There have been many incidents where cryptocurrency has been stolen, but the Mt. Gox incident is the largest to date Mt. Gox was at one time the largest cryptocurrency exchange on the net, facilitating as much as 80% of global bitcoin trades, according to some sources. And then about 850,000 bitcoin suddenly went missing. At the exchange rate in 2014, when the problem came to light, that many bitcoin were worth about $450 USD. At the time of this writing, with Bitcoin at a high in 2017, that man... Continue reading...
Created about the same time as the FDIC, the FSLIC, which insured up to $100,000 in deposits at savings and loan institutions, also known as “thrifts.” In the 1980s, the “savings and loan crisis” caused the FSLIC to become insolvent. In 1989 it was disbanded by the FIRREA Act and replaced by the Resolution Trust Company (RTC) which was merged with the FDIC a few years later. During the 1980s, a huge number of savings and loan companies (“thrifts”) went bankrupt. Continue reading...
Federal Credit Unions are essentially banks that are owned by their clients instead of publicly traded or what-have-you. Instead of being part of the FDIC, they have the National Credit Union Association (NCUA). They tend to be able to offer higher interest rates on savings and lower interest rates on loans than banks can, due to their mutual-ownership structure. Credit Unions operate as non-for-profit businesses, which can allow their management to use 457 retirement plans, but they are not associated with the Federal government. They do, however, charter under federal regulations, as opposed to state banks. Continue reading...
The Federal Deposit Insurance Corporation (FDIC) is a government entity created by the Glass-Steagall Act of 1933, and its purpose is to protect savers from losing their deposits in banking institutions if the bank becomes insolvent. FDIC insurance only covers certain types of assets, up to certain limits for each person, and only at member banks. FDIC insurance will “make whole” any deposit amount up to $250,000 per person if the banking institution that held the funds declares insolvency. Most banks are members of the FDIC program, which was established by the Federal government in the 1930s. Continue reading...
Foreign deposits are taken in by international branch locations of US-based banking institutions. Banks are not obligated to pay FDIC premiums on these deposits. Foreign deposits are placed by customers into a US-based bank branch which is located in international locations. Because it is outside of Federal jurisdiction, banks are not subject to the same capital reserve requirements and do not have to pay FDIC insurance on the deposits. Continue reading...
The Foreign Credit Insurance Association protects American businesses from non-payment in international trade deals where goods were sold on credit. The Foreign Credit Insurance Association (FCIA) is a group of insurance companies which underwrite the foreign credit insurance sold by the Export-Import Bank of Washington DC. The Export – Import Bank, also known as the Ex/Im Bank, is an independent government entity that facilitates and encourages some international trade activity of American companies. Continue reading...
Bond insurance is a contract that protects the issuer and the holder of bonds from the risk that bond payments will not be made. Bond issues from the corporate or municipal world, or from derivative sources as with asset-backed securities and CDOs, come with the risk of default-- that is, that payments will not be made on time. The major credit ratings agencies (CRAs) assign a risk of default to each bond issue with proprietary analysis methods and ratings. Continue reading...
Universal Life Insurance is a permanent cash value insurance that has a term-insurance component and a savings component as well. The savings component is invested in a tax-deferred account, designed to create a cash build-up that can increase the death benefit or to be used at the discretion of the policy-owner. The cash grows inside the policy tax-deferred, and if money is taken out as a loan, it avoids taxation as income. Continue reading...
Whole Life Insurance provides lifelong death benefit coverage as well as a tax-deferred savings account. A large portion of your premium goes into the general account of the insurance company, and this increases the cash value available to the policy holder at a growth rate dependent on the investment and sales experience of the company. Every dollar and amount of interest which is credited to the policy cash value is vested with the policy-owner and will not decrease. Continue reading...
As a rule of thumb, life insurance should not be considered an investment at all, since it’s primary purpose is to provide insurance coverage. That said, some cash value policies have attractive features that can be appealing in certain circumstances. We will say that a smart investor who has done research and gotten good advice will generally not end up with a permanent cash value life insurance policy. Continue reading...
Homeowners insurance covers a variety of risks to a homeowner, including damage to the property and the belongings within it, as well as liability coverage in the event that someone else is injured on the property. It does not include coverage for flood or earthquake damage, so people living in areas where that might be a problem will need to find a separate policy for those coverages. Homeowners insurance is highly advisable for any homeowner, and most mortgage lenders will require it. Continue reading...
Second-to-die policies are also known as survivorship policies, and are primarily used by married couples to provide a guaranteed legacy to their children after they have both passed away. These come in handy for estate planning, when an estate tax bill might be looming for the heirs. To be clear, this insurance covers the lives of two individuals and provides a death benefit to a listed beneficiary only after the last surviving insured individual dies. Continue reading...
Variable Life Insurance is a permanent universal life policy that has a death benefit as long as the cash value and premiums are sufficient to pay the increasing cost per-thousand, while the premiums and cash value have the option of being invested in separate accounts which behave much like mutual funds. Often the policy-owner has a choice of many investment options, and can construct an entire portfolio within the policy. Continue reading...
Life insurance is one of the oldest financial products in existence, with roots going back beyond the ancient Roman Empire. Today, there are many different kinds of life insurance available, most representing variations on the main categories of term life, whole life, and universal life. It can be written in a private contract, but most often it is offered as packaged products to the public. Life Insurance’s main purpose is to ensure that dependents of a deceased provider or caretaker will have some financial resources to fall back on, but it can also be used as a means to create a guaranteed legacy or a tax-advantaged pool of money. Continue reading...
Life insurance contracts sometimes contain provisions by which the death benefits can be paid out to an insured person while they are still alive. This is called “accelerating” the benefits. Certain terms must be met for the benefits to be accelerated, and different policies have different contract language and exclusions. Sometimes these provisions are attached to a regular contract as a Rider, which might require an additional premium, or might be included by default. Continue reading...
If an annuity or pension will pay your spouse a survivor’s benefit that is adequate to support his or her lifestyle, then you may not need to a life insurance policy to cover this need. Annuities are seen as longevity insurance which protect against outliving money, while life insurance protects beneficiaries if the insured person dies younger than expected. If something happens to you and you have an annuity, your surviving spouse would either continue to receive periodic benefits or take a lump-sum distribution, depending on what kind of payout option you chose when you signed the contract. In the case of the lump sum it may only be for the amount of principal that had not been paid out yet in annuity payments. Continue reading...
Life insurance companies that have not been around more than 20 years may not be reliable. Even the ones that have been around 30 years or so need to have very good credit ratings and business models for you to expect them to be around in 30 years or so to pay a possible death claim. To determine whether an insurance company is reliable, it is necessary to look at their financial strength rating. A financial strength rating is a letter-grade provided by major rating services, such as Moody’s Investor Services, Fitch Ratings, and others. For example, Moody’s Investor Services ratings are as follows: AAA, AA, A, BBB, BB, etc. Continue reading...
Foreign investment is the act of an individual or corporation, or institutional investor, acquiring a large stake in a company, which may be a controlling or non-controlling interest. When it is a controlling interest, it is known as Foreign Direct Investment (FDI). Foreign corporate expansion in terms of newly acquired domestic facilities and equity interest in domestic companies tends to be monitored by domestic governments. Continue reading...
Life insurance guarantees that a death benefit is paid if an insured person dies while the policy is in effect. Various kinds of life insurance exist, and people buy various amounts of coverage for different purposes, most often to provide for the insured’s dependents if the insured dies prematurely. Life insurance represents a contractual obligation by a company to pay a death benefit to an insured person’s designated beneficiaries if the person dies while the policy is in force. Continue reading...
Accidental Death and Dismemberment (AD&D) coverage is normally offered as a rider on health or regular life insurance policies, or as a part of voluntary deduction supplemental insurance offered to an employee group. AD&D policies provide separate coverage and terms for the instance of death by accident and the loss of limbs or specific functionality of body parts. The main attraction to this insurance is that it is very affordable, and many employees check to box to have it deducted from their pay because it is such a negligible amount. Continue reading...