Top 10 Life Insurance Myths

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Life insurance is complex, and there is no one-size-fits-all advice. Don’t let misunderstandings stop you from choosing the right coverage.”

Life Insurance. Those two words bring up a number of questions to the average person. We are pretty sure we need it, but we aren’t always sure exactly how much we need, what type we need, how it affects our taxes, and which companies are the best to choose from.

A recent MSN Money news article explains why having a good handle on this information is so important.

“Life insurance is not a simple product. Even term life policies have many elements that must be considered carefully in order to arrive at the proper type and amount of coverage. But the technical aspects of life insurance are far less difficult for most people to deal with than trying to get a handle on how much coverage they need and why.”

The article breaks down some of the more common life insurance questions and gives simple and concise answers to 10 Life Insurance Myths. (Click here for the full article  http://money.msn.com/health-and-life-insurance/top-10-life-insurance-myths)

We have chosen five of these Myths to discuss on our Blog today.

Myth: If I’m single and don’t have dependents, I don’t need coverage.

Even single people should have at least enough life insurance to cover the costs of personal debts, medical and funeral bills. If you are uninsured, you may leave a legacy of unpaid expenses for your family or executor to deal with. Plus, this can be a good way for low-income singles to leave a legacy to a favorite charity or other cause.

Myth: My life insurance coverage needs to be twice my annual salary.

The amount of life insurance you need depends on your specific situation. There are many factors to consider. In addition to paying medical and funeral bills, you may need to pay off your mortgage and provide for your family for several years. A cash-flow analysis can help determine the amount of insurance you need.

Myth: My term life insurance coverage at work is sufficient.

Maybe, maybe not. For a single person of modest means, employer-paid or -provided term coverage may actually be enough. But if you have a spouse or dependents, or know that you will need coverage upon your death to pay estate taxes, then additional coverage may be necessary.

Myth: Only breadwinners need life insurance coverage.

Nonsense. The cost of replacing the services formerly provided by a deceased homemaker can be higher than you think, and insuring against the loss of a homemaker may make sense, to compensate for cleaning and child-care costs.

Myth: I’m better off investing my money than buying life insurance.

Not True. Until the value of your assets exceeds your debt, you need life coverage of some sort. Once you amass $1 million of liquid assets, you can consider discontinuing (or at least reducing) your million-dollar policy. But you take a big chance when you depend solely on your investments in the early years of your adult life, especially if you have dependents. If you die without coverage, there may be no means to provide for them after your current assets are depleted.

The Bottom line is that there are many, many misconceptions about Life Insurance. Considering how vitally important it is to understand such a critical part of financial planning, the best option is to seek advice from a Licensed Advisor.

As one of our previous articles has explained, (https://cswta.wordpress.com/2012/09/11/working-with-your-best-interests-in-mind/) the right Financial Advisor can guide you in your decision making process, completely free of charge!

Cornerstone has these such representatives at branches across the Nation, who will visit you in your home for a financial analysis at your convenience.

Another article on MSN Money gave a great comparison of the best A-rated insurance companies around. (http://money.msn.com/life-insurance/best-life-insurance-companies.aspx) Cornerstone is proud to work in affiliation with seven of the companies featured in the article, plus more than 50 other top-rated Insurance providers.

Contact us today, set up a free Financial consultation, and make sure that you are on top of your responsibility to stay educated about your options in this ever-changing industry.

Lost Life Insurance Policies

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Last week’s blog focused on a program that can help the person managing your affairs after you pass away. https://cswta.wordpress.com/2012/08/06/silent-partner/. In a follow-up to that post, we’d like to reference a recent article found on Yahoo Finance entitled “Life Insurers Pressed on Lost Policies.”*

The article begins by mentioning a woman, named Mary Lou, who was surprised to receive a check for $7,000 more than a decade after the death of her father. The check was from unclaimed life insurance policies her father had taken out previously, that his family had no knowledge of.

At the time of her father’s death, Mary Lou inquired with the insurance company with whom she knew he had policies, to see if there were any other accounts. She was told at the time that they didn’t owe her anything else. As it turns out, that $7,000 check was for three policies that she didn’t have a policy number for.

Mary Lou voices her concern for the situation as it may affect others, “Can you imagine all the millions or billions of dollars that belong to other people and they don’t know to claim it,” she says, in Yahoo’s article?

Backing up Mary Lou’s statement, state regulators estimate that over the decades life insurance companies have failed to pay well over $1 Billion in death benefits. The reason? Because it’s up to the beneficiaries to file a claim following death.  One industry official says that whatever the amount is, it’s a “very small percentage” of total claims paid. “We know the percentages represent real people and we’ve been working with policy makers on ways to ensure all policyholders get the benefits they deserve,” said the official, Bruce Ferguson of the American Council of Life Insurers.

Recognizing that new technology can help alleviate this problem, insurance companies in many states are being required to check old unclaimed policies against death databases, and to make payouts to those they owe.

Most insurance companies will probably not fight these regulations. Yahoo’s article went on to state that opposing a requirement to check the databases would be particularly difficult given that many insurance companies already check them when it’s in their interest- for example, to learn about the deaths of annuity customers because such deaths usually end the insurers duty to make payments under retirement-income contracts.

As many such modern systems are slowly being implemented into this industry, the process of handling insurance claims is no doubt going to undergo some changes. The article mentioned above referenced a number of such changes that are already taking place.

Of course we all look forward to a time when this process has been completely ironed out and programs such as “Silent Partner Executor Planning” will no longer be necessary. But in the mean time, the monetary figures mentioned most likely only strengthen your resolve not to be one of the many whose unclaimed benefits make up that staggering $1 Billion.

Taking advantage of a free program to keep you out of that statistic is definitely a wise course.

For more information about this program as offered through Cornerstone please visit us here: http://www.cornerstonewealthsc.com/silent_partner.php

*http://finance.yahoo.com/news/life-insurers-pressed-lost-policies-030100774.html 

Silent Partner

It’s pretty much understood that planning for the future with products such as retirement packages and Life Insurance are necessary in today’s world. Nobody wants to leave their family members scrambling to come up with funeral expense funds in the wake of losing a loved one!

So, you’ve taken care of this, and that’s great! You have the best interests of your spouse, or children in mind and you have taken definite steps to make that inevitable occurrence a little easier to handle. However, one thing many people neglect to consider is how arduous the process can be when it comes to filing paperwork and handling claims. Especially because sometimes the family members left behind aren’t fully aware of what kinds of plans/policies their deceased loved one even had!

This is where something called a “Silent Partner Program” can really come in handy.

A Silent Partner Program is just another term for an Executor Planning Document and is a way to keep family records organized and up-to-date. This will take a lot of the stress away from someone who is going to be grieving and may find it difficult to navigate the planning process ahead of them.

Many people find it difficult to compile this information and share it with their family members, but fortunately, a number of Retirement Planning companies provide a structured program to manage all of this data.

Usually, a representative from the company will meet with you one on one and walk you through filling out all necessary documents. This will likely include details on the following personal information:

•             Personal Documents

•             Survivor’s Guide

•             Family Data

•             Safe Deposit Box Inventory

•             Contacts

•             Budgeting

•             Additional Sources of Help

•             Personal and Financial Security

As you work together to gather all this data, you will no doubt start to realize how important it is to have this available to those who care about you most!

When all the details are correct and finalized, a number of copies of this document will be created to be kept by the necessary individuals. You will keep one copy for yourself so that you can refer back to it annually and make sure it’s still up to date. Another copy will go to your “Silent Partner,” the person who will be using this information in the event of you becoming disabled or passing away. A final copy will be kept by your retirement planning agency. Your representative will check back with you periodically to see if you need to execute any changes to the information, in which case a new document will be created and distributed. This representative will also be the point of contact for your family members when the time arises to use the information contained in the document.

Just like a will or a Life Insurance policy, a Silent Partner Program is an essential step in looking out for the future of your loved ones. It’s a simple service that many companies provide for free to you and your family.

Why not start working on yours today? http://www.cornerstonewealthsc.com/silent_partner.php

The Importance of Fact Finding

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You’re at home on a Tuesday afternoon and you receive a phone call from a local retirement planner, offering to visit you at your home, explain the Medicare program and do a free financial review.

Of course, as an informed consumer, you are skeptical. “What are they going to try to sell me? Is this legitimate?” You may wonder.  And these are valid questions. ANY time ANYONE wants to visit you at your home or wants you to divulge personal information, it’s your responsibility to do your due diligence and make sure the representative is legitimate. In a society filled with dishonesty, scams and scandals it can be hard to know who to trust! This article will discuss a few ways you can help ensure that you are dealing with who you THINK you’re dealing with and also that they give you the treatment you deserve.

Step 1- Identification

When you book an appointment with a representative over the phone, be sure to get their FULL name and the name of the Company they represent. Your first step is to make sure that they are licensed to do what they say they do. If they are representing an insurance company, or a group that works with insurance companies, they are required to have a state insurance license. You can easily go online and do a search for the Department of Insurance for the state you live in. Each website usually has something called a “Producer Search” which allows you to inquire by Insurance License Number, or by name.

When you find the name of the person you’re looking for you will want to verify that their license is current and active. If you have trouble finding them, don’t hesitate to contact them back and ask for a State Insurance License Number. If you still can’t find it, or if it’s not active, do not meet with this person! Contact their company back and ask for a manager. The company should be able to provide you with a different representative who can help you. You can also contact the state Department of Insurance for more information on that individual.

If you DO find them online, you’ll also want to search further and see which companies they’re licensed with. If you don’t immediately see a particular company listed, don’t be alarmed. Insurance Agents frequently become contracted with new companies as rates fluctuate and products change. They just want to be able to offer their clients the very best options! But sometimes these companies take time to reflect those contracts in the State’s online system.

Another issue is that sometimes an agent works with an agency of a certain name (For example: Jones Retirement Center) who has contracts with insurance companies (Like, John Hancock or Lincoln Financial) So the person on the phone might say: “This is Mike, with Jones Retirement Center.” but when you look him up online you don’t see any sort of contract listed for “Jones Retirement Center”, you only see “John Hancock and Lincoln Financial”. This is because the State sometimes only lists the contracts for actual Insurance Companies, not for the agencies they work through.

If this is the case, you’ll want to do another online search for the name of the agency they work for. So, using the example above “Jones Retirement Center in Financeville, Washington.” Most agencies have a website and you can use this site to review a little more about the company the agent represents and possibly even verify that the agent DOES in fact, work for that agency. (Many agencies list their representatives on their website.) You might also check other outside online listings such as Yellow-Pages or Google, to read reviews about this agency. If negativity seems prevalent with no response or explanation from the business, then you might want to turn elsewhere for your financial planning advice.

If the agent and agency clear all the above filters, the last thing you’d want to do, is just verify that they are who they SAID they are, when they come to your house for their appointment. Asking to see a driver’s license or insurance license will not throw an honest agent off-guard. They will be happy to share their credentials with you. Hopefully they’ll tell you that they appreciate your diligence and that they’re glad to be working with someone who has taken steps to protect themselves in this crazy world we live in.

Step 2- Fact Finding

If you went to a doctor for a check-up and he walked in the room and handed you a prescription for a heart medication, without ever talking to you, taking your blood pressure or running any other tests, you’d think he was crazy! He knows nothing about you or your situation, yet he’s trying to get you to take a drug for a heart condition! How can he even know you HAVE this condition? And even if he’s right, you might already be taking some other medication to treat it! Who knows how the two could affect each other!

It’s just as unreasonable, for a representative to come to your home and tell you that a certain product or service will best suit your needs, if they haven’t first done a financial review.

Also called a “Fact Finder” a financial review will let your agent know about everything you are and aren’t currently doing with your insurance, investments and savings. Having this information will allow them to inform you of possible problems and offer valid solutions.

It can be unsettling to divulge this type of personal information, but keep in mind, you’ve already verified that this is a licensed and trained representative, working for a company that has a good reputation. It’s vital that they have a full picture of your financial situation BEFORE you purchase any new product, or they suggest any changes to your retirement plan.

You may be asked any of the following questions:

  • What types of investments do you currently have? What are the interest rates and total balance of those accounts? (They will want to see statements if you have them and might even call the company to confirm different details of your policies.)
  • What type of life insurance do you have? (This is another case where showing the agent your policy and letting them call the company for full details is definitely to your benefit.)
  • What are the balances of your checking and savings accounts?
  • What type of health insurance do you currently have?
  • What is the current state of your physical health?

Honestly answering all of these questions is the only way that your representative can truly evaluate your situation and offer real solutions that could change your life!

If your representative doesn’t take the time to do this type of review with you, they aren’t doing their job. To get the best service in this industry, you must demand it! Don’t settle for less. Give them your full attention, and they will give you theirs.

Together you can work towards a secure future for yourself and your family.

For more information about Wealth Management and Financial Planning visit www.cswta.com.

 

Same monthly payment- double the benefit! How?

You may wonder why Cornerstone is constantly emphasizing the importance of having a regular financial review at least once a year. Managing Partner/Branch Sales Manager Jonathan Booher recently encountered a situation, which is a great example why these reviews are so important!

Mr. Booher recently met with a client who we will refer to as Mrs. Jones. Mrs. Jones is 66 years old currently in good health and hasn’t had any major medical complications within the last five years. Mrs. Jones was very happy with all of her insurance policies and felt like she was set and did not need a financial review. To be on the safe side, she decided to let Cornerstone review her current policies to make sure everything was still in force and in good standing, and that there weren’t any oddities to the policies she might have been unaware of (seems like there’s always SOMETHING hidden in the small print. Right?)

The Life Insurance Policy Mrs. Jones had purchased many years before, was a whole life policy that had a $25,000 death benefit. Her monthly premium was $50, and she made it very clear that was the most she could afford to pay for her life insurance.

When Mr. Booher did some research into this life policy, he found that in the years Mrs. Jones had been paying premiums into her life insurance policy, it had accumulated over $10,000 of cash value! However, Mr. Booher explained to Mrs. Jones, that in the event of her death, her beneficiary (her daughter) would ONLY be entitled to the $25,000 death benefit, and NOT to the $10,000 of cash value! This was very upsetting to Mrs. Jones, because her main goal was to leave as much of a legacy behind to her daughter as possible, and it seemed like a waste to just lose that cash value that was rightfully hers!

So, through Cornerstone, Mrs. Jones was able to take out a new life insurance policy. Using the $10,000 of cash value that had grown within her old policy she was able to fund a new policy with a death benefit of $52,800- more than double her previous benefit! ALL of this money will go to her daughter when Mrs. Jones passes away. And best of all, her monthly premium stays exactly the same!

In just one simple (and FREE) financial review, Mrs. Jones was able to use an asset she already had and double the benefit that will be paid to her family with NO added monthly financial responsibility!

This is just one example of how beneficial a financial review can be!

Cornerstone has more than 50 trained professionals who will complete a financial review completely free and with no obligation to the client! It’s what we do! These meetings can take place in the comfort of your own home at a time convenient for you.

Contact us to set one up today!

843-376-3350

administration@cswta.com

Behold! The Power of Life Insurance!

Wanted to share this article written about life insurance, by our representative Matthew Gouin, a few years back. Very helpful information!

Tuesday, June 7, 2011 at 11:18am ·

By Matthew Gouin, Field Trainer

I’ve helped seniors with their retirement for the last several years now and I’d like to share a few ideas that have helped others I’ve met along the way.Life Insurance can be a powerful tool and can be used for much more than covering one’s final expenses. There are many ways to use life insurance and I’m going to share a few. The first is through Pension Maximization. When choosing a pension payout, you typically have several monthly options. Many retirees choose to take a partial amount to provide a widows benefit for their spouse. In doing so you will receive a lesser amount. I recommend taking the full amount and using the difference to invest in a life insurance policy. You can provide a large lump sum to your spouse rather than a monthly payout.

In addition to Pension Maximization, many of my clients are choosing life insurance to leave behind a legacy or offset estate taxes. The end of 2010, means the end of the Bush tax cuts. Starting in 2011 estate tax could be as high as 55% over the $1,000,000 exemption. Instead of using a monthly income to pay premiums, we will utilize the Required Minimum Distribution or (RMD) from IRAs to pay annual premiums. This gives the client cheaper premiums by paying annually, an answer on how to use the mandatory RMD, and it also creates a tax free benefit to whomever you choose.

Many retirees I meet with have old life insurance policies saturated with cash value. If you cash in the policy you will forfeit your death benefit and pay taxes on part of that money. If you borrow against it, you must pay that loan back plus interest. In most cases when you pass away that cash value stays with the life insurance company. There are few options to use that cash value so what good is it? Did you know that you can use that cash value towards the purchase of a new policy? Even though you may be 10,20,30 years older you can utilize that cash value to work for you. Insurance companies are more concerned with the health of an applicant than their age. Last year I had an 80 year client issued Preferred due to her good health.

Through a 1035 Exchange, we can transfer the proceeds from an old life insurance policy to a new life insurance policy with no tax consequences. Ultimately, this provides clients with three options: 1) Pay the same premium and maximize death benefit 2) Keep the same death benefit and reduce premiums considerably, or 3) Sometimes a policy that is completely paid-up.