Financial advisers and insurance agents rarely address their clients’ mortgage payments, interest rates or their insurance premium to protect the bread winners in case of disability or death. People are looking for assistance in analyzing their overall indebtedness. In fact, consumers are seeking advice on debt issues more than they are seeking guidance on their assets under management. In general terms there are four categories of mortgagees: DINKS (dual income no kids), DIRKS (dual income raising kids), SINKS (single income no kids) or SIRKS (single income raising kids). Mortgages are predicated on the income of one or two spouses.  Cultural change has occurred in America, and women are now fully integrated into the workplace. So, mortgages are predicted on two incomes. Protecting the lifestyle of the family at large requires scenarios to cover one or two deaths. Shopping for the best deal generally means defaulting to your local bank who carries your mortgage or “stalking” online virtual banks in hope of a better deal. Financial professionals are slowly coming into the mortgage protection market as part of their overall services to consumers. Some have become trained to qualify as a mortgage protection specialist. Online information and direct mail have proven   Read more…

It seems somewhat antithetical that most small businesses have little to no planning. In fact, most small businesses are unaware of existing problems and future challenges because they work in their business, not on their business. So, a new market of businesses that help businesses is emerging.  CPAs, attorneys and trust officers have some influence over these owners by virtue of tax preparation, entity creations and banking. But they don’t address the key issues that confront everyday business owners. There are seven basic business items that are foundational to daily operations, preparing the company for sale and future access to the sale proceeds in a tax favored way. Recruiting and Retaining Employees requires perks beyond a base salary and healthcare to be competitive with the labor force. Ancillary benefits can provide extra incentive for recruits to join and employees to stay. Employee Benefits such as health savings accounts, short and long term disability as well as ancillary coverage like life insurance, chronic health and long term care, are necessary to recruit employees in a competitive environment. Key Employee Coverage for the revenue rainmakers and the administrator that operate your business. Identification on key employees can be the difference between catastrophe   Read more…

To understand annuities, you have to understand your financial profile. The first step in developing a financial profile is taking a risk tolerance test. The test itself is not a pure science, but it is an indicator of your attitude towards money. It’s not surprising to discover that most seniors evolve into money conservatives as they approach retirement. After the lost decade where four out of ten years experienced significant losses, and the market turbulence of 2018, guarantees are at the forefront of geriatric thinking. Non-qualified, fixed rate annuities continue to outperform bank certificates of deposit, even from virtual banks and they have the luxury of deferring taxes until distributions are made. The rate plus the deferral has economic leverage. If fixed rates hit 5% guaranteed for 5 years, many future retirees ten years from retirement will more than likely flee the equity market for safety. So, 5 for 5 is the benchmark. Another milestone to be aware of is 4% internal rate of return (IRR) with lifetime annuities, a composite of higher rates, increased mortality credits and extended life expectancy. If you can average 4% IRR with zero beta risk, i.e. no risk but the insurance company itself, then   Read more…

FEGLI, CERS, FERS, VA, FBI, DEA, TSP. Each applies to the federal government, but without a scorecard, it’s difficult to tell which is an organization and which is a benefit of working for an organization. Though efforts have been made over the years to align federal workers’ benefits with their private sector counterparts, key differences remain, and the feds’ benefits can be a language unto itself. According to a 2010 Washington Post article, non-uniformed, federal government employees totaled nearly 2.8 million, including about 600,000 in the United States Postal Service. Despite the volume of workers – and many billions of dollars under management – outstanding rates and payouts are not the norm. While workers can participate in pensions, life insurance, Social Security and a 401(k)-like equivalent named Thrift Savings Plan (TSP), there are quirks that many workers don’t realize. For example, workers can specify that a spouse receive a portion of their pension, 50% – 55%, if the worker predeceases the spouse. For that right, the worker’s pension is reduced by 10%. But it’s 20% when calculated as a 10% cost of a 50% payout. Surprising to most, the accumulated pension amount withheld is retained by the government should the   Read more…

The infinite banking concept is a solid approach to building wealth, but using Your Family Bank addresses debt reduction, a big first step in recovering financial health. But to get started you need to select a participating whole life insurance company with a good history of solid dividend performance and low policy loan costs. It’s important to stay away from expensive “direct recognition policy loans.” After you eliminate debt, you can use your money for a variety of ventures whether college education, retirement planning and investing. Keep in mind that the vast majority of a life insurance company’s portfolio is in investment grade bonds, so to avoid redundancy, you can consider minimizing or eliminating bond positions in your portfolio. If your investments out perform your insurance policy, you have successfully arbitraged or leveraged your money…again in a tax advantaged way. Money opportunities may present themselves from time to time, so you can harness the power of liquidity in the mid-term. Many consumers attempt to lock in fixed rates of return in certificates of deposit. The money is illiquid, and you have to pay taxes regardless of whether you took constructive receipt of the earnings or not. Accessing money inside the   Read more…