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Finances - iStockThere are two basic types of life insurance: term and permanent.

The fundamental difference is right there in the name: Term life insurance is only in force during a set period or “term,” while permanent life insurance is yours for your entire life. So why doesn’t everyone just get permanent? Because it’s much more expensive — 10 times more than term, on average. The higher cost makes sense, since the insurance company knows it will be paying out eventually (whereas with term, there’s a good chance you’ll outlive the policy and cost the company next to nothing). However, it also means that most people can’t afford permanent life.

For most people, term is the way to go.

Term life insurance is way simpler than permanent. You pay a (much lower) premium for a set period of protection, which typically coincides with your prime working years. You can think of it as insurance on the income you haven’t yet earned. The advantage is pretty obvious: You can guard against uncertainty by securing a large death benefit for relatively little money. And if you invest the money you save by not going with a permanent insurance policy, you can wind up with more cash at the end of your life than a permanent policy would’ve paid anyway (of course, the tricky thing is actually putting aside that difference rather than spending it).

But even if you don’t invest the balance of what you’d pay for a permanent policy, term life insurance still offers a ton of value by safeguarding your dependents when they’re most vulnerable. You can buy a 20- or 30-year term policy with the expectation that your kids will be able to provide for themselves by its end, and when you and your partner will also hopefully be reaping the rewards of prudent investing, not to mention Social Security and pensions. Sure, your term policy has no value once it expires, but that’s OK — you were paying for the protection.

But there are some cases when permanent makes sense.

Life insurance is all about covering need, and in some cases the need for it lasts your entire life. One example is for those with special-needs children who will always require care.

Permanent life insurance also makes sense if you’ve built up enough wealth that your heirs will need to pay an estate tax — this year, that bar is set at $5.45 million. Life insurance death benefits are not subject to income tax, so if you get a permanent policy, you’ll know that your heirs will have cash-on-hand to pay the estate tax. This may make even more sense if the majority of your wealth is in property or other non-liquid assets.

Your health and age at the start of the policy are the biggest factors in determining your premiums.
The formulas life insurance companies use to set premiums are incredibly sophisticated, but they’re all designed to gauge life expectancy, which means age and physical health are the primary factors. However, your physical health is only actually measured once, via that medical exam when you first apply for coverage. The insurance company then uses population data to project your average risk of dying over the course of the policy (and sets your premiums accordingly).

This means that the younger and healthier you are at the start of the policy, the lower your premiums will be. It’s also why guaranteed renewability and a guaranteed conversion option are so important, because they too rely on that initial health picture, which is most likely the healthiest you’ll be at any time during your coverage.

Think carefully about how much life insurance you really need.

Maybe you’ve heard that you should multiply your annual income by 10 to get your life insurance face value, but five seconds probably isn’t enough to spend calculating something so important.

First, consider your long-term debts. Do you have a mortgage that will require payments for the next 25 or 30 years? What about student loans, medical expenses, and credit card balances? If you have kids, are you planning to pay their college costs?

Then ask yourself how much it takes to sustain your household at your current spending habits.

Don’t assume you’re covered through work.

Most employer plans carry a death benefit of far less than you would want your dependents to have, and they’re also not portable if you switch jobs. It’s great if you have employer-sponsored life insurance, but you should probably supplement it with a policy of your own.

Do yourself a favor and work with a broker.

Insurance brokers (people who sell insurance for multiple carriers) sometimes get a bad rap because they work on commission, and if they’re slimeballs, they can push an expensive policy that you don’t need just to get a heftier cut of the action. But most brokers aren’t slimeballs, and they can be a huge help.

Brokers not only can quickly sift through hundreds of options to find the policies that best fit your needs, but also know which companies are likelier to offer you the lowest premium. How? They’ve reviewed insurance policies every day (probably for years), so they’re familiar with the specific underwriting criteria of various companies — which ones are more generous on height and weight tables, or which ones are particularly strict about driving records.

You also won’t save money by not working with a broker. Insurance companies assume a broker fee when they set their premiums, so even if you buy your policy through a website like, your premiums will be the same as if you worked with a broker. The only difference is where that commission money goes.

Maybe you’ve heard that you should talk to a fee-only financial planner instead of a broker. While it’s true that fee-only advisers don’t receive commission from insurance companies, that doesn’t mean they don’t have some other arrangement that incentivizes them to suggest certain policies. Plus, a fee-only adviser only makes recommendations, leaving you to purchase the policy yourself (and pay the built-in commission).

Even though brokers are paid on commission, that doesn’t mean they won’t give you good advice. Just make sure they’re licensed to sell life insurance in your state, and they don’t have a disciplinary record. Both of these pieces of info are publicly available from your state’s Department of Insurance.

The Bottom Line

If you have dependents who rely on your income, you need life insurance. Term offers the best value for the money, but make sure your term policy is with a financially strong company, with enough coverage and flexibility to allow for changes in your situation. It pays to shop around, but ultimately your best bet is to use an agent or broker who knows the marketplace.

This post originally appeared on the Simple Dollar.


SavingsAccording to a report by the Association of Certified Fraud Examiners, which is the largest global anti-fraud agency, small businesses constitute 31.8 percent of all fraud-related cases reported per year. This is a significantly higher percentage than for larger businesses. The losses for a small business are also amplified due to their relative size and resources to larger corporations. To make matters worse, roughly 50 percent of fraud-related cases fail to recover compensation for the business.

Define Different Types of Fraud

Before launching your offensive plan for taking on fraudulent behavior and processes, you’ve got to know what you’re up against. As a small business, there are different angles from which fraud can attack. Fraudulent acts can fall under three categories, namely theft, financial statement fraud, and asset misuse. According to experts, theft is the most common category of fraud, which involves stealing cash, creating false expenses, and taking business assets.

Vet Your Employees

Employees are often the culprits of fraud, particularly theft. Although this can be difficult to swallow for any small business owner, it’s a reality one must acclimate to if future cases of fraud are to be prevented. Vet your employees for any criminal records he/she may have, such as past theft or identity fraud convictions. Making the right hiring decisions is the first step to proactively avoiding fraud.

Educate Your Workforce

Employees are arguably one of your biggest points of entry when dealing with fraud. Educating your workforce, however, can also turn them into your biggest line of defense. Conduct regular training sessions concerning fundamental security threats and how to prevent each one. Your employees must also learn how to properly use the company’s confidential data including but not limited to financial statements and customer contacts.

Dedicate More Than One Person to Handle Accounting

Small businesses often choose to delegate accounting and bookkeeping tasks to one person due to their limited manpower. This leaves only one person responsible for overseeing a variety of key functions including client receivables, client payment processing, invoice payments, petty cash management, and recording through the chosen accounting framework. This makes it fairly easy for fraudulent behavior to go unchecked within the business. Instead, have at least two people handle these tasks.

Change Passwords Regularly

Don’t just encourage your employees, make it a requirement to change account passwords at least once every two or three months. Set specific parameters for passwords, such as at least one upper case letter, one number, one special character, etc. Make sure passwords are more complex than just “password123”.

Protect Your IT Infrastructure

Small business owners will do well in investing in a robust IT infrastructure, comprising of a firewall and antivirus system. Data backups are also something you should regularly perform. Backing up data to a cloud-based server is a great way to protect from fraud and malware attacks.

Safeguard Credit Cards and Bank Accounts

Just as you would protect your customer’s information, be sure to protect your personal and business bank accounts and credit cards. Keep separate accounts so it’s easier to keep track of and hackers don’t get a hold of all your cash after hacking one account. Your card numbers must also only be entrusted to employees and business partners you have full confidence in.

Get Business Insurance

Fraud and cybercrime are events that you cannot fully circumvent. Being prepared of the aftermath will give your business a cushioned pad from which to restart and rebuild again. One of the best ways to prepare for fraud-related damages is to secure business insurance that specifically protects your company against such events.


mother holds hands with kids - iStockThis article discusses some of the legal documents that can assist in planning for the physical care of a minor child in the event of a parent’s death or incapacity. Minnesota law provides that a parent may appoint a guardian over a minor child by will, designation of standby guardian, or certain other signed writings executed in the same manner as a health care directive. Wills are still the most common document used, but appointing a Standby Guardian seems to be increasingly popular. After reading this article you will have a general understanding of how both documents work to aid in the succession of a child’s care.

Using Wills and Trusts

The most common way parents plan for the care of their children is still through the appointment of responsible persons within a will. Traditionally, a will is used to name the person or persons that should take physical custody of the child if something should happen, and a trust is used to direct how assets of the parent should be managed – including for the benefit of the child. The person responsible for the child’s physical care is called the “guardian” and the person responsible for the management of the trust is called the “trustee.” It is not uncommon for parents to choose the same person to serve in both roles.

Under standard procedures, a guardian named in the will is able to obtain court confirmation fairly quickly after both parents pass on. The nominated guardian must first file the will with the proper county court (if it has not already been filed) and an acceptance of appointment. The nominated guardian is then required to provide a legal notice containing certain statutorily required information to the child if the child is older than age 14; the notice must inform the child that the child may object to the appointment. If someone else has physical custody of the child, the nominated guardian must also provide the notice to such person. If nobody has objected, the nominated guardian will then be granted Letters of Guardianship. If an objection is filed, a hearing will be held and the court will determine who may serve as guardian.

Using a Designation of Standby Guardian and Custodian

Minnesota law permits parents may petition for court confirmation of guardians and custodians prior to the death or incapacity of a parent, removing the need for a nominated guardian to seek approval from the court after something has happened. [1] Ostensibly, a will could be used for this purpose, but filing the will in this manner would make it a public document, meaning its provisions could be read by anyone that cared to look.

A separate document, known as a Designation of Standby Guardian and Custodian (“Designation”), should be used instead for a preemptive filing. The Designation allows the parent to maintain an increased degree of privacy relating to financial matters by avoiding unnecessary disclosure of information contained in the will. More importantly, filing the Designation prior to the triggering event allows the parent to proactively address possible challenges by family and friends who may object to the appointed guardian/custodian. By seeking court approval while alive, the parent may participate in a hearing should it be necessary.

If the parent creates a Designation, but fails to secure court approval prior to passing away, the Designation is still valid, though with limitations. A person appointed in a Designation not previously approved by the court automatically has authority to act for 60 days following the triggering event. The nominated person must seek court approval to extend the Designation for any period greater than 60 days.

The Designation of Standby Guardian should not be confused with the Designation of Temporary Guardian. Designation of Temporary Guardian is a document that parents may use to appoint someone to look after children while the parent is unable, for example, due to a trip overseas. The Designation of Temporary Guardian, however, is limited to 24 months in duration; the Designation of Standby Guardian has no such limitation.

What a Will and Designation May NOT Do

None of the documents discussed above may be used to deprive a parent of parental rights and responsibilities. Only a court may determine that another person may serve as guardian/custodian if the other parent: (1) still wishes to serve, (2) has parental rights, (3) known whereabouts, and (4) the ability to take care of the child. Furthermore, the above documents, on their own, do not relieve the responsibility of a parent to support a minor child, and the appointed person has the right to sue an absent parent for child support if the parent is neglecting their responsibilities.


Appointing a guardian and/or custodian in the manner discussed above is a simple and useful way to reduce friction in the succession of caregivers for minor children. Without any such document, a would-be guardian must engage in a much more formal, drawn-out, process, involving the preparation and filing of a legal petition, the court-appointment of an attorney to represent the child, the appointment of a designated visitor to evaluate the home and suitability of the proposed guardian, and a hearing to confirm the appointment. Appointment of a guardian – be it through a will or use of a Standby Guardian Designation – is, in contrast, much simpler, faster, and easier for everyone involved.

[1] Minn. Stat. §§ 524.5-202 and 257B.03 deal with the appointment of standby guardians and custodians, respectively. Though largely overlapping in the powers and rights they relate to, it is worth noting that guardian and custodian are distinct legal concepts. For example, there are some instances when a guardian may exercise the power of contract with regard to a minor’s property, but a custodian may not. For the purposes of this article, the distinctions between the terms are largely irrelevant.

This article does not constitute legal advice, nor does it constitute the initiation of an attorney/client relationship. Please consult an attorney licensed in your jurisdiction for assistance applicable to your specific facts and circumstances.

This article was originally published June 28, 2016 by Michael S. Divine on Dudley and Smith, P.A.’s blog


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