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Q. Can premium be paid with a credit card?
A. It depends on the state and the carrier. Some allow this, some allow only the initial premium to be paid by a credit card. Some don’t accept credit cards at all.
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Last issue - long term care.
2. Not stay an empty nester Unless your child has a good career, chances are he or she may need some help from parents or even move in to stay with you. Are you ready for that? Pew Research data reveals that the percentage of 25- to 34-year-olds living in “multigenerational” households rose from 11% in 1980 to 21.6% in 2010. And only 48% of these so-called Boomerang kids pay rent to their parents. Next issue: pay your child's health plan 1. The cost of long-term care insurance
Long-term care insurance can help pay for so-called “custodial care” services, which are often not covered by Medicare - but the longer you wait to buy a policy, the more expensive it’s likely to be. It’s something to start thinking about even prior to age 50 because the cost of long term care becomes more expensive as you grow older. According to 2012 data from the American Association for Long-Term Care Insurance, a couple taking out a policy at age 55 will pay an average of $2,466 a year, while a couple who waits until they’re 60 will pay $3,381. But some health conditions—a stroke or metastatic cancer, for example—can make you ineligible to purchase such a policy in the first place. So it can be wise to look into a policy now, while you’re in good health. Next issue, empty nester, or not? Q. I am pregnant right now. If I apply for life insurance, when should I schedule my medical exam?
A. It depends on how far along you are in your pregnancy. The carriers usually will consider an applicant who is pregnant for life insurance coverage as long as there are no complications with the pregnancy. They will also consider the applicant at her current height and weight. If you are in your pregnancy's early stage and have not gained a lot of weight, you can do the paramed exam now; otherwise you can schedule a medical exam after the birth. Q. Should I put my IRA and 401K into a revocable living trust? What else should I put into the trust?
A. Retirement accounts such as 401K and IRAs can't be owned by a trust, but the trust can be the beneficiary of those accounts. Before you decide what to fund a trust, you need to understand the two advantages of funding a trust with certain assets: 1) When you become incapacitated and need someone to step in and handle your estate, it can be seamless with a trust. 2) When you die, a trust will make life much easier for your beneficiaries (if you only have a will, your estate will first have to go through the probate court process, there is no probate with a revocable living trust). With the above benefits in mind, you can consider putting everything into your revocable living trust, such as your house, your savings, CD, etc. so if anything happens to you, your children can get the money from the revocable living trust easily. In this blog, we will wrap up our previous discussions on the taxation of social security benefits as a margin tax rate increase.
Strategy 3. Defer Taxes Tax deferral strategies can also be appealing to manage Social-Security-triggered higher marginal tax rates. This might not only include just continuing to maintain and stretch tax-deferred IRAs (to the extent they're not converted), but also the use of non-qualified fixed or variable annuities to defer income; while tax-deferral doesn't eliminate exposure to the effect entirely, it's nonetheless true that tax deferral itself is worth a whole lot more when someone's marginal tax rate is so high! Similarly, effective asset allocation strategies to shelter the most high-income tax-inefficient assets also become more important where one's marginal tax rates are so high. Strategy 4. Not to Invest in Tax-free Income On the other hand, it's notable that strategies like investing in tax-free income to avoid high Social-Security-taxation marginal rates does not work, since municipal bond income is itself included in provisional income! The end result is that while the bonds themselves still wouldn't be taxable, they would still face a 7.5% - 12.75% marginal tax rate (for those in the 15% tax bracket) as 50% or 85% of Social Security benefits become subject to taxation. Similarly, the impact can also boost the marginal tax rate for capital gains, which may enjoy a 0% tax rate for those in the bottom tax brackets, but nonetheless increase AGI and provisional income and therefore indirectly trigger the taxation of Social Security benefits. The Bottom Line Unfortunately, the reality is that no two people will be exactly the same for their exposure to higher marginal tax rates from the taxability of Social Security benefits, because the exact scope varies depending on both the nature of their taxable income and the total amount of their Social Security benefits that may be subject to taxation in the first place. For some people with smaller benefit payments, the impact is fairly limited; for others with a very large pool of payments, the effect can continue over a much wider range of income and spanning across not just the 15% tax bracket (with 27.75% marginal rates) but the 25% bracket (with 46.25% marginal rates). Ultimately, everyone will cap his or herexposure when the maximum 85% of Social Security benefits are being taxed, but the exact level of this cap itself will vary depending on the amount of Social Security being received. Which means in the end, the analysis must be done on a personal basis... but with potential 46.25% marginal tax rates, it's worth the effort! For entrepreneurs -
If you tell your customers that "you can get this from anyone, but please consider me", you probably won't go very far ... What if instead, you create a reputation as the person or organization that can honestly say, "you can't get this from anyone but me?" Remember, if the work is easy, it's not for you! Q. A friend told me to set up mortgage payments biweekly so I can save interest over the life of the loan. How do I know the amount of savings I will get?
A. This is just a math trick - normal mortgage payment is per month, so each year you will have 12 payments. However, if you set up bi-week payments, each year you will make 13 payments, this adds up will save a lot for you. You can use a calculator at Bankrate.com to see the total interest savings. If you intend to set it up this way, don't pay any third party to do this for you, you can call your mortgage company and set it up by yourself, free. Q. How to measure a fund's trading cost's impact?
A. We all know a fund's high expense ratio hurts, but does excessive trading also hurts? Excessive Trading Hurts an Investor In 2000, two professors at UC DAvis published a groundbreaking paper in the Journal of Finance - "Trading is Hazardous to Your Wealth", they got access to over 66,000 customers' records and found that people who traded the most averaged returns that were 30% less than those of the average customers and 36% lower than the stock market itself! Hypothesis Researchers naturally suspect a fund that engages in excessive trading might also hurt its performance. While it's easy to quantify a fund's expense's impact on return, it's hard to measure the trading costs' impact. A Fund's Trading Costs Nevertheless, it's possible to breakdown a fund's trading costs into the following categories:
Proxy to Excessive Trading The best proxy to trading cost impact is probably a fund's turnover rate, which is reported annually by every fund. A fund that rarely buys and sells has low turnover (and low aggregate trading cost). For ordinary investors, the best strategy is probably buy and hold, or find a buy-and-hold fund managers, or simply buy-and-hold an index fund for the long term! Q. Is accelerated death benefit rider free in William Penn's Term life policy in NY?
A. Yes, Accelerated Death Benefit (ADB) is a free rider included in William Penn's Term life policies, and is available in all states except Connecticut. Q. What is ADB for Term life products?
A. ADB stands for Accelerated Death Benefit, it is payment from the insurance company in the event of a qualifying terminal illness. Most Term life products include ADB rider free of cost and make it available in most states. The maximum accelerated death amount is usually the less of the face amount or a percentage (e.g. 75%) of the policy's primary death benefit, less any policy loan. The accelerated death benefit is treated as a lien, which accrues interest. Upon the death of the insured, the death benefit payable are reduced by the total accelerated death benefit lien. Q. I have an existing life insurance policy with $500K coverage just approved recently, now I want to increase it to $1M. Do I need to start a new application?
A. Yes, if you want to increase the coverage amount, a new application will be required; if you want to lower your coverage amount, a new application is not required. Since your policy is fairly new, you might be able to use the same medical exam results, especially if you want to go with the existing insurer. Nevertheless, a new underwriting decision is needed and the final decision will depend on your age, the face amount and the current policy. Q. What are the differences in liability protection from a credit card, a debit card, and a prepaid card?
A. Below is a brief discussion of the differences on how the three different types of cards limit your liabilities: Credit Cards
Debit Cards
Prepaid Cards
Q. What is the longest term life insurance coverage period?
A. Term Life insurance is known for its affordability, the longest Term life you can apply for covers 30 years time period. If you want even longer life insurance coverage, you need to consider Permanent life insurance products which there are a variety of products fitting different families' needs. The most affordable one is probably Guaranteed Universal Life (GUL), it's like a "permanent" term life product with little to no cash value build up overtime. You will have lifetime coverage, but you don't necessarily have to pay premiums lifetime, most people choose a 7-pay or 10-pay scheme, meaning you will pay all the required premium in 7 or 10-years and then you are done, with guaranteed death benefit. If you think this sounds like an investment, it is, with tax-free benefits. Check out our GUL calculator to see the kind of return it generates. Q. My son is a freshman and I am preparing his college dorm supplies, how to save money on that?
A. If you can wait, wait till your state's tax-holiday to make the purchases. If you can't, prepare a list of the college dorm supplies and start shopping now, and stay organized don't make duplicate purchases. There are a few internet sites provide college dorm supply lists for both boys and girls, for example, here is a quite comprehensive one for first year college life at either campus dorms or offsite apartments, you can check them out and use them as a reference list. Q. What niche insurance products I shouldn't consider?
A. There are two principles you can use when it comes to purchase an insurance product:
If an insurance product meets the above two principles, it's worth buying, for example, Term life insurance, disability insurance, etc. You can skip the following niche insurance products:
In our last blog post, we discussed the reasons why you should roll over your previous jobs' 401(k)s to an IRA.
Now we will discuss reasons why you should leave those 401(k)s at where they are.
Q. I have several 401(k)s from my previous jobs, should I roll them into an IRA?
A. If you talk to a representative from a financial service firm, chances are the advice you will receive is to consolidate and rollover those 401(k)s to an IRA at those firms. But like everything else, there are pros and cons doing so. Pros of Rolling 401(k)s to an IRA
In our next blog post, we will discuss some of the Cons of rolling 401(k) from previous jobs to an IRA. Q. Should I buy travel insurance for a planned big summer vacation? If yes, how to find the best travel insurance offering?
A. There is no need to buy a travel insurance policy for most instances, for two simple reasons: a. While unforeseen events are typically covered (death, illness, layoff at work, a terrorist incident, etc.), foreseen ones are usually not covered. For example, a tropical storm being tracked is a foreseen event, if you cancel your trip due to the tropical storm might ruin your vacation, it's not covered. b. You will be reimbursed only for nonrefundable expenses. For example, if the airline rebooks your trip at no charge or a cruise line gives you a voucher for a cancelled trip, you are not covered. One-stop Shop Travel Insurance If you really want to get a travel insurance, you can use InsureMyTrip.com or SquareMouth.com to search and compare Travel insurance offerings. Q. Summer is here, I want my teenager daughter to learn a foreign language, which foreign language learning resource is the best for a starter?
A. Below is a list reputable foreign language learning websites and apps, you have to go through them to find out which one works the best for you:
Q. I had 2 water damage related claims in the past year and as a consequence, my previous insurer dropped my coverage and I was turned down by others too. What can I do now?
A. Your best chance is to work with an independent insurance agent that represents many different insurers and ask the independent agent to use his or her experience to find an insurer for you. At the same time, you need to do your part by fixing all the causes of the past water damage incidents (this is a serious issue because a water damage usually leads to other damages as well). Make sure you can present evidence that you have done all the necessary repairs. In the end, it's the price versus risk evaluation, you should be able to find one insurer who is willing to take you as a client, at the right price. If you want to check the value of a property, the following websites can help:
Q. How can I do a periodic evaluation of my portfolio to make sure it still fits the optimal target as expected?
A. You can use the free tool from Morningstar to do such a portfolio review easily: First, go to the Morningstar Instant X-ray tool. Second, enter your mutual funds' tickers and stock symbols, as well as dollar values. Third, click the button "Show Instant X-Ray". Now, you will be presented with a very detailed portfolio breakdown, by stocks, bonds, and cash. It will show you the portfolio allocation among stocks, bonds, and cash, the number of stocks by name and weight (including the stocks held by funds), your allocation by sector, and a lot more details. The tool also compares your annual fees to a similarly weighted model portfolio, if you pay more, look for comparable low cost index funds or ETFs. Give this Instant X-ray a try today, it's FREE! Will Misrepresentation in Life Insurance Application Lead to Deny of Benefits in the Future?6/17/2014 Q. If I lied during an application for life insurance (I am a smoker but I said non-smoker in the application), could the insurance company use this as an excuse to deny any future claim?
A. It depends on how long your beneficiary will file a claim. In insurance, there is a term called "contestability period", it is a short window in which insurance companies can investigate and deny a claim. The contestability period is usually 2 years in most states, and it begins as soon as a policy goes into effect. If you die within the contestability period, the life insurance company can investigate whether you gave accurate information on your life insurance application or not. The company can subsequently deny paying the death benefit if you died - even if the cause of death has nothing to do with misrepresentation on your application. Q. I received a collection letter about a small amount occurred many years ago, will it hurt my credit score?
A. It depends on how small is your collection amount. Since 2009, FICO has changed its credit score calculation by not counting any balance less than $100. While FICO score is the most commonly used credit score, you should also check credit scores produced by the three major credit bureaus: Equifax, Experian, and TransUnion. CYou can get free report each year at Annualcreditreport.com. |
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