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June 1, 2020

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Luis Puente

Luis Puente

Financial Education

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April 27, 2020

A Brief Guide To Tariffs

A Brief Guide To Tariffs

Tariffs have become a hot button issue over the past few years.

But what exactly are they? And what kind of impact do they have on the economy? Here’s a brief guide to all things tariff!

Quick definition and brief history
A tariff is a tax on imports and exports between states. Let’s say you make pottery and sell it on the internet. You start getting lots of orders from Belgium, so you need to ship bowls and vases across the pond. You have to bump up prices a bit to cover the transportation costs, but your products do well.

But then Belgium decides to impose a tariff on imported pottery. Suddenly, you have to pay a 10% tax to get anything into the country. So what can you do? Increasing your prices to cover the tax will probably make your pottery too expensive and it won’t sell. As long as that tariff is in place, it might make more sense to sell locally or find another country without the tariff.

Who do tariffs benefit?
Why would a country want to impose a tariff? It doesn’t necessarily make the government more money. People can find other markets where they don’t have to pay an entrance fee. And besides, untaxed or free trade normally produces more jobs in poorer countries and gets cheap products into richer ones.

Unfortunately, not everyone wins in free trade. What if your pottery was so amazing and so much cheaper than local pottery that you started putting Belgian potters out of business? Sure, you would probably create tons of jobs in your own country and Belgium would be flooded with superior plates and mugs, but thousands of Belgians would be out of work. And they wouldn’t be happy and they might take out that anger at the ballot box. A tariff on imported pottery would be a way for Belgium to protect a section of their economy (and voters) from financial ruin.

Imposing tariffs, like any economic policy, are a mixed bag. They’ve been out of style for a long time, but globalization and changes in the world economy have made them more appealing to workers competing with (and potentially losing to) cheap foreign labor. Only time will tell if their comeback is for good or just a flash in the pan!

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April 22, 2020

She Got the House… AND the Life Insurance Policy?

She Got the House… AND the Life Insurance Policy?

Life insurance is great for protecting your spouse… as long as it’s for your current one.

This Forbes article tells the story of Warren Hillman, a man with a life insurance policy, a wife, and an ex-wife.

Now, I don’t know if the former Mrs. Hillman “got the house” in her divorce from Warren, but she definitely got the life insurance policy payout! When Warren died from a rare form of leukemia, the entire amount of $124,558.03 was given to Judy, the former Mrs. Hillman. Warren’s widow Maretta got nothing.

Why? When Warren remarried, he never changed the beneficiary designation on his life insurance policy.

Maretta and Judy fought over that money in court for years. The case went all the way to the Supreme Court. And the justices ruled in Judy’s favor. She, the ex-wife, was entitled to the entire payout.

All that time and money wasted on legal battles could have been avoided by changing a name on a form! Speaking of which… When’s the last time you reviewed your own life insurance policy? After reading this, you may already be scrambling through your files to find it!

Let’s check up on your policy together. Contact me today, and we can get the ball rolling on:

  • Reviewing (or revising!) your list of beneficiaries.
  • Making sure you have the coverage you want.
  • Discussing the life insurance features you might have that you can use now.
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Read More Over at Forbes

April 20, 2020

Your Life Insurance Rate & You: Poor Health Habits

Your Life Insurance Rate & You: Poor Health Habits

What are you digging so deep in your pocket for? If you’re looking for a lighter, you might need to dig for some extra change, too…

… You’ll need help to meet your higher life insurance rate if you’re planning on lighting up a cigarette.

Health details and everyday habits that may seem small or insignificant can have a massive effect on your life insurance rate. You may have heard something about the underwriting process. The purpose of the underwriting process is to determine how risky a person will be to insure. And the riskier someone is to insure, the higher their rate is likely to be. That risk is calculated by how soon an insurer estimates an applicant will need the full payout of their life insurance policy.

Some factors that influence risk (like age and gender) are out of your control. But did you know that your habits can also send your life insurance rate up?

Here are 3 poor health habits that an underwriter will definitely uncover and will definitely affect your life insurance rate:

1. Smoking
If you smoke cigarettes, expect a higher life insurance rate. Period. Even products like nicotine patches, gum, or lozenges can earn a life insurance applicant “smoker” status (depending on the provider). At this point, are there really any lingering questions about how cigarettes affect your overall health and projected longevity? Cigarettes contain thousands of chemicals and at least 70 known carcinogens.

A bit of good news? The longer it’s been since you quit smoking, the better things might look for you from an underwriting standpoint. For instance, some underwriters are only required to look back into your history as far as 12 months, so if you have quit cigarettes for a year, you may end up with a better classification – and a better classification potentially means a better life insurance rate.

2. Being Too Overweight
An underwriter will also assess your height-to-weight ratio. Your unique ratio will classify you according to a certain rate. Being overweight or obese increases health risks like stroke, type 2 diabetes, coronary heart disease, and high blood pressure, among others. So the more overweight you are, the riskier you are to insure. And what does that mean? You guessed it: your chances of a higher rate are significantly increased.

3. Drinking A LOT of Alcohol
Did reading about this poor health habit throw you off? After all, a few drinks isn’t that bad, right? Well, “a few drinks,” no, but drinking in excess can start to have adverse effects on your overall health. Excessive or “binge” drinking would be 5+ alcoholic drinks for men and 4+ alcoholic drinks for women at the same occasion or within a couple of hours of each other on at least 1 day in the past month. Chronic excessive drinking brings these common health risks: liver disease, pancreatitis, cancer, brain damage, and more.

How will an underwriter know if you’re drinking to excess? They’ll give you a questionnaire, you’ll be subject to a medical exam, and they’ll see your driving record. So If there is any evidence of drinking excessively and getting behind the wheel of a car, consider your life insurance rates raised.

Kicking these 3 habits can have great effect on your personal health and on your life insurance rate! With a little effort, time, and preparation, you can put yourself in a better position for a potentially more affordable rate. But don’t wait to get started! Remember: when you apply for life insurance, you may not get full credit for changes to these 3 poor health habits made in the 12 months prior to your application..

Every insurer’s rates are going to be a little bit different, and that’s why you have an advantage by working with me. We’ll shop around for the policy and rate that’s tailored to your unique needs.

So if you’ve been waiting for a sign to stop smoking, quit eating too much junk food, or cut back on drinking, consider this it!

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February 10, 2020

Is Your Employer-Provided Life Insurance Enough?

Is Your Employer-Provided Life Insurance Enough?

Just because your company provides you with free life insurance coverage doesn’t mean you’re fully protected.

While it certainly doesn’t hurt to have, it may not be enough to provide for your family in the event of a tragedy.

For the first time ever, more Americans have employer-provided life insurance (108 million) than have individual life insurance coverage (102 million), according to a new LIMRA study. This is important especially during Life Insurance Awareness month to make sure you’re aware that typically life insurance through your job is not portable. Which means you can’t take it with you. Everyone should make sure they have individually owned insurance to protect their family just in case they switch jobs or lose their job or potentially start your own company.

How employer-provided life insurance works.
A life insurance policy from your employer is typically a group plan that’s offered to you and your co-workers. Your policy is held by the company, and they’ll often pay most if not all the premium costs. The amount of insurance you’ll receive varies, but it’s normally one to two times your annual salary.

Problems with employer-provided life insurance.
A $50,000 payout, for example, may seem like a lot. But you may notice a problem when you stop thinking in terms of numbers on paper and look at how long the insurance money would last. You go from $50,000 per year to just $50,000, period! A life insurance benefit is essentially buying your family time to grieve and plan for their future in your absence. That might mean looking for new jobs, adjusting to a single-income lifestyle, taking out student loans, and so on.

If your employer-provided policy just matches your annual salary, your loved ones would only be covered for a single year as they go through the process of readjustment (assuming their spending habits don’t change and they don’t encounter any emergencies). In fact, 5 to 10 times your annual income is considered a reasonable amount of insurance for just this reason; it gives your loved ones plenty of time to figure things out.

Another problem with an employer-provided life insurance policy is that it depends on your employment status. If you leave that job (voluntarily or involuntarily), what might happen to your family if they are left unprotected? While employer-provided life insurance is definitely a perk, it often might not be enough.

Alternatives to employer-provided life insurance.
That’s why considering an individual plan is so important. It may not be provided by your employer, but you’ll get what you pay for – a safety net for the ones you love and the time they’ll need to recover… regardless of where you’re working.

Have questions? Feel free to contact me! I would love to help you prepare your insurance strategy and help protect your family’s future.

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December 18, 2019

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
Contrary to 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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December 11, 2019

Party of Two?

Party of Two?

Life insurance is the most personal type of insurance you can have in today’s world.

But there seems to be a lot of confusion about it. Every consumer has different priorities and feelings. Add to that the fact that life insurance can be used for a variety of financial goals and needs, and you have a recipe for befuddlement.

When it comes to life insurance, most agree that if you have children, you should probably have it. There is no question. But what if you don’t have children? Do you need to purchase life insurance? Here’s why it may still be important, even if you don’t have kids now (or don’t plan to):

Many households need a dual income to survive.
Since women began entering the workforce en masse in 1960, household incomes have been on the rise. Many households have now adopted a lifestyle that depends on a dual income to maintain itself. If you’re in this situation, there might be some consequences of your life insurance decisions.

If something happened to you or your spouse, would the survivor still earn enough money to maintain their lifestyle? If the answer is no, consider how a life insurance policy might help.

Mortgage debt is big debt.
Mortgage debt in the United States is big – bigger than credit card or student loan debt. Still, mortgage debt is “healthy” debt assuming the growing equity in a home makes it worthwhile.

But mortgage debt can become a problem if a household’s income takes a hit. Life insurance can protect families from this risk by helping to pay off a mortgage, should something happen to you or your spouse. Either a term life policy or a special mortgage life policy can be used to pay off a mortgage.

Mortgage life insurance can be a nice layer of protection for couples that don’t have children but do have a mortgage.

Life insurance can be used as a savings tool.
Many life insurance policies offer a cash value. This means that certain policies can be cashed in whether or not a death has occurred. In this way, a life insurance policy can act as a savings tool.

Couples without children can pay into their policy in the form of the premiums, and then cash it out for a retirement dream: a new home, a hobby business, or an extended vacation. Using life insurance as a savings tool can offer tax benefits, a guaranteed savings method for the “savings challenged”, and a creative way to finance a dream. In short, it’s a savvy use of life insurance for couples who don’t have kids.

Funeral expenses can wipe out an emergency fund.
A life insurance policy can help cover funeral expenses for you or your spouse. This is one of the most common uses of life insurance. The average funeral today can cost between $7,000 and $10,000. That’s enough to wipe out an emergency fund, or seriously deplete it.

Having a life insurance policy in place can help cover expenses if you or your spouse were to pass away unexpectedly, so you can leave your fund for the day-to-day difficulties intact.

Whether you have children or not, a sudden illness or loss of a breadwinner can have lasting consequences for the loved ones you leave behind. Taking advantage of a well-tailored life insurance policy to shield them from an unnecessary financial burden if something were to happen is one of the best gifts you can give.

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November 18, 2019

Matters of Age

Matters of Age

The younger you are, the less expensive your life insurance may be.

Life insurance companies are more willing to offer lower premium life insurance policies to young, healthy people who will likely not need the death benefit payout of their policy for a while. (Keep in mind that exceptions for pre-existing medical conditions or certain careers exist – think “skydiving instructor”. But in many cases, the odds are more in your favor for lower premiums than you might guess.)

At this point you might be thinking, “Well, I am young and healthy, so why do I need to add another expense into my budget for something I might not need for a long time?”

Unlike a financial goal of saving up for a downpayment on your first house, waiting for “the right moment” to get life insurance – perhaps when you feel like you’re prepared enough – is less beneficial. A huge part of that is due to getting older. As your body ages, things can start to go wrong – unexpectedly and occasionally chronically. Ask any 35-year-old who just threw out their back for the first time and is now Googling every posture-perfecting stretch and cushy mattress to prevent it from happening again.

With age-related health issues in mind, remember that the premium you pay at 22 may be very different than the premium you’ll pay at 32. Most people hit several physical peaks in that 10 year window:

  • 25 – Peak muscle strength
  • 28 – Peak ability to run a marathon
  • 30 – Peak bone mass production

If you’re feeling your mortality after reading those numbers, don’t worry! You’re probably not going to go to pieces like fine china hitting a cement floor on your 30th birthday. But there is one certainty as you age: your premium will rise an average of 8-10% on each birthday. Combine that with an issue like the sudden chronic back problems from throwing your back out that one time (one time!), and your premium will likely reflect both the age increase and a pre-existing condition.

If you experience certain types of illness or injury prior to getting life insurance, it often goes in the books as a pre-existing condition, which will cause a premium to go up. Remember: the less likely a person is going to need their life insurance payout, the lower the premium will likely be. Possible scenarios like the recurrence of cancer or a sudden inability to work due to re-injury are red flags for insurance companies because it increases the likelihood that a policyholder will need their policy’s payout.

A person’s age, unique medical history, and financial goals will all factor into the process of finding the right coverage and determining the rate. So taking advantage of your youth and good health now without bringing an age-borne illness or injury to the table could be beneficial for your journey to financial independence.

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November 13, 2019

You Can’t Take It With You

You Can’t Take It With You

A LinkedIn study found that Millennials are likely to change jobs 4 times in their first 10 years out of college. That equates to landing a new job roughly every 2.5 years by age 32!

So if you’re feeling the itch to leave your current job and head out for a new adventure in the workforce, the experience you’ve gained along the way will go with you. You may have made some great business connections too, and gotten some fabulous on-the-job-training. All of these things will “travel well” to a new job.

But there’s one thing you can’t take with you: An employer-supplied life insurance policy. While the price is right at “free” for many of these policies, there are several drawbacks that may deter you from relying on them solely for coverage.

1. An employer-provided policy turns in its two weeks notice when you do. Since your employer owns the policy – not you – your coverage will end when you leave that job. And unless you’re walking right into another employment opportunity where you’re offered the same type and amount of coverage, you might experience gaps or a total loss of coverage in an area where you had it before. When you’re not depending on an employer to provide your only life insurance coverage, you can change jobs as often as you please without the worry of the rug being pulled out from under you.

2. The employer policy is touted as ‘one size fits most.’ But it’s not likely that a group policy offered through an employer will be tailored to you and your unique needs. There may be no room for you to chime in and request certain features or a rider you’re interested in. However, when you build your own policy around your individual needs, you can get the right coverage that suits who you are and where you’d like to go on your financial journey.

3. An employer policy may not offer enough to cover your family. What amount of coverage is your employer offering? When you’re first starting out in your career, a $50,000 or even a $25,000 employer-provided policy might sound like a lot. But how far would that benefit really go to protect your family, cover funeral costs, or help with daily expenses if something were to happen to you?

Whether or not your 5-year plan includes 5 different jobs (or 5 entirely unrelated career paths), with a well-tailored policy that you own independent of your employment situation – you have the potential for a little more freedom and security in your financial strategy. And you won’t be starting from square one just because you’re starting a new opportunity.

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October 28, 2019

3 Simple Benefits of Indexed Universal Life Insurance

3 Simple Benefits of Indexed Universal Life Insurance

If you’re not familiar with indexed universal life insurance, you’ve come to the right place.

What is an IUL?
Indexed universal life insurance (IUL) is a type of permanent life insurance that has an investment element that helps the policy build cash value.

Part of the premium for an IUL is invested in stock options that track an index, like the S&P 500 or NASDAQ 100. This provides a higher growth potential than a whole life policy or a standard universal life policy (both of which provide a conservative fixed return). Gains may be capped in an indexed universal life policy, but the policy provides protections that prevent stock market meltdowns or slow slides from eroding the cash value in your policy.

Here are some of the main benefits of an IUL:
1. It protects your downside. Unlike direct investments, mutual funds, or other types of investments – an indexed universal life policy protects your downside. If the market drops for the index (or indexes) your policy tracks, you keep the gains and are sheltered from the losses. Don’t you wish your 401k or private investments could do that?

2. The cash value in your policy grows tax-deferred. Without the frequent tax liability that often comes with trading in and out of stocks or funds, the cash value can grow unhindered by the ball and chain of capital gains or income taxes.

3. Gains for an indexed universal life policy can be significantly higher than with a whole life policy or a universal life policy. Even with capped gains, which is a tradeoff in exchange for providing a floor to protect your policy from losses, the gains in an indexed universal life policy can outpace the earnings in fixed-rate policies. As with any investment, time tends to be your best friend, smoothing the down years (flat years for an IUL) with strong years to build an upward trend line.

An indexed universal life insurance policy can help supplement your retirement savings strategy and work in parallel with your existing 401k and IRAs – but with access to your cash value before age 59 ½ – or after – and without the dreaded 10 percent penalty for early withdrawal.

Summing It Up
As both a permanent life insurance policy and a tax-deferred investment vehicle that shields you from market losses, an indexed universal life policy can help provide for your family at nearly any point in life and then provide for your beneficiaries when you pass away.

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October 23, 2019

Top Reasons Why People Buy Term Life Insurance

Top Reasons Why People Buy Term Life Insurance

These days, most families are two-income households.

That describes 61.9% of U.S. families as of 2017. If that describes your family (and the odds are good), do you have a strategy in place to cover your financial obligations with just one income if you or your spouse were to unexpectedly pass away?

Wow. That’s a real conversation-opener, isn’t it? It’s not easy to think about what might happen if one income suddenly disappeared. (It might seem like more fun to have a root canal than to think about that.) But having the right coverage “just in case” is worth considering. It’ll give you some reassurance and let you get back to the fun stuff… like not thinking about having a root canal.

If you’re interested in finding out more about Term insurance and how it may help with your family’s financial obligations, read on…

Some Basics about Term Insurance
Many of life’s financial commitments have a set end date. Mortgages are 15 to 30 years. Kids grow up and (eventually) start providing for themselves. Term life insurance may be a great option since you can choose a coverage length that lines up with the length of your ongoing financial commitments. Ideally, the term of the policy will end around the same time those large financial obligations are paid off. Term policies also may be a good choice because in many cases, they may be the most economical solution for getting the protection a family needs.

As great as term policies can be, here are a couple of things to keep in mind: a term policy won’t help cover financial commitments if you or your spouse simply lose your job. And term policies have a set (level) premium during the length of the initial period. Generally, term policies can be continued after the term expires, but at a much higher rate.

The following are some situations where a Term policy may help.

Pay Final Expenses
Funeral and burial costs can be upwards of $10,000. However, many families might not have that amount handy in available cash. Covering basic final expenses can be a real burden, especially if the death of a spouse comes out of the blue. If one income is suddenly gone, it could mean the surviving spouse would need to use credit or liquidate assets to cover final expenses. As you would probably agree, neither of these are attractive options. A term life insurance policy can cover final expenses, leaving one less worry for your family.

Pay Off Debt
The average household in the U.S. is carrying nearly $140,000 in debt. For households with a large mortgage balance, the debt figures could be much higher. Couple that with a median household income of under $60,000, and it’s clear that many families would be in trouble if one income is lost.

Term life insurance can be closely matched to the length of your mortgage, which helps to ensure that your family won’t lose their home at an already difficult time.

But what about car payments, credit card balances, and other debt? These other debt obligations that your family is currently meeting with either one or two incomes can be put to bed with a well-planned term life policy.

Income Protection
Even if you’ve planned for final expenses and purchased enough life insurance coverage to pay off your household debt, life can present many other costs of just… living. If you pass unexpectedly, the bills will keep rolling in for anyone you leave behind – especially if you have young children. Those day-to-day living costs and unexpected expenses can seem to multiply in ways that defy mathematical concepts. (You know – like that school field trip to the aquarium that no one mentioned until the night before.)

But Wait, There’s More
A well-planned term life insurance policy can provide other benefits as well, including living benefits that can help prevent medical expenses from wreaking havoc on your family’s financial plan if you become critically ill. One note about the living benefits policies, though: If the critical and chronic illness features are used, the face value of the policy is reduced. But which might be more prepared to take a financial hit: the face value of the life insurance policy that just helped you cover your medical expenses… or your child’s college fund?

In some cases, policies with built in living benefits may cost more than a standard term policy, but it may still cost less than permanent insurance policies! And because a term policy is in force only during the years when your family needs the most protection, premiums can be lower than for other types of life insurance.

Term life insurance can provide income protection to help keep your family’s financial situation solid, and help things stay as “normal” as they can be after a loss.

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October 21, 2019

Is Survivorship Life Insurance Right For You?

Is Survivorship Life Insurance Right For You?

A survivorship life insurance policy is a type of joint insurance policy (a policy built for two).

You may not have thought much about that type of insurance before, or even knew it existed. But joint policies, especially survivorship policies, are important to consider because they can provide for heirs, settle estates, and pay for final expenses after both spouses have passed.

Most joint life insurance policies are what’s known as “first to die” policies. As the unambiguous nickname suggests, a first to die policy is designed to provide for the remaining spouse after the first passes.

A joint life insurance policy is a time-tested way of providing for a remaining spouse. But without careful planning, a typical joint life policy might leave a burden for surviving children or other family members.

A survivorship life insurance policy works differently than a first to die policy. Also called a “last to die” policy, a survivorship policy provides a death benefit only when both insured spouses have passed. A survivorship policy doesn’t pay a death benefit to either spouse but rather to a separate named beneficiary.

You’ll find survivorship life insurance referred to as:

  • Joint Survivor Life Insurance
  • Second-to-Die Life Insurance
  • Variable Survivorship Insurance

Survivorship life insurance policies are sometimes referred to by different names, but the structure is the same in that the policy only pays a benefit after both people insured by the policy have died.

Reasons to Buy Survivorship Life Insurance
We all have our reasons for buying a life insurance policy, and often have someone in mind who we want to protect and provide for. Those reasons often dictate the best type of policy – or the best combination of policies – that can meet our goals.

A survivorship policy is well-suited to any of the following considerations, perhaps in combination with other policies:

  • Final expenses
  • Estate taxes
  • Lingering medical expenses
  • Payment of debt
  • Transfer of wealth

It’s also most common for a survivorship life insurance policy to be a permanent life insurance policy. This is because the reasons for using a survivorship policy, including transfer of wealth, are usually better served by a permanent life policy than by a term insurance policy. (A term life insurance policy is only in force for a limited time and doesn’t build any cash value.)

Benefits of Survivorship Life Insurance

  • A survivorship life policy can be an effective way to transfer wealth as part of a financial strategy.
  • Life insurance can be difficult to purchase for individuals with certain health conditions. Because a survivorship life insurance policy is underwriting coverage based on two individuals, it may be possible to purchase coverage for someone who couldn’t easily be insured otherwise.
  • As a permanent life insurance policy, a survivorship life policy builds cash value that can be accessed if needed in certain situations.
  • Costs can be lower for a survivorship life policy than insuring two spouses individually.

The good news is that life insurance rates are more affordable now than in the past. That’s great! But keep in mind, your life insurance policy – of any type – will probably cost less now than if you wait for another birthday to pass for either spouse insured by the policy.

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October 14, 2019

Getting a Degree of Financial Security

Getting a Degree of Financial Security

The financial advantage gap between having a college degree and just having a high school diploma is widening!

In 2015, the average college graduate earned 56% more than the average high school graduate. This is the widest gap between the two that the Economic Policy Institute has recorded since 1973!

This income difference is making saving for retirement difficult for millennials without a college degree. According to the Young Invincibles’ 2017 ‘Financial Health of Young America’ study, millennial college grads – even with roadblocks like student debt – have saved nearly $21,000 for retirement. That’s quite a lot more as compared to the amount saved by those with a high school diploma only: under $8,000.

However, a college grad may encounter a different type of retirement savings roadblock than a reduced income – student loan debt. But the numbers show that even with student loan debt, the advantages of having a college degree and a solid financial strategy outweigh the retirement saving power of not having a college degree.

Here’s an issue plaguing both groups:more than two-thirds of all millennial workers surveyed do not have a specific retirement plan in place at all.

Regardless of your level of education or your level of income, you can save for your retirement – and take steps toward your financial independence. Or maybe even finance a college education for yourself or a loved one down the road.

The first step to making the most of what you do have is meeting with a financial advisor who can help put you on the path to a solid financial strategy. Contact me today. Let’s work to get your money working for you.

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October 7, 2019

Mortgage Protection: One Less Thing To Worry About

Mortgage Protection: One Less Thing To Worry About

How many things do you worry – er, think – about, each day? 25? 50? 99?

Here’s an opportunity to check at least one of those off your list. Read on…

Think back to when you were involved in the loan process for your home. Chances are good that at some point during those meetings, a smiling salesperson mentioned “mortgage protection”.

With so many other terms flying around during the conversation, like “PMI” and “APRs”, and so much money already committed to the mortgage itself – and the home insurance, and the new furniture you would need – you might have passed on mortgage protection.

You had (and hopefully still have) a steady job and a life insurance policy in place, so why would you need additional protection? What could go wrong?

Before we answer that, let’s clear up some confusion.

Mortgage Protection Insurance is not PMI
These two terms are often used interchangeably, but they are not the same thing.

Both Private Mortgage Insurance (PMI) and Mortgage Protection are insurance, but they do different things. PMI is a requirement for certain loans because it protects the lender if your home is lost to foreclosure.

Essentially, with PMI you’re buying insurance for your lender if they determine your loan is more risky than average (for example, if you put less than 20% down on your home and your credit score is low).

Mortgage protection, on the other hand, is insurance for you and your family – not your lender.

There are several types of mortgage protection, but generally you can count on it to protect you in the following ways:

  • Pay your mortgage if you lose your job
  • Pay your mortgage if you become disabled
  • Pay off your mortgage if you die

Say, That Sounds Like Life Insurance.
Not exactly. Mortgage protection actually can cover more situations than a life policy would cover. Life insurance won’t help if you lose your job and it won’t help if you become disabled. Mortgage protection bundles all these protections into one policy – so you don’t need multiple policies to cover all the problems that could make it difficult to pay your mortgage each month. (Hint: A life insurance policy would be a different part of your overall financial plan and often has its own separate goals.)

How Does Mortgage Protection Work?
A mortgage protection policy is usually a “guaranteed issue” policy, meaning that many of the roadblocks to purchasing a life insurance policy, such as health considerations and exams, wouldn’t be there.

If you lose your job or become disabled, your policy will pay your mortgage for a limited amount of time, giving you the opportunity to find work or to make a backup plan. Again, your house is saved, your family still has a roof over their heads, and you’re a hero for thinking ahead. Accidents happen and people lose their jobs every day. Mortgage protection is there to catch you if you fall.

One More Thing…
A mortgage protection policy is a term policy, so you don’t need to keep paying premiums after your house is paid off.

Now that you know a little bit more about mortgage protection policies, have those 99 worries ticked down to 98? Reaching out to me for guidance on your financial worries could help you make that number smaller and smaller… 97… 96… 95…

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September 30, 2019

So You Want to Buy Life Insurance for Your Parents...

So You Want to Buy Life Insurance for Your Parents...

Playing Monopoly as a young kid might have given you some strange ideas about money.

Take the life insurance card in the Community Chest for instance. That might give the impression that life insurance is free money to burn on whatever the next roll of the dice calls for.

In grown-up reality, life insurance proceeds are often committed long before a policy holder or beneficiary receives the check they’re waiting for. Final expenses, estate taxes, loan balances, and medical bills all compete for whatever money is paid out on the policy.

If your parents don’t have a policy or if you think their coverage won’t be enough, you can plan ahead and buy a life insurance policy for them. Your parents would be the insured, but you would be the policy owner and beneficiary.

A few extra considerations when buying a life insurance policy for your parents:

  • Insurable interest still applies. If your parents already have a significant amount of life insurance coverage, you may find that some insurers are reluctant to issue more coverage. Insurable interest requires that the amount of coverage doesn’t exceed the potential financial loss. (In other words, if your parents already have enough coverage, a company may not want to insure them for more.)
  • Age can limit coverage amounts. Assuming that your parents are older and no longer generating income, coverage amounts will be limited. If your parents are younger and still have 20 or more years ahead of them before they retire, they can qualify for a higher amount of coverage.
  • Age can limit policy types. Certain types of life insurance aren’t available when we get older, or will be limited in regard to length of coverage. Term life insurance is a good example. Your options for term life insurance will be fewer once your parents are into their sixties. The available term lengths will also be shorter. Policies with a 30-year term aren’t commonly available over the age of 50.

How Can I Use The Life Insurance For My Parents?
Depending on the amount of coverage you buy – or can buy (remember, it may be limited), you could use the policy to plan for any of the following:

  • Final expenses: You can expect funeral costs to run from $10,000 to $15,000, maybe more.
  • Estate taxes: Estate taxes and so-called death taxes can be an unpleasant surprise in many states. A life insurance policy can help you plan for this expense which could come at a time when you’re not flush with cash.

Can Life Insurance Pay The Mortgage Or Car Loans?
It isn’t uncommon for parents to pass away with some remaining debt. This might be in the form of a mortgage, car loans, or even credit card debt. These loan balances can be covered in whole or in part with a life insurance policy.

In fact, outstanding loan balances are a very big consideration. Often, people who inherit a house or a car may also inherit an additional mortgage payment or car payment. It might be wonderful to receive such a generous and sentimental gift, but if you’re like many families, you might not have the extra money for the payments in your budget.

Even if the policy doesn’t provide sufficient coverage to retire the debt completely, a life insurance policy can give you some breathing room until you can make other arrangements – like selling your parents’ house, for example.

You Control The Premium Payments.
If you buy a life insurance policy for your parents, you’ll know if the premiums are being paid because you’re the one paying them. You probably wouldn’t want your parents to be burdened with a life insurance premium obligation if they’re living on a fixed income.

Buying insurance for your parents is a great idea, but many people don’t consider it until it’s too late. That’s when you might wish you’d had the idea years ago. It’s one of the wisest things you can do, particularly if your parents are underinsured or have no life insurance at all.

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September 16, 2019

Your Life Insurance Rate & You: Pre-Existing Conditions

Your Life Insurance Rate & You: Pre-Existing Conditions

What’s a fact that you know is a fact… but you kind of brush aside?

  • That your buddy never ever washes that game jersey?
  • That those crazy-expensive yoga pants aren’t really for yoga?
  • That definitely wasn’t chicken in that road trip hunger-attack pit-stop sandwich?

An interesting thing about all of those uncomfortable facts are the results.

  • That dirty jersey is a good luck charm – it helps the team win every time!
  • Those yoga pants are the best lounging investment ever made.
  • … There’s no way to rescue that last one, sorry!

The idea of brushed aside facts applies to life insurance, too… But perhaps brushing aside the facts feels necessary to many uninsured people in order to get a good night’s sleep.

One fact that may keep people with pre-existing conditions up at night? The younger and healthier a person is, the easier they are to insure. For example, a healthy 30-year-old can get a $250,000 term life insurance policy for less than $14 a month.

Why might this keep people with pre-existing conditions up at night? It can be more difficult to get an affordable rate for a life insurance policy when you have a pre-existing condition. For the 1 in 5 non-elderly Americans affected by a pre-existing health condition, this is troubling news. That’s 25 million Americans without a way to provide for their families if their cancer returns or if a congenital heart defect acts up or a degenerative disease suddenly progresses at a rapid rate.

If you have a pre-existing condition, I’m here to help!

The advantage of working with me? You are not confined to the offerings of one insurance provider. There are multiple possible solutions and multiple companies that you may be able to choose from. This isn’t a guarantee for success, but I’m willing to help and walk down this road with you. Give me a call today, and together we can explore your options – and that’s a fact you don’t need to brush aside.

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September 11, 2019

Your Life Insurance Rate & You: The Risk Takers

Your Life Insurance Rate & You: The Risk Takers

Lightning strikes and shark attacks and winning the lottery – Oh my!

Two big things to keep in mind:

  1. None of these are likely to happen to you. (The odds of winning the lottery alone are 175 million to 1! Being killed by a shark: 3.7 million to 1. Getting struck by lightning: 960,000 to 1.)
  2. Occasionally playing in the rain, swimming in the ocean, or buying a lotto ticket won’t affect your life insurance rate.

But…

Bungee jumping and kayaking and skydiving – Oh my! These 3 are a different story when it comes to determining your life insurance rate!

When you apply for a life insurance policy, the underwriting process involves reviewing a variety of different factors about you – your age, gender, family health history, lifestyle, etc. The underwriters need to help your potential insurer determine what kind of risk you pose to the insurance company.

What are insurance companies looking for? Ideally, someone who is young, healthy, and will not likely need their policy payout soon. These are the individuals who typically enjoy the lowest insurance rates. However, it’s important to note that no matter your age or how healthy you are, if you engage in some risky hobbies, they have the potential to bungee you right out of the easy-to-insure category.

Let’s take a look at skydiving, for instance. You voluntarily:

  • Strap a giant piece of cloth stuffed in a bag to your back.
  • Get into an airplane, take off, and then open the door mid-flight.
  • Approach said open door of the plane.
  • Jump. Out. Of the plane. Roughly 13,000 feet above the ground.

And we’re not even addressing the part where you trust the giant piece of folded up cloth to deploy correctly and carry you safely to the ground! This is textbook risky. (And certainly just one way to look at skydiving – most insurers don’t care that this might be a big check mark on your bucket list.)

When you raise your odds of being in harm’s way, you raise your life insurance rate – and sometimes your inability to be approved for a policy at all. In 2016, 1 in 153,557 skydiving jumps resulted in a fatality in the US. While these odds are not as likely as the odds of getting your cheek pinched by Great Aunt Gladys at Thanksgiving or seeing a brand new Porsche taking up two parking spaces at the mall on Black Friday, it’s a lot more likely than your lottery odds, to be sure.

And willingly leaping out of a plane is going to raise a red flag for any insurer.

Some other risky hobbies that may have an impact on your life insurance rate or policy approval:

  • Hot air ballooning
  • Scuba diving
  • Car racing, boat racing, bike racing
  • Skiing and snowboarding
  • Hang gliding

If you enjoy living a bit more adventurously than most, it doesn’t mean that you can’t get life insurance to protect your future and your loved ones. Working with me gives you a distinct and adventurous advantage: you’ll have multiple products and insurers to work with. This isn’t a guarantee for success, but we can embark on this journey together and explore your options. Finding a life insurance policy that suits your lifestyle isn’t an impossible task, but you should take that leap sometime soon. Why not start today? (Parachute optional!)

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August 28, 2019

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 get 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? However, 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?
Good 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.

So 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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August 21, 2019

Who Can Be My Life Insurance Beneficiary?

Who Can Be My Life Insurance Beneficiary?

Do you have a recipient in mind for the proceeds of your life insurance policy?

Many people have someone in mind before they purchase their policy. This person or entity can be named as your beneficiary. Naming your life insurance beneficiary helps to ensure that the party you choose gets the proceeds of your life insurance policy, even if your will leaves your estate to someone else. If you’ve decided that you want to provide for a special person or organization through your life insurance policy, it’s important that the beneficiary section will do what you expect.

Here are some simple tips that can help point you in the right direction:

Choosing Your Life Insurance Beneficiary
Who you name as your beneficiary is a deeply personal decision, and there’s no right or wrong answer. Here are some areas to consider:

  • Family: Spouses, children, siblings, and parents are all very common choices as life insurance beneficiaries. However, children under the age of 18 are a special case. Life insurance companies won’t pay a death benefit to a minor, so you may want to choose a responsible adult whom you trust with the welfare of your child.
  • Legal guardian: If your life insurance policy does name a minor as your beneficiary, your insurer may require that you designate a legal guardian.
  • Business / Key Person Life Insurance: In business partnerships, other partners can be a named beneficiary. Businesses also sometimes insure the life of a key employee with the business as the beneficiary.
  • Friends, etc: You can also name a friend as a beneficiary – assuming your friend isn’t a minor.

Note: Contrary to popular belief, you can’t name a pet as your beneficiary — but you can name someone you’d trust to care for your pet. (Sorry, Fluffy.)

Multiple Beneficiaries and Contingent Beneficiaries
You can name multiple beneficiaries for your life insurance policy, but when doing this, it’s better to use percentages rather than fixed dollar amounts. For permanent life insurance policies, like whole life insurance and universal life insurance, the death benefit payout amount can change over time, making percentages a better strategy for multiple beneficiaries.

You can also name contingent beneficiaries. Think of a contingent beneficiary as a back-up beneficiary. In the event that your primary beneficiary passes before you do (or at the same time), the proceeds of your policy would then go to the contingent beneficiary.

Final Thoughts
Avoid using general designations, such as “spouse” or “children” as your beneficiary. Spouses can change, as divorce statistics remind us, and you never know which long-lost “children” might appear if there’s a chance of a payday from your life insurance policy. In the very best case, general designations will cause delays in payment to your intended beneficiaries.

Choosing a life insurance beneficiary isn’t necessarily complicated, but there’s some room for error in certain situations. While the decision is always yours to make, it’s best to discuss your options with your financial professional to help make sure the settlement goes smoothly and your wishes are honored.

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July 17, 2019

Your Life Insurance Rate & You: How Gender Factors In

Your Life Insurance Rate & You: How Gender Factors In

Men and women pay different rates for life insurance from the get-go. And it’s purely the result of statistics.

Life insurance rates are determined largely by life expectancy, so the longer you’re projected to live, the lower your rates might be. Statistically, women live longer: an American woman is expected to live about 81 years to a man’s expected 76 years. Therefore, if qualifying for life insurance was based on life expectancy alone, a man would pay more every time. (However, it’s important to note that gender is only one consideration while you’re applying for life insurance. Other factors include your age and your overall health.)

Now throw this stat into the mix:46% of Americans don’t have any type of life insurance coverage at all. That means far too many people do not have the coverage in place to provide for their loved ones in the event of a sudden tragedy. Nothing to cover final expenses or replace lost income and no inheritance left behind… Finding yourself in financial trouble knows no gender.

When you’re ready to work together to build the tailored policy that takes you, your loved ones, and your goals into account, contact me. Stats are stats, but your unique needs have the potential to shape your coverage and your rate into something unexpected!

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June 26, 2019

A Lotto Bad Ideas

A Lotto Bad Ideas

A full third of Americans believe that winning the lottery is the only way they can retire.

What? Playing a game of chance is the only way they can retire? Do you ever wonder if winning a game – where your odds are 1 in 175,000,000 – is the only way you’ll get to make Hawaiian shirts and flip-flops your everyday uniform?

Do you feel like you might be gambling with your retirement?

If you do, that’s not a good sign. But believing you may need to win the lottery to retire is somewhat understandable when the financial struggle facing a majority of North Americans is considered: 78% of American full-time workers are living paycheck-to-paycheck, and 71% of all American workers are currently in debt.

When you’re in a financial hole, saving for your future may feel like a gamble in the present. But believing that “it’s impossible to save for retirement” is just one of many bad money ideas floating around. Following are a few other common ones. Do any of these feel true to you?

Bad Idea #1: I shouldn’t save for retirement until I’m debt free.
False! Even as you’re working to get out from under debt, it’s important to continue saving for your retirement. Time is going to be one of the most important factors when it comes to your money and your retirement, which leads right into the next Bad Idea…

Bad Idea #2: It’s fine to wait until you’re older to save.
The truth is, the earlier you start saving, the better. Even 10 years can make a huge difference. In this hypothetical scenario, let’s see what happens with two 55-year-old friends, Baxter and Will.

  • Baxter started saving when he was 25. Over the next 10 years, Baxter put away $3,000 a year for a total of $30,000 in an account with an 8% rate of return. He stopped contributing but let it keep growing for the next 20 years.
  • Will started saving 10 years later at age 35. Will also put away $3,000 a year into an account with an 8% rate of return, but he contributed for 20 years (for a total of $60,000).

Even though Will put away twice as much as Baxter, he wasn’t able to enjoy the same account growth:

  • Baxter would achieve account growth to $218,769.
  • Will’s account growth would only be to $148,269 at the same rate of return.

Is that a little mind-bending? Do we need to check our math? (We always do.) Here’s why Baxter ended up with more in the long run: Even though he set aside less than Will did, Baxter’s money had more time to compound than Will’s, which, as you can see, really added up over the additional time. So what did Will get out of this? Unfortunately, he discovered the high cost of waiting.

Keep in mind: All figures are for illustrative purposes only and do not reflect an actual investment in any product. Additionally, they do not reflect the performance risks, taxes, expenses, or charges associated with any actual investment, which would lower performance. This illustration is not an indication or guarantee of future performance. Contributions are made at the end of the period. Total accumulation figures are rounded to the nearest dollar.

Bad Idea #3: I don’t need life insurance.
Negative! Financing a well-tailored life insurance policy is an important part of your financial strategy. Insurance benefits can cover final expenses and loss of income for your loved ones.

Bad Idea #4: I don’t need an emergency fund.
Yes, you do! An emergency fund is necessary now and after you retire. Unexpected costs have the potential to cut into retirement funds and derail savings strategies in a big way, and after you’ve given your last two-weeks-notice ever, the cost of new tires or patching a hole in the roof might become harder to cover without a little financial cushion.

Are you taking a gamble on your retirement with any of these bad ideas?

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