BeamaLife Blog

Last month the White House decided to get into the business of giving financial advice.  The White House’s “Middle Class Task Force” recommended that Americans, many of whom are in a terrible financial bind, begin investing in immediate annuities. 

With the volatility of the stock market, the crash of the real estate market, and the staggering unemployment numbers, Americans are looking for any way to preserve their investments and set themselves up for a livable future.  The most conservative investments, like certificates of deposit and money-market accounts, are returning almost nothing these days. 

If you’re not familiar with these investment options, let me explain how they work.  You buy an immediate annuity by making a large investment with an insurer.  Then you begin to receive large payouts which last for the rest of your life.  An example in a recent Wall Street Journal article shows how a 65-year old buying a $100,000 immediate annuity would receive roughly $7,500 per year. 

Should everyone immediately invest in immediate annuities?  I think that makes about as much sense as suggesting that everyone should take an aspirin every day, just because for some people, it’s a good way to fend off a second heart attack.  Financial planning is never one size fits all.

Some financial gurus suggest, for example, that the best way to use life insurance as part of your planning is to “buy term and invest the difference.”  And while that’s a great strategy for some, it’s a horrible mistake for others.  In the same way, buying immediate annuities makes great sense for some investors, but is a sure way to a less happy retirement for others.

Today’s interest rates are super low, and as the Wall Street Journal article pointed out, these pension-like investments require you to make a very educated wager that hinges on something most of us know nothing about:  how long we’re going to live.  If you live a long time, an immediate annuity can be a great investment.  But if you don’t, the one who will benefit the most from your investment is the insurance company.

Don’t get me wrong.  As someone whose career has been built around helping people to make the right decisions – about life insurance, disability insurance, college savings plans, and yes, annuities – I’m happy to have the White House advocating that Americans take a look at a variety of financial options they might not have considered in the past.  But rushing into something is almost always a mistake, and it pays to take your time and to seek the advice of competent professionals before making any major financial moves – especially when your family’s future is at stake.

The economics of life insurance relate to human life value, which in turn pertains to human capital. Human capital is a person’s income potential over their lifetime as well as additional factors such as fringe benefits, monthly expenses, and savings growth rate. The human life value concept is the primary reason for insurance and the basis of the ‘survivorship need’.

 The ultimate goal is to maintain your assets and pass them on to your family in the event of premature death or even if you live your full life. You want your family to receive the full value of your working life if you were to die prematurely. Also, you don’t want the government to end up as the biggest heir to your estate, if you die wealthy. Upon your death, tax on your assets is inevitable if you fall in the estate tax bracket. But understanding the economics of life insurance will allow you to cover what is due by creating a source of funds to pay estate tax liabilities through affordable premium payments in the form of a gift to an Irrevocable Life Insurance Trust. Furthermore, the death benefit from your life insurance policy to your loved ones has no federal estate tax, no state inheritance, and no federal or income state tax consequences if life insurance policy is structure in a correct manner.

The economics of life insurance also concerns tax-deferred growth. By law, the cash value growth inside a permanent life insurance policy is tax deferred. This makes a permanent life insurance policy especially whole life insurance a tremendous savings vehicle and provides great value for any individual with tax concerns. Lastly, the growing cash value inside a whole life insurance policy is increasingly used to fund children’s education, retirement savings and wealth creation purposes.

If you’re like many Americans, your plans for retirement include not retiring – at least not for a few more years.  Sun Life Financial recently released what it calls its “Unretirement Index,” which found that 65% of working Americans not expect to be working at least one year longer than they had previously planned.  That number is up 11% from where it was at the end of 2008, which goes to show that the lingering recession and its aftereffects are hitting hard, not only with those who have lost their jobs, but with everyone.

Sun Life’s report, which was detailed in the December issue of “Employee Benefits Adviser,” was compared with similar findings by Prudential Financial and by Vanguard.  Both company’s findings showed the same trend: more workers thinking that retirement would have to wait at least a year longer than they had previously considered. 

The Sun Life survey went further, finding that a larger percentage of workers expected to continue working full time or part time well into what would have normally been considered their “retirement years” – age 67 and beyond.  And only 40% of the workers surveyed felt that they would have enough money to cover “basic living expenses.” 

We all know that this recession won’t last forever.  Housing prices will rise, and unemployment will get back down to 5% or 6%.  But now that the U.S. Senate has passed its landmark version of the health care reform bill, we’ll have to wait and see what affect that will have on the current economy.   I hate to use the phrase “perfect storm,” but with banks failing left and right, with more and more Americans out of work, it certainly doesn’t seem like the right time to implement a major program that everyone agrees will cost our government and us taxpayers more money.

Regardless of what’s happening in the broader economy, your retirement savings plans are still, for the most part, in your hands.  You have lots of tools at your disposal, so take the time now to make sure that you’re using all of them.  If you have a 401(k) or 403(b), put as much as you can into it.  If you have whole life insurance, make sure you keep up the premium payments and keep that cash value building.  If you can put money into a traditional or Roth IRA, by all means, put as much as you can into it.

And if, like so many of our clients, you are a medical professional, or you own your own business, or you’re an independent contractor, you KNOW that your success is in your hands.  You’ve worked hard over the years to establish yourself, to build a reliable income stream, and to chart your own course for the future.  Take the steps you need to now to make sure that your business is protected and your retirement is plan with retirement planning guide.  It’s the best retirement plan you’ll ever have!

It’s a new year, and that’s the time when many people make resolutions to change their lives for the better in the coming months.  Many of the changes you might be considering can also be ways to save money on your life insurance.  Of course, there are the usual ways that most people would think of, like quitting smoking, or cutting back on drinking alcohol, or losing a few pounds.

But here’s one you may not have considered: going vegetarian. With all the talk about what’s happened to the American diet over the years, it isn’t a surprise to anyone that there are many health benefits to being a vegetarian.  But here are a few facts:

• Vegetarians are half as likely to develop heart disease as meat eaters
• Vegetarians have just 40% of the cancer rate of meat eaters
• Meat eaters are nine times more likely to be obese than vegetarians

When an insurance company evaluates your risk, which most of them do through a medical examination, there are a number of ways in which being a vegetarian will result in your being a lower risk, and therefore having lower life insurance rate and premiums. 

• Your cholesterol levels will be lower
• Your blood pressure will be lower
• Your risk for diabetes will be lower
• Your risk for heart disease will be lower

At this time there’s no “official” life insurance premium discount offered to vegetarians, like there is for people who don’t smoke.  But the health benefits are so clear that your acceptance is guaranteed to have fewer problems than you’d have as a meat eater.

Life insurance companies believe that it would be hard to verify that someone really was a vegetarian, or if they were just trying to get a discount they didn’t deserve.  Well, unless someone lights up a cigarette in the middle of a medical exam, it’s hard to prove that they’re a smoker, too.  So I think this is something that will change in the years ahead.

But even without an official discount, the benefits of being a vegetarian will lead you to a healthier life, and that means more time to enjoy all of the things that make your life worth living.  Best wishes for a healthy and happy 2010 from all of us at BeamaLife! Please call (866) 972-3262 to speak with life insurance specialist or complete life insurance quote request form for term insurance quote or whole life quote.

In the December issue of Employee Benefits Advisor magazine, a survey of 4,500 employers found that 2010 will be a good year for your employee benefits in lots of ways.  Most employers remain committed to keeping their benefits plans robust, offering medical and dental, vision, life insurance, short and long term disability insurance.

Here are the highlights you should know about:

• 82% of employers plan to keep their contributions levels the same for employee medical insurance in 2010.  With premium increases in the double digits, this is definitely good news for employees.
• 97% of employers do not plan to make any changes to their dental coverage in 2010.  Dental premiums are not rising as fast as those for medical insurance, but this also great news for employees. 
• Very few employers plan to add vision coverage this coming year, while a small percentage are actually considering dropping the coverage to save money.  If you have health insurance, you probably have some vision insurance as well.  I suggest employers make vision coverage voluntary – make it available for employees who want to pay for the benefit themselves.
• 90% of survey respondents indicated that they offer life insurance, and another 8% said that they intend to add life insurance in 2010.  This is great news, as the number of Americans with adequate life insurance is really quite low.  As I’ve written before, however, if your employer offers voluntary group life insurance, it may actually be less expensive to buy the same amount on your own.  Get the term insurance insurance or whole life insurance you need, and be smart about how much you pay for it!
• 90% of employers that currently provide long term disability insurance coverage are planning to keep it in 2010, but only 4% of companies that don’t offer it now are planning to add it.  Whether your company offers it now or not, you should have right amount of disability insurance coverage.  Please call (866) 972-3262 to speak with disability specialist about supplement coverage if you have disability from work or new your own coverage if you don’t have any protection.
• Short Term Disability is the least likely to be added in 2010.  Most disabilities are short term – less than 90 days in duration.  But that’s enough time to ruin your finances.  Protect yourself, even if your employer is already providing you with some short term disability.

The majority of Americans get the majority of their some financial services through their employers, so it’s great that companies are still willing and able to fulfill that role.  My advice is that what your employer offers should be your starting place – not the end of your financial planning journey.   visit BeamaLife for Term Life Quote, Whole Life Quote, Disability Insurance Policy, Long Term Care, College Savings and Retirement Savings – and make 2010 your best year ever!

According to the MIB Life Index, life insurance applications in the U. S. are on the rise, with November showing some of the biggest increases in the last two years. 
That’s a good thing for the life insurance business, of course, but it points to some very good things that are happening in the economy – and it points out an important lesson that every generation seems to need to learn again as if for the first time.

The MIB numbers showed that for November 2009, non-group life insurance applications rose 4.1% over the same time period last year.  The numbers themselves point to the fact that in general Americans are being freer with their money and are still very much aware that a big part of a family’s financial security depends on having adequate life insurance. Taking the numbers apart, however, reveals something that never seems to change.

The largest increase in individually-underwritten life insurance applications came in the 60+ age group – 18.8%, while the lowest increase – 0% – came from those who are 44 or younger.  The 45 – 49 age group also increased by 6.7%.  Why is it that the younger people – those who have young families, of course, but even those who are single – seem the least likely to have the life insurance they need?

There are a number of reasons.  Perhaps they think that their income levels are not high enough to support a quality life insurance policy.  Or maybe they think that because they get a small amount of life insurance from their employer, they have no need for anything more permanent.  Certainly these young people with relatively few assets are not a “target” for financial services professionals who work on commissions.

These are just some of the reasons that my colleagues and I built BeamaLife.com.  We want to dispel the myths that you can’t afford the insurance you need, that your employer-paid life insurance is enough, that as a single person, you don’t need life insurance.  If you are a business owner, or work for someone else, or if you’re a freelance or contractor – even if you’re a homemaker raising children and taking care of your family.  There is a solution out there, and you don’t have to look very far to find it! Call (866) 972-3262 for term life rates & life insurance quotes or complete life insurance quote request now.

There’s no question that for many people, money is tight these days.  And when you’re low on options for increasing your income, your thoughts may turn to that life insurance policy that you’ve been paying on for so many years.  You could sell it in what’s called a “life settlement,” but is that the right move?

According to The Wall Street Journal, more than $10 billion worth of life insurance policies were sold this way last year along.  The concept is pretty simple.  You sell your life policy for less than its face value, and when you die, the third party gets the payout from the policy.  You get the cash you need right now. 

In my experience, there definitely are times when selling your life insurance to another party makes sense.  When you no longer need the life insurance – for example, when your kids are grown and gone, your house is paid for, and you’ve got enough money to cover any estate taxes that will be due when you’re gone yourself. 

But it’s difficult to determine just how much your life insurance policy might be worth to another party.  If you’re 70 years old and have a policy with a $1 million face value, would you take $250,000 for it today?  Or even $400,000? 

And there are other factors to be considered as well.  There is no more life insurance benefits for your loved one, somebody is waiting for you to die, and there’s plenty of paperwork to go around.  According to current industry transaction, you as the seller should not expect to walk away with much more than 20 cents in return for every dollar of the policy’s face value. 

So if you’re in a cash crunch, and you’re thinking that selling your life insurance might be a way out, be sure to talk to a couple of expert  advisors at (866) 972-3262 before you take the plunge.  It may be a good move for you, but you bought the life insurance for a reason.  Most people would shudder at the thought of choosing to lose 80% of their investment.  You should too. Let me know what you think…

With tuition costs rising dramatically over the past 20 years, it’s no wonder that financially savvy parents have started saving more money more quickly, just to make sure there’s enough to put the kids through college when the time comes.  And 529 college savings plans have been promoted as the number one way to set that money aside and watch it grow.

According to Financial Research Corporation, $15.5 billion when into 529 plans it 2006, and $15.2 billion in 2007.  But when the market collapsed, many investors began to shy away from 529 plans, often at the recommendation of their financial advisors.  In 2008, the contributions fell to $5.2 billion, and in 2009 so far, the number is just $4.8 billion.

That’s still a lot of money, but like what’s happening with the stock market in general, many Americans are looking for ways to grow their college funds more securely and with greater flexibility – even if that means losing the tax advantages the 529 plans provide.  In order to get the tax benefit the 529 college savings plans provide, you have to use the funds for qualified higher education expenses.  If your child doesn’t go to college, you’ll pay taxes and penalties on the gains.

If you’re reconsidering what to do with your college savings money, call (866) 972-3262 to speak with college savings specialist.  There are many other investment choices that can help you to be prepared when your children head for higher education.  As someone who truly believes in proper risk management and multiple uses of money, I recommend you take a look at these college savings option.  They offer tremendous flexibility and guaranteed returns and might be just the solution you’re looking for. 

Let me hear from you, parents.  What are you doing with your college savings money these days?

There’s an old saying that goes, “there are two kinds of people in the world: those that divide the world into two types of people, and those that don’t.”  You have to love the logic of Aristotle, even when it sounds funny, like that old saying does.  But a recent Gallup poll did divide people into two groups – which one are you in?

The question the Gallup pollsters asked Americans what this:  which do you enjoy more, spending money, or saving money?  In years past, the numbers have always been very consistent, and nearly equal, with those who said they like to save money just a bit ahead of those who like to spend it.  But that’s all turning around now.

In this year’s survey, the overwhelming majority (59%) said they enjoyed saving money more.  Just 37% said they enjoyed spending money more.  And if you’re a member of the group of people that like to do math in their heads, congratulations!  You just figured out that 4% of the survey respondents had no opinion.  Don’t take any financial advice from these people…

The survey found that, regardless of income level, the numbers broke down along almost identical lines.  So from the working poor to the super rich, the different isn’t about how much money you have, it’s about your mindset.  And I’m sure that most people would agree that this is a very positive trend.

Now, I know that there’s a big difference between what we intend to do and what we actually do.  I know plenty of peoples who are always planning to lose weight, or to start living on a budget, or to get and advanced degree.  They just never get around to taking that first step.  But with spending, for many people, the first step was taken for them when the stock market crashed and real estate values dropped and layoffs began.

We’ve learned, and are still learning, a hard economic lesson.  Let’s keep this trend going!  Whichever group you’re in – the spenders, or the savers – if you haven’t taken a look at your finances recently, do it today because its black Friday.

BeamaLife.com help you to be in 59% who like to save money rather than spend. BeamaLife.com finds the best rates on life insurance protection, simply complete our Life Insurance Quotes request, and let us do the research for you. Whether you are looking for Term Life Quote, Return of Premium, Universal Life Insurance or Whole Life Quote we search through over 100 highly rated life insurance companies to get the right plan for you.

Okay, so I’m not the biggest fan of country music, but I know a wise saying when I hear one, and recently I read where country superstar Garth Brooks once said “The greatest conflicts are not between two people, but between one person and himself.”  And according to a recent study, that’s becoming more and more true for many Americans.

The Gallup Organization has been tracking people’s average daily spending habits for years, and what they’ve discovered is that whether it’s in person or online, at the grocery store or the gas station, Americans spend more money on average over the weekend days (Friday through Sunday) then they do on other days of the week.  With the typical person’s busy lifestyle, Monday through Thursday don’t offer too many opportunities for shopping or other spending, so the results don’t come as any major surprise.

What is surprising is that spending goes up dramatically during weeks in which an employee gets paid.  This “paycheck effect” is most likely due to the fact that many Americans of all income categories are living paycheck to paycheck, and can’t buy anything – including necessities – until the next paycheck clears.  Certainly part of this problem is the economy.  But a larger part is caused by the fact that most people don’t like to live within a budget.  And all of that spending, when it’s not part of your long term goals, makes weekends the worst days of the week as far as your financial future is concerned.

And that’s where Garth Brooks’ observation comes in.  We all struggle when there is a conflict between our short term wants and our long term goals.  None of us want to continue working long past the time when we should be retired.  None of us want to die leaving nothing but expenses to the ones we’ve left behind.  None of us want to have to depend on others when we’re no longer able to take care of ourselves.  So it’s up to us to create the plan for our future, and then to be disciplined enough to stick with the plan, no matter what.

At BeamaLife, we’re proud to provide you with the information and access to the tools you need to create the plan that will lead to the best future for yourself and your family.  I can’t promise that you’ll never face a difficult decision about how to spend your money, but I really believe that when you’ve got the right plan in place, and when you focus on where you want to be 5, or 10, or 20 years from now, you’ll have far fewer conflicts with yourself. Please call one of our life insurance specialists at (866) 972-3262 to determine the right kind of life insurance & financial plan for you and for your family’s financial security or please complete life insurance quote request form now.