Six Factors to Consider When Buying Life Insurance
Life insurance can be an important component of a financial plan, but what kind you choose and how much you purchase depends on your individual financial circumstances.
Here are six factors to consider when thinking about life insurance:
- Consider whether you need life insurance in the first place. You generally purchase life insurance in order to protect the people you leave behind. Don’t buy it unless you have a spouse, children or other people who are financially dependent on you.
- If you do need life insurance, consider which kind you need. Life insurance policies fall into one of two camps: Pure term policies and whole life policies. Pure term offers life insurance coverage only: You pay a premium and the policy pays your beneficiaries a certain amount when you die. Whole life combines term policies with an investment product to build cash value.
- Consider what term will meet your needs. For example, you’ll most likely want the policy to last as long as you have dependents. It’s a guessing game, but your advisor can help you make it less so.
- Think about what you can afford, but don’t leave yourself underinsured. Because whole life insurance is often more expensive than term life, many people purchasing whole life buy too little.
- Be a savvy buyer. It’s always a good idea to buy insurance when you’re young and healthy, because rates will usually rise for older individuals and those who are in less than optimal health.
- Always tell the truth when you apply for coverage; if you don’t disclose all relevant factors and then make a claim, the insurance company will investigate, deny the claim and likely cancel your policy.
Life insurance is no place to skimp. By consulting with your advisor before you purchase a plan, you’ll ensure that you have just the right amount of insurance for your needs.
‘Tis the Season…to Decorate
The holiday season is about the only time we can indulge our decorating fantasies. Whether your dream decor is over the top or simple and elegant, the following will give you ideas to make your holiday fantastic.
- Pinterest (http://pinterest.com/) is a great source for inspiration and home for the latest design trends. For example, during Halloween, we saw painted pumpkins (even gold-leafed) used as flower centerpieces. For Christmas and Hanukkah, we’ll see more clever ideas for reimagining and repurposing holiday decor items.
- The DIY trend continues: Make your own Christmas ball garland by stringing your favorite ornaments on fish line, twine or ribbon. It works beautifully on your fireplace mantle or stair railing (but don’t forget to leave spaces for hand holds).
- Last year the emphasis was on mercury glass, but this year there’ll be a reversion back to natural materials that focus on a central theme such as a classic winter wonderland.
- Consider clusters of beribboned ornaments on tabletops and use flameless candles and strings of lights to brighten up darker corners.
- Advent calendars are making a comeback – in an unexpected and fun way. Stretch a string across your fireplace and hang 24 numbered and handmade paper cones containing small gifts and candies. The kids can pull off one a day from December 1 to 24.
Deep Six the Eight-Glass Myth
Your mother always told you to drink eight glasses of water a day. Now it seems she’s wrong.
More and more health experts agree that drinking eight glasses of water isn’t necessary to stay hydrated.
Why not? Because we tend to get enough fluids from the foods and beverages we ingest throughout the day – even from drinks like coffee and tea.
Foods like lettuce and watermelon contain enough water to keep you satiated and hydrated for a few hours, so you don’t have to chug a glass or two with every meal to feel virtuous.
What do the experts recommend? Drink when you’re thirsty. And while it’s not a bad thing to drink eight glasses of water a day, it’s not been proven scientifically that it’s the only way to stay hydrated. Sorry, mom.
Critical Illness Plans Offer Lower Premiums
No one wants to gamble on his or her health, but over the past few years many Americans have decided to do just that. However, there is another way.
With the tight economy and high unemployment, many people have been skimping on health care. While the Patient Protection and Affordable Care Act aims to make health care more affordable, most of the recommended changes are still being discussed, and many significant ones won’t take effect until 2014.
People with lower incomes and the self-employed, as well as those whose jobs don’t provide health insurance, are increasingly opting for a less expensive way to protect themselves by purchasing catastrophic insurance.
This form of insurance effectively lowers monthly premiums and raises out-of-pocket costs while offering complete coverage in the event the insured experiences a catastrophic health issue, such as a stroke, heart attack or cancer.
Do you need catastrophic coverage? To get the most from this type of insurance, you should be a basically healthy person – not one with many prescriptions or regular doctors’ visits. These are the high-cost areas. You’ll pay high out-of-pocket costs for them, and it’s best to keep them to a minimum. Older people also will find catastrophic insurance provides them with peace of mind at a lower cost.
Recipe: Artichokes Stuffed with Brie
Serves four as an appetizer for holiday dinner parties.
- 4 large artichokes
- 8 ounces Brie
- 4 tablespoons chopped shallots
- 2 cups dry white wine
- 1 stick of butter cut in cubes
- 8 ounces whole grain mustard
- 4 tablespoons white wine vinegar
- 4 tablespoons lemon juice
- Salt and pepper to taste
Cut off the top ends of the leaves and the bottom stems of the artichokes. Cook in boiling water for 10-15 minutes or until the bottoms are easily pierced. Run under cold water.
When cooled, cut the inner chokes away from the hearts, removing the inner leaves and keeping the outer ones. Cut the Brie into 1/2″ chunks. Stuff the centers of the artichokes and between the leaves with the Brie. Bake on a cookie sheet at 350 degrees until the Brie melts (approximately 10 minutes).
Combine the shallots and white wine in a saucepan over high heat. Gradually whisk in the butter and remove from heat. Stir in the mustard, vinegar, salt, pepper and lemon juice. Drizzle the mixture over artichokes and serve.
Investing in Annuities a Little at a Time
When planning for retirement, it’s tough to know exactly how much of an annuities nest egg you’ll need in order to create the guaranteed income stream to support your desired lifestyle once you reach your golden years.
The good news is you don’t have to decide. Now you can buy an annuity in stages as opposed to one lump sum – a little here and there versus a lot now.
In essence, an annuity is a contract with an insurance company.
In exchange for making a payment now, you are assured that the insurance company will provide you with a stream of income in the future. That stream of income could last for life. Depending on the annuity, it could even go to your beneficiaries after your death.
Many investors believe an annuity must be purchased in a lump sum.
It is true that an annuity can be purchased in a lump sum, but it can also be purchased in a series of installments. Investing in an annuity in this way – a little at a time – means you don’t have to hand over a huge chunk of cash at once. It also eliminates the need for investing all your money when interest rates (and thus payout amounts) are low, which may be the case in today’s market, thanks to the quantitative easing by the U.S. Federal Reserve Board.
Whether you’re making a lump-sum payment or a series of payments, it’s important to choose the highest-quality insurance company – one with high ratings from Standard & Poor’s and A.M. Best Company.
Ask your advisor to help you to make this important decision.
Can an Annuity Replace Social Security?
Social Security is an important component of most Americans’ retirement plans, but it’s also a collapsing program.
Social Security’s revenues fall short of its spending on benefits, and it is expected to run dry in or before 2036. That would slash benefits by about 25%.
But do you know that it is possible to retire without Social Security and its reduced benefits?
Retiring without Social Security may seem like a stretch, but it’s less so than you might think. That’s because Social Security is essentially a lifetime income annuity. You pay into Social Security for a certain period of time. Then Social Security sends you a check every month until you die. As such, Social Security could, theoretically, be replaced by an annuity. So why not consider buying an annuity to help protect your retirement?
According to the Wall Street Journal, the average retiree receives $14,000 a year from Social Security. A similar income stream for an annuity would cost a 66-year-old roughly $250,000.
According to a survey by the Employee Benefits Research Institute, many Americans don’t have that kind of money to invest; the survey reported that fewer than half of American workers have saved $25,000, and only a third has saved $50,000. If, however, you’ve been saving and can afford an annuity, why not consider it?
Keep in mind that Social Security offers some benefits most annuities don’t. These include a federal government guarantee and inflation protection.
Don’t underestimate the importance of these benefits: During the financial crisis, many annuity holders were worried about what would happen if their insurance carriers filed for bankruptcy protection. Plus, even small amounts of inflation will gradually eat away at your purchasing power.
If you’re concerned about Social Security but are unsure whether you can handle retirement without it, why not contact your advisor for advice on your retirement savings plan?.