Umbrella insurance is a type of insurance that provides extra protection beyond your auto and homeowners insurance. Let’s say that a tree on your property falls and completely destroys a neighbor’s house. You get sued and are ordered to pay $500,000 in damages, but your insurance will only cover $300,000. If you don’t have umbrella insurance, you’re going to have to cover that additional $200k out of your own pocket. Unless you like giving away a couple hundred thousand dollars (if you do, give me a call), you’re probably going to wish you had umbrella insurance. For around two or three hundred dollars a year, you can get an umbrella policy that will provide you with up to $1 million of umbrella coverage.

Sponsor: Brohans Video Blog - It’s Like Binary Dollar. Except you don’t learn anything.

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Who’s to blame for the worst economic crisis since the Great Depression?

Warning… long rant ahead.

Have you heard the latest bad joke around? Okay not this bailout crisis joke I wrote about a week or so ago but the one on how we’re socializing our financial markets by making the taxpayers bail out all our financial institutions. As someone put it, “this is a form of wealth distribution alright, the government robbing from the poor to give to the rich….”.

So when will this nightmare of a crisis end? Sure we’re shoring up our failing banks and institutions right now, and even possibly certain vital industries that are the heart and pulse of our nation. But, I also see the flip-side, which is the fact that we (and our kids, and maybe even our grandkids) will be paying off for this till kingdom come, with the whole thing financed by our debt to foreign interests (e.g. Chinese).

This soap opera can’t be without its sorry cast of characters.

Golden Sach’s Bailout Man: Henry Paulson and George W. Bush, by Buckfush

Big 3 take private jets to grovel for cash, by Daily News

Capitalism Gone Awry

I wonder: how naive have I been? I am big on capitalism and believe wholeheartedly in rewarding anyone for the work they’ve done and value they’ve produced. I’ve always been of the mind that, if a CEO does well by his company and makes me happy as a stockholder, I have no qualms in approving a commensurate pay package for the geezer.

I’ve always been a proponent of self-regulation and a laissez faire economy, but this very thing has led to the disasters we’re seeing today. Now with the government sweeping in to save “the big guys” from themselves and their gross mistakes, I see that apparently, self-accountability is optional in this free market. Very interesting what this blog has to say:

Now consider: finance is a necessary function, but is represents a tax, a drain on the productive economy, just as defense and lawyers do. It is ironic that free market fundamentalists have so vociferously argued for unfettered markets, without understanding (or perhaps understanding all too well) that the house always wins.

The whole crisis has caused a very large swing from one extreme to another, the moving pendulum leaving behind much collateral damage: credit’s gone from very loose to extremely tight overnight.

Some people who had access to a lot of credit will correctly have a lot less, and that on dearer terms. But there are also perfectly worthwhile businesses and individuals who are also caught in the meat grinder of indiscriminate reduction of loan balances. Times are bad, and any efforts to extract more revenues from customers, even if it is blood from a turnip, or worse, even if it puts a viable business under, is warranted.

Silly me to have been so gullible, as I now stand confused about what should be done and how the economy should be run. It doesn’t help that I keep reading stuff like this to feed my migraines and sour stomach bouts.

How This Economic Crisis Is Breaking Financial Rules

What stance do I take now, as a die-hard pro-business supporter? I had placed my faith in the “powers that be” and didn’t think I’d ever see these levels of corruption, unchecked greed and blatant mismanagement in a first world country on this grand a scale (yes, I say this as someone who’s no stranger to the machinations of the third world, where corrupt ineptitude is rampant). This stuff happens, sure enough, but it happens in another world, and under the covers.

But there’s no hiding the ugly anymore. All I can see now is just how the ruling class has done a number on the working masses. And for the millions of people who followed the financial rule book throughout their lives to meet a horrible end to their futures because of the incompetent, morally degenerate few — well, I can say I’m beyond disappointed, and have crossed the line to feeling outrage and disgust.

Yes, this crisis is breaking all sorts of rules, including those I’d consider as long-standing successful personal financial tenets. Responsible approaches to personal finance don’t have a chance against a crisis of tsunamic proportions:

So let’s see — doing the right thing by scrimping, saving, investing, diversifying, doing proper asset allocation, avoiding market timing, indexing, and hedging against inflation through equities, even doing your job well will no longer guarantee you a splendid, worry-free financial future. Not when a “once in a century financial event” can just come by and rob you off the stuff you worked so hard for; not when someone “up there” can change the rules for you, just like that.

I didn’t necessarily see it coming, but some of my readers here have: I see just how observant readers have been, as they’ve shared their insights on the causes and consequences of the subprime mortgage financial crisis, the pros and cons of financial bailouts, and the relevance of market timing during a stock market bear and the current investment climate.

The Economic Crisis Calls For Faith: Do You Have Any To Spare?

Perhaps I’ve placed far too much faith in the integrity of our political and business leaders and trends in modern history to believe that our financial system was strong enough (and people were smart and honest enough) to absorb any shakeups, shocks and imbalances that happen. I still have hope, but recent events continually call to question my position in this matter.

Not long ago, I had asked: who’s to blame for the subprime mortgage mess? I said then that everyone here had a hand in this (from the mortgage lenders to the developers to the Fed to ignorant homeowners), but in reality, I’m now seeing where the bulk of that blame should go. It should be clear by now who should bear the brunt of your harsh judgment: follow the money.

Sure we (as the little people) can’t really do much about this (except whine, rant and call the villains out), but with more discussion, we can spread awareness of these ridiculous affairs. What I got out of this is that there’s little out there we can count on and few people we can trust when it comes to our finances. A sobering thought. Do you think there are really any lessons and takeaways here for the future? Do we even have much of a future the way it’s been mortgaged?

I welcome your thoughts on this matter. Fire away!

This is a post from The Digerati Life.

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Could the failure of the “Big 3″ cause a depression?

That’s what a Chrysler executive claims:

“We’re on the brink with the U.S. auto manufacturing industry,” Press told The Associated Press in an interview. “If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it’s a huge blow. It could trigger a depression.”

I’m not sure about that but I am sure that it’s in this executive’s best interest to paint as bleak of a picture as possible in order to get his bailout. What do you think?

I’m sure failure would not be good. But, as we’ve talked about before, we can’t just give money to the automakers and allow them to carry on business as usual. Big changes need to be made and now is as good a time as any to make those changes. These changes have needed to be made for years but the current crisis really brought them to light.

Please weigh in with your opinion.

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I’m really excited for my wife.  She showed some of her quilt patterns to the owner of a local quilt store, and the owner has decided to give a trial run to ten of her patterns!  She loves designing quilts so this is a big deal.  She’s also gearing up for a craft show.  A few of her patterns are here, and she blogs about quilting as well.

Here are some posts I pieced together from the great blogs in my reader:

• Mrs. Micah talks about anchoring as it applies to credit card minimum payments.
• Get Rich Slowly shares almost three dozen make-it-yourself gift ideas from his readers and other sources.
• Paid Twice gives five concrete tips for paying yourself first.
• Money Ning combines financial and physical well-being with this post.
• Green Panda Treehouse saved money with her own cable-phone-internet bundle.
• Smart Spending lists a number of Black Friday deal sites.
• Wisdom Journal offers some sound advice for weathering the dark economic cloud.
• Think Your Way to Wealth considers whether $2 gas is good or bad.
• Five Cent Nickel reports on the 2009 tax brackets.
• Don’t Mess with Taxes celebrates three years of tax blogging.
• All Financial Matters picked up on the guaranteed retirement account movement.  (Also known as Social Security 2.0.)
• Free Money Finance has a guest post on giving generously during hard times.
• The Simple Dollar posts on investing in skills for the slippery slope down.
• Chief Family Officer is very thankful for her family’s emergency fund.

Mighty Bargain Hunter’s Carnival participation:

• The Digerati Life included my income streams post in last week’s Carnival of Personal Finance.
• Money Ning included my forget the lolcats post in this week’s Carnival of Personal Finance.
• Simply Forties chose my basics of debt reduction post as an Editor’s Pick for this week’s Carnival of Debt Reduction.  Thank you!

Have a great week!

I no longer have a job to worry about (today, I’m self-employed and have other problems…), but allow me to share my own job layoff story with you from way back when.

Scary things are beginning to happen around here as the harsh realities of recession begin to hit closer to home.

At this time, I’m personally encountering more and more people who are hurting because of the effects of the shrinking economy. Here in Silicon Valley, there’s practically nobody I know now who isn’t either laid off, worried about being laid off in the near term, or is in the middle of an active job hunt. Just last week, a dear friend was involuntarily released from his job, while others are debating whether they should take some work time off because “business is slowing down” and they’d rather prepare for what they think is the inevitable.

My Own Job Layoff Story

What I’m seeing here is a much more broad-based recession than the one I remember in 2000. Seven years ago, I was laid off from my position at a Silicon Valley startup because of the dot com bust. The company I worked for imploded painfully after 4 waves of lay offs. I stuck with the company till the bitter end, being one of the core managers and early employees of the company, so I had to participate in the layoff process from both sides of the desk. I had to lay off people in the first 3 waves, and finally, as was expected, I was let go on the last wave as the company itself shut down altogether. It was definitely a sad and stunning process to live through, especially since it was one place I truly enjoyed working 14 hours a day at . But those are the risks and vagaries of startups. Startups and recessions prove to be a lethal combination, unfortunately: they just don’t mix well.

So as the recession hits, we’ve gone from foreclosures, tighter credit, plummeting housing prices, failing banks, crashing stock markets to the dreaded layoffs. The last thing that stands between us and the food line is our cash flow, and once that’s at risk, it’ll be like landing in the final circle of doom in Dante’s Inferno (for some). Speaking of lethal…. More and more are resorting to extreme behavior when their livelihood is threatened. Yet one more tragic indicator of how far this economy has fallen?

Job Loss Tracker and Where To Get Your Next Job

More signs and symptoms of our weakening economy include this Job Layoff Tracker from Techcrunch that I stumbled upon recently. But don’t panic just yet, as there are many options available to those on the lookout for new jobs, which I promise to cover in detail sometime this week. In the meantime, if you’re needing a job or wanting to be proactive about your employment situation, you can check out a few online resources such as Job.com, Resume Rabbit and Snag A Job. It never hurts to be one step ahead of the game.

This is a post from The Digerati Life.

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Oil dropped another $3.12 to $43.67…the lowest level since January 2005.

If someone would have told me back in July that oil was going to be trading in the 40s by the end of the year, I wouldn’t have believed them. It’s simply amazing how quickly things can turn.

Of course the bad side to all this is that now there’s less incentive for finding alternative fuels. I guess all those plans will get put on the back burner until it makes financial sense to go for them.

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Finance Findings is Binary Dollar’s periodic link dump.

• Does Achieving Wealth Make You ?Upper Class?? Facts About Class [Digerati Life]
• All the Free Shavers [Sun’s Financial Diary]
• Car Hunt And Enterprise Rent-A-Headache [Tao]
• The 100,000 Wedding Gift? [Lazy Man and Money]
• Mutual Fund Distributions Explained [Generation X Finance]
• Money Mistakes To Avoid - Misunderstanding Risk [Money Smart Life]
• Identity Theft Tips from Frank Abagnale [Blueprint]
• Amazon Deal on the New Harry Potter Book [Five Cent Nickel]
• Mind Over Money — My House is Worth More if I Think It’s Worth More [Free Money Finance]
• IQ and richness [Mighty Bargain Hunter]
• 2007 State Sales Tax Holidays for Back-to-School Shopping [Raising 4 Boys]

Send your submissions for Finance Findings to henry@binarydollar.com.

Sponsor: Parlayer - Henry and Matt blog about sports and stuff.

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I read somewhere over the weekend a letter to the editor of some newspaper (I can’t for the life of me remember where I read the comment) by a guy who was lamenting the fact that investors get screwed no matter who is president. His letter mentioned that some stocks do well when a Republican is in office and other stocks do well when a Democrat is in office—he just didn’t know which ones.

I have a suggestion:

Buy the index and don’t worry about it.

Yes, we can make more money IF we know which stocks are going to outperform the market. The problem is either WE DON’T KNOW or it’s hard to know. Therefore, buying the index is the prudent way to go because you don’t have to worry about picking stocks (unless that’s something you love doing).

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Well we're a few weeks beyond Hurricane Ike, and our collective attention has turned from tropical storms to financial ones - a topic that I'll write about shortly. 

Most of Houston is back to normal.  Among the properties that I own we suffered a few downed fences and an uprooted tree or two, along with a tenant who appears to have disappeared and abandoned her lease (I'll write about that as well).  All and all I've been pretty lucky - and thanks to those of you who sent your best wishes. 

But take a look at the JPMorganChase tower in Downtown Houston.  Looks like they've cornered the local plywood market. 

Below is an email interview with Brent Kessel, author of It’s Not About the Money: Unlock Your Money Type to Achieve Spiritual and Financial Abundance*, a book that I reviewed earlier this week.

Why did you decide to write a book?

Without wanting to sound cliché, I never really feel like a made the decision. I had observed so many people suffering around financial issues, and barking up the wrong tree, as it were, that I felt compelled to write it. It was one of the easiest things I?ve ever done professionally.

What do you think is the number one reason people fail financially?

They don?t understand what payoff their financial habits are giving them. If they?re chronic overspenders, there?s a need that their purchases are filling, an emotional need, and buying purses or cars or new furniture allows them to feel good about themselves for some time. In order to change the financial habit, they have to replace the payoff with some other payoff that fills the same need. But most people never question what?s motivating their financial habits.

You say in your book that the ideal person would be balanced among the eight financial archetypes. How do you recommend a person obtain that balance?

It?s very difficult work, but very rewarding. It?s very hard to answer this question in a generalized way, which is why there are about 60 highly customized exercises in the book, so that each archetype can create the balance that they need. One way to say it, is that we often need to cultivate the positive attributes of the archetype which is most dormant in us. So for me, that?s mostly been the Innocent. Being willing to have faith and trust that things will work out, without putting quite so much focus on the numbers, given that I?m a Guardian/Saver/Empire Builder predominantly.

Which of the eight archetypes do you think is most prevalent in today?s society?

Pleasure Seeker and Innocent were prevalent until Summer 2008, which is why we?re in this mess. Today, it?s much more Guardian and Saver. People seem to be returning to the values of the ?30?s ? 50?s, but we?ll see how long that lasts.

How do you explain the archetypes to your clients?

I usually don?t. This is part of why I wrote the book, so that they could read the complete story about each archetype in there. As an example, I?ll more intuitively give a client ?homework? to spend more money on things which bring sensory pleasure, in the case of an overly frugal Saver, or have an Innocent hire a bookkeeper or sign up for an internet-based service like mint.com which shows them where the money?s all going.

What is the typical response from your clients once they learn about the different archetypes?

?Wow, I had no idea you had me so pegged.?

Do you ever have clients who deny the findings?

?Not really. The most I?ve had is someone who felt they couldn?t find themselves in any of them, which is usually a sign of the Innocent. Some people feel that they?re a balance of many, or that it?s constantly changing. Both of these are good signs.?

Once you know a client?s financial archetype, how do you cater your financial advice to fit the archetype?

Again, this is very customized. The Appendix of the book has specific financial planning recommendations tailored to each archetype, and it?s many pages, so it?s hard to summarize. But one example might be to have a Pleasure Seeker sell their vacation home and art collection and deploy that money in more income-producing assets (which don?t produce sensory pleasure), like stocks, bonds, or income properties.

Since writing the book, do you find yourself trying to figure out the archetypes of the people you meet?

Sometimes. It?s mostly intuitive though. If you go to my first MSN story, there?s a video of me walking around Central Park interviewing people and guessing their archetypes. Kind of humorous. The other stories there may give you some good blogging ideas too.

Finally, is it natural for a person?s archetype to change over the years or do people tend to stay the same throughout their lifetimes?

The healthiest people I?ve met with money are able to express different ones at different times. But there?s a whole class of people who, especially when the going gets tough, go back to their tried and true archetypes. Financial habits are hard to break, because unless we very intentionally try to cultivate those which have been dormant, they?ll stay dormant.

Thanks, Brent!

Also, I want to go ahead and announce the winner of the “It’s Not About the Money” book giveaway. There were forty-nine entries and the randomly-selected winner was commenter #31, Walter. Congrats, Walter. I hope you enjoy your book!

I have another giveaway coming up soon. Stay tuned…

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It’s one of those “deep-thought” days when I switch myself into a philosophical mode. Sometimes, this results in some extreme contemplation about the things I have been generally doing in my life. This time it was all about financial contemplation. The choice of the title is obviously inspired by the book “Zen and The Art of Motorcycle Maintenance” by Robert Pirsig.

Before I start my rant, let me give you a very brief summary of what is the concept of Zen. It essentially means going back to the basic fundamentals, starting from zero, and building your way up (Robert Pirsig’s Zen, not the original Zen). This much knowledge is sufficient for the purpose of this article. If you want to read more about this concept click here and here.

Your financial life is a big machine with a lot of odds and ends thrown into it. To maintain this beast, you require some kind of financial prudence. Now, if there is a problem with this machine, the *Zen* way is to start looking at some fundamental issues. To do that, you have to take it apart and try to put it back together. In doing so, you will realize the significance of each component. This is exactly what I will attempt to do in the following.

I have listed some potential fundamental roadblocks that defeat financial prudence. Along each factor, there is a short line of description that sort of adds financial relevance (it’s deep…you could apply this to many other issues in life). Please note that these are from my personal experiences. I will encourage readers to find some peaceful time and do this exercise for themselves at least once.

1. Greed: This is foremost cause of most financial troubles. We want more, and we just don’t want to stop. Our greed not only puts us in the holes but also makes other people’s life miserable.
2. Lack of self-control: Sometimes we acknowledge our greed, but we just can’t stop spending any how. Credit cards don’t swipe themselves, we swipe them.
3. Lack of foresight: Greed also blinds our foresight. We buy stuff, but we simply fail to estimate how much it is going to cost us in the long run. Don’t buy an elephant just because it’s being offered for zero down and no payments for 12 months.
4. Underestimation of consequences: Sometimes, we have all of the above, but we grossly underestimate the financial repercussions of our decisions. You can also term this as too much optimism or lack of proper judgement.
5. Ignorance: Ok, people don’t like to acknowledge this, but this is true. How many of us really know how credit card payments are calculated? Whether your card is a charge card or a credit card? Whether not paying telephone bills affect your credit score? What is the grace period on your credit cards?
6. Inability to recognize a problem: Sometimes we don’t realize that we have a problem. At times we don’t recognize the *right* problem. If you earn $120K a year and still live paycheck-to-paycheck, low income is not your problem, it is something else.
7. Inability to learn from previous mistakes: Ok we made that late payment once and paid for it with heavy fines and increased APR. What did we do about it? did we make changes to the way we do things to avoid making the same mistake again?
8. Lack of organization: Oh ! I forgot to make the minimum payment. Oh ! forgot to mail in the rebate. Oh! I thought this due date was for the other card that I have. Oh ! I thought I had more money in my bank when I wrote that huge check for that expensive television.
9. Sheer laziness/carelessness: Ah!..what’s the hurry, I will do it later. I have seen countless people not willing to check out more than one store for some of their large purchases…the reason: “I am bored already”. Here is another one I have heard recently, “I don’t know anything about what kind of 401K plan our company offers. I have been planning to talk to HR about it, but I find it very boring to discuss this financial stuff”. What?!
10. Overconfidence: This is really dangerous when coupled with ignorance. Leads to situations like “I can make this mess and then I will easily bluff my way out of it”
11. Circumstances: This one is tricky. There are two types of circumstances. Type 1: self-inflicted; these are due to some or all of the above reasons. Type 2: sheer bad luck; these are just out of your control: medical expenses, car trouble, job loss, failure to garner enough votes for the economic bail-out package, etc.,

Except “Type 2″ circumstances, there is a scope for improvement in all of the above. We just need to look into ourselves before point fingers for our financial mess. Once you do that, you will be an expert in the art of financial prudence, and hopefully stay out of trouble for a long time to come. This is more philosophy than practicality, but you can give it a try..it may work for some of you.

In all humility, I am guilty of some (almost all) of them at some point or other, but I am learning.

It's a rhetorical question, I think.  Or, maybe not.  If I have already decided the answer, does that make it rhetorical.  Because here's the answer:  absolutely not.

Several months ago, I wrote a post about the wonder juice, Mona Vie.  It's a juice made with acai berry and other exotic sounding things that you couldn't possibly grow yourself.  You see, you would have to get the magic seeds from the depths of the Brazillian rain forest.  Ever wonder why the most healthy things in the world only grow in the far reaches of Brazillian rain forests and Himalayan mountain tops?

Anyway, I analyzed the business plan offered to those wishing to be part of the Mona Vie pyramid.  Er, I mean, take advantage of the exciting business opportunity.  Looks to me like it is possible to make some money.  Of course, I don't wish to view all of my friends and family as sales prospects.  So, I guess I wouldn't be successful.

Not surprisingly, the comments were one of two things.  Either it was someone telling us all that Mona Vie cured their high blood pressure, insomnia, baldness, made them taller, grew back their amputated leg, etc.  The other type of comment was that Mona Vie made them broke, ruined their marraige, caused them to be impotent and friendless.  Tragic, really.

So, I guess I shouldn't be surprised that it was that same post that instigated my first bit of hate mail.  Here's the email that I found in my inbox this morning:

"It seems that before you question the business of Mona Vie that you would at least find out what pv means.  Hey, here's a concept why don't you drink it for a month and then make your claims.  How long do you have to take vitamins before feeling any difference?  Do vitamins help lower your blood pressure because that is what Mona Vie has done for my mother.  Don't ruin it for everyone else who can benefit from the nutritional value of Mona Vie."

It was sent from the catering department of a golf course.  I wonder if she's slipping some acai berries into the fruit tart.  Lucky golfers.

As things stand in early 2007, estate and generation skipping (GST) taxes will be repealed in 2010 and reinstated in 2011. And given that Democrats now have control of the House and the Senate, experts are predicting that the permanent repeal of the estate tax is unlikely in the next two years.

At present, for 2007 and 2008, the estate tax exemption is $2 million per person, rising to $3.5 million in 2009, repealed in 2010, and then the tax returns in 2011 with an exemption of $1 million. Given existing laws, experts suggest that using life insurance to pay for potential estate taxes is a very viable solution.

According to industry reports, the number one product sold for estate liquidity today is universal life with a secondary guarantee. In short, this is a policy whereby insurers guarantee the insurance benefit on a universal life insurance policy even if the cash value in the policy goes to zero. This is known as a ?secondary guarantee.? The policy owner agrees to pay a premium which is often less than a whole life insurance premium and if the policy owner keeps-up payments, the policy?s death benefit is guaranteed to age 100.

Policies with secondary guarantees are often used for estate planning where the crucial component is a guarantee of the death benefit and cash value build-up is secondary.

Survivorship life insurance (also called joint and survivor life insurance or second-to-die life insurance) can also be used for estate planning to create the cash liquidity to pay the estate taxes. However, in order for the insurance death benefit to avoid both income and estate tax, the policy must be set-up properly within an Irrevocable Life Insurance Trust (ILIT).

So what in general is universal life, what are its advantages and disadvantages, and when should it be used? According to Tools and Techniques of Life Insurance Planning, universal life ? which was first introduced in the late 1970s — is often referred to as a ?flexible premium,? ?current assumption,? ?adjustable-death-benefit? type of cash value policy. It?s flexible premium because the policy owner can pay whatever premium they wish within a given range and adjust later as needed. Policy owners can even skip premium payments provided there?s enough cash value in the policy to cover policy charges. It?s called a current assumption because current interest rates and current mortality and expense charges are used to determine the cash value of the policy. And it?s called an adjustable death benefit because the policy owner can lower the death benefit at anytime and can raise it with evidence of insurability.

Given this flexibility, universal life is a useful product should a person?s estate tax liability rise or fall with the Congressional tides. Typically, a universal life is best suited for long-term coverage needs; while a non-renewable term policy will generally be more cost-effective for short-term needs. Generally, however, such policies work best when flexibility is needed and policy owners need to reconfigure their premiums or death benefits.

According to some planners, the biggest advantage of using guaranteed universal life is this: The policy owner pays the least expensive premiums to guarantee a lifetime death benefit. The policy owner can also adjust the premium. If, for instance, there?s enough cash value to cover the mortality charges, the policy owner could even skip premium payments.

However, caution should be followed in skipping or delaying payments on these contracts since the ?guarantees? could be impacted. Even premiums received during the grace period could affect the accumulated values and ?guarantees.? Policies differ on this and need to be reviewed before any change is to be made.

The policy is also transparent ? the policy illustrations and annual reports break out and report each element of the policy, such as premium, death benefit, interest credits, mortality charges, expenses and cash value, separately.

Universal life policies also offer two death benefit options, one that is similar to a traditional whole life policy and one that is like a traditional whole life policy with a term rider. The first, a level death benefit; the latter, an increasing death benefit.

When selecting a universal life policy, it?s especially important to consider the amount credited to cash values. The prospective policy owner should know how the insurer determines the amount credited to cash values. The amount credited to cash values depends on the expenses charged against the policy, the mortality charges assessed against the policy, net investment yield earned by the insurer on its portfolio investments and the method used to allocate interest to various blocks of policies.

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