Insurance-life

Deborah Firman filed suit against Becon Construction and Life Insurance Company, a Cigna company, for more than $200,000 it's refusing to pay for the death of Gilberto Espinoza, who died on Sept. 20, 2008, in a single-vehicle drunken driving accident in Trimble County, Ky. Cigna refused to pay the claim, calling Espinoza's injuries "intentionally self-inflicted."

The recession may be over, but many families are still feeling the effects. Unemployment is at a record 10.2% and wages are flat. The cost of gas is taking a bigger bite out of paychecks, and home foreclosures were one fifth of home sales in September.

To help, WalletPop is launching an occasional series in which your personal financial questions will get answered by our experts. Leave your questions in the comments section below.

Question: As a single, self-employed mother of two, I need to buy life insurance. How much should I buy?
--Laurie W., 51, psychologist

Kiplinger.com, the website of Kiplinger's Personal Finance, recently published a round-up of ways you can lower your insurance costs. While some are spot-on, others could actually cost you more under certain circumstances. Here's a look at their advice. We've spotlighted five solid tips as well as a couple of additional ones that come with caveats.

Shop around. This is good advice for any type of insurance. If you've had the same policy for years, see if another insurer can match or beat the cost. If you've incurred any new expenses (such as adding a teenage driver or an inground pool), definitely shop around. While you've got that policy out, take a look and see if it still meets your needs. You might discover that you were over-insured.

Ask for discounts. For car insurance in particular, this is a biggie. If you drive fewer than 7,500 miles a year, carpool or are willing to take a defensive driving course, you might be able to net a lower rate. Also, tell Junior to keep his grades up; students who get Bs or better are often eligible for a discount.

Investors large and small are looking for a new way to return to the juicy profit level of sub-prime's heyday, and one product beginning to gain popularity is life settlement funds, AKA Grim Reaper funds.

In a life settlement, investors pay the elderly cash today in return for the money from their life insurance when they pass. Yes, it sound ghoulish, but when has that been an impediment on Wall Street? With $26 trillion of life insurance currently in effect, the prospects are enormous.

In the same way that mortgages were bundled and turned into securities, companies such as Credit Suisse are buying up quantities of policies to create funds. Investors are hoping for returns as generous as 20-40%. Last year, seniors sold life settlements with a face value of $11.8 billion. But I have some serious reservations above this investment vehicle.

You'll recall that the sub-prime mortgage fiasco was due in large part to fraud on behalf of those selling mortgages to anyone with a pulse, regardless of qualifications. Viaticals were a precursor to life settlements. In the 1980s, investors bought the right to life insurance settlements from AIDS victims who they expected would die soon, never expecting that the cocktail would kills their profits.

This seamy business attracted scam artists like flies to a dump. In a 2000 Florida court case the jury found that almost half of the viaticals offered as investments by companies in that state were fraudulent. Can the life settlement industry avoid the same fate?

Accurately projecting the life span of those from whom the policies are purchased is a key to the profitability. What happens if our medical care changes substantially? What if we cure cancer? What if the swine flu turns dramatically more deadly? These factors add risk to the investment. The industry plans to manage these risks by doing a better job of vetting those buying and selling the settlements, and creating bundles of policies that include a wide variety of diseases and maladies.

The return on investment also depends on the dependability of the insurance companies to pay claims. As we've seen, the fortunes of these companies are deeply intertwined with the general economy, and if some were to go bust, so would the life settlement funds that depend on their payments.

Finally, there's the question of ethics. Some people (including yours truly) would be very uncomfortable knowing that widespread, unexpectedly early death would result in a windfall for them.

Ironically, one of the biggest customers for such a product? Public and private retirement funds, which already stand to benefit most from early death.

Don't be surprised if, in a few years, pundits begin to talk about a death bubble. I just don't want to be on one. Or in one.

Back when she was a 16-year-old earning $7 an hour stocking shelves, Callie Rogers became the second youngest person to win the lottery in UK history.

She took home the equivalent of $3.67 million -- and promptly went on a "never-ending spending spree," she told News of the World. "I was spending a fortune on cocaine, a nasty evil drug which tears your life apart. I'll be honest, about £¼ million of my win has been wasted on it. Most of it wasn't for me, it was for my ex Nicky Lawson who was addicted to it." The story has also been picked up by The New York Daily News.

She also wasted money on lavish vacations, loser boyfriends and breast implants.

She's attempted suicide and has moved back in with her mother. She's afraid that her kids will be taken away from her.

It's actually amazing how common these stories are. Awhile back, BankRate.com ran a feature story on eight lottery winners who lost their millions. In a way though, it shouldn't be surprising: If you're too stupid to understand that lottery tickets are one of the dumbest things you can buy, you're also too stupid to hold onto millions of dollars for more than a few years.

These Lottery losers also expose a key global financial literacy shortcoming. Studies have shown that close to 80% of NFL football players are bankrupt or broke within two years of leaving the game.

So you have to ask yourself: If a huge chunk of people who accumulate a huge amount of money can't manage to hold on to it, what does that say for the financial futures of average people who never run into a windfall?

Of course, this story has its own moral: Stay away from lottery tickets, cocaine, loser boyfriends, and boob jobs.

Karen Knee's insurance problems began with her 2005 New Year's resolution: addressing her nagging health concerns. First on her list was to get those little benign cysts on her scalp removed. Blue Cross pre-approved the procedure, and it went off without a hitch -- at first.

But then the insurer retroactively canceled her policy, claiming that Knee (at right), of Orange County, Calif., had failed to disclose a pre-existing condition, and saddled her with a $30,000 medical bill.

Back in 1983, Ola Ray was a 22-year old model and aspiring actress. Her greatest accomplishment was an appearance as Playmate of the Month in the June 1980 issue of Playboy.

That all changed when she was Michael Jackson's love interest in Thriller, the game-changing music video that hit MTV on December 2, 1983. The 14-minute epic was named the "most successful music video of all-time" by the Guinness Book of World Records in 2006, and has sold over 9 million units and counting.

But Ms. Ray doesn't think she's gotten her cut. The Associated Press reports that "Ray's attorney filed paperwork in Los Angeles last week stating she is a creditor to the singer's estate and is owed an undetermined amount of money. The actress sued Jackson in April, claiming he had failed to pay her royalties that she was due from the "Thriller" video for the past four years."

Now the MJ's death has given a nice boost to the video's sales, she's probably owed far more money than she was when she sued back in April.

According to her Wikipedia entry, Ola Ray has never matched the success of the Thriller video, and doesn't have any film credits since 1987.

Betsy McCaughey is a crazy lady, in that when you hear her spew her political rhetoric that health care reform will kill senior citizens, you wonder if she's not channeling Joe McCarthy. This woman has been making quite a living scaring people out of supporting health care reform, as James Fallows explains in The Atlantic:

"In the early 1990s McCaughey single-handedly did a phenomenal amount to distort discussion of health-care policy and derail the Clinton health bill. She did so through an entirely fictitious argument about what the bill would do. You can go back in the records here, here, and here, but the issue boils down to this: She claimed that the bill would make it illegal to go outside the government plan for coverage or pay doctors on your own. If a doctor took money for such outside-the-system services, she said, the doctor could go to jail. That was a flat-out lie. (One of the very first clauses of the legislation said, "Nothing in this Act shall be construed as prohibiting the following: (1) An individual from purchasing any health care services.") But her imaginary "no exit" claim was repeated so often by so many "respectable" media sources that it effectively became "true" and played a large part in stopping the bill. It would be as if the "birthers" had persuaded John Roberts to say, "Wait a minute, let's take another look at that birth certificate" and decline to swear in Obama on inauguration day."

And she's baaack, spreading the false rumor that the latest health care reform proposal includes a government death panel! It doesn't.

Luckily we have Jon Stewart to point this out and stand up to McCaughey's fancy politician footwork, in other words her blatant self-serving, careerist, narcissistic lies. Stewart dedicated an entire episode of the Daily Show to interviewing McCaughey, since her lies were so destructive the first time the government tried to fix the abysmally broken health care system.

Below are three videos of their debate, and each one gets hotter and hotter.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Betsy McCaughey Pt. 1
www.thedailyshow.com
Daily Show Full Episodes Political Humor Healthcare Protests

The Bureau of Labor Statistics reports that workplace suicides surged 28% in 2008 -- perhaps driven by financial stress, job insecurity, and the extraordinary pressure that so many Americans have found themselves under.

Overall though, the death on the job news is good. Workplace fatalities fell by 12% -- but could that have been driven by high unemployment and layoffs in high-risk construction fields that shed jobs as the economy contracted? The USA Today reports that "The 5,071 workplace fatalities recorded in 2008 was the lowest number since the agency began tracking the data in 1992.

Of course, that number includes 251 suicides, the highest number since official reporting began."

She smoked two packs of Marlboros a day every day from age 16 to her death in her 70s, from lung cancer, natch.

So was Shirley Barbanell or Philip Morris USA responsible for her habit... and the eventual grief of her husband, Leon Barbanell? A jury of six deliberated in Florida for about a day and delivered the culpability in percentages and dollar figures. Philip Morris is 36.5% to blame; Shirley retains 63.5% of the fault. But as for Leon, he's above reproach for his wife's self-destructive oral fixation.

It's a good thing Shirley's now passed away, because her husband's grief has been valued at $5.3 million, and if I'm doing my math right, that makes her $3.365 million responsible. But perhaps we don't do things that way in the U.S.; the financial responsibility is only picked up by the company that makes the aptly-nicknamed "cancer sticks." So Phillip Morris has been ordered to pay $1.9 million in punitive damages because of a "design defect" and breach of warranty.

Unsurprisingly, Phillip Morris is appealing. It's part of the legal curiosity known as "Engle progeny," in which a class action case was "de-certified" (in other words, smokers and their families could now file cases as individuals) and some of the facts from the lawsuit filed by Miami Beach pediatrician Howard A. Engle regarding the link between smoking and disease could be applied to so-called progeny cases.

While the Engle progeny makes for an easier win for the families of smokers, it also makes for a number of reasons for appeal. And if anything is a sure thing (other than that smokers will eventually die, and something about taxes...) it is that tobacco companies will take any chance at appeal.

Angry militias, death threats against our President and his family, swastikas and loaded guns--is this what a debate to fix our broken health care system should look like? Everyone can agree that the system is in crisis, except for the people who profit from it being broken--the insurance companies and the politicians who rake in their generous support. So why all this hostility and public shows of utter stupidity? Who's behind scaring people into thinking health care reform will actually be bad for them, to the point where they believe the ridiculous "death panels" rumor?

Health care reform isn't scary, it's the industries and crooked politicians trying to control the debate and manipulating people's emotions that's terrifying. (Swastikas, really?) I don't know about you, but I'd like everyone to be covered by health insurance, have an affordable deductible, and be able to see the doctor they need, when they need to.

Walletpop Big News, our new weekly filmed radio show, spoke with author Bob Cesca, of the Huffington Post, who's been closely following the bag of tricks unleashed by the insurance industry and their pet politicians. Hear what he and our panel of writers had to say.

What would you pay to lie eternally on top of Marilyn Monroe?

In what has got to be one of the most obscene gesture yet in this recession, a Los Angeles woman is proving you're not even safe in death. She's putting her husband's prime crypt real estate, directly above the bombshell blonde, up for sale on eBay, with bids opening at $500,000, reports the LA Times. Is nothing sacred?

The Pierce Brothers Westwood Village Memorial Park cemetery is home to a slew of celebs including Merv Griffin, Natalie Wood, Dean Martin, Mel Torme, Truman Capote, and now Farrah Fawcett.

WalletPop's Lan Nguyen chats with T.J. Stiles, author of The First Tycoon: The Epic Life of Cornelius Vanderbilt (Knopf), on how the Commodore became one of the wealthiest and most powerful men in American history. Stiles recounts and explains how Vanderbilt catapulted himself from a working-class Dutch background to wealth so vast that if he sold all his assets at full market value at the moment of his death in 1877, he would have taken one out of every twenty dollars in circulation, including cash and demand deposits.

How should you spend your retirement money? For years, senior citizens have been overspending and accumulating more debt, according to a recent study by Demos, a non-partisan public policy group. Such overspending can lead to financial death, or as one unusual story shows, lead to complications with the other kind.

The BBC News reports that, in January, Joan Cunnane died at age 77 of natural causes at her home in England. She had bronchial pneumonia and cancer and lived alone in unusual conditions.

As if California's economy wasn't dead enough, the Los Angeles Times is reporting that the Los Angeles County Coroner's office is getting as crowded as Disneyland on Seniors Day.

With families struggling to meet their bills, fewer have the money necessary to pay for the burial of their loved (or at least tolerated) ones. Twenty-five percent more bodies have gone unclaimed this year, sending subsequent cremations up from 525 to 712.

In Baton Rouge, Melvin Stewart's 15-year-old son Melvin passed away recently, felled by cancer. The Stewarts were facing a $5,000 funeral home bill to properly bury their son, a sum that was beyond their means.

Funeral director Hall Davis IV suggested they could save $300 by digging the grave themselves. (Does that seem like cold-hearted advice to you?) Members of the Louisiana State Troopers Association were so moved by this that they stepped in and paid the remaining amount.

Finally, the New York Times reported on the dramatic increase in home burials, a return to the death rituals of the frontier U.S.

By building the casket themselves, passing on embalming, showing the body at home and burying the deceased on family-owned property instead of a graveyard, a respectful sendoff can be done for a tiny fraction of the $6,000 spent on the average American funeral.