How do I protect my families money?

Here are 10 things you can do to protect your families wealth from the simple creating a will to the less obvious like discounted gift schemes.

1.Make a will
Without a will, the State decides who receives money and assets in your estate. When this happens in England and Wales, your spouse takes the first £125,000 as well as your personal possessions and an interest for life in half the balance. The rest goes in equal shares to your children.

By making a will you could, for example, transfer some of your assets to children, grandchildren or others after your death within the £300,000 nil-rate band which would mean these bequests were IHT-free. All transfers between spouses are IHT-free but simply passing all assets to the surviving spouse means the IHT allowance of the first spouse to die is wasted and an extra £120,000 extra tax may be paid when the second spouse dies.

You could also use your will to set up a family trust but recent legal changes may mean your will needs updating. It is important to revise your will whenever your circumstances change - for example, when there is an addition to the family.


2.Change ownership of your home
Couples usually own their home jointly, meaning you both own the entire property. You should change ownership to become tenants in common so that you each own half of it.

David Rothenberg of accountants Blick Rothenberg explained: 'If you own it jointly, the house automatically belongs to the other person when you die. "By severing the joint tenancy you can give your share away to someone else when you die."

It is simple and cheap to do. A lawyer should charge around £100 to do it. But it is very important to consider the risk such a bequest might present to the security of tenure of the surviving spouse.


3.Equalise other assets
Equalise your estates. By having most of your cash, savings and assets held jointly or in one name only, the other person will not be able to use up their IHT allowance in their will.

Accountant Charlotte Black of Brewin Dolphin said: "If everything is held jointly it causes a problem as there is nothing to pass on when the first person dies."

Where husbands and wives or other members of civil partnerships trust each other sufficiently to equalise assets, they may even achieve immediate tax savings through making more use of the personal allowance for income tax - currently £5,225 per person aged under 65 - and capital gains tax - £9,200 per person during the tax year which ends on April 5, 2008.


4.Give with warm hands
You can give money and assets away before you die but there are strict limits under the IHT regime. Each person can give away £250 a year to any number of people as well as £3,000 in total annually to different people.

If the £3,000 allowance wasn't used last year you can give away another £3,000 this year. So, for example, couples who have made no use of this gift allowance can give away £12,000 in total this year.

There are no limits on the amount you can give away regularly out of your income, but it must not reduce your lifestyle.

Mr Rothenberg explained: "The Revenue is getting quite tough on this - so it's important to keep records of your expenditure as your income has to remain sufficient to cover your expenses. And record what you've given away."


5.Put your life cover in trust
When you die your life insurance will automatically pay out to the beneficiaries without having to go through the IHT regime if it is held in trust. The death benefit passes directly to them without being counted towards your estate. The life company - or, for example, the insurer which issued a with-profits endowment - will give you a form to complete to do this and it is usually free.


6.Check your pension arrangements
Employers' pensions are normally written in trust meaning any death-in-service lump-sum payment passes directly to whoever you nominate. Pension benefits for a widow or widower do not affect IHT though they will be subject to income tax.

Personal pensions should be written in trust, too, so that the pension pot can pass tax-free to whoever you wish. This must be done before you have to buy an annuity at 75 and cannot be done if you are in poor health - so it makes sense to consider action sooner rather than later. For example, as Mr Rothenberg said: "You can't change it if you are at death's door."


7.Consider tax-efficient investments
Several investments are free of IHT after they have been held for two years. These are shares quoted on the Alternative Investment Market (AIM), forestry land, farming land - provided you farm it, rather than rent it out - and partnerships or shares in a private business.

However, the favourable tax treatment should not blind you to the risks in these investments, particularly AIM shares. Small or recently formed companies are often more vulnerable to setbacks in a particular sector and may have smaller reserves to help them survive difficult conditions. There is no point losing capital to avoid tax.


8.Think of a PET
Potentially exempt transfers (PETs) are gifts of assets, cash or property you make before you die but you have to survive for seven years before they become IHT-free.

After three years, the beneficiary may get some tax relief which can increase each year until the seven years is up. However, if the gift is less than the nil-rate band the whole amount is added back into your estate when calculating how much you owe in death duties.

Mike Warburton of accountants Grant Thornton explained: "The tax relief is a discount on the tax, not the transfer itself. A single gift of £300,000 six years before the death of the donor will save nothing because the gift would all be within the nil rate band. This is frequently misunderstood."

You can't give your house away and continue to live there to diminish IHT liabilities, as the Revenue will regard it as remaining in your estate. But you can give it to a child who lives with you, said John Liddington of lawyers Speechly Bircham. He explained: "The child must live in the property until you die or go in to a home and you must both contribute to the running costs in order not to fall foul of tax rules."


9.Discounted gift schemes
These are single premium life policies which pay you an income for life and you give the policy itself away. Because it is paying a fixed income, the value of the policy is reduced. The actual discount is based on your age - the older you are the more valuable it is - so you have to be under 90 years old to use this type of scheme. However, it is important to understand that HM Revenue & Customs has pursued a strategy of challenging tax avoidance schemes in the courts which may continue in future.


10.Set up a trust in your will
Homeowners usually have the majority of their wealth tied up in their property. Without a trust, you cannot give away your share of the family home safely.

In this instance, the trust only comes into existence when you die. You will your assets and share of your house (held as tenants in common) to the trust up to the value of the nil-rate band, currently £300,000 and due to rise to £350,000 by 2010.

Then the trustees sell the share of the house back to the surviving spouse in return for an IOU. When the second person dies, the loan is repaid, thus using up the first person's nil-rate band.

It may sound simple but trusts are complicated and need a specialist to handle them. For example, earlier this year, the family of an Oxford don and his wife had to pay £60,000 in IHT when their trusts were considered to fall foul of IHT rules.

The problem was that Dr Patrick Phizackerley gave half his house to his wife, who then willed it to a trust on her death, and the trust lent him the share back until his death. However, the Special Commissioners, who settle disputes between taxpayers and the HM Revenue, ruled the scheme did not apply as Mary Phizackerley had no income and had not contributed to the house.

Mr Liddington said: "Since he'd given her half the house and then loaned it back to him via the trust after her death, he was considered to have lent his gift back to himself so the loan was not deductible for IHT."

Checklist - 10 things to do

1. Write a will and/or check that your existing will is up to date
   
   
2. Consider changing the legal form of ownership of your home
   
   
3. Equalise your assets so that both partners make use of tax allowances
   
   
4. Make gifts sooner rather than later
   
   
5. Put life assurance policies in trust and outside IHT
   
   
6. Check pension death benefits
   
   
7. Consider investing in tax shelters
   
   
8. Think of a PET - or Potentially Exempt Transfer
   
   
9. Discounted Gift Schemes may help - but beware pitfalls
   
   
10. Set up a trust in your will

What happens if a smoker lies on a life insurance policy

With life insurance, there are three different premium classifications: standard, preferred or preferred plus. By not smoking (or having not smoked for at least 5 years) and being in excellent health, you will be awarded with a lower life insurance rate because your chances of dying sooner are reduced.

If for instance, you are classified as "normal healthy," meaning you haven't used nicotine in at least three years-then you would fall into a standard classification with a life insurance company. Under this standard classification you would pay a normal life insurance rate for your age, as opposed to a smoker, who would pay a higher insurance rate because they are tagged a potential risk. Something to think about the next time you light up a cigarette!

Are you considered a smoker?
In the world of life insurance, by answering "yes" on your application to the questions, "do you smoke?" or "do you consider yourself a smoker?," you would be considered a smoker. The same goes for answering yes to the questions of "have you used tobacco products, cigarettes, cigars or chewing tobacco within a specified time?" By insurance standards, even if you smoke socially or just once a year, you are considered a smoker. For the occasional smoker, you should answer the question as best as you see fit.

The cost of smoking
Research shows that smokers pay at least three times the premium of nonsmokers-which is what motivates many people to lie on their life insurance applications.

To lie, or not to lie
With life insurance, a nonsmoker's application is due to be reviewed more thoroughly than a smoker's life insurance policy, because the premiums are so different.

It is possible for smokers to "cheat" the system, because nicotine clears out of your system within 72 hours after smoking your last cigarette. Cotinine is the primary metabolite of nicotine, and the most common identifier of nicotine levels. If the urine test is given 72 hours after your last cigarette, the nicotine level may be low enough to escape detection. This is theoretically possible for even the heaviest of smokers.

You passed! Now what?
The policy between you and your insurance company is a legal contract, so it is important that you do not lie about your smoking habits. If you were caught lying during the underwriting process, your rates would be bumped up to a smoker's rate when your policy is approved. No insurance company is going to come right out and says they are going to drop your policy if they found out that you were lying. However, some life insurance companies will place random phone calls to applications who are questioned on a multitude of things, even smoking. The survey is designed to weed out liars by listening for inconsistencies in the applicants' answers.

What happens if you are caught?
The worst thing that could happen if you are caught is that your life insurance policy will be issued at a higher rate.

What if you start smoking after the policy is issued?
Many life insurance companies go by the "don't ask, don't tell" idea. It is important to be truthful when filling out your life insurance policy, but if you start smoking after it's issued, you are not required to tell your insurance company. If you die, and your life insurance policy labels you as a nonsmoker, when indeed you began smoking, your death benefit will not be jeopardized.

If you are interested in purchasing a life insurance policy or would just like to get some life insurance quotes, visit the Post Office at http://www.postoffice.co.uk/portal/po/jump1?catId=19300223&mediaId=61000695

How much life insurance do I need?

'How much life insurance do I need?' is a question that is asked frequently. Basically, the cost of life insurance depends on two factors:

1. How much cover you want.
2. How long you want it for.

Then your age, sex, occupation, health and smoking habits are taken into account. The other issue affecting premiums is your medical history and current state of health. If you have any concerns, please do call us so we can advise on the most appropriate insurer for your circumstances.

There are many life insurance calculators out there, we recommend the This is Money website who have a good life insurance calculator.

Here are some typical life insurance costs taken from the Post Office in Jan 2009.

Level term monthly premiums

£100,000 of cover for a period of 10 years
	Female		Male
Age	Smoker	Non-smoker	Smoker	Non-smoker
25	£5.25	£5.00	£8.09	£6.17
30	£6.00	£5.00	£8.68	£6.18
35	£7.60	£6.60	£11.18	£7.58
40	£11.70	£7.87	£14.99	£9.28
45	£19.49	£10.58	£23.89	£13.18
50	£32.39	£15.79	£39.49	£19.39
55	£52.98	£24.40	£69.06	£30.71

£150,000 of cover for a period of 10 years
	Female		Male
Age	Smoker	Non-smoker	Smoker	Non-smoker
25	£7.85	£6.46	£11.15	£6.17
30	£9.35	£6.61	£12.20	£6.18
35	£12.05	£8.45	£15.65	£7.58
40	£17.60	£11.45	£22.40	£9.28
45	£29.45	£15.95	£36.01	£13.18
50	£48.05	£23.45	£58.85	£28.40
55	£79.66	£35.41	£103.25	£44.75

Decreasing term monthly premiums

£100,000 of cover for a period of 10 years
	Female		Male
Age	Smoker	Non-smoker	Smoker	Non-smoker
25	£5.00	£5.00	£6.12	£5.01
30	£5.02	£5.00	£6.47	£5.05
35	£6.06	£5.00	£8.06	£5.52
40	£8.01	£5.41	£10.58	£6.91
45	£12.76	£7.52	£16.11	£9.08
50	£21.31	£11.21	£25.91	£13.31
55	£34.21	£16.41	£43.21	£20.31

£150,000 of cover for a period of 10 years
	Female		Male
Age	Smoker	Non-smoker	Smoker	Non-smoker
25	£6.46	£5.71	£10.06	£6.76
30	£7.06	£6.01	£10.06	£6.76
35	£8.71	£6.01	£12.01	£9.16
40	£12.01	£7.66	£15.91	£9.91
45	£19.51	£11.41	£24.16	£13.66
50	£31.36	£16.81	£38.86	£19.96
55	£51.31	£24.61	£63.46	£30.46

Your monthly premium will depend on a number of things, including the level, type and length of cover, medical history, your age and gender and whether or not you smoke. Some typical monthly premiums are shown below. You can apply for life insurance if you are between 18 and 66.

Get a life insurance quote from the Post Office or call 0800 096 5484*.

How much life cover do I need?
If you're the breadwinner, you will want to keep your family in something like the style to which they have become accustomed. If you're a carer, then you want to provide cash for professionals to take over because you're not around.

Generally speaking, the figure should be enough to produce around two thirds of your earnings or £20,000 for professional care each year.

How long for?
Until your dependants are old enough to look after themselves. 20 years is about right for most people, or until your savings can adequately provide for you and your partner - possibly by the time you're 60 years old.

How much mortgage cover do I need and for how long?
You need to cover the amount of the outstanding debt, up until the debt is paid off.

What type of cover do I need?
Is your mortgage a repayment one? If so, you need a Decreasing Term Assurance policy. Or is it an interest-only mortgage, in which case you need a level term policy.

What is term life insurance?

Term life insurance or term assurance is life insurance which provides coverage for a limited period of time, the relevant term.

After that period, the insured can either drop the policy or pay annually increasing premiums to continue the coverage. If the insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is often the most inexpensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis.


Health and Life Insurance: What is "term life insurance"?

Term life insurance is the original form of life insurance and is considered to be pure insurance protection because it builds no cash value. This is in contrast to permanent life insurance such as whole life, universal life, and variable universal life.

Term insurance functions in a manner similar to most other types of insurance in that it satisfies claims against what is insured if the premiums are up to date and the contract has not expired, and does not expect a return of Premium dollars if no claims are filed. As an example, auto insurance will satisfy claims against the insured in the event of an accident and a home owner policy will satisfy claims against the home if it is damaged or destroyed by, for example, an earthquake or fire. Whether or not these events will occur is uncertain, and if the policy holder discontinues coverage because he has sold the insured car or home the insurance company will not refund the premium. This is purely risk protection.

Usage
Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities, for the insured. Such responsibilities may include, but are not limited to, consumer debt, dependent care, college education for dependents, funeral costs, and mortgages.

Annual renewable term
The simplest form of term life insurance is for a term of one year. The death benefit would be paid by the insurance company if the insured died during the one year term, while no benefit is paid if the insured dies one day after the last day of the one year term. The premium paid is then based on the expected probability of the insured dying in that one year.

Because the likelihood of dying in the next year is low for anyone that the insurer would accept for the coverage, purchase of only one year of coverage is rare.

One of the main challenges to renewal experienced with some of these policies is requiring proof of insurability. For instance the insured could acquire a terminal illness within the term, but not actually die until after the term expires. Because of the terminal illness, the purchaser would likely be uninsurable after the expiration of the initial term, and would be unable to renew the policy or purchase a new one.

This issue is frequently overcome by a feature in some policies called guaranteed reinsurability included on some programs, that allows the insured to renew without proof of insurability.

A version of term insurance which is commonly purchased is annual renewable term (ART). In this form, the premium is paid for one year of coverage, but the policy is guaranteed to be able to be continued each year for a given period of years. This period varies from 10 to 30 years, or occasionally until age 95. As the insured ages, the premiums increase with each renewal period, eventually becoming financially inviable as the rates for a policy would eventually exceed the cost of a permanent policy. In this form the premium is slightly higher than for a single year's coverage, but the chances of the benefit being paid are much higher.

Level Term Life Insurance
Much more common than annual renewable term insurance is guaranteed level premium term life insurance, where the premium is guaranteed to be the same for a given period of years. The most common terms are 10, 15, 20, and 30 years.

In this form, the premium paid each year is the same, and is based on the summed cost of each year's annual renewable term rates, with a time value of money adjustment made by the insurer. Thus, the longer the term the premium is level for, the higher the premium, because the older, more expensive to insure years are averaged into the premium.

Most level term programs include a renewal option and allow the insured to renew for a maximum guaranteed rate if the insured period needs to be extended. It is important to note that the renewal may or may not be guaranteed and the insured should review their contract to see if evidence of insurability is requierd to renew the policy. Typically this clause is invoked only if the health of the insured deteriorates significantly during the term, and poor health would prevent them from being able to provide proof of insurability.

Payout Likelihood and Cost Difference
Both term insurance and permanent insurance use the exact same mortality tables for calculating the cost of insurance, and a death benefit which is income tax free, as long as the policy is in force and premiums are current; however, the premiums are substantially different.

The reason the costs are substantially different is that term programs may expire without paying out, while permanent programs must always pay out eventually. To address this Permanent programs have built in cash accumulations vehicles to force the insured to "self insure" making the programs many times more expensive.

Insurance industry studies have shown that the probability of filing a death benefit claim under a term insurance policy is unlikely.[citation needed] One study placed the percentage as low as 1% of policies paying a benefit. The low payout likelihood allows term insurance to be relatively inexpensive. The low payout percentage is a combination of there being a low likelihood (in the aggregate) of a random, healthy person dying within a short period of time. Because of the low likelihood of an insurer having to pay a death benefit, term insurance seems better when considered in terms of coverage per premium dollar basis - by a factor of up to 10.

Summary of Term Life Insurance

• Term life Insurance is a pure death benefit.
• It has no cash values.
• It is just a pure death benefit.

Premiums today are usually locked in for ten, fifteen, twenty, or thirty years.

As an example, a healthy 30 year old male might be able to buy half million pound term life insurance policy with premiums guaranteed to be level for twenty years at three hundred dollars.

Now after twenty years the premiums go through the roof. So as an example, it might be three hundred dollars for twenty years, but in the twenty first year the premium might be three thousand or five thousand dollars per year.

And it goes up every year thereafter because as you get older, the mortality tables tell you that you are likelier to die than when you are twenty years of age or thirty years of age.

That is when the premiums go through the roof. But some people have an opinion that they will only need a life insurance policy for a ten or fifteen or twenty year period.

I talk to people all the time who say in twenty or thirty years I will have enough money in my bank account, my retirement account, I will inherit tons of money. And they say I will not need life insurance after that period of time. And I can point out that that usually is not the case. But ultimately you have to make that decision because as a good insurance broker, it is your agenda not my agenda.

I can guide you and tell you, "here are things people can do." It is your decision what you want to do.

Cashing life insurance

Thinking of cashing in your life insurance? Cashing a life insurance policy can be costly business! In recent years cashing a life insurance policy has become a very common practise. It used to be that most life insurance policies were left in force in order that the intended beneficiaries could receive the face value of the insurance policy upon the death of the insured.

Ever since the inception of the aids virus, people with the disease have searched for ways to get their hands on cash to pay medical bills and in some cases just to live. Thus, if these people have life insurance policy with large cash values they end up cashing a life insurance policy or selling their life insurance policies.

Even the people who are receiving structured settlements from life insurance or an annuity are cashing their settlements in return for an immediate lump sum. These companies that buy these settlements or policies are enjoying a real bonanza...but the person with the terminal illness and their families are really losing in the end.

These investment companies buy life insurance policies from terminally ill people for a percentage of the face amount of the policy. The investment company pays all premiums for as long as the insured stays alive and collects the death benefit upon his or her death. The investment company is called a viatical company. Selling the policies can be referred to as "viatication".

In some situations people who are not terminally ill also sell their policies. In their situation their health has declined and they are in need of cash. These are referred to as life insurance settlements.

Instead of cashing a life insurance policy or selling your life insurance policy it may be prudent to take a loan from your policy if the "loan value" is sufficient to meet your financial needs. Bear in mind that there may also be tax implications involved with cashing a life insurance policy or selling it.

10 reasons why to buy life insurance

Why should you get life insurance? Well, insurance is designed to protect a person and the family from disasters and financial burdens. There are many kinds of insurance of which, the basic and most important is considered to be life insurance. It provides for the dependants after your death.

Since there are certain financial commitments you need to meet throughout life and do contribute in some way to the family income, you need to provide something even in death—to secure the home, help the family meet expenses for a while, protect dependant parents, or secure the children or spouse.

Financial obligations could include funeral expenses, unsettled medical bills, mortgages, business commitments, meeting the college expenses of the children, and so on.

How much insurance a person needs would vary, depending on lifestyle, financial needs and sources of income, debts, and the number of dependants? An insurance adviser or agent would recommend that you take insurance that amounts to five to ten times your annual income. It is best to sit down with an expert and go through the reasons why you should consider insurance and what kind of insurance planning would benefit you.

As an important part of your financial plan insurance provides peace of mind for any uncertainties in life.

So here are 10 reasons why you should consider getting life insurance:

1. Life insurance correctly planned will on premature death provide funds to deal with monies due, mortgages, and living expenses. It offers protection to the family you leave behind and serves as a cash resource.
   
   
2. It secures your hard earned estate on death by providing tax free cash which can be utilized to pay estate and death duties and to tide over business and personal expenses.
   
   
3. Life insurance can have a savings or pension component that provides for you during retirement.
   
   
4. Some policies have riders like coverage of critical illness or term insurance for the children or spouse. There are certain rules regarding eligibility for riders which you will need to determine clearly.
   
   
5. Having a valid insurance policy is considered as financial assets which improves your credit rating when you need health insurance or a home loan or business loan.
   
   
6. In case of bankruptcy, the cash value as well as death benefits of an insurance policy is exempt from creditors.
   
   
7. Life insurance can be planned such that it will cover even your funeral expenses.
   
   
8. Term life insurance has double benefits, it protects and you can get your money back during strategic points in your life.
   
   
9. Insurance protects your business from financial loss or any liabilities in case a business partner dies.
   
   
10. It can contribute towards maintaining a family’s life style when one contributing partner suddenly dies.
    

Insurance is vital to good financial planning and security but you would need to assess your personal risk and long term commitments. Insurance stands a person in good stead throughout life and can be used in case of emergencies during a life time by requesting a withdrawal or loan.

Visit Post Office® for life insurance quotes and to buy a simple, cost effective life insurance policy, offering you a way to pay off your mortgage or leave your family a cash sum when you die.

Life Insurance

1 in 3 is the number of families who have no life insurance cover, critical illness insurance, or income protection cover in place. It is very important that people understand exactly what they are buying. Speak to a life insurance and protection adviser who will highlight appropriate policies. People should view income protection, critical illness, life insurance, private medical insurance and mortgage payment protection insurance as a basket of goods, choosing which are most relevant for them at any given moment.

When buying insurance, you can be overwhelmed by an information avalanche. To protect your future from poor choices today, try searching in terms of the 5 W's:

Who? What? Where? When? Why? and How much?

Who?
The classic argument to avoid life insurance runs, "If I die, why do I need money?" You don't -- but your family, your business or your favorite charity might. So anyone with dependents, human or otherwise, might need life insurance. Of course, if you don't need to protect anyone else, insurance is not a wise way to spend money.

What?
People approach life insurance with predisposed notions. They might be oriented to term insurance, yet don't have a good argument as to why. Any kind of insurance is a contract with requirements on both sides. Unfortunately, too many people think life insurance is a commodity, like going to the grocery store and picking up a piece of fruit to judge."

"Term" insurance forms the base of every life insurance policy. Think of it as renting a safety net: The owner pays a fixed premium toward a concrete payoff over a specific time. If you die during this period, the insurance company pays the promised amount. When the policy reaches its deadline, the coverage vanishes.

Some insurers offer convertible policies that allow a return client to take out another policy at the rate of a healthy person, but you pay a higher premium for the privilege. Insurance companies also offer three variations of permanent life insurance - that is, insurance that covers you for your entire life.

"Whole life" offers term insurance's set payoff for a set premium, except this policy doesn't come with an ending date. You'll pay the premium for the rest of your life, unless you decide to cash in and receive the cash value as a lump sum.

With "universal life", the insurance company separates the investment and death benefit portions, socking your investment dollars into its choice of bonds, mortgages and money market funds. Then your investment fund pays for the cost of the set death benefit. And, according to LIFE, no matter how badly the investments pan out, the insurance company guarantees you a minimum return.

You, as the policyholder, can change the premiums and death benefits to suit your current budget, so this appeals to younger crowds.

Finally, if you buy variable life, the death benefit payoff depends on your success in picking investment opportunities with the money (although the insurance company does cough up a guaranteed minimum death benefit at your death if you screw up too badly). These policies must be registered with the U.S. Securities and Exchange Commission.

Where?
Approximately 90 percent of life insurance is sold at the kitchen table; a growing 7 percent to 10 percent is sold over the Internet, according to AccuQuote's statistics. In either case, caution should prevail. This is not something you want to screw up and leave someone in the lurch.

When?
If you buy a term policy, there's no penalty to committing today. Just as homeowners refinance mortgages at lower interest rates, life insurance policyholders can cancel a policy at any time to replace it with a less expensive equivalent -- providing their health remains stable, of course.

Why?
Life insurance provides instant liquidity to meet the obligations that become due upon your death. It's a pool of money to complete what you can't finish. It's also not taxable income. Of course, don't make it your sole investment strategy. Other vehicles' returns beat permanent insurance products hands down!

The old story is to buy term and invest the rest. And that's fine if you immediately put that extra money into an investment vehicle, but it does take discipline to do that. If you don't, check universal or whole life.

How much?
When pondering coverage, buyers first should inventory their assets:

• job insurance perks
• social Security benefits
• IRA accumulations
• stocks
• bonds
• savings accounts

Then consider factors, such as how many people work in your household and if your need is temporary or permanent. For instance, do you want your spouse to stop working to care for the children?

"We don't want to think about these objectives because it's unpleasant for ourselves. It's easier to flip on a computer, say I need £125,000 and discover it costs X amount per month! Many buyers arrive at coverage numbers using the popular formula of four times their annual current salary. Wrong.

Too frequently people go into this half cocked with numbers they literally pull out of the sky. Taking a simple multiple of your current earnings is so nonspecific, it doesn't add up.
You should rely on a capital assessment to determine coverage need.

I typically tell people during the accumulation phase of their financial life that now is the time you can start cutting back on life insurance. Instead, build up your capacity to self-insure. Otherwise, here I am five years down the road with pay raises, and I'm still using a multiplier of four times whatever my income is. I'm basically buying more life insurance than I need."

As yourself this question "If I wrote you a cheque today for the amount on your insurance policy, would you work for me for the rest of your life at no pay?"

Next, is the price you pay reasonable? Insurance companies use life expectancy tables and risk classes to determine rates, then factor in underwriting costs. They consider mortality rates over time, so isolated events, such as the Sept. 11 attacks, don't significantly impact rates.

Today, Internet speed means companies compete on rates by the minute, so overall life insurance rates have plummeted nearly 60% from their costs just seven years ago. Yet a 40-year-old in good health seeking a 20-year term policy can find quotes ranging from £18 to £100.

The middle of the pack is almost double what you need to be paying, and believe me, plenty of companies in this level sell tons of life insurance. However, a few extra pounds for an A-plus-rated firm makes sense. Niceties like convertibility and quick claims processing stack up, too. In other words, cheapest isn't the only consideration.

Anything within £15 and £30 annually isn't worth the savings to deal with a poor company!

People often say, 'When I buy life insurance I'm betting against myself.' That's the worst expression I've ever heard,"

When you purchase life insurance, you're betting you'll live but providing an assurance in case you're wrong!

Can I write my own will?

Did you hear the one about what Robert Louis Stevenson left in his will? Along with the veritable fortune earned from sales of Treasure Island (and an inherited vase no doubt) he tried to leave his birthday to a friend. And for good reason too, for his buddy was born on Christmas day and subsequently never had her own proper celebration. This light-hearted approach suggests that old Robbie may have done a DIY job on his last will and testament. But in this age of debt and obligatory sibling squabbles is it still possible to write it ourselves?

The primary reason that people want to write their will themselves instead of employing a professional will-writer or solicitor is to save money. This makes sense, as the time in one's life to take these kinds of actions may well coincide with the expense of life insurance also. However many points must be considered if choosing to take on this task yourself.

The first thing to think about is the simplicity of your circumstances. Of course it is up to you to decide if you have a great many assets to be split unevenly. However, if, like the aptly named Ms. Eleanor Ritchly, you want to leave your vast estate to a pack of dogs, you may not need the help of an attorney. But you may need the help of a psychiatrist.

Similarly, if you have a dependent who is unable to care for him/herself, then it is also advised to seek the help of a professional (a will writer who is qualified should be a member of the Institute of Professional Willwriters or the Society of Will Writers). Also, if you have children from a previous marriage it is also wise to not write a will without external help.

It is important to acknowledge the great difficulty of avoiding the costs of inheritance tax if you write your will yourself. Again, if you circumstances are complicated and you wish to take avoidance measures you will need a solicitor or other professional. Following this, if a business is involved, i.e. if you are the owner or manager, it is also best to seek help to prevent complex issues arising for those who receive your assets in the future.

Finally, if you live or own property abroad, or are not a British citizen, you should seek advice. And, it is probably worth pointing out at this point, that by writing your will yourself, it will only be valid if the correct number of witnesses are present when it is signed.

Visit Post Office® for life insurance quotes and to buy a simple, cost effective life insurance policy, offering you a way to pay off your mortgage or leave your family a cash sum when you die.

Drinkers face Life Insurance price rise

Middle class drinkers who consume more than their recommended weekly intake of alcohol face paying higher life insurance premiums. The changes are likely to hit middle-aged, middle class consumers, particularly women, experts said.

Official guidelines say women should drink no more than 14 units of alcohol a week, and men 21 units – with one unit equivalent to half a pint of beer, a shot of whisky or a small glass of wine.

But the reality shows that many drink far more, with 10 million adults – 20% of men and 30% of women - drinking at a level which is "hazardous" to their health.

Insurers say they are reacting to increases in health-related problems such as cirrhosis of the liver, heart problems and certain cancers. A woman who drinks 21 units a week, not far above the Government's guidelines, could end up paying an extra £50 a year.

A man drinking 35 units, equivalent to two and a half pints of lager a night, could pay extra premiums of up to £100 a year.

And a man who admitted consuming 50 units a week could see his premiums double from £150 to £300 because his drinking would be categorised as "harmful". Very heavy drinkers could be refused cover completely. Most life insurance firms are now checking doctors' notes for signs of alcohol use in order to make sure claimants are not lying about their alcohol use.

Several companies admit refusing to pay out claims if they have evidence that they were drink-related. Companies including the AA, Norwich Union, Legal and General and Direct Line said they will increase premiums for drinkers.

A spokesman for the AA said: "Heavy drinkers are more likely to suffer from liver disease, high blood pressure and strokes. They are also more likely to have an accident, possibly fall into the road, and they are more likely to be involved in a fight."

Malcolm Tarling of the Association of British Insurers said: "Insurance companies are simply making a normal judgment of risk.'"

New Year Resolution - To Check Your Life Insurance Policy

Have you got life insurance? If so, make sure one of your New Year resolutions is to check to see if you are not paying over the odds for your life insurance premiums.

The cost of life insurance has fallen by around 40% over recent years which means that many customers could be wasting thousands of pounds by not reviewing their protection policies.

Life insurance customers should use the new year as a reason to get their finances in order, and compare life insurance quotes to ensure they are not getting overcharged to better prepare themselves for what could be a tough 2009.

Last year saw the price of life insurance and critical illness insurance continue to fall, which means now is a good time buy. With the rising level of unemployment, income protection insurance is also becoming more important than ever, and, according to research from MoneyExpert.com, more than a third of Brits believe payment protection insurance to be an important purchase as a result of the current economic climate.

While income protection insurance has remained relatively static in price, it is still possible to save money and it could prove to be a valuable investment as the economic crisis tightens and more businesses topple under the weight of a recession.

Those who gave up smoking for their new year's resolution last year and have stuck to it for 12 months should review their life insurance policy and inform their insurance company; while this does not guarantee a cheaper premium, because it also depends on age and health, it could potentially cut hundreds of pounds off the cost of cover.

Over the average term of a life insurance policy for a 35 year old male in good health, there could be a saving of £1,239 between the most expensive and cheapest policies, a £3,039 difference between the cheapest and most expensive critical illness insurance policies, and a huge disparity of £8,769 between the cheapest and most expensive income protection insurance cover, so an individual could save as much as £13,000 over the terms of their insurance policies.

There are a number of steps that customers can take in the new year to freshen up their finances and save a bit of money. The first thing is to actually take action. Don't wait until New Year's Day 2010 comes round before you start thinking about saving money on insurance premiums again. However, it is important to remember that price should not be the only consideration when choosing a protection product and customers should look at the policy that offers the best value for money rather than simply the cheapest.