term insurance, but in a way it could be described that way.

How long does it last and should you get this kind of insurance?

With whole life insurance policies, as long as you pay the premiums, the death benefit will be paid. These policies are designed and priced for you to keep over a long period of time.

It’s important to remember that if you’re not sure that you’re going to keep this kind of insurance policy then it’s probably the wrong type of insurance for you. In that case, you should look at term life insurance.

The biggest difference between whole life insurance policy and the different types of term policies is that whole life insures something that will unfortunately happen for certain - one’s death. Term insures the possibility of you dying during the term period, whether that is 1 year or up to 30 years depending on the type of term insurance you get.

Whole life also has a cash component. This cash value can grow and interest is credited to the cash value. Interest growth in these policies is tax-deferred. You don’t pay taxes on the growth. If you die, your beneficiary also does not pay income taxes on the benefit received. If you cash in the policy and you receive back more than you put in, you pay income taxes only on the amount above what you put in.

There are differences among these policies. Some of these policies are from mutual life insurance companies, which means that the insurance company is owned by the policyholders. Mutual company policies can pay dividends to the policyholders that can both enhance cash values and increase the insurance amount. Your lifeinsure.com representative can show you comparative quotes from different highly rated insurance companies. 

Another type of whole life is survivorship life insurance which is a type that covers two people and pays the insurance amount when both people have died. This is used often in estate planning to create cash to pay the estate taxes.

Return of Premium Life Insurance (ROP Term)

Return of premium life insurance is a newly introduced term life insurance policy that provides both death benefit protection and a return of premium insurance feature. Return of premium life Insurance is aimed right at one of the greatest objections to term life: “I am probably not going to die, and my money will have been wasted."

Here’s how it works: If you keep your policy for the term period, at the end of that time whether 15, 20 or 30 years, the life insurance company that issued the insurance with the return of premium policy, returns the entire premium that you paid for the insurance.

There also is some partial return of premium for policies canceled before the end of the term (depending on the year it’s canceled – the longer it’s kept, the higher the amount of the return.)
When you buy insurance with a return of premium option, you do not have to waste your money.

Unlike regular term policies, Return of Premium term life insurance rewards you for keeping the policy by giving a guaranteed return of your total cumulative premium paid on the policy during the level term period, not including substandard (extra charges for health) and rider charges (extra benefits such as disability coverage), if any, which will be paid to the policy owner at the end of the level term period if the policy is then in force.

Here’s an example: Male, age 35 with the best rate of preferred plus, $500,000 of 30-year return of premium term life insurance:
Annual premium = $810; Return of Premium after 30 years = $24,300
($810 x 30yr = $24,300)

The life insurance return of premium is considered income tax free, because you aren’t receiving back more than you put into the return of premium life policy. The return of premium term life insurance policies feature fully guaranteed level premiums for the first 15, 20 or 30 years.

What is Term Life Insurance?

Term is simple. You pay a premium for a period of time (the term) from one to thirty years and if you die during that time the insurance is paid to the person or persons you designate to receive it - called the beneficiary(ies).

Term life insurance usually has the lowest premium in the early years, making it the most affordable life insurance - initially. Term does not build cash value.

It covers you for a specified period of time (usually from 5 to 30 years, you choose). If you purchase a $1,000,000 term life insurance policy for 20-year period and you die in any of those 20 years, your beneficiary receives the million dollars.

If you are still living at the end of the term, your insurance policy is over unless you can renew the policy. When you renew (assuming your policy has that feature) it will renew at a higher price reflecting your now older age. Term insurance has no buildup of cash as with whole life insurance. Some term life insurance policies do offer a return of premium. See section on Return of Premium

We are committed to making it as easy and convenient as possible for you to purchase quality, low-cost term life insurance for you and your family and to helping you make intelligent choices regarding your insurance choices.

You can instantly compare hundreds of term insurance quotes from top rated insurance companies. Our online search engine will provide you competitive insurance rates from the highly rated insurance companies for comparison.

It’s easy. You can get your term life insurance quotes right on this site, anonymously. You’ll see the prices instantly and can then choose the insurance company that fits your needs. Then you click the “apply now” button and we’ll help you set it up.

To start the process click the button on the right side of this page for the type of insurance policy that you want to quote.

Universal Life Insurance Policies and Quotes

A Universal life insurance policy is designed to provide lifetime insurance protection.

This type of insurance policy is one type of permanent life insurance. With a permanent policy, the insurance is designed to last as long as you pay the premiums. Whole life insurance guarantees this lifetime protection. Universal life does not have these guarantees but there are now universal life policies where you can add a feature that guarantees that the insurance will last the rest of your life. We can tell you more about that and give you quotes for this by using the navigation for quotes on the left.

Permanent insurance policies are designed and priced for you to keep over a long period of time. If you don’t intend to keep the policy for the rest of your life, this may be the wrong type of insurance for you. If so, it may be better to consider term life insurance or return of premium insurance.

The two main types of permanent life insurance are whole life and universal life. These have a feature known as cash value or cash surrender value. Term insurance policies do not have cash values.

Universal life (or whole life) covers an event that’s certain to happen; one’s death, while term covers you for the possibility of you dying during the term period.

A term life policy is sometimes renewable (you can keep it but at a price that reflects your older age). At some point, as you get older term goes up in price and may become too expensive for you to keep.

Your Whole Life Policy Illustration

How can you tell if the policy you are considering is the best choice for your needs? Obviously, you want quality coverage at a competitive cost. But a life insurance product is a highly sophisticated, actuarially designed financial product. The product you are considering may have taken a year or more to develop, based on dozens of factors and millions of pieces of information. So evaluating your policy involves more than a quick glance at the premium table and insurance amount. You should also review each page of your policy with your agent. Nonetheless, you can get a better understanding of how your policy will fulfill your needs over the long term, how it can reasonably be expected to perform for you and your family — not just today, but every year for your entire life. The key is to learn how to read the policy illustration provided by your agent.

How to Read a Policy Illustration
A policy illustration for a permanent cash value whole life policy is a computer-generated document that shows how policy values develop over time. Your illustration provides a year-by-year snapshot of how a policy's guaranteed minimum values, as well as non-guaranteed values develop. Specifically, it shows relationships between premiums, guaranteed cash values, guaranteed death benefits and non-guaranteed cash values, and non-guaranteed death benefits based on the company's current dividend scale, which is not guaranteed.

An illustration is not part of the policy and is not a contract. However, it is a valuable tool to help your agent explain your policy.

At first glance, an illustration can look quite confusing. So, here are a few pointers to help you understand your policy's illustration:

• Review the entire document, starting with the proposal page. This page identifies the type of policy, face amount, premiums and other relevant information. Then note that the rest of the illustration consists of columns that show changing values year-by-year. Note: The illustration should have no highlighting, underlining, or any other marks on it.
• Recognize the difference between guaranteed and non-guaranteed cash values. Your guaranteed cash values are just that — the policy's guaranteed values. Provided all premiums are paid when due and no policy loans are taken, this is the amount of cash value in the policy each year — guaranteed.
• Your total cash value is the sum of the guaranteed values and the non-guaranteed values. This number provides an idea of how your policy values could look over time. The figures are based on the company's current dividend scale continuing in the future. They should not be viewed as guarantees or a prediction of future performance.
• Be aware of the assumptions used in the illustration. Examples: That it is based on the current dividend scale, which is neither guaranteed nor an estimate of future performance; that there are no policy loans against the cash value; that dividends are used to purchase paid-up additions. All these will have an impact on future values.
• Ask questions. An illustration can be fairly complicated, so keep in mind that the only dumb question is the one you don't ask. Your agent will be glad to explain information or footnotes that you do not understand.

A Word About Dividends
Because whole life insurance policies involve long-term guarantees and premiums are guaranteed never to increase over the life of the policy, premium rates are set conservatively to provide a margin of safety. The "unused" portion of the premium determined not to be necessary to provide coverage and benefits or increase the company's contingency funds surplus can then be returned to the policyowner in the form of annual dividends. The actual amount of the dividend depends on the company's experience in the areas of investment return, mortality and expenses.

Choosing to Use Dividends to Pay Your Policy Premiums

Pros and Cons
There are several options available for paying your New York Life permanent life insurance premiums. You can pay premiums by an automatic monthly bank draft (this arrangement is called Check-O-Matic); you can ask to be billed either annually, semiannually or quarterly; and, in some circumstances, you can pay by government allotment or by regular deductions from your salary called voluntary payroll deduction.

New York Life offers several premium payment options. One option is called "Premium Offset Plan" or "POP". Under POP, your premium — or part of it — is paid with the policy's own built-up values. These "values" are the dividends that accumulate within your policy. The basic idea is that your premiums are paid in whole or in part each year by using a combination of your current dividend and your accumulated dividend values. As long as these dividend values are available, you are able to pay your premiums with no cash outlay.

Premium Offset Plan (POP)
When current dividend values plus anticipated future dividends are sufficient to cover your entire future scheduled premiums, POP is available to you¹. The chief benefit of this arrangement is that once you elect it, you do not have to pay your premiums with out-of-pocket funds, as long as there are sufficient dividends to continue to fund this arrangement. A reduction in the applicable dividend scale may result in further out-of-pocket cash premiums being made necessary.

¹ Dividends are based on the policy's applicable dividend scale or interest crediting rate which is neither guaranteed nor an estimate of future performance.

Partial POP (PPOP)
PPOP allows you to select a fixed dollar amount of premium which is billed to you at scheduled intervals. You elect to pay part of your scheduled premium with out-of-pocket funds and the balance of your premium is paid through available policy values.

For example, if your total premium is $300 per quarter, you may choose to pay $200 from out-of-pocket funds and the remaining $100 will be taken from your policy values. With this option, your out-of-pocket payments may remain constant, assuming dividends continue to be sufficient to support this premium paying method.

This option is attractive when there are not enough dividends to pay your full premium. Partial POP is available to customers being billed annually, semi-annually, quarterly, or by Check-O-Matic arrangement. PPOP is not permitted through government allotment or by regular deductions from your salary.

Signing up for PPOP will terminate previously elected billable OPP or Check-O-Matic OPP arrangements. You will still be able to take advantage of this valuable rider to your policy, but you will be required to make lump-sum payments. Special note for policies with modified premiums (i.e., those policies where the premiums are not level): For those policyowners who have policies with modified premiums, premiums can fluctuate and therefore affect your PPOP arrangement. A fluctuating premium will result in a change in the dividend amount needed to pay the premium. If there are not enough dividends to cover the balance of the fixed dollar premium amount you elected to pay, you will need to increase the amount of out-of-pocket premium you pay. We will notify you and you will need to sign up for a new PPOP arrangement with a higher scheduled premium. If you decide not to do this, your initial PPOP arrangement will be terminated and the full premium will be due.

Some Things to Consider
When you select any of the POP options, your out-of-pocket premium expenses will be reduced — or eliminated — while the face amount shown in your policy remains the same. Once a POP payment option is selected, it will stay in force as long as dividend values are sufficient to keep the plan in effect. If your policy dividends ever fall below the amount necessary to sustain the POP option you selected, you will be notified in advance. In most cases, the POP option will be terminated and you will be billed for the full amount of your premium.

Customarily, a POP option is meant to be permanent. But there are many circumstances that can make a policy "come off POP" or "un-POP". Either you or New York Life can take actions that lead to the termination of the POP option and the resumption of out-of-pocket premium payments. Here are some of the things that you could do to cause a "POP" policy to "un-POP":

• you could withdraw dividend values
• you could take a policy loan or increase a loan
• you could change your dividend option
• you could add a policy rider or supplementary benefit
• if you increase the amount of your coverage
• you could change the ownership or assign your policy

On the other hand, if New York Life were to take any of the following actions, it could also cause your policy to "come off POP":

• the Company could decrease the current dividend scale
• the Company could decrease the interest rate it credits on dividends left on deposit
• the Company could increase the policy's variable loan interest rate, which would increase the amount of loan interest due each year, if there is an outstanding policy loan

In a word, the POP or PPOP arrangement ceases when the policy experiences a dividend shortfall. It does not matter whether this shortfall is caused by certain actions of the policyowner — perhaps a new policy loan or an increase in scheduled premiums — or by certain actions of New York Life — perhaps a reduction in the current dividend scale. Dividends paid on permanent life insurance are not guaranteed. And because dividends are not guaranteed, neither is the POP or PPOP arrangement.

There is no magic in the POP arrangement. It doesn't mean that you don't have to pay your full policy premiums; it simply means that your policy pays all or part of those premiums from its own dividend values. When, for whatever reason or combination of reasons, those values have run out, the POP arrangement is terminated. At that point, you would resume out-of-pocket premium payments to keep your policy in force. (Currently, New York Life sends a warning letter before a policy is anticipated to "come off POP".)

You might think of the POP arrangement as living off the values of your policy. When you utilize a POP option, you prevent your policy values from growing as quickly (and, consequently, as much) as they would have otherwise grown if you had paid your premiums with out-of-pocket funds; you can even deplete them. Those values can even be depleted when other actions (for example, new policy loans) are taken that reduce policy values. If your objective is to increase the values of your policy, you'll want to use out-of-pocket funds to pay your premiums and/or purchase paid-up additions.

"To POP or not" is a complex question. Even when intended to be permanent, POP can occasionally turn out to be temporary. And while a policy is on POP, it is living off its dividends and can not grow as quickly (and, consequently, can not grow as much) as if new money were added to it.

What Are Dividends?

What Are Dividends?
A mutual company reports its profits in terms of gains from operations. If, after paying expenses, claims, and other liabilities, including benefits, a mutual company accumulates more funds than it deems advisable to cover the policy reserves that are used to provide for future life insurance benefits, it has a surplus.

Following each year's operations, the company determines how much of its total surplus should be distributed to policyowners. This amount is known as "divisible surplus" and it is distributed equitably among classes of policies in the form of dividends. Dividends are payable on a participating policy's anniversary date, and are generally considered a return of premium and, therefore, do not generally create taxable income until dividends withdrawn exceed the premiums paid.

The premium rates of a mutual company are often based on conservative assumptions. This is necessary because of the long-term guarantees that are provided by insurance policies. Dividend distributions are possible because of the margins provided in the premiums as well as from the difference between actual and expected mortality experience, operating costs, and investment results.

In short, the portion of the premium determined not to have been necessary to provide coverage and benefits, to meet expenses, and to maintain the company's financial position, is returned to policyowners in the form of dividends. The attraction to the customer of a mutual company is this combination of long-term guaranteed benefits and the prospect of dividends.

There is no way to know in advance what level of dividends, if any, will actually be paid on a participating policy. Neither the payment nor amount of dividends can be guaranteed, since these depend on the company's investment, expense, and mortality experience. None of these can be predicted with unerring accuracy. Thus, a company may do well with its investments, but generate a smaller-than-expected surplus due to unanticipated mortality costs — as resulted for many companies, for example, from the influenza epidemic of 1917-1918. Or investment results can suffer due to lower available interest rates or economic downturns.

While you can't predict a company's future dividends, you can take a close look at its past performance, comparing illustrated dividends versus those actually paid. You can also judge a company's investment philosophy by looking at the distribution of assets in its investment grade and non-investment grade securities. Also, independent rating companies such as A.M. Best, Moody's, Standard & Poor's, and Fitch rate companies on financial strength and stability and claims-paying ability. As a consumer, these are your best guides to evaluate an insurer.

What Are Your Options?
How you use your dividends is up to you. For example, you can use them to enhance the value of your policy, or to help fund it, or you can simply spend them. A whole life policy from New York Life gives you these dividend options:

• Purchase additional paid-up insurance — insurance that requires no future premium payments, already has cash value, and is itself eligible for dividends. As with the cash value of your basic policy, the cash value of paid-up insurance grows tax-deferred.
• Purchase one-year term insurance to inexpensively increase your overall insurance protection. (Electing this option requires underwriting.)
• Repay policy loans — use your dividends to repay loan interest, then principal, then purchase paid-up insurance with the balance, if any.
• Reduce the premium of your basic policy with dividends.
• Leave on deposit to compound at interest. (The interest you earn on these dividends, however, is taxable.)
• Take your dividends in cash.

An additional option available to many policyowners is to make consistent premium payments for a number of years and then have future payments made from current and accumulated dividends. While this method of paying premiums eliminates cash outlay, it requires that a sufficient dividend balance be available. However, since dividends can increase or decrease due to a variety of factors — and since dividends, in fact, are never guaranteed — the continued viability of this premium-paying method cannot be guaranteed. If the policy experiences a dividend shortfall, you would need to resume out-of-pocket premium payments to keep your policy in force.

You can choose any one of these dividend options. Moreover, you can change your option whenever you like or as your circumstances change. A whole life policy is a very flexible financial asset, which provides a wide range of dividend options. Managing those options is key to getting the most out of your policy.

Term Life Insurance or Permanent Life Insurance

Term Life Insurance or Permanent Life Insurance: Which One Meets Your Needs?
The term versus permanent life insurance debate has gone on for years, as if it were possible to say that one type of coverage is all good, the other all bad. Sorry, it's just not that simple.

Term insurance is designed to help people purchase the protection they need when they can't afford to purchase all permanent insurance or when they only need coverage for a specific period of time. Term life insurance has a guaranteed death benefit but no cash value and the premiums will increase at pre-determined intervals such as 1 year, 5 years, 10 years and 20 years.

It is also very often the product of choice when protection needs may be high for a period of time, then drop back, such as when your family is growing. Term insurance can also be an effective way to supplement permanent insurance during high-need years, such as when family and other financial responsibilities are outpacing income.

In these situations, term coverage allows you to obtain crucial death benefit protection without breaking your budget. Also, if the coverage is convertible (the coverage can be "converted" to a comparable cash value policy, without the need to provide evidence of insurability), you can get the coverage you need today — with the ability to obtain permanent coverage in the future. In this respect, term insurance meets a valuable need.

The True Cost of Term Insurance
However, term insurance has its drawbacks. It certainly isn't right for all people or under all circumstances. Among its weaknesses, be aware of the following:

• You do have to "die to win." As unpleasant as that sounds, it's true. Term life insurance provides a death benefit only, for a specific period of time. When the term coverage expires, so does your protection. Also, if you stop paying premiums, the coverage ends. Period.
• Let's say that you own $500,000 of term insurance. You've kept the coverage in force for ten years, and the policy expires at midnight on December 31. If you die at 11:59 on New Year's Eve, your beneficiary receives the full $500,000 in death benefit proceeds. However, if you die at 12:01 on January 1, your beneficiary receives nothing under the policy, since the contract has expired.
• Purchasing term insurance is often compared to renting a house. When you rent, you get the full and immediate use of the house and all that goes with it, but only for as long as you continue paying rent. As soon as your lease expires, you must leave. Even if you rented the house for 30 years, you have no "equity" or value that belongs to you.
• There is the very real danger of becoming uninsurable when the term coverage expires. While many term policies are convertible to permanent coverage, others may not be. Most of all, even if the coverage is convertible, there are time limits. If the policy is allowed to expire, you may be required to reapply. If you are found to be uninsurable at that time, you will be without coverage.
• Since premiums increase at each renewal, the long-term cost of term can be burdensome. Many people buy term coverage when they're in their 20s because it seems more affordable when compared to a cash value life insurance policy with the same death benefit amount. By the time they're in their 40s, the coverage seems a bit pricey, as the rate goes up. In their 50s, the cost has generally outstripped the cost of permanent coverage. Finally, in their 60s, if not sooner, they drop the policy — not because they no longer need the protection, but because they usually can't afford it. Meanwhile, the person who may have paid more for that permanent policy in his or her 20s may still be paying the same premium. That's why the term policy's conversion privilege is so important. This valuable feature is usually available in the first few years of the policy, and allows you to convert to permanent insurance without submitting evidence of insurability. Converting to a permanent policy lets you "lock in" a fixed and level premium, and your coverage can never be canceled provided premiums are paid.

The Value of Permanent Life Insurance
Cash value life insurance is often the best long-term solution for many people. The reasons:

• Cash value life insurance provides life-long insurance protection, provided premiums are paid. With few exceptions, once you have been approved for the coverage, your policy cannot be canceled by the carrier. Regardless of your health, the insurance will remain in force.
• Despite higher initial premiums, cash value life insurance can actually be less expensive than term in the long run. Most permanent policies are eligible for dividends, which are not guaranteed, if and when they are declared by the insurance company. Many companies offer the option to apply current and accumulated dividend values towards payment of all or part of the premiums. If dividend values are sufficient, out-of-pocket premium payments may end or be reduced after several years, yet coverage can continue for life. So while premiums must be paid under both the permanent and term insurance plans, long-term out-of-pocket cost of permanent life insurance may be lower compared to the total cost for a term policy.
• It can eliminate the problem of future insurability. Cash value life insurance does not expire after a certain period of time. Also, some policies contain guaranteed purchase options, which allow you to buy additional coverage at specified times, regardless of your health.
• It builds cash value. This amount — part of which is guaranteed under many policies — can be used in the future for any purpose you wish. If you like, you can borrow cash value for a down payment on a home, to help pay for your children's education or to provide income for your retirement. (Note: Borrowing cash value from your policy requires the payment of loan interest and will affect your total policy values.) Plus, if you decide to stop paying premiums and surrender your policy, the guaranteed policy values are yours.

Six tips for the First-Time Buyer

Looking to buy life insurance for the first time? If so, you're probably asking yourself questions such as "How much do I need?", "What kind of policy is best?" and "Which company should I buy from?" There's no question buying life insurance for the first time, like any other new experience, can be more than a bit daunting. Below are six important tips that we hope will make the process smoother, eliminating frustrating false starts and unnecessary bumps in the road.

Six tips for the First-Time Buyer

1. Understand Why You Need It
While most people may need life insurance at some point in their life, don't buy a policy just because you heard it was a good idea. Life insurance is designed to provide families with financial security in the event of the death of a spouse or parent. Life insurance protection can help pay for mortgages, a college education, help to fund retirement, provide charitable bequests and of course is a key element in estate planning. In short, if others depend on your income for support, you should strongly consider life insurance. Even if you don't have any of these needs immediately, you still may want to consider purchasing a small "starter" policy, if you anticipate you will have them in the future. The reason: the younger you are, the less expensive life insurance will be.

2. Determine the Amount of Coverage You Need
The amount of money your family or heirs will receive after your death is called a death benefit. To determine the proper amount of life insurance an online calculator, like the one available at this site, can be helpful. You can also get a ballpark figure using any number of formulas. The easiest way is to simply take your annual salary and multiply by 8. A more detailed method is to add up the monthly expense your family will incur after your death. Remember to include the one-time expenses at death and the ongoing expenses such as a mortgage or school bills. Take the ongoing expenses and divide by .07.That indicates you'll want a lump sum of money earning approximately 7% each year to pay those ongoing expenses. Add to that amount any money you'll need to cover one-time expenses and you'll have a rough estimate of the amount of life insurance you need.

As useful as calculators and rough estimates are, there are some things they don't do.

They cannot provide you with any final answers. Calculators only allow you to perform "hypotheticals," recalculating and generating new results as you make and input new assumptions. Using these tools and educating yourself on the workings of life insurance and other financial products, however, can help you feel more comfortable when discussing your needs with such professionals as a New York Life agent.

3. Find the Right Type of Policy
Once you've got an estimate of how much insurance you'll need, it's time to think about the type of policy that best fits your needs. Today life insurance comes in many varieties, but there are four basic types term, whole life, universal life, and variable life. As a first-time buyer, one will more than likely fit your needs.

Term Life Insurance
As its name implies, term insurance provides life insurance protection for a specific period of years. Benefits can be used to help pay off mortgages and other outstanding debts in the event of a premature death. Generally the least expensive form of life insurance, term provides pure insurance protection only. It does not accumulate cash value, and generally does not receive dividends.

Term may be an ideal choice when you need life insurance coverage for a well-defined period of time. It can be used to protect needs that last for a predictable period, such as a student loan or mortgage. People in their 20s and 30s often purchase a term policy and later convert it to a permanent plan (see Whole Life, below). The conversion privilege in their term policies guarantees their insurability at a later date-even if they become uninsurable.

New York Life makes a variety of term policies available, including five-, ten-, and 20-year policies.

Whole Life
In contrast to term insurance, whole life, also known as permanent insurance, protects you throughout your lifetime, from the day you purchase the policy until you die, as long as you pay the premiums. Another difference between the two is that permanent insurance builds cash value. Through policy loans, you can access the cash values and use them for a host of purposes such as education funding and supplemental retirement income. However, policy loans against the cash value accrue interest and reduce the death benefit and the cash value by the amount of the outstanding loan plus interest. Guaranteed for life, your policy will be renewed every year, regardless of your health for as long as you live, again, as long as required premiums are paid.

Permanent policies are also eligible to receive dividends, a portion of the company's surplus that is distributed to the owners of participating policies. (Dividends can be taken in cash, used to reduce the premium, left to accumulate at interest, or used to purchase paid-up additional insurance. Dividends are not guaranteed.) Whole life can provide a permanent solution to several financial concerns including:

• Mortgage protection: Benefits can be used to help pay off mortgages and other outstanding debts in the event of a premature death.
• Estate preservation: Whole life insurance can provide funds to cover estate expenses and help avoid the need to sell assets and or borrow money to cover these expenses.
• Retirement funding: Cash values can be accessed through policy loans or surrenders to supplement a retirement income. Loans will reduce the death benefit.
• Charitable giving: A whole life insurance policy can enable you to make a significant donation to your favorite charity upon your death.
• Business needs: Whole life can be an attractive executive and employee benefit and a means to assure a business's financial future.

New York Life offers many permanent life insurance policies, including Modified Premium Whole Life, and Survivorship Whole Life.

Universal Life
Universal life also provides permanent life insurance protection and access to cash values that grow tax-deferred. Universal Life differs from whole life in its flexibility that enables you to choose the amount of protection that best suits your family or business. With Universal Life, you can increase or decrease your coverage, as your insurance needs change and control the amount and frequency of premium payments. The policy can also be customized with various riders to fit your lifestyle.

Variable Life*
Variable universal life insurance is a type of flexible premium, permanent life insurance policy that allow the policy owners to have premium dollars allocated to a variety of investment options, including a fixed account backed by the assets in the general account of NYLIAC. Variable universal life insurance generally provides a federal tax-free death benefit, and is accessible through policy loans and/or withdrawals. Note, all guarantees, including death benefit payments are dependent on the claims-paying ability of NYLIAC and do not apply to the investment performance or the safety of the underlying Investment Divisions on the variable universal life policies. Also, loans against the cash value and withdrawals may reduce death benefit and the cash value. If the policy is designated as a Modified Endowment Contract, withdrawals taken prior to age 591/2 may be subject to a 10% IRS penalty and surrender changes may apply. Additional taxes may apply to policies designated as a modified endowment. The product prospectus contains this information in details.

There are risks associated with investing in variable universal life insurance policies. Please be aware that assets allocated to the Investment Divisions are subject to market risks and will fluctuate in value. Please be aware there are fees and charges associated with the contract. Variable universal life insurance policies are sold by prospectus only through properly licensed Registered Representative. To obtain a copy of the product and fund prospectuses for the VUL policy that may be right for you, please contact your NYLIFE Securities Registered Representative or call 1-800-598-2019. Investors are asked to consider the investment objectives, risks, charges and expenses of the investment carefully before investing. Both the product and the underlying fund prospectuses contain this and other information about the product and underlying investment options. Please read the prospectuses carefully before investing.

*VULs are issued by New York Life Insurance and Annuity Corporation (A Delaware Corporation) and distributed by NYLIFE Distributors LLC, Member FINRA/SIPC.

4. Look at the Quality of the Company
An insurance policy is only as good as the company that backs it. You want to know for certain that the company that issues your policy will be around to service it and eventually pay the death claim. To help you discern the strongest companies, there are several ratings agencies that rate insurance companies on the quality of their fiscal fitness, quality of investments, and overall financial soundness. A credit rating represents an independent assessment of the insurer's ability to pay its claims on time and meet all its other financial obligations, the bottom line for any life insurance company. There are four leading agencies: A.M. Best, Standard and Poors, Moody's, and Fitch.

Each agency has slightly different criteria and looking at different ratings for one company will give you a good overview of the company's financial strength. New York Life's ratings are among the highest from each of the four agencies.

New York Life and its subsidiary, New York Life Insurance and Annuity Corporation, have received among the highest ratings for financial strength from four major rating services as indicated below:¹

Moody's: Aaa

A.M. Best: A++

Standard & Poor's: AA++

Fitch: AAA

5. Consult an Agent
Agents provide an invaluable service. First, an agent can help you factor in the other "human' elements into your insurance equations to help you determine the right amount of insurance. The relationship you develop with an agent can last a lifetime. Second, an agent can help you update your coverage as your needs change. They can help you guide you through a lifetime of financial decisions, giving you one less thing to worry about.

6. Increase Your Vocabulary
Any discussion of insurance will probably include words such as cash value, premium, dividends, death benefit and more. To discuss life insurance knowledgeably, it will help to understand the terms. Below is a brief summary of some common terms. This site offers a complete glossary of insurance terms.

• Cash Value: In a whole life (also called "permanent") life insurance policy, this is the money that can accumulate in the policy.
• Dividends: A portion of the company's surplus that is distributed to the owners of participating policies. Dividends are not guaranteed.
• Mutual company: An insurance company which has no capital stock or stockholders, but is instead owned by its policyowners. New York Life is a mutual company.
• Premium: In insurance, the periodic payment required to keep a specific policy in force.

Reach financial goals in your 20s and 30s

Do terms like "money market fund" and "401(k)" leave you scratching your head? The new edition of "Get a Financial Life" by Beth Kobliner helps you learn the basic language of the financially savvy. This excerpt offers a cheat sheet on some of the fundamentals you should know about saving money.

Chapter one
Crib notes: A "cheat sheet" for time-pressed readers
If you prefer CNN Headline News to the newspaper and opt for the Cliffs Notes over actual books, this chapter is made for you. It cuts to the chase and offers you the most important steps toward a good financial start. So if you don't have the patience to read the entire book right now, adopting one or two of these strategies will put you ahead of the game.

Of course, as someone's mother once said, cheaters only cheat themselves. And while this chapter is a good launching point, ignoring the remaining eight chapters is a little like relying on a friend's ten-minute summary of Moby Dick — you'll get the basic plot line but never understand it in any real depth. Still, the following crib notes should give you a quick-and-dirty rundown on the basics, I've tried to list them in rough order of importance, but your priorities may depend on your own situation.

1. Insure yourself against financial ruin.
It's not surprising that people don't like to talk about insurance. It's expensive, confusing, and mostly about sickness and death. But if you're interested in getting adequate medical care in case of a serious accident or illness, and would prefer not to bankrupt yourself and your family in the process, there really is no higher financial priority than health insurance.

If you work for a company that offers employees health insurance, you're lucky; participating in your employer's group plan will probably cost you much less than buying a policy on your own, and the coverage you get is likely to be more comprehensive than any individual policy you could afford. You may even have more than one type of health insurance plan to choose from through your employer. When deciding among offerings, make sure you consider not only price but also the type of coverage you will receive. If, for example, you're thinking about joining a type of plan called a health maintenance organization (HMO), inquire about exactly what is covered, ask about the procedure for seeing specialists, and find out what happens if you want to visit a doctor outside the HMO. Although HMOs are generally less expensive, if you come down with a serious illness and want to see a specialist outside your HMO network, you may have to foot the entire bill yourself. Before you sign up for any health insurance plan, talk to coworkers about their experiences with the various options.

If the company you work for does not offer insurance, you'll have to pay for it yourself. If you recently graduated from college, see if you can extend coverage from your parents' plan for a few years. If you're job hunting, at the very least get temporary coverage. If you're employed but your company doesn't offer you insurance, see if there are any organizations you can join (a trade association, for example) that will allow you to purchase health insurance at a group rate. This can be much less expensive than purchasing individual coverage. Since plans vary dramatically from state to state, your best bet if you're on your own is simply to call the major insurers and HMOs in your area and see what they have to offer. Also call Quotesmith (800-556-9393), USAA (800-531-8000), and your local Blue Cross/Blue Shield company for quotes. And if you're having trouble getting coverage because of a medical condition, your state insurance department may be able to provide you with the names of companies that will cover you. (See page 182 for the phone number of your state's office.)

Another type of protection you may want to consider is life insurance, but only if you have children or if someone else is financially dependent on you. If you don't have dependents, you don't need life insurance. If you do, the type you should buy is called term insurance, which is relatively inexpensive. There are several services that will scan their multicompany databases free of charge and mail you a list of some of the least expensive policies. Try the Wholesale Insurance Network (WIN) (800-808-5810), Quotesmith (800-556-9393), SelectQuote (800-343-1985), and Termquote (800-444-8376). One warning: If you deal with a life insurance agent, be prepared to hear a big pitch for a type of policy known as cash value life insurance. Ignore it. While it's more profitable for the agent, it's probably not a good deal for you.

Depending on your current financial situation, you may also want to consider protecting your earning power with disability insurance. A disability policy will pay you an income (typically 60% to 70% of your current salary) if you're injured or very sick, and are unable to work for an extended period of time. Depending on the state in which you're employed, you may already be covered by a mandatory disability insurance program and/or by insurance provided voluntarily by your employer as part of your standard employee benefits package. Even if you are, it's a good idea to find out how much coverage you currently have, whether it's possible to buy more, and what it would cost you. As with health insurance, the least expensive way to buy disability insurance is generally through an employee benefits plan. If it's not available to you through your employer's plan, look into purchasing some on your own, though you'll probably find that it's pretty expensive. Some companies that specialize in disability insurance are Unum Life Insurance (800-227-8138), Paul Revere (800-843-3426), and Provident Life and Accident (615-755-1011). Also try USAA (800-5318000), the Wholesale Insurance Network (800-808-5810), and Termquote (800-444-8376).

2. Pay off your debt the smart way.
Whether you're drowning in debt or just have a few manageable loans, more often than not the smartest financial move you can make is to take any savings you have (above and beyond money you need for essentials such as rent, food, and health insurance) and pay off your high-rate loans. The reason is simple: You can "earn" more by paying off a loan than you can by saving and investing. Paying off a credit card that has a 17% interest rate is equivalent to earning 17% on an investment — an extremely attractive rate of return. (Actually, it's even better than that; it's the equivalent of earning 17% after taxes.) If you want a full explanation of this concept, turn to page 48. Otherwise, take my word for it.

If you can't pay off your high-rate debt immediately, take steps to reduce the interest rate you pay. One of the simplest ways is to apply for a low-interest-rate credit card. For a list of low-rate credit card issuers, send a request and $4 (check or money order) to Bankcard Holders of America, 524 Branch Drive, Salem, VA 24153, or call 703-389-5445. Another good source is RAM Research's CardTrak, P. O. Box 1700, Frederick, MD 21702; the charge is $5.

If you have several different types of debt — say, a credit card balance on a card with a 17% interest rate, a car loan with a 12% rate, and a student loan at 9% — pay off the loan with the highest interest rate first. One strategy you may want to consider is stretching out your student loan payments over 15 years instead of 10 years by signing up for the Federal Direct Consolidation Loan program. (To see if you're eligible, call the Department of Education at 800-4FED-AID.) This will reduce your monthly student loan payment and leave you with extra cash. Use this money to pay off your credit card balance faster. Once you've gotten rid of your credit card debt, start paying off your auto loan faster. After you wipe out that loan, too, increase your student loan payments to at least their initial levels.

The only time it doesn't make sense to kill your debt is when the interest rate you're being charged is lower than the rate you can receive on an investment. If, for example, you have a special student loan with a 3% rate, you'd be better off maintaining your usual payment schedule on the loan and putting your cash into an investment that pays you an after-tax rate greater than 3%.

How to reduce your auto insurance premiums

Here’s something to stop and consider: When’s the last time you devoted mental energy to the particulars of your auto insurance policy? Did you basically set it and forget it?

It’s incredibly easy to let that happen — and if it has happened in your case, it might be high time to refresh your memory on just where your policy stands. You may be able to take a bite out of your insurance bill with a minimal amount of effort.

These quick tips can help you see whether you can save a little – or a lot.

1. Request higher deductibles. The deductible is the amount of money you have to fork over before your insurance policy comes to the rescue. By bumping your deductible up from $200 to $500, you could lower the cost of your collision and comprehensive coverage by 15 percent to 30 percent. By increasing it to $1,000, you could decrease that cost by at least 40 percent.

2. Forgo coverage you don’t need. Think about dropping collision and/or comprehensive coverage on older cars with a low market value. Such coverage often is not worth it because any claim you make probably won’t exceed the cost of the insurance and the deductible amount. To assess your car’s current value, visit Kelley Blue Book or Edmunds.com.

3. Avoid duplicating medical coverage. If you already have good health, life and disability insurance, buy only the minimum personal injury protection required by the state where you live.

4. Purchase a low-profile car. It’s more expensive to insure a vehicle that’s expensive to repair, popular with thieves or known for not having the greatest safety record. For a rundown of vehicles’ risk levels, visit the Insurance Institute for Highway Safety’s Web site. (To check on older models, go to the bottom of the page.)

5. Carpool or drive less. Many insurance companies offer “low-mileage discounts” to policyholders who carpool to work or drive a lower-than-average number of miles each year. You can call your insurer and find out whether you qualify.

6. Opt for safety gear. You can qualify for a discount on many policies if you have air bags, automatic seat belts, anti-lock brakes and daytime running lights. An approved alarm system or other anti-theft device can give you additional savings.

7. Seek out discounts for teens. Insure teenagers on the parents’ policy rather than a separate policy. Teens who maintain good grades and pass an approved drivers’ education course usually can qualify for reduced rates. An additional discount may come into play if your child goes to college more than 100 miles from home and doesn’t bring a car along.

By Laura T. Coffey

Mommy savers: 5 financial tips for moms

Just how important is life insurance or properly saving for your retirement fund? Perhaps more than you realize. Parenting magazine shares smart advice on what you need to know to protect your family's finances — and your relationship:

Money has to be a couple thing
Why: If you or your partner gets sick, loses a job or you divorce, you both need to know where your money is. More immediately: "Two heads are always better than one when it comes to money, even if one of you is less experienced," says Janet Bodnar, deputy editor of Kiplinger's Personal Finance magazine and author of "Money Smart Women."

You've probably already agreed that one of you is responsible for the daily money management (paying bills, keeping your bank account balanced). If you're the designated family bookkeeper, you're not alone: Sixty-two percent of moms balance the family checkbook and 54 percent are responsible for paying household bills, according to a 2007 survey by Oppenheimer Funds, a New York-based asset-management company. This is fine — either of you can take the lead on money tasks — as long as you keep each other up-to-date on your financial picture.

What to do: It can take as little as 15 minutes a week to talk about how much you're spending and where. If nothing else, hand over the checkbook or print out a copy of your monthly budget (and how much you've spent) so you can each see where the money is going and make suggestions for change.

Julie Miller, a mom of three in Portland, Ore., recently started having twice-a-month financial sit-downs with her husband, Dave. "We realized I was doing the majority of the household spending but my husband was managing the overall budget. I wasn't seeing the monthly bank statements or paying the bills, so I would just spend until the debit card was declined," she says. Now he lets her know when their budget is heading into the red and she fills him in on what she needs to buy.

Every marriage needs ‘ours,’ ‘yours’ and ‘mine’ accounts
Why: A joint checking account is a smart and easy way to pay for shared expenses like your mortgage, utilities and childcare. This is true whether you and your husband pool your paychecks or each contribute a percentage of your earnings to "together" bills, or if only one of you has an income. After that, though, it's a good idea for each of you to have a small, separate account for your own, no-questions-asked spending money. This is especially important if you're a stay-at-home mom — no one likes being on an "allowance" and having to constantly justify her spending to a working spouse.

What to do: Pay yourselves that agreed-upon personal money every pay period. Just be sure to clarify what comes out of this cash: Are haircuts and lunches with friends "personal" or family expenses? What about gifts for each other? There's no right way to do this. It's up to you, as a couple, to decide.

So if your husband can't live without those new golf clubs, no problem. And he can stop razzing you about your monthly manicures, since you're paying for them yourself. Voilà! Dozens of silly money squabbles are now history.

Your own financial identity is worth protecting
Why: If you had a healthy credit history before you married, hang on to it. It's useful for joint purchases — and if life throws a curveball and you need credit on your own.

What to do: Always keep at least one credit card in your name. This account helps you maintain your own credit history and financial autonomy. Both are smart to have — and that's still true if your husband has a stellar financial record.

If your spouse has paid bills late in the past or maxed out credit cards, definitely don't add your name to those accounts or co-sign with him on any new accounts. Doing so will ding your credit rating. "If you're planning to buy a big-ticket item like a car or home in both your names, though, take time to spiff up his accounts so you'll get the best possible interest rate," Bodnar says. Work together on paying down any old debt in his name and make sure current payments are always on time.

He shouldn't close all of his old credit cards once they're paid up, though. On-time payments and available credit are good for his credit score. (All this advice applies to you, too, if you're the one who has a spotty financial past.)

Life and disability insurance are musts for both parents
Why: Any time people are dependent on your income to pay for their living expenses — that would be your darling kids — you need insurance. Life insurance is intended to help pay for family living expenses until your children are 18 or on their own. Disability is another important, but often overlooked, form of insurance that provides money in case a working parent is ill or injured and unable to work.

What to do: Both you and your spouse need life insurance — no question about it. If you're staying at home, your life insurance wouldn't replace an income, but it's just as important: If something happened to you, it could pay for necessary help like child care or a housekeeper. There's no magic formula for how much you'll need, either; talk to a financial planner or insurance agent about what it would take to cover your important expenses.

Look for level-term life insurance, which is relatively inexpensive. Avoid whole-life or cash-value insurance; it's not worth the extra money, since they invest your cash and there are better ways to do that. Search for term policies at sites like insure.com or accuquote.com. For disability insurance, check with your employer if you work outside the home. Companies often offer it at a reduced rate.

Note: You don't need life insurance on your kids! No one's relying on them for income, and kiddie policies aren't a good way to invest for college (as they're sometimes marketed). Steer clear.

Saving for retirement always trumps saving for college
Why: You can borrow for college — but not for retirement. It might go against your protective parenting instinct, but worrying about how to pay for your child's college education before you and your husband have a solid retirement plan means you need to reorder your priorities, says Helga Cuthbert, a certified financial planner in Decatur, Ga., and the mom of one.

What to do: If you and your partner both work, you should aim to save 15 percent of your before-tax incomes in your workplace retirement plans (especially if the companies offer matching funds) or in a Roth IRA or personal IRA account, says Cuthbert.

If that sounds like a lot of money, don't panic. Start with a smaller percentage and bump up your contributions when you get bonuses or raises. If you're a stay-at-home mom, you can also open a spousal IRA and contribute up to $4,000 a year to it. This account is a great way to increase your family's tax-advantaged savings.

Start the college account once you're on track toward retirement and have paid off personal debts. Feel like the college fund won't happen in this lifetime? "Remember that once your kids are ready to go to college, you'll be in your prime earning years and better able to afford it," says Cuthbert. "Plus, if one of you has been staying home, you can go back to work to earn even more. You'll have lots of options for paying for college."

Teri Cettina, a mom of two, admits that most of her "mine" money goes for coffee and haircuts.