Browse > Home / Archive by category 'Financial News'

| Subscribe via RSS

Mortgage Rates May Stay Low for a Long Time

October 24th, 2016 | No Comments | Posted in Financial News

Why aren’t they rising? Are they the new normal.

shutterstock_114626293In November 2012, the interest rate on a 30-year home loan averaged just 3.31%. That was an all-time low. Simultaneously, the 15-year fixed-rate mortgage averaged just 2.63% interest and the rate on the adjustable 5/1-year loan fell to 2.74%.1,2

Nearly four years after Freddie Mac reported those numbers, mortgage rates are back near those levels. The 30-year FRM has averaged less than 4% interest all year, declining from a high of 3.97% in Freddie’s January 7 Primary Mortgage Market Survey down to the vicinity of 3.5%, in its September 15 PMMS findings.3

Are ultra-low mortgage rates here to stay? They could be. When the Federal Reserve raised the benchmark interest rate in December 2015, analysts thought mortgages would gradually become more expensive. That hasn’t happened. An overseas economic development helped to keep them in check. After voters in the United Kingdom approved the Brexit in June, U.S. investors raced to buy Treasuries. Their yields hit record lows as prices jumped, thanks to demand.4

While the yield on the 10-year Treasury quickly rebounded, the Brexit caused Freddie Mac’s analysts to revise their view of where rates were headed. In July, they forecast that rates on conventional home loans would stay at 3.6% or lower for the rest of 2016, and average around 4% in 2017. Kiplinger analysts predict that the average interest rate on the 30-year FRM will be no higher than 3.7% at the end of 2017.4,5

Mortgage rates tend to move in relation to expectations about Federal Reserve policy. You may see rates move north appreciably when the Fed hikes, but they could fall again thereafter. In fact, that was exactly what happened in the first half of 2016.6

The Fed’s dot-plot forecast of near-term interest rates posits that the federal funds rate will be under 5% for the balance of this decade. With the central bank setting those kinds of expectations, there is an excellent chance that you may see relatively low mortgage rates for the next few years. (Historically, interest rates on conventional mortgages have averaged around 8%.)6,

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

«RepresentativeDisclosure»

Citations.
1 – realtormag.realtor.org/daily-news/2016/07/15/mortgage-rates-stay-near-record-low [7/15/16]
2 – freddiemac.com/pmms/archive.html?year=2012 [9/19/16]
3 – freddiemac.com/pmms/archive.html?year=2016 [9/12/16]
4 – washingtonpost.com/news/where-we-live/wp/2016/07/14/mortgage-rates-remain-low-and-look-to-stay-that-way-for-a-while/ [7/14/16]
5 – kiplinger.com/article/business/T019-C000-S010-interest-rate-forecast.html [9/16/16]
6 – cnbc.com/2016/09/12/mortgage-rates-finally-break-higher-what-you-should-watch.html [9/12/16]
7 – businessinsider.com/fed-dot-plot-june-2016-2016-6 [6/15/16]

Homeowners Insurance – Hard to Place Homes

October 24th, 2016 | No Comments | Posted in Financial News

pexels-photo-164522Although it’s always important to purchase homeowners insurance to protect your investment, some homes are harder to insure than others. These homes, referred to as “hard to place homes,” are usually exposed to a large number or variety of risks, and insurance providers are more hesitant to provide coverage for them.

Here are some common reasons that homes can be considered hard to place, and steps you can take to make insurers more likely to cover your home:

  • Natural disasters: Homes in areas of the country that are more prone to disasters such as wildfires, earthquakes and hurricanes can be harder or more expensive to insure. Take steps to install weather-resistant additions to your home, such as a reinforced roof and shutters.
  • Vacation homes: If you don’t use your home throughout the year you may not be aware if it suffers damage, such as a break in or broken water pipe. If you own a vacation home, be sure to install a security system that will alert you if any damage occurs.
  • Dangerous features: If your yard has equipment such as a playset, pool or trampoline, or if it’s located near natural hazards such as a steep drop or body of water, you could be held liable for damage done to anyone on your property. Be sure to install fencing to guard against natural hazards and prevent strangers from trespassing on your property.
  • The age of your home: Older homes may have outdated electrical or plumbing systems. Additionally, architectural features that add to its aesthetics could be costly to replace. Be sure to keep your Liberty Insurance Agency representative aware of any improvements you make to your home to make it easier for insurers to assess.

FAIR Plans

Even if you take steps to insure your home, it’s possible that you won’t be able to find a policy on the standard insurance market. However, every state has home insurance programs called fair access to insurance requirements (FAIR) plans.

These plans act as an insurer of last resort, and can only be obtained if you’ve taken steps to seek out other insurance and have made improvements to your home to limit potential liabilities.

© 2016 Zywave, Inc. All rights reserved.

Could Insurance Save Your Retirement?

October 24th, 2016 | No Comments | Posted in Financial News

The right coverage might help to insulate you against a money crisis. 

pexels-photoMost people begin insuring themselves when they marry or start a family. They buy coverage in response to two potential calamities – disability during their working years, and death.

Somewhere between youth and death comes retirement, and in retirement, the role of insurance is often downplayed. Does a retired multimillionaire really need a life insurance policy? Now that he or she is not working, what is the point of having disability coverage?

Make no mistake, insurance can play a vital role in retirement planning. It may help to keep a retiree household financially afloat in a money crisis. It can also be used creatively to address other financial concerns.

What can life insurance do for a retiree before he or she dies? Many permanent life insurance policies accumulate cash value over time. Potentially, that cash value could be tapped to pay off medical expenses, education debt, mortgage debt, or debts owed by a business. It could fund a buy-sell agreement. It could go into an investment vehicle that could later pay out income. While the death benefit of a policy may be reduced as a consequence, the trade-off may be worth it for the policyholder.1

What else can life insurance do for a retiree household? It can help the kids. Sometimes a retired dad or mom is 20-30 years older than his or her spouse, and the kids are minors. If the older spouse dies, the death benefit can help to provide for these minor children, who could have special needs.1

There is also the matter of income replacement, even in retirement. When a retiree receiving a pension dies, the surviving spouse may subsequently get far less pension income. A life insurance death benefit may help to make up for it. In another scenario, a widowed spouse may elect to live on a life insurance policy’s lump sum death benefit for a year or two, as an alternative to drawing down tax-advantaged retirement savings accounts.1,2

How about disability insurance? In some households, one spouse retires, but another spouse keeps working well into his or her sixties and earns a large income. A couple or family would definitely miss that income if it went away. Keeping disability insurance coverage may be very wise in such instances.2

Long-term care coverage is expensive, but not compared to the cost of eldercare. Imagine paying $6,235 a month for a semi-private room in a nursing home. Outrageous? No. Merely average. According to the Department of Health and Human Services, that is the average monthly cost for such care today. That comes to $74,820 annually.2

Financially speaking, that kind of expense could break the back of a retiree household. Medicare and disability insurance will not absorb the cost – one that could deplete a retiree’s entire savings, with the next step being Medicaid or turning to adult children (who will be retired or approaching retirement themselves). When eldercare is needed, the daily benefit from long-term care coverage can feel invaluable. That benefit can also fund home health care and assisted living services.2

Liability insurance may come in handy. In certain states (such as California), retirement accounts are not protected against creditor lawsuits. So if a judgment against a retiree in one of those states is large enough, retirement account assets may be seized to satisfy it if liability limits on an auto or homeowner policy are too low. This is why an umbrella liability policy may have merit for some retirees.2

Insurance should not be a “missing piece” in your retirement plan. You may need life, disability, long-term care, or liability coverage more than you think.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

«RepresentativeDisclosure»

Citations.

1 – investopedia.com/articles/personal-finance/010716/do-you-need-life-insurance-after-you-retire.asp [1/7/16]
2 – money.usnews.com/investing/articles/2016-09-13/4-kinds-of-insurance-that-can-save-your-retirement [9/13/16]

3 Bills To Pay Off Before You Retire

October 24th, 2016 | No Comments | Posted in Financial News

It’s one year till retirement, and the clock is ticking. Sure, you knew better than to pay for junior’s $30,000-a-year college tuition, but you did it anyway because he’s a good kid, and, as parents, we want to give them a head start, right?

Now, the looming mortgage balance and the credit card debt (that vacation to Italy was nice) have your financial future in flux. “It’s not that you failed,” says Ivory Johnson, founder of Delancey Wealth Management in Washington, D.C. “But you had a good time when you were working, and the money that you should have saved you didn’t.”

Well, you’re not alone. According to a study by the Employee Benefit Research Institute, 65.4% of American families with heads of household 55 and older held debt in 2013.

The good news? It’s not too late — no matter what your age — to pay off debt. Here are three bills to tackle, along with expert advice on how to get it done.

• Unsecured debt. “Get rid of any lines of credit or revolving credit cards because they reassess every month,” says Johnson. If you have $10,000 on a credit card with 12% interest, for example, it’s going to take more than nine years to pay it off if you’re only making $150 payments, according to Credit Karma’s calculator, and you’d pay almost $6,600 in interest.

In addition, look at your highest-interest debt and consolidate. “If you transfer a balance from a high-interest-rate credit card, some companies offer zero percent interest for 12 months on the transfer,” says Delvin Joyce, managing director at Prudential Financial in West Palm Beach, Fla. “Eliminating debt means you have to make sacrifices, so sit down, go through your budget and figure out where you can trim the fat.”

• Student loan debt. “Keep in mind that your child can finance their education, but you cannot finance your retirement,” says Tracy East, director of communication and outreach at Consumer Education Services in Raleigh, N.C. While experts don’t advise that you stop saving for your future, if you’ve taken on the responsibility of paying for your child’s education, start repaying loans as soon as they come due, make more than the minimum payment, and as soon as your child gets a job after graduation, have them contribute a certain amount each month to paying down the debt. Also, encourage them to raise their grades to become eligible for scholarships, take only the classes they need to graduate and consider saving for the first year to lessen the total amount of the loans. The bottom line: Don’t shoulder the burden if you cannot afford it.

• Mortgage debt.  Nearly 33% of Americans’ total expenditures in 2015 went toward housing, according to the U.S. Bureau of Labor Statistics. One way to shave down your mortgage is to apply extra money toward the principal. But not so fast, say some financial planners. “I consider a mortgage ‘good debt,’” says Joyce. “If you’re a retiree, or soon to be, your kids are likely out of the home, so your home may be one of your only tax shelters.” He advises clients to take advantage of this low interest-rate environment to refinance their mortgage to pay lower rates, save more in interest, and get a higher return on their biggest investment, their homes.

If you’re close to retirement and you’re having trouble digging out of debt, you may have to bite the bullet and work longer than you had planned. “Every year you work, that is one less year you will have to  fund in retirement and another year to accumulate savings,” says Lori A. Trawinski, a certified financial planner and a director at the AARP Public Policy Institute. And if you’ve already retired, think about going back to work. Become an Uber driver, teach an online course or go to work at your favorite retailer for a couple of years and funnel every dime toward your debt.

If you still need to raise cash, leverage your assets. “The money you pay into a life insurance policy grows tax-deferred, so when you borrow from it, it is not considered a taxable event. You don’t pay on the taxes until you pass away,” explains Johnson. But if you cash out any money from your 401(k), the plan’s administrator will automatically withhold 20% of your withdrawal for taxes and you will be subject to a 10% early withdrawal fee if you are younger than 59½.

“A lot of Americans take the head-in-the-sand approach to managing debt,” says Joyce. “If you sit down with a financial adviser who can help you chart a path, you can eliminate the debt responsibly.”

Tanisha A. Sykes is a writer and editor who specializes in personal finance, career development and small business. Follow her on Twitter @tanishastips. 

Source: usatoday.com

Characteristics of the Millionaires Next Door

September 19th, 2016 | No Comments | Posted in Financial News

The habits and values of wealthy Americans.
shutterstock_360001805

Just how many millionaires does America have? By the latest estimation of Spectrem Group, a research firm studying affluent and high net worth investors, it has more than ever before. In 2015, the U.S. had 10.4 million households with assets of $1 million or greater, aside from their homes. That represents a 3% increase from 2014. Impressively, 1.2 million of those households were worth between $5 million and $25 million.1

How did these people become rich? Did they come from money? In most cases, the answer is no. The 2016 edition of U.S. Trust’s Insights on Wealth and Worth survey shares characteristics of nearly 700 Americans with $3 million or more in investable assets. Seventy-seven percent of the survey respondents reported growing up in middle class or working class households. A slight majority (52%) said that the bulk of their wealth came from earned income; 32% credited investing.2

It appears most of these individuals benefited not from silver spoons in their mouths, but from taking a particular outlook on life and following sound financial principles. U.S. Trust asked these multi-millionaires to state the three values that were most emphasized to them by their parents. The top answers? Educational achievement, financial discipline, and the importance of working.2

Is education the first step toward wealth? There may be a strong correlation. Ninety percent of those polled in a recent BMO Private Bank millionaire survey said that they had earned college degrees. (The National Center for Education Statistics notes that in 2015, only 36% of Americans aged 25-29 were college graduates.)3

Interestingly, a lasting marriage may also help. Studies from Ohio State University and the National Bureau of Economic Research (NBER) both conclude that married people end up economically better off by the time they retire than singles who have never married. In fact, NBER finds that, on average, married people will have ten times the assets of single people by the start of retirement. Divorce, on the other hand, often wrecks finances. The OSU study found that the average divorced person loses 77% of the wealth he or she had while married.3

Most of the multi-millionaires in the U.S. Trust study got off to an early start. On average, they began saving money at 14; held their first job at 15; and invested in equities by the time they were 25.2

Most of them have invested conventionally. Eighty-three percent of those polled by U.S. Trust credited buy-and-hold investment strategies for part of their wealth. Eighty-nine percent reported that equities and debt instruments had generated most of their portfolio gains.2

Many of these millionaires keep a close eye on taxes & risk. Fifty-five percent agreed with the statement that it is “more important to minimize the impact of taxes when making investment decisions than it is to pursue the highest possible returns regardless of the tax consequences.” In a similar vein, 60% said that lessening their risk exposure is important, even if they end up with less yield as a consequence.2

Are these people mostly entrepreneurs? No. The aforementioned Spectrem Group survey found that millionaires and multi-millionaires come from all kinds of career fields. The most commonly cited occupations? Manager (16%), professional (15%), and educator (13%).4 

Here is one last detail that is certainly worth noting. According to Spectrem Group, 78% of millionaires turn to financial professionals for help managing their investments.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

«RepresentativeDisclosure»

Citations.
1 – cnbc.com/2016/03/07/record-number-of-millionaires-living-in-the-us.html [3/7/16]
2 – forbes.com/sites/maggiemcgrath/2016/05/23/the-6-most-important-wealth-building-lessons-from-multi-millionaires/ [5/23/16]
3 – businessinsider.com/ap-liz-weston-secrets-of-next-door-millionaires-2016-8 [8/22/16]
4 – cnbc.com/2016/05/05/are-you-a-millionaire-in-the-making.html [5/5/16]

Are There Really Tax-Free Retirement Plan Distributions?

September 19th, 2016 | No Comments | Posted in Financial News

A look at some popular & obscure options for receiving money with little or no tax.

shutterstock_191070785Will you receive tax-free money in retirement? Some retirees do. You should know about some of your options for tax-free retirement distributions, some of which are less publicized than others.

Qualified distributions from Roth accounts are tax-free. If you own a Roth IRA or have a Roth retirement account at work, you can take a tax-free distribution from that IRA or workplace retirement plan once you are older than 59½ and have held the account for at least five tax years. One other nice perk: original owners of Roth IRAs never have to take Required Minimum Distributions (RMDs) during their lifetimes. (Owners of employer-sponsored Roth retirement accounts are required to take RMDs.)1,2

Trustee-to-trustee transfers of retirement plan money occur without being taxed. In a rollover of this kind, the custodian financial firm that hosts your workplace retirement plan account makes a payment directly out of the account to an IRA you have waiting, with not a penny in taxes levied or withheld. Trustee-to-trustee transfers of IRAs work the same way.3

If you are older than 80, you might get a tax break on a lump-sum withdrawal. If you were born prior to January 2, 1936, you could be entitled to a tax reduction on a lump-sum distribution out of a qualified retirement plan in certain cases. Unfortunately, this is never the case with an IRA RMD.4

Your heirs could receive tax-free dollars resulting from life insurance. Payouts on permanent life insurance policies are normally exempt from federal income tax. (The payout may be included in the value of your taxable estate, though.) A life insurance death benefit paid out from a qualified retirement plan is also tax-exempt provided the death benefit is greater than the policy’s pre-death cash surrender value. Even if an employee takes a distribution from a corporate-owned life insurance policy on his or her life while still alive, that distribution may not be fully taxable as it may constitute a return of the principal invested in the life insurance contract.4,5

Sometimes the basis in a workplace retirement account can be withdrawn tax-free. If you have made non-deductible contributions through the years to an IRA or an employer-sponsored retirement plan account, these contributions are not taxable when they are distributed to the original account owner, accountholder, or an account beneficiary – it is considered return of principal, a recovery of the original account owner or accountholder’s cost of investment.4

IRA contributions can optionally be withdrawn tax-free before their due date. As an example, your 2016 IRA contribution can be withdrawn tax-free by the due date of your federal tax return – April 15 or thereabouts. If you file Form 4868, you have until October 15 (or thereabouts) to do this.6

Withdrawals such as these can only happen, however, if you meet two tests set forth by the IRS. First, you must not have taken a deduction for your contribution. Second, you must, additionally, withdraw any interest or income those invested dollars earned. You can also take investment losses into account. (There is a worksheet in IRS Publication 590 you can use to calculate applicable gains or losses.)6

These common and obscure paths toward tax-free retirement income may be worth exploring. Who knows? Perhaps, this year, your retirement will be less taxing than you think.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

«RepresentativeDisclosure»

Citations.
1 – irs.gov/retirement-plans/retirement-plans-faqs-on-designated-roth-accounts [1/26/16]
2 – irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions [7/28/16]
3 – irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions [2/19/16]
4 – news.morningstar.com/articlenet/article.aspx?id=764726 [8/13/16]
5 – doughroller.net/personal-finance/life-insurance-proceeds-tax/ [8/18/16]
6 – tinyurl.com/gwoxed8 [8/18/16]

The Trump & Clinton Tax Plans

September 19th, 2016 | No Comments | Posted in Financial News

How do they differ?

shutterstock_171116387Seemingly every presidential candidate offers a plan for tax reform. You can add Donald Trump and Hillary Clinton to that long list. Here is a look at their plans, and the key reforms to federal tax law that might result if they were enacted.

Donald Trump revised his tax plan this summer. The latest plan put forth by Trump and his advisors contains the key features of the one introduced last year.

Under Trump’s plan, the standard deduction would rise. It would rise from the current level of $6,300 to $25,000 for single filers. Joint filers could claim a $50,000 standard deduction. (The GOP plan proposes respective standard deductions of $12,000 and $24,000.) Instead of seven federal income tax rates, there would just be three – 12%, 25%, and 33%. (In his original tax reform blueprint, the rates were 10%, 20%, and 25%.)1

The estate tax would vanish entirely under Trump’s plan. Taxes on capital gains and dividends would top out at 20%.2,3

Trump wants to reduce the corporate tax rate from 35% to 15%. The new lower rate would apply to partnerships, LLCs, and S corps as well as C corps. (With a proposed corporate tax ceiling of 15% and a proposed individual tax ceiling of 33%, some economists have wondered if a Trump presidency might generate a wave of individuals incorporating themselves.) Full expensing would also be allowed for business investments under Trump’s plan.1

Notably, Trump’s reforms would do away with the deferral of taxes on foreign profits. As it stands now, corporate taxes on foreign profits are deferred until overseas affiliates repatriate them. It can take years for those inbound dividends to arrive. The Trump plan would tax domestic and foreign profits on the same current-year basis.1

Trump has also publicly spoken of greater tax relief for families raising children. This would likely not be an expansion of the Child and Dependent Care Credit, but something new – either a deduction, a credit, or an exclusion. Given the high standard deductions that would be offered if Trump’s tax plan becomes law, higher-income households might be most interested in such an expanded child care deduction. If the Trump plan applies a child care deduction to payroll taxes rather than income taxes, many lower-income households could, theoretically, claim it. Less payroll tax revenue would mean less revenue for some key government programs.1

Hillary Clinton’s tax plan would lower some taxes & raise others. As the non-partisan Tax Policy Center has noted, only around 5% of Americans would see any real change to their taxes under the Clinton reforms – but the richest Americans would pay higher income taxes under her plan. Clinton’s corporate tax reforms would encourage firms to do more business in America, while her estate tax reforms could prompt changes in wealth transfer planning for some families.2,3

High-earning households could see marginal rates rise. Under Clinton’s plan, taxpayers with adjusted gross incomes greater than $5 million would pay a 4% surtax, effectively setting their marginal tax rate at 43.6%. Anyone earning more than $1 million would face an effective tax rate of 30%. Investors would have to buy and hold for longer intervals to take advantage of long-term capital gains tax rates. The current long-term rate of 20% would only apply if an investor owned an investment for six years; in preceding years, it would be incrementally higher.2,3,4

The federal estate tax would also rise to 45% through Clinton’s reforms. The current $5.45 million individual exemption would be reduced to $3.5 million ($7 million for married couples).2

Clinton’s plan would adjust corporate taxation. U.S. firms would find it harder to make tax inversions, whereby they merge with an overseas competitor and move their headquarters to another country to exploit that nation’s lower corporate tax rate. Earnings stripping – in which U.S. affiliates of multinational corporations “strip” profits from their stateside taxable income and send them to overseas parent companies in pursuit of tax savings – would cease. Companies would also face limits on deducting interest payments on their debt. While she has talked of a tax on the biggest financial institutions, Clinton has also expressed a desire to make the process of estimating, filing, and paying taxes less involved for small business owners.2,3

Like Trump, Clinton wants tax relief for families. She wants a new kind of tax credit for child care; the details have yet to emerge at this writing.2

These plans have one destination. That is Congress, and there is no telling how many or how few of these reforms may become law if Clinton or Trump are elected.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

«RepresentativeDisclosure»

Citations.
1 – taxanalysts.org/tax-analysts-blog/trump-s-tax-plan-version-20/2016/08/12/194511 [8/12/16]
2 – nytimes.com/2016/08/13/upshot/how-hillary-clinton-and-donald-trump-differ-on-taxes.html [8/13/16]
3 – cbsnews.com/news/hillary-clinton-donald-trump-taxes-presidential-campaign-2016/ [8/3/16]
4 – fool.com/investing/2016/06/19/how-would-hillary-clinton-change-your-taxes.aspx [6/19/16]

Are You Insured?

September 19th, 2016 | No Comments | Posted in Financial News

Too many Americans have no life insurance. Their loved ones may pay dearly for that choice.
shutterstock_400913152

September is National Life Insurance Awareness Month – a good time to think about the value and importance of insuring yourself.

According to a recent Bankrate survey, 42% of Americans have no life insurance at all. They may not know that life insurance coverage has become much more affordable than it once was.1

Many people ask if life insurance is really worth the cost; maybe you are among them. The simple answer to that question is yes. It can be stunningly cheap: a healthy, non-smoking man in his thirties may pay less than $45 a month for a $1 million 20-year term policy. Permanent life insurance costs more than term life insurance, but permanent life policies can build cash value over time; term policies cannot.2

Life insurance is about managing risk, and if other people rely on you financially, you need to have it in place in case your passing puts them at financial risk. When a spouse or parent dies, there are financial matters to address: a sudden lack of income for a household, bills and mortgages or rent to pay, final expenses such as funeral or cremation costs, and the cost of children’s education. Without adequate life insurance coverage, a household is hard-pressed to meet these immediate, financially draining challenges.

Many growing families have inadequate life insurance coverage. The Bankrate survey discovered that 37% of parents with children under age 18 had no policy at all. Some younger families find coverage through group plans, but perhaps not enough: 32% of the survey respondents raising minor children said that the death benefits on their life insurance contracts were $100,000 or less.1

The problem of inadequate coverage seems to plague households of all ages. A five-figure life insurance payout can pay for a funeral, but it will not offer much economic insulation to a family after a wage earner dies. Bankrate found that 47% of the Americans who have life insurance have policies with coverage amounts of $100,000 or lower. Twenty-one percent of Americans have policies with death benefits of $25,000 or lower.1

How much coverage is adequate for you? Ideally, you should determine that with the help of an insurance professional. As a rough rule of thumb, the death benefit on a policy should be about 15 times your income. If you are considering a term life policy, the term should not end before your envisioned retirement age.2

Life insurance can also be valuable while you are alive. A policy with cash value components may grow over time, either by a fixed amount per year or a variable amount as a result of the insurer directing some of the assets into underlying equity investments. (In such cases, it is also possible for the cash value to decline if the underlying investments do poorly.) After a while, you may be able to borrow against the cash value. Sometimes the payout amount on these types of policies can be adjusted as well as the size of the premiums. Of course, you must keep paying the premiums to keep any kind of permanent life or term life policy in force.3

While you may decide you prefer one kind of policy over another, the important thing is to have coverage in place – not just to reassure yourself, but those you love. Life insurance can help a spouse or a family maintain financial equilibrium at a time when it is most needed.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

«RepresentativeDisclosure»

Citations.
1 – bankrate.com/finance/insurance/money-pulse-0715.aspx [7/8/15]
2 – forbes.com/sites/timmaurer/2016/01/05/10-things-you-absolutely-need-to-know-about-life-insurance/ [1/5/16]
3 – nerdwallet.com/blog/insurance/should-you-consider-cash-value-life-insurance/ [5/6/15]

© Prime Solutions Advisors, LLC. All Rights Reserved. Visit our website at www.primesolutionsadvisors.com | Powered by OnLetterhead Digital Marketing Solutions.