January Newsletter


 
 
Beneficiaries’
Needs

Many times when discussing life insurance needs and options with clients, the discussion focuses upon the future of the insured person: potential savings; final expense costs; tax treatment of premiums and cash values; and future sretirement benefits.

Yet what should never be overlooked is the key purpose of all life insurance: protecting the financial future of those you leave behind. According to a recent study by several financial planning services, those dependent upon insurance benefits from a recently deceased person were often left wanting: 65% said death had a “devastating” or “major” financial impact on the families’ financial security.

Of those who did receive life insurance benefits, 84% received less than three times the annual income of the deceased (experts often recommend five to 10 times as a good benchmark), and 55% received less than one year of the deceased’s income.

Based upon your current life insurance protection, where would those you love appear in these surveys? There are several different investment options to help your family financially in the event of your untimely death. Call us to find what’s available.

 
Planning for Long-Term Care

According to a 2009 market survey:

• Assisted living in the U.S. costs an average of $3,131 per month

• The average daily cost of a private room in a nursing home in the U.S. is almost $80,000 per year

• The average length of stay in a nursing home for current residents is 2.4 years, which makes the average cost of a nursing home stay approximately $168,000

• Home healthcare assistance averages $21 per hour nationally.

When setting your financial plans for the future, a focus on desired income is great, but don’t forget to consider what may be your biggest expense: healthcare.
Talk to our planning experts about options concerning future health expenses,
including the advisability and availability of long-term care coverage.


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An Opportune Time for Life Insurance

There has never been a better time to buy life insurance. There are more
than 2,000 companies offering life insurance in
America.The vast marketplace, along with
increasing life expectancies, has resulted
in a steady decline in rates. Premiums
versus benefits are often pennies
on the dollar.

Additionally, life insurance is almost always
a better deal now than later. Insurers will,
in most cases, require medical information
when determining your “insurability”
—that is, your eligibility for the policies
they offer, the type/amount of insurance the
company is willing to sell to you and the price.
Insurability tends to decline with age. It may
be possible to obtain a policy with excellent
terms today and keep that policy for many
years, even if your health status declines.

A key selling point for many types of policies
is that they are guaranteed renewable, which
means the premium may change but you will not
have to provide evidence of insurability
to keep the coverage. That makes it easier
to assure that you will have benefits far into
the future, even if you become ill later.

For many people, obtaining insurance when
they are young is the difference between
having coverage later in life and not getting
coverage at all.

Starting a Retirement Fund in Your 40s

If you are in your 30s, 40s or 50s, hopefully
you have a good start on your retirement savings.
If so, congratulations! Stay the course!

If not, now is the time to begin. Decide if
your income and expense situation will allow
you to start putting away the 25%-35% of
your salary that experts recommend at your
age if you wish to retire on roughly the same
level of income as your pre-retirement, pre-tax
salary. Your immediate goal is to hit the
maximum annual contribution to your 401(k)
or other employer retirement plan.

Add an IRA or a Roth IRA if you’re eligible
and can afford it. Self-employed? Then
establish an individual 401(k), SEP-IRA or
QRP/Keogh plan. If you’re 50 or older, take
advantage of any additional “catch-up”
contributions available to you through your
employer’s 401(k) plan or your IRA.

If the recommended percentage is beyond
reach, put away whatever is possible. You can
also increase your potential Social Security
payments by waiting past the “normal”
retirement age before you start receiving
payments (up to age 70).

Wherever you are in your retirement planning,
let our experts help find an investment
plan that best fits your needs and abilities.

Medicare Supplement Insurance

If you are one of the record-setting number of
Americans about to become eligible for Medicare,
you may be thinking about Medicare Supplement
insurance, or Medigap as it is sometimes called.
There are 10 different Medicare Supplement plans
available to new purchasers, so choosing can be
complicated.

Medicare Parts A and B cover hospital, inpatient
care, physician, outpatient care and equipment
costs. Those plans have deductibles and co-
payments that an insured pays out of pocket. A
supplemental plan helps pay for some of the
costs that aren’t covered by Medicare Parts A
and B. Some cover prescription drugs, some cover
emergency care fees, some cover medical
treatment outside the U.S.—there are many
other options depending on which supplemental
plan you choose.

Your premium will be based on the plan you
choose, your age, your gender, your state
of residence, and possibly other factors.
There is a wide variation in rates
—sometimes more than $100 a month per plan—
so carefully look at all the details. Some
plans offer important “gap” coverage but charge
higher out-of-pocket fees.

The government offers a guide for Medigap
insurance at
www.medicare.gov/publications/pubs/pdf/02110.pdf.
Enrollment is limited to a six-month
period when you first are covered under
Medicare Part B and are 65 or
older (some states have additional rights),
so do your research and contact one
of ourspecialists before it’s time
to sign up.

Parents Are the Best Financial Teachers

Just like other healthy habits, financial fitness
begins at home. It’s never too early to teach
children the value of saving money. Establishing
good financial habits at an early age can lead
to lifelong practices of saving and financial
planning. Yet some parents may be saying,
“I’m struggling to figure these things out
for myself! How in the world can I teach my
kids anything?”

Do not despair. Here are some tips from
education and finance experts:

Set an example. Children watch how their
parents deal with money. In fact, about half of
those who closely monitor their finances
reported learning money-management skills at
home.

Seize teachable moments. Opportunities to
talk about saving money arise frequently in
daily life. Talk about smart shopping and setting
aside funds for the things you expect (and don’t
expect!) to need. Discuss needs versus wants.

Keep it simple. Kids are visual and tactile.
Those who learn to put part of their birthday
money or allowance into a piggy bank at a young
age are more likely to invest part of their income
as adults.

There are also financial products that can help
you establish a foundation for your children.
College saving plans, trusts, stock-based asset
funds and more are available. If you establish
something small for them early, they can deposit
into the account as teens and watch their assets
grow with each statement. Contact us to talk
about the opportunities.

Disability Insurance Beyond Social Security
Forgoing disability insurance in the belief that Social Security disability benefits are adequate to cover
your loss of income from a catastrophic illness or
injury is dangerous.

Review the following Q&A taken from the Social
Security Administration’s “What You Should Know Before
You Apply for Social Security Disability Benefits”
fact sheet. A copy of the entire sheet can be found at
http://www.ssa.gov/disability/Adult_StarterKit_Factsheet.pdf.

Q: How does Social Security decide if I am
disabled?

A: By law, Social Security has a very strict
definition of disability. To be found
disabled:

• You must be unable to do any substantial
work because of your medical condition(s);
and

• Your medical condition(s) must have lasted,
or be expected to last, at least one year, or
be expected to result in your death.

Q: My doctor says I am disabled. Is that enough
to qualify me for disability benefits?

A: No. You cannot get disability benefits solely
because your doctor says you are disabled.

Q: I am getting disability payments from my job
or another agency. Can I automatically get
Social Security benefits?

A: No. Social Security disability laws are
different from most other programs. For example,
Social Security does not pay benefits for
partial disability.

Q: How long does it take to get a decision?

A: It takes about three to five months. This
depends on how much time it takes to get your
medical records and any other evidence needed
to make a decision. During that time, there
are no government payments to you.

The bottom line is that getting Social Security
disability benefits is not assured. If you
are the primary breadwinner in your home, it
may be best to secure another source of disability
benefits on the private market.

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