Disability Insurance Awareness Month Part 2

In the previous post I discussed what Disability Insurance Awareness month was and why Disability Insurance (DI) is important to have. Along with that was some very valuable information about how it is structured and the ways it can work for you. But I do want to pivot a bit and go over how you can figure out how much coverage you need, or if you need any DI at all. 

As mentioned previously, DI is considered to be "paycheck insurance" by many because it replaces your income if you are unable to work due to an accident or sickness. As I tell my clients, just because you are out of work doesn't mean the bills will stop coming. The stress of seeing bills pile up can make an illness even worse.

And speaking of illnesses, did you know the vast majority of disability claims are paid due to illnesses and not accidents? When we talk to people about being disabled they think of car accidents and such, but in reality, cancer, heart attacks and strokes, along with other dread diseases, are the reasons why most claims are filed. Even Covid has been a huge factor in DI claims.

For a few people, a DI policy is not necessary. Having passive income streams like rental properties or other investments can provide enough money to pay their bills. But for the rest of us we need every dollar we can get our hands on if we are not able to work.

How much do you need if you are applying for coverage? Generally speaking, most group plans that you get through work will pay up to 60-70% of your gross pay, which is about what your take home pay is after you deduct taxes. 

On the other hand, if you are self-employed or a business owner, your income may not be the same each year. A different way of calculating is needed. Luckily, we have a web based quoting system for determining the amount you are eligible for based on your income, which gives us a maximum benefit amount. Again, you can apply for "up to" that maximum, but you may not need the full amount. This is when we use the "HUG" system to work out the numbers. HUG stands for: 

• Housing. How much do you pay each month for rent or mortgage?
• Utilities. Electricity, water, gas and other maintenance.
• Groceries. Just because you are out of work doesn't mean you can't eat. At the same time, it doesn't mean you'll be going to Outback every night either.

Using the HUG method, you can determine a minimum amount of coverage you need to get you by while you're out of work. Remember, the more coverage you apply for, the higher the premium will be. 

A few years ago I had a real estate agent ask me a very good question. She wanted to know if she was approved for a policy during a year when she was making good money and got disabled during a year when the housing market was down and her income was lower, would she still get the benefit she applied for? I called one of our carriers and spoke to an underwriter about this dilemma who agreed it could be confusing, but in her words, "We just want to know if this person was working at the time of the disability." In other words, yes, she would get her benefit as long as the real estate agent hadn't quit her job.

If you would like a quote visit our site and drop us a note, or book a short phone appointment. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Disability Insurance Awareness Month Part 1

May is once again Disability Insurance Awareness Month, when the insurance industry tries to let the public know the importance of having a disability insurance policy. As I say whenever I sit with a client or talk to a group, the Holy Trinity of insurance is your life insurance, your health insurance and your disability insurance (DI). That's how important it is!

Think about it. If you are sick or hurt and are not able to work, your bills just keep coming. No one is going to let you have a free pass on your car payment, mortgage or phone bill because you are a nice person. In essence, having a DI plan in place is paycheck insurance. That's why people call DI "paycheck protection".

How does it work? Depending on your employment and how you get paid there can be variations. The more common scenario is that you buy a group plan through work or your employer pays for it or both. I have seen instances the employer pays for Long Term Disability (LTD) but the employee pays for their own Short Term Disability (STD) policy.

These types of policies usually pay up to 60-70% of your gross income. Keep in mind that if your employer is paying for your policy and you should start receiving benefits, those benefits will be taxable. This is also true if you purchase your plan through a "worksite*" insurance company and they pre-tax your premiums. 

Short term DI usually pays for the first 3, 6 or 12 months of a disability, while long term DI will start paying after those dates. The key is to make sure you have coverage seamlessly throughout the time you are out of work, which is determined by your physician. 

Also, group plans will typically cover maternity for 6 weeks (8 weeks if a caesarean is called for). Too many people will drop their DI plan when they decide that they aren't having any more children. I always encourage people to keep their policy, as it is not "baby coverage" as many seem to feel.

On the other hand, if you are self-employed or a 1099 employee, like a realtor or insurance agent, you may need to look into an individual DI plan. These are structured a bit differently in that rates will be determined based on factors like:

• Your occupation. A welder or a roofer will pay more than a secretary because their job is more dangerous. 
• Your health, age and tobacco usage. Just like life insurance, the insurance company wants to know if you are a good risk or not. 
• Your income. Determining your benefit amount is dependent on how much money you earn, so the insurance carrier may ask for a copy of your tax returns. We have one company that ask for it when you file a claim. 

Another important factor is the "elimination period", which is like a deductible, but in time instead of money. If you have a 14 day elimination period, that means that the policy won't start paying out benefits until the 15th day of your illness or accident. Elimination periods can vary from 7 days to 6 months, and like the deductible on your car insurance, the higher you go, the less the policy will cost you.

Also, keep in mind that individual plans will not cover maternity.

In Part 2 of this topic we'll discuss how to determine how much coverage you need. In the meantime, please stay healthy!

*Companies that offer voluntary benefits like DI, dental, vision and other ancillary insurance products. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

How To Choose A Term Life Insurance Policy 2023

Have you thought about what would happen to your family if you were to die too soon or unexpectedly? Making sure that your family can stay in their home without the stress of paying outstanding debt is important. But you want to make sure that taking care of this is affordable as well.

This is where a term life insurance policy can fit the bill. Term life is great in that it can fit into almost any budget as it is pure death insurance. Most of the time there are no bells and whistles like cash value accumulation or extra benefits. 

Term life insurance is, as the name implies, covers you for a determined amount a time, such as 10 years, 20 years or 30 years. The rate is locked in for that term and won't increase. We at Surf Financial Brokers, have one insurance carrier that offers a 40-year term which is great for younger people who want a policy that will stay the same price into their 60's. 

Which term should pick? That depends on what your needs are. Take into consideration things like your mortgage. If you have just purchased a home and have a 30 year mortgage, a thirty year term policy will be appropriate. But if you have just a few years left on your mortgage, you can lower the term. 

On the other hand, if you have small children, you may want to consider how long it will be until they are out of the house and on their own. We all know that kids aren't cheap and even if the mortgage is paid off, raising the children will still take money that won't be there if you were to pass away.

How much coverage do you need? The simple way to figure this out is to add up the total amount of the following:

• The balance on your mortgage. 
• Credit card debt.
• Balances on car loans
• Final expenses. When doing this I like to add in what I call "costs associated with death", which could be your medical deductible if you are in the hospital for a few days before passing away. And even though many have decided they don't want a funeral, there are those who do. I had a client who wanted to cover the cost of catering and an open bar. He wanted his friends to have a good time.
• Replacement of income. Figure in your annual income and multiply by 5 to help your spouse or significant other pay the expenses that will need to be addressed like car repairs or other emergencies that can pop up.
• Educational costs. If you have kids you may want to help them pay for college when you aren't around. 

It may look like a lot of money, and it probably is. Most people underestimate the amount of coverage they need, which can come back to bite your loved ones. If you aren't sure how much life insurance to purchase, use the calculator provided on our life insurance quoting tool. It will give you a more accurate number as to how much your family will need.

Another factor that may determine your term life insurance purchase may be a convertibility option. This means that at some point in the term the insurance carrier may allow you to convert to a permanent policy. I discussed this in a previous post. 

If you have any questions about purchasing a term life policy, drop us a note on our website. In the meantime, please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life, disability, long term care, cancer, accident and other insurance coverages in North Carolina, South Carolina, Virginia, Tennessee and Georgia. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Does A Tax Free Retirement Plan Exist?

Keeping with the theme of taxes this week, I wanted to share some information on a life insurance plan and how to use it to your advantage when it comes to taxes, or should I say "tax avoidance". One product in particular may help you supplement your retirement without having Uncle Sam reaching into your pocket. 

First, I have to again give the obligatory disclaimer that I am not a tax expert and if you have questions or concerns regarding any of this you should consult your own tax professional. 

As an insurance agent I have worked with many products and, for the most part, my clients are made up of middle class people. Many of them are small business owners (less than 50 employees) or self-employed individuals in sales or other related professions. In a nutshell, I'm not working with a lot of millionaires.

Life insurance for most of these people is usually term, which is affordable, but does not offer many other features other than a death benefit. When I ask about their retirement plans they usually have a small amount of money put away, but not much. (After the Great Recession of 2008 many used their 401(k) plans to pay their bills). 

With this in mind, I let them know that life insurance has a special status when it comes to taxes. The death benefit is almost always non-taxable. Once people figured this out they started taking advantage of this and companies developed policies like whole life and universal life insurance that could build some cash value internally.

These policies also allowed for "over funding", which means you can pay additional premiums into the policy, over and above the stated price of the insurance, with the intention of having some money accumulating. The IRS made some guidelines to prevent the abuse of this loophole, by declaring a policy with too much premium going in as a Modified Endowment Contract* (MEC). 

However, permanent life insurance policies do allow one to access that cash value inside the policy. How they access the money is the tricky part (it's not that tricky) to avoid paying any taxes on it. 

Taking the cash out of the policy as a loan removes the tax burden on insured person because everyone assumes that the loan will be repaid. And if the person dies before repayment, that loan is deducted from the death benefit. And this is where these policies are most effective. 

Because that loan is tax-free, one can over fund a policy to its maximum (without becoming a MEC) and use that money as a "retirement supplement" without paying a dime to the government. 

Here is where I have to give another disclaimer. First and foremost, these are life insurance policies and NOT investment vehicles. For years when the interest rates were high, agents sold universal life as a way to make money instead of protecting money. This practice is frowned upon in our industry.

And since it is life insurance, an insured age, tobacco usage and medical history can affect the cost of the policy, as well as the cash accumulation. A 30 year old healthy non-smoker will get much more out of this plan than a 40 year old obese smoker with high blood pressure and diabetes.

Even though this can be done with a whole life insurance policy, the most efficient way to do this is with an indexed universal life (IUL) policy. I will acknowledge that there are detractors to these policies who see the problems from the past when traditional universal life policies failed to provide the cash when interest rates began to fall. 

The secret here is to structure an IUL properly from the beginning. If done properly, an insured can access the money in the policy in the form of a loan for many years. 

If you would like information on how to use a life insurance policy a tax-free retirement supplement, let us know. In the meantime, please stay healthy.

*When a policy becomes a MEC it also becomes taxable. Since no one wants that too happen we, as life insurance agents, will run an illustration to get as close to a MEC without having it become one. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! 

4 Things To Consider When Choosing A Term Life Policy

Over the years I have noticed that many of my prospective clients don't really know about the different types of insurance, such as term insurance or whole life. As a matter of fact, I just met with a young couple who said they needed whole life because "that's what my mother said to buy". When they saw the price of the whole life policy compared to a term and a universal life they were surprised at the cost. "Maybe Mom didn't know what she was talking about after all," the young man said with a chuckle.

Don't get me wrong. There is nothing wrong with whole life or any other kind of life insurance, as long as it fits your needs and your budget. As I always say, each insurance product is good for something, but not all insurance products are good for everyone. In the case of this couple, the best fit for their needs and their budget was a term life policy.

Term life insurance is exactly as it sounds. It provides coverage and a guaranteed rate for a specific term, say 15 or 20 years. It does not build cash value and you can't borrow against it. Think of it as renting a home compared to buying a home. If you are buying a home you can build equity and borrow against the value. Renters can't do either of those. 

The advantage of term life insurance is that, because it only provides a death benefit, it can be much less expensive and one can purchase a lot of coverage. For example, a 40 year old man who does not use tobacco and is fairly good health can get a $100,000 20-year term policy for under $25/month. That same person applying for a whole life policy for the same face amount would pay at least $100/month. That's a big difference in price. 

So what do you need to look for when shopping for a term policy? Here are a few suggestions.

1. Term length. How long of a term do you need? Be aware that the longer the term, the more the premium will go up, but it is better to be safe than sorry. If you have a 30 year mortgage maybe a 30 year term is a good fit. Also, you can consider how long it will take to pay off the house and to get the kids out of the house. For younger people, we offer term policies to age 65. 
2. Riders. Many term policies will offer optional riders you can add on to the policy. Most of my clients like the Waiver of Premium option because if they are disabled and unable to work, the insurance company will pay the premium for them. 
3. Other features. Some policies have riders that are built into the policy at no additional charge. We have one carrier that includes benefits for chronic illness and and critical illnesses in their term life policies. 
4. Convertibility. This is important for those people who may want a permanent policy at some point because they can "convert" part or all of the policy without any health questions. There may be limitations on when one can convert their policy so check with your agent.

If you are considering an affordable way to protect your family's finances in case something should happen to you, term life insurance coverage may be a good fit. Please feel free to leave questions or comments and let us know if we can help you. In the meantime, please stay healthy.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

How To Make Life Insurance Work

Life insurance has come a long way since the days when it was known as burial insurance and used mainly to pay for funeral expenses. Today, life insurance is a crucial part of many estate plans. You can use it to leave much-needed income to your survivors, provide for your children’s education, pay off your mortgage, and simplify the transfer of assets. Life insurance can also be used to replace wealth lost due to the expenses and taxes that may follow your death, and to make gifts to charity at relatively little cost to you.

To illustrate how life insurance can help you plan your estate wisely, let’s compare what happened upon the death of two friends: Neil, who bought life insurance, and Bob, who did not. (Please note that these illustrations are hypothetical.)

Life insurance can protect your survivors financially by replacing your lost income

Neil bought life insurance to help ensure that his survivors wouldn’t suffer financially when he died. When Neil died and his paycheck stopped coming in, his family had enough money to maintain their lifestyle and live comfortably for years to come.

And since Neil’s life insurance proceeds were available very quickly, his family had cash to meet their short-term financial needs. Life insurance proceeds left to a named beneficiary don’t pass through the process of probate, so Neil’s family didn’t have to wait until his estate was settled to get the money they needed to pay bills.

But Bob didn’t buy life insurance, so his family wasn’t so lucky. Even though Bob left his assets to his family in his will, those assets couldn’t be distributed until after the probate of his estate was complete. Since probate typically takes six months or longer, Bob’s survivors had none of the financial flexibility that a life insurance policy would have provided in the difficult time following his death.

Life insurance can replace wealth that is lost due to expenses and taxes

Neil planned ahead and bought enough life insurance to cover the potential costs of settling his estate, including taxes, fees, and other debts that his estate would have to pay. By comparison, these expenses took a big bite out of Bob’s estate, which had to sell valuable assets to pay the taxes and expenses that arose as a result of his death.

Life insurance lets you give to charity, while your estate enjoys an estate tax deduction

Using life insurance, Neil was able to leave a substantial gift to his favorite charity. Since gifts to charity are estate tax deductible, this gift was not subject to estate taxes when he died. Bob always dreamed of leaving money to his alma mater, but his family couldn’t afford to give any money away when he died.

Life insurance won’t increase estate taxes — if you plan ahead

Before buying life insurance, Neil talked to his attorney about the potential tax consequences. Neil’s attorney told him that if his estate was large enough, it could be subject to federal and state estate taxes, depending on the applicable law at the time of his death. Neil and his attorney put a plan in place that would allow Neil’s survivors to use his life insurance policy to help pay for some of the potential estate taxes that might be owed at his death.

Be like Neil, not like Bob

Throughout his life, Bob worked hard to support his family. Neil did, too, but went one step further — he bought life insurance to protect his family after his death. Here’s how you can be like Neil:

• 
  
• 1. Use life insurance to ensure that your family has access to cash to help them meet both their short-term and long-term financial needs.
• 2. Plan ahead — buy enough life insurance to cover the potential costs of settling your estate and to ensure that the assets you leave to your survivors aren’t less than you intended.
• 3. Consider using life insurance to give to charity.

As you can see, these are just a few ways to make sure your life insurance policy is used efficiently. If you have any questions or comments, let us know. In the meantime, please stay healthy. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Getting Our Priorities Straight During the Holidays

With the holidays right around the corner I thought it would be appropriate to share a story from years ago when I was working for a very large insurance carrier. The agents were required to meet once a month and discuss our sales production numbers, and part of the process was that the veteran agents would give advice to the newer sales reps. 

As was usually the case in December, sales were down across the board. People generally don't buy much life or disability insurance before the holidays, with the exception of signing up for their benefits through work, so the agents were not too happy. I was one of them.

I shared how I would sit down with a couple to discuss life insurance, for instance, and would hear interesting excuses for not buying. "The holidays are coming and I need the money to buy a television," or "The new Iphone is coming out this week." 

That made no sense to me. "You have a wife and kids and a mortgage. If you were to die unexpectedly in the next few days, that cell phone isn't going to help your family stay in their home," I exclaimed to no avail.

Herein lies the problem for us insurance agents sometimes. We deal with people who mean well, and want to do right by their families, but their priorities are out of whack. The short term goals have overtaken the long term goals. Living in the moment is their mantra because "who knows what the future holds?" If they really want to know what is in store for them they should ask their elders. 

As I expressed these concerns to my colleagues at our sales meeting, a veteran agent laughed. "I know what you mean. Everyone is living in the moment, especially younger people. They think they are going to live forever and nothing will happen to them," he said. "But you have to help them understand that is wrong."

He continued to talk about the whole situation. "The holidays should be a time to emphasize the family. That should be their focus and if it isn't, then you need to make it their focus." It made sense. 

Of course we all want to have some nice gifts under the tree for the kids to open on Christmas morning. But trying to outdo ourselves (or anyone else for that matter) isn't what the holidays are all about. Wiping out our bank accounts at the end of the year over a phone or a television actually can make our festivities (and the new year) miserable. 

More importantly, all the gifts in the world can't make up for the loss of a loved one. So my message for you this year is this: It's fine to splurge a bit. This year has been tough on everyone, but remember that the holidays are about family, whether they are immediate, extended or otherwise. Make sure your priorities are in the right order. 

My job, as an insurance agent, is to make sure that your family will be able to continue to live comfortably if something should happen to you. Your priority should be making sure that your family is able to stay in their home and continue without you were to die unexpectedly. 

As I talk to my friends and clients I am learning that many have decided to cut back a bit on expenses this year. One less stocking stuffer or electronic gadget won't be missed. My wish for you and yours is to enjoy your family as much as you can. And please stay healthy! 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Do I Need Business Overhead Expense Insurance?

 

When I speak to groups about their insurance, I often mention "Holy Trinity" of insurance, which is their medical insurance, life insurance and disability insurance. The last one, disability insurance, I tell them, is just is important as the other two, because if one were to get sick or hurt and couldn’t work, the bills don’t stop coming and will need to be paid. Disability is basically paycheck insurance.

But what if you are, like me, self-employed, a 1099 employee or a business owner and don't have access to a group plan? What would happen to your business if you were unable to work?

Which is why I like to bring up Business Overhead Expense  (BOE) coverage. It’s an insurance product most people probably haven’t heard of before even though it's been around for a long time. And it definitely one of the most undersold policies out there, probably because there are agents who don’t even know about it.

Business overhead expense insurance is designed to keep things going when a disability or illness requires you to be temporarily absent. This is different from personal disability insurance, which makes payments directly to you to replace lost income if you can’t work.

If you own a business, it’s important that you understand how BOE works so you can decide if it’s something you need.

BOE is a type of insurance that pays benefits to your business if you’re unable to work. For example, if you’re in a car accident and are seriously injured, or you’re diagnosed with a serious illness, your policy’s benefits could kick in to provide the business with cash flow while you recover.

This type of insurance is typically used to help manage your business’s day-to-day expenses. It helps your business continue as usual even when you can’t be there.

What BOE Insurance Covers

BOE is business-specific, meaning it applies to expenses related directly to running your business. The types of expenses you can use business overhead expense insurance to pay include:

• Rent or lease payments
• Loan payments
• Insurance premiums
• Utility bills
• Custodial services
• Payroll for employees
• Tax obligations
• Business credit card bills

There are, however, some things that overhead expense insurance is not designed to cover. For instance, these policies don’t extend to expenses related to improving or expanding your business, such as buying new equipment or opening a second location.

Overhead expense insurance also doesn’t cover your salary. That’s why you would need an individual policy on yourself.

It’s worth considering purchasing this type of insurance if you’re the person who’s primarily in charge of running your business. Having an overhead expense insurance policy in place means the bills continue to get paid for the business when a disability or illness puts you on the sidelines.

Depending on the terms of your policy, your insurance company could pay benefits for up to two years after you file an eligible claim. That can be helpful if you have a serious disability, illness or injury that requires extensive rehabilitation or physical therapy.

Keep in mind that not every business owner may qualify for this type of insurance. If you’re self-employed as a freelancer and run a business from home, for example, you may not be able to purchase a policy. You may have to stick with a regular personal disability insurance policy instead.

There are advantages associated with having this kind of insurance for your business.

Here are some of the key benefits of BOE insurance:

• Your business can remain open even when you can’t be there to run it
• Essential business expenses can be paid for using policy benefits, allowing you to preserve your business’s cash reserves
• Being able to meet payroll means you have a better chance of retaining key employees
• A BOE policy decreases the odds of having to dip into personal savings to cover business spending
• Premiums paid for coverage may be tax-deductible
• Business expenses paid with premiums may also be tax-deductible

In terms of the downsides, here are a few things to keep in mind:

• Policies don’t pay benefits to you directly so you’ll still need separate disability coverage for that
• Benefits typically have a time limit of 2 years and can’t be paid indefinitely
• Any benefits you receive may be considered taxable income for the business
• Policies may enforce a maximum monthly benefit limit, which may be less than what you need to continue operations

As you can see, the pros generally outweigh the cons but they still need to be factored in. And you also have to consider the potential return on investment for purchasing this kind of coverage. Having it can be a safety net if you get sick or become disabled but if you never end up using your coverage, you may feel as if you’ve paid premiums for nothing.

The key advantage to having a BOE is that it gives you time to make a decision if you are disabled. You probably won’t know when or if you’ll recover, or if you should shut down the business, sell it or keep it open. That 2 year benefit window gives you time to figure it all out.

If this is something you think you need, drop by our website and make an appointment to have an agent call you. Or you can leave a question on our contact form. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

My Personal Long Term Care Story Part 1

When I speak to groups about long term care I usually start off by asking the audience to raise their hand if they know of someone who is either receiving care or has received long term care. Of course, every hand goes up. Each participant has a story about a parent, grandparent or other family member who has been in a facility or had home care at some time. 

Since it's Long Term Care Awareness Month I thought I would share a personal story. In 1979 my aunt, who was already having mobility issues, fell down and broke her hip. My mother's oldest sister by 20 years, my aunt was moved to a nursing facility. Her adult children were in no position to pay for a nursing home, so it fell on my parents to help out.

My aunt had inherited a rental property when my grandmother had died a few years earlier, but the rent was not enough to cover her bills. At the time, long term care insurance had not been developed yet, so the cost of her care would have to come out of someone's pockets. 

After some thought and negotiations, her rental property was put in a trust, with my father as the trustee and the beneficiary. Any shortages would be the responsibility of my parents, who were in their 50's at the time. Statistically, people who have broken a hip usually survive on average around 3-5 years. If and when my aunt would pass away, my parents would inherit her rental property. 

Years came and went. The five year mark, then the ten year mark. My father renegotiated the leases as they expired to keep up with the cost of his sister-in-law's care. More years went by, and my aunt continued on in her nursing home. And as this wore on, my parents continued to age as well. Money was tight as my parents try to keep themselves and my aunt afloat. 

I was in high school when my aunt was put in the nursing home. While she was there I went to college, graduated, moved away, got married and had a child. When she passed away in 2001, my aunt had been in the nursing home for 22 years. My parents, who were now in their 70's, were financially and emotionally drained. At the time of her death, my mother and father were paying over $5000 per month out of their pockets for her care. 

After her funeral, my aunt's adult children asked about their inheritance. Apparently no one, including their mother, had bothered to mention the arrangement with the trust fund. Upset with the situation, they never spoke to my parents again.

As I was restarting my career in insurance, I tried to speak to my parents about their care. At the time, they were still eligible to purchase coverage, but being children of the depression, they deflected my pleas to look into it. 

"Don't put us (my sister and I) in the same position you were in all of those years," I begged to no avail. I lived about two hours away from my parents and my sister was about seven hours away. "What are we going to do if something happens to mom?" I asked my father. 

"I'll take care of her," he said. Sadly, his words were prophetic. 

In Part 2 of this post, I'll share what happened as my parents became chronically ill. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

Do I Need An Out-Of-Pocket Protection Plan?

As we are in the middle of open enrollment for ACA (Obamacare) plans, we are seeing that many individuals are selecting higher deductibles, fewer copays and more out-of-pocket costs to make their health insurance premium more affordable. These out-of-pocket costs may still cause unnecessary burdens to many people. 

As a matter of fact, the number one reason for bankruptcies in the country is medical expenses, with the percentage being estimated at over 60%. In 2015 the Kaiser Family Foundation found that medical bills caused 1 million adults to declare bankruptcy. The same survey also found that 26% of Americans between the ages of 18 and 64 struggled to pay their medical bills. 

When a family member has a medical condition and has to go to the hospital, they don't need added financial burdens. Our new Out-Of-Pocket (OOP) Protection Plan* is designed to help pay some of the costs that most families will experience from higher deductible plans with fewer benefits. 

Having a policy that covers out-of-pocket expenses for hospital stays could not come at a better time. The news is filled with statistics of Covid cases on the rise, and hospitals filling their rooms. Because of this, we have had an increase in interest for plans like this. 

  This plan pays directly to the policyholder. There are no networks nor deductibles. Even filing a claim is simple. And the benefits are paid directly to you in one lump sum, not the hospital or the doctor. Plus the plan pays in addition to any other insurance and workers compensation.

The best part is that you can choose the benefit and premium. For example, you can decide what amount of benefit you would like for your daily inpatient hospital confinement benefit. Next, you decide on how much you would like for your first hospital admission benefit. Included in this is a $50 benefit for doctor office visits (2 each year). 

There are also optional benefits, like an outpatient surgery benefit (limited to 2 a year) and an emergency accident benefit (limited to 4 per year).  It even covers maternity as any other illness. Not many plans do that!

You probably would like to know how much a plan like this costs. The best way to find out is to run a  your own quote which you can do by clicking here. You can cover yourself, you and a spouse, you and your children or the entire family. 

If you are trying to save money by choosing a high deductible health insurance plan, be aware that one hospital stay can burden your family's finances. By having a policy to cover those deductibles, copays and coinsurance costs can keep you afloat when you need it most.

People don't plan on being admitted to the hospital, much less having to be confined for a week or more. Those out-of-pocket costs will definitely be there when you are released from the hospital, but what about your other bills? For those of us who are self-employed, spending days in the hospital means not working, and not working means not making money that pay our usual bills. Housing, utilities, groceries and car payments can add up quickly if you don't have the money. As I mentioned earlier, this plan pays you so you can take care of those monthly obligations. 

If you have questions about this plan or any of our other insurance plans, please leave us a note in the comments section below, or go to our website at www.SurfFinancialBrokers.com and book a phone appointment. In the meantime, please stay healthy! 

*Not available in Virginia

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

6 Term Life Insurance Issues To Be Aware Of

For years there has been a debate in the financial services industry over which type of life insurance people need. One side says to "buy term and invest the difference" while the other says that cash value life insurance is a safe way to lock in a rate and let your money grow. I'm not going to argue the pros and cons of either in this post because I think that it really depends on what the client's situation is. In other words, despite the financial gurus who like giving generic advice, I prefer having a discussion with a client to find out what their needs are.

With that in mind, this post will be about term life insurance and things to be aware of when purchasing it. Here are a few things to keep in mind when buying a term life policy.

1. Make sure you're buying enough. That small policy that is offered to you through work probably isn't going to be enough coverage. Take into consideration things like the balance of your mortgage, replacing your income, paying off credit cards and other debt (like car payments). If you have children, include education costs. In other words, make sure that your family can continue to comfortably live in their home, without worrying. 

Also, if you have a 2-income family, make sure to insure both spouses. Those two incomes are typically combined to pay the bills. When determining how much you need to replace income, a simple formula is to take your annual income and multiply it by 10. It may sound high, but it is realistic.

2. Don't wait too long to buy life insurance. By putting off a life insurance purchase, you are actually paying more in the long run. As you age, your premiums increase, so waiting five years to buy a policy will actually cost you more. More importantly, you can leverage your good health by getting coverage when you're younger. Odds are good that you will not be any healthier in the future as you are now and it only takes one health event, such as a heart attack to leave you either uninsurable or with a rate that is out of your price range.

A friend of mine, who is in his early 40's, recently had a mild stroke. Luckily he had coverage in place, but if he didn't, the chances of him getting another policy would be difficult and probably out of his price range.

3. Don't buy too short of a term. Unless you have a specific need in mind, like a 10-year note that needs to be secured, you should be looking at longer term periods. Consider how many years it will take to pay off your mortgage and get the kids out of the house (they may "boomerang" back). A 20 or 30 year term may be what you need. We even offer a term policy that locks in until age 65, which may be the perfect solution for a younger couple. 

4. Be careful with riders. The majority of policies have different riders you can add to your policy, such as a disability rider or accidental death. I personally think that a disability waiver of premium rider is a great value, because it continues to pay your premiums for you if you are deemed "disabled" and can't work. The last thing you need in that situation is your life insurance pulled out from under you.

Depending on the carrier, some riders will be included at no charge, such as accelerated death benefits. We have a term life policy that includes a chronic illness rider with no extra charge. 

5. Review you policy every few years. The fact is that as time passes, your financial situation may change. If you bought a policy 10 years ago, you may now have a totally different status. You may have received a raise, relocated, had twins, or become fabulously wealthy. 

Also, making sure your beneficiaries are up to date is very important. If the individuals you have chosen are deceased or no longer in your good graces, you can replace them at any time. 

6. Find a policy that is convertible to a permanent policy. The convertibility option of a policy is important because your term policy will eventually run out. Having the option to convert your policy to a permanent policy without any health questions makes sense in case you have some change in your health status. 

Term life insurance can be affordable and can be great helping your family if you were to die too soon, but keep in mind that the vast majority of term policies never pay a claim because the term expires before the policy holder. If you have questions or concerns look us up on website and book an appointment to discuss your needs. In the meantime, stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

It's Open Enrollment Time

It's that time of year again when a lot of people are making changes to their various medical plans. The choices you make during open enrollment will be affect how much your medical bills will be next year, unless you are fortunate enough not to have any. 

This past February I experienced my first major health event and spent nearly a week in the hospital. The hospital bill was around $75,000, with my major medical insurance picking up the tab for most of it. A small change in my open enrollment strategy could have cost me a great deal more and set me back financially. 

This is the struggle during open enrollment.  Trying to predict what your medical bills will be is nearly impossible, even with my Magic 8 Ball. I had always been a fairly healthy person, so being admitted and confined to a hospital was not in my gameplan when trying to decide which medical plan I would go with. I was just trying to find a policy that I could afford.

That is why it is so important to have some good supplemental plans at your disposal. Premiums for medical insurance go up each year. Medical inflation outpaces all of our other bills. Having a good disability plan or other coverage in place can help you if you are left with high deductibles or copays.

People will sometimes ask why I think it's so important to have more than life insurance and health insurance. My response is as follows: Health insurance won't pay all of the bills if something serious happens.  Add to that the fact that people generally don't have enough life insurance to cover all the expenses their family will have if they die. Supplemental (or voluntary plans, as they are known) can help you fill in those gaps. 

To this end, I am a huge proponent of supplement policies, not just because I sell them, but because I own them myself. I personally know the value of a Hospital Indemnity policy. I have a cancer plan on my family because I know that the out-of-pocket expenses are extremely high. My disability insurance policy will help cover my bills if I am sick or hurt and can't work. 

I don't want my friends to have to set up a GoFundMe page because they don't have the money to pay their bills. But I do want my friends (and clients) to have a good accident insurance policy so I don't have to contribute to their crowdfunding when they get hurt.

These plans all have a place and none will break my bank account. However, not having an extra policy or two in case of a serious illness or injury could destroy your family's finances. The vast majority of bankruptcies in this country are caused by major medical events. According to CNBC, 137million Americans were struggling with medical debt in 2019. And TD Ameritrade found that medical expenses are the number one reason why people of all ages cash out their 401(k)'s or other retirement savings. 

The majority of these types of plans are sold through the workplace, with employers deducting the premiums from the employees' paychecks. For those of us who are business owners, contract employees and otherwise self-employed, Surf Financial Brokers has comparable plans that can be purchased on an individual basis. And we can take your application right over the phone. Check out our website and book an appointment that works for you to make sure you have this valuable coverage. 

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog! Thanks!

How Do I Cover Out-Of-Pocket Medical Expenses?

With Covid in the news so much, we have had a spike in interest regarding the various supplemental plans we offer. Even though medical insurance pays the majority of the hospital and doctors' bills, there are still a lot of expenses that are not covered. Deductibles and coinsurance just two of examples. We recommend you take a look at your medical coverage when enrolling and check to see what your Out of Pocket (OOP) maximum is during the plan year. 

The OOP is the amount you could be on the responsible for if you were to be seriously ill. Earlier this year I was hospitalized for nearly a week when my pancreatitis flared up. Beside the physical pain I was having (it really hurt!) I knew there was going to be some financial pain as well. My OOP was around $4500. 

Many people have chosen medical plans with high deductibles to keep their premiums low, but they haven't considered how they will pay for those deductibles if they are hospitalized. Sure, you can call the hospital or other provider and work out a payment plan, but it would be much easier to have an insurance policy that can pay those out-of-pocket costs.

This is the time of year when many people are making changes into their medical plans. Open enrollment gives us an opportunity to made adjustments that fit into our budgets.

 

There has been a misconception that we have to work for a company to be eligible for group supplemental plans, but that's not always the case. A large number of individuals who are business owners, contract employees, or otherwise self-employed, can still have access to some great policies that will help cover those bills that their major medical does not.

We have options like our Hospital Indemnity (HI) plans, which give you extra money if you are admitted and confined to the hospital. As mentioned earlier, interest in these plans has increased due to the pandemic. And you can tailor the plan to give you the coverage you need. 

These plans pay directly to you, not the doctor or the hospital, so you can use the money as you need. There are no networks involved, so it doesn't matter where your received care. And these plans pay in addition to other insurance and workers' compensation plans. 

When you apply for an HI plan you can choose amounts for being admitted to the hospital, as well as daily confinement benefits. There are also optional riders for serious accidents and outpatient surgery. That flexibility lets you customize your plan to be affordable for you.

Filing a claim is easy as well. After leaving the hospital, simply fill out the forms and attach any medical receipts. 

During these crazy times when the Coronavirus is in the news each day, we see hospitals filled to capacity all over the country. Record numbers of cases remind us that anyone can get seriously ill, and not necessary from Covid, but from other ailments, like heart disease, cancer and strokes. And of course, serious accidents can also be costly. That is why we have health insurance in the first place. Making sure we can cover our health insurance premiums is tough, but trying to cover those extra expenses can be even tougher. And trust us when we say that not everyone wants to contribute to a GoFundMe page.

Let us help you with keep those out-of-pocket expenses low and please stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Should There Be Humor In Insurance?

Selling insurance is a serious business to most people. Let's face it, life insurance, disability insurance and other lines like cancer and accident plans are heavy subjects. Sitting with a client and talking about how their family will handle it when they die isn't the happiest discussion of the day. And asking them how they think their loved one will handle the family's finances if they can't work or become chronically ill is necessary, but not the kind of conversation one considers enjoyable. 

As an agent and insurance broker, I've had people tell me that they just want to avoid these doom and gloom topics. I completely understand that our everyday lives are full of negativity and bad news, especially with a pandemic and economic troubles in the news each day. But some topics, like making sure that your family is taken care of, have to be considered.

With this in mind, I try to keep the conversation serious, but not too serious. Half of the battle is to keep a good demeanor and let the client know that the seriousness of what we are trying to accomplish, which is securing the financial future of a family. 

However, sometimes a little humor injected into a conversation lightens the mood. I'm not advocating wearing a clown outfit when meeting with clients. But I do think that tossing in a little humor doesn't hurt anyone and keeps it all in perspective. Check out the video below to see how a bit of humor is okay.

A good example of this is when I discuss life insurance with a client. Part of the talk usually involves funeral costs. The average funeral runs about $7360, according to the National Funeral Directors Association, and there are usually some other expenses associated with death, like a brief hospital stay. To be safe, I may give a client an illustration for $10k. I sometimes will include a second illustration for $15k and show that as well. 

When the client asks why I show two illustrations I say, "The first quote covers the cost of your funeral. The second one is for the funeral plus an open bar for your mourners." That usually gets a chuckle. I even had one client take the higher coverage.

In my 20+ years in the business, I've worked with people who tried to be either too serious, or thought that they were standup comedians. Personally, I try to get to know my client a bit before trying to inject jokes. And I have even had clients who took a dark subject, like their own death, and made light of it. 

One client of mine began by telling me, in front of his wife and kids, that he had been shopping around for someone to cremate him and was on the hunt for the best rates. "I think I've got a guy down to $750, but I want him to guarantee that rate." His wife looked on in horror as he laughed at his own comment. "She's worried that the crematorium will increase the price when I'm not around to argue," he said with a sly grin. Dark humor at it's best.

Someone once said that people won't always remember everything you say, but they will remember how you made them feel when you said it. I don't expect my clients to remember every facet of the policy they are considering, but I do want them to feel comfortable and know that I'm looking out for their best interest, hopefully with a little humor.

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!

Planning For Your Retirement

According to an EBRI (Employee Benefits Research Institute) survey conducted in 2015, 66% of workers had saved less than $50,000 for their retirement. And 28%  had saved less than $1,000. The numbers slowly got better over the years, mostly because employment increased. As a result employer sponsored retirement savings plans helped, as they were the most effective way for people to save. 

And then the pandemic hit us. For the millions who have lost their jobs, retirement has been put on the back burner as trying to survive financially day-to-day and keeping one's head above water has become the priority.

Again, we are definitely headed into a retirement crisis. After the market drop of 2008, many people cashed out part or all of their retirement plans to pay their bills.  Scared of another market drop, many took their money out of stocks and moved to low-interest yielding investments in an effort to preserve their capital. 

The difference now is that the market is doing well while the rest of the economy is hurting. Companies have learned that they can keep productivity up with less employees, thus increasing profits. Those profits are reflected in the growth of the stock market, but not everyone is enjoying these gains.  

And yes, real estate has done well. Interest rates are still incredibly low, attracting buyers, but who is selling? Perhaps it is those who can no longer afford to be in their home due to a loss of income. The world has become very confusing. And it can still be confusing for those who are trying to plan a retirement. 

There are a few things to remember when planning for retirement.  

First, safety costs money.  If you put your money in an annuity with "guarantees", you'll pay in fees or additional charges.  (And yes, regardless of what your agent sales, there are fees in an indexed annuity). See my previous post on the free dinner at the steak house.

CD's at the bank can cost you in this low interest rate environment by way of inflation eating away at your money.  Your principal can lose value by inflation outpacing your growth. Do a little homework and find out what the current inflation rate is. Currently it's around 1.3%, which is very low, but it can change quickly if oil prices spike or another global crisis, like a war, should happen.

Also, when planning for retirement, a holistic approach is best.  The commercials for "orange money" or a big wood carved number people walk around with is great, but what does it really mean?  Trips, vacations, seeing the grandkids?  

I have mentioned that the three phases of retirement are the "Go go years, the slow go years and the no go years". Everyone plans to be active and have fun once they retire but the hard truth is that you may spend most of your retirement sick or homebound. You should also figure in medical costs associated with aging.  Long term care insurance (or something akin to it) are a must, especially if you have assets you want to pass on.

Estate planning has been replaced with "legacy planning" in some circles.  Legacy planning is a broader term and takes the concept of estate planning one step further, letting you incorporate your morals, beliefs and ideals into your estate plan, and by allowing you to "make a difference" with gifts you leave to charities and loved ones. Retirement planning goes hand in hand with estate planning.

 

But back to our retirement crisis.  Most people clearly don't have enough money socked away.  The government isn't in a position to take care of us.  As life expectancy increases, that doesn't necessarily mean you will live longer and enjoy it. As we say to our clients, just because you may live longer it doesn't mean you'll live better. Quality isn't the same and quantity in this case.  

The bottom line is that is doesn't have to be all gloom and doom. If you are in a position to contribute something each month, even if it's just a few dollars, to your retirement plan, do so. Mix it up as much as possible by diversifying your portfolio. Consider both putting money into your savings while protecting your assets with a long term care policy, which is a great way to play offense and defense at the same time. 

Have questions or comments, put them in the comments section below. And in the meantime, stay healthy!

Chris Castanes is the president of Surf Financial Brokers, helping people find affordable life and disability insurance coverage. He's also is a professional speaker helping sales people be more productive and efficient and has spoken to professional and civic organizations throughout the Southeast. And please subscribe to this blog!