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Life Insurance 101 – Part 2: How does life insurance work?
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Parking Your Cash
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How Not to Pay for a House
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More Social Security Back Doors
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Frozen HELOCs

Life Insurance 101 – Part 2: How does life insurance work?

Today I’d like to offer a simple explanation for how life insurance “works.” This discussion will also lay a foundation for discussing the difference between term and permanent life insurance. The first post in this series, on the reasons someone might need life insurance, is worth reading if you’re not sure whether you need life insurance.

Suppose that you’re a 20-year old male and you’ve decided that you need some life insurance.  For the purpose of this illustration, let’s assume you’ve determined that you need $1,000,000 in coverage for an indefinite period of time.  Let’s also assume that you …

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Parking Your Cash

Parking your CashIf you have a longer-term CD that is now coming to maturity, you’ve probably been disappointed to discover how much interest rates have dropped since you last locked in your CD rate. What are the best options for those with short-to-medium-term cash to invest these days?

My first observation is a warning: you should scrutinize closely any investment that is not a straightforward money market fund or CD.  Why?  Because there are quite a few short-term cash “alternatives” being touted right now; among these are a variety of ultrashort bond funds, bank loan funds, and exchange-traded notes.

With interest rates …

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How Not to Pay for a House

How Not to Pay for a House: With PlasticMany homeowners struggling to keep up with mortgage payments are probably using their credit cards to make ends meet. Now, apparently, people who can’t pay their mortgages have a new alternative: they can charge their monthly mortgage payments to a credit card directly. I wish I were making this up, but I’m not.

Paul Jackson at housingwire.com has noted various firms that let people make mortgage payments with plastic.  Last year, American Express, which should know better, began piloting a charge-your-mortgage-payment service in collaboration with two mortgage lenders that are (surprise!) now down for the count.  Actually, that’s not quite …

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More Social Security Back Doors

I previously discussed a loophole in the Social Security law that allows current retirees to pay back the benefits they’ve received (without interest) and restart the Social Security clock at a higher benefit level. Recently, I discovered two additional unusual Social Security strategies.

Boston College maintains a Center for Retirement Research that publishes all sorts of interesting working papers and studies about retirement.  Recently, the center published a short worksheet discussing three Social Security strategies that it dubbed “Strange, but True.”

The first item is the scheme that I discussed back in May; it arises from a loophole that …

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Frozen HELOCs

Frozen HELOCsIt wasn’t that long ago that mortgage lenders were eager to extend credit lines to anyone with a pulse and a property title. Alas, the industry’s mood has turned with the swooning of housing prices: frugal caution has displaced wild abandon. Many homeowners, unaware that their lines of credit could be curtailed summarily, have been unpleasantly surprised.

Countrywide Financial, infamous for its subprime loan exposure, led the way by freezing over 100,000 home equity lines of credit (HELOCs); in many cases, the borrowers were not delinquent, but their levels of home equity had dropped due to price declines.  Countrywide’s new …

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