1) Make sure your age, family history, smoking status, and any medical or weight issue you have is compatible with the insurance company you choose! When selecting life insurance I’m reminded of that old motor oil commercial with the billowing smoke trailing the driver’s car as he proclaims “motor oil is motor oil.” The point of the commercial and my point with respect to choosing which life insurance company to work with, is that there are many different companies or “carriers” and your particular need or health situation may require you to choose the best carrier for you, not what was great for your uncle Bob or friend! He may not have your family history of cancer or heart problems, or may not have your medical condition. The mistake I often see is a client knows an agent who represents a well known life insurance company or the client may have car insurance with one of the large auto insurance companies and assumes that their life insurance products must be a great fit for them because the company is well known. The problem is that you may overpay by as much as 20 to 50% for coverage from a company that didn’t really want your business at a fair price and priced their coverage to discourage you. They may cost 25% more to cover all the advertising they paid for to get you to know them well! Conversely, there are always companies or carriers that want your business and price their coverage more favorably than most others. While it may be true that for really healthy young people who only want a short duration term policy all prices are fairly inexpensive, there are many companies that offer a better price or coverage for your specific need or medical condition, especially… Read More »
You have worked long and hard and fortunately the fruits of our labor have allowed you to save for retirement. Now that you are looking to supplement your traditional income with retirement or investment income it is important to look at the hard earned nest egg and determine how this egg will feed you for the rest of your life. There are many options for liquidating your retirement savings into retirement income but not all options are equal. In this article we will discuss how to implement these retirement income strategies in order to provide you with an income you can depend on. Now that you are ready to relax and enjoy your life’s work you will most likely look at the large dollar amount you have saved. While looking at this figure and congratulating yourself on a job well done it is important not to forget that this sum will have to support you for the remainder of your life, a life that may very well continue for 20 or 30 more years. This increased life expectancy and increasing cost of living is the primary concern for most retired Americans, “How do I guarantee that my retirement savings provides me with retirement income for the rest of my life?”. Life insurance companies and financial banks have fortunately designed products specifically for assisting today’s retirees with transitioning retirement savings into retirement income. Increasingly growing in popularity with retirees are annuities. Annuities can be very useful because of the guaranteed safety of your investment, tax deferred treatment of interest growth, and life time income options. A Traditional diversified investment portfolio consisting of stocks and mutual funds can help provide an emergency fund for those unexpected twist and turns in life. Social Security does not provide an opportunity for investment growth or… Read More »
Business Considerations Business owners know that proper planning is critical to the growth and success of businesses of all sizes. However, many business owners neglect to consider that their business’ continued success is also dependent on proper planning in the case of a “triggering event” such as retirement, divorce, disability, or death of a key owner. Many difficult questions need to be answered to ensure a smooth and successful transition of ownership. As a business owner here are a few of the key questions to consider: Who will run the operations of the business? How will the ownership structure change? How will my family be provided for? Is there debt associated with the business? Can/will family members of the deceased/disabled owner become involved? How will the remaining owners finance any buyout of the deceased owner’s share? If you run a business in which you have invested considerable time and money or from which you earn your living, a buy-sell agreement should be considered as a means of protecting your business assets. A buy-sell agreement can benefit businesses of all shapes and sizes including sole proprietorships, partnerships, S corporations, C-corporations, and Limited Liability Companies. Planning Goals A well thought out and properly implemented buy-sell agreement will ensure an orderly transfer of the business if/when a key owner retires, divorces, becomes disabled, or dies. When you set out on creating a buy-sell agreement you should have a few goals in mind: Create a market for the business’ stock when it is needed Establishing the value of the business today Establish a methodology for the business’ future valuation Create the funds needed to buy out an owner’s share Create the funds needed to pay estate tax and estate settlement costs Establish the framework for the transfer of ownership Reduce the overall risk to… Read More »
THE PROBLEM Many baby boomers are approaching retirement or are already in retirement and are worried that they may outlive their savings. This worry is compounded by the advances in medical care which is extending the lives of millions of Americans, and the historic low rates investors are receiving on their savings. If those two trends weren’t enough cause for worry, the bursting of the real estate bubble has left millions of seniors with lowered values in their primary asset, their homes! These trends have wreaked havoc on retirement plans that looked quite sound even 5 years ago. While we’re spreading doom and gloom we’ll throw one more monkey wrench into the stew and that is the problem with downsizing. Aside from the previously mentioned issue with people being trapped in their real estate holdings hoping for a bump in valuation and market demand, a recent Wall Street Journal article points out that plans to cut down on one’s living expenses once retirement begins has proved to be difficult. Who wants to give up their cable TV, wireless phone, or internet service? Moreover, this worry about outliving one’s savings has compelled many baby boomers to take more risk in order to shore up their retirement funds. The favored risk is the stock market through direct stock holdings or via mutual funds. The appeal is understandable- purveyors of stock investments show a 30 year return on the S&P 500 of about 8%, which beats the heck out of money market rates of about ¼ of 1%! The problem is that most stock promoters don’t like to talk about the trend over the last 5 years because the financial meltdown hurt most portfolios so much their return has been about zero. Once in a lifetime anomaly you say? Well we had the… Read More »
Medical Exams are a commonly required step of the application process when purchasing a life insurance policy. This exam is for an Insurance Carrier to evaluate the risk involved with providing you with coverage. Exams typically are completed in under an hour and are completed by licensed paramedical companies or a medical doctor. During the process, the technicians will do basic tests including urinalysis, take a blood sample, your measurements as well as your blood pressure. This exam will be provided at no cost to you! The agent assigned to your case will assist you with the scheduling of the appointment. These medical exams are typically completed at your residence or another agreed upon location and all results are kept strictly confidential. EXAM PREPARATION TIPS Make sure to be in a relaxed state at the time of the exam. This means no stressful activities or heavy exercise for at least 24 hours prior to the exam. Be prepared to have your blood drawn and blood pressure taken – wear loose fitting or short sleeves to allow for easy access to your arms. Let the Paramedical Company or your assigned licensed agent know if there are any special needs that may require special attention, prior to the visit. Test your blood pressure prior to your exam to ensure you are within carrier guidelines. You can check your blood pressure by downloading Instant Blood Pressure on your iPhone or Android. This is a 50 second test that will measure blood pressure, no cuff required. Download the Instant Blood Pressure monitor at the: Apple App Store (iPhone) Google Play Store (Adnroid) Drink a lot of water within the 24 hours prior to the exam. It is a good idea to have your exam scheduled for the morning before you eat. Your test results will be more accurate… Read More »
Nobody likes to imagine what life would be like if they were to become disabled. For example, someone who suddenly became disabled may have to foreclose on their house or declare bankruptcy because they became unable to pay their expenses. The loss of income can be devastating financially. That’s why it is important when meeting with your financial planner that you learn about the best policy options for you. Mr. Smith is an excellent example of this. He is 50 years old and is responsible for a wife and 2 kids. He also has a family history of cancer and is taking a medication to treat high cholesterol. He is concerned about paying for his family’s expenses if he was unable to work, and at his current age he sees himself as a higher than normal risk of needing disability benefits either due to an accident or illness. Mr. Smith’s financial planner pointed out that Mr. Smith’s greatest risk is becoming disabled. According to a study by American Health Insurance Plans (AHIP), 1 out of 3 people will miss 90 days of work due to a disability. The financial planner also educated Mr. Smith on the differences in having private disability insurance compared to a typical policy through the workplace, and how difficult it can be for anyone to qualify for government paid disability benefits. At the end of the meeting Mr. Smith learned that disability policy provided by an employer may cover less than 60% of the employee’s income because employers usually take the tax deduction for providing the employee benefit. When this happens the employee’s benefit becomes taxable, and the employee’s after-tax benefit is likely lower than 60% of the employee’s annual income. He also learned that it’s extremely difficult to be approved for social security or government… Read More »
Definition: Key Person Insurance (aka Key Man Insurance) is a type of life insurance that is purchased to offset the expense and financial losses due to the death of a valued employee. This type of plan will provide funds for lost sales, recruiting cost, cost of training and cost of replacing the key employee. What Makes A Key Person? A key person can be anyone. What distinguishes someone as a key person is that his or her loss would severely impact a business until a replacement is found. Key people can be found in a variety of positions and with various titles such as: An owner or non owner. Management/Executives Key Sales People Key Technical People (Engineers, Scientist, Creative, etc) The bottom line is that any person considered vital to the success of the business and essential to its profitable operation is a key person. Quatifying the Amount of Insurance: The amount of insurance coverage should reflect the estimated monetary loss the business would suffer from the death of the key employee. There are two frequently used methods to quantify the face amount of coverage: For traditional deals, the general guideline is 5-10 times total compensation package (Salary, Deferred Comp, Stock Options, Retirement Plan, and Bonus) For debt coverage deal, 50-70% of debt (less the existing amount of key person coverage already in force). Getting Started: Check out some of the addtional resources available for download below. Please contact us to request a quote or if you have any questions.
Welcome to our quarterly newsletter. This edition discusses new, less expensive, options for those concerned with the prospect of needing Long Term Care for yourself or a family member. What’s all the hubbub about Long Term Care Insurance? The crux of the case for Long Term Care (LTC) is that most of us are living longer but may require special care if we are no longer able to perform all of the functions of normal daily living. Unfortunately, health or medicare insurance does not pay for the extended care needed if we are no longer fully functional. Most LTC insurance policies are triggered when at least 2 of the 6 daily living functions can’t be performed – (toileting, eating, bathing, continence, mobility, and dressing) or the insured suffers from severe cognitive impairment. When LTC is needed it often drains a family’s finances or stresses relationships because of the hardship imposed on family members who are the caregivers or paying for the care of a loved one. The most common examples of extreme long term care burdens are dementia and stroke victims who may need care for several years. Costs for nursing homes and other specialized facilities in California average $68,000 per year. If you’re lucky enough to have saved so that $68,000 per year is not a burden, this would be a good time to stop reading this newsletter edition! Not many people have LTC insurance for a few simple reasons: When coverage is the least expensive and easy to obtain in our 30’s and 40’s most people can’t conceive of the future need for long term care because they are at the height of their mental and physical powers and money for insurance is spent on car, home, health, and life insurance, not long term care. When people reach… Read More »