Insurance For Your Life Insurance

There's currently a television commercial that mentions how a family depends on the income of the husband (or it could be the wife, mom, etc).  The question they ask is "How would your family make it without your paycheck?"

At first glance I thought they were talking about disability insurance since that truly is insurance for your paycheck.  However, this was an advertisement for life insurance.  And it is true that your family depends on your paycheck and would be in big financial trouble if you suddenly died.

But what if you didn't die?  What if you survived and you were disabled? The truth is that this could be an even worse situation for your family.  Not only would you not be able to work, but you may need a caretaker.  Like a client once told me, "If I'm dead I'm out of the picture, but if I'm disabled, I still have to eat."

And the last thing you need at that point is not being able to afford your life insurance.  Which is why we at Surf Financial Brokers stress the importance of an optional Waiver of Premium (WP).  The WP rider pays your life insurance premiums for you in the event that you are disabled and can no longer work.  Insurance on your insurance for a small additional charge.

You Can Figure Out Life Insurance

Many times when meeting with a client, I'll hear, "I don't understand anything about life insurance so I'm going to have to trust you with this." 

Even though I greatly appreciate the client's trust, I still take the time to explain in easy-to-understand terms all the different types of life insurance and what they do that sets them apart from one another.  Let's do this quickly and you'll understand (in general terms) life insurance in a few minutes.

First, there are 2 main types of life insurance:  Term and permanent.  

Term life insurance is just a death benefit for a certain amount of time (10, 20, 30 years) that you decide upon when purchasing.  That's all it does.  No cash value, no borrowing against it, nothing. Term life insurance is very reasonably priced. 

Permanent life insurance is where things get a little tricky because there are differing kinds of permanent coverages.  The idea is that they all have the potential to build cash value.  How they do that is the difference.

Whole life - Very safe, very slow growth, most expensive to purchase later in life.

Universal life (traditional) - Growth based on interest rates.  Less expensive than whole life but don't expect a lot of growth in a low-interest environment.

Variable universal life - Growth based on investment accounts.  Premiums are comparable to traditional universal life but can lose money.  Can only be purchased by a securities licensed agent.

Indexed universal life - Growth based on an index that reflects the market.  Can be a steady and quick grower of cash value with a floor (minimum) and a cap (maximum).  

That wasn't too hard to understand was it?  The key to it all is that you have enough coverage to help your family if you were to die too soon and to make it affordable.  If you have any questions, give us a call or look us up at Surf Financial Brokers.  

How You Can Plan For Long Term Care Costs

What are the images that come to mind when you think of Long Term Care (LTC)?  For most people, it's not something they want consider for themselves or a loved one.

There are two types of burdens when a family member is in a LTC situation:  financial and emotional.  We can't help you with the latter, but we can help you plan for the financial part.

Of course, there are LTC policies out there and they can be pricey.  The insurance industry has recently starting developing life insurance plans which can be used for LTC expenses as well.  Again, they can be a bit pricey.  What's the alternative?

One product we've come across is a Disability Income policy with rider that can help cover LTC costs.  And the good news is that the rider is very affordable.  When you consider that you need a disability policy anyway, why not cover some, or all, of your LTC needs while you can?

Give us a call or look us up on the web and let us help you.

Don't Get Overwhelmed With This Stuff

Occasionally someone will tell me that they just don't understand the differences between term, permanent, whole life, universal or indexed life insurance.  Throw in annuities, disability insurance, and other financial products being sold out there and even us agents get confused.

As I have mentioned before, there are hundreds, if not thousands, of products from over 1100 companies.  My philosophy is that every one of those products has a need somewhere, but for the vast majority of our clients, simple is better.

We want our clients to be as comfortable with a financial product as possible.  Whether we are discussing the benefits of a life policy or the fees in a retirement plan, there should be no confusion.

And if someone tells you that a products has "no fees", that implies that the financial institution isn't making any money.  Of course, that isn't the case either.

If you have questions about a product, give us a call or drop us a line on our website.

That Time of Year Again

It's tax season and it isn't too late to make some last minute deductions and try to keep as much of your hard earned money as you can.  Here are a few pointers that may help you this year, as well as a few that will save you money next year as well.

1.  You have until April 15 to make contributions to your IRA or other tax-qualified retirement plan. Remember that you can deduct contributions to a traditional IRA, but not a Roth.  

2.  Keeping your refund closer to zero is better than getting back a large refund.  If you are getting back a lot of money, remember that you loaned that money to the government free of charge and they are just paying it back.  

3.  If you are a business owner, self-employed or an independent contractor, you should seriously consider a SEP-IRA or a Simple IRA.  The contribution limits are much higher and can save you money on your business' tax bill.  

4.  Make a habit of keeping track of all of your deductions throughout the year.  This will save you a lot of time.

5.  A tax preparation company can be expensive.  If you have 1 employer and you don't itemize, an EZ form can be done on your own.  On the other hand, if  you have questions throughout the year, maybe an accountant is worth the money.  

The question we ask our clients is this:  How efficiently does the government spend your money and can you do better?

Don't Suffer From Low Interest Rates

Many people have taken advantage of low interest rates to refinance their homes and purchase cars.  However, there is a downside to these rates.

There is a record 9.4 Trillion Dollars sitting in underperforming CD’s, Money Market Accounts, Savings Accounts and fixed annuities earning record low interest rates.   Now is the perfect time to look into ways to maximize the growth of those funds and most importantly the possibility of transferring the money to your children, grandchildren or favorite charity –income tax free!

Many of you have done a fantastic job saving for retirement and many are looking for things to do with the money designated to pass onto the next generation.  Life insurance is an excellent option to consider.

If you have "lazy money" in sitting in an account that you don't need immediately then consider a Single Premium Whole Life policy.  

What Is Final Expense Insurance and How Can I Avoid Buying It?

You probably have seen the commercials on TV with Alex Trebek pitching a life insurance plan with no medical questions.  These ads typically show elderly people discussing how one of their friends died and the surviving spouse was left with all the bills.

What they are selling is known in the industry as "Final Expense" insurance and if you plan correctly, you won't need it.

Final Expense is a whole life policy, typically sold in units.  Each unit is $1000, so multiply the price Mr. Trebek is telling you times the number of units needed to have a nice funeral.  With the average cost of a funeral between $7000 - $10,000, depending on where you live and how fancy you want to your send off to be, you'll be paying more than the price you see on the screen.

The "no medical exam" part can cost you extra as well.  Anytime an insurer does less underwriting on a policy, they build that additional risk into the premium.

And some final expense policies have a provision that says that if you die in the first 2 years of the policy, your beneficiary doesn't get the death amount, but instead a refund of the premiums paid plus some interest.

The reason people purchase these policies is because they have either put off the inevitable and/or they have had a health scare, which makes them less able to get better rates.  Generally speaking, you probably will not be getting healthier as you age.  Now is the time to look at life insurance, not when you are sick and old.

So what can you do to avoid all of this?  Talk with your insurance agent (hopefully it's us!) and discuss a comprehensive life insurance plan that includes your final expenses.  An affordable alternative is a Guaranteed Universal Life policy purchased while healthy and will cover you to age 120 (yes, we do that now).  The lower rates will be locked in and you'll have one less thing to worry about.