What keeps employees from work the most? Illness or Injury?

By | May 16, 2012

A recent survey by the Consumer Federation of America found that the a majority of employees wished their employer offered disability insurance coverage. According to the survey, illnesses are the cause of the majority of disabilities that affect a person’s ability to work, not injuries as most supposed. In fact, fifteen percent of long term disability claims are caused by cancer. Employees are more likely to believe that injuries (66%), rather than illnesses (34%), cause the majority of disabilities that keep employees from work for at least three months.

“The kinds of circumstances that affect nearly all of us, whether directly or indirectly, are the most common causes of absence from work,” says Diane Garofalo, SVP of the Benefits Center at Unum. “Most people believe that injuries and work-related events drive disability, but the truth is far different.”

In 2011, Unum’s leading causes of long term disability claims were:

• Cancer (15%)

• Back disorders (excluding injury) (14.6%)

• Injuries (10.4%)

• Behavioral health issues (10.1%)

• Circulatory system disorders (9.3%)

• Joint disorders (8.5%)

The leading causes of short-term disability were:

• Normal pregnancy (18.9%)

• Injuries (10.9%)

• Complications from pregnancy (8.8%)

• Digestive disorders (8%)

• Back disorders (7%)

• Cancer (6.6%)

“A disabling illness or injury can cause real financial hardship for many individuals and their families, and disability insurance creates a backstop against significant income loss during the period of absence, recovery and return to work,” says Thomas R. Watjen, president and CEO of Unum.

Disability insurance benefits can really provide relief at a time when they are most needed. I have personally seen the benefits of a good disability insurance policy work, and the good it can do to help a family when illness strikes. For more information about disability insurance, and what makes a disability insurance policy a good fit for your own specific needs, contact me. I’d be happy to help.

Getting Married? Here’s What You Need To Know…

By | May 12, 2012

Thinking of getting married? Here’s what you need to know about your future partner, and his or her financial situation.

They say love is blind, but if you walk into marriage blindly, you can end up in a financial mess not of your own doing. It is advisable to discuss potential financial concerns like bad credit, foreclosure, bankruptcy and other financial setbacks ahead of time. These concerns and financial problems need to be addressed before you tie the knot.

Bad credit, mortgage foreclosure and bankruptcy may seem like obvious marriage deal breakers, but according to a new “Couples and Money” survey conducted by a prominent financial services giant, love may be blind to these and other financial setbacks.

Avoid any financial surprises by discussing these topics beforehand:

Debt: Financial and money secrets are no way to start off a marriage on the right foot. Talking about student loan or credit card debt may not be the most romantic of topics, however, it’s important to understand how each partner feels about debt, and know their approach to managing debt. A person’s attitude toward debt can deeply affect the future financial situation of a married couple.

Know the Score: Checking your credit score once a year can help identify red flags and allow you to correct any potential errors. It’s important to know your credit score, especially if you’re planning on making larger purchases as a couple, such as buying a new car or a house. It is equally important for your future partner to know their score as well. Keep track of the score, and your financial future on track.

Know the “K”: Many people get married later in life, so for many couples, one or both partners may come into the union with a 401(k), an IRA or other type of retirement or investment account(s). It’s important to discuss long-term goals and understand how you both plan to manage these accounts for the long term. It’s also a good idea to determine and name beneficiaries on retirement accounts, life insurance, wills and trust documents.

Money Habits: While one partner may be frugal, and the other more of a spender, it doesn’t mean financial arguments are inevitable. What it does mean is that it is more important for these future partners to discuss their saving/spending philosophies and work on finding a workable solution that benefits both.

The Budget: Creating a realistic budget that includes savings goals, combined or separate spending accounts, retirement planning, healthcare planning and other similar concerns is just plain common sense and necessary to make sure both partner’s financial goals are in sync.

Insurance: Life insurance is bound to become an important area of concern, especially once children become a part of the family. Make sure you know of any policies in force at the time of marriage, and how they will fit into your protection needs as a family. Be sure to discuss and update any beneficiary information, if necessary.

By no means will discussing financial concerns beforehand guarantee a happy marriage, but it can certainly help alleviate some of the most difficult aspects of potential marriage troubles. One of the leading causes of unhappy marriages and divorce are financial concerns. It only makes sense to talk about these and other financially related issues beforehand, rather than get unpleasantly surprised after.

What is a Fixed Annuity and Who Should Buy Fixed Annuities?

By | April 23, 2012

What is a Fixed Annuity, and Who Should Buy Fixed Annuities?

Fixed Annuities are unique in that they offer a wide range of benefits for those planning for retirement. Not only can fixed annuities be used to fund their retirement but to protect their retirement fund they have a retirement plan in place. Fixed annuities can also be used once to insure a legacy for their loved ones. However, fixed annuities are not investment products and they may not be suitable for everyone. Fixed annuities are insurance products, and they should be used as such – for protection against risk of loss.

Fixed annuities come with many benefits, but they also have certain restrictions or limitations that, if not fully understood, could work against an individual’s specific need. For the right person, however, and when used as part of a well designed financial or retirement plan, fixed annuities can be an extremely flexible component of that financial or retirement plan that helps to accomplish specific financial goals.

The features and characteristics that go into making fixed annuities work the way they do are best understood when applying them to the specific financial needs and planned objectives of consumers who are positioned to benefit from them. You can determine if a fixed annuity will be a good fit in your financial or retirement plan by using the following guidelines to determine if a fixed annuity would be a good fit to help you meet your financial or retirement planning needs:

A Fixed Annuity Is A Good Choice For:

1. People Who Don’t Like Risk

Some people prefer to put their money in vehicles that have little to no exposure to financial risk. Most of us associate savings accounts, T-Bills and bank CD’s with safety of money, or principal. There are many different types of risk, which, if not taken into account when coming up with a financial or retirement plan, could have a negative impact on long-term savings. However, as a  savings vehicle for retirement and other long term needs, fixed annuities provide many layers of protection for preserving your retirement funds. or principal set aside for specific long term needs.

In addition to the guarantees offered by many fixed annuities, these insurance products also include minimum rate guarantees to protect against steep declines in interest rates. Often, fixed annuities also provide a floor which will protect retirement funds, or principal, when the market takes a downturn. This protection of principle is one of the strongest features of a fixed annuity.

2. People Who Don’t Like Taxes

Nobody likes paying taxes. For those fortunate individuals in the higher tax brackets, fixed annuities offer the benefit of tax deferral on earnings that accumulate inside the fixed annuity. For someone in a high tax bracket (for example someone with combined state and federal taxes), that would mean that their earnings could grow faster than in an equivalent taxable vehicle. They will, however, have to pay taxes on their earnings when they are taken out, but assuming they are in a lower combined tax bracket at retirement due to their lower income level, they will end up saving on the amount of taxes that would have otherwise been paid.

Deferred tax advantage is one of the features of a fixed annuity that can provide consumers with a specific and usable benefit as part of their overall financial or retirement plan.

3. People Who Want To Participate In Market Gains

Even people who don’t like risk enjoy taking advantage of occasional stock market gains. These consumers like to get that extra edge of a half a percent or more interest credited to their savings or retirement accounts whenever possible. The earnings on annuities tend to be higher than those available on other savings vehicles like Bank CD’s and traditional savings accounts. In addition, many fixed annuity contracts will pay a bonus rate on initial deposits that exceed a certain amount. For CD-type annuities, the rates go up even further when the deposits are committed to a minimum guarantee period such as five to 10 years, for example. These fixed annuity bonuses can be a great way to recover and replenish stock market losses in retirement funds.

4. People Who Like To Plan Ahead for the Long Term

For those that have other savings or investment accounts that are available for meeting short-term or emergency needs,fixed annuities can be used for longer-term requirements such as retirement, or specific savings goals. In return for the guarantees offered by fixed annuities, the tax deferral, the competitive interest rates and the extra layer of protection that fixed annuities provide, the fixed annuity carrier asks that consumers commit their funds for a specified period of time.

These periods are called surrender periods during which any withdrawal of funds in excess of 10 percent of the account value, will incur a surrender charge or fee. This surrender charge, or fee, should not be a concern for individuals with a long-term financial or retirement plan because, eventually (typically, but not always, within 7 to 12 years), the surrender period ends and the funds in a fixed annuity can be withdrawn without any fee or penalty. After age 59-and-a-half, consumers don’t have to worry about the 10 percent IRS penalty assessed on early withdrawals.

It is good to keep in mind that fixed annuities are a long term savings and financial protection vehicles. Not a place to keep money you might need now, or in an emergency. These funds should be set aside for retirement purposes, or for specific, planned goals that are long term, in nature.

5. People Who Don’t Like Unpredictability

Even investors who are risk takers like some measure of predictability, especially those who experienced heavy market losses in recent years. It is important that retirement and long term financial plans have stability and predictability. Fixed annuities, with their minimum rate guarantees and minimum income guarantees, can help accomplish that stability and predictability.

When combined with other investments that fluctuate in value due to market swings, fixed annuities can level out the downside returns with their steady, guaranteed rates and predictable, guaranteed income streams. It is good to remember that fixed annuities are insurance products, and by their very nature are good vehicles to use for the protection of retirement funds, or principal set aside for specific purposes.

6. People Who Might Live Longer Than Expected

Many baby boomers worry if their assets are sufficient enough to generate the income they need for their life in retirement. Many of these baby boomers are victims of the stock market downturns that happened during the years of 2001 to 2009. Many people lost their retirement funds, or had significant losses to their retirement funds due to the unpredictable stock market upheavals. Others just fell into the habit of not saving enough. In either case, many people are approaching retirement with great reservations and many find that fixed annuities are an effective and safe way to ensure the financial security of their remaining retirement funds.

Fixed annuities are designed to protect funds, and turn those funds into income. Fixed annuities are uniquely designed to guarantee a minimum level of income for as long as a person needs it. Insurance carriers are able to convert a specific amount of money into a guaranteed income stream that cannot be outlived. Because the annuity buyer trades control of their fixed annuity deposit for guarantees and safety, it is recommended that these fixed annuity buyers have other assets, or funds, under their control that are available for income investing, as well as for short-term, or emergency needs. It is important to remember that fixed annuities work best as a long term savings and income vehicle.

Fixed annuities aren’t right for everyone. The key is to thoroughly understand your financial and retirement needs, objectives, priorities, period of time and tolerance for risk before deciding to transfer funds into fixed annuities or purchase a fixed annuity. If you fall into one or more of the six descriptions described above, fixed annuities may be the right choice as part of your financial or retirement plan.

Learn more about using Annuities as part of your planning. Get the free Book: The Smart Saver’s Guide to Using Annuities

The New Risk You Need Protection From: Living Longer Than Expected

By | April 21, 2012

The number-one new risk consumers need to protect themselves against is longevity, or living longer than expected. To illustrate, if you take a husband and wife who are both 65, there is a 50/50 chance that one of them will live to age 92. There is a 25 percent chance that one of them will live to 97. While living longer is a good thing, this increased longevity has created a huge problem for retirees because this longevity increases risk. The longer people live the greater the chance their retirement income:

  • will be impacted by inflation or deflation
  • will run out
  • will be used to take care of growing long term healthcare needs

In order to be able to retire with at least some semblance of comfort, consumers must deal with the risk of living longer than expected. In other words, the longevity risk needs to be taken off the table. This risk cannot be dealt with, or eliminated, by using stocks, bonds, mutual funds, hedge funds, money managers, or investment advisors. The best way to deal with this risk is the way you deal with all risk – through insurance products namely fixed annuities and life insurance.

One tool you can use is a fixed annuity, or a deferred fixed annuity, to provide lifetime income. This type of fixed annuity is in essence longevity insurance. A fixed annuity protects you from living longer than expected, or living too long. While a variable annuity with living benefit can play a role, it is not an ideal, or even a good, solution to cover basic expenses since the payout will likely be significantly lower than a lifetime income fixed annuity ‑ especially at older ages. Be wary when an investment advisor suggests a variable annuity. This type of annuity is the worst kind of annuity, and the annuity that gives all annuities a bad name. Make sure your annuity is a fixed annuity sold by a reputable insurance company.

Because only the life insurance industry can protect people from the financial impact of dying too soon, or living too long, it is the best place to look for a solution to this need and protect against this risk. When you buy insurance, you transfer the risk to the insurance company. You need to make sure you choose a life insurance company with the financial strength to protect you now, and in the future. The risk to a life insurance company that sells a life insurance policy is that the insured dies too soon. The risk when the life insurance company sells an annuity is that the insured lives too long. Because life insurance companies occupy both sides of this longevity risk, they can plan and prepare to effectively neutralize this longevity risk to themselves and to the insured. Money managers, investment advisors or stock brokers cannot protect you with this risk. You need a life insurance professional to help you protect against this risk.

Fixed Annuities Guarantee Paychecks or Play Checks for Life

In today’s new world of limited Social Security benefit payouts and vanishing employer sponsored pension plans, guaranteed lifetime income is a vital need for retirees. A lifetime income fixed annuity can make their worries go away by guaranteeing them paychecks or if they are fortunate enough to already have that covered, play checks for life. In any case, it’s guaranteed income for life at the stage of life when you need it most – retirement.

There are so many benefits to clients using a fixed annuity as part of their retirement plan:

  • An annuity vs. a Bank CD: Compare the lifetime income annuity to a popular investment – the bank CD. The average rate of return on a one- or two-year CD is presently less than 1 percent. It would take 72 years for a client to double their money. Bank CDs were never made to create or guarantee income. A lifetime income fixed annuity typically offers a far better payout rate and is a superior income vehicle since it pays principal, interest and mortality benefits. Many lifetime income fixed annuity products offer a period certain option so that beneficiaries will continue to receive income payments even in the event the person purchasing the income annuity dies sooner than expected.
  • Recover Market Losses: Another great benefit of the lifetime income fixed annuity is that it can help recover some market losses. In the last few years, many retirees suffered serious losses to their retirement funds due to the market fluctuations. Many retirees saw their accounts lose value, in some cases by hundreds of thousands of dollars. For example, if a couple’s retirement fund dropped from $600,000 to $400,000 due to keeping this money in the market. A solution could be to keep part of their money, say $100,000, in an account with liquidity in case of an emergency, and place the remaining amount, in this case $300,000, in a joint lifetime income fixed annuity. This fixed annuity solution may provide considerably more retirement income for life than a bank CD and, if the entire $400,000 is put into an insurance product with a longer term, it may be able to provide back all the money they had before the market took a downturn.

Protection Against Living Too Long, or Longevity Insurance

The deferred lifetime income fixed annuity, which provides the protection against living too long, is the other way for clients to deal with, or take the longevity risk off the table. Unlike the SPIA, payouts can be set up to start at different periods. Consumers can ladder, or stagger, these deferral periods to optimize their retirement income needs. For example, at younger ages, consumers can set up a fixed annuity with a 10-year deferral and receive income at retirement age. Then, at an older age, they can use another fixed annuity with a 20-year deferral and receive larger payouts during later stages of retirement.

Consumers can also take advantage of the many living benefits available to them through the use of riders as part of their fixed annuities. These fixed annuity riders offer accelerated payments in the event long term healthcare or nursing home care is needed. Another huge advantage of the deferred fixed annuity is that it grows tax-deferred and all transfers are tax free as well.

Few investment advisors truly understand that the insurance industry has the best solution for solving the baby boomer retirement crisis. Retirement needs from the consumer’s standpoint have changed. Retirees need  protection from the volatile markets of the last few years. Most retirees need guarantees that they won’t run out of money. Today’s retirees need to eliminate or at the very least protect against market risk to be able to pass their hard-earned money to the surviving spouse when they are gone, and then on down to their favorite charities, their children or grandchildren.

Living longer, while a good thing, presents new problems that require new solutions for those contemplating, or already in, retirement. Fixed annuities help provide that solution. Fixed annuities can guarantee income for life for people living in retirement, even if they live longer than expected. When paired with life insurance products which provide living benefits, in case long term care is needed, these insurance products – life insurance and fixed annuities – can provide the security retirees and their loved ones need to preserve capital, assets and, best of all, provide a lasting legacy of love and financial security.

Are you concerned about outliving your income? Download our free report: How To Get and Stay Rich

A New Look At Permanent Cash Value Life Insurance

By | April 21, 2012

It’s time for a new look at permanent cash value life insurance as part of your financial or retirement plan.  Permanent cash value life insurance can come in a variety of policies such as universal life insurance and whole life insurance. These types of permanent cash value life insurance policies provide individuals and families with options for life.

In recent years, the popularity of low-cost, no-lapse Universal Life, or UL, policies with little or no cash value has left a generation of life insurance consumers with little exposure to the benefits of permanent cash value life insurance products, especially as part of a well structured financial or retirement plan.

There’s an old saying that was taught to life insurance agents many years ago, and it still has truth today:

Whether you die too soon, live too long or become sick or disabled, a permanent cash value life insurance product can help you every step along the way.

Permanent cash value life insurance has been largely ignored in recent years, but it continues to be a relevant and useful type of life insurance policy, especially as a part of a sound financial or retirement plan:

  • Die too soon? The income tax-free death benefit can help protect families that haven’t had time to accumulate the necessary assets, build an estate, or provide for loved ones.
  • Live too long? At retirement, owners can turn the policy around and take systematic cash value distributions to supplement other sources of retirement income, potentially income tax-free. At death, the policy’s death benefit can help beneficiaries pay for potential estate tax or transfer costs to preserve wealth.
  • Become sick or disabled? Life insurance policy riders provide coverage, or benefits, for a number of illnesses, accidents or disabling events that can help provide financial assistance and other living benefits.

Consider other types of financial products such as traditional savings accounts, bank CD’s, mutual funds or securities. If you die too soon, you won’t have enough time to build your estate, fund your dreams or provide for your loved ones. If you live too long, you create potential income tax, or estate tax problems. Permanent cash value life insurance provides for consumers the flexibility to do the things someone may want to do over the different periods of a person’s life. More importantly, this type of life insurance policy provides access to a cash money fund, which can be used for many different purposes as much during life as at death. Permanent cash value life insurance provides individuals with options for life. This type of life insurance policy enhances the consumer’s ability to adapt to changing life conditions and build economic or financial self-reliance.

Permanent cash value life insurance policies provide more than just the pay-in/pay-out death benefit that has become popular with the use of no-lapse guarantee life insurance. Permanent cash value life insurance policies are flexible, can adapt to changing conditions and can satisfy multiple financial or retirement planning objectives. Permanent cash value life insurance policies give consumers more flexibility within their financial or retirement plan, and provide an opportunity for consumers to look at the bigger picture as part of the financial or retirement planning process.

Buying life insurance should be more than just looking for a low life insurance premium. Restoring the value in permanent cash value life insurance would be a welcome change for many consumers and their financial or retirement plans.

Five steps to help avoid a potential income drop in retirement

By | April 21, 2012

Here are five steps you can take to help avoid a potential income drop in retirement. Research indicates many retirees may experience a potential income drop of up to twenty-eight percent in retirement. Many more indicate they may not have sufficient income to cover their monthly expenses. These retirement income gaps could force significant sacrifices that could include cuts in discretionary expenses, such as travel, entertainment, etc.

To help prepare for retirement there are five steps you can take, such as adjusting asset allocation and annuitizing retirement assets, that will help ease the potential income gaps that will come with life in retirement. Within the overall scope of your retirement plan, taking these five steps may help you better prepare for life in retirement by making sure any potential income gaps are taken care of.

The five steps, which are actions often considered when developing and implementing a comprehensive retirement plan, include a variety of financial strategies that can be implemented now, no matter if a person is working or already in retirement:

  1. Adjust Asset Allocation – The level of involvement in the stock market should be based on how close you are to retirement. Many pre-retirees and retirees have improperly allocated their assets in stocks and other stock market based products and run the risk of losing their retirement funds at a stage in their life when they may not have time to recover those losses in the market. Think fixed index annuities instead which protect your principal, while still allowing you to take advantage of market increases without worrying about the market drops.
  2. Increasing Savings – Pre-retirees saved an average of about $3,500 in 2011, but most are still not fully benefiting from the tax-advantaged/deferred savings potential of their workplace or individual retirement accounts. This is especially important for younger investors, who have a longer time frame and more potential for their money to grow. The earlier you start saving the better off you will be. Start saving now!
  3. Adjust Your Retirement Date – The typical planned retirement age is 65, but delaying full retirement by a couple of years or continuing to work part-time can help preserve assets so they have a better chance of lasting through retirement if you live longer than expected, and many people do live longer than their parents did. This step can be especially useful for baby boomers to help preserve retirement funds for discretionary spending.
  4. Annuitize Retirement Assets – A fixed index annuity can create a guaranteed lifetime income stream to cover essential expenses. It can also be an important tool to help ensure your retirement savings last as long as you do. People are living longer than ever, and the worry is not having your retirement fund last long enough. With a fixed index annuity, you can guarantee yourself income no matter how long you live.
  5. Tap into Home Equity – Home equity can be used to generate income through a reverse mortgage.

These five steps can be taken at any stage in your retirement plan. If you are farther from retirement, these five steps offer flexibility to let you adjust as you come closer to retirement. If you are already in retirement, these five steps can help you find the balance you need to ensure you don’t run out or money, even if you live longer than expected.

The New Retirement Plan: What to Consider As You Plan For Retirement

By | April 20, 2012

The new retirement plan requires careful thinking and consideration of today’s financial reality and circumstances. Today’s pre-retirees and retirees have a unique set of concerns and circumstances that their parents never had to deal with, such as a stock market crash that devastated their retirement savings and the disappearance of private pension plans. Today’s retirees are also faced with the probability that government programs like Social Security and Medicare will be completely changed in the coming years, leaving a once solid cornerstone of their retirement income on uncertain ground.

As a result, many pre-retirees and retirees seek to combine retirement with some type of work. There is no such thing as permanent retirement with today’s financial reality. Today’s retiree has to combine retirement and work in order to make ends meet. Thus, the new retirement plan has to provide enough money to run and play for a month or two at a time, and then come back and work for a month or two. That is the reality of the new retirement for many clients due to financial necessity; they are looking to recoup the losses they suffered in the 2008 market downturn.

When you are planning for retirement and drawing up your retirement plan with this in mind, use a fixed index annuity with guaranteed income riders. Also, keep in mind that your life expectancy is greater than your parents, so include fixed index annuities with long term care benefits to help preserve assets and retirement funds. Fixed index annuity products with income riders make it easy to get money in case of an emergency. In order to help recoup some of your market losses look for a fixed index annuity with a bonus of some type. This type of fixed index annuity will help you capture some of the losses you may have experienced in the past several years.

What to do about Social Security?

Although some financial gurus say that everybody should take Social Security at age 62, following that advice may not be the best fit for everybody. Keep in mind that it is not a one-size-fits-all proposition guideline. If you have the financial means to delay taking your Social Security benefit, then maybe you should. By law, a person’s Social Security benefit goes up 8 percent a year. If the trustees of the Social Security administration declare a cost of living adjustment like they did last year of 3.6 percent, by delaying one year, your Social Security annuity has just grown 11.6 percent, for example. It might benefit you to wait, if you have the financial means to do so, and let your social security benefits grow. In retirement, every little bit helps.

Once the Social Security factor is determined, then you need to structure your retirement plan with other retirement products, such as permanent life insurance, SPIA’s (single premium immediate annuities) and fixed index annuities. Your goal should be to determine by what your financial goals are and then you can use your retirement products to maximize your Social Security benefit.

You can still have a successful retirement no matter where you are financially. Many have lost everything but their IRAs and 401(k)s. Put plans in place to guarantee and safeguard this money by using life insurance and fixed index annuity products that are issued and guaranteed by financially strong insurance companies.

Long term care insurance offers benefits & protection for smart consumers

By | April 18, 2012

Many of us have a hard time picturing the benefits of long term care insurance. Long term care insurance offers many benefits & protection for smart consumers who plan ahead. Long term care insurance has many uses, and offers many benefits, but by its very nature, it is for the long term, many people have a hard time envisioning how and when they will actually use it. Long term care insurance, or LTCI for short, is used to protect family members and finances.

As part of your financial planning process, it’s important to understand the potential impact that needing long-term care may have on your assets, your family, and your future.

Long term care can cost between $70,000 to $220,000 a year, depending on what part of the country you live in. Every year, the costs of long term care increase. It is important to note that Medicare and traditional health insurance do not pay for long-term care, as many consumers mistakenly believe. Without a long term care insurance policy, consumers are essentially “self insuring” their risk of paying for long term healthcare.

While wealthy consumers may have the financial means to cover their costs for long term health care, this use of money, or assets, is not the best possible use fro your money or assets. Buy long term care insurance and use other people’s money for this type of health care. Many consumers overestimate their ability to pay for long term health care over an extended period, or convince themselves that they won’t need care, however, the risk of needing and paying for long term healthcare remains.

Waiting to address your future long term healthcare needs, especially if you wait until you actually need this type of healthcare, may significantly impact your financial situation, your quality of life, and your ability to maintain your independence. Incorporating long term care insurance into your financial plan can help protect your assets, reduce the burden of long term healthcare that would otherwise fall on family members, and enable you to receive the type of care you want in the setting you want to receive it in, i.e. at home surrounded by family and friends, or a specific facility of your choice.

My recommendation: Buy long term care insurance before you actually need it. Prepare for the worst. You might never need it, but you will be comforted by the peace of mind knowing that if you do require long term health care help, you’ll be taken care of in your time of need in the manner that you choose, in a place of your choosing.

Insurance and George Zimmerman and Trayvon Martin – Who is liable?

By | April 14, 2012

The case of George Zimmerman and Trayvon Martin presents several interesting questions for the insurance industry. The effects of this case may well end up affecting the insurance industry on multiple levels. This case may well affect how policies are underwritten in the future, as well as how the actions of one person affects the liability of a group, in this case the homeowners of the subdivision George Zimmerman was guarding that night.

As many of you know by now, the death of young Trayvon Martin in Florida is at the center of a current controversy that is increasingly dividing this nation. Not being talked about much yet, is something I believe will soon be an important component of this controversy. That component is the issue of liability. Who is going to pay for this death? Who will bear the financial responsibility for the death of this young man? Will the legal teams that will handle this case be able to establish proof of liability on someone, or a group of someones, as in the homeowners in the subdivision George Zimmerman was guarding?

Thus far, the details of what actually happened, how it happened and why it happened are sketchy at best. Contradicting scenarios are being presented by all sides in this controversy, and it is hard to tell fact from fiction. The one fact that does stand quite clearly is the fact that George Zimmerman was working under the auspices of the homeowners association. What level of liability will fall on the homeowners association, and the individual homeowners in that subdivision as a result? What may be determined by the trial is that the homeowners association, and in turn, the homeowners themselves may ultimately be held financially liable and responsible for the death of young Trayvon Martin.

For the insurance industry, this case may prove more than an interesting decision. It may well prove to be a landmark decision that will affect how policies are underwritten in the future. Also, it may prove to be expensive. The question for the insurance industry may well become how much will the homeowners association and its insurance company have to pay as a result of the actions of these two young men.

The issue of liability must first be established. Two types of policies may come into play here. A homeowners policy and a business policy, if the homeowners association has one. Under a typical homeowners policy, George Zimmerman must first be found legally liable in the shooting death of Trayvon Martin. In the typical policy, there are no exclusions in a homeowners policy regarding guns, but there is an exclusion, which would apply to both liability and medical payments, for “expected or intended injury.”

The questions that remain, and must be addressed, in order to determine ultimate liability then are the following:

Question number one – Was there an intent to harm or injure? Did George Zimmerman, and by extension, the Homeowners Association intend to harm or injure Trayvon Martin. If the insured intended to harm or injure someone, then the above exclusion comes into play except if the harm or injury is caused by the use of “reasonable force by an ‘insured’ to protect persons or property.”

Question number two – What is reasonable force? The judge and the court(s) may have to make this determination. The court will have to consider the level of oversight, control and authority that the homeowners association kept over George Zimmerman. Thus far, liability for the homeowners association is not clear cut until the courts determine the answers to the oversight, control and authority questions.

If the homeowners association has a commercial property and liability policy in place, and the association is sued under the provisions of this commercial property and liability policy, then additional factors come into play. Under this scenario, the insurance company would most likely have to defend against the claim, not simply pay out. If the judgement goes against the homeowners association, and the policy must pay, the payout would be up to the policy limits which could well end up being in the millions, depending on the policy.

The answers to these questions must be settled by the court(s), and will no doubt consume the attention of not just the courts, but the entire nation for quite some time. It will be interesting to see how it develops on many fronts. The fact remains, though, that one young man is dead, and the answers as to why he is dead are not easy to find. Add the increasingly pronounced racial divide that seems to be developing as a result of this case. Mix in the actions of an irresponsible and seemingly biased mass media seemingly intent on provoking that racial divide, and all bets are off. It will be a difficult and eye-opening experience for the nation and for many of us in the insurance and financial services industry.

Looming Retirement? Make a Retirement Income Plan To Guarantee Income For Life

By | April 13, 2012

If you are contemplating retirement or are planning to retire soon, you’ll need to plan in order to make sure your retirement years are as comfortable as possible for you. One thing you need to do is to make a retirement income plan with your insurance advisor to make sure you don’t run out of money, or worse, lose your retirement fund by following the advice of greedy stock brokers by keeping your funds at risk in the stock market. Here’s what to do in order to ensure you’ll have income to live off of comfortably for the rest of your retirement years.

I recommend a retirement income plan that uses fixed annuities to guarantee monthly income no matter what happens with the economy, even if you live longer than expected. Fixed annuities are insurance products, not investment products. This means that no matter what happens in the market, your funds will be protected, or insured, by the same companies that are already protecting your home, your auto, and your life.

The first thing you have to do in a retirement income plan is to turn assets into income. The standard rule of thumb for making your money last used to be to something like:

Withdraw 4% of your assets the first year you retire, adjust annually for inflation, and you’ll have nearly a 90% chance of your money lasting 30 years. But that calculation assumes 8% returns for stocks, 5% for bonds.

Today, however, stock market returns are not what they used to be. With today’s low interest rates and uncertain stock market performance, you might need to start at 2% or 3%. Will this rate leave too little to live on? You bet, and this means that you’ll need to be conservative and manage your cash flow.

Establish a minimum level of guaranteed income every month for basic living expenses. You’ll need to collect a guaranteed check every month in order to ensure guaranteed income every month for your daily living expenses. The easiest, most effective way you can do so if you do not have a monthly pension, is by buying an immediate annuity. An annuity, despite all of the bad-mouthing it gets from greedy financial advisers, is the best way to make sure you guarantee yourself a monthly check that will never run out, even if you live longer than expected. An immediate annuity guarantees you a monthly paycheck for as long as you live.

When you buy an immediate annuity your goal will be to put enough into the annuity so that the income it produces, combined with Social Security check or any other retirement plan income you get, covers your primary living expenses each month. This strategy allows you to let the rest of your investment portfolio keep growing. Remember that if the stock market starts to dip or fluctuate as it has done in the recent past, switch your funds into fixed annuity products to guarantee their safety. Your goal, if this should happen, is to protect your principal – don’t worry about the return ON your money, worry about the return OF your money.

Another good piece of advice when it comes to using annuities in your retirement income plan is to keep in mind that annuity payouts depend on your age and current interest rates, so purchase your annuities over a span of time in order to ensure you don’t invest all your money when rates are low.

One thing you’ll definitely have to do is pay attention along the way, and not be afraid to be flexible and be able to make adjustments as needed, in order to protect your retirement income and your retirement fund. For example, when the stock market does better than expected, you could take out 5% or 6%. But when it dips and takes a tumble, and it will do so at the worst possible times, dial it back. Once a year, sit down with your insurance advisor and come up with a safe withdrawal amount based on your expenses.

You’ll need to come up with a strategy to deal with the the tax monster. That’s right, Uncle Sam isn’t going to forget all about you just cause you retired. Your goal, as always, will be to minimize taxes as much as possible. Once you start cashing out traditional IRAs and 401(k)s, the government comes calling, rather quickly. Your withdrawals will be taxed as ordinary income.

Generally, the advice is to draw from taxable investments first and let retirement-plan money grow tax-deferred. Most advisors rightly recommend saving Roth IRAs for last since you never have to take withdrawals. Do remember, however, that’s a guideline, not a rule. Remember my advice about being flexible and making adjustments along the way, sometimes you might have to change up the order. I’ll give you an example: Say, 401(k) withdrawals push you into a higher tax bracket, take out just enough to stay in a lower bracket and pull the rest from your Roth. This way, you manage your tax bill, as well as use your retirement funds to your best possible advantage. Remember, you have to pay attention, and be flexible, in order to make sure your money works for you.

One area of concern to keep in mind is the rising cost of healthcare. Don’t forget rising health costs for ling term care, nursing home care and general medical expenses that increase along with age. A year in a nursing home averages about $78,110 a year. A typical 65-year-old couple today will spend about $230,000 on out-of-pocket medical expenses, according to a recent survey by Fidelity. Long Term Care insurance (LTCI) can be a safety net, even though it will cost you about $3,000, or more, a year for a couple in their fifties today.

You’re a good candidate for Long Term Care insurance if you’re a woman because of a longer life expectancy. You’re also a good candidate for LTCI if you have a family history of diseases like Alzheimer’s, dementia, or Parkinson’s. In order to make sure LTCI is worthwhile for you, you’ll need to consider the amount of assets you have. If less, then the price is too high. If you have more, then you may be able to self-fund. It’s a balancing act to determine if buying a Long Term Care insurance policy will be worthwhile for you. Make sure you always consult your insurance advisor before making a decision about Long Term Care insurance.

A retirement income plan will help you make sure you have enough monthly income to live comfortably during your retirement years. You need to have a strong, well-thought out retirement income plan to make sure you don’t run out of income, and out of money. You’ll need to be flexible, and stay on top of your retirement funds to make sure you don’t lose them if the stock market takes a tumble. One thing you’ll need to change is your way of thinking about your investment fund. You’ll need to be concerned with maintaining your retirement fund rather than making it grow. Growth is good, but not at the risk of losing your retirement fund. Many stock brokers, or investment advisors do not seem to understand that change in thinking at this stage of life. They are so focused on growth, they forget about safety. Remember it’s not about the return ON your money, but the return OF your money. Keep that in mind, and you should be alright. Don’t forget to consult with your insurance advisor for safe money strategies for your retirement fund.