Insurance

Understand Why Before Deciding How

understand why before deciding howI recently sat down with a new client who needed help understanding her financial accounts. It takes two-way communication and objectivity to determine what investment strategy best serves a client’s needs. Essentially, you must understand why before deciding how. Unfortunately, this woman’s previous advisor did not take such actions.

Several years ago this person recommended (as a sales agent) she move her IRA and brokerage accounts into equity-indexed annuities. That locked up most of her investable assets for 10 years into an insurance product that levies a fee to access her money.

As we chatted, I learned she wanted to travel and take classes in her retirement. Annuities hindered her ability to do that right away. Once I took the time to understand her goals, we knew this product was not the best choice.

Situations like this are all too common and have created a stigma for annuities. Yet, some annuity products may be appropriate investments in certain circumstances. One example is a client who had not had a fixed paycheck during his career as a realtor. When he retired, we purchased an annuity for him to complement his Social Security benefits. The steady annuity income was a welcome change from the unpredictable income stream he’d had while working and gave him peace of mind in retirement.

These examples highlight the importance of knowing what you need and want before making any decisions about your portfolio. It’s critical to explore all the reasons why you are investing before deciding how to invest and what products will be most effective in meeting your goals.

To learn more about our financial planning process and investing strategies, click here.

By |2019-08-14T13:59:44-07:00July 29th, 2019|Insurance, Investing|

Comparing Auto Insurance

comparing auto insuranceComparing auto insurance can be overwhelming. As a result, many people just pick a policy and stay with it. But pricing varies depending on your age, location, vehicle and even your credit score, so re-evaluating your options every few years is worth the effort.

Here are a few points to consider:

  • If you have undergone life changes – such as having a baby, turning 25 or moving to a new city – you may be eligible for a discount. If you had a ticket or a violation dropped recently, ask your agent to remove the surcharges on your policy.
  • When talking to your agent, ask questions about your existing coverage and any extras that come with the policy. It’s important to make sure you have everything you need covered, and equally important that you are not paying for features you don’t want or no longer need.
  • Many insurance companies consider your credit score when deciding on premiums, according to Consumer Reports. If you have great credit, make sure your agent knows. If your credit is less than perfect, talk with a financial advisor about ways to improve it.

Finding the right auto insurance is possible. Know what questions to ask, and don’t be afraid to ask them. Comparing auto insurance could save you money today, as well money, time and frustration down the road if you are in an accident.

Written by Alicia Vallee, a Phoenix-based freelance writer.
Photo credit: FrameAngel courtesy of freedigitalphotos.net
By |2019-08-14T13:59:44-07:00June 10th, 2019|Insurance|

Explore Long-Term Care Options

Mike McCann, CFP, AIFThe common U.S. life expectancy is 87 years. When you live into your 70s and beyond, the likelihood that you’ll need long-term care is considerable. Of course, much younger people can require these services, too, as a result of accidents or illnesses. About 30 percent of new long-term care insurance claims begins by age 80, and another 25 percent between ages 81 and 85, according to industry data for 2018. It’s important to explore long-term care options sooner rather than later.

Long-term care expenses average from $4,000 to $8,000 per month, depending on the level of care.

Yet, private health insurance policies, Medicare supplemental plans and group/employer plans generally do not cover long-term care costs. Medicare benefits are limited to 100 days and offered only after a hospitalization or injury. The Veterans Administration typically only covers long-term care for those with service-related disabilities.

Long-term care insurance pays for care when you become unable to care for yourself due to a disability or chronic condition; 99 percent of policies cover nursing home, assisted living and home health care. Annual premiums average $2,800. That said, different companies offer different rates and discounts, so premiums can vary by as much as 60 to 90 percent.

Our health changes, especially as we grow older. So it’s smart to look into care options well before reaching retirement age. This is especially true if you have a family history of chronic disease or disability.

There are many options for funding long-term care, and it’s important to gather as much information as possible to find the best one for you. Here are some examples:

  • Health Savings Accounts (HSAs) allow you to put money aside tax-free for medical costs, including long-term care insurance premiums.
  • Specialty or hybrid products like Life/LTC policies and LTC Annuities are becoming more common.
  • Pensions or Social Security benefits can help, depending upon the amount of money you receive and the care you need.
  • Retirement and other investment savings, if significant, may provide for your long-term care needs.
  • A home equity credit line, reverse mortgage or outright home sale can help fund care.
  • When all options have been exhausted and your income/assets have been depleted, Medicaid programs will cover nursing home care (but not assisted living care).

Before making any decisions, talk with your financial advisor. He or she can help you explore long-term care options and find the best financial solution for you and your family.

Sources: U.S. Department of Health and Human Services (longtermcare.acl.gov), American Assoc. for Long-Term Care Insurance (aaltci.org), Stanford Institute for Economic Policy Research, Morningstar.com Center for Insurance Policy and Research, Genworth.com
By |2019-10-15T12:14:27-07:00May 27th, 2019|Health Care, Insurance|

Assessing Life Insurance Needs

Assessing life insurance needs is part of estate planning.No one wants to think about their death and how it will impact others. But, if you have anyone in your life who depends on you, you must think about it. While you can’t ease the emotional burden of your loved ones when you die, you can help alleviate their financial burdens. An important part of the estate planning process is assessing life insurance needs.

Everyone’s situation is unique; and different types of life insurance policies meet different needs. Is your salary the main source of your family’s income? Are you a stay-at-home parent or caregiver? Do you have a child with special needs? Are you a small business owner? Have your children grown and started their own families?

This information from Nerdwallet.com demonstrates how life insurance funds can help in different scenarios. It can:

  • provide income replacement, so that your family can continue to pay everyday expenses;
  • cover the cost of paying for services the stay-at-home parent does for “free,” such as child care and home cleaning;
  • fund a trust, to ensure a child with special needs will have life-long financial support no matter when a parent dies;
  • cover mortgage payments, student loans or other debt, so your family won’t inherit debt or be forced to move;
  • fund a buy-sell agreement that allows a business partner to buy out your share;
  • provide a supplemental source of income for someone who has maxed out other retirement plans.

Term life lasts for a specific number of years and can be purchased, for example, to cover your mortgage or other debt. If the term expires before you die, there is no payout. Whole life and other types of permanent life insurance policies usually include a “cash value” account that builds value over time. This could help during retirement, if needed.

Assessing Life Insurance Needs

If you haven’t reviewed your life insurance in the past few years, schedule an appointment with your financial planner to help make sure your needs are being met.

By |2019-08-14T13:59:45-07:00April 23rd, 2019|Insurance|

Understanding Liability Insurance

Liability insurance can protect you in the event of serious injury, property damage or other economic liability. Thus, understanding liability insurance is an important piece of your personal financial plan.

One of the most common types of liability insurance is bodily injury and property damage for your auto coverage. It provides payment to others when you are the driver at fault in an accident. Arizona has minimum levels of coverage of $15,000 bodily-injury liability per person, $30,000 per incident (two or more people) and $10,000 for property damage ($15k/$30k/$10k). If someone has a $50,000 medical claim and you only have the minimum $15,000 in bodily injury coverage, they may pursue you for the remaining costs. More typical levels of coverage are $100k/$300k/$100k.

Another common type of liability protection is a vital component of homeowner’s insurance. Coverage typically starts at $100,000; however, to protect your family’s assets, $300,000 or more is advisable. If a guest or contractor slips and falls on your property, medical bills and lost wages can quickly add up to more than $100,000. Do you have a dog, pool or trampoline? Claims from these risks are common for pain and suffering, as well as for medical bills.

An umbrella liability policy is less common, though strongly recommended. Also known as a personal liability policy, it complements your auto and homeowner’s insurance by extending liability coverage where the underlying policies end. A car accident resulting in severe injuries can quickly exceed $500,000 in medical bills, property damage and lost wages, not to mention claims for pain and suffering. Any amount not covered by your auto policy could cause an action to be brought against you and your family for your personal assets (bank accounts, cars, home equity, wages). With a $1 million umbrella liability policy, you would have more sufficient coverage. In addition, the insurance company would pay for an attorney to represent you and negotiate with the other party.

More generous umbrella policies may also cover claims such as false arrest, libel or slander (such as a negative online review). Premiums for umbrella policies typically range from $250 to $500 per year for an additional $500,000 in liability protection.

By |2019-08-14T13:59:49-07:00July 1st, 2018|Financial Planning, Insurance|