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Tuesday, November 18, 2014

"Ten Things Life Insurance Agents Won't Say": Thing #8

8.  "Someone could fake your death and collect on your benefits" is next in my series of responses to "10 Things Life Insurance Agents Won't Say" by Daniel Goldstein "Personal Finance Reporter" for MarketWatch.

Goldstein quotes Henry Bagdasarian (Pres. Identity Management Institute) that life insurance fraud costs the industry about $70 bil. per year.  It's closer to $100 bil. these days.  But that includes people directly ripping off insurance companies with fake claims and money laundering schemes.  I could find no reliable statistics on the dollar amount of stolen death benefits.  I suspect it is a very small portion of the total.

Assuming someone could fake your death and collect your benefits right out from under your nose, how can you prevent that from happening?  On his website Bagdasarian has built an exhausting list of cautions and steps.  Goldstein has a few.  But they both miss the most important gate keeper between your life insurance policies and fraudsters:  your agent.

An experienced, local independent agent is your best advocate.  Have doubts about a phone call or correspondence?  Call your agent.  Do you really believe that you or some columnist is going to be more versed in the industry than your agent, who has dealt with thousands of real people in real situations?  You agent will periodically review your situation, usually with you present.  If the company gets a death claim (or any change request for that matter) your agent will be notified.  And he or she will check with you, don't you think?

So, I guess Goldstein is correct with Thing #8.  Even though it's remotely possible, I've never said, "Someone could fake your death and collect on your benefits".

Tuesday, November 11, 2014

"Ten Things Life Insurance Agents Won't Say": Thing #7

THING #7:  "Our regulators can be toothless" is next in my series of responses to "10 Things Life Insurance Agents Won't Say" by Daniel Goldstein "Personal Finance Reporter" for MarketWatch.
In a continuation of his evidence-free article, Mr. Goldstein opines, "Unlike banks and big investment firms, which are largely regulated at the federal level, insurance companies are largely regulated by states . . .State insurance commissioners . . .don't have as much power to affect the practices of nationwide companies."
My first reaction is not printable.  We've seen exactly how well federal regulation has worked, allowing the very bankers who tanked our economy to walk away with record bonuses while stiffing their investors for the fines that were levied against them.  This is why many insurance companies want a "unified" regulatory system.  So it's easier to corrupt in their favor.
Reality is the converse of Mr. Goldstein's assertion.  State regulators can put an insurance company or agent out of business, in effect a corporate death penalty.  Oregon, though, is quite a bit more progressive than that by not allowing inferior companies and products to do business here in the first place.
Yes, regulation by the states creates a "patchwork" of inconsistent regulations and enforcement.  But the states that do it right become great places to live, work and do business in because of the economic stability and level playing field good regulation creates.

Saturday, November 1, 2014

IRS Doesn't Like You

Hey, c'mon.  Even IRS has a heart.  Look at all the inflation adjusted goodies they're giving us.  This is directly cut and pasted so any errors are not mine.
- Gary

In 2015, Various Tax Benefits Increase Due to Inflation Adjustments

IR-2014-104, Oct. 30, 2014
WASHINGTON — For tax year 2015, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2014-61 provides details about these annual adjustments.
The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts -
  • The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
  • The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100.
  • The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
  • The personal exemption for tax year 2015 rises to $4,000, up from the 2014 exemption of $3,950. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly.)
  • The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly).
  • The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
  • Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
  • For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014.
  • For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.
  • The annual exclusion for gifts remains at $14,000 for 2015.
  • The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA)  rises to $2,550, up $50 dollars from the amount for 2014.
  • Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.
Details on these inflation adjustments and others not listed in this release can be found in Revenue Procedure 2014-61, which will be published in Internal Revenue Bulletin 2014-47 on Nov. 17, 2013. The pension limitations for 2015 were announced on Oct. 23, 2014.