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The dangers of payday loans and cash advances

December 9, 2019

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Marlys A. Nash

Marlys A. Nash

Financial Professional

m: (303) 947-2557
w: (303) 221-3639 x 8
f: (303) 302-6900

6160 S Syrcuse Way
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Greenwood Village, CO 80111

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Getting Your Reindeer In a Row

Getting Your Reindeer In a Row

Dasher. Dancer. Prancer. Vixen. Comet. Cupid. Donner. Blitzen. (And Rudolph too, of course.)

This is a holiday roll-call that’s instantly recognizable: the reindeer that pull Santa’s magical sleigh. But what if things got so hectic at the North Pole (not a stretch when you’re in charge of delivering presents to every child on Earth), that when it was time to hitch up the reindeer on Christmas Eve, they were all out of order?

Prancer. Cupid. Dasher. Comet. Dancer. Vixen. Blitzen. Donner.

Hmmm, someone’s missing…. what happened to Rudolph? (Looks like he got left behind at the North Pole. In all the hubbub one of Santa’s elves forgot to review the pre-flight checklist.)

Since so much can change during the year from one crazy “Happy Holidays!” to the next, your ducks – or reindeer, that is – may not even be in a row at this point. They could be frolicking unattended in a field somewhere! And who knows where your Rudolph even is.

We can help with that. An annual review of your financial strategy is key to keeping you on track for your unique goals. Lots of things can change over the course of a year, and your strategy could need some reorganizing. I mean, did you hear about everything that changed for Prancer? (What do you call a baby reindeer, anyway?)

Here are some important questions to consider at least once each year (or even more often):

1. Are you on track to meet your savings goals? A well-prepared retirement is a worthy goal. Let’s make sure nothing drove you too far off track this year, and if it did, let’s explore what can be done to get you back on the right path.

2. Do you have the potential for new savings? Did your health improve this year? Did that black mark on your driving record expire? Changes like these have the potential to positively impact your life insurance rate, but we’d need to dig in and find out what kinds of savings might be in store for you.

3. Have your coverage needs increased? Marriage, having a child, or buying a home are all instances in which your life insurance coverage probably should be increased. Have any of these occurred for you over the last year? Have you added the new family member as a beneficiary?

If you haven’t had a chance to review your strategy this year, we can fit one in before Santa shimmies down the chimney. Which of your reindeer do you need to wrangle back into the ranks before the New Year gets going?

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The Birds Have Flown the Coop!

November 18, 2019
The Birds Have Flown the Coop!
November 18, 2019

The kids (finally) moved out!

Now you can plan those vacations for just the two of you, delve into new hobbies you’ve always wanted to explore… and decide whether or not you should keep your life insurance as empty nesters.

The answer is YES!

Why? Even though you and your spouse are empty nesters now, life insurance still has real benefits for both of you. One of the biggest benefits is your life insurance policy’s death benefit. Should either you or your spouse pass away, the death benefit can pay for final expenses and replace the loss of income, both of which can keep you or your spouse on track for retirement in the case of an unexpected tragedy.

What’s another reason to keep your life insurance policy? The cash value of your policy. Now that the kids have moved out and are financially stable on their own, the cash value of your life insurance policy can be used for retirement or an emergency fund. If your retirement savings took a hit while you helped your children finance their college educations, your life insurance policy might have you covered.Utilizing the cash value has multiple factors you should be aware of before making any decision.*

Contact me today, and together we’ll check up on your policy to make sure you have coverage where you want it - and review all the benefits that you can use as empty nesters.

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*Loans and withdrawals will reduce the policy value and death benefit dollar for dollar. Withdrawals are subject to partial surrender charges if they occur during a surrender charge period. Loans are made at interest. Loans may also result in the need to add additional premium into the policy to avoid a lapse of the policy. In the event that the policy lapses, all policy surrenders and loans are considered distributions and, to the extent that the distributions exceed the premiums paid (cost basis), they are subject to taxation as ordinary income. Lastly, all references to loans assume that the contract remains in force, qualifies as life insurance and is not a modified endowment contract (MEC). Loans from a MEC will generally be taxable and, if taken prior to age 59 1/2, may be subject to a 10% tax penalty.

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3 Ways to Give Thanks for Loved Ones

3 Ways to Give Thanks for Loved Ones

Just saying “thanks” without giving a little thanks back tends to lose its charm when we start to lose our first teeth.

When we’re young, it seems like our parents and older siblings are just relieved that we’re learning some manners to offset our little legs swinging wildly off the chair under the dinner table, narrowly missing people’s shins. (Hey, it’s hard to sit still at big family meals when you’re that little!) All the grown up talk about far away jobs or how much you’ve grown wasn’t as stimulating as the tooth that had started to wiggle ever so slightly when you bit into some turkey… But at least you remembered to say thank you when someone passed the cranberry sauce!

As we got older, though, those conversations became easier to participate in as we shared our own stories, watched our extended family grow and mature, and then tried to wrangle our own kids into saying “thank you” when they were given a gift by a relative they hadn’t seen in a year.

The biggest lesson we learn about being thankful as we get older? It’s important to show the people we love how thankful we are for them – not just say it. We learn more about the responsibility we have to take care of the people we are thankful for. And at this time of year, we can give our thanks to them by making sure they are financially prepared if we suddenly aren’t around anymore.

Here are 3 ways you can give thanks for your loved ones:

1. Consider getting life insurance. Replacing lost income, covering funeral expenses, gaining potential tax advantages, having early access to money – these benefits of life insurance will give your loved ones a bit of financial stability and let them know how thankful you were for them. However, many of these benefits can depend on what type of life insurance you have, so taking the time to find the right type and amount of insurance for your particular needs and goals is important. Which leads us to the second way to give thanks…

2. Get the right type and amount of life insurance. Life insurance policies are not “one size fits all,” so investing your energy into this step is a key way to give thanks for your loved ones. Different types of policies have different kinds of coverage, benefits, and uses. Having the right policy with adequate coverage is the key to protecting your loved ones in the event of a traumatic event – not just the loss of life. Adequate life insurance coverage can help keep you and your loved ones afloat in the case of an unexpected disabling injury, or if you’re in need of long term care. Your life with your loved ones isn’t going to be one size fits all, and your life insurance policy won’t be either.

3. List the right beneficiaries on your policy. This question is particularly important if you haven’t looked at or updated your beneficiaries in a while. Why? Because listing the correct beneficiary will help ensure that any insurance payout will get delivered to the them. You may need to review your policy’s beneficiaries if you have recently married or divorced, had kids, or maybe even met with a cousin over the holidays who you’d like to leave a little something to!

If you can’t say that the 3 ways above are how you’re going to give thanks for your loved ones this year, give me a call. I’d like to give my thanks to you by assisting you with a whole new way to say “thank you” – tailored life insurance!

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*Neither World Financial Group nor its agents may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Any guarantees associated with a life insurance policy are subject to the claims paying ability of the issuing insurance company.*

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3 More "I Dos" for Newlyweds

3 More "I Dos" for Newlyweds

Congratulations, newlyweds!

“To have and to hold, from this day forward…”   At a time like this, there are 3 more “I dos” for you to consider:

1. Do you have life insurance?
Any discussion about life insurance is going to start with this question, so let’s get it out of the way! As invigorated as people feel after finding the love of their life…let’s face it – they’re not invincible. The benefits of life insurance include protecting against loss of income, covering funeral expenses, gaining potential tax advantages, and having early access to money. Many of these benefits can depend on what kind of life insurance you have. Bottom line: having life insurance is a great way to show your love for years to come – for better OR worse.*

2. Do you have the right type and amount of life insurance?
Life insurance policies are not “one size fits all.” There are different types of policies with different kinds of coverage, benefits, and uses. Having the right policy with adequate coverage is the key to protecting your new spouse in the event of a traumatic event – not just loss of life. Adequate life insurance coverage can help keep you and your spouse afloat in the case of an unexpected disabling injury, or if you’re in need of long term care. Your life with your spouse isn’t going to be one size fits all, and your life insurance policy won’t be either – for richer or poorer.

3. Do you have the right beneficiaries listed on your policy?
This question is particularly important if you had an existing policy before marriage. Most newlyweds opt for listing each other as their primary beneficiary, and with good reason: listing the correct beneficiary will help ensure that any insurance payout will get delivered to them– in sickness and in health.   If you couldn’t say “I do” to any or all of these questions, contact me. It would be my pleasure to assist you newlyweds – or not-so-newlyweds – with a whole NEW way to care for each other: tailored life insurance coverage – ’til death do you part!

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Neither World Financial Group nor its agents may provide tax or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.

Any guarantees associated with a life insurance policy are subject to the claims paying ability of the issuing insurance company.

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The Challenge Of Losing Your Income

October 23, 2019
The Challenge Of Losing Your Income
October 23, 2019

You’ve already got a lot to deal with. Why buy life insurance at all?

It all comes down to protection. The idea of protecting things like your car or house are pretty common. Even if car insurance weren’t mandatory in most states or provinces, buying it would probably be a good idea. You’d want to make sure you could cover any damages from an accident – especially if you’re at fault. And protecting your investment in your home from the unexpected like an earthquake, fire, flood, theft, etc. is a bit of a no-brainer.

One of the most important things to protect before all others? Your ability to earn an income. Your income enables you to not only buy your car and your house but also the insurance to protect those things. If you were to lose your income, then those things could also be lost if you can’t afford them any longer.

Getting laid off or fired could be a cause of lost income. In that case, you still have the ability to work, which means finding a new job is possible. But in the event of a disability, critical illness, or premature death of a breadwinner? Those situations are a bit tougher to bounce back from – especially that last one.

Before becoming financially independent, a financial situation may typically be less secure, meaning you might have more financial responsibility than wealth. For example, if you don’t have a lump sum of cash to buy a house, you’d need to finance the purchase over a longer period of time via a mortgage. This creates a responsibility to continue making the mortgage payments in full and on time. Losing your income would be devastating since it could affect your payments – and when mortgage payments can’t be made, you might lose your home.

What all of this means: Your ability to earn an income should also be protected. Getting the right type and the right amount of insurance can seem complicated, especially if you’re considering all the different kinds you may need. That’s where speaking with a financial professional might come in handy. If you’re looking to protect the most important aspect of your financial situation (namely, your ability to earn income) and you’d like to see your options, let’s talk. It would be my pleasure to help you get a better understanding of your options.

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Any guarantees associated with a life insurance policy are subject to the claims paying ability of the issuing insurance company.

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Putting a Wrap On the Sandwich Generation

September 23, 2019
Putting a Wrap On the Sandwich Generation
September 23, 2019

Ever heard of the “Sandwich Generation”?

Unfortunately, it’s not a group of financially secure, middle-aged foodies whose most important mission is hanging out in the kitchens of their paid-off homes, brainstorming ideas about how to make the perfect sandwich. The Sandwich Generation refers to adults who find themselves in the position of financially supporting their grown children and their own parents, all while trying to save for their futures. They’re “sandwiched” between caring for both the older generation and the younger generation.

Can you relate to this? Do you feel like a PB&J that was forgotten at the bottom of a 2nd grader’s backpack?

If you feel like a sandwich, here are 3 tips to help put a wrap on that:

1. Have a plan. In an airplane, the flight attendants instruct us to put on our own oxygen mask before helping someone else put on theirs – this means before anyone, even your children or your elderly parents. Put your own mask on first. This practice is designed to help keep you and everyone else safe. Imagine if half the plane passed out from lack of oxygen because everyone neglected themselves while trying to help other people. When it comes to potentially having to support your kids and your parents, a tailored financial strategy that includes life insurance and contributing to a retirement fund will help you get your own affairs in order first, so that you can help care for your loved ones next.

2. Increase your income. For that sandwich, does it feel like there’s never enough mayonnaise? You’re always trying to scrape that last little bit from the jar. Increasing your income would help stock your pantry (figuratively, and also literally) with an extra jar or two. Options for a 2nd career are everywhere, and many entrepreneurial opportunities let you set your own hours and pace. Working part-time as your own boss while helping to get out of the proverbial panini press? Go for it!

3. Start dreaming again. You may have been in survival mode for so long that you’ve forgotten you once had dreams. What would you love to do for yourself or your family when you have the time and money? Take that vacation to Europe? Build that addition on to the house? Own that luxury car you’ve always wanted? Maybe you’d like to have enough leftover to help others pursue their goals.

It’s never too late to get the ball rolling on any of these steps. When you’re ready, feel free to give me a call. We can work together to quickly prioritize how you can start feeling less like baloney and more like a Monte Cristo.

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Term or Perm? Life Insurance: A Quick Review

July 15, 2019
Term or Perm? Life Insurance: A Quick Review
July 15, 2019

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 policy, because it might be shorter than a permanent policy.

There’s a small downside to term policies, and it’s found right in the name: term policy. This kind of life insurance policy does have an expiration date. While you may have the option to convert to a whole or permanent life insurance policy through a conversion rider or you may choose to extend your policy, you may find yourself needing to go through the underwriting process again. Life insurance premiums tend to rise the older you get, so the term policy premium you paid when you first got your policy at, say, 30 years old has the potential to be very different from the ones you’d pay at 50 or 60 years old.

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.

If this doesn’t sound like the right kind of policy for you, there’s another option…

Permanent Life Insurance
Contrary to term life insurance, permanent life insurance provides lifelong coverage, as long as you pay your premiums. And contrary to term life insurance, permanent life insurance can be more complex because of its many parts and therefore harder to understand and know what choices are right for you. 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.

There are some key things to keep in mind if you’re considering a Cash Value Life Insurance Policy: It is important to remember that loans and withdrawals will reduce the policy value and death benefit dollar for dollar. Additionally, withdrawals are subject to partial surrender charges if they occur during a surrender charge period. Loans are made at interest. Loans may also result in the need to add additional premiums into the policy to avoid a lapse of the policy. In the event that the policy lapses, all policy surrenders and loans are considered distributions and, to the extent that the distributions exceed the premiums paid (cost basis), they are subject to taxation as ordinary income. Lastly, all references to loans assume that the contract remains in force, qualifies as life insurance and is not a modified endowment contract (MEC). Loans from a MEC will generally be taxable and, if taken prior to age 59½, may be subject to a 10% tax penalty.

And don’t worry too much about the hard to understand parts. A financial professional can give you an idea of what a well-tailored permanent life insurance policy may look like for you and your unique situation.

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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The Closest Without Going Over Wins

July 1, 2019
The Closest Without Going Over Wins
July 1, 2019

“How many jellybeans are in the jar?” This is one of life’s serious questions.

You know how it works. If your guess is the closest without going over, you win the prize. And whether it’s a cash pot, a season pass for your hometown’s team – or even just the jellybeans themselves, it’s a situation with a lot at stake. You’ve been presented with a ripe opportunity to prove your keen intellect, not to mention maybe winning some free candy!

You may start pulling out your old high school algebra equations. You may laboriously count the visible jellybeans so you can extrapolate the total. You may even pick the jar up and hold it to the light – shaking it and assessing any gaps in area coverage.

Take your time. It’s a big decision.

Unfortunately for many people, it seems not as much thought goes into estimating how much a life insurance policy may cost. Can you guess how much a policy might cost?

LIMRA’s 2017 Insurance Barometer study shed a little light on just how off these guesses can be: When those surveyed were asked how much they thought a healthy 30-year-old would pay for a $250,000 policy, their median guess was $500 – more than 3 times the actual cost!*

That stat is pretty revealing: odds are that the number you have in mind is a lot higher than what you might actually end up paying for your policy. As a result, it may feel like you’re saving money right now by not having life insurance. But in the case of a sudden illness, the passing of a breadwinner, or an unexpected loss of income, not having (what is potentially affordable) protection for your loved ones feels as silly as writing down a guess of 1,000,000 jellybeans next to the mathematician’s answer of 1,086.

The bottom line: Have you overestimated how much a well-tailored life insurance policy could cost you? Not sure? Reconsider your guesstimate with a financial professional who knows the in’s and out’s of your needs and what coverage may be available that fits your budget. (It’s like knowing how many jellybeans are in the jar before you have to guess!)

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Source: “2017 Insurance Barometer Study Reveals That Consumers Want Transparent Life Insurance Buying Options.” Life Happens, https://lifehap.pn/2tMcxwy.

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Matters of Age

June 19, 2019
Matters of Age
June 19, 2019

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:¹

  • 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.² 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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Sources: ¹ Weller, Chris, and Skye Gould. “Here are the ages you peak at everything throughout life.” Business Insider, https://read.bi/2uloTeP. ² Roberts-Grey, Gina. “How Age Affects Life Insurance Rates.” Investopedia, https://bit.ly/2L7P0x6.

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You Can’t Take It With You

June 12, 2019
You Can’t Take It With You
June 12, 2019

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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Source: Long, Heather. “The new normal: 4 job changes by the time you’re 32.” CNN Money, https://cnnmon.ie/1RRxCfl.

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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 set up a trust or 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.
  • Estate: Your estate can also be the beneficiary of a life insurance policy. The proceeds of your life insurance policy would be paid to the executor of your estate. Choosing your estate as a beneficiary also requires that you’ve drafted a last will and testament and that you haven’t named a specific person as a beneficiary on your policy. There may also be tax ramifications and other considerations that can affect this choice, so talk this one over with an expert first.
  • Trusts: You can name a trust as your life insurance beneficiary. However, the trust must exist before the policy goes into force.
  • Charity: Charities can absolutely be named as life insurance beneficiaries.
  • 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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Headed in the Right Direction: Managing Debt for Millennials

Headed in the Right Direction: Managing Debt for Millennials

Three simple words can strike fear into the heart of any millennial:

Student.

Loan.

Debt.

The anxiety is not surprising: Members of the Class of 2017 had an average of $39,400 in student loan debt.¹

Nearly $40 grand? For that you could travel the world. Put a down payment on a house. Buy a car. Even start a new business! But instead of having the freedom to pursue their dreams, there’s a hefty financial ball and chain around millennials’ feet.

That many young people owing that much money before they even enter the workforce? It’s unbelievable!

Now just imagine adding car payments, house payments, insurance premiums, and more on top of that student debt. No wonder millennials are feeling so terrible: studies show that graduates with debt experience feelings of shame, panic, and anxiety.² Now is the time to get ahead of your debt. Not later. Not when it’s more convenient or feels less shameful. You have the potential right now to manage that debt and get out from under it.

So how do you get out from under your debt? Sometimes improving your current situation involves more than making smarter choices with the money you earn now. Getting out of that debt ditch means finding a way to make more.

There are 2 things you can monetize right now:

  • Your education
  • Your experience

Both have their own challenges. You may not have spent much time in a particular field yet, so not a lot of experience. And what if you’re working a job that has nothing to do with your major? There goes education.

Two speed bumps. One right after the other. But you can still gain momentum in the direction you want your life to go!

How? A solid financial strategy. A goal you can see. A destination for financial independence.

Debts can become overwhelming – remember that stat up there? But with a strategy in mind for the quick and consistent repaying of your loans, so much of that stress and burden could be lifted.

Contact me today. A quick phone call is all we need to help get you rolling in the direction YOU want to go.

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¹ “A Look at the Shocking Student Loan Debt Statistics for 2018.” Student Loan Hero, 5.1.2018, https://bit.ly/2de72OP. ² Muller, Dr. Robert T. “Crushing Debt Affects Student Mental Health.” Psychology Today, 1.4.2018, https://bit.ly/2LKDg3w.

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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 2017.¹ 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 $10,000.² 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.³ For households with a large mortgage balance, the debt figures could be much higher. Couple that with a median household income of under $60,000,⁴ 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.) The death benefit of a term life insurance policy may help, for a time, fill in the income gap created by the unfortunate passing of a breadwinner.

But Wait, There’s More… There are term life insurance policies available that can provide other benefits as well, including living benefits that may help keep 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. It’s important to consider whether a reduction in the death benefit would be a good alternative to using savings planned for other purposes.

In some cases, policies with built-in living benefits may cost more than a standard term policy but 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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Sources: ¹ United States Department of Labor. “Employment Characteristics of Families Summary.” Bureau of Labor Statistics, 4.19.2018, https://bit.ly/2kSHDvm. ² “Funeral Costs: How Much Does an Average Funeral Cost?” Parting, 9.14.2017, https://bit.ly/2isoHUC. ³ Sun, Leo. “A Foolish Take: Here’s how much debt the average U.S. household owes.” USA Today, 11.18.2017, https://usat.ly/2hJ7lah. ⁴ Loudenback, Tanza. “Middle-class Americans made more money last year than ever before.” Business Insider, 9.12.2017, https://read.bi/2f3ey3F.

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Why You Should Care About Insurable Interest

May 6, 2019
Why You Should Care About Insurable Interest
May 6, 2019

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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Is Survivorship Life Insurance Right For You?

May 1, 2019
Is Survivorship Life Insurance Right For You?
May 1, 2019

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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World Financial Group, Inc., its affiliated companies and its independent associates do not offer tax and legal advice. Please consult with your personal tax and/or legal professional for further guidance.

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4 Reasons Why Life Insurance From Work May Not Be Enough

April 17, 2019
4 Reasons Why Life Insurance From Work May Not Be Enough
April 17, 2019

In some industries, the competition for good employees is as big a battle as the competition for customers.

As part of a benefits package to attract and keep talented people, many employers offer life insurance coverage. If it’s free – as the life policy often is – there’s really no reason not to take the benefit. Free is (usually) good. But free can be costly if it prevents you from seeing the big picture.

Here are a few important reasons why a life insurance policy offered through your employer shouldn’t be the only safety net you have for your family.

1. The Coverage Amount Probably Isn’t Enough.
Life insurance can serve many purposes, but two of the main reasons people buy life insurance are to pay for final expenses and to provide income replacement.

Let’s say you make around $50,000 per year. Maybe it’s less, maybe it’s more, but we tend to spend according to our income (or higher) so higher incomes usually mean higher mortgages, higher car payments, etc. It’s all relative.

In many cases, group life insurance policies offered through employers are limited to 1 or 2 years of salary (usually rounded to the nearest $1,000), as a death benefit. (The term “death benefit” is just another name for the coverage amount.)

In this example, a group life policy through an employer may only pay a $50,000 death benefit, of which $10,000 to $15,000 could go toward burial expenses. That leaves $35,000 to $40,000 to meet the needs of your spouse and family – who will probably still have a mortgage, car payment, loans, and everyday living expenses. But they’ll have one less income to cover these. If your family is relying solely on the death benefit from an employer policy, there may not be enough left over to support your loved ones.

2. A Group Life Policy Has Limited Usefulness.
The policy offered through an employer is usually a term life insurance policy for a relatively low amount. One thing to keep in mind is that the group term policy doesn’t build cash value like other types of life policies can. This makes it an ineffective way to transfer wealth to heirs because of its limited value.

Again, and to be fair, if the group policy is free, the price is right. The good news is that you can buy additional policies to help ensure your family isn’t put into an impossible situation at an already difficult time.

3. You Don’t Own The Life insurance Policy.
Because your employer owns the policy, you have no say in the type of policy or the coverage amount. In some cases, you might be able to buy supplemental insurance through the group plan, but there might be limitations on choices.

Consider building a coverage strategy with policies you own that can be tailored to your specific needs. Keep the group policy as “supplemental” coverage.

4. If You Change Jobs, You Lose Your Coverage.
This is actually even worse than it sounds. The obvious problem is that if you leave your job, are fired, or are laid off, the employer-provided life insurance coverage will be gone. Your new employer may or may not offer a group life policy as a benefit.

The other issue is less obvious.

Life insurance gets more expensive as we get older and, as perfectly imperfect humans, we tend to develop health conditions as we age that can lead to more expensive policies or even make us uninsurable. If you’re lulled into a false sense of security by an employer group policy, you might not buy proper coverage when you’re younger, when coverage might be less expensive and easier to get.

As with most things, it’s best to look at the big picture with life insurance. A group life policy offered through an employer isn’t a bad thing – and at no cost to the employee, the price is certainly attractive. But it probably isn’t enough coverage for most families. Think of a group policy as extra coverage. Then we can work together to design a more comprehensive life insurance strategy for your family that will help meet their needs and yours.

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What You Need To Know About Permanent Life Insurance

April 15, 2019
What You Need To Know About Permanent Life Insurance
April 15, 2019

Most people, when they think of life insurance, might think of two types: Term Life Insurance and Whole Life Insurance.

There are two types of policies, but it’s more accurate to think of them as temporary or permanent. It’s kind of like renting an apartment vs. buying a home. When you rent, it’s probably going to be temporary, depending on your situation. However when you buy a house, the feeling is more like you’re settling down and you’ll be there for the long-haul. When you rent, you don’t build value. But when you buy, you can build more equity in your home the longer you own it.

Permanent life insurance can build a cash value, something a term policy can’t do. A term life policy only has monetary value when it pays a death benefit in a covered claim. Temporary and permanent policies also have some types of their own.

For example, term life insurance can include living benefits or critical illness coverage, as well as group term life insurance and key person life insurance, which is sometimes used in businesses. These are all designed to be temporary coverage. Here’s why. The policy might guarantee premiums for 10 years – or as long as 30 years – but after its term has expired, a term policy can become price-prohibitive. For this reason the coverage is, for all practical purposes, considered temporary.

Permanent Life Insurance: Designed to Last a Lifetime

As its name suggests, permanent life insurance is built to last. It’s a common perception that permanent life insurance and whole life insurance are synonymous, but whole life insurance is just one type of permanent life insurance.

At first glance, a permanent life insurance policy can seem more expensive than a term policy, but you’d have to consider the big picture to be fair in comparing the two options. Over the course of a full lifetime, permanent life insurance can be less costly – in part – because term policies become expensive if you require coverage after the initial term has expired. An investment element also helps to build cash value in a permanent life insurance policy, taking pressure off premiums to provide coverage.

If I’ve left you scratching your head over your options, no worries! Understanding the benefits of each type is important, and choosing which policy is best for you is a uniquely personal experience. Contact me, and we’ll review your options to find the right strategy for you and your family.

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What Happens If a Life Insurance Policy Lapses?

April 8, 2019
What Happens If a Life Insurance Policy Lapses?
April 8, 2019

The dollar amount of death benefit payouts that seniors 65 and older forfeit annually through lapsed or surrendered life insurance policies is more than the net worth

That’s $112 billion worth of death benefits, inheritance, donations to charities, and cash value down the drain. Or, more specifically, that’s $112 billion that goes right back to insurance companies – all because policyholders surrendered their policies or allowed them to lapse.

A lapse in a life insurance policy occurs when a premium isn’t paid. There is a brief grace period in which a premium payment for a life insurance policy can still be made. But if the payment is not made during the grace period, the life insurance policy will lapse. At this point, all benefits are lost.

There are circumstances in which the life insurance policy can be recovered. It could be as simple as resuming premium payments… or it could involve a lengthy process that includes a new medical exam, repaying all premium payments from the lapsed period, and possibly the services of an attorney.

The best practice to avoid a policy lapse is to make premium payments on time. To help out their customers, many insurance companies can automatically withdraw the monthly payment from a checking account, and some companies may take missed premium payments out of the policy’s cash value – but please note: term life insurance has no cash value. In this case, missed premium payments won’t have the cash value failsafe.

If you’re in danger of a lapse, contact me today. Together we can review your financial strategy to help you and your loved ones stay covered.

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How to Build Credit When You’re Young

March 18, 2019
How to Build Credit When You’re Young
March 18, 2019

Your credit score can affect a lot more than just your interest rates or credit limits.

Your credit history can have an impact on your eligibility for rental leases, raise (or lower) your auto insurance rates, or even affect your eligibility for certain jobs (although in many cases the authorized credit reports available to third parties don’t contain your credit score if you aren’t requesting credit). Because credit history affects so many aspects of financial life, it’s important to begin building a solid credit history as early as possible.

So, where do you start?

  1. Apply for a store credit card.
    Store credit cards are a common starting point for teens and young adults, as it often can be easier to get approved for a store card than for a major credit card. As a caveat though, store card interest rates are often higher than for a standard credit card. Credit limits are also typically low – but that might not be a bad thing when you’re just getting started building your credit. A lower limit helps ensure you’ll be able to keep up with payments. Because you’re trying to build a positive history and because interest rates are often higher with a store card, it’s important to pay on time – or ideally, to pay the entire balance when you receive the statement.

  2. Become an authorized user on a parent’s credit card.
    Another common way to begin building credit is to become an authorized user on a parent’s credit card. Ultimately, the credit card account isn’t yours, so your parents would be responsible for paying the balance. (Because of this, your credit score won’t benefit as much as if you are approved for a credit card in your own name.) Another thing to keep in mind is that some credit card providers don’t report authorized users’ activity to credit bureaus.* Additionally, even if you’re only an authorized user, any missed or late payments on the card can affect your credit history negatively.

Are secured cards useful to build credit?
A secured credit card is another way to begin building credit. To secure the card, you make an initial deposit. The amount of that deposit is your credit line. If you miss a payment, the bank uses your collateral – the deposit – to pay the balance. Don’t let that make you too comfortable though. Your goal is to build a positive credit history, so if you miss payments – even though you have a prepaid deposit to fall back on – you’re still going to get a ding on your credit history. Instead, it’s best to use a small amount of your available credit each month and to pay in full when you get the statement. This will help you look like a credit superstar due to your consistently timely payments and low credit utilization.

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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Source: “Does Being an Authorized User Help You Build Credit?” Discover, 2018, https://discvr.co/2lAzSgt.

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4 fundamental home buying guidelines

March 6, 2019
4 fundamental home buying guidelines
March 6, 2019

Over the course of a 30-year mortgage term, a humble home may save you thousands of dollars as opposed to a more opulent one.

Even if you abide in a smaller house than you might have envisioned as a kid, it could still provide wonderful memories while offering a haven for your family.

Home ownership can be a desirable goal, but it may become a burden, however, if the home makes you “house poor”. Imagine if every spare penny had to go toward your mortgage or upkeep of your home with nothing left over. That’s the definition of things owning you instead of you owning things. Thankfully, there’s a different way.

If you’re in the market for a new home, there are four areas to consider before you start your serious search.

Save first
You might discover there are lots of ways you could buy a house with almost no money down. However, resist the temptation of low-down-payment loans. In what could be a still-volatile housing market, you would not want to run the risk of finding yourself in a negative equity position, which means you would owe more than your house is worth. You also may pay more for Private Mortgage Insurance, which is required for home loans with less than 20% down. Before you make your move, try to save up for the 20% down payment as well as any additional amounts to help cover closing costs. You’ll also want to have an emergency fund stashed away before you buy.

Think smaller
If you don’t need a “big” house, consider buying a smaller home. Everything in smaller homes may be less expensive to replace or maintain because there’s simply less square footage involved. (The purchase price could be lower as well.)

Keep your budget under 25%
The loan officer for your mortgage might say “yes” to an amount that would cause your monthly payments to be more than 25% of your take-home pay, but that doesn’t mean those payments will fit your budget. Leaving yourself some extra margin may help you navigate life’s surprises and may give you the freedom to save more, provide more for your kids’ college, or even plan that trip you’ve always wanted to take. Bear in mind that mortgage payments may include other fees, which may increase your final monthly payment amount significantly. A 30-year mortgage may provide flexibility

When you’re focused on how much you’re borrowing, a 15-year mortgage that pays down the debt faster may be tempting. Consider a 30-year loan, though. The potential flexibility of not being obligated to a possible higher monthly payment with a 15-year loan may come in handy when those unexpected emergencies happen.

All in all, it’s worth considering your long-term outlook before you even begin your new home search.

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