At face value, it seems almost silly to think that IPOs would offer a quality investment opportunity this year. The market obviously isn’t in its best shape, there’s less money out there to inflate the value of new stock offerings and we’re in what some have termed an “IPO drought”.

In fact, a recent CNN/Money article noted that the “current drought is the second-longest on record, and the number of withdrawn or postponed IPOs increased 62% to 120 in 2008 from 74 deals in 2007, according to data tracker Dealogic.”

So, why would anyone think that this is a good time to hop aboard the IPO train?

There are a few reasons why 2009’s IPOs might work out well for the companies involved and their new investors. We won’t be witnessing massive IPO volume, but the state of the economy and the companies that do go public will team up to create some interesting opportunities.

As strange as it might sound, current economic conditions could actually improve the quality and potential of new publick stock offerings. In headier times, borderline companies might opt to go public in hopes of raising substantial capital in a hurry. Knowing that investors in the current climate aren’t likely to take the kind of risks associated with those offers “thins the herd”. The companies who remain in contention are thus you might vote “most likely to succeed”.

That’s why you can find a little cautious optimism in the recent Renaisance Capital report on 2009 IPOs. The authors of that report (which is available in full here) state:

“Historical precedent suggests that IPOs in periods of low issuance can generate very strong returns as companies are forced to become more realistic with their proposed valuations in order to successfully raise capital, thereby creating opportunities for investors”

Ken Schacter at Red Herring, who remarked that after a bad 2008, the IPO scene for 2009 “can’t be much worse” interpreted the Renaisance report as evidence that companies with “decent fundamentals and realistic prices” could put together credible IPO offers.

That’s a perspective supported by one investment expert quoted in the previously-referenced CNN/Money article. She maintained that the right IPOs could be winners in the current economy:

“There really aren’t very many people on the buy side who have said to us ‘don’t show me any IPOs… But everyone has said ‘I need a good clean company, I need a clean balance sheet, I need visibility, I need good valuation, I need a reason to believe that I’m not taking a silly risk.’”

So, all things considered, it looks like there may be a little room for the right IPOs even in today’s shrinking market. The overall economic circumstances should separate the wheat from the chaff, giving investors who are looking for the right opportunities a chance to buy into new stocks.

The “glory days” of wild IPOs and billions in instant capital might be gone, but the down market won’t freeze out strong young companies with the right stuff. Considering how well many established companies have been faring, some investors might feel a little extra affection for the new blood, too.

Now, I long for them.

That’s because the chat choice d’jour is now the economy. You can’t stand in line at the supermarket or the DMV for more than a few minutes before someone will start talking about just how lousy things are right now. A few short years ago, people seemed to take some kind of perverse satisfaction in predicting blizzards, hurricanes and droughts based on a week’s worth of weather. Today, they get that same look in their eye when confronting strangers with tales of escalating unemployment and a looming Depression.

We can play chicken and egg with this. Is the constant chit-chat about the falling economic sky persuading media outlets to focus more and more on grim economic news, or is the media’s obsession with any negative economic indicator and its horrific potential consequences feeding the conversation?

It really doesn’t matter. The result is the same. Everyone seems convinced that our economy is on death’s door and that soup lines will soon be forming in front of abandoned auto dealerships. The swollen ranks of the homeless will be stacked like cordwood in the shells of emptied shopping malls. Economic Armegeddon is upon us.

The disproportionate negativity is annoying. It might also be dangerous because it influences the way we assess real risks in our every day life.

I recently came across an interesting article about risk analysis in the IT field. It mentioned that people are prone to overestimating a risk when they’re too close to an issue. They lose the necessary objectivity to reasonably assess the likelihood of events because they’re so wrapped up in the analysis of every shred of risk-related information about a topic. When you get too close, you make poor decisions.

It’s very likely that many people are getting a little too close to the doom and gloom reports about our economy and it really makes one wonder if that’s not leading to some very poor decisionmaking. All of this chit-chat from our neighbors, co-workers and evening news anchors may be negatively influencing our personal ability to conduct reasonable risk analysis.

Before the faltering economy became a focus of attention, expert recommended that one should save about six months worth of salary as a cushion before quitting a job to start something new. That seemed like a reasonable buffer for those who wanted to flex a litte entrepreneurial muscle.

Today, if you talk about intentionally quitting your job to do create a new business, people look at you as if you’re insane. They can’t believe that anyone would give up steady work “at a time like this”. Experts recommend holding onto unrewarding jobs if they’re bearable until things get better.

How many entrepreneurs with great ideas and the potential to help energize the economy have we lost due to the fear of a cruel economic fate reserved for those willing to walk away from employment?

When the markets began to fall, people began cutting back on 401k contributions. Some even pulled their money out completely, regardless of the tax implications.

How much did they lose in the process relative to where they might be five years from now had they held things together? How much did those panic withdrawals encourage a further drop in the markets?

I won’t argue that everything is right in the world. Nor will I maintain that recent legislative actions have a strong likelihood of rejuvenating an economy in recession. However, I also won’t join in announcing the death of the U.S. economy and I certainly don’t plan to start hoarding canned goods and ammunition any time soon.

I’m just trying to dodge a constant stream of negative information and I’m working a little harder to get to the truth about our economic future. It doesn’t necessarily look rosy, but I don’t think we’ll be wearing barrels and eating dirt by July, either.

I guess you could say I’m trying to stay just far enough away from the details of your sister’s friend’s layoff and the news about how they’re cutting part-time hours at the big box store that it all doesn’t overwhelm me or my ability to assess real risks and probabilities. I don’t want to get too close because I don’t want to overreact, even though overreaciton seems to be replacing baseball as our national pastime.

That’s what I’m doing.  Oh, I’m also talking about the weather.

Okay, my frugal-minded friends, it’s time to play Van Helsing!  You need to go on a vampire hunt.  Instead of tracking down the reflectionless bloodsuckers, however, you’re going to target a different vampiric beast.  I’m talking about vampire appliances.

Vampire appliances.  We all have them and they’re exacting a toll on all of us.  You don’t need to worry about your refrigerator sneaking into your bedroom and nibbling on your jugular.  These vampires prefer electrical energy over blood, waste and inefficiency over immortality and shape-changing.

Vampire appliances are the various gadgets in your house that continue to suck electricty even while you’re not using them.  If they’re plugged in, they’re running up your energy bill.  No single device is probably squandering a terror-inducing about of electricity, but the combined effect of your home’s vampire hoard could account for a significant part of your monthly utility bill.  It’s a scary enough proposition that the Department of Energy

recommends unplugging when possible.

Appliances with transformers are often part of the wasteful army of the undead.  Your cell phone chargers and other similar power adapters are notorious for drawing electricity even when they’re not connected to anything.  If you’ve ever walked into a darkened room, you’ve probably been greeted by the red and green eyes of other vampires.  These are appliances that stay partially on even when you’re not using them.  They suck “standby” electricity to prepare them for the moment you put them into use by tapping a remote control.  Other vampires are less obvious in their presence.  Many older electronic appliances can sip electricity all night long.

The best way to beat these monsters?  Unplug the appliances when they’re not in use.  If you don’t relish the idea of reaching behind the entertainment center and contorting your body into something worthy of the center stage at a Cirque de Soleil show, you can opt for a power strip with an “off” switch.

So, defeating the beasts doesn’t require a great deal of real effort, time or expense.  Nonetheless, it does require you to do something so we should probably make some determination of the value of playing electrical Van Helsing.  How much money will unplugging electrical devices really put back into your pocket?

That’s going to depend on two variables:  The price you’re paying for electricity and the particular appliances in your home.  Overall, it seems as though people regularly suggest you can save 5% – 7% or more on your power bill by fighting vampires.  Some people report significantly larger savings, others claim that the trimming is trivial.

That’s really only part of the story, though.  By consuming less electricity, you reduce overall demand for energy.  This, in turn, has advantages on a conservation level and on a price level.  Reduced demand results in lower prices.  Thus, your 5% savings is contributing to the possibility of an eventual rate cut for electricity.  True, one person’s actions aren’t going to change our plugged in society.   If enough people unplugged, however, it could theoretically have a price-reducing impact.

So, fighting those phantom power suckers ala Van Helsing will save you mone while reducing your environmental impact and contributing to a reduction in demand for power.  All things considered, it doesn’t seem like a bad idea.

You don’t need the wooden stake.  You can grab a power strip instead.  Don’t worry about draping a garlic necklace around your neck, either.  You can substitute the willingness to take an extra second to flip a switch or to pull a plug.  Going unplugged will be a hard habit to start, but once it’s in place you’ll be killing vampires like a professional  hunter.

We all realize that there’s some real potential to save money by using grocery coupons.  A quarter here, a 2-for-1 there…  It can add up.  Serious economizers swear by smart coupon use (hitting the stores on coupon doubling days and buying pantry items in bulk when the deals are too good to pass up, etc.).  It’s like a big pile of cash is waiting for you in every Sunday’s paper if you’ll take the time to read through the ad circulars with a pair of scissors in your hands.

And that’s where the deal falls apart for most of us.  We’re either too busy or too lazy t0 make a point of chopping those grocery coupons out of the paper.  It’s one of those great “at your fingertips” ways to save some money that we just don’t use to our advantage.

That’s why coupon books sound like such a fantastic idea.  You can by a book of vouchers for the coupons you want at a fraction of the coupon face value.  For fifteen bucks, for instance, you can get a booklet of vouchers that might offer up to two hundred dollars in coupons.  And the fact that you get to choose the products for which you want the coupons makes it sound even better.

Well, that’s exactly what my wife thought a couple of years ago when a couple of fresh-faced kids came knocking on the door.  They explained the value of the book, the low price and, if I’m not mistaken, there may have even been some sort of vague promise that a worthy cause was going to get a chunk of our money, too.

We’re gonna buy food with or without the coupons an fifteen dollars isn’t a lot of money, she reasoned.  She bought a book.  Who wouldn’t want to trade fifteen bucks for two hundred?

It turned out that this little grocery coupon investment was a disaster.  The Federal Trade Comission doesn’t hesitate to call these things scams.  I don’t know if they’re all crooked, but any grocery coupon book working from this model is definitely not the best deal in the world, to put it mildly.  If Mrs. Dellison had done her homework online, she wouldn’t have made the buy.  The reviews of these babies are generally NOT positive.

Here’s why you should avoid any of these coupon voucher books.

First, you need to list about three dozen products for which you’ll accept coupons for each of the vouchers you use.  If you’re like us, you don’t really purchase three dozen name-brand grocery items on a truly consistent, month in and month out basis.

Second, the list of available products isn’t comprehensive.  So even if you do have several big-brand products on your regular shopping list, the company probably isn’t going to offer coupons for all of them.

Third, the devil is in the details of the fine print.  The company doesn’t really promise to fill your order.  It promises to try.  Trying is nice and all but it doesn’t save you money on lunch meat, if you get my drift.

Fourth, these suckers will nickel and dime you death.  There are handling or processing fees for your vouchers and the book we got even required us to pony up the return postage for when they got around to sending the coupons to us.

We did get coupons.  They “tried” to fill our order and managed about a 40% success rate in getting us the coupons we wanted.  Not so great.  It took forever to get them and unless you’re the most organized and consistent shopper in the whole world (and have psychic powers), waiting for the coupons to show up is a bit of an aggravation.  Oh, and one of the coupons we did receive was on the very brink of expiration (better buy that cereal TODAY!).

We never bothered with a second voucher.  An hour with a pair of scissors and the Sunday news makes much more sense.

Now, if you’re still not ready to do that, there might be another solution.  The Simple Dollar had a post that talked about online coupon brokers.  They gave one a rave review.  These are sites where you can purchase the exact tickets you need for far less than the coupon face value and it might be worth considering.

If those kids come knocking at your door, however, it is not worth considering their coupon voucher book.  This is one deal you should avoid.

Internet-based credit report monitoring and improvement services aren’t in short supply.  If you’ve made the smart decision to find out what your scores look like and to take efforts to improve and protect them, you can choose from many options.

You can go to the site that advertises with a band of 20-somethings who serve up catchy jingles.  You can use the service that Ben Stein promotes (note that questions about the quality of this option cost Ferris Buehler’s favorite teacher a regular gig with the New York Times), or you can roll the dice with literallly scores of other sites promising to get you the data and to show you how to improve your scores.

In this extremely crowded arena, one site appears to be separating itself from the pack.  A site called myFICO.com has a nice range of products available to those who are ready to smartly deal with their credit and credit scores.  It may not have the mindworm musical commercials, but it does have what most people really need–solid information and guidance at reasonable prices.

WHAT DOES myFICO OFFER?

The myFICO.com site advertises four different product options–all of which come with free credit reports for members. They’ve also released a new FREE service for those with an interest in government mortgage relief.

SCORE WATCH: Score Watch is the least expensive product on the myFICO option list.  This is an alert service.  For just a few dollars per month, it will monitor your credit scores and reports, providing you instant notifications.  This is a good way to sense whether the changes you’re making in life and money management are having a postive effect.  It’s also a nice protection against unauthorized uses of your credit and/or identity.

Score Watch customers receive two reports from Equifax per year, along with reports detailing their content and menaing.  Currently, myFICO is providing a 30-day free trial of Score Watch.  You get a credit report, credit score and FICO score with some potentially valuable extras.

SCORE STANDARD: This is an option that has no recurring billing, provides essential information and comes in for less than $20.  Score Standard allows myFICO customers to get their hands on either a TransUnion or Equifax credit score and report.  This is the ideal option for those who’ve already requested their free annual credit report but who need to check reports or numbers again before being eligible for another free copy.

FICO Standard also comes with a simulator designed to show you how various actions and/or improvements may impact your credit score.  This is a great way to get an idea of how you can improve your scores.

SUZE ORMAN’S FICO KIT PLATINUM: While the other sites rely on singers, myFICO has a wildly popular and highly-regarded financial self-help expert on board.  Best-selling author and television host Suze Orman does more than lend her name to the company, she’s also involved with one of their more interesting and full-featured products.  Suze Orman’s FICO Kit Platinum gives myFICO clients a full range of information and tools for optimal credit managment.

Of course, you get your credit scores and reports–including full explanations of their contents.  That essential core information is supplemented with a range of additional tools, all of which are easily accessible online via any Internet-connected computer.

The FICO Kit Action Planner marches users through a step-by-step system to improve credit scores.

• Debt Eliminator shows users how to get out from under their credit card bills by creating a personalized debt analysis and payment plan.
• A bill reminder system will email you to remind you of approaching bills, helping you to break the “late pay habit”, which can wreak havoc on credit scores.
• The InfoVault allows you to save critical information in a secure online location.
• Online Home and Car Coaching gives you a chance to find out what kind of financing and rates you may quality for BEFORE you start shopping for a loan.  The myFICO site claims this “could save you thousands of dollars in interest payments over the life of your loan”.
• The FICO Simulator will show you how different actions may influence your credit score.
• Error detection services will highlight potential mistakes in your credit reports and will help you to fix them.

FICO QUARTERLY MONITORING: Knowing your credit score is good.  Knowing it and how to improve it is even better.  Knowing it, having a plan to improve it and checking it on a consistent schedule is ideal.  That’s the idea behind this myFICO product.  You get the scores and reports on a quarterly basis, allowing you to track your progress as you make an effort to iprove your scores.

This option includes a number of interesting extras including identity theft insurance and is available for less than five bucks per month. You can also access the free FICO credit score estimator.

MORTGAGE RELIEF. You can use myFICO.com to get FICO scores and mortgage relief information with this new, FREE, option.  The Mortgage Relief Online program is sponsored by MyFICO, the Homeownership Preservation Foundation and Money Management International.  It’s designed as a way to help individual homeowners learn more about, and to determine their likely eligibility for the US Treasury’s “Making Home Affordable Program”.  This government program was designed with the objective of aiding as many as nine million homeowners who may be in difficult straits to avoid foreclosure.

According to MyFICO, the option works like this:

Simply enter a few details about your mortgage and your financial situation and we will instantly tell you if you appear to be eligible for mortgage relief under the Making Home Affordable plan. If you appear to be eligible for a loan modification, you will be connected with a professional counselor from Money Management International who will guide you through the loan modification process.

SUPPORT FOR myFICO

While other online credit reports are consistently lambasted by media sources and consumers as overpriced and unnecessary, myFICO.com continues to receive positive attention.

The New York Times, LA Times, and Wall Street Journal have all reported favorably about myFICO.com and its mortgage relief option, as have many other well-respected newspapers.  According to myFICO, The Chicago Tribune has stated, “The best spot I’ve found on the Internet to check my credit is www.myfico.com.”

A quick check of completely independent reviews of the services revealed that most customers are happy with what they get.  They get the reports, the scores and the added services without incident.  The only complaints you’re likely to find from seemingly reasonable users involve the ease with which one can cancel subscription services.  Some feel as though myFICO could be slightly faster and more responsive in this regard.

STRAIGHT FROM THE HORSE’S MOUTH

The quality of service and rave reviews for myFICO aren’t suprising when you understand who’s behind the site and its products. While many credit report services are owned by elements lacking a long involvement in the credit industry and are hoping to capitalize on consumer fears during these trying economic times, myFICO stands out for its direct connection to those who know the most about the issues.

You see, myFICO is part of Fair Isaac’s consumer division.  Fair Isaac is the very company that invented the FICO score.  Fair Isaac has been providing these services to consumers since 2001 and have sold over ten MILLION socres since that time.  In other words, when you deal with myFICO.com, you’re getting information, scores and direction straight from the horse’s mouth instead of relying on a third party who may or may not have the background or experience necessary to handle things correctly.

FREE EDUCATION

While myFICO is a for-profit wing of Fair Isaac, it does offer valuable free information, as well.  In addition to the aforementioned mortgage relief tool, the site also features a Credit Education center that offers free content covering issues related to credit scores, how they’re determined, what makes them go and and down, and how to best manage credit.  There’s even information targeting new American citizens, giving them a primer on our credit system.  While the free information may be simplistic for those with experience and strong interest in matters of personal finance, those just getting started in efforts to improve their situations may find it quite valuable.

HSBC Direct

That dedication to a quality product, combined with HSBC’s reputation as one of the oldest and most firmly established banks in the world has been responsible for “cementing its status as one of the most popular and consistent big-name marketers of online only savings accounts with very appealing interest rate deals.”

A FREQUENTLY (AND STRONGLY) RECOMMENDED OPTION

HSBC Direct isn’t a fly-by-night way to set up a savings account. The bank has been regularly recognized for the quality of its options.

In 2007, Kiplinger ranked HSBC as the “best overall online savings account,” citing its many features and the high interest rates paid to depositors.”

A Kiplinger endorsement should be a sufficient reason to have faith in the institution and quality of its services. With that big-name testimonial in place, it comes as no surprise that many others have added their voices to the chorus of support the bank receives. A review from 2008 put HSBC among the top three online banking options. Jim Wang ranked HSBC in the top five, as well.

SAVINGS ACCOUNTS WITH FLEXIBILITY

Most of us think of savings accounts as little more than a place in which we can park a little extra money that we’d like to keep liquid. Interest rates generally range from low to nonexistent. Accounts offer very little flexibility. Savings accounts, in most cases, are the most boring financial instrument in the world. HSBC Direct, however, has re-envisioned the idea of a savings account, creating a more feature-rich account.

HSBC Direct savings account holders experience tremendous flexibility in addition to everything one would generally expect to get from a savings account.

• ATM. Savings accounts come with ATM cards that can be used all around the world. This allows customers to handle their banking and to make withdrawals with ease.
• FEE FREEDOM. Unlike many online savings account options, HSBC Direct does not charge its customers any fees for accounts.
• NO MINIMUM. There’s no minimum balance requirement. You can open an account for as little as $1 and you’re not required to keep more than a penny in the account after that.
• GOOD RATES. Like other online banking options, HSBC Direct offers interest rates unrivaled by your corner bank.
• INSURANCE. All accounts are FDIC insured up to $100,000. These are legitimate accounts with a legitimate bank and standard federal protections.

INTEREST RATES

For a long time, HSBC attracted customers with an impressive 6% rate of return (APY) on its accounts. While that was a promotional rate that later dipped, it was enough to get a great deal of attention and is probably one reason for the bank’s rapid climb up the popularity ladder.

You won’t get 6% today. That rate is long gone, a casualty of the Fed’s actions on interest rates and the banks negative experience in the wake of the subprime mortgage crisis and attendant financial crisis. Like other major online account providers, including Ing, HSBC Direct has reduced its interest rates.

Currently, the APY sits at 3%. While 3% isn’t the kind of ROI we’d like to help give our retirement money a boost, it’s still much more than what most brick and mortar banks can even think of providing. It’s also more than what you’ll find from a variety of competitors, too.

GETTING AN ACCOUNT

Signing up for an HSBC account isn’t significantly different than signing up for any other online savings accounts. You complete an online application and later “seal the deal” with some traditional paperwork. In order to move through the process, you will need information about your other accounts and the standard material you’d expect to produce when opening any other bank account.

HSBC does not appear to require any particular level of creditworthiness to establish an account. The do conduct a credit check, but it’s of the “soft” variety and is used exclusively to confirm the identity of the account holder.

People who’ve set up accounts with HSBC report that thee process worked ran smoothly and that the bank quickly posted initial deposits.

If you’re interested in establishing your own account with HSBC Direct, you can access the online application by clicking on this link.

RECAP

Most of us use savings accounts. They may not be the centerpiece of our personal finance strategy, but they are an element of how we handle our money. Many of us are currently relying on checking accounts that offer us little more than an old-fashioned passbook and a few cents worth of interest earnings per year.

HSBC Direct provides a compelling alternative. You can secure all of the benefits traditionally associated with brick and mortar bank offerings while experiencing a higher level of overall functionality and a superior interest rate.

You’re going to maintain savings account. You should do it in a smart place and that’s exactly what HSBC Direct provides.

Gerber Life Insurance

If you’re going to buy life insurance for your child, Gerber seems like an obvious choice. The real question, however, isn’t from whom to buy the policy. It’s whether you should buy ANY policy in the first place.

In the insurance world, there are few subjects of disagreement as pronounced as the child life insurance question.  Opinions are split.  While some view it as a wise investment others decry it as a waste of money. What’s the bottom line? Should you be calling the folks at Gerber immediately or should you save your dough?

THE CASE FOR INSURING A CHILD’S LIFE

The arguments in favor of life insurance for children are persuasive. Consider the following:

- Low costs
- Guaranteed future coverage
- Investment value

Cheap, cheap, cheap. The actual cost outlay associated with life insurance for children is low. While every dollar counts, this isn’t a budget-busting decision for most families. One could certainly argue that the peace of mind stemming from having a policy in place, in and of itself, is worth the expense associated with its purpose.

Future insurability. Children’s life insurance, including products like the Gerber Grow-Up Plan, allow the child to lock into whole life coverage at a low price and the insurance will remain in effect and available in the future–regardless of the child’s eventual medical circumstances. That doesn’t just apply to the tender years, either. The policy will still be in effect after the insured reaches the age of majority. Think about what that means. If the child develops a serious medical condition as an adult that would make life insurance cost-prohibitive or impossible to obtain, he or she would still have coverage in the form of the policy opened when he or she was young. This opportunity for guaranteed future insurability is a definite mark in favor of buying that policy for your little one.

Investment value. As noted, kids’  life insurance is a whole life product. That means that it does have investment value. One can also eventually borrow against the policy’s benefit. Many people have used whole life insurance, started during childhood, as a method of obtaining down payment money for a home or to defray the costs of a college education. Unlike term insurance, which is basically “rented coverage” with no lasting value beyond the designated term, whole life provides a secure investment vehicle for the insured.

ARGUMENTS AGAINST LIFE INSURANCE FOR CHILDREN

So, in light of those arguments, why do some people maintain that buying life insurance for a child is unnecessary or undesirable? They have a few arguments of their own–and a few of them are persuasive at face value. They include:

- Low risk of utilization
- Absence of at-risk income
- Investment inferiority

The policy probably won’t be used while the insured is a child. That’s a statistical reality. Fortunately, most of us do survive well into adulthood and the risk of death for a child is almost slight when you look at it in actuarial terms. This, critics argue, means that the premiums paid for coverage are, not considering potential investment value, wasted. Likewise, the number of adults unable to secure term life or other whole life coverage later in life is relatively small, statistically speaking. This, some argue, renders the “guaranteed future coverage” argument moot.

There’s no income to replace. Critics of Gerber and other child life insurance providers maintain that the primary function of life insurance is to protect income. Since children generally don’t bring home the bacon, they claim that insurance becomes an unnecessary expense.

It’s not an ideal investment. Borrowing against a policy isn’t “free money”, after all. You do pay interest on the funds. Additionally, the historic rate of return on whole life policies of these sorts has underperformed other popular investment options. Those who disagree with the idea of insuring a child’s life will often point out that the parents have other opportunities to earn more money at their disposal and that whole life isn’t a great option.

ANSWERING CRITICS OF CHILD LIFE INSURANCE

While criticisms of Gerber and other child life insurance products do have some prima facie appeal, they become far less persuasive when examined critically. Let’s look at the three aforementioned arguments against insuring your children a little more closely.

The “you won’t use it” argument isn’t all that persuasive, nor is the idea that there’s no real income to replace.

I’ve carried auto insurance for over 22 years and I’ve never personally needed it. Not once. Does that mean I should’ve been taking to the streets with nothing more than a rabbit’s foot in the glove box? Of course not. We insure ourselves and our loved ones against low-risk propositions every day. And before you discount the auto insurance parallel due to the higher statistical likelihood of a crash compared to a child’s death, consider the risk analysis involved in situations like these.

We’re talking about an event that will be costly on its face (funeral expenses, etc.) and that brings with it a huge emotional impact. The impact of a child’s death is so substantial that it warrants action in the face of even a reduced risk of need.

Critics of children’s life insurance seldom consider the emotional trauma associated with a child’s passing. It’s actually a very important consideration, however. Not because a cash payment will “make things feel better”, but because the emotional impact of the tragedy will undoubtedly have a financial repercussions. Critics fail to consider these.

If your child is sick before he or she passes away, how much work will you miss tending to his or her medical needs? How will your time away from work and constant rumination on the seriousness of the child’s condition impact your work performance or opportunities for advancement? If the unthinkable should happen, how much time away from work will be required? Will you be prepared or capable of returning to work before you begin to feel a financial squeeze? If your spouse works, what will the impact be on his or her work situation?

We live in a society where even many so-called middle class families are only a few paychecks removed from falling into poverty or extreme financial hardship. Under those circumstances, it makes no sense to ignore the REAL financial risk associated with a child’s passing.  It’s amazing how infrequently you see even the strongest advocates of these policies explain this position.

Think in terms of solid risk analysis when considering the issue of future insurability, too. Is it likely that your child will be unable to secure good coverage later? Of course not. If the risk was that high, the product couldn’t be that affordable. However, the seriousness of the impact associated with being unable to get coverage is substantial enough to justify the relatively small cash outlay associated with Gerber and other life insurance products for children.

The argument regarding the merits of whole life as an investment is, admittedly, slightly stronger. Historically, other investment opportunities have outperformed whole life. However, an examination of what has happened during the last few years demonstrates that putting one’s faith in traditionally stronger investments isn’t always the best idea. Look at your 401k balance and compare the number with where it was at a few years ago. If you’re like most Americans, you’ve witnessed a significant decline in the value of your investments.

While whole life insurance may not have the potential to create rags to riches stories, it does have a solid track record of producing quality returns and of being an almost completely safe investment opportunity. At times like these, the idea of trading fast cash potential for security makes a great deal of sense. Plus, the gap between earnings associated with other investment vehicles and whole life for kids usually doesn’t represent a huge chasm even during non-recessionary times. When one considers the other advantages of products like those offered by Gerber, the return is more than adequate.

A LIFE INSURANCE POLICY FOR YOUR CHILD

Now that we’ve established why purchasing a policy for a child makes so much sense, let’s examine Gerber’s most popular product, the Grow-Up Plan. This should give you a good idea of what a strong child’s life policy can look like.

• Benefit levels are variable. Parents can choose between $5K, $10K, $15K, $25K, $35K and $50K. Premiums start at as little as eleven cents per day and are locked in forever—they’ll never increase. That’s true even when the insured turns eighteen—even though the benefit level AUTOMATICALLY DOUBLES at that point, providing heftier levels of adult coverage without a price increase.
• Insured parties can also offer to increase their coverage levels as they age. They will have guaranteed continued coverage AND opportunities to “buy up” to higher benefit levels.
• As a whole life insurance offering, the Gerber plan does build cash value. According to the company, that cash value is worth 100% OR MORE of the sum of the premiums paid after just 25 years.

While the debate will undoubtedly rage on, it would appear as though purchasing life insurance for a child can make a great deal of sense—assuming one is purchasing a quality product from a solid vendor like Gerber Life Insurance who combines security and stability with solid policies.

Hi Everyone,

Here are some Blog Carnivals that we participated in over the last week.  Enjoy!

- Carnival of Twenty Something Finances was hosted by Money Under 30 and you can find our post entitled Scholarships for Left Handed People? Sort of. listed there.

- Carnival of Personal Finance #213 (The New Zealand Edition) was hosted by Man vs Debt and you can find our post entitled The Average Cost of Groceries Per Person: Best Guesses listed there.

- Money Hacks Carnival #73 (Working for the Weekend Edition) was hosted by Money Beagle and you can find our post entitled Save Money on Your Coffee Addiction: Buy a Starbuck’s Gift Card listed there. ]]> http://www.personalfinanceanalyst.com/personal-finance-carnival-round-up-33/feed/ 0 http://www.personalfinanceanalyst.com/personal-finance-carnival-round-up-33/ http://feedproxy.google.com/~r/personalfinanceanalyst/zrPD/~3/Zz5wRUGJ8y4/ http://www.personalfinanceanalyst.com/personal-finance-carnival-round-up-32/#comments Sun, 26 Jul 2009 16:41:28 +0000 Anthony http://www.personalfinanceanalyst.com/?p=2104

Hi Everyone,

Here are some Blog Carnivals that we participated in over the last week.  Enjoy!

- Carnival of Taxes #55 (The Tax Firewoks Edition) was hosted by Don’t Mess with Taxes and you can find our post entitled Tax Day Discounts: Celebrating the Un-Celebratable listed there.

- Carnival of Twenty Something Finances was hosted by Kanjoh and you can find our post entitled 5 Wacky Scholarships! listed there. We got the Editors Pick for that post!

- Carnival of Personal Finance #212 (The Independence Day Around The World Edition) was hosted by Darwins Finance and you can find our post entitled 5 Wacky Scholarships! listed there.

- Carnival of Debt Reduction (Stale Brat Edition) was hosted by Rocket Finance and you can find our post entitled How to Reduce Your Debt Significantly Without Tightening Your Belt listed there.

- Money Hacks Carnival #72 (Staying Cool Edition) was hosted by Personal Finance Playbook and you can find our post entitled The Main Event: The Coupon Mom vs. the Grocery Game listed there.

- Festival of Frugality #185 (The Barbeque Edition) was hosted by Your Money Relationship and you can find our post entitled Tax Day Discounts: Celebrating the Un-Celebratable listed there. ]]> http://www.personalfinanceanalyst.com/personal-finance-carnival-round-up-32/feed/ 0 http://www.personalfinanceanalyst.com/personal-finance-carnival-round-up-32/ http://feedproxy.google.com/~r/personalfinanceanalyst/zrPD/~3/GwwZi09ZMKg/ http://www.personalfinanceanalyst.com/seven-simple-ways-to-save-on-medical-expenses/#comments Tue, 21 Jul 2009 20:14:15 +0000 David R. Lampsen http://www.personalfinanceanalyst.com/?p=2141 While we can all advance our positions and take sides in the ongoing healthcare debate, I think we can all agree that it would be nice to cut down on our own medical expenses in the meantime.  So, in the spirit of frugality and bipartisanship, I thought I’d share a few tricks for saving on medical expenses.

STAY OUT OF THE ER. Emergency room treatment costs more than alternatives.  Unless you’re really facing a legitimate EMERGENCY, you should do what you can to seek treatment elsewhere.  While some people hit the ER because they don’t have insurance and know they’ll get some care there, folks should be aware, as Being Frugal notes, that there are many clinics that offer affordable care based on a sliding fee scale.

CALL YOUR DOCTOR. Before you go see your doctor, only to then be referred to another doctor or specialist, call first.  In many cases, you can get the direct referral without making an unnecessary and expensive appointment.  Unless you love sitting around reading back issues of Field and Stream while you wait an hour for a 45 second, “you need to see Dr. So-and-So” appointment, let your fingers do the walking instead.

MORE TELEPHONE MAGIC. Not only can you avoid the dreaded referral (dis)appointment with a phone call, it’s also possible to get actual medical advice via telephone.  Instead of setting up an appointment, see if someone can help you via telephone.  Some hospitals and clinics offer great nurse help lines you can call.  In many cases, they can give you a few simple directions that will keep you from making a money-sucking appointment.  Obviously, you can’t try this technique if you have a railroad spike sticking out of your temple or a snapped femur.  In non-emergency situations, however, it can be worth making a call.

LOOK AT YOUR BILLS. Don’t assume the statement you receive in the mail is accurate.  It might be, but in many cases people find overbilling or billing for services that weren’t rendered on their bills.  It won’t take you that long to read through the itemization and it could save you a great deal of money.

A POUND OF PREVENTION. Stop smoking.  Eat an orange instead of three Cherry Mash candy bars and a large Dr. Pepper (light on the ice, please).  Consider testing the soles on your shoes instead of the world’s fossil fuel supply every once in awhile.  You know the drill.  Most of our medical expenses are avoidable.  If we took better care of ourselves in the first place, we wouldn’t be seeing the doctor as often or popping all of those pills.  We’d be saving on medical expenses by avoiding them.

NEXT TO GODLINESS. Practicing good hygiene and cleanliness can reduce the risk of contracting many illnesses.  Wash your hands, touch items within public toilets only when you’re wearing a HazMat suit, don’t play “give me five” with your nephew right after he wipes is runny nose on his hand.  This is really a subset of the other prevention factors, but I though it deserved it’s own entry because people often overlook this opportunity to stay healthier and to save dough on medical costs.

GENERICS. By now, this should be a second nature to anyone who’s not in the habit of burning cash for heat.  Generics contain the same stuff as the name brands, they do the same thing and they cost far less.  If you can fill your Rx with a generic, do so.

There you have it–seven very practical ways to save on medical expenses.  Following these recommendations won’t end the healthcare debate in Washington, but they may save you enough money to make a trip out there to lobby your Senator or Representative.