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BabyExamplePictureCalling all Parents and Grandparents!!

Sometimes life insurance seems like a losing proposition. You pay and pay premiums and can’t envision the time when you will need it or even worse, when your family gets the money upon your death.  While traditional products were designed for death benefits protection, today’s products are much more flexible, allowing people to use them for cash value accumulation, disability protection, long term care protection, and should none of those needs become a reality…death benefit protection.

The term we insurance people use to describe these flexible uses of a life insurance policy is  “living benefits” – meaning values created by a life insurance policy can be used during the insured’s life, not just upon their death..  These living benefits become more and more lucrative the earlier you start.

Starting early in a child’s life can allow you to provide benefits to them throughout their life. This can be through cash distributions for college funding or acceleration of death benefit for disability and long term care needs..  We’ve been structuring policies that grow to as much as $1 million of available benefit when the child reaches their 80s (i.e. when they’re most likely to need that coverage for long term care needs) for as little as $25 a month. We don’t start at a million because that would be silly, but we design the policy so it’s gets there when the time is right.

These hybrid products can allow you to use one contract for multiple needs. Cash accumulated inside the policy can be withdrawn on a tax free basis, provided the actual policy stays in force. Much more flexible than a 529 plan, these withdrawals can be used for college funding, starting a business, a home purchase and basically anything the child may need in the future. The living benefit riders allow the insured to draw down on the coverage amount for disability or long term care funding. It’s important that I note here that different carriers have different protections associated with these living benefit riders, so understanding what any given carrier is offering is essential.

These policies can be taken out up to age 90, but like we said, they perform beautifully when started in the toddler years. It’s really not about protecting those years as much as it is providing the long term living benefits we’ve discussed. Many parents and grandparents will also take out like coverage for themselves in order to protect their children and grandchildren from the financial exposure of their own long term care needs later in life. If you’ve shopped for long term care coverage you know it’s a use it or lose it proposition. When you use a hybrid life insurance product with living benefits it’s not. You use the benefit during your lifetime or it passes to your beneficiaries when you’re no longer here.

If you’d like to discuss your personal situation we’d love to hear from you. And PS…these types of policies don’t pull up on our quoting system, so don’t let that scare you.

 




 

crazy hair guy_cropBy Diana Fishlock

Some people opt for the extended warranties on their televisions or cars to protect their valuables if something goes wrong after their purchases. A home warranty offers the same kind of protection, but for the major appliances and systems in a house. Since a house is the largest purchase most people ever make, a home warranty can add a layer of security to the purchase process.

Home warranties usually cover some of the following home features: heating and cooling systems, heat pumps, air conditioners, water heaters, major appliances, electrical and plumbing systems, washers and dryers and even septic systems and swimming pools.

WHAT TO LOOK FOR WHEN PURCHASING A HOME WARRANTY?

Cost Effectiveness

Before committing to a plan, consumers should double check the cost of the plan, the amount of deductibles and what’s included in the policy. The homeowner pays a deductible or co-pay for each visit. If the repair charge is still costly, the warranty may not be much of an asset. Anyone considering a home warranty should add up the costs of the policy and the co-pays to see whether a warranty makes sense or if they’d be better off putting money aside for emergency household repairs.

Convenience

With a warranty, a homeowner or renter only needs to call the warranty company when there’s a problem. Then the warranty company finds an available local repair service. Consumers should make sure warranty companies use bonded and reputable repairmen.

Buyers should check their policies to make sure all repairs will be completed in a short timeframe. Check for loopholes in the policy that eliminate most major items from plan coverage. A good warranty will replace what can’t be repaired.

People should ask friends and neighbors to recommend regional or national home warranty companies that hire good repairmen and are fair to consumers.

WHEN TO PURCHASE A HOME WARRANTY?

Upon Buying a Home

Because the true costs of mortgages are so expensive for buyers, a home warranty that reduces their financial risk often facilitates a purchase. Buyers don’t know how well previous owners maintained their furnaces or dishwashers, but those items are protected with a warranty (usually for the first year after the sale). Adding in a warranty can be the tipping point that leads to a home sale. Home buyers can negotiate with property sellers for a warranty with the most coverage.

For Handy Repairs

A warranty can simplify life for people who are busy or not handy with home repairs. Not everybody owns a tool set or wants to call around for estimates. A warranty can shorten the to-do list when little things go wrong around a house. Since a policy has a prescribed deductible, a homeowner understands up front how much the job will cost.

In Old Age

A warranty can become a comfort for older homeowners who should no longer stand on ladders or move refrigerators out from the wall. In just one call, all of the home repairs can be addressed on budget.

As a Landlord

A home warranty is helpful for people who weren’t expecting to become landlords. Sometimes people decide to rent out a house instead of selling it, which adds inconvenient repairs to their busy schedules.

Home warranties can help renters, landlords and homeowners, but it’s important to understand what’s covered and how long repairs should take. A good policy encourages owners to have the small things fixed so they don’t become bigger and more problematic.

We love it when a good infographic comes along. This time it’s courtesy of the Life Foundation, and they bring up a thought provoking question: Do you have enough life insurance?

LIFE_life_insurance_infographic_letter

 

 

 

 

 

Scheduling in a little down time, both on your calendar and in your budget, will help too.

Scheduling in a little down time, both on your calendar and in your budget, will help too.

Everyone wants to be their own boss, make the rules, stop living under the proverbial “man,” but it can be a scary plunge to take and, quite honestly, not for the weak of heart. Owning your own business requires financial responsibility and risk that many people aren’t willing to take on, but if you are up for the challenge and are going to chase down that elusive American dream then there are a few ways to keep things from coming to a screeching halt before they even start. The transition into the life of owning your own business can be an expensively slow and rocky road, but there are some things you can do put yourself on the right path from the start. Before you venture on this journey, here’s what you need to do prepare for the ride.

1. Payoff all your credit cards. If you can’t pay off the balances on your credit cards now, you certainly won’t be able to once you start your business. You will also find yourself tempted to use those cards to cover the expenses of your business. Use these as your last resort. Paying off those cards now will give you some room to use them later, but relying on them for too many things in the startup process can quickly shut everything down.

2. Find your monthly budget, and then reduce it. You need to keep track of your basic expenses for the month: rent/mortgage, food, insurance, gas and so on. When you do this think about how this will change when you start your small business. Will you save money on gas with a shorter commute? Will you eat out more when you have less time? Once you have a number in front of you that highlights your current expenses, try to make that number smaller. This isn’t anyone’s favorite part, but you will appreciate the savings later. Do you need to run the air conditioning at home, or can you open the windows? Do you need the super fancy touch screen phone? Do “Fruity O’s” really taste that different from the real thing? It’s cutting back on little things that can send money your way from places you never thought about before. Also, it’s smart to make the transition to these saving habits months before you make your move into entrepreneurship to reduce the shock you may experience when you lose those extra 30 channels during hockey season.

3. Fill up that piggy bank. Before you take a single step towards your new business, you need to have a stock pile of money saved up. You should take the cost of your monthly expenses determined earlier, multiply that by six months, and set the bar there. You should have at least six months of your expenses saved up before you begin. With this, you need to make sure that you are realistic about how often you will be cracking into that piggy bank. A lot of people get the “do-it-yourself-bug” when they start their own projects. They think that they will do it all by themselves to save money. Know what you can do, and what you will need others to do. Will you hire an accountant? Will you need a handyman for small changes to your business space? Think about these future expenses when you are saving for your plunge.

4. Understand the benefits that you will lose. One of the biggest changes that small business owners incur is the cost of individual health insurance. Think about how to reduce this cost, for example switching your insurance plan before your next birthday before they can increase the premiums based on age. Look at your retirement plans and understand how your investments will change when you don’t have a 401(k) matching plan to double your contributions. These changes don’t have to be life altering, but they are simple things that, if planned for in advance will remain simple.

5. Don’t get hasty and quit your job. You need to give yourself time to startup your small business, and keeping your source of income can be a huge help during this time. There is a long list of expenses you need to pay before you can even think of opening up your doors, and it’s smart to keep your current job until you have those taken care of.

Entrepreneurs are some of the hardest working, committed individuals in the workforce. It can be the most frustrating and rewarding experience at the same time, but taking the time to plan before you plunge can save you some of that frustration and bring forth more of the rewards. Above all, remember that launching a business is a lot like starting a family. You’re never quite ready and can’t be prepared for absolutely everything that’s about to come your way.

Destruction Derby insurance? Probably a good idea. If you're into that sort of thing, of course.

Destruction Derby insurance? Probably a good idea. If you’re into that sort of thing, of course.

In Part I of this article, we covered flight insurance, rental care insurance, extended warranties and even life insurance for children, establishing that none of these insurance policies were typically worth your while. In this final portion of this article, we’ll look at six more types of insurance coverage you can feel confident about skipping.

Mortgage Life Insurance

As the name suggests, this type of policy pays off your mortgage in the event of your death, ostensibly so your loved ones needn’t be burdened by a looming mortgage. The reason not to buy mortgage life insurance is really quite simple: if you spent that money on term life insurance, your life policy, if an adequate amount, will cover much more than just the mortgage, taking care of other bills and expenses to ease your survivors’ financial strain.

Credit Card Insurance

Just about every credit card offer these days comes with a pitch for inexpensive credit card insurance, a policy that would pay off your bill should you be unable to do so. While it may seem like a good idea at first blush, if you have several credit cards, those policy payments can really add up. The better idea is simply to avoid running up credit cards entirely and to use them carefully and sparingly. Paying off your balance monthly will not only negate the need for credit card insurance, but you’ll also save a boatload on interest payments.

Disease-Specific Insurance

There are innumerable policies available to cover just about every major illness one could ever suffer, including everything from cancer insurance to diabetes coverage to heard disease insurance. Rather than assembling your health coverage piece mail, all you need to do is purchase one good medical coverage policy. Even a bare-bones major medical policy will cover everything an individual policy would—and having coverage for everything is always better than having coverage just for certain things.

Unemployment Insurance

Most experts agree that it’s far better to put aside regular savings for an emergency fund than it is to shell out premiums for unemployment insurance. While it’s easy to see why this might be an appealing option, relying on your own savings is a far better plan. After all, should you lose your job, odds are that in addition to your savings, you’ll be able to draw unemployment while looking for a new employer. Of course, a great deal of people never find themselves in this position, which means wasted money that could have been saved for something more productive.

Flood Insurance

Despite the terrifying commercials, if your home isn’t in a flood plain or located in an area that’s ever experienced excessive flooding, this is a policy you need not own. Do just a bit of research on your area’s history with water, and you’ll know whether you need to shell out the cash for this rarely necessary coverage.

Accidental Death Insurance

The odds of you dying in an accident are extraordinarily low, especially since most major tragedies that could befall you such as a fire or car accident are covered by other policies. Even if you work a hazardous job, you’re absolutely protected while on the job as well. The lack of real necessity coupled with exorbitant waiting periods and fine print make accidental death insurance a policy you can skip and still sleep well at night.

There are so many policies to chose from, and they all cost money. While a certain amount of insurance coverage is necessary and prudent, you need to choose carefully. In general, broad policies that offer coverage for a multitude of potential events are a better choice than limited-scope policies that focus on specific diseases or potential incidents. Before you buy any policy, read it carefully to make sure that you understand the terms, coverage and costs. Don’t sign on the dotted line until you are comfortable with the coverage and are sure that you need it.

Might of needed bad music insurance for this one.

Might of needed bad music insurance for this one.

Without the ability to see into the future, we often turn to insurance to protect ourselves from the unforeseen. Since we can’t predict our own mortality, we buy life insurance to protect our families’ financial wellbeing. We can never know if the person ahead of us on the road is going to slam on their breaks suddenly, so we purchase auto insurance to cover repairs, and own health insurance to help pay the costs of treating any injuries. Who knows why a burglar would break into your home and not the 24 others that look exactly like it along your street, but thank goodness you have homeowner’s insurance… you get the idea. There are certain kinds of insurance almost everyone should have, such as those listed above, while other types of policies tend to be specific to certain regions or circumstances, and still other kinds of insurance really aren’t worth it for anyone — period. Here’s a list of 10 insurance policies you can feel OK about not buying, as they’re just not worth the money for what these policies ostensibly cover.

Extended Warranties

It seems that whether you’re buying a dishwasher or a BluRay player, the salesperson pushes you to purchase an extended warranty. The fact is, most consumers never end up using these warranties. This is especially true if you make a big-ticket purchase from a reputable brand with a solid history of longevity. Don’t these people have any faith in what they’re selling?

Rental Car Insurance

Almost everyone pays a little more for an auto insurance policy that covers the cost of car rentals (usually limited by a certain dollar amount per day and a maximum amount of days they’ll cover). Many insurers promote this as a sound benefit, just in case your car requires some repair work after an accident. Granted, the price of  having rental care insurance on your auto policy is relatively low, but given how seldom you’re likely to rent a car, you’d save more money over the years to forego this policy and simply pay the low rental car rate yourself should you find yourself in need of a quick replacement.

Children’s Life Insurance 

You most likely own life insurance to provide for your children, heirs or other dependents in the event of your untimely death. Children, however, have no familes they must protect financially, so it makes little sense to purchase this coverage for your kids. Some insurers will argue that by starting a life policy for your children now, they can’t be denied coverage in the future if, for example, it was discovered they had a chronic illness. This is largely a waste of money, since statistically, most children will reach adulthood in good health. A more productive investment in your childrens’ future would be to use that money to fund an individual retirement account (IRA) or an education savings vehicles, such as a 529 college savings plan.

Flight Insurance

There is absolutely no need for you to purchase a flight insurance policy. No matter how much terrifying footage of airplane accidents you may have seen in your lifetime, your chances of being killed in a flight accident is statistically infamentesimal. Even beyond the rarity of these events, however, is that should the worst happen, your life insurance policy will cover this type of tragedy. Furthermore, it’s not uncommon for survivors of airline accidents to receive either settlement or court-ordered recompense through class-action litigation.

That concludes Part I of this article series on kinds of insurance you don’t need. Check back next week for the conclusion of the article, when we’ll look into the merit (or lack therof, as is the case) of six more insurance policies that aren’t worth your time or money.

With tax season coming to a close and the IRS having just released information that it plans to issue refunds about as quickly as it did last year (9 out of 10 refunds released in under 21 days (www.irs.gov)), now is the time to start considering what you’re going to do with your refund. While the promise of a big check from the government always comes with some temptations (a new grill for the summer, a gift you missed out on over the holiday season) you should always make sure you’re investing that money wisely. While it may seem like a gift, and an easily spent one at that, remember that it’s mostly money from your other sources of income that you were never able to collect on. Your tax return should be treated like any other money put away, safe from withdrawals for a long period of time; take your excitement at getting such a big break in the mail as incentive to be smart and save. Here are a few tips to get you thinking about putting some of your tax refund to work.

Save it! Invest it!: The importance of either putting some of your return into a savings account or investing it cannot be stressed enough. A good rule of thumb, at the bare minimum, is take ~10% of every check you get and put it into a savings account or towards your investments. Before you know it, you’ll have a tax return a few times over waiting for you whenever you need it that can be used anytime throughout the year.

It’s too much and you don’t know what to do with it!: If it seems like you’re getting too much back on your tax return, get in touch with either a tax preparation specialist or financial advisor. In this case, you can see if there are any changes you can make to your tax documentation in order to get more of that money throughout the year instead of the one big chunk annually. Chances are if you haven’t already done so, you could be seeing a slight rise everywhere else and a reduction in your tax return check.

IRA?: Alongside the 10% rule for saving/investing, it’s also a good idea to look at doing something long-term with some of the money, namely, putting some of it towards an IRA or other form of guaranteed retirement income (annuities, etc). Nothing is more valuable to someone right now than an investment in future stability. Consider asking your advisor, while you’re trying to shrink your tax refund, about recommended retirement investment opportunities.

The pool at the St. Regis Laguna Beach sounds more fun than an IRA, no?

The pool at the St. Regis Laguna Beach sounds more fun than an IRA, no?

 

While it may seem like something of a killjoy at first, making sure that the first thing you do with your tax return is putting some of it in a place that will give you access to it in the future is of utmost importance in tax season. Whether you’re saving, investing, putting it into a retirement fund or contributing to a child or grandchild’s education, just remember that it’s better if your short-term desires wait until your long-term stability is taken care of. Before you know it, they will have caught up to each-other, and you’ll have made some hefty gains in the meantime.

 

IRS_largeEvery year you repeat the same tired task. You collect all your receipts forms, and related tax information and either settle in for a marathon self-preparation session, or you hand it all over (along with a few hundred bucks, give or take) to your tax preparer. When all’s said and done, you’ll see exactly how much money the federal government took from your paychecks, but you certainly don’t see an itemized list of where that money will go.

However, in his 2011 State of the Union Address, President Obama pledged to develop a new online tool that would allow every American to see precisely how the government spends his or her annual tax payments. The resulting and first-of-its-kind public website, “My Federal Tax Receipt,” launched last year and was just recently updated to reflect current spending. The tool is an online calculator, located on the a site called MyFederalTaxReceipt.gov. Once there, you simply enter your income tax, Medicare tax Social Security tax, and a detailed calculation of how your tax dollars are allocated pops up on the screen.

But you don’t actually have to do anything at all to satisfy your general curiosity — after all, you could just simply scan the numbers and learn how much of the collective federal income tax is allocated where, as it’s all broken into categories and subcategories and measured by percentage. While the information on the site is incredibly informative, intriguing, and perhaps even a bit surprising, I’d be less than honest if I neglected the site’s democratic political bent, but the information is still interesting, despite the occasional overt partisan prose.

Exploring the site is a fascinating way to see where your national priorities lie when compared to those of the government. How much goes to job development and education compared to health care? How does health care rank when it comes to foreign policy and even foreign aid? Most of us don’t have a clue, let alone how much tax money is allocated to each different cause.

The programs and services funded by your income tax, as well as the percentage of your total income-tax payment they receive, are as follows:

National Defense 24.9%
Health Care 23.7%
Job and Family Security 19.1%
Education and Job Training 3.6%
Veterans Benefits 4.5%
National Resources, Energy, and Environment 2.0%
International Affairs 1.6%
Science, Space, and Technology Programs 1.0%
Immigration, Law Enforcement, and Administration of Justice 2.0%
Agriculture 0.7%
Community, Area, and Regional Development 0.5%
Response to Natural Development 0.4%
Additional Government Programs 7.9%
Net Interest 8.1%

In addition to these statistics, the site offers a great deal of interesting content. Curious about foreign policy issues, for instance? You’ll easily find your way to a cache of information including everything from the National Security Strategy, Obama’s National Strategy for Counter Terrorism, and short pieces describing things such as “Refocusing on the Threat from al Qaeda in Afghanistan and Pakistan,” to other stories that tout presidential achievements such as “Stopping a Massacre and Supporting the Libyan People” or “Promoting Peace and Security in Israel and in the Middle East.”

In addition to these 12 major categories, there are an additional 34 subcategories to break the spending down further into segments such as “Ongoing operations, equipment, and supplies,” which consumes 10.3 percent of the total slice of pie that goes toward National Defense, or “Child care, foster care, and adoption support,” a subset of the Jobs and Family security category that sees only 0.6 percent of its share of your tax dollars.

The site certainly warrants a visit, regardless of your political affiliation. Having a better understanding of what we pay for and how makes us stronger citizens, and let’s face it, it’s information we deserve to know.

LifeInsuranceMythsLife insurance may not sound all that exciting, but when you do stop to think about life insurance and you, it’s not uncommon to assume that since the concept of life insurance is simple enough, so too are the products. It’s also fairly easy to rationalize the things you really don’t understand about life insurance, and before you know it, you’re harboring potentially damaging life insurance myths.

In addition to your own edification, and frankly, for the safety of your loved ones’ financial futures, it’s important to understand exactly what life insurance is, what it does, and how — not to mention if — you should make a move either to purchase or upgrade your coverage. Read the myths below to see if you need to adjust your thinking when it comes to life insurance.

1. The coverage you get at work is enough.
While this may, in fact, be the case if you’re single, in good financial standing, have no dependents and aren’t worried about estate taxes, for most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs. After all, your insurance payout must not only support your family financially, it must also pay off any debts, such as the mortgage or even the MasterCard, as well as settle up with Uncle Sam.

2. Only the working spouse needs life insurance.
This is a curious — and wildly inaccurate — belief, yet it somehow persists. Life insurance on the breadwinner is intended to fill in the gap left by the loss of a paycheck, but that discounts all the valuable work a stay-at-home partner contributes to the relationship. If you’re used to this arrangement, how would you pay for child care or the cleaning, or even manage the household without a little financial help in the event of such a loss? It can be easy to overlook the many contributions of the non-breadwinner, but to do so would be remiss.

3. The value of your life insurance coverage should equal two years’ salary.
Everyone’s financial circumstances are different, and so are their life insurance needs. You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If your lifestyle is more modest and you’re not financially responsible for anyone, on the other hand, then two years’ salary may even be excessive.

4. Single people without dependents don’t need to own life insurance.
While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off a few debts, and maybe leave a little bit behind for your parents. And as one MSNBC article on the topic suggests, using a life insurance policy to fund a gift to a favorite charity can be a wonderful legacy for a single person to leave behind.

5. You don’t need professional services to buy life insurance.
You now have the choice to shop online or in person. The tools a professional life insurance agent has to offer can help you identify the needs you have, what you must protect and how best to protect it. With the knowledge of myriad different policies, if you’re honest about your financial and life circumstances, a professional can not only help you determine how much coverage you need, but also help decide whether a term or permanent policy is right for you. They can even customize a plan to meet your unique needs. Our suggestion? Do as much research as you can online paying attention to the credibility of the sources you find. If you’re still confused about your needs, take it to the next level and talk to a professional.

Life insurance is an important product for most everybody to consider, but it helps if you have your facts straight. So whatever else you think you know about life insurance, you might consider running it past an agent or using a credible online source with the right tools to help in your decision making.

The Tax Man Cometh
07Mar
2013

Tax law is confusing. Unless you’re in the business of waxing poetic on IRS code, it’s like reading Mandarin. And just when you think you’ve figured out how to work with current tax laws, they change. My favorites are the ones they say are “permanent”…until they change them.

Anyhow, our trusted friends at Nationwide have put together a nice summary of what’s changing without too much financial tax nerd speak. I’m not sure I’d classify it as bedtime reading, but if that’s your only opportunity, it’ll have to do. But definitely not if you have a devices curfew. Those are serious for the insomniacs in the crowd.

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