Discover Your Retirement Number

September 22, 2021

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Luis Puente

Luis Puente

Financial Education

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Farmers Branch, TX 75234

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September 20, 2021

The Breakdown: Term vs. Perm

The Breakdown: Term vs. Perm

Navigating the world of life insurance can be a daunting task.

Even more daunting can be figuring out what policy is best for you. Let’s break down the differences between a couple of the more common life insurance policies, so you can focus on an even more daunting task – what your family’s going to have for dinner tonight!

Term Life Insurance. A Term life insurance policy covers an individual for a specific period of time – the most common term lengths being 10, 20, or 30 years. The main advantage of this type of policy is that it generally can cost the consumer less than a permanent insurance plan, because it might be shorter than a permanent policy.

The goal of a term policy is to pay the lowest premiums possible, because by the time the term expires, your family will no longer need the insurance. The primary thing to keep in mind is to choose a term length that covers the years you plan to work prior to retirement. This way, your family members (or beneficiaries) would be taken care of financially if something were to happen to you.

Permanent Life Insurance. Unlike term life insurance, permanent life insurance provides lifelong coverage, as long as you pay your premiums. This insurance policy – which also can be known as “universal” or “whole” – provides coverage for ongoing needs such as caring for family members, a spouse that needs coverage after retirement, or paying off any debts of the deceased.

Another great benefit a perm policy offers is cash accumulation. As premiums are paid over time, the money is allocated to an investment account from which the individual can borrow or withdraw the funds for emergencies, illness, retirement, or other unexpected needs. Because this policy provides lifelong coverage and access to cash in emergencies, most permanent policies are more expensive than term policies.

How Much Does the Average Consumer Need? Unless you have millions of dollars in assets and make over $250,000 a year, most of your insurance coverage needs may be met through a simple term policy. However, if you have a child that needs ongoing care due to illness or disability, if you need coverage for your retirement, or if you anticipate needing to cover emergency expenses, it may be in your best interest to purchase a permanent life insurance policy.

No matter where you are in life, you should consider purchasing some life insurance coverage. Many employers will actually offer this policy as part of their benefits package. If you are lucky enough to work for an employer who does this, take advantage of it, but be sure to examine the policy closely to make sure you’re getting the right amount of coverage. If you don’t work for a company that offers life insurance, don’t worry, you still may be able to get great coverage at a relatively inexpensive rate. Just make sure to do your research, consider your options, and make an informed decision for you and your family.

Now, what’s it going to be? Order a pizza or make breakfast for dinner? Choices, choices…

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September 13, 2021

The Cost of Goodbye

The Cost of Goodbye

The emotional cost of losing a loved one can’t be quantified, and knowing how to say goodbye can’t be taught so much as learned. It can be a long and difficult road for many.

Offsetting the financial aspect of that struggle can be done.¹ Not through gimmicks or escapism, but through a real, tangible solution: Final expense plans.

A traditional funeral can cost up to $10,000. If that number seems a bit outrageous, look at how quickly some of the basic items and services can add up:

  • Cost of the grave site: $1,000
  • Cost to dig the grave: $600
  • Cost of a casket: $2,300
  • Cost of a grave liner/outer burial container: $1,000
  • Cost of a headstone: $1,500

That’s already $6,400… and says nothing of payment of mortician’s services, use of the funeral home, the fee for the funeral director, the cost of flowers, and more details that one never thinks about until they’re in a position where they need to think about it. These costs will vary by geographic location, but one thing you can count on is that the emotional cost you or your loved ones experience later could be compounded with financial cost that could be avoided with a bit of careful preparation now.

In the face of losing someone you love, finances might be the last thing on your mind. With a solid final expense plan, you can keep it that way.

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¹ “Funeral Costs: How Much Does an Average Funeral Cost?” Parting, Sep 13, 2020, https://www.parting.com/blog/funeral-costs-how-much-does-an-average-funeral-cost/

September 1, 2021

Homemakers Need Life Insurance, Too

Homemakers Need Life Insurance, Too

Are you a stay-at-home parent? Even if you’re not contributing monetarily to your family’s income, you still need life insurance.

That’s because you offer support to your family that’s as valuable as the main breadwinner.

Let’s break it down…

The goal of life insurance is to replace income. If the main income earner dies, the death benefit can replace their salary. It offers financial headroom for grieving families to help put their lives back together.

However, a stay-at-home parent provides services for their family that are just as important and can be expensive to replace.

For instance, what if you provide childcare for your family? Replacing your services could cost $8,355 yearly per child.¹

Then factor in other potential costs like…

  • Education
  • House cleaning
  • Driving kids to events
  • Running errands
  • Managing home repairs and yard maintenance
  • Planning meals, shopping, and cooking

And so much more! These costs are simply a snapshot of how much life insurance a homemaker could need. It should be enough to cover expenses to replace all the work you do around the house and on your family’s behalf.

If you’re not sure what that number is, contact me. We can sit down, review your family’s situation, and draw up a strategy to help provide for your loved ones, no matter what.

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“Parents spend an average of $8,355 per child to secure year-round child care,” Megan Leonhardt, CNBC, May 19 2021, https://www.cnbc.com/2021/05/19/what-parents-spend-annually-on-child-care-costs-in-2021.html

August 30, 2021

What You May Not Know About Life Insurance

What You May Not Know About Life Insurance

Life insurance has one main job—helping to protect your family’s financial security in the event of your death.

And it does that by providing your loved ones with a one-time payout that replaces your income.

Your family depends on you to provide. It’s how they afford necessities like food and shelter. It’s also how you support them with their lifestyle.

But if you pass away, your income dries up. Your family would have to face their financial responsibilities with fewer resources.

That’s where life insurance helps. If you pass away, your family receives a benefit that can help ease the financial pressure.

Instead of a yearly salary, your loved ones now receive a once-in-a-lifetime salary.

That’s why it’s common to base the size of your life insurance policy on your income. Rule of thumb, you want a policy that’s 10X your annual income.

So if you currently earn $60,000, you probably would need a $600,000 policy.

There are factors besides income to consider. For instance, your family may need more protection if you’re paying off a mortgage.

In conclusion, if anyone you love depends on your income, you need life insurance. It’s a way to provide for your family, even if you’ve passed away.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or policies that may be available to you. Any examples used in this article are hypothetical. Before enacting a savings or retirement strategy, or purchasing a life insurance policy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

August 25, 2021

3 Saving Strategies For College

3 Saving Strategies For College

In this day and age, it seems like college tuition is skyrocketing.

Students and parents are increasingly reliant on loans to cover the cost of higher education, often with devastating long-term results.¹

In this article we’ll cover three saving strategies to help you cover the cost of college without resorting to burdensome debt.

Strategy #1: Use “High-Yield” savings accounts. This strategy is simple—stash a portion of your income each month into a savings account. Then, when the time comes, use what you’ve saved to cover the costs of tuition.

Unfortunately, this strategy is riddled with shortcomings. The interest rates on “high yield” savings accounts are astonishingly low—you’d be hard pressed to find one at 1%.²

Even if you did, it wouldn’t be nearly enough. For example, if you had $3,000 saved for college in a savings account earning 1% interest per year, it would only grow to about $3,100 after four years—not enough to cover a whole semester’s tuition!

Even worse, inflation might increase the cost of tuition at a pace your savings couldn’t keep up with. Your money would actually lose value instead of gain it!

Fortunately, high-yield interest accounts are far from your only option…

Strategy #2: Consider traditional wealth building vehicles. That means mutual funds, Roth IRAs, savings bonds, indexed universal life insurance, and more.

The growth rates on these products are typically significantly higher than what you’d find in a high-yield savings account. You might even find products which allow for tax-free growth (the Roth IRA and IUL, for example).

But, typically, these vehicles have two critical weaknesses…

  1. They’re often designed for retirement. That means you’ll face fees and taxes if you tap into them before a certain age.

  2. They’re often subject to losses. A market upheaval could seriously impact your college savings.

Note that none of these vehicles are identical. They all have strengths and weaknesses. Consult with a licensed and qualified financial professional before you begin saving for college with any of these tools.

Strategy #3: Use education-specific saving vehicles. The classic example of these is the 529 plan.

The 529 is specifically designed for the purpose of saving and paying for education. That’s why it offers…

  • Tax advantages
  • Potential for compounding growth
  • Unlimited contributions

It’s a powerful tool for growing the wealth needed to help cover the rising costs of college.

The caveat with the 529 is that it’s subject to losses. It’s also very narrow in its usefulness—if your child decides not to pursue higher education, you’ll face a penalty to use the funds for something non-education related.

So which strategy should you choose? That’s something you and your financial professional will need to discuss. They can help you evaluate your current situation, your goals, and which strategy will help you close the gap between the two!

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Market performance is based on many factors and cannot be predicted. This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Any examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.


¹ “Student Loan Debt: 2020 Statistics and Outlook,” Daniel Kurt, Investopedia, Jul 27, 2021, https://www.investopedia.com/student-loan-debt-2019-statistics-and-outlook-4772007

² “Best high-yield savings accounts in August 2021,” Matthew Goldberg, Bankrate, Aug 25, 2021, https://www.bankrate.com/banking/savings/best-high-yield-interests-savings-accounts/

August 23, 2021

Financial Essentials for Retiring Baby Boomers

Financial Essentials for Retiring Baby Boomers

Are Baby Boomers out of time for retirement planning?

At first glance, it might seem like they are. They’re currently aged 57-75, meaning a good portion have already retired!¹

And those who are still working have only a few precious years to create their retirement nest eggs and get their finances in order.

Perhaps you’re in that boat—or at least know someone who is. If so, this article is for you. It’s about some essential strategies retiring Baby Boomers can leverage to help create the futures they desire.

Eliminate your debt. The first step is getting rid of your debt. After all, it’s not optional in retirement—you’ll need every penny to fund the lifestyle you want.

That means two things…

  1. Don’t take on any new debt. No new houses, boats, cars, or credit card funded toys.
  2. Use a debt snowball (or avalanche) to eliminate existing debts.

That means focusing all of your financial resources on a single debt at a time, knocking out either the smallest balance or highest interest debt.

Eliminating, or at least reducing, your debt can help create financial headroom for you in retirement. It frees up more cash flow for you to spend on your lifestyle and on preparing for potential emergencies.

Maximize social security benefits. Delay Social Security as long as possible (or until age 70). Delaying Social Security increases your monthly payments, so it’s a simple way to maximize your benefit.

For example, if you started collecting Social Security at age 66, you would be entitled to 100% of your social security benefit. At 67, it increases to 108%, and by 70 it increases 132%. That can make a huge difference towards living your dream retirement lifestyle.

Check out the Social Security Administration’s website to learn more.

Protect your wealth and health with long-term care (LTC) coverage. The next step is to protect your assets from the burden of LTC. It’s a challenge 7 out of 10 retirees will have to overcome, and it can be costly—without insurance, it can cost anywhere between $20,000 and $100,000. That’s a significant chunk of your retirement wealth!²

The standard strategy for covering the cost of LTC is LTC insurance. It pays for expenses like nursing homes, caretakers, and adult daycares.

But it can be pricey, especially as you grow older—a couple, age 55, can expect to pay $2,080 annually combined, while a 65 year old couple will pay closer to $3,750.³

The takeaway? If you don’t have LTC coverage, get it ASAP. The longer you wait, the more cost—and risk—you potentially expose yourself to.

Pro-tip: If you have a permanent life insurance policy, you may be able to add a LTC rider to your coverage. Meet with a licensed and qualified financial professional to see if this option is available for you!

Review your income potential with a financial professional. The final step on your path to retirement is reviewing your income options. You want to strike a balance between maximizing your sources of cash flow and keeping control over your retirement plan.

Many retirees lean heavily on two primary income opportunities: Social security and withdrawals from their retirement savings accounts.

And that’s where a financial professional can help.

They can help you review your current retirement lifestyle goals, savings, and potential income. If there’s a gap, they can help come up with strategies to close it.

You’ve worked hard and made sacrifices—now it’s time to reap the rewards of all that elbow grease. Which of the essentials in this article do you need to tackle first?

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¹ “Boomers, Gen X, Gen Y, Gen Z, and Gen A Explained,” Kasasa, Jul 6, 2021, https://www.kasasa.com/articles/generations/gen-x-gen-y-gen-z

²”Long-term care insurance cost: Everything you need to know,” MarketWatch, Feb 19, 2021, https://www.marketwatch.com/story/long-term-care-insurance-cost-everything-you-need-to-know-01613767329

³ “Long-Term Care Insurance Facts - Data - Statistics - 2021 Reports,” American Association for Long-Term Care Insurance, https://www.aaltci.org/long-term-care-insurance/learning-center/ltcfacts-2021.php

July 7, 2021

Keeping the House

Keeping the House

Life insurance can save your house.

Picture this…

A couple owns a beautiful home out in the suburbs. It’s where they’ve raised their children and made memories that will last a lifetime.

Until one of them passes away too soon. Suddenly, the whole picture shifts. See, they are a two income household. They relied on both income streams to buy groceries, cover children’s education… and pay the mortgage.

Now, the surviving partner isn’t simply coping with grief. They’re facing the potential loss of their house, with all of its memories and meaning, as well.

It’s not a far-fetched scenario. Death is one of the Five D’s of foreclosure—the others are divorce, disease, drugs, and denial.

Life insurance can help. It’s the safety net to have in place to protect your family from financial uncertainty and provide for their future.

That’s because the death benefit that’s paid out to your loved ones can cover the cost of mortgage payments, or possibly even pay off your mortgage entirely.

What does that look like in the scenario from earlier?

First, it prevents a personal tragedy from becoming a financial crisis. The last thing a grieving person needs is to have to cope with financial stress.

Second, it means that the grieving partner could keep the house if they so desire. After some time has passed, they can make plans on what the future of their life should look like, without undue financial restrictions.

If that’s a peace you would like to help provide to your family, contact me. We can review what life insurance would look like for you and your budget.

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June 7, 2021

How to Make the Most of Your Life Insurance Policy

How to Make the Most of Your Life Insurance Policy

Your life insurance policy is one of the most important things you’ll buy in your lifetime.

Knowing how to make the most of it will help you sleep better at night and more easily plan for the future. We’re going to cover the aspects of life insurance with a focus on making those numbers work for YOU!

Choose a policy with enough coverage. As a rule of thumb, a life insurance policy should provide a death benefit that’s at least 10X your annual income. Why? Because the benefit can serve as an income replacement for your family if you pass away. A payout above 10X your annual income can provide your family with a generous financial buffer to recover and make a plan for their future. Buying enough coverage helps ensure your policy fulfills its function—to financially protect your family when you pass away.

Choose the right type of insurance. There’s no one-size-fits-all life insurance policy. They each have different strengths and shine in different circumstances.

Term life insurance, for instance, is typically better for families who need protection on a thin budget. That’s because term is often an affordable option for securing a large death benefit.

Permanent life insurance might be better if you’re looking for an investment that grows over time. It’s also a good choice if you need lifelong protection for your spouse and children, but don’t want to be burdened by higher premiums as they age. That makes it particularly attractive to families with permanent dependents or who are interested in wealth-building vehicles.

Choose a policy that fits your budget. Life insurance shouldn’t consume your income. Rather, it should protect your income in case of disaster. Get as much life insurance as your family needs, but don’t add all the bells and whistles if you can’t afford it!

You want a life insurance policy that protects your family, aligns with your goals, and doesn’t break your budget. If you’re not sure what that looks like, meet with a licensed and qualified financial professional. They can help you hammer out goals and find policies that help you meet those goals!

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This article is for informational purposes only and is not intended to promote any certain products, plans, or policies that may be available to you. Any examples used in this article are hypothetical. Before enacting a savings or retirement strategy, or purchasing a life insurance policy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

June 2, 2021

Don't Panic: What You Need To Know For Your Life Insurance Medical Exam

Don't Panic: What You Need To Know For Your Life Insurance Medical Exam

I don’t know about you, but most people don’t like exams – either taking one or having one done to them.

But there’s no need to panic over your life insurance medical exam (yes, you’re probably going to have one). I’ve got some steps you can take before the “big day” to help prevent readings which may skew your test results or create unnecessary confusion.

One important thing to keep in mind is that the exam’s purpose isn’t to pass or fail you based on your health. Your insurer just needs to understand the big picture so they can assign an accurate rating. Oftentimes, the news can be better than expected, and generally good health is rewarded with a lower rate. Alternatively, the exam might uncover something that needs attention, like high cholesterol. That might be something good to know so you can make necessary lifestyle changes.

Think of your exam as a big-picture view. Your insurer will measure several key aspects of your health. These areas help determine your life insurance class, which is simply a group of people with similar overall health characteristics.

Your insurer will most likely look at:

  • Height and weight
  • Pulse/blood pressure tests
  • Blood test
  • Urine test

Tests can indicate glucose levels, blood pressure levels, and the presence of nicotine or other substances. Body Mass Index (BMI) – a measurement of overall fitness in regard to weight – may also be measured as part of your life insurance exam.

So let’s find out what you can do to prepare for your exam!

The most obvious cause that could affect your results is medications you’ve taken recently. These will probably show up in your blood tests. Bring a list of any prescription medications you’re taking so your insurer can match those to the blood analysis.

Over the counter meds can interfere with test results and create inaccurate readings too, so it might be best to avoid them for 24 hours prior to your medical exam if possible. Caffeine can cause spikes in blood pressure.¹ Limit your caffeine intake or avoid it altogether, if possible, for 48 hours prior to your exam. Smoking can elevate blood pressure as well.²

Alcohol has a similar effect on blood pressure. Try to avoid alcohol for 48 hours prior to taking your life insurance medical exam.³ Some types of exercise can also spike blood pressure readings temporarily.⁴ If you can, avoid strenuous exercise for 24 hours before your medical exam.

Some types of foods can create false readings or temporarily raise cholesterol levels.⁵ It’s best to avoid eating for 12 hours prior to your exam, giving your body time to clear temporary effects. Scheduling your exam for the morning makes this easier.

Stress can affect blood pressure readings.⁶ (Surprise, surprise.) Try to schedule your life insurance medical exam for a time when you’ll be less stressed. After work might not be the best time, but maybe after a good night’s rest would be better.

Have any further questions on how you can prepare for your exam? I’m here to help!

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¹ “Caffeine: How does it affect blood pressure?,” Sheldon G. Sheps, M.D., Mayo Clinic, Jan, 26, 2019, https://www.mayoclinic.org/diseases-conditions/high-blood-pressure/expert-answers/blood-pressure/faq-20058543

² “Smoking, High Blood Pressure and Your Health,” American Heart Association, Oct 31, 2016, https://www.heart.org/en/health-topics/high-blood-pressure/changes-you-can-make-to-manage-high-blood-pressure/smoking-high-blood-pressure-and-your-health#.Wrz8uNPwZTZ

³ “Short-term Negative Effects Of Alcohol Consumption,” BACtrack, https://www.bactrack.com/blogs/expert-center/35042501-short-term-negative-effects-of-alcohol-consumption

⁴ “Does Exercise Raise Blood Pressure?,” Barrett Barlowe, SportsRec, Nov 28, 2018, https://www.sportsrec.com/6277164/does-exercise-raise-blood-pressure

⁵ “How to Prep for a Cholesterol Test,” Vanessa Caceres, Livestrong.com, Apr 29, 2020 https://www.livestrong.com/article/326114-what-not-to-eat-before-cholesterol-check/

⁶ “Managing Stress to Control High Blood Pressure,” American Heart Association, Oct 31, 2016, https://www.heart.org/en/health-topics/high-blood-pressure/changes-you-can-make-to-manage-high-blood-pressure/managing-stress-to-control-high-blood-pressure#.Wr0OsdPwZTY

May 24, 2021

Why Families Buy Term Life Insurance

Why Families Buy Term Life Insurance

Why does term life insurance seem to be so common among your friends and family?

For many, it’s simply the most affordable strategy for securing life insurance. And that means it can provide critical financial protection for many different situations. Here are a few of the most common reasons families choose term life insurance.

The power of term life insurance is that it’s typical affordable. It provides a death benefit for a limited term, typically 20-30 years, which means you can often purchase more protection at a lower price than other types of policies. As long as your protection lasts while you have financial dependents, you’re covered.

But there are more pragmatic reasons why families buy term life insurance. For many, it serves as a source of income replacement. When a breadwinner passes away, the income they provide is gone. That means a family might find themselves with a serious cash flow deficiency in addition to the tragic loss. The death benefit can replace the lost income.

A family might also need to purchase life insurance when they have dependents, such as college-aged kids with high educational expenses. If a family has dependents and no life insurance, the burden of funding higher education falls on the family, who are down an income. With term coverage in place, they have the financial power to help cover those bills with confidence.

Term life insurance can also be invaluable for families with high debt obligations. Because it’s often so affordable, term life insurance may provide significant coverage without diverting financial resources away from getting out of debt. And, if the policyholder passes away before the debt is eliminated, the death benefit can also go towards finishing off loans.

Finally, term life insurance can be used to cover the costs of funeral expenses. Families who don’t have any other form of coverage for these out-of-pocket bills often need extra cash to cover the costs of burial. Term life insurance is a simple way to pay for the funeral the family needs.

In conclusion, term life insurance can be a great way to cover the costs of many big ticket items and expenses at a reasonable cost. Would that be a good fit for your family? Contact me, and we can explore what it would look like for you!

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May 19, 2021

The Advantages of Survivorship Insurance

The Advantages of Survivorship Insurance

A survivorship policy pays out only after two people pass away.

Why does that matter? For many families, it doesn’t. They need more traditional forms of life insurance that protect income for their spouses and children.

But there are specific situations where survivorship insurance might be critical for your legacy. Read on for the advantages of survivorship insurance!

First, survivorship insurance can be an invaluable tool for estate planning. If one spouse dies, they can pass their assets to their spouse without facing federal estate taxes.¹ Not so for wealth left to future generations! For some couples with substantial assets to pass on to children, survivorship can leave a sizable death benefit that can offset the cost of estate taxes.²

If this strategy appeals to you, reach out to an attorney and a financial professional. You’ll need their help to get your estate in order and navigate your state’s tax system.

Second, survivorship insurance can cover ailing or elderly couples. As a rule of thumb, survivorship insurance is a good option for those who don’t qualify for term or permanent life insurance due to health or age. That’s because the rates are based on two life expectancies, potentially lowering rates and increasing your likelihood of qualifying.³ This is especially useful if the couple has children who are still dependents or will need special care.

In conclusion, survivorship insurance can be a powerful tool for specific people in specific situations. That’s why it’s best to collaborate with legal and financial professionals to make a decision that will be right for you and your family.

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¹ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

² “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

³ “An act of mutuality: Survivorship insurance,” Shelly Gigante, MassMutual, Mar 30, 2021, https://blog.massmutual.com/post/survivorship-insurance

May 17, 2021

A Matter of Life and Debt

A Matter of Life and Debt

You might never have thought about this before, but how are debt and life insurance connected?

Well, the answer is very simple. Debt is one of the largest financial struggles in society today—total consumer debt has grown to a staggering $14.9 trillion as of 2020.¹ That represents a staggering financial burden on Americans throughout the country.

But what happens if someone in debt passes away? The debt doesn’t just vanish. The estate of the deceased is often responsible for repaying creditors.² That means a family, already down an income, has to cope with the stress of managing debt.

That’s where life insurance can help.

Life insurance pays out a lump sum in the event of death. The money can help family members repay debt, care for children or other dependents, and provide financial security to those left behind.

So how much life insurance do you need? That’s something only you can answer for your own household. Typically, experts recommend 10X your annual income to provide a sufficient financial cushion for your family. But, depending on your level of debt or the particular needs of your spouse and children, you may require more coverage!

Life insurance could be critical for the financial well-being of your family if you’re carrying debt. It might provide the cash they need to pay your creditors and start building a new future.

If you’re looking for life insurance, contact me. We can estimate the amount of protection that’s right for your family!

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May 12, 2021

A Beginners Guide to Saving and Shredding Documents

A Beginners Guide to Saving and Shredding Documents

It’s time to manage all those papers that are taking up space in your filing cabinets!

But how? Which documents should you preserve? Which ones should you shred? Here are 11 helpful tips on what to do with tax documents, legal documents, and property records.

Documents to keep <br> At the top of this list? Estate planning documents. Your will, your living trust, and any final instructions should be carefully labeled, stored, and protected. Your life insurance policy should be safeguarded as well.

Records of your loans should be preserved. That includes for your mortgage, car and student loans. Technically, you can shred these once they’re paid off, but it’s wise to keep them around permanently. Someday you may have to prove you’ve actually paid off these debts.

Tax returns <br> Here’s a trick—keep tax returns for at least 7 years. Why? Because there’s a 6 year window for the IRS to challenge your return if they suspect you’ve underreported your income.¹ Keep your records around to prove that you’ve been performing your civic duty by properly reporting your income.

(Check your state’s government website to determine exactly how long you’re supposed to keep state tax returns.)

Property records <br> Keep all of your records pertaining to…

  • Your ownership of your house
  • The legal documents for buying your house
  • Commissions to your real estate agent
  • Major home improvements

Save these documents for a minimum of 6 years after you move out of your home. If you’re a renter, keep all of your records until you’ve moved out. Then, fire up your shredder and get to work!

Speaking of your shredder…

Annual documents to destroy <br> Every year, you can shred paycheck stubs and bank records. Just be sure of two things…

First, make sure that you’re not shredding anything that might belong in your tax records.

Second, be sure that you’ve reviewed your finances with a professional who will know which documents may need preserving.

Once you’ve done that, it’s fine to feed your shredder at your discretion!

Credit card receipts, statements and bills <br> Once you’ve checked your monthly statement against your bank records and receipts, you’re free to shred them. You may want to hold on to receipts for large purchases until the item breaks or you get rid of it.

When in doubt, do some research! It’s better than tossing out something important. And schedule an annual review with a licensed and qualified financial professional. They can help you discern which documents you need and which ones can be destroyed.

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¹ “Save or Shred: How Long You Should Keep Financial Documents,” FINRA, Jan 27, 2017, https://www.finra.org/investors/insights/save-or-shred-how-long-you-should-keep-financial-documents

May 5, 2021

Why You Should Care About Insurable Interest

Why You Should Care About Insurable Interest

First of all, what is insurable interest?

It’s simply the stake you have in something that is being insured – and that the amount of insurance coverage for whatever is being insured is not more than your potential loss.

To say things could become a bit awkward might be an understatement if your insurable interest isn’t considered before you’re deep into the planning phase of a project or before you’ve signed some papers, like a title or a loan.

It’s better for your sanity to understand insurable interest beforehand. Where the issue of insurable interest often arises is in auto insurance. Let’s look at an example.

Let’s say you have a car that’s worth $5,000. $5,000 is the maximum amount of money you would lose if the car is stolen or damaged – and $5,000 would be the most you could insure the car for. $5,000 is your insurable interest.

In the above example, you own the car, so you have an insurable interest in it. By the same token, you can’t insure your neighbor’s car. If your neighbor’s car was stolen or damaged, you wouldn’t suffer any financial loss because it wasn’t your car.

Here’s where it might get a little tricky and why it’s important to understand insurable interest. Let’s say you have a young driver in the house, a teenager, and it’s time for him to go mobile. He’s been saving up his lawn-mowing money for two years and finally bought the (used) car of his dreams.

You might have considered adding your son’s car to your auto policy to save money – you’ve heard how much it can cost for a teen driver to buy their own policy. Sounds like a good plan, right? The problem with this strategy is that you don’t have an insurable interest in your son’s car. He bought it, and it’s registered to him.

You might find an insurance sales rep who will write the policy. But there’s a risk the policy won’t make it through underwriting and – more importantly – if there’s a claim with that car, the claim might not be covered because you didn’t have an insurable interest in it. If you want to put that car on your auto insurance policy, the car needs to be registered to the named insured on the policy – you.

Insurable Interest And Lenders If you have a mortgage or an auto loan, your lender is probably listed on your policy. Both you and the lender have an insurable interest in the house or the car. Over time, as the loan is paid down, you’ll have a greater insurable interest and the lender’s insurable interest will become smaller. (Hint: When your loan is paid off, ask your agent to remove the lender from the policy to avoid any confusion or delays if you have a claim someday.)

Does Ownership Create Insurable Interest? Excellent question! It might seem like ownership and insurable interest are equivalent – they often occur simultaneously. But there are times when you can have an insurable interest in something without being an owner.

Life insurance is a great example of having an insurable interest without ownership. You can’t own a person – but if a person dies, you may experience a financial loss. However, just as you can’t insure your neighbor’s car, you can’t purchase a life insurance policy on your neighbor, either. You’d have to be able to demonstrate your potential loss if your neighbor passed away. And no, it doesn’t count if they never returned those hedge clippers they borrowed from you last spring!

Now you know all about insurable interest. While insurable interest requirements may seem inconvenient at times, the rules are there to protect you and to help keep rates lower for everyone. Without insurable interest requirements, the door is open to fraud, speculation, or even malicious behavior. A little inconvenience seems like a much better option!

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April 7, 2021

The Power of Living Benefits

The Power of Living Benefits

Preparing for the possibility of a critical medical illness or condition is probably not high on your list of fun things to do.

But its importance cannot be overstated—two-thirds of people who file for bankruptcy do so because of medical debt.¹

What many don’t know, however, is that life insurance can help you shoulder the high cost of medical care… if you utilize living benefits!

How living benefits work <br> Almost all life insurance policies come with a death benefit. It’s money that will go to your beneficiaries when you pass away. A living benefit is a feature of some life insurance policies that allows you to access the death benefit while you’re still alive.

So let’s say you have a life insurance policy with a $400,000 death benefit. You suddenly get diagnosed with a serious illness that requires you to take time off work and undergo intensive medical treatment.

That means you’re facing a substantial expense with a decreased income. Your medical crisis has also become a financial crisis!

But what if you could access your death benefit in the present? $400,000 may cover a substantial portion—perhaps even all—of the cost of treatment.

And you don’t have to use your entire benefit. If your medical bills add up to $100,000, you could use $100,000 from your life insurance policy to cover your expenses, and leave the remaining $300,000 as the death benefit!

Keep in mind that only certain types of illness may trigger your ability to access your benefit. That’s why it’s important to work with a licensed and qualified financial professional to create the right policy for you.

If you’re interested in what living benefits would look like for you, contact me. We can review your income and how much life insurance your family needs!

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¹ “This is the real reason most Americans file for bankruptcy,” Lorie Konish, CNBC, Feb 11 2019, https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html

March 15, 2021

What You Need To Know About Life Insurance

What You Need To Know About Life Insurance

Buying life insurance is something that many people put off.

But it’s important to take the time to learn about what type of policy you may need and how much coverage you should buy. If you have a family, buying enough life insurance might be the most important part of your financial strategy.

Here are 4 things you need to know before you buy life insurance.

What is life insurance? Simply put, life insurance is an agreement between an insurer and a policyholder. When the policyholder dies, the insurer is legally obligated to pay a set amount of money, called a death benefit, to whomever the policyholder had predetermined.

Do you need life insurance? If people you love are dependent on your income, you may need life insurance. The death benefit can serve as a replacement for income that would vanish in the case of your passing. A personal tragedy doesn’t have to become a financial crisis!

What if I don’t have any dependents? Then life insurance may not be for you! However, you should note that life insurance might be useful if you’re carrying high levels of debt like student loans or a mortgage.

How much coverage should I get and how long should my policy last? As a rule of thumb, your life insurance coverage should be worth 10X your annual income. That should provide your family with a financial cushion while they grieve and plan for the future.

If you buy a term policy, be sure that it lasts through periods of high financial responsibility like paying a mortgage or raising a family.

If you want to learn more about life insurance, let me know! I can help you evaluate your financial situation and what a policy would look like for you.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or policies that may be available to you. Any examples used in this article are hypothetical. Before enacting a savings or retirement strategy, or purchasing a life insurance policy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

March 1, 2021

How to Find Your Net Worth

How to Find Your Net Worth

Usually when we think of net worth we imagine all the holdings of a wealthy tycoon who owns several multi-million dollar businesses.

Net worth is just a balance sheet of a person’s assets and liabilities, not unlike the balance sheets used in business. You also have a net worth, and it’s important to know what it is.

Calculating your net worth is simple. First, you’ll want to tally up all your assets. These would include:

  • Personal property and cars
  • Real estate equity
  • Investments
  • Vested retirement plans
  • Cash or savings
  • Any amounts owed to you
  • Cash value of life insurance policies

Next, you’ll calculate your liabilities (what you owe someone else). These would include:

  • Loans
  • Mortgage balance
  • Credit card balances
  • Unpaid obligations

Your total liabilities subtracted from your total assets equals your net worth.

The number could be positive, or it could be negative. Students, for example, often have a negative net worth because they may have student loans but haven’t had a chance to build any personal assets.

It’s important to realize that net worth isn’t always equal to liquid assets. Your net worth includes non-liquid assets, like the equity in your home.

Measuring your net worth regularly can be a strong motivation when saving for the future—it can mark progress toward a well-reasoned financial goal.

When you’re ready to put together a personalized strategy based on your net worth and (more importantly) your future goals, reach out! We can use your current net worth as a starting point, while keeping focused on the real target: your long-term financial picture.

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February 24, 2021

2 Strategies to Build Credit When You’re Young

2 Strategies to Build Credit When You’re Young

The sooner you establish your credit score, the better positioned you’ll be for financial success.

Why? Because your credit score touches every aspect of your financial life—a high score can help you obtain a lower interest rate on mortgages and car loans, insurance payments, and even your rent!¹ That can help free up more cash for building wealth.

So, where do you start?

Apply for a credit card… and then use it responsibly! Credit cards are excellent tools for building your credit history. If you attend a university, you might be able to score a student credit card. However, just remember that credit cards are not free money. The less you use your credit card, the higher your credit score. Choose a few recurring expenses, and limit your credit card usage to those. Then make sure you pay off the balance every month, on time.

Use automatic payments on all your debts. Missing payments on your debt obligations can torpedo your credit score. It’s absolutely critical to pay on time for your credit card bill, student loan payments, and anything else you owe.

Consider automating all of your debt payments. It’s a simple, one-time move that can steadily reduce your balances and help boost your credit score.

As you build your credit history, you’ll be able to apply for credit in larger amounts, and you may even start receiving pre-approved offers. But beware. Having credit available is useful for certain emergencies and for demonstrating responsible use of credit—but you don’t need to apply for every offer you receive!

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December 28, 2020

More financial tips for the new year

More financial tips for the new year

There’s nothing like the start of a brand new year to put you in a resolution-making, goal-setting, slate-cleaning kind of mood.

Along with your commitment to eat less sugar and exercise a little more, carve out some time to set a few financial aspirations for the new year. Here are some quick tips that may add up to significant benefits for you and your family.

Check your credit report
Start the new year with a copy of your credit report. Every consumer is entitled to one free credit report per year. Make it a point to get yours. Your credit report determines your credit score, so an improved score may help you get a better interest rate on an auto loan or a better plan for utilities or your phone.

Check your credit report carefully for accuracy. If you find anything that shouldn’t be there, you can file a dispute to have it removed. There are several sites where you can get your free credit report – just don’t get duped into paying for it.

Up your 401(k) contributions
The start of a new year is a great time to review your retirement strategy and up your 401(k) contributions. If saving for retirement is on your radar right now – as it should be – see if it works in your budget to increase your 401(k) contribution a few percentage points.

Review your health insurance policy
The open enrollment period for your health insurance may occur later in the year, so make a note on your calendar now to explore your health insurance options beforehand. If you have employer-sponsored health insurance, they should give you information about your plan choices as the renewal approaches. If you provide your own health insurance, you may need to talk to your representative or the health insurance company directly to assess your coverage and check how you might be able to save with a different plan.

Make sure your coverage is serving you well. If you have a high deductible plan, see if you can set up a health savings account. An HSA will allow you to put aside pretax earnings for covered health care costs throughout the year.

No spend days
Consider implementing “no spend days” into your year. Select one day per month (or two if you’re brave) and make it a no spend day. This only works well if you make it non-negotiable! A no spend day means no spur of the moment happy hours, going out to lunch, or engaging in so-called retail therapy.

A no spend day may help you save a little money, but the real gift is what you may learn about your spending habits.

Do some financial goal setting
Whether we really stick to them or not, many of us might be pretty good at setting career goals, family goals, and health and fitness goals. But when it comes to formulating financial goals, some of us might not be so great at that. Still, financial goal setting is essential, because just like anything else, you can’t get there if you’re not sure where you’re going.

Start your financial goal setting by knowing where you want to go. Have some debt you want to pay off? Looking to own a home? Want to retire in the next ten years? Those are great financial goals, but you’ll need a solid strategy to get there.

If you’re having trouble creating a financial strategy, consider working with a qualified financial professional. They can help you draw your financial roadmap.

Clean out your financial closet
Financial tools like budgets, savings strategies, and household expenses need to be revisited. Think of your finances like a closet that should be cleaned out at least once a year. Open it up and take everything out, get rid of what’s no longer serving you, and organize what’s left.

Review your household budget
Take a good look at your household budget. Remember, a budget should be updated as your life changes, so the beginning of a new year is an excellent time to review it. Don’t have a budget? An excellent goal would be to create one! A budget is one of the most useful financial tools available. It’s like an x-ray that reveals your income and spending habits so you can see and track changes over time.

Make this year your financial year
A new year is a great time to do a little financial soul searching. Freshen up your finances, revisit your financial strategies, and greet the new year on solid financial footing.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Before investing or enacting a savings or retirement strategy, seek the advice of a financial professional, accountant, health insurance representative, and/or tax expert to discuss your options.

December 21, 2020

Permanent or Term Life: Which is right for you?

Permanent or Term Life: Which is right for you?

Life insurance has many benefits.

Most people purchase life insurance to serve as a safety net for the financial health of their family if something happens to them as the primary provider. A life insurance policy in such cases could be used for funeral costs, medical bills, mortgage payments, or other expenses.

You’re finally convinced you need a life insurance policy, and you’re ready to buy. But what do you need exactly? What type of life insurance is best for you?

When preparing to purchase life insurance, there are two main types of policies to consider – permanent and term. Read on for a short primer on the differences and which one may be right for you.

Term life insurance at a glance <br> Term life insurance offers life insurance coverage for a set amount of time – the “term”. If you pass away during the term, the policy pays out to your beneficiary. A term policy is sometimes called a pure life policy because it doesn’t have financial benefits other than the payout to your dependents should you die within the term.

There are different terms available depending on your needs. You could purchase a term life policy for 10, 20, or 30 years.

Term life insurance pointers <br> When purchasing a term life policy, consider a term for the number of years you’ll need coverage. For example, you may want life insurance to provide for your child in case you die prematurely. So, you may select a 25-year term. On the other hand, you may want a life insurance policy to help with the mortgage should something happen to you. In this case, you may opt for a 30-year term which will expire when your mortgage is paid off.

You’ll need to purchase enough insurance to cover your family’s needs if something happens to you and you cannot provide for them. Term life insurance benefits could serve as income replacement for your wages, so buy enough to pay for the expenses your paycheck covers.

For example, if you cover the mortgage, car payment, and child care, make sure the term life policy you purchase can cover those expenses.

Term life insurance policies when appropriately used should expire around the time the need for them goes away, such as when your children are self-sufficient, or your mortgage is paid off.

Permanent insurance at a glance <br> This type of policy can provide coverage for your entire life, unlike a term policy that expires at a set time. A permanent life policy also contains an investment benefit which is known as the policy’s cash value. The cash value of a permanent life policy grows slowly over time but is tax-free (provided you stay within certain limits), so you don’t pay taxes on the accumulating value.

A permanent life policy can be borrowed against. You can borrow against the cash value, but you must abide by the repayment terms to keep the policy payout unchanged.

Some permanent life insurance policies offer dividends. The dividends are paid to the policyholders based on the insurance company’s financial profits. Policyholders can take dividends in the form of cash payouts or use them to earn interest, payback a loan on the policy, or purchase additional life insurance coverage.

Some of the key points regarding permanent life insurance include: <br>

  • The premium can remain the same throughout the policy term if you abide by the conditions and terms in the policy
  • The policy offers a guaranteed death benefit

Cost of life insurance <br> Term life insurance is generally less expensive than permanent life insurance because the policy has a pre-selected term. Permanent life insurance, on the other hand, covers the insured for their entire lifespan, so you can expect premiums to be higher.

Which life insurance policy is right for you? <br> If you aren’t sure which policy is right for you, talk to a qualified financial professional who can help you find the right type of life insurance policy to meet your goals and budget.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Before investing or enacting a savings or retirement strategy, seek the advice of a financial professional, accountant, and/or tax expert to discuss your options.

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