No matter how strong an investment portfolio you’ve put together, chances are you haven’t considered the impact the sudden death of your spouse could have on your finances. For Baby Boomers who are already shouldering the costs of mortgage payments, child care or tuition – and possibly the care of an aging parent, such a sudden tragedy can wreak emotional as well as financial havoc. Employer-based insurance may provide some relief, but the pivotal question to ask is: Could you live without your spouse’s income? Emory and Goizueta Business School faculty discuss key strategies to consider when confronting this issue. Been Hacked? Call Your Insurance Agent
Following yet another highly public hacker attack – this one targeting the credit card numbers of participants at the World Economic Forum in Davos, Switzerland - insurance industry reps are pointing even more vigorously to the havoc that hackers can wreak on businesses. Cyber insurance, they say, can ease the pain. A New Look at the Payoff from Annuity Investments
Investors often regard annuities as a poor substitute for mutual funds and other investments. A new study by Wharton’s Pension Research Council shows, however, that middle-income investors approaching retirement age may be missing a good bet if they overlook annuities. “Mutual funds don’t protect you against the risk of outliving your assets,” says Olivia S. Mitchell, the council’s executive director. Risky Business: Kidnappers Target Global Executives
As corporate America buys and sells more goods and services abroad, the number of company employees kidnapped for ransom in places like Mexico, Brazil, the Philippines and Chechnya has increased. Along with that increase have come escalating demands for ransom money, more expensive insurance policies and more sophisticated negotiation tactics on both sides of the table. Knowledge@Wharton looks at recent developments in the kidnap and ransom business. Making Retirement Saving Work Smarter
Only half of Americans say they’ve thought about saving for retirement, and many of those who have tried to save don’t know if they are saving enough. Olivia S. Mitchell, executive director of Wharton’s Pension Research Council, and finance Professor Zvi Bodie of Boston University outline this problem and propose some fresh approaches to it in the introductory chapter of a forthcoming book titled Financial Innovations for Retirement Income. Among their suggestions: cash-balance pension plans, reverse annuity mortgages and inflation-indexed bonds. They also advocate more knowledgeable financial advisors and well-educated retirees. The Fatal Effects of No-Fault Auto Insurance
A number of states have adopted no-fault coverage in various forms as a way to cut auto insurance costs. Yet research studies over the past decade suggest that no-fault insurance may increase fatal auto accidents. These studies, however, were considered inconclusive, in that they did not fully account for possible factors outside of no-fault that may have contributed to fatal accident rates. A recent study by Wharton professor J. David Cummins and two colleagues addresses these concerns and offers its own assessment of the no-fault approach. Lax Building Codes Can Prove Hazardous to Your Health
Natural disasters, ranging from the recent earthquakes in Turkey and Taiwan to Hurricane Andrew in Florida in 1992, tend to focus the public’s attention on the importance of well-enforced building codes as a way to reduce property damage and loss of life. According to Wharton professor Howard Kunreuther, approximately 25% of the $15 billion worth of insured damage in Florida alone could have been averted had structures met existing building codes. He argues that a mix of economic incentives, along with support from insurers and mortgage lenders, can result in stricter building codes and safer homes. Behind the Pension Tension at IBM
Did IBM make a blunder when it decided some weeks ago to switch employees from a traditional defined benefit pension plan to the newer and more controversial cash balance? Older employees seemed to think so and they lost no time mounting a very public protest and accusing their employer of age discrimination. In the wake of IBM’s decision to revise its plan, Olivia Mitchell, director of Wharton’s Pension Research Council, looks at the pros and cons of cash-balance plans and how they fit into companies’ long-range strategy. Conglomeration or Strategic Focus: Which Is the Better Choice?
The latest wave of mergers and acquisitions among financial institutions and insurance companies has led to the rise of “universal banks”—firms of enormous size and product scope. Although this trend promises to continue, is it wise for companies to integrate different lines of business? Or is it better to remain specialized in an established area of expertise? A study by J. David Cummins, executive director of the S.S. Huebner Foundation for Insurance Education, and three colleagues for the Wharton Financial Institutions Center provides some answers to the conglomeration vs. specialization debate. Is Life Insurance Good for Retirement Planning?
At first glance, the life insurance industry appears to be in trouble as it faces the millennium. As the large baby boomer market ages, these consumers have shifted their financial focus away from life insurance and towards assuring their future comfort. Although the industry has long recognized that its future lies in more in financial products than in life insurance, it has lately been losing its share of the retirement market. But is the news all bad for life insurance firms in the retirement market? Two experts--Paul Hoffman and Anthony Santomero--answer that question with a decided "no."