Insurance World

Every family should have a life insurance policy on at least one of the financial providers. A policy should always be in place in case one of the primary breadwinners passes away so that the family will be able to support itself if no other source of income is available after the breadwinner dies.

Estate or “Death” taxes can be as high as 55% when the insurance policyholder dies. Many families cannot afford to pay these steep taxes and still maintain the lifestyle that they are accustomed to. Therefore, we have compiled a few tips to help ensure that your family can maximize the benefits they receive from your life insurance policy - and avoid giving so much of it to the government.

First of all, you should know that a portion of your estate will be given to your beneficiaries with a tax exclusion. The number of dollars covered by the exclusion each year varies, but here’s a brief overview: in 2004 and 2005, the exclusion was $1.5 million per person. From 2006 through 2008, the exclusion is $2 million, and, in 2009, the exclusion is $3.5 million. The estate tax is repealed for the year 2010, but the tax returns with an exclusion of $1 million in the year 2011. Now, that can get confusing!

Because the government can take so much of your estate for taxes, it’s important to shield as much as possible with the use of a variety of Trusts. One such Trust is the Irrevocable Life Insurance Trust, otherwise known as the ILIT.

When you establish an ILIT, you will name a trustee to manage that trust. Your trustee can be your financial advisor or a beneficiary. Your trustee will purchase a life insurance contract on your life. Upon your death, the policy’s death benefit will provide liquidity of the assets in your Trust.

With your ILIT, you can control how the estate is divided and spent. Having the ability to control your own estate, post-mortem, may prove to be especially helpful if you have young adults who are going to receive a sizeable sum of money. You can, for example, enumerate which funds will be spent for education, which for costs of living, and which for other activities. Thus, you can allocate portions of your estate for any activities you wish.

You can also transfer ownership of the life insurance policy you already own. However, there are complications that may arise from the transfer. You will want to consult a qualified attorney to ensure that you fully understand how the system works. For example, if you die within three (3) years of transferring ownership of your existing policy, the life insurance policy will be taxed as part of your estate.

With the right help, figuring out how to handle life insurance (and your estate in general) doesn’t have to be difficult or complicated. Consult a qualified attorney for more information on how to set up your ILIT or other Trusts so that your beneficiaries can receive the most benefit from your assets.

Swinton Group, the UK’s biggest High Street insurance chain, today purchased the high street insurance intermediary business Budget Retail from the Budget Group.

The deal continues the growth strategy of Swinton, giving the company an annual income of more than Ј500m and consolidating its position as a leading UK insurance intermediary.

Swinton’s existing 350 high street branches (including those of its brand Colonnade, acquired in 2002) are now joined by 92 Budget branches offering home insurance, car insurance, travel insurance, pet insurance and most other forms of personal and life cover.

The Budget Retail brand will be maintained for 12 months, after which the branches will trade under one of the Swinton brands.

Patrick Smith, Chief Executive of Swinton, says: “This deal means that we have over three times the national coverage of our nearest competitor. We are within easy reach of almost everyone in the UK. This gives us a huge advantage over our major competitors who only offer telephone or internet contact.”

“Research shows that when customers need assistance with their insurance impersonal interactive voice response is strongly disliked by most people. Our professional teams, working right across the UK, give us a great opportunity to capitalise on our personal service operated through local branches either face to face or on the telephone. Our successful growth has shown the clear benefits of providing this personal service.”

All Budget branch staff will remain employed by Swinton. The total number of Swinton employees is now 3,000, made up of staff working in the branches, call centres and head office functions.

As part of the deal Swinton will also take over Budget’s taxi and motor-home units based in Warrington and Coventry respectively.

Around 230,000 policies will be added to the Swinton database and the combined operation will hold more than 2m insurance policies.

Patrick Smith added: “We have strategic plans to continue this growth and enhance our current business capabilities by increasing our customer base through further improvements in direct marketing, increasing our diversification of product and enhancing the relationship between our branches and our online business.

“We intend to keep all the new branches open as we believe that Budget’s coverage is complementary to our existing network and the increased capacity will allow Swinton Group to handle our planned growth and further service our customers’ requirements.

“Our model has great capacity for expansion and we intend to take on the giants of our industry and show that, by caring more for our customers, we can become the leading provider in the personal insurance market.”

Last year Swinton had a gross premium income of Ј440m and expects premium income to grow to more than Ј600m next year following today’s purchase. The company has made over 250 broker acquisitions during the past five years.

Cobbetts LLP acted as legal advisors and Swinton received advice from Ernst & Young.

For more information and for interviews with Swinton Chief Executive Patrick Smith, contact Andrew Spinoza or Jaime Markey   at SKV PR 0161 236 9909,