Financial Choices for Safety and Security in this Era of Trump

Although 401(k)s are rebounding, financial safety and security continues to be sought in America. 

In this context, traditional whole life insurance and annuities must be considered as safe and secure options for acquiring sufficient money to have a satisfying retirement.

The long standing traditional whole life insurance lasts for your whole life and the premium remains the same as long as the policy is in existence. 

Traditional whole life insurance contains the basic essentials of term insurance, with an investment element added.

You pay a premium amount larger than the premium which would be paid for term insurance and that part of the payment is invested over the life of the policy. 

The growth of that investment is nontaxable to you. This favorable treatment of return on investment is exclusive to life insurance and offers a significant wealth buildup vehicle.

In a nutshell, here's what traditional whole life insurance have to offer:

• ·         tax-favored cash values
• ·         death benefits
• ·         competitive interest rate
• ·         guaranteed return

Next, an annuity is an investment contract between you and the insurance company. You receive a return on your investment that supplements your contribution. In the future, you can choose to "annuitize" the investment to provide income for a specified period of time in your lifetime.

The earnings on an annuity can grow without being lessened by taxes. These earnings are not taxable until you withdraw them, and then they are spread out over a number of years. 

When you begin receiving income from an annuity, only part of your income is taxable because you receive both interest and a partial return of the invested principal.

To make the best use of the positive tax advantages of an annuity, you also must be aware of the potential tax problems. The IRS imposes a penalty of 10 percent along with the tax owed on withdrawals unless you are over age 59 1/2 when withdrawing money from the annuity or cashing it in. 

These charges are in addition to any insurance company fees that might be imposed upon the withdrawal.

It is advisable to approach the purchase of an annuity with the expectation that you will not draw on it until you are older than age 59 1/2. 

To fully make the most of the tax advantages you should plan on holding the annuity for many years so that the earnings can grow without current taxation. No matter what the tax advantages of an annuity are, you still must pay close attention to the rate of return on the investment.

Here's what annuities have to offer:

• ·         a guaranteed return.
• ·         a competitive interest rate.
• ·         and, tax-free or tax-favored benefits

Because of their safety and security, both whole and annuities, should be given a major consideration for providing either partial or full retirement benefit. 

Keep current on the tax laws. They change frequently. 

Call (773) 614-3201 or e-mail me at bwillbar@gmail.com if you have questions regarding life insurance and annuities

6 Crucial Estate Planning Tips

Estate planning isn't just for the wealthy. It is to make sure your family is taken care of if something happens to you.

The basic pieces of estate planning are a Will, a Living Will or Durable Power of Attorney, a Revocable Trust, Life insurance, and 
Long Term Care.

1. The Will

The most important part of your estate plan is your will. It names your heirs -- the people you want to receive your money and possessions after you die. If you have children or dependents, a Will also names the person you want to take care of them.

In most states, you need a lawyer to create a will, but it needn't be very expensive. If you die without a will, the state will decide who will get your assets, your money and who will take care of your children.

2. The Living Will or Durable Power of Attorney

A Living Will or Durable Power of Attorney (POA) says what types of medical treatment you want (or don't want) if you get sick and cannot talk to the doctor. This document also states that you give someone permission to make decisions about your money and property if you are not able to make them yourself.

3. Health Care Directive

This document is also frequently referred to as a Living Will. With this document, you name a person who will make decisions about your health care if you are personally unable to make those decisions. Be sure your doctor has a copy of your health care directive.

Although you may have both documents, keep in mind that they may conflict since the Health Care Directive allows another to make decisions while the Living Will already states what is to be done. Absent statutory or document direction, healthcare providers may experience a conflict as to what to do.

4. The Revocable Trust

In incorporating a Revocable Trust into your estate plan, don't forget to update all the account titling into the name of the trust. Not changing titles creates problems.

Moreover, never name a financial institution as successor executive/trustee after surviving spouse or instead of a surviving spouse.  In some cases, this is to the detriment of the spouse and other beneficiaries because large institutions usually follow their fiduciary responsibilities with a less personable approach that another trustee could provide.

Finally, just having a will just about guarantees probate which can cost approximately 3% of your estate. A properly drafted and funded trust-based plan (seriously consider a land trust if your state laws allow for it) can avoid probate and protect your beneficiaries from predators and creditors. It can also incorporate sophisticated tax planning so that you can avoid or reduce estate tax liability.

5. Life Insurance

Do not name minor children outright as primary or contingent beneficiaries of life insurance or retirement plans. When children are named as primary or contingent beneficiaries a court must appoint a guardian who then must be bonded and file a laborious annual accounting with the local court.

Also, with regards to beneficiaries, it is important to remember to change the beneficiary in the event of a divorce or death. And never name a special needs child or a grandchild directly as beneficiary. Instead, use a trust for the benefit of the child. If you list a child as a direct beneficiary, you affect the child's eligibility for Social Security disability benefits.

6. Long-term Care Insurance (LTCi)

Long-term care can be a wise investment. If you become unable to perform routine daily functions such as dressing yourself then long-term care will pay the expense for someone to help you whether in your home or elsewhere. LTCi will also protect your assets, so that you have something left in your Will to direct to your heirs.

Now its your turn. How much importance do you put on estate planning. Do you think that any one of these steps are more important than another?

Leave your comments below. 

Whole life, Universal Life, or Term - How to Decide What's Best for You

A whole life insurance policy covers you for your entire life. Your death benefit and premium in most cases remain the same. 

Whole life also builds cash value, which is a return on a portion of your premiums that the insurance company invests. This tax-deferred cash value can be borrowed to help finance your children's education and is self-completing if either parent unfortunately experience an untimely death. 

Whole Life
A whole life insurance policy may be used as a part of your estate planning. Consequently, whole life insurance is a good choice for you if you want to ensure that you have a life insurance policy in place for your entire lifetime and can comfortably afford the premiums, 

While whole life insurance is designed to provide coverage on the insured for the insured's entire life as long as the premiums are paid and the policy has not been surrendered, 

Universal Life
Universal life is a type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element, like whole life insurance, which is invested to provide a cash value buildup. 

The death benefit, savings element and premiums, can be reviewed and altered as a policyholder's circumstances change. 

In addition, unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums.

Universal life insurance was created to provide more flexibility than whole life insurance by allowing the policy owner to shift money between the insurance and savings components of the policy. 

Premiums, which are variable, are broken down by the insurance company into insurance and savings, allowing the policy owner to make adjustments based on their individual circumstances. 

For example, if the savings portion is earning a low return, it can be used instead of external funds to pay the premiums.

Universal Life and Whole Life Compared
Unlike whole life insurance, universal life allows the cash value of investments to grow at a variable rate that is adjusted monthly. As an example, the Indexed Universal Life may base the performance of its cash values on one of several indices, including the S & P 500 or the Dow Jones Industrial Averages. 

Moreover while it provides an opportunity for growth, it has guaranteed returns and provides considerable stability. In that it provides both growth potential and a safety net, it is excellent for college planning or retirement supplemental planning.

Term Life

Term life insurance provides coverage only for a fixed period 10, 15, 20, or 30 years, as stated in the policy. And, it has no cash build up. While it can be extremely affordable for a person in good health up to the age of fifty. After that age, the premiums start to get progressively more expensive. 

Term should be purchased if you only need insurance for a specific period of time, such as if you want an outstanding fifteen or thirty year mortgage balance paid off in the event of an untimely death.

Any comments on the needs for  life insurance? Leave them below. If you need a quote, call (773) 614-3201.

5 Ways to Protect Your Family's Financial Independence

If you have a growing family, you probably realize that it has a way of outgrowing everything, especially their income and that there is a need for financial management.

While you are working towards achieving financial independence, think also about simultaneously implementing steps for protecting it. 

Having the right types of financial insurance and proper estate planning helps to relieve you of concerns associated with protecting your family's financial independence should a negative, unexpected event happens.

Consider these 5 financial management strategies for doing so:

1. Purchase long-term care insurance (LTCi) 

Long-term care Insurance is available to cover you if you acquire a chronic disease or disability and relieves your family of the burden of providing for your personal care. As I said in an previous post on long term care insurance, this type of policy covers the possibility of you not being able to perform at least two activities of daily living, without assistance, with the expectations that it will last at least 90 days. 

It includes a wide range of healthcare and social services such as day care, custodial care, home health care, hospice care, intermediate care, respite care, and skilled nursing care. LTCi does not cover hospital care.

2. Maintain appropriate levels of life, auto, home, and health insurance benefits.

Life insurance is one of the most important products you must consider obtaining in order to provide financial security for your loved ones. Auto accidents can cause financial and economic havoc to you and your family. Besides, in most states it's legally required. 

3. Homeowners insurance is especially a necessity for both homeowners and renters if you want to ensure that your possession are protected in case of a fire, theft, liability, or any other disaster. And, if you have ever been sick or injured, you know that it is important to have the right type of health insurance

4. Evaluate the need for an umbrella policy to help protect you from lawsuits. A serious personal liability lawsuit can reach catastrophic levels for the party defending the law suit as the judgment may potentially exceed the insurance policy liability limits. 

Once the liability limits are exhausted, the insured is often forced to pay a substantial amount out-of-pocket. Depending on your occupation and situation, you may require increased protection against catastrophic lawsuits.

5. Make sure your estate planning is up to date. The field of estate planning is a very complicated. It requires a focus on wills, taxes, law, and life insurance. 

Achieving and protecting your financial independence goes together. While it would be a shame for you to lose a substantial amount of of your money by gambling or taking a chance on risky stocks, it is equally a shame to have to pay out a substantial amount of money on a major hospital bill, for care in a nursing home, or through losing a court suit. After all you worked for it, why not keep it and pass it on.

I'll be delving into estate planning in a future post. 


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