Americans have been through economic challenges during the last several years. Some withdraw funds from their 401(k) accounts to pay for rising costs of living while others max out credit cards. However, many people fail to consider their life insurance policies and their investment benefits.
When it comes to life insurance, the two main types are permanent and term. A permanent policy comes with investment opportunities, and it blends the investment component with the death benefit to yield a higher cash value accrual over time. Term life policies only pay when the insured dies before the chosen term. For example, a person who chose a term of 30 years and died after 20 years would be covered, and a person with the same term who lived 40 years would not be covered. Several permanent policies come with options for accessing cash immediately when necessary.
Permanent Life Insurance Choices
As long as the policyholder pays the premium, the permanent life insurance policy stays in place. It has a cash value that increases as time passes, and the policyholder can borrow against the value. These are the main forms of permanent life coverage:
Life Insurance Premiums
The premium is determined by the age at which a person buys a policy as life insurance is more expensive for older individuals. Health also affects the cost. A person with a chronic illness would pay more than a person with no history of health issues and so some companies ask for urine and blood samples in addition to accessing past medical records. While some companies will not insure people with cancer, diabetes and other serious chronic illnesses, others will simply charge more for placing them in a high-risk category. Smoking or drinking problems within the past five years can negatively affect the premium, and dangerous hobbies such as sky diving raise costs. Driving records, geographical location and occupation are also considered.
It helps to compare costs of different types of permanent life insurance before choosing a policy. To learn more about this type of life coverage feel free to contact me.
When eligible candidates consider taking a job with a company, they usually look closely at the health benefits. Also, they generally read the retirement plan and look at other perks such as vacation days and sick days. However, very few people consider disability benefits or even bother to ask about them.
Although most employees do not think of disability benefits as an important asset, statistics show that 25 percent of people who are 20 years old now will become disabled before they reach an age that makes them eligible for collecting retirement income. The Employee Benefits Survey of 2016 found that most employers still offer disability benefits in their packages whether workers choose to consider them or not. Here's a recap of the survey:
Since the economic status of the nation is still shaky, both the young and old generations of America worry about retirement and financial prospects. Research shows that about 90 percent of people feel confident with their own financial decisions. Approximately 50 percent of Generation Y (Millennials) members aren't sure where to begin with retirement planning. However, about 30 percent of Generation X members are unsure of how to go about planning for retirement.
This research shows a nationwide need for comprehensive and continuous education about finances and retirement planning, which is necessary to properly prepare the public. If individuals receive proper education, they'll be able to have the tools and guidance necessary for building a sound strategy that will contribute to a secure financial future. It's important to have financial security from the time adulthood begins to survive rough economic times. However, it's also crucial to be financially secure when the economic stability is good.
To see Americans in every life stage feel a sense of financial control, research and findings must be made known on national agendas regarding how private and public sectors can help with this issue. To make the importance of these findings more apparent, it's important to consider what the people of both generations are saying about their opinions. The same research showed that about 80 percent of Generation X members think the economy is going in the wrong direction. Almost 50 percent of Generation X members feel that they're not financially secure. This figure represents the highest percentage of all groups surveyed.
It's also interesting to note that about 55 percent of Generation X members are worried that they won't have enough money saved for a modest retirement. Since this generation experienced the economic crises in 1987 and 2008, their worries are likely associated with those periods of economic downturn. However, they're not the only ones who experience a lack of trust for the economy. The same research showed that about 65 percent of the general population would choose to keep their money in savings instead of investing it. In addition to this, about 60 percent feel that with an economy that is less stable, it's best to contribute more to individual retirement funds. However, Generation X member disagree. About 45 percent of this generation's members feel that investing in retirement is not as important during periods of economic instability.
Unfortunately, Generation X members have been negatively impacted by the economic turmoil of the past several decades. However, this research clearly shows that all Americans show signs of uncertainty about making financial decisions. Helping these individuals move past inaction is a challenge that professionals are trying to conquer. To learn more about retirement planning, discuss available options with me today.
Start now. General George S. Patton was fond of saying that the perfect was the mortal enemy of the good. This is to say that a basic plan put energetically into action now is better than a perfect plan next year. Next year may never come. Things will always come up to knock you off track - especially if you have neglected an emergency fund cushion.
Every year you delay is a year of compounding that you miss forever. You can catch up on missed contributions, maybe, but not on missed time. Maybe you aren't ready to fully fund a college savings account yet. Fine. Put the building blocks in place first:
Why? Because of the way the federal government calculates the expected contributions of children and family members under the federal need-based financial aid system. If your family is wealthy, there won't be any need-based financial aid to be had. If your family is still very poor, you may be able to get substantial need-based financial aid. The real squeeze comes for families in the middle.
Pay close attention to how assets are titled. If assets are held in your college student's name, the federal government will expect your child to spend down most those assets on his or her college education. If assets are held in the parents' name, the expected family contribution as a percentage of that wealth for a single student is significantly lower. You can use an online calculator to run scenarios and estimate your family's expected contributions, after need-based financial aid, here. Keep in mind, though, that much of the financial aid will be in the form of federally-guaranteed student loans, not grants.
Minimize student assets
Ideally, you will have little or nothing held in the child's name when he or she goes to college. Students are expected to contribute 20 percent of all the assets in their own name to their college education in any given year. This includes money in an UTMA or UGMA. The more the student owns, the smaller the amount of need-based financial aid you can expect.
Minimize countable parental assets
While assets held in the parent’s name are preferable to assets held in the child's name, they still count against you when federal officials calculate the amount of need-based aid your child or children may qualify for. Assets parents own in Section 529 plans count against the family when calculating the EFC. Federal officials expect a family to spend 5.64 percent of their total assets on their child's education each year.
Maximize non-countable assets
But some kinds of assets do not count against the family for the purposes of determining need-based financial aid. These include:
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Getting Started with College Planning
When it comes to saving money to pay for a child's college expenses, there are three basic rules:
Your own financial and retirement security must come first. Many families make the mistake of sacrificing their own long-term financial well-being for the sake of paying for college. Every spare penny is set aside for college, and they pay little heed to funding their own 401(k)s, IRAs, 403(b)s and taxable long-term savings accounts. Remember that while parental contributions are important, they are not the only resources your child will likely have in college. There are many other possibilities as well: