Category: Insurance - PFwise.com

Permanent Life Insurance As a Financial Tool

3/4/2021

As you prepare for retirement, you’re probably concerned about protecting the value of your assets, retiring comfortably and leaving a legacy for your family.

Preparing for the future
By accumulating cash value in a permanent life insurance policy, you can build an “opportunity reserve” for future priorities, including:

Starting a business
Funding college education
Living comfortably in retirement
Capitalizing on financial opportunities

Which financial tools will best suit your needs during each phase of life?

Accumulation — saving and growing assets during your working years
Distribution — using your assets for retirement income
Legacy — maximizing assets and preparing them for transfer to beneficiaries upon your death

Congress Gives a Gift to Permanent Life Purchases From 2021

2/26/2021

Effective January 1, 2021, after 35 years of dropping interest rates, Congress has finally adjusted the "Insurance Interest Rate" down to 2% for 2021 and a floating rate based on benchmarks for years thereafter.

What is the impact of this lower rate?

The MEC limit for permanent life insurance policies will be increased from 10% for older insured to around 200% for younger insured!

What is MEC Limit?
It stands for Modified Endowment Contract. IRS has a 7702 code which limits the amount of premium and cash value in a policy relative to the death benefit, so you cannot put too much money into your permanent life insurance policy and making it more like a "tax-free" investment.

To determine the maximum amount you can put into a policy, there is a "7-Pay Test", if your policy fails the 7-pay test, it will become a MEC, which effectively takes life insurance taxation and turns it into annuity taxation.

So with a higher MEC limit effective January 1, 2021, anyone who purchases permanent life policies (Whole Life, IULs, etc.) now will be able to put more money into their policies and that money will grow tax-free and taken out tax-free as policy loans.

The above will apply for new policies, unfortunately it won't apply for policies went effective prior to January 1, 2021.

Use IULs to Create Income for Life?

2/25/2021

For everyone, there are usually 3 needs for a life insurance, as outlined below, with #2 and #3 needs coming up in later life stages:

To protect incomes and pay for mortgages for beneficiaries if die prematurely
As an empty nester with the need to pay some college expenses
As a retiree with the need of supplementary funds so one doesn't outlive his or her retirement savings

Term life is the best solution for need #1.

A Holistic View of What a Life Insurance Policy Can Do
An IUL with a lifetime income rider provides the flexibility to address all of a person's changing financial needs at various stages of life.

When a person's children are independent and mortgage is paid, the need for death benefit is no longer as prominent. If he purchases an IUL policy it can adapt to meet the financial needs of he and his spouse as their circumstances and priorities change. For example, if he finds himself wanting to withdraw money as a policy loan to pay for a vacation or help his children with college expenses, his IUL has the flexibility to accommodate those needs.

And with a lifetime income rider on the IUL, he can use the policy to supplement his retirement savings with a guaranteed income he can't outlive. The rider is built into the policy, and you don't pay for it unless you use it.

How Lifetime Income Riders Work
The lifetime income rider is built into the life insurance chassis. If the policyholder activates the rider and begins to take an income stream, the carrier will base its payout on the policyholder's age and current account value. After the income payment is calculated there is a rider activation charge deducted from the policy's account value. The charge does not affect the income payment amount, as it is applied after the income calculation is made.

The income is treated as tax-free since it is under the chassis of the life insurance policy. The insurance carrier will also guarantee a minimum death benefit and minimum account value for the life of the policyholder.

The conditions to Meet
In order to activate the lifetime income rider, insurers typically require: the insured age between 50 and 85, the insured not receiving benefits from other policy riders, and the policy has been issued at least 10 years.

Homeowners Insurance vs. Renters Insurance - Part D

2/9/2021

In last blogpost, we discussed what are not covered by either homeowners insurance or renters insurance.

Which insurance is right for you?

Usually, the answer will depend on whether you’re owning or renting. Mortgage lenders usually require borrowers to have homeowners’ coverage, and landlords may require renters’ coverage.

Renters should make sure to get a policy that protects their personal property, not just the landlord’s liability.

If you own a home and rent rooms
A homeowners’ policy makes sense if you live in the building full-time or if you have furnishings and belongings there you want to protect.

Homeowners’ policies don’t typically cover damage caused by renters, so your renters should be encouraged to purchase their own coverage.

If you don’t live in the building, you might be considered a renter yourself, meaning you might not need a standard homeowners’ policy. Different insurance providers have different guidelines. When in doubt, however, it’s best to get full coverage including dwelling coverage.

If you live in a rent-to-own space
Most often you’ll be considered a tenant until you actually purchase the home. As a tenant, you’ll need renters insurance.

Once you officially own the home you’ll have to cough up for homeowners insurance, but not until then.

If you live in a co-op or condo
These housing arrangements may have specific insurance requirements. As a general rule, however, condo owners will want a homeowners policy with dwelling coverage.

Co-op owners only own a percentage of their building, so a renters or tenant policy should suffice.

Homeowners Insurance vs. Renters Insurance - Part C

2/8/2021

In last blogpost, we discussed what does a renter's insurance cover. Now we will discuss what are not covered by either insurance.

What a homeowner's insurance does not cover?

Floods and earthquakes are major enough to require their own separate policies. They’re almost never included in dwelling coverage. If you live in a flood- or earthquake-prone area, you can get additional coverage for a cost.

And insurance providers won’t cover homeowner neglect: damages that could have been prevented by basic maintenance and upkeep.

Policies also don’t extend to government demolition or power failure (if the power source is outside of your residence).

What a renter's insurance does not cover?

Since renters don’t own the buildings they live in, their insurance won’t include dwelling coverage, which means it won’t pay for structural damage to the building.

As with homeowners policies, renters’ personal property compensation is limited to “covered events” or perils listed by the insurance company.

And unless you’re married or living with your family, a renters insurance policy will only cover the belongings and liability of the person who pays for it. If you have roommates you’ll need to get separate policies if everyone wants coverage.

In next blogpost, we will discuss which insurance is right for you.

Homeowners Insurance vs. Renters Insurance - Part B

2/7/2021

In last blogpost, we discussed what does a homeowner's insurance cover.

What does a renters insurance cover

Personal property
This is mostly what you’re paying for. Renters insurance protects your personal property — electronics, clothing, equipment, and other valuable items.

Before buying a policy you’ll take an inventory of what you own and determine what it costs to replace. This approximate amount will be your coverage limit.

You may have the option to select “replacement-cost” coverage or “cash-value” coverage (the cash value of your belongings). Replacement-cost means a bigger payout if your items are damaged or destroyed, so the policy is nominally more expensive — $20 to $50 a year more.

Cars aren’t included in the policy since they’re covered under your auto insurance. Objects stolen from your car will be covered, though, even if the car’s not on your property at the time.

Personal liability
This coverage kicks in if someone’s injured on your property, much like homeowners coverage. It also protects you from a landlord’s lawsuit if you cause accidental damages to the building.

Medical payments and additional living expenses
Both homeowners and renters get this coverage.

In next blogpost, we will discuss what are not covered by homeowners insurance and renters insurance.

Homeowners Insurance vs. Renters Insurance - Part A

2/6/2021

Homeowners insurance and renters insurance both cover slightly different types of property damage, and it’s good to know the difference before you get coverage.

What does a Homeowner's Insurance Cover?

Dwelling coverage
This is the key difference between homeowners and renters insurance: only homeowners insurance includes dwelling coverage, which covers damage to the actual structure of the home.

This includes anything from a broken door or window to total building demolition. Dwelling coverage extends to other structures on property you own, such as a fence, garden, or garage.

Not all damages will qualify you for a payout. Most companies have what’s called a “named peril” policy which lists qualifying perils or “covered events” — the damages your insurance will pay to repair. Weather phenomena like heavy wind and hail, two of the most common dangers, are usually on the list.

Other covered events might range from smoke, fire, falling ice, and water damage to vandalism and theft.

Personal property
Personal property coverage protects the belongings inside your home. Even if the object isn’t physically in your home — for instance, if your laptop or bicycle is stolen from your car — the policy kicks in.

For homeowners, the price is usually included as a percentage of your dwelling coverage, but you can raise or lower the amount as needed before buying a policy.

Personal liability
If someone’s injured in your home, or if someone sues you for damage to themselves or their property, this is where personal liability insurance comes into play. The amount is flexible. Pet owners whose animals tend to be aggressive, for example, often end up paying more.

Medical payments
This insurance covers medical costs if someone gets hurt on your property and needs a doctor’s attention. Unlike personal liability, medical coverage is on a no-fault basis; you won’t be held legally liable.

Additional living expenses
This catch-all phrase just means you’ll have money for living expenses, including a hotel or rental if you need to vacate your home after a covered peril.

In the next blogpost, we will show you what does a renter's insurance cover.

Rethink SPIAs in Retirement

1/31/2021

Based on this article from Advisorperspectives.com, the role of Single Premium Immediate Annuities (SPIAs) should be relooked at.

The Traditional View of SPIAs
The traditional view of Single Premium Immediate Annuities (SPIAs) is that, as a vehicle that turns a lump sum into a fixed and guaranteed (but otherwise illiquid) stream of monthly payments for life, they are best used for retirees that are focused entirely and solely on generating steady guaranteed income in retirement (to the point that they’re willing to give up the liquidity and any portfolio upside potential).

And in practice, that trade-off isn’t actually very popular for most, with LIMRA statistics showing meager adoption of SPIAs (compared to other annuity alternatives), with sales that actually fell dramatically in 2020 (despite the market volatility and what is otherwise usually a flight to safety during times of market fear).

The New View of SPIAs
Yet as the author notes that the value of SPIAs isn’t just their lifetime guarantee, but the fact that SPIAs are a “fixed income” vehicle that pays not only principal plus interest like a bond but also a “mortality credit” (the benefit of pooled longevity reduced by the insurance company’s own expenses, otherwise known as the portion of annuity payments that are shifted from those who pass away early to support the continued payments to those who live longer), which may be trivial early on but after 25 years (for a 65-year-old annuity purchaser) can amount to 17% of their ongoing payments (and by age 100 rises to almost 39% of their cumulative payments). Which means another way to view an SPIA is not as a guaranteed income vehicle for retirement lifestyle spending, but essentially as a bond alternative that, once annuitized, is then reinvested into equities as the payments are received and the annuity effectively self-liquidates.

The appeal of such a strategy is that it both helps to mitigate sequence of return risk (by buffering the early years of volatility with the guarantees of the annuity payment), helps to ameliorate what is otherwise a significant inflation risk of SPIAs (as the payments aren’t there to maintain purchasing power, but to reinvest back into equities that grow to maintain purchasing power over time), and provides more flexibility (as it doesn’t entail fully liquidating the portfolio but simply carving off a portion of it) while providing a better outcome for those who live the longest (and get the most mortality credits to out-compound the return of just buying bonds alone).

Where to Find Guaranteed Returns in a Low Yield Environment

1/30/2021

With Treasury Bills providing a mere single-digit-basis-point yield, money market funds paying so little that most have had to waive some or all of their internal fees to avoid having a negative yield (or have outright closed to new investors), and CDs yielding little more, where to find satisfactory yields?

Try MYGAs
Based on this article from Advisorperspectives.com, one key option is the use of the ‘traditional’ fixed annuity… specifically, the kind that pays multi-year guaranteed rates, often called MYGAs (Multi-Year Guaranteed Annuity) for short. As in practice, many MYGAs are still paying yields as high as nearly 3%, while even longer-term 5-year CDs are yielding barely over 0.3%.

Of course, the reality is that annuity yields aren’t fully guaranteed, in that there’s a credit risk of the annuity company itself – and a not-surprising risk-based tendency that higher-quality insurers pay lower yields, while the lower-credit-quality (i.e., higher-risk) annuity carriers are the ones offering the highest near-3% yields. In practice, insurance companies have additional backstops (e.g., state guaranty associations), can actually benefit from their illiquidity (i.e., annuities with surrender charges or similar exit fees may be unappealing for some, but actually help ‘lock-in’ the money for the insurance company to be able to offer higher yields, akin to the higher yield for longer- versus shorter-term CDs). And MYGA yields still exceed yields from corporate bonds with similar credit ratings and maturities.

How to Use Life Insurance and Become Your Own Banker

1/14/2021

We all make major purchases as we go through life. Cars need replacing, appliances need updating and we may want to purchase recreational equipment or boats, second homes, etc. The question then becomes, what is the best way to pay for these items? If you are not able to pay cash, you will need to finance these types of purchases.

If your answer to these questions is, “I don’t know,” you may need some help.

Rather than using a bank or other financial institution to borrow from, consider using an established life insurance policy. If you had fully funded an IUL or whole life policy ten to twelve years ago and the cash value has performed, you would have sufficient cash value to make loans from the policy to themselves for cars, appliances, or a down payment on a home. Instead of paying non-deductible interest to a bank, you can be paying yourself interest on the loan which then increases cash value in the policy which can then be borrowed out again in the future for another purchase or supplemental retirement income.

Bankers contend that the interest is being paid to the insurance company so there is no benefit. They leave out the fact that although individuals are paying interest to the insurance company all their money, including the loan amount, is still earning interest based upon how the money in the whole life or IUL policy is invested. When you borrow money against a life insurance policy, you are borrowing from the general fund of the life insurance company while using cash value to secure the loan. If the policy earns more in interest than the insurance company is charging, then you come out ahead.

What kind of people does this apply to?

Individuals who want a portion of their portfolio allocated to modest but guaranteed growth
Those who believe income tax rates may increase in the future
People who want to save money for emergencies
Individuals who want to save for specific events such as education funding or weddings etc.
People from high probate states that want assets to bypass probate
Individuals who like the features of a Roth IRA but who cannot qualify to contribute to a Roth IRA
Individuals who seek asset protection

Benefits of Using a life insurance policy:

Principal protection
Competitive growth rate
Access to equity prior to age 59 ½
A tax-free death benefit over and above the loan and accrued interest amount
Tax sheltered growth
Creditor protection in many states
Ability to access Accelerated Benefit Riders in the event of a covered illness or accident

Another reason that this works for the insured is because it is a cheap source of liquidity and is available without completing loan documents or a credit application. If the loan is not all paid back, the insurance company pays itself back out of the death benefit. It does work better if the loan is paid back so the insured can take advantage of cheap financing again and again.

How to Use Cancer Insurance to Supplement Your Health Insurance

1/3/2021

With health care premiums rising and increases in treatment costs, many people are looking to fill the gap between coverage and out-of-pocket expenses. Cancer Insurance & Heart Attack/Stroke Insurance pays you a lump-sum payment upon diagnosis, providing you with some security in your time of need.

The monthly premium for an individual policy is usually significantly less than what you would be paying with your group coverage, and if you ever left your workplace, an individual cancer insurance policy could be portable too.

Your Retirement Savings Might Not Last As Long As You Think

12/24/2020

The Setting Every Community Up for Retirement Enhancement Act of 2019 (Secure Act) is bringing this theory to defined contribution plans such as 401(k)s. A new rule would require plan sponsors to provide workers with an annual disclosure showing what their monthly (and lifetime) income would be if they converted their plan savings to an annuity with a guaranteed stream of income. The law is designed not necessarily to push people into buying annuities but to illustrate how their funds will need to stretch over their lifetime.

People hear that they have to accumulate a lot of money for retirement. As time goes on and their 401(k) balances increase, they become overconfident that they have enough money to retire. But, they need to begin asking themselves: "What would it produce in income down the road?”

TIAA provided an example of what someone around age 39 might see on his or her statement. Let’s say as of June 2019 the worker had $87,851 saved. Based on a monthly contribution of $420 that increases each year with inflation, and a number of other assumptions such as rate of return, at 65 the person is estimated to have a balance of $829,150 (or $382,585 in today’s dollars).

The hypothetical annuity payment would be $4,586 (or $2,116 in today’s dollars). This assumes a single life annuity with a 10-year guarantee period and 4 percent interest rate.

But what if your 401(k) account has just $200,000 when you retire?

If such a person annuitizes $200,000 at 65 this might produce a hypothetical payment of $13,274 a year, or $1,106 per month based on a 6.6 percent payout rate (including interest rate and return of principal based on life expectancy). Although, the actual annuity payment will depend on current interest rates when annuitized.

The 6.6 percent income rate means that for every $100,000 annuitized, the annualized income will be $6,600. The 4 percent interest rate is used in the calculation of the annuity factor to come up with the payment amount. With a lifetime immediate annuity, which is what would be used for the illustrations under the Secure Act, the payout rate is different from the rate of return. The actual realized return depends on how long a person lives, beyond the guarantee period.

The Secure Act also dictates that there would be disclosure within the example to make sure workers understand that the calculations depend on numerous factors that can affect the estimates they are given.

The Labor Department is required to issue rules instructing plan administrators on the assumptions that will be used to estimate a lifetime income stream. The illustrations would estimate retirement benefits that might be paid as a life annuity to a retirement account holder and a survivor annuity over the life of the participant’s surviving spouse, child or dependent. The plan administrators would assume the plan participant and a spouse were the same age, and a single-life annuity would also be shown.

Done right, this new requirement could be a useful reality check. Rather than focusing just on your total balance, which could give you a false sense of financial security, this lifetime income illustration could bring clarity to how you view retirement savings. Keep in mind your money may have to last you several decades in retirement.

This might shift people’s behavior and help them realize they need to save more for retirement.

When Should You Accelerate a Life Insurance Policy's Rider?

12/18/2020

The following article is from American National whose life insurance policies come with accelerated benefits riders. It could be applied to other insurance policies with similar accelerated riders.

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It is a golden rule that you always understand your product before you sell it. Would you sell it to your mother? Life Insurance with ABR’s? You bet I would. The key point to make in this continuation of ABR discussions is to understand when the time is right to consider accelerating a rider. As we know already, Accelerated Benefit Riders were and are designed to be available for assistance when the time is right. So, what is that time? Well that is a good question and the answer will depend on the individual and their situation.

Let me try to answer this another way, if a policy holder files a claim and his or her life expectancy is long, a smaller and in some cases zero payment could be available. If their life expectancy is short due to their qualifying condition, a much larger payment could be available. Simply having a qualifying condition does not always mean you need to accelerate immediately or at all. Let me give you a couple of examples here from individuals I actually know and associate their stories to ABR’s. A 53-year-old male with a $100,000 of 10-year term which has been in effect for one year has what is considered a very mild heart attack. As an avid Crossfit athlete, he was found to have a 90% occlusion in one of his arteries. His condition was resolved with a coronary stint and improved with proper diet management and continuation of his exercise regimen. Negligible damage to his heart was done and his cardiologist indicated he has at minimum 30 years to live. A heart attack is a qualifying condition. Is this a good time to accelerate? No, because his life expectancy (30 years) or mortality has not changed. The present value of the future premiums is deducted from the present value of the death benefit. Take into account PV of nine years of 10-year Term premiums and 21 years of ART premiums being deducted from the PV of $100,000; this would result in an unpayable claim.

A female age 45 with $500,000 IUL diagnosed with ALS (Lou Gehrig’s Disease) given a life expectancy of two years. She had very minor symptoms at time of diagnosis. Was it time to accelerate? You bet it would be a good idea to, at minimum, do a partial acceleration now. Use that partial and enjoy some time with her family while she is still functional. Further accelerate for expenses or other reasons when needed. Here again, life expectancy is very short resulting in a larger payment. She actually beat the odds and lived 3.5 years, but my point here is acceleration was appropriate and put to good use when really needed.

Accelerated Benefit Riders from American National are a wonderful tool to provide peace of mind for future events should they occur. The important part is understanding how they are calculated and when is the best time to utilize them. As you have seen, simply having an event does not always mean immediate acceleration is needed. However, sometimes it does and that is the backbone of what these riders are for. Your protection when you really need it.

Which Life Insurance Policy is the Best for a Special Needs Child?

12/17/2020

Why a special needs child is special?
When a child is born with a special need, they will have a lifetime of care ahead of them. Typically, they will receive government aid, which will assist in paying for their future care and education. As such, they are limited in the amount of assets they can own or the income they can have and still qualify for aid.

In addition, an expensive lifetime of need arises. This need is too expensive for parents to shoulder for the lifetime of the special needs child. Although most of the need will be paid for by the government, they will have other needs throughout their lifetime and potentially after the parents are deceased. There is a need to create a special needs trust to have sufficient funds available for future care, especially after parents are gone. The special needs trust will be set up to allocate money for the special needs child’s care without serving to disqualify the special needs child from government aid due to too much in assets or income.

How does a family provide for a special needs child?
Life insurance on mom, dad, and both sets of grandparents can help meet that need. With a life insurance policy, the death benefit can be allocated to the special needs trust to fund the child’s care for years to come after a grandparent or parent passes away. The biggest worry of a special needs child’s parents is what will happen to their child if they are not there to take care of the child. With life insurance as a funding vehicle for the special needs trust, the parents and grandparents can rest knowing they have the situation taken care of and the child will be cared for after they are gone.

Which policy is the best?
Typically, a Guaranteed Universal Life (GUL) policy is utilized. This policy often provides the most cost effective permanent policy that will serve the purpose of funding the special needs trust. Grandparents need permanent coverage in that they are older when purchasing the policy. Parents are also attracted to the GUL policy due to the low cost for permanent protection. Make sure the GUL policy also comes with Accelerated Benefit Riders in the event of a qualifying illness or accident that significantly reduces life expectancy.

Differences Between Short Term Disability Insurance and Long Term Disability Insurance - Part C

12/7/2020

In last blogpost, we discussed what is long term disability insurance. Now we will discuss how to buy disability insurance.

Short-term disability is a pretty common employee benefit and can cover as much as 80% of your income for a few months. If you work in California, New York, New Jersey, Rhode Island or Hawaii, employers are required to offer short-term disability coverage. If you’re in another state, ask your human resources department for details.

Some employers also include long-term disability insurance coverage as an employee benefit. You may also be able to purchase a group long-term disability policy through your company when you’re hired or during open enrollment if they offer supplemental benefits.

Remember, if you get insurance through your employer, the coverage may end when your employment ends unless they have a portability option. Employers can decide to stop providing coverage at any time and or insurance companies can cancel policies. And keep in mind that you’ll probably have to pay taxes on employer-paid disability coverage.

Buying your own policy allows you to customize it depending on your specific needs — which is why some people choose to buy their own coverage even if their employer offers one.

Plus, if you own the policy, your benefits are tax-free.

Individual coverage is a lot more comprehensive, because it’s not tied to your job. If you leave your job, it goes with you across the country. It’s kind of like a shadow — it follows you wherever you go.

If you’re self-employed or want coverage beyond what your company offers, you can buy it directly from an insurance company representative or work with a broker for help. You might also be able to find group coverage through a professional association.

Like life insurance, you’ll have to go through a medical underwriting process, which can feel pretty invasive. Medical underwriting involves answering health questions, giving a blood and urine specimen, providing access to your medical records and prescription history.

You will also need to be underwritten financially since the carrier is replacing lost income. This involves the insurance company reviewing your tax returns, W-2s, pay stubs, and similar documents.

As for how much it costs? Long-term disability insurance premiums vary depending on your income, age, occupation, and lots of other details, but most people spend 1% to 3% of their annual income. The younger you are when you sign up, the lower the premiums are likely to be.

Differences Between Short Term Disability Insurance and Long Term Disability Insurance - Part B

12/6/2020

In last blogpost, we discussed short term disability insurance. Now we will discuss what is a long term disability insurance.

Long-term disability insurance kicks in after you have been disabled for a certain period of time, typically three to six months, or at the end of your short-term disability policy term.

Depending on what riders your long-term disability policy includes, it can help replace your income if you need to take months or years off while receiving treatment for an illness like cancer. It can also help supplement your income if you have to cut back on work due to diagnosis or treatment.

Long-term disability policies typically pay 60% to 70% of your gross monthly income. If you become permanently disabled, long-term disability insurance policies either pay out for a prescribed period of time, such as 10 years, or until you reach an agreed-upon retirement age, like 65.

You might be wondering: What about Social Security? Yes, supporting you after you’re no longer able to work is part of what Social Security does. But you have to be permanently unable to do any kind of work to qualify for SSDI. That leaves out lots of people who are partially or temporarily disabled.

In next blogpost, we will discuss how to buy disability insurance.

Differences Between Short Term Disability Insurance and Long Term Disability Insurance - Part A

12/5/2020

Q. What are the differences between short term disability insurance and long term disability insurance?

A. We will explain short term disability insurance first.

Short-term disability insurance kicks in to cover part of your income for a short period of time, typically up to six months, while you recover from a non-job-related illness or injury. (If you get injured on the job, you’d probably receive workers compensation, too.)

Some companies offer short-term disability insurance as an employee benefit. These policies might cover you as you recover from surgery or if you face an illness requiring hospitalization or frequent treatment.

Some group policies include a maternity benefit, which will pay out for a certain number of weeks after you give birth, but most individual policies don’t, unless you are disabled. Your plan should clearly explain what’s covered and what isn’t.

If you’re self-employed or own your own business, consider purchasing your own short-term disability coverage. These policies are generally inexpensive because they often only need to cover a few months.

If you’re not a good saver, you probably need to have short-term disability in place because a short-term policy can help you keep up with your bills without cleaning out your savings.

In next blogpost, we will discuss what is long term disability insurance.

LTC Options and Different Products for People at Different Ages

11/30/2020

November is Long-Term Care (LTC) Awareness Month! Below is a good summary of all the LTC options:

This online presentation from Securian below has a good discussion of various products that best fit for people at different stages of life.

Some Leading Mutual Life Insurers' 2021 Dividend Rates

11/24/2020

A mutual life insurer is a life insurance company that’s owned by some or all of its policyholders. A mutual may use dividends to pay part of its profits to the policyholder owners.

Mass Mutual
Mass Mutual is cutting its 2021 dividend rate slightly, to 6%, from 6.2% for this year The company says it expects to pay a total of $1.7 billion in dividends in 2021. A year ago, MassMutual said it expected to pay $1.7 billion in dividends for 2020.

Northwest Mutual
Northwest Mutual says the interest rate it uses to calculate the 2021 dividend payments will hold steady at 5%.

Ohio National
Ohio National says the interest rate it uses to calculate the dividend payments will fall to 4.7% for open block policies, from 5.2% for this year, and to 4% for closed block policies, from 4.5% for this year.

5 Annuity Options In One Map

11/23/2020

While all annuities are designed to provide income, there are different kinds to align with your accumulation goals and how much risk you’re comfortable taking.

Immediate Annuity
Carrying the lowest risk, immediate annuities convert your premium payment to a guaranteed income stream for life, or for a specific period.
Fixed Annuity
Fixed annuities offer a fixed interest rate that’s guaranteed for a certain time period. The guarantee may appeal to you if you’re willing to sacrifice the potential for higher returns when the markets rise.
Fixed Indexed Annuity
In the middle of the spectrum, fixed indexed annuities have become increasingly popular with people who have a moderate appetite for risk. You can earn interest credits based in part on the upward movement of a stock market index while enjoying protection of a zero percent floor. If the net change in the index over a given crediting period is negative, you would earn zero interest credits for that period, but never less than zero.
Registered Index-Linked Annuity
These products are designed for people with a higher risk tolerance. Registered index-linked annuities offer the potential for index credits tied to index performance while providing a measure of protection from market loss.
Variable Annuity
This type carries the highest level of risk because your money is invested directly in the market. Variable annuities offer the highest growth potential of any of the products on the annuity spectrum, but they also leave you fully exposed to market loss.

5 Criteria to Look For When Researching Permanent Life Insurance

11/22/2020

If you are looking for permanent life insurance protection, make sure to look for products that meet the following 5 criteria.

Volatility Protection – Offers protection against market volatility, through global and domestic index interest crediting strategies.
Cash Value Access & Riders – Allows you to take distributions as needed because life doesn’t always go as planned.
Tax Diversification – Helps fuel supplemental retirement income that is generally tax-free
Low Cost Structure – Its affordable and transparent cost structure is designed to help generate optimal, stable income in good years and bad years.
Non-Medical Underwriting – It’s faster and easier to acquire for policies that qualify.

5 Resources to Start Caregiving Research For Your Aging Parents

11/20/2020

1. Start by contacting the local Area Agency on Aging.
There are over 600 “Triple As” that form a national network, connecting older people and their families throughout the country with local programs and services. Created under a Federal law, the Older Americans Act, they support services such as meals on wheels, transportation, adult day care, and senior centers, all available at no or low cost. They also sponsor an information telephone line for family caregivers and can provide general guidance on home care, assisted living, respite care and other public and private services. To find the Area Agency on Aging in your community, visit their website or call 1-800-677-1116.

2. Explore eldercare benefits offered through your employer.
Many employees of large or medium-sized companies are surprised to find that their employer makes resources available to assist working caregivers with eldercare issues. Employees at these companies are likely to have access to an internal website with a wealth of caregiving information, and the option to speak with a designated eldercare coordinator who ca answer questions, provide lists of local resources and help them think through what might be needed. Though not as common, some employers offer more robust services such as in-person consultations or paid leave. Check with the human resources department to see if these benefits are available.

3. Retain a care manager.
It may be a smart move for caregivers to hire a private geriatric care manager--usually a social worker or nurse--to help families with eldercare needs. They generally start with an in-home assessment, then meet with the family and put a car plan in place. Depending on the agreement, families may want them to implement the plan and take on more responsibility. As the onsite experts, coordinators and advocates, they provide services such as monitoring care, solving problems, dealing with health insurance issues, and handling crises as they occur. To locate a care manager, contact the Aging Life Care Association (ALCA). All 2,000+ members must meet strict criteria and sign a code of ethics.

4. Visit websites for caregivers.
There are a number of websites that focus on caregiving and it’s worth taking time to look into them. Their subject matte is extensive, and ranges from information on benefits and legal documents to tips for hiring private caregivers to caring f someone with Alzheimer’s Disease and suggestions for coping with the ups and downs of being a caregiver. Some have chat rooms that function as virtual support groups so caregivers can share their experiences. Others help you locate independent caregivers, home care agencies or assisted living facilities (although caregivers should note that they may b listed because they are advertisers). AARP has a robust section on its website for caregivers. Another helpful website Is sponsored by the Family Caregiver Alliance. You can google “caregiving” to find other good websites.

5. Understand more about financing care and protecting against financial abuse.
While caregivers begin their journey mainly concerned about parents’ health and safety, they soon find out that the financial and legal aspects of caregiving need to be dealt with too. They discover that home care, assisted living and nursing home care is very expensive and they may end up being the ones who will pay for Mom or Dad’s care. In the best of all worlds, their parents planned ahead, have all their legal and financial papers in order and purchased long-term car protection. No matter what the situation, a financial professional can play a valuable role by reviewing care options and the cost implications and by providing some strategies to help stretch caregiving dollars. Since elders are often victims o financial abuse, losing their financial nest e impacts their ability to pay for care. It’s a good idea to become familiar wit ways to prevent and report scams and fraud. Google “financial elder abuse” for descriptions of the causes, types of abuse and whom to contact if necessary, or go to the National Adult Protective Services Association website.

A Case Study How to Use Money In CD To Cover Long Term Care

11/19/2020

The client
Age 75 to 85; has $150,000 from a large build up in a Non-Qualified Annuity not subject to surrender charges or money from a CD; views proceeds as lazy or emergency money.

The situation
Client is concerned about efficiently funding an extended health care or Long-Term Care (LTC) event. Has already identified assets to use but wants preservation of their capital, a reasonable rate of return and access and control over their money if they need it. The agent’s current BD doesn’t allow sale of Indexed Annuities.

A solution
To address the specific concerns of the client, a 1035 transfer to Annuity Care, base policy only, may be a possible solution.

This solution offers the client on $150,000:
• The ability to access gains tax-free for extended care or LTC events
• A 34.8% tax-free income stream for 36 months ($4,348 a month) for qualifying LTC expenses
• Can add a spouse or other insured giving both access to the full monthly benefit
• Retain access and control over the assets just like in their current annuity
• No medical underwriting or cognitive phone interview for base policy only
• Ability to add a rider doubling pool of assets or lifetime coverage (requires cognitive phone interview)

Common Problems That Life Insurance Products Are Good Solutions

11/18/2020

Long Term Care Insurance 101

11/17/2020

Long-Term Care Insurance 101

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