Archive for January 12th, 2012
We all have habits that can seriously affect our life making it either more pleasing or stressful. Habits can provide us with comfort and relief when it’s needed and even those habits that are not as good for your health can be beneficial for your psychological well-being. However, what’s calming in the short run can be a cause for disturbance and even serious problems in the long run and that is especially true for bad habits. One of the aspects that gets seriously affected by bad habits in a negative way is your own health and from the life insurance perspective there’s nothing worse than being known for your bad habits and addictions.
Life insurance costs are strictly linked to the customer’s health condition and depending on how healthy or ill the person is life insurance rates can vary from affordable to unbearable. The person’s health condition tells a lot of things to the insurance company, yet the most important piece of information it provides is how it’s likely for the company to pay out the benefits it should in the near future. Healthy people have longer life expectancy so they always get lower life insurance quotes. But what this has to do with bad habits, you might ask?
The most common negative habits people have these days are smoking, alcoholism and drug addiction and if the link between life insurance costs and these factors isn’t obvious for some of you, let’s make it clear why customers with such habits always get expensive life insurance. All of the factors mentioned are known to cause serious health implications that shorten the life expectancy of people exposed to them. Smoking is associated with various types of cancer and heart diseases. Alcoholism is know for seriously affecting the liver, causing hypertension and raising the risk of heart attack among many other things. Drug addiction can cause serious and even fatal health complications in a very short period of time. So if the insurance company finds out that you have any of these habits your rates will go up instantly while some providers will even deny your application because they won’t be willing to take such a risk upon themselves. What can you do about your habits to get affordable life insurance?
The obvious solution would be leaving them behind for good. Though it’s not easy as it sounds, today there are countless clinics and centers that help overcome any type of addiction. Yet, if you were successful at beating your bad habit don’t rush to the insurance provider too much because the will still charge you higher rates if you have a recent history of serious addictions. You will need at least two or three years to go clean in order to get an affordable rate. And if your life insurance provider finds out that you’ve started smoking, drinking or doing drugs again after getting the policy they can automatically charge you with higher premiums or terminate your policy without the right to re-apply, also making hard for you to get covered with other providers. So, as you see there’s nothing relaxing in having a bad habit when it comes to life insurance costs.
The world is full of people who have no respect for you or your property. Although crimes of violence have been falling, it’s still dangerous to walk alone at night in some neighborhoods. It’s the same with vehicles. Some were clearly designed with thieves in mind. This can be something red with jaw-dropping acceleration – a vehicle much prized by the young driver who wants a thrill and enjoys racing with local law enforcement officers. Or it can be a high-end vehicle on a list given to professional thieves who either want to export the car or break it for parts. Or it can just be simple to steal and so the easiest way to get home after a night drinking at a local bar. Naturally, the manufacturers of the expensive hardware also spend a lot of money on security. In theory this makes it difficult for the thieves to drive it away. Even if they succeed, there are GPS transmitters to help law enforcement officers track its movements. Many such vehicles are either simply damaged by unsuccessful thieves, or recovered still in one piece
Car theft rates are often tied to ZIP codes. When a town or neighborhood sees an increase in vehicle-related offenses, it’s often a signal of economic and social decline. If funding policies fail to address the causes of this decline, the whole area can rapidly go downhill with all those who can afford it moving out and businesses closing down. A vicious circle then chases the neighborhood down to the bottom. This is one of the reasons why insurers take ZIP codes into account. It’s a fact of life there are more claims from these areas.
This month has seen the release of two reports on vehicle theft rates by the Highway Loss Data Institute (HLDI) and the National Insurance Crime Bureau (NICB). They give us a picture of theft rates falling nationally as the design of security systems improves, but with the same areas reporting stubbornly high numbers. It seems there’s local pride in being able to steal more vehicles than anywhere else. The HLDI identifies the Cadillac Escalade as the most stolen brand. The NICB decides the winner is the 1994 Honda Accord. The reason for the difference is the way in which the two national bureaus collect their data. The NICB relies on the police to collate all the reports of vehicles stolen, whereas the HLDI relies on claims data supplied by the insurance industry. In theory, the numbers should tally and produce the same winning brand. After all, it’s a requirement of making a claim that the insured should report the vehicle stolen. But not all the vehicles reported stolen are then the subject of an insurance claim – this requires a comprehensive policy and many people now drive with only a liability policy, particularly when the vehicle is older and not expensive to replace. So look at the lists of the most easily stolen vehicles before you buy. When the auto insurance quotes come in, you will save money. If you do buy a vehicle easily stolen, fit anti-theft devices and then get a new set of car insurance quotes to see how much you can save.
This month, it’s been slightly disconcerting to see stories about Rep. Michele Bachman and a New York rabbi agree the earthquake that hit the East Coast was the work of the Old Testament God. The rabbi claimed God was upset that New York had legalized same sex marriage. Bachman said God was warning Washington politicians to cut back on spending. Frankly, the idea a candidate for the President of our great nation believes she has a hotline to God should ensure mental health treatment is available to all those who have so far voted for her. The rabbi can presumably count on his flock for continued support. This year has seen a remarkable number of natural disasters and attributing them to divine intervention is unhelpful.
That said, one of the consequences of all this disaster has been a rise in the premium rates for insuring property. Private insurers have already shown themselves unwilling to continue insuring against flooding, leaving it to the federal and state programs. With the increase in the number and severity of hurricanes and tornadoes, rates have also begun to rise in the states most at risk. As weather events grow more extreme, the ground has now started to show signs of damage. Geology used to be one of these sciences no one was interested in. Now experts are in demand to explain why long periods of drought followed by intense periods of heavy rain can cause mudslides. The science of the sinkhole is also developing rapidly in states like Florida. For those of you who live on solid ground without the risk of earthquakes or the less dramatic collapses, it may seem unlikely the ground can literally just disappear into a hole. Yet, in the space of an hour, a patch of ground can subside or open into a fissure. Houses built on this ground can be wrecked without the possibility of rebuilding.
It’s a standard term of mortgages that the owners carry a valid policy of insurance on the property. The lenders want reassurance the security for the loan is protected from all the usual forms of damage. Until a few years ago, this was not such a burden but, first the withdrawal of flood protection, and now the limitation of wind damage, is making life increasingly difficult for the home owner. Mortgage lenders are not the most forgiving of people. If owners fail to put a valid home insurance policy in place, the lenders buy cover at whatever rate they can find and add the premium, plus an administrative fee plus interest to the capital of the loan. This has produced some spectacular growth in the amount alleged to be owed on some mortgages. Take the cost of sinkhole insurance in Florida as an example of the problem. Private insurers don’t want to insure so Florida created the state-backed Citizens Property Insurance Corp. Until this year, it could not increase the premium by more than 10% a year. Now we see some counties where the risk of subsidence is the highest being asking to pay more than 2000% increases. Not surprisingly, those holding home insurance policies have said they can no longer afford the rates. Over time, this will force the mortgage lenders to repossess for default – not the most desirable of outcomes.
Financial Spread Betting give you access to many advantages – which are well covered in my other articles – but one of the main advantages is also one of the main risks. Which one? That will be ‘Leverage’. The possibilities of much higher returns versus ordinary equity investments as a ration of capital invested is one of the key attractions to Financial Spread Betting, but the flip side of that is that it is also one of the key risks. We need to accept that before we ever place a single bet, and develop a strategy that reduces and mitigates that risk.
But what are the key elements to reducing this particular risk? The first is quite simply the size of the bet. Always bear in mind – unlike with ordinary equity investment – that you can lose more than you invest. As a result some novice traders lose their perspective on the size of their bets. Keep your bet sizes small, particularly during the learning period.
See how much the swings in the market can make you win – and lose – over a very short period of time. Only when you are confident in your trading ability should you consider your appetite – or otherwise – for larger bets.
Another simple risk mitigator is to understand your market properly. Time and experience will show you which markets tend to move quickly and which are less volatile. You will also learn to pick up the signals that indicate movement is likely. Novices often suffer from not understanding their market. But remember, historical performance is only a guide, it can never guarantee how any particular market or instrument will perform in future.
The main tool you can use for loss mitigation are ‘stop losses’. Those of you who follow my articles know that setting a stop loss for every trade you do is one of my golden rules.
Not only can it help mitigate losses at times when you can’t constantly monitor the market yourself, but it can also be used as a ‘base marker’ to ensure you have a reality check on where each bet started. If you don’t use stop losses then you need to monitor your positions all the time, real time. Also remember that stop losses only trigger an order. If there is market ‘slippage’ the price may move beyond your limit before it can be executed. Many traders are happy to live with this risk, but if it is an issue for you then consider using the more expensive, but safer ‘guaranteed stop loss’ facility that some firms offer.
The type of bet you chose to undertake can also affect your risk profile. For example Binary Bets limit your loss to a predetermined amount, as opposed to a standard spread bet which can in some cases be unlimited. One of the main reasons – however – that some proponents of Financial Spread Betting dislike the binary bet derivative is because the downside is restricted, but so is the upside. They argue that a standard bet with a stop loss limits the downside whilst allowing you to ‘ride’ the unlimited upside.
Financial Spread Betting gives you the benefits of leverage, just make sure you cover off the risks!
It really doesn’t matter how careful people are, debts can get out of control. For almost every family, the monthly mortgage installment will be their most significant payment. If there’s an emergency of manifests and more money has to be borrowed on a loan or credit cards, this can disturb the delicate balance between receivables and monthly payments. What was within means suddenly becomes too much to bear. How should families react when confronted with a disastrous situation? The first rule is always to communicate with your lenders. If you have an issue, they should be the first to find out. The second rule is to keep paying as much as you can on all your unpaid debt. The moment you quit, this destroys every creditor’s empathy for your problem. You are now a delinquent, and penalties and service charges will accelerate the total amount. Can this all be avoided? Well, with a little care, you can talk some lenders into modifying the loan or refinancing the debt.
The modification you want from your mortgage bank is some reduction in the monthly payment.
This may come from extending the term of the loan or from reducing the APR applied. Why should a lender modify the loan? The problem for banks is that foreclosure is a sledgehammer remedy to crack a nut. If the lender does foreclose, there is a fair amount of fees to be paid to end up with ownership of a property it cannot sell in a bad market. Actually, lenders are now looking at more costs to maintain and repair properties to prevent further losses in value. None of these costs will ever be recovered from the borrowers, particularly if they are forced into bankruptcy. It is more cost-effective to take less from a borrower and leave the house occupied. This retains the property value and keeps some money coming in from the borrower. Most banks now have a dedicated department to deal with modification applications. Applying for relief is more likely to receive a positive response today.
President Obama has pushed through a package called “Making Home Affordable”. It covers both mortgage refinancing and loan modification. If you qualify, mortgage providers, lenders must reduce your monthly repayments so that they are less than 31% of your income. To qualify, you must be current on your loan with no payment over 30 days overdue. You must be able to show the market value of your house has dropped by over 15% and that your family situation justifies government help. For these purposes, all those with a mortgage from Fannie Mae or Freddie Mac automatically qualify. This can entitle you to interest as low as 2% with all the lender’s losses covered by the government and represents an excellent deal if you can bring yourself within the terms of the scheme. If you do not qualify, it will come down to you or a professional financial advisor working for you to talk the mortgage lender into agreeing a refinancing package on favorable terms. It’s in everyone’s interests that you save on mortgage installments and keep sending in payments to the lender. This way leaves you with peace of mind, knowing that the ownership of your house is secure.
In 2011, Many Tax Benefits Increase Slightly Due to Inflation Adjustments
In 2011, personal exemptions and standard deductions will rise and tax brackets will widen due to inflation,
The value of each personal and dependent exemption, available to most taxpayers, is ,700, up from 2010.
The new standard deduction is ,600 for married couples filing a joint return, up 0, ,800 for singles and married individuals filing separately, up 0, and ,500 for heads of household, also up 0. The additional standard deduction for blind people and senior citizens is ,150 for married individuals, up , and ,450 for singles and heads of household, also up .
Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is ,000, up from ,000 in 2010.
The maximum earned income tax credit (EITC) for low- and moderate- income workers and working families rises to ,751, up from ,666 in 2010.
The maximum income limit for the EITC rises to ,078, up from ,362 in 2010.The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children.
The modified adjusted gross income threshold at which the lifetime learning credit begins to phase out is 2,000 for joint filers, up from 0,000, and ,000 for singles and heads of household, up from ,000.
Several tax benefits are unchanged in 2011. For example, the monthly limit on the value of qualified transportation benefits (parking, transit passes, etc.) provided by an employer to its employees, remains at 0.
Gary Levine is a practicing CPA from Richmond, VA. He serves as the Executive Director of Non-Profit Connection, a nonprofit organization that provides finance and accounting support exclusively to other nonprofit groups. Our website is www.non-profitconnection.org.