- CollegeAmerica
- CollegeBoundFund
- NextGen College Investing Plan Select
- BlackRock CollegeAdvantage 529 Plan
- Fidelity Advisor 529 Plan
- John Hancock Freedom 529
Thursday, December 13, 2012
Six Largest "Advisor-Sold" 529 Plans (according to Morningstar)
According to Morningstar the Six Largest Adivsor-Sold529 Plans:
Retirement Benefits That Will Change in 2013
I really like and enjoy Annuity Think Tank's articles. This is about retirement benefits changing in 2013.
Pay attention to this inside the article:
Social Security taxes will increase with the expiration of the payroll tax deduction from 4.2% to 6.2% and the amount of taxable income will increase from $110,100 to $113,700.
http://blog.annuitythinktank.com/retirement-benefits-that-will-change-in-2013/
Pay attention to this inside the article:
Social Security taxes will increase with the expiration of the payroll tax deduction from 4.2% to 6.2% and the amount of taxable income will increase from $110,100 to $113,700.
http://blog.annuitythinktank.com/retirement-benefits-that-will-change-in-2013/
Wednesday, December 12, 2012
Have you inherited an annuity and want to use it for your retirement?
Common for family members to inherit annuities and to decide to keep the annuity and use it for their retirement? I'm not sure as to how common that is but it is something you need to be "up" on.
Annuity Think Tank has helped get you "up" on issues surrounding such an event aforementioned.
http://blog.annuitythinktank.com/inherited-iras/
Annuity Think Tank has helped get you "up" on issues surrounding such an event aforementioned.
http://blog.annuitythinktank.com/inherited-iras/
Thursday, December 6, 2012
Wednesday, November 7, 2012
November Is Not Just Long Term Care Insurance Month...
Long Term Care Insurance is expensive, but do you know how expensive a day in a long term care facility is these days and will be? Are you familiar with filial law? 2013 is sure to bring about changes in the way we save and protect our money, or should. We have answers, you should have answers so that everyone knows what to expect. This is not a scare tactic, rather an opportunity to be informed to make your family's decisions the best they can be...thank you.
http://www.producersweb.com/r/pwebmc/d/contentFocus/?pcID=42007c21d6f5b1d8b406213a22973d07
http://www.producersweb.com/r/pwebmc/d/contentFocus/?pcID=42007c21d6f5b1d8b406213a22973d07
Thursday, November 1, 2012
Tuesday, October 30, 2012
Protect Your Children Against Identity Theft
An increasing number of identity thefts in America give us reason to be cautious, be careful and get some knowledge with the situation. Experian's website (link provided) has the most informative I've seen both generally and detailed. Please do your own research about the subject. Thank you.
http://www.experian.com/ask-experian/20080416-protecting-children-from-identity-theft.html
http://www.experian.com/ask-experian/20080416-protecting-children-from-identity-theft.html
Tuesday, October 23, 2012
Tuesday, October 16, 2012
Tuesday, October 9, 2012
What Does Your 401k Really Cost You?
Despite many of the people who may read this may not read your statements and look for the charges. Even with the "Plain English" fee-disclosures made mandatory by the federal government many people still may not read and may not understand the charges. But you should. I have always felt, 401k's aren't for everyone and this is more proof why.
http://online.wsj.com/article/SB10000872396390444024204578044422783570446.html?mod=WSJ_RetirementPlanning_MoreHeadlines
http://online.wsj.com/article/SB10000872396390444024204578044422783570446.html?mod=WSJ_RetirementPlanning_MoreHeadlines
Tuesday, October 2, 2012
Thursday, September 20, 2012
What is Filial Responsibility Law? Will it Affect You?
What is Filial Law? Will it Affect You?
In 29 States with filial responsibility laws
create statutory liability for children of the long term care patients.
In other words, take notice of the period of time between the patient of long
term care runs out of money and when they can qualify for Medicaid.
In these 29 states, Indiana, Kentucky, and Ohio
included, adult children of the patient can be legally responsible for the
money owed to the facility. This is a law on the books within these 29 states
but not enforced until May 2012 in Pennsylvania (Health Care & Retirement
Corp. of America v. John Pittas).
With the federal and state governments running up
debts, they may start to enforce the law more and more in the future. Whether
you think states should seek to recover the expenses or not, you should be
aware of the law.
Proper estate planning with a qualified estate
planner can expose such liability.
Get Informed! For a complete listing of the
states included go to:
Tuesday, September 18, 2012
QE3 New Makes a Strong Case for Fixed Income Sources
QE3 News Makes a
Strong Case for Fixed Income Sources
Ben Bernanke, Fed Chairman,
says that while savings at a higher rate are important, getting the country heading
in the right direction is the goal. And while every economic book I’ve ever
studied said that borrowing money at the rate the U.S. is will only lead to
higher inflation while those rates stay low.
Realtor associations have already
released comments on QE3 saying that while the housing market is seeing an
increase in home sales on a fairly consistent basis and home prices are
mirroring the sales numbers. They also state that while the consumer may jump
at first due to rates staying low, overall sales may take a hit because the
consumer now knows the rates will be consistently low for quite some time.
“In August, Gross, who runs the world’s biggest bond fund, cut
his holdings of U.S. Treasuries to the lowest since October. He said in a
Twitter post on Sept. 12 that more stimulus from the Federal Reserve will lead
to a resurgence of inflation.”
Investments, insurance products, and
savings vehicles that are directly related to rates being higher and sounder,
will definitely continue to be impacted. For my clients, we have talked about fixed
products. And what I am discovering is the clients are coming to me asking
about guaranteed growth and some asking for information concerning income for
life.
You’re taught to stay the course in
investing. The only problem is we haven’t seen these economic conditions for a
long, long time. Many of my clients aren’t interested, at their age, to chance
their retirement funds, especially with QE3 now in the news.
While the rates are tied to U.S.
Treasuries, the rates in an investment or savings vehicle will reflect the
notion that rates being low, coupled with debt accumulating at this rate, will
surely lead to inflationary times.
Although 401k’s have bounced back nicely,
as they are supposed to, aging clients don’t have time for recovery again. I say
to this group of clients, we shouldn’t chance it, guaranteed growth is
guaranteed. Different strategies, once scoffed at, are now being listened to by
the general public.
Monday, September 17, 2012
"Hard Dollars vs.Soft Dollars" and How it Matters to You
Hard Dollars vs. Soft Dollars and How They Matter to You
What are
hard dollars? What are soft dollars? One thing is for sure if you don’t know,
you better learn. It is really quite simple, although when I first heard…I had
no idea. Honestly, I thought about hearing for first time about hard water. We’ll
start with hard dollars.
Think about
it this way, if it is “hard” to earn the dollars, they are probably hard
dollars. Your paycheck would be considered hard dollars. Cash and currency in
your pocket literally and figuratively speaking are considered hard dollars.
Not much of a detailed meaning but I think you grasp the idea.
Soft dollars
are usually money and value that is created with hard dollars as in growth from
an investment, life insurance death benefits that have been bought by paying
your premiums in return for a large death benefit which by far outweighs the
amount of hard dollars used to pay those premiums.
Now, how do
these two types of hard and soft dollars matter to you? I’ll answer that with a
question, as I do to avoid tough questions sometimes! Seriously, how do you
want to pay for your burial in 100 years? Would you like to pay with hard or
soft dollars? Let me ask that another way. Would you like for your loved ones
to use money out of the checking account or would you prefer they use a life
insurance policy that you paid $50,000 over your lifetime to receive the
$500,000 death benefit from your typical term policy? The difference in hard
& soft dollars in this example would be the difference between $500,000 and
the $50,000 (hypothetical of course) you paid for the policy.
I know my
wife would much rather prefer that she paid for the burial with the soft
dollars than take away new shoe money or clothes money. I’m joking, so to
speak. Although quick, knowing that many readers fully understand what it is I’m
talking about here. And it goes without saying, that if I get, I know you can.
So, the
moral of the story, get some soft dollars. Max out the contribution to your
401k your employers is offering and match it to maximize the soft dollars you’ll
get in return. Look into a universal life policy and jam some cash into it to
get back and combine with the soft dollars you’ll gain in return. And then send
me a check for the advice to help me recover some of the hard dollars used for
shoes and clothes! Just joking.
Wednesday, September 12, 2012
Leave Your Legacy During the Life Insurance Awareness Month
Recently, all
of the talk lately in politics concerning wealth, and with the discussion of “haves
& have nots” provides an opportunity to discuss what should be most
important to you…you and your family. I, like you, care about my family and am
passionate about their quality of life they have when my day has come. Lately I
have been focused on the legacy I will leave for my wife and children.
When I speak
of legacy, one probably thinks what people will think of me in the past tense.
For me, the limitation does not conclude at what others think of me that day,
my focus is on what my family will think of me from a fiscal responsible
aspect. Hopefully they think well of me, as a husband, father, friend and
provider. And with those titles I have comes a great deal of responsibility and
expectations. These expectations are the wood on the fire that we call
“pressure.” We need a degree of pressure in our lives to help us perform a
little better.
I can
remember in athletics when I was younger that I always seemed to be a little
faster, a little more competitive, and much more aware of my surroundings when
I had pressure on me. Its funny when you hear a coach tell says, “Sports is
like life.” I have to agree.
In answering
the bell everyday for my family and myself, I often think without my financial
contribution, how will they do? I mean will the girls go to school on money
that we saved, money left for them through my estate or will they be forced to
borrow and assume debt, something we have preached they won’t have to endure as
they get older.
Like the old
saying goes, “the painter’s house probably needs painting.” I didn’t want to be
that person. Through proper estate planning and the use of life insurance
within that estate plan, I am able to go to bed every night and know that if
today is my last day this family will be able to grieve and carry on with their
lives and with a good work ethic, achieve their goals.
I try not to
be “the insurance guy.” I don’t call on my family and friends, using my
relationship to drum up business. What I do is simply tell those that I see on
a daily or weekly basis that we all know tomorrow is not guaranteed but since
there has never been an insurance company that has not paid its claims in our
history. One has come close, AIG, and even they have worked to pay back a good
portion of their U.S. taxpayer debt and they still vow to pay 100% back. Life
insurance, as long as the premiums are paid, is the closest thing to a
guarantee that your family will be taken care of when the time comes.
Assuming
what you just read is the gospel, if you are able to have proper estate
planning, your estate will be settled without having to pass through government
probate court. Probate court will add monetary fees and take up time with
assets that your family may not have the time to wait on in life.
I urge you
to leave your legacy, assure your family that their quality of life is one of
the most sacred things in the forefront of your mind and allow them to grieve
and get on with life with the opportunities they deserve. I know I gave a
general course in estate planning and I don’t want to confuse you, feel free to
contact me to help you get started.
Thursday, September 6, 2012
Why Are Income Annuities Not Part of Your Retirement Portfolio?
It's not just about purchasing a guarantee from the annuity company, it is the protection of principle. Sure the volatility is taken out of the equation. Yes, the exchange or rollover bonus from 5-10% is nice. Ask yourself to the best of your knowledge, has there been an insurance company that couldn't pay its claims or provide income as promised to annuitants? AIG came close, but they have made tremendous progress to repay their debt. They own American General out of Texas, and it is a very strong performer for them. To the best of my knowledge, there is not an insurance company that couldn't pay its claims or provide income as promised to annuitants.
I know in the days to come, there will be a person that walks into their local bank, sits down and purchases a CD with a very modest 1.5% rate, and I do occasionally run into this person and I will be blunt in out conservation...FDIC is what I hear 9 or 10 times out of ten. If you are along the same lines as the bank customer, I urge you to do your research and formulate your own opinion of FDIC. If it works, get in line for that interest rate that doesn't keep up with inflation. If it doesn't I urge you to email, research, or even call me for information about some of the best Fixed-Income annuities (FIA's) on the market. If we don't do business, at least you will have a good idea why to not sit down and grab onto that 1.5% rate. Go to my website: www.prospectsfinancial.com and visit the "Library" link. You will find a Wharton article of FIA's for you to read. As with any financial product, strategy, policy or contract...please research and read what you're about to agree to in writing.
http://blog.annuitythinktank.com/archives/13847?utm_source=twitterfeed&utm_medium=twitter
I know in the days to come, there will be a person that walks into their local bank, sits down and purchases a CD with a very modest 1.5% rate, and I do occasionally run into this person and I will be blunt in out conservation...FDIC is what I hear 9 or 10 times out of ten. If you are along the same lines as the bank customer, I urge you to do your research and formulate your own opinion of FDIC. If it works, get in line for that interest rate that doesn't keep up with inflation. If it doesn't I urge you to email, research, or even call me for information about some of the best Fixed-Income annuities (FIA's) on the market. If we don't do business, at least you will have a good idea why to not sit down and grab onto that 1.5% rate. Go to my website: www.prospectsfinancial.com and visit the "Library" link. You will find a Wharton article of FIA's for you to read. As with any financial product, strategy, policy or contract...please research and read what you're about to agree to in writing.
http://blog.annuitythinktank.com/archives/13847?utm_source=twitterfeed&utm_medium=twitter
Tuesday, August 28, 2012
Have You Converted Term to Whole or Permanent Life Insurance?
*My 1st concern is for our clients to be properly insured and the proper amount. I always do what is best for our clients.
Scenario: You had a term life insurance policy and converted (meaning the term life policy has now become an universal or whole life policy). Now, you would to like to know if you may convert back to term? While it is hard for me to tell someone that all permanent insurance policies are expensive, its a given that whole life policies are in fact expensive. In addition, variable life insurance policies (meaning there are life policies that are linked indirectly to the S&P, etc) with regard to the consumer-confidence in America may not be an option for every buyer.
As the article points out, no there is no such thing as converting back to term life insurance. What has to be done is a new term life insurance application needs to be completed. Be careful here!
Let's say you had a twenty-year term life policy taken out at age 30. You are now 45. Applying for the new term policy is based on age-45 or 46. That means you will pay for term rates at age 45 or 46, which obviously is higher than when you were 30. The are a few complexities to seek expertise from a professional that should bring you up to speed on your concern.
For now, I'll end this topic. I'll end in agreement with a great point from Mr. Hungelmann's article, "Believe me when I tell you that your surviving spouse and children are not going to care what kind of life insurance you had. They are only going to care about how much life insurance you had."
http://www.bankrate.com/finance/insurance/undo-term-life-insurance-conversion.aspx
Scenario: You had a term life insurance policy and converted (meaning the term life policy has now become an universal or whole life policy). Now, you would to like to know if you may convert back to term? While it is hard for me to tell someone that all permanent insurance policies are expensive, its a given that whole life policies are in fact expensive. In addition, variable life insurance policies (meaning there are life policies that are linked indirectly to the S&P, etc) with regard to the consumer-confidence in America may not be an option for every buyer.
As the article points out, no there is no such thing as converting back to term life insurance. What has to be done is a new term life insurance application needs to be completed. Be careful here!
Let's say you had a twenty-year term life policy taken out at age 30. You are now 45. Applying for the new term policy is based on age-45 or 46. That means you will pay for term rates at age 45 or 46, which obviously is higher than when you were 30. The are a few complexities to seek expertise from a professional that should bring you up to speed on your concern.
For now, I'll end this topic. I'll end in agreement with a great point from Mr. Hungelmann's article, "Believe me when I tell you that your surviving spouse and children are not going to care what kind of life insurance you had. They are only going to care about how much life insurance you had."
http://www.bankrate.com/finance/insurance/undo-term-life-insurance-conversion.aspx
Income Annuities Sales Up 23% Last Quarter-wsj.com
Income Annuities sales are up 23% last quarter. Consumers want guarantees and their assets to last. And looking at gold, they also want to avoid rising inflation as well.
http://www.smartmoney.com/invest/strategies/desperately-seeking-income-1346104789616/
http://www.smartmoney.com/invest/strategies/desperately-seeking-income-1346104789616/
Monday, August 27, 2012
Stay A Step Ahead of the New Medicare Surtax (Morningstar) Set to Take Effect in 2013
*Important: this takes effect in 2013!
http://news.morningstar.com/articlenet/article.aspx?id=559915
http://news.morningstar.com/articlenet/article.aspx?id=559915
Wednesday, August 22, 2012
Monday, August 20, 2012
Thursday, August 16, 2012
Grow Smart Louisville
Regarding the issue of where to build the new VA Hospital in Louisville, KY...please support this if you agree Louisville!
http://growsmartlouisville.org/
http://growsmartlouisville.org/
Wednesday, August 15, 2012
August is National Leave a Legacy Month
It is a fact that August is National Leave a Legacy Month. And while much of the articles you will see ask if what you will contribute to the world before you pass, my scope or paintbrush will not be so broad. My experience and an estate planner and insurance agent does not allow me to see broader than that for my clients or prospective clients. I ask my clients, what are your goals beyond retirement? What legacy do you want to leave behind for your family's generations?
It really doesn't matter what side of the isle you are on when it comes to politics, both spend money they don't have. With regards to leaving behind a legacy, surely you don't want to leave behind a legacy of debt for your family and especially dependents.
When a client sits down with me and as we advance into fact finding about their lives, goals and dreams I insist if there should be a balance of debt to be left behind, lets carry enough extra life insurance to cover that debt. What I feel makes me unique as an estate planner, is for the first part of my consultation, I listen. I don't make notes, don't check my phone or emails and most importantly I do not think what I can sell this couple!
If an estate planner listens carefully, the goals, the dreams and financial situation will equate to what they would like to leave as their legacy. It is difficult to have a discussion concerning a person's mortality, but it is much better to discuss this with the client than with the family when it is too late.
You've worked hard over the years to accumulate wealth, and you probably find it comforting to know that after your death the assets you leave behind will continue to be a source of support for your family, friends, and the causes that are important to you. But to ensure that your legacy reaches your heirs as you intend, you must make the proper arrangements now. There are four basic ways to leave a legacy: (1) by will, (2) by trust, (3) by beneficiary designation, and (4) by joint ownership arrangements.
Despite the loss the family is experiencing, which is tough enough, but how you be remembered fiscally? My goal is to give them as good of a good life if not better than when I was alive. Quality of life for my family is vital for me. A client should leave his or her family to grieve only for the loss, not how to make the mortgage next month.
With August being National Leave a Legacy Month it is much more than how the world will perceive you. It is simply about how will you leave your mark on your family financially, once that day comes.
It really doesn't matter what side of the isle you are on when it comes to politics, both spend money they don't have. With regards to leaving behind a legacy, surely you don't want to leave behind a legacy of debt for your family and especially dependents.
When a client sits down with me and as we advance into fact finding about their lives, goals and dreams I insist if there should be a balance of debt to be left behind, lets carry enough extra life insurance to cover that debt. What I feel makes me unique as an estate planner, is for the first part of my consultation, I listen. I don't make notes, don't check my phone or emails and most importantly I do not think what I can sell this couple!
If an estate planner listens carefully, the goals, the dreams and financial situation will equate to what they would like to leave as their legacy. It is difficult to have a discussion concerning a person's mortality, but it is much better to discuss this with the client than with the family when it is too late.
You've worked hard over the years to accumulate wealth, and you probably find it comforting to know that after your death the assets you leave behind will continue to be a source of support for your family, friends, and the causes that are important to you. But to ensure that your legacy reaches your heirs as you intend, you must make the proper arrangements now. There are four basic ways to leave a legacy: (1) by will, (2) by trust, (3) by beneficiary designation, and (4) by joint ownership arrangements.
Despite the loss the family is experiencing, which is tough enough, but how you be remembered fiscally? My goal is to give them as good of a good life if not better than when I was alive. Quality of life for my family is vital for me. A client should leave his or her family to grieve only for the loss, not how to make the mortgage next month.
With August being National Leave a Legacy Month it is much more than how the world will perceive you. It is simply about how will you leave your mark on your family financially, once that day comes.
Tuesday, August 14, 2012
How Much Does Your Financial Advisor Charge You? Do You Know?
Recently I viewed an article asking "How is My Financial Advisor Compensated?" Very good question for someone to ask. Commission-only, fee-based, Fee-only are the three methods in which I'm familiar. I work off of commission-only. For me the choice was obvious for my clients. I couldn't see handing a client a bill for my hours put into their case, as I will receive a commission on the products associated with the plan we've implemented on behalf of the client. Not all advisors who have chosen fee-based are wrong or unethical, because you have that handful of prospects (and it may be family!) every year that want a couple hours of your time, advice, etc. to not hear from them for a long time.
Again, I'm not criticizing that fee-based or fee-only advisors are the worst or evil. I'm merely giving you the information so that you, the consumer of a very important service, have the insight before you sit down with one. Yes, there are times when I wished I had a fee-based system in place for those aforementioned. For me, if I receive a $25k or higher commission for piece(s) in the plan, I may feel indifferent about sending a bill for 8 hours of estate planning at about $200/hr. In those cases where I would like a fee-based system as well, product commissions take care of the $1600 I would've billed.
Everybody is different and the method of compensation that is part of their bsuiness-fabric, is up to them. The point to not be missed here is totally the shared information. An educated consumer is a consumer who makes some of the best choices when it comes to imploring a business or individual to complete a service.
That is the reason, without judgement on those who choose a different compensation style, I tell my clients or prospective clients that I am a commissioned-based advisor.
The items within the scope of what is being planned and proposed are usually commissionable products that compensation is sufficient for my time. Usually, the more you work with higher net worth clients and market, you will see higher commissions that make it easier to choose to adopt a commission-based compensation platform.
There are numerous advisors who choose other compensation plans and could teach me something about the field I'm proud to have a career in and servicing my clients...many of which have become family friends.
Great article by Roger Wohlner http://thechicagofinancialplanner.com/2009/06/23/how-is-my-financial-advisor-compensated/
Follow Roger on twitter @rwohlner
Good stuff Roger!
Again, I'm not criticizing that fee-based or fee-only advisors are the worst or evil. I'm merely giving you the information so that you, the consumer of a very important service, have the insight before you sit down with one. Yes, there are times when I wished I had a fee-based system in place for those aforementioned. For me, if I receive a $25k or higher commission for piece(s) in the plan, I may feel indifferent about sending a bill for 8 hours of estate planning at about $200/hr. In those cases where I would like a fee-based system as well, product commissions take care of the $1600 I would've billed.
Everybody is different and the method of compensation that is part of their bsuiness-fabric, is up to them. The point to not be missed here is totally the shared information. An educated consumer is a consumer who makes some of the best choices when it comes to imploring a business or individual to complete a service.
That is the reason, without judgement on those who choose a different compensation style, I tell my clients or prospective clients that I am a commissioned-based advisor.
The items within the scope of what is being planned and proposed are usually commissionable products that compensation is sufficient for my time. Usually, the more you work with higher net worth clients and market, you will see higher commissions that make it easier to choose to adopt a commission-based compensation platform.
There are numerous advisors who choose other compensation plans and could teach me something about the field I'm proud to have a career in and servicing my clients...many of which have become family friends.
Great article by Roger Wohlner http://thechicagofinancialplanner.com/2009/06/23/how-is-my-financial-advisor-compensated/
Follow Roger on twitter @rwohlner
Good stuff Roger!
Friday, August 10, 2012
Thursday, August 9, 2012
Wednesday, August 8, 2012
Tuesday, August 7, 2012
Insurance Sales: Be Careful About Who's Hiring!
If you are or currently in the insurance industry, we have all seen the ads on job sites..."wanted sales reps for insurance company, expected 1st year earning from $60k-$100k." Then you respond. Then they contact you and invite you in for an interview. They promise an entrepreneurial lifestyle, leads & training.
Then you show up for the "interview." It seems like an interview, starting out with questions about your experience noted on your resume. You're asked what your goals are, salary expectations and your current lifestyle. My favorite question you will hear, "what is the most you've made in one year." Two-sided question, one side of it is to see if you are a good producer which there is nothing wrong with asking someone that who wants a job. The other side is where I have my problem. The other side of the coin is to make you squirm in your seat. You have been looking for an interview and a job for awhile and you're excited and vulnerable at the same time.
You think you know where I'm going with us at this point but I am getting ready to shock you. Please be careful of insurance sales positions, and this is why. The conversation has been good, you've been complimented since you came in the door. Once the interviewer figures out you may be a solid and a good producer the script proceeds as an interview. But if you seem "green" or "wet behind the ears" that script follows like a flow chart that just hit a right turn.
You now are exposed. Let's say you've been laid off, fired or you quit your last place of employment. Chances are you had a 401k where you were. Chances you haven't tapped into as of yet and if you have, shame on you! The question about that 401k comes out.
What you are now in is a sales presentation as a possible candidate for some type of annuity. They wow you by saying, "take your 401k as an example, what I would do is roll that over into an annuity (which probably has a 8-12 year contract)." Perhaps the "interview" takes that right turn and it turns into the fact finding portion of the sales presentation.
The pot gets sweeter when they speak of a bonus of up to 10% for the rollover, which they will also tell you (and is true) that when you pass from the 401k to the annuity, the taxes will not be due on the money at that time...that's a good thing normally. So, if you have $100k in your account, minus the fees of withdrawing the money from the account, you will receive the bonus of up to 10% on the balance.
You actually start thinking, this is is a good deal. You are almost convinced that you can do without the funds for 8-12 years. You have also almost forgotten why you are there. Then you wake up, then you become upset you have been pitched to during the "interview."
Something you may not know is that insurance companies subscribe to these job sites and do actually have positions open but insurance sales positions are always available because usually most positions are commission-only. And as an estate planner who started out working for such a company before starting my own firm, makes your first couple of years on a commission-only pay scale can be quite straining to say the least.
The larger part of their goal is to lure people, who they think through qualifying questions, to sign people up for an annuity contract that has a contract and surrender charge period of 8-10 years. Cruel but it could be worse. At least they didn't steal or swindle the funds out of you. But in this profession, from what I was taught and how I was raised...this is unethical.
If you don't have a consistent income from employment and/or retired with plenty of savings you do not need an annuity of any sort. There is no gray area, this is unethical behavior and wrong. And in better terms this is uncool. The bottom line you don't want to work for someone who would do this. These people will also be the people who are responsible for paying you commission on your sales!
Feel free to contact most ethical insurance professionals and they will probably tell you the same. Run! If you are seriously considering getting into the insurance field, do your research on the company. Once you sign your name you will have no one to blame but yourself.
I hope this helps!
Then you show up for the "interview." It seems like an interview, starting out with questions about your experience noted on your resume. You're asked what your goals are, salary expectations and your current lifestyle. My favorite question you will hear, "what is the most you've made in one year." Two-sided question, one side of it is to see if you are a good producer which there is nothing wrong with asking someone that who wants a job. The other side is where I have my problem. The other side of the coin is to make you squirm in your seat. You have been looking for an interview and a job for awhile and you're excited and vulnerable at the same time.
You think you know where I'm going with us at this point but I am getting ready to shock you. Please be careful of insurance sales positions, and this is why. The conversation has been good, you've been complimented since you came in the door. Once the interviewer figures out you may be a solid and a good producer the script proceeds as an interview. But if you seem "green" or "wet behind the ears" that script follows like a flow chart that just hit a right turn.
You now are exposed. Let's say you've been laid off, fired or you quit your last place of employment. Chances are you had a 401k where you were. Chances you haven't tapped into as of yet and if you have, shame on you! The question about that 401k comes out.
What you are now in is a sales presentation as a possible candidate for some type of annuity. They wow you by saying, "take your 401k as an example, what I would do is roll that over into an annuity (which probably has a 8-12 year contract)." Perhaps the "interview" takes that right turn and it turns into the fact finding portion of the sales presentation.
The pot gets sweeter when they speak of a bonus of up to 10% for the rollover, which they will also tell you (and is true) that when you pass from the 401k to the annuity, the taxes will not be due on the money at that time...that's a good thing normally. So, if you have $100k in your account, minus the fees of withdrawing the money from the account, you will receive the bonus of up to 10% on the balance.
You actually start thinking, this is is a good deal. You are almost convinced that you can do without the funds for 8-12 years. You have also almost forgotten why you are there. Then you wake up, then you become upset you have been pitched to during the "interview."
Something you may not know is that insurance companies subscribe to these job sites and do actually have positions open but insurance sales positions are always available because usually most positions are commission-only. And as an estate planner who started out working for such a company before starting my own firm, makes your first couple of years on a commission-only pay scale can be quite straining to say the least.
The larger part of their goal is to lure people, who they think through qualifying questions, to sign people up for an annuity contract that has a contract and surrender charge period of 8-10 years. Cruel but it could be worse. At least they didn't steal or swindle the funds out of you. But in this profession, from what I was taught and how I was raised...this is unethical.
If you don't have a consistent income from employment and/or retired with plenty of savings you do not need an annuity of any sort. There is no gray area, this is unethical behavior and wrong. And in better terms this is uncool. The bottom line you don't want to work for someone who would do this. These people will also be the people who are responsible for paying you commission on your sales!
Feel free to contact most ethical insurance professionals and they will probably tell you the same. Run! If you are seriously considering getting into the insurance field, do your research on the company. Once you sign your name you will have no one to blame but yourself.
I hope this helps!
Monday, August 6, 2012
Wednesday, August 1, 2012
Why I Don't Want to Buy Life Insurance?
Today, in America, life moves at an incredible pace. Each morning many people have the best intentions to get everything done but all too many times, life comes up. Estate planners, financial planners and insurance agents during their initial consultations an absence life insurance. They will also discover for clients who have life insurance that are under-insured. Forefield touches on this below.
Why I Don't Want to Buy Life Insurance
October 12, 2011
Page 1 of 2, see disclaimer on final page
If you're like most people, it's not that you don't
appreciate the value of life insurance. In fact, many
people believe they need more coverage. You
probably wouldn't mind owning additional life
insurance. It's just that you don't want to buy it.
Thinking about buying life insurance, talking about
buying life insurance, discussing the reasons for
buying life insurance--all of this makes many people
feel uncomfortable. Here are just some of the reasons
why you may be putting off buying the life insurance
you know you need.
I don't have enough time
You'll get around to buying life insurance, but not
today. With all the things you've got to do, buying life
insurance can come off as a low priority--just one
more thing you ought to do. Plus, the whole idea of
discussing life insurance isn't a whole lot of fun. Who
wouldn't rather take the dogs for a walk on the beach,
attend a child's softball game, or spend those
precious few hours of free time in the evening visiting
with friends?
Nonetheless, buying life insurance is really an
important task that should be addressed. Life
insurance can help ensure that your family will have
enough money to meet their financial obligations in
the event of your death.
The subject is boring and morbid
If you really don't like to think about death, you're not
alone. Death is an unpleasant subject, and life
insurance raises issues of our own mortality. Some
people say that the very thought of starting the life
insurance buying process makes them feel stressed
out. There's no great appeal to contemplating our own
mortality. It's a subject we'd rather ignore than
address. The result can be inertia or denial.
It doesn't have to be that way. People who do act on
their life insurance needs tend to focus on the positive
aspects: the idea of meeting their responsibilities to
provide for, and care for, their loved ones. They think
of it as contingency planning, protecting their families
against the uncertainties of life. They also recognize
that life insurance is really about life and love, about
helping to ensure a positive quality of life for their
spouse and children if they die prematurely.
I don't know where to start
If you don't have a clue about which type of policy is
right for you, or how much life insurance you need,
join the club. Few of us truly understand life
insurance: why we need it, what type of policy is best,
how much we need, when and how benefits are paid,
how benefits may be taxed, and more. That's okay.
It's not your job to know everything about life
insurance. That's the job of an insurance professional.
Thinking you need to have all of the answers about
which type of life insurance is best for you is sort of
like needing surgery and thinking you need to know
which type of scalpel to use. That's the surgeon's job.
In the same respect, the right insurance professional
can guide you through the process of selecting the
policy that best suits your needs, budget, and
objectives, and can answer your questions.
Life insurance isn't a high priority
compared with the other expenses I
have
For many underinsured people, it's not so much that
they don't want the life insurance they need; it's just
difficult to find the extra dollars to pay for it.
Buying life insurance you can't afford benefits no one.
If it causes your family hardship or requires you to
make choices that seem incongruous ("Gee kids, I'd
love to take you on vacation, but our life insurance
premium is due"), you'll eventually discontinue the
policy. Then you lose, and your family loses.
That's why it's important to purchase a policy that
meets your needs and your budget. Fortunately, there
are many types of life insurance available. These
include term life insurance policies and various types
of permanent (cash value) life insurance policies.
Term policies provide life insurance protection for a
specific period of time. If you die during the coverage
period, your beneficiary receives the policy's death
benefit. If you live to the end of the term, the policy
simply terminates, unless it automatically renews for a
new period.
Permanent insurance policies offer protection for your
entire life, regardless of future health changes,
provided you pay the premium to keep the policy in
force. As you pay your premiums, a portion of each
payment goes toward building up the policy's cash
value, which may be accessed through loans or
withdrawals. (Keep in mind, though, that loans and
withdrawals will reduce the cash value and the death
benefit, and could cause the policy to lapse). The
cash value continues to grow--tax deferred--as long
as the policy is in force.
Several different types of permanent life insurance
are available, including:
• Whole life insurance
• Universal life insurance
• Variable life
• Variable universal life
Note: Variable life and variable universal life
insurance policies are offered by prospectus, which
you can obtain from your financial professional or the
insurance company. The prospectus contains detailed
information about investment objectives, risks,
charges, and expenses. You should read the
prospectus and consider this information carefully
before purchasing a variable life or variable universal
life insurance policy.
The bottom line
It's easy to understand why people tend to put off
purchasing the life insurance they know they need.
But look at it this way: buying life insurance is one
way you can help secure your family's financial future.
And what could be better than knowing your loved
ones will be protected, even if you're no longer
around to take care of them?
Basically you have a choice in life how you can impact the future. One way is to leave a legacy for your family. Let them mourn emotionally, and not financially as well. If not adequately insured and planned, please do so. If not from me, somebody.
Why I Don't Want to Buy Life Insurance
October 12, 2011
Page 1 of 2, see disclaimer on final page
If you're like most people, it's not that you don't
appreciate the value of life insurance. In fact, many
people believe they need more coverage. You
probably wouldn't mind owning additional life
insurance. It's just that you don't want to buy it.
Thinking about buying life insurance, talking about
buying life insurance, discussing the reasons for
buying life insurance--all of this makes many people
feel uncomfortable. Here are just some of the reasons
why you may be putting off buying the life insurance
you know you need.
I don't have enough time
You'll get around to buying life insurance, but not
today. With all the things you've got to do, buying life
insurance can come off as a low priority--just one
more thing you ought to do. Plus, the whole idea of
discussing life insurance isn't a whole lot of fun. Who
wouldn't rather take the dogs for a walk on the beach,
attend a child's softball game, or spend those
precious few hours of free time in the evening visiting
with friends?
Nonetheless, buying life insurance is really an
important task that should be addressed. Life
insurance can help ensure that your family will have
enough money to meet their financial obligations in
the event of your death.
The subject is boring and morbid
If you really don't like to think about death, you're not
alone. Death is an unpleasant subject, and life
insurance raises issues of our own mortality. Some
people say that the very thought of starting the life
insurance buying process makes them feel stressed
out. There's no great appeal to contemplating our own
mortality. It's a subject we'd rather ignore than
address. The result can be inertia or denial.
It doesn't have to be that way. People who do act on
their life insurance needs tend to focus on the positive
aspects: the idea of meeting their responsibilities to
provide for, and care for, their loved ones. They think
of it as contingency planning, protecting their families
against the uncertainties of life. They also recognize
that life insurance is really about life and love, about
helping to ensure a positive quality of life for their
spouse and children if they die prematurely.
I don't know where to start
If you don't have a clue about which type of policy is
right for you, or how much life insurance you need,
join the club. Few of us truly understand life
insurance: why we need it, what type of policy is best,
how much we need, when and how benefits are paid,
how benefits may be taxed, and more. That's okay.
It's not your job to know everything about life
insurance. That's the job of an insurance professional.
Thinking you need to have all of the answers about
which type of life insurance is best for you is sort of
like needing surgery and thinking you need to know
which type of scalpel to use. That's the surgeon's job.
In the same respect, the right insurance professional
can guide you through the process of selecting the
policy that best suits your needs, budget, and
objectives, and can answer your questions.
Life insurance isn't a high priority
compared with the other expenses I
have
For many underinsured people, it's not so much that
they don't want the life insurance they need; it's just
difficult to find the extra dollars to pay for it.
Buying life insurance you can't afford benefits no one.
If it causes your family hardship or requires you to
make choices that seem incongruous ("Gee kids, I'd
love to take you on vacation, but our life insurance
premium is due"), you'll eventually discontinue the
policy. Then you lose, and your family loses.
That's why it's important to purchase a policy that
meets your needs and your budget. Fortunately, there
are many types of life insurance available. These
include term life insurance policies and various types
of permanent (cash value) life insurance policies.
Term policies provide life insurance protection for a
specific period of time. If you die during the coverage
period, your beneficiary receives the policy's death
benefit. If you live to the end of the term, the policy
simply terminates, unless it automatically renews for a
new period.
Permanent insurance policies offer protection for your
entire life, regardless of future health changes,
provided you pay the premium to keep the policy in
force. As you pay your premiums, a portion of each
payment goes toward building up the policy's cash
value, which may be accessed through loans or
withdrawals. (Keep in mind, though, that loans and
withdrawals will reduce the cash value and the death
benefit, and could cause the policy to lapse). The
cash value continues to grow--tax deferred--as long
as the policy is in force.
Several different types of permanent life insurance
are available, including:
• Whole life insurance
• Universal life insurance
• Variable life
• Variable universal life
Note: Variable life and variable universal life
insurance policies are offered by prospectus, which
you can obtain from your financial professional or the
insurance company. The prospectus contains detailed
information about investment objectives, risks,
charges, and expenses. You should read the
prospectus and consider this information carefully
before purchasing a variable life or variable universal
life insurance policy.
The bottom line
It's easy to understand why people tend to put off
purchasing the life insurance they know they need.
But look at it this way: buying life insurance is one
way you can help secure your family's financial future.
And what could be better than knowing your loved
ones will be protected, even if you're no longer
around to take care of them?
Basically you have a choice in life how you can impact the future. One way is to leave a legacy for your family. Let them mourn emotionally, and not financially as well. If not adequately insured and planned, please do so. If not from me, somebody.
Tuesday, July 24, 2012
Baby Boomers Tapping Into Their 401k's Costs!
I have never been a huge fan of 401k's, and I'm still not a fan. According to Allianz Life just
five years ago, the 10-year Treasury was around 5.0%. Today, it hovers around
1.5%. In January this year, the Fed announced that economic conditions “are
likely to warrant exceptionally low levels for the federal funds rate at least
through late 2014.”
This is one reason I am a huge fan, if the situation calls for it, of Fixed Index Annuities. If I say to you I can guarantee with a fiscally responsible company, your 1035 exchange from your account to an FIA, that you will not lose a penny of the principle and applied interest in your account. If I also said that with respect to the S&P Index, you can benefit from the upswing, but evade the downturn; wouldn't these facts alone be worth hearing more about?
If I went on to tell you the existing account, annuity and/or life insurance policy could receive anywhere from a 5%-10% bonus on the 1035 exchange balance...still sound interesting?
If in the guarantee of not losing a penny included a 0% floor, that no matter what the condition of the market, the lowest interest rate in the future you could receive was 0%, I'm sure that would be interesting.
I'm not saying that FIA's are better than 401k's, but I am saying that in an economy that is less than predictable it would be better to guarantee our growth and guard against risk while receiving a bonus of the balance of aforementioned accounts. To me, that sounds interesting in these economic times.
Baby Boomers feel the crunch of these times and look to those 401k's that they are already are subject to costly fees all along the time you are involved with one. The fees include penalties at the time of tapping into it if you are not of the correct age. The fees are administrative and also include up & down swings that can feast on your funds. The thing I don't like the most, that in this case of tapping into your 401k, the boomer may actually be taking a loan out of their money.
Yes, as you pay that loan back, remember you are paying yourself back. To me, that is fool's gold. Baby boomers are taking the path to least resistance, absorbing the hit of the loan, and unfortunately the worst feature is decreasing their account value.
In closing, that shrinkage of account value could be either erased or offset by the 5%-10% bonus that a fiscally responsible company offers.
This is one reason I am a huge fan, if the situation calls for it, of Fixed Index Annuities. If I say to you I can guarantee with a fiscally responsible company, your 1035 exchange from your account to an FIA, that you will not lose a penny of the principle and applied interest in your account. If I also said that with respect to the S&P Index, you can benefit from the upswing, but evade the downturn; wouldn't these facts alone be worth hearing more about?
If I went on to tell you the existing account, annuity and/or life insurance policy could receive anywhere from a 5%-10% bonus on the 1035 exchange balance...still sound interesting?
If in the guarantee of not losing a penny included a 0% floor, that no matter what the condition of the market, the lowest interest rate in the future you could receive was 0%, I'm sure that would be interesting.
I'm not saying that FIA's are better than 401k's, but I am saying that in an economy that is less than predictable it would be better to guarantee our growth and guard against risk while receiving a bonus of the balance of aforementioned accounts. To me, that sounds interesting in these economic times.
Baby Boomers feel the crunch of these times and look to those 401k's that they are already are subject to costly fees all along the time you are involved with one. The fees include penalties at the time of tapping into it if you are not of the correct age. The fees are administrative and also include up & down swings that can feast on your funds. The thing I don't like the most, that in this case of tapping into your 401k, the boomer may actually be taking a loan out of their money.
Yes, as you pay that loan back, remember you are paying yourself back. To me, that is fool's gold. Baby boomers are taking the path to least resistance, absorbing the hit of the loan, and unfortunately the worst feature is decreasing their account value.
In closing, that shrinkage of account value could be either erased or offset by the 5%-10% bonus that a fiscally responsible company offers.
Solutions for a low-interest rate environment-Allianz Life
Solutions for a low-interest rate environment-Allianz
Life
Income riders
Just
five years ago, the 10-year Treasury was around 5.0%. Today, it hovers around
1.5%. In January this year, the Fed announced that economic conditions “are
likely to warrant exceptionally low levels for the federal funds rate at least
through late 2014.”
Today’s
low interest rate environment creates additional challenges for retirees. The
prospect that rates may stay low through 2014 has been challenging for clients
looking for sustainable income in retirement. Clients who are faced with the
possibility of having less income than they expected generally have just three
options:
- Reduce
their lifestyle and
attempt to live on the income they can currently produce
- Increase
their risk tolerance and
attempt to generate more assets by taking on more risk
- Spend
more of the principal of their savings and hope to not run out of
money
For
clients who can’t afford to reduce their lifestyle, and are not comfortable
increasing their risk, the guaranteed income benefits (may come as additional
cost riders) that we offer on our fixed index annuities can help protect
clients from running out of income, by providing lifetime income and the
potential for income increases following each year their allocations earn
interest.
Monday, July 23, 2012
Thursday, July 19, 2012
Monday, July 16, 2012
Sunday, July 8, 2012
Veterans needing help with determining eligibility for the "Aid and Attendance" program...
Determining eligibility through Veterans Affairs for "Aid and Attendance" below:
http://www.vba.va.gov/bln/21/pension/wartime.htm
http://www.vba.va.gov/bln/21/pension/wartime.htm
Veterans Benefits called "Aid and Attendance" and the Louisville Prospects Foundation
The Louisville Prospects Foundation offers "Aid and Assist" to offer free guidance in determining eligibility and enrolling in the VA program referred to as "Aid and Attendance."
www.louisvilleprospectsfoundation.org & www.prospectsfinancial.com
www.louisvilleprospectsfoundation.org & www.prospectsfinancial.com
We
Provide Aid and Assistance with VA’s Aid and Attendance…
Louisville
Prospects Foundation, Inc. and Prospects Financial, Inc. offer a service to
War-Time United States Veterans. This is a benefit to you as a War-Time U.S.
Veteran. The benefit program is called the “Aid and Attendance” program. Check with your local VA office to determine
eligibility.
It offers a
pre-determined monthly benefit while the U.S. Veteran requires Long Term Care
while at home or residing in a retirement facility. It even has a benefit to
the Veteran’s spouse. Please refer to your local VA office for more
information.
The funds
from the veteran’s benefits, is paid-out to the beneficiary, not the facility
or any other agency. These facts and more will be discussed at a time that is
convenient for you and the professional.
Prospects
Financial is pleased to partner with our non-profit organization to bring our
U.S. Veterans a good deed in hopes of showing our support for their sacrifice
& courage. The Louisville Prospects Foundation is delighted to work with
our veterans and provide some peace of mind.
Thank You,
Jay R. Jones
President of
Prospects Financial
Notes:
*Members from Prospects Financial will
conduct business on a volunteer basis. The volunteer professional will provide
you with expert guidance through the “Aid and Attendance” program.
*The Louisville Prospects Foundation is not
a Government agency. We have not entered into any financial agreement or
contract with the United States government to make a profit. The “Aid and
Attendance” program is a War-Time United States Veteran benefit. VA will review
necessary documents to see if the veteran is eligible does qualify and is to be
approved.
*Some information provided via
www.vba.va.gov
What are Aid and
Attendance and Housebound benefits?
- Aid and Attendance (A&A) is
an enhanced or special monthly pension benefit paid in addition to
basic pension. You may not receive enhanced or special monthly pension
without first establishing eligibility for basic VA pension. However,
because enhanced pension is based upon a higher income limit, a claimant
ineligible for basic pension due to excessive income may be eligible for
enhanced pension benefits. A Veteran may be eligible for A&A when:
- The Veteran requires the aid of another person in
order to perform his or her activities of daily living, such as bathing,
feeding, dressing, attending to the wants of nature, adjusting prosthetic
devices, or protecting himself/herself from the hazards of his/her daily
environment,OR,
- The Veteran is bedridden, in that his/her disability
or disabilities requires that he/she remain in bed apart from any
prescribed course of convalescence or treatment, OR,
- The Veteran is a patient in a nursing home due to
mental or physical incapacity, OR,
- The Veteran has corrected visual acuity of 5/200 or
less, in both eyes, or concentric contraction of the visual field to 5
degrees or less.
- Housebound is
an enhanced or special monthly pension benefit paid in addition to
basic pension. You may not receive enhanced or special monthly pension
without first establishing eligibility for basic VA pension. However,
because enhanced pension is based upon a higher income limit, a claimant
ineligible for basic pension due to excessive income may be eligible for enhanced
pension benefits. A Veteran may be eligible for Housebound benefits when:
- The Veteran has a single permanent disability
evaluated as 100-percent disabling AND, due to such
disability, he/she is permanently and substantially confined to his/her
immediate premises, OR,
- The Veteran has a single permanent disability
evaluated as 100-percent disabling AND, another disability,
or disabilities, evaluated as 60 percent or more disabling.
A Veteran cannot receive both Aid and Attendance
and Housebound benefits at the same time.
Saturday, July 7, 2012
Friday, July 6, 2012
Monday, July 2, 2012
Tuesday, June 26, 2012
Home Prices, Buying a Home and strategy
Today evidence showed an increase in home prices in every state...good news, but may be too early to truly determince data. This news comes as mortgage rates are extremely low! If you have been disciplined, amid of everything going on economically, you are current on your bills. Many have to keep our eye on the security of our financial assets from identity theft.
If the above applies to you and your job/career outlook is secure, then it may be time to get "that house" you have wanted.
Many think a home is an asset, although cherishable. One could make the case for equity value in the home to an asset. In addition, the case may be made the home is an asset in vibrant economic times.
A good indicator of the economy & housing is commerical building & life insurance sales. When housing dips, life insurance sales go up for a couple of reasons...that's another subject. If businesses aren't building, they're not hiring. So keep an eye on commerical building and life insurance sales and that will give you some better insight.
If, what we discussed in the earlier paragraphs still apply to you and the aformentioned markets are stable or even growing, and for you to keep your eye on in the near future. And fr argument's sake let's say the answer is yes, then I think it may be a great time to take advantage of the situation.
Personally I am preparing to take advantage and we're excited. A client whose family have become close with over the years, have just completed the process. If it's sound, make the move.
There's a lifetime credit cap of $500 ($200 for win-
Consult a tax professional for details.
*Forefield provided a portion of the information above*
*Important, the above is from myexperience in my field/career. Always consult your tax professional, financail advisor and seek legal advice before taking any financail measures in the near future. Thank you for reaading.
If the above applies to you and your job/career outlook is secure, then it may be time to get "that house" you have wanted.
Many think a home is an asset, although cherishable. One could make the case for equity value in the home to an asset. In addition, the case may be made the home is an asset in vibrant economic times.
A good indicator of the economy & housing is commerical building & life insurance sales. When housing dips, life insurance sales go up for a couple of reasons...that's another subject. If businesses aren't building, they're not hiring. So keep an eye on commerical building and life insurance sales and that will give you some better insight.
If, what we discussed in the earlier paragraphs still apply to you and the aformentioned markets are stable or even growing, and for you to keep your eye on in the near future. And fr argument's sake let's say the answer is yes, then I think it may be a great time to take advantage of the situation.
Personally I am preparing to take advantage and we're excited. A client whose family have become close with over the years, have just completed the process. If it's sound, make the move.
Like homes themselves, mortgages come in many sizes and types. The type of mortgage that's right for you
depends on many factors, such as your tolerance for risk and how long you expect to stay in your home. Here
are some characteristics of various popular types of mortgages.
Popular Types of Mortgages
Conventional Fixed Rate Mortgages Adjustable Rate Mortgages (ARMs)
•
Low risk
•
10- to 40-year terms
•
Interest rate doesn't change
•
Large down payment (compared to
government mortgages) may be required
•
Payment remains the same
•
Higher risk
•
Initial interest rate often lower than
conventional fixed rate mortgage
•
Interest rate may go up or down
•
Interest rate usually adjusted annually
•
Rate adjustments may be limited by cap(s)
•
Payment caps can result in negative
amortization in periods of rising interest rates
Government Mortgages Hybrid Adjustable Rate Mortgages (ARMs)
•
FHA, VA, or bond-backed
•
Interest rate sometimes lower than
conventional fixed rate mortgage
•
Variety of programs available
•
Low down payment requirements
•
Liberal qualifying ratios
•
Attractive to first-time homebuyers
•
Higher insurance costs may apply for FHA loans
•
Payment remains the same
•
Higher risk
Deducting points and closing costs
Buying a home is confusing
enough without wondering
how to handle the settlement
charges at tax time.
When you take out a loan
to buy a home, or when
you refinance an existing
loan on your home, you'll
probably be charged closing
costs. These may include
points, as well as
attorney's fees, recording
fees, title search fees, appraisal
fees, and loan or
document preparation and
processing fees. You'll need to know whether you
can deduct these fees (in part or in full) on your federal
income tax return, or whether they're simply
added to the cost basis of your home.
Before we get to that, let's define one term. Points
are certain charges paid when you obtain a home
mortgage. They are sometimes called loan origination
fees. One point typically equals 1 percent of the
loan amount borrowed. When you buy your main
home, you may be able to deduct points in full in the
year that you pay them if you itemize deductions and
meet certain requirements. You may even be able to
deduct points that the seller pays for you. More information
about these requirements is available in IRS
Publication 936.
Refinanced loans are treated differently. Generally,
points that you pay on a refinanced loan are not
deductible in full in the year that you pay them. Instead,
they're deducted ratably over the life of the
loan. In other words, you can deduct a certain portion
of the points each year. If the loan is used to
make improvements to your principal residence,
however, you may be able to deduct the points in full
in the year paid.
What about other settlement fees and closing costs?
Generally, you cannot deduct these costs on your
tax return. Instead, you must adjust your tax basis
(the cost, plus or minus certain factors) in your
home. For example, you'd increase your basis to
reflect certain closing costs, including:
•
Abstract fees
•
Charges for installing utility services
•
Legal fees
•
Recording fees
•
Surveys
•
Transfer or stamp taxes
•
Owner's title insurance
For more information, see IRS Publication 530.
Tax treatment of home
improvements and repairs
Home improvements and repairs are generally nondeductible.
Improvements, though, can increase the
tax basis of your home (which in turn can lower your
tax bite when you sell your home). Improvements add
value to your home, prolong its life, or adapt it to a
new use. For example, the installation of a deck, a
built-in swimming pool, or a second bathroom would
be considered an improvement. In contrast, a repair
simply keeps your home in good operating condition.
Regular repairs and maintenance (e.g., repainting
your house and fixing your gutters) are not considered
improvements and are not included in the tax
basis of your home. However, if repairs are performed
as part of an extensive remodeling of your
home, the entire job may be considered an
improvement.
If you make certain improvements to your home that
improve your home's energy efficiency, you may be
eligible for a federal income tax credit.
Energy tax credit
A credit is available to individuals who make energyefficient
improvements to their homes. You may be
entitled to a 10% credit for the purchase of qualified
energy-efficient improvements including a roof, windows,
skylights, exterior doors, and insulation materials.
Specific credit amounts may also be available for
the purchase of specified energy-efficient property:
$50 for an advanced main air circulating fan; $150 for
a qualified furnace or hot water boiler; and $300 for
other items, including qualified electric heat pump
water heaters and central air conditioning units.
Exclusion of capital gain when your
house is sold
If you sell your principal residence at a loss, you
generally can't deduct the loss on your tax return. If
you sell your principal residence at a gain, you may
be able to exclude some or all of the gain from federal
income tax.
Generally speaking, capital gain (or loss) on the sale
of your principal residence equals the sale price of
the home less your adjusted basis in the property.
Your adjusted basis is the cost of the property (i.e.,
what you paid for it initially), plus amounts paid for
capital improvements, less any depreciation and
casualty losses claimed for tax purposes.
If you meet all requirements, you can exclude from
federal income tax up to $250,000 ($500,000 if
you're married and file a joint return) of any capital
gain that results from the sale of your principal residence.
In general, this exclusion can be used only
once every two years. To qualify for the exclusion,
you must have owned and used the home as your
principal residence for a total of two out of the five
years before the sale.
For example, you and your spouse bought your
home in 1981 for $200,000. You've lived in it ever
since and file joint federal income tax returns. You
sold the house yesterday for $350,000. Your entire
$150,000 gain ($350,000 - $200,000) is excludable.
That means that you don't have to report your home
sale on your federal income tax return.
What if you fail to meet the two-out-of-five-year rule?
Or what if you used the capital gain exclusion within
the past two years with respect to a different principal
residence? You may still be able to exclude part
of your gain if your home sale was due to a change
in place of employment, health reasons, or certain
other unforeseen circumstances. In such a case,
exclusion of the gain may be prorated.
Additionally, special rules may apply in the following
cases:
•
If your principal residence contained a home
office or was otherwise used partially for
business purposes
•
If you sell vacant land adjacent to your principal
residence
•
If your principal residence is owned by a trust
•
If you rented part of your principal residence to
tenants, or used it as a vacation or second home
•
If you owned your principal residence jointly with
an unmarried individual
Note:
Members of the uniformed services, foreign
services, intelligence community, as well as certain
Peace Corps volunteers and employees may elect to
suspend the running of the two-out-of-five-year requirement
during any period of qualified official extended
duty up to a maximum of ten years.
*Forefield provided a portion of the information above*
*Important, the above is from myexperience in my field/career. Always consult your tax professional, financail advisor and seek legal advice before taking any financail measures in the near future. Thank you for reaading.
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