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Are You Covered If . . . ?

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 24 Jun 2011 15:33:22 +0000

John Jastremski Presents:

Are You Covered If . . . ?

If something just happened and you need to know if you’re covered, you should immediately call your insurer or agent or take a look at your policy. But if you’re simply wondering what’s covered (and what’s not) for future reference, you might start by familiarizing yourself with some real-life scenarios.
A word of caution

It’s important to understand a few things upfront. First, there are several types of standard homeowners policies, and each provides different coverage. What’s more, even policies of the same type often don’t provide exactly the same coverage. Another key point: To say that you’re covered for something doesn’t always mean that you’re fully covered. Out-of-pocket deductibles typically apply to the dwelling and personal-property portions of your policy, and every part of your policy is subject to coverage limits. Losses that exceed these limits must be paid out of your own funds.
Your house: are you covered if . . . ?

Lightning strikes a power line leading to your house and starts a fire? Yes. Fire damage is standard coverage.
A delivery truck careens off the road and smashes into your house? Yes. Damage from vehicles is standard coverage.
A pipe bursts in your cellar and covers your downstairs room with water? Yes. Water damage from burst pipes is standard coverage.
A huge gust of wind blows a tree onto your house? Yes. Windstorm damage is standard coverage in most parts of the country.
A repairperson damages your walls and ceilings? Yes. It doesn’t matter who caused the damage.
The river behind your house floods, and you have water damage? No. Flood protectionrequires separate insurance. So does earthquake coverage.
Your house slides down a cliff? No. You need separate insurance to protect against this.
Mice infest your home and chew up your insulation? No. The same exclusion applies to infestation by insects and other pests.
The market value of your home plummets? No. Market value has nothing to do with insurance that is based on replacement cost.
A house that you haven’t lived in for months is vandalized? No. To be covered, the house can’t have been vacant for more than 30 days.
You need to upgrade your home to meet local building codes? It depends. You may need an optional endorsement for this.
Your home is damaged by water coming in from backed-up sewers? It depends. This coverage may also require an endorsement.

Your personal property: are you covered if . . . ?

A wild animal gets into your house and rips apart your upholstery? Yes, unless the animal is a rodent or a pet of yours. If the rodent or pet causes a fire, you’re covered for the fire damage.
A thief breaks into your home and steals your stereo, jewelry, and the family silver? Yes, but keep in mind that separate coverage maximum limits apply to some types of personal property.
Your golf clubs are stolen from the trunk of your car? Yes (even though the theft occurred off your premises), but you may not receive the full replacement value.
Your wardrobe is ruined by the smoke from a fire? Yes. Clothing falls under personal property coverage.
The power goes out on your block, causing the food in your refrigerator to spoil? Yes, under most policies ($500 is a standard limit).
The laptop computer that you use for your home business is stolen? No. The laptop would be covered only if it were for personal use at home.
Your boat is damaged in a storm? No, unless it meets the requirements for a “small-motor” boat. Boats generally require separate insurance.
Your central air-conditioning breaks down in the middle of summer? No. Homeowners insurance doesn’t cover heating, cooling, and plumbing systems or home appliances for simple breakdown. If they are damaged by a covered peril, such as fire, they are covered.
A repairperson scratches up your furniture? No, in most cases. Damage to your personal property is usually covered only when it’s caused by a named peril (e.g., fire or vandalism).
A company dumps toxins into the creek that runs through your yard? No. The company that did this would be responsible for the cleanup bill and other damages.
Your fine art collection is stolen? It depends. In many cases, you need a special endorsement to cover valuable art and antiques.
The movers you hired damage your belongings? It depends. Some policies will cover insured property during a move. Otherwise, you need separate transit insurance.

Your liability: are you covered if . . . ?

You accidentally leave your boots on the front step, and your invited neighbor trips over them, breaking her hip? Yes. This is a straightforward liability question.
You accidentally run your shopping cart over a man’s foot at the grocery store, breaking his foot? Yes. Your liability coverage protects you off your premises as well as on.
Your son hits a baseball through your neighbor’s window? Yes, as long as your son didn’t break the window on purpose.
Your dog bites a passerby on the street? Yes. However, many insurers will cover you only for a certain number of dog bites (in some cases, only one).
After an accident at your home, the injured party brings a lawsuit against you, and you’re saddled with legal fees? Yes. Most homeowners policies cover the costs of defending you against lawsuits.
A client is injured by falling boxes in your home office? No. Separate liability coverage is needed when you run a business out of your home.
You’re renting out part of your house, and your tenant’s stuff is stolen from the premises? No, and you’re not liable, either. Your tenant needs renters insurance to protect his or her belongings.
You beat up someone who insulted your wife? No. Homeowners insurance does not cover liability arising from injuries you have intentionally caused.
You throw a rock at a squirrel and it hits and injures a neighbor? Yes, because even though throwing the rock was an intentional act, you didn’t mean to hurt your neighbor.
You swing the sail on your boat and accidentally hit your passenger with it? No. Homeowners insurance does not cover liability arising from the use of boats and watercraft.
You accidentally run someone over while driving down the street? No, because your auto insurance would cover your liability in a case like this.
A tree falls from your yard into your neighbor’s yard, breaking his fence? It depends. Your neighbor’s insurance would generally cover damage to his own property. However, if you were negligent (e.g., your neighbor told you the tree was dying, and you did nothing), you’d have to turn to your own liability coverage.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com, access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Guaranteed Annuity Contracts

John Jastremski - The Retirement Group (800) 900-5867 — Wed, 22 Jun 2011 17:49:24 +0000

John Jastremski Presents:

Guaranteed Annuity Contracts

As the name implies, a guaranteed annuity contract is an annuity that guarantees a fixed rate of return. In this respect, it is very similar to a fixed rate annuity.

What distinguishes a guaranteed annuity contract is that it covers a group of annuitants who are usually linked through work or membership in a group or organization. Since multiple annuitants can be covered under one contract, the expenses (per annuitant) for the annuity tend to be lower than if separate annuities were purchased for each person.

The issuer of the guaranteed annuity contract will usually guarantee that the annuity will be credited with a fixed rate of interest for a certain period of time. For example, the issuer may guarantee that it will pay 6 percent on the annuity for the first five years of the contract and then pay a minimum of 4 percent for the remainder of the contract. Typically, the annuity issuer will also agree to renew the annuity after the initial period and pay the higher rate of interest for another term, depending on the level of interest rates at the time.
Uses for group annuities

Guaranteed annuity contracts were developed in the 1920s and used frequently by large corporations to fund their defined benefit pension plans. During the 1970s, as the number of defined benefit pension plans declined, many companies used guaranteed annuity contracts to fund their defined contribution retirement plans.

The use of guaranteed annuity contracts has declined in popularity in recent years, partly because of the increased volatility of interest rates. Insurance companies that issue these contracts have been stung by unexpected interest rate changes that reduced profits or caused the companies large losses. Although some guaranteed annuity contracts are still in existence, very few companies or groups use this type of annuity to fund their pension plan obligations.

Today, the main use of guaranteed annuity contracts is to purchase benefits when a defined benefit pension plan is terminated. By definition, these terminated benefits must earn a stated rate of interest, determined by government regulations. The guaranteed annuity contract makes it relatively easy to ensure that these terminated benefits closely matched mandated rates with a minimum of administrative headaches for the plan administrator.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

How Much Life Insurance Do You Need?

John Jastremski - The Retirement Group (800) 900-5867 — Wed, 22 Jun 2011 17:45:44 +0000

John Jastremski Presents:

How Much Life Insurance Do You Need?

Your life insurance needs change as your life changes. When you are young, you may not have a need for life insurance. However, as you take on more responsibility and your family grows, your life insurance needs increase. Your needs may then decrease after your children are grown. You should periodically review your needs to ensure that your life insurance coverage adequately reflects your life situation.
Estimating your life insurance need

There are a couple of simple methods that you can use to estimate your life insurance need. These calculations are sometimes referred to as rules of thumb and can be used as a basis for your discussions with your insurance professional.
Income rule

The most basic rule of thumb is the income rule, which states that your insurance need would be equal to six or eight times your gross annual income. For example, a person earning a gross annual income of $60,000 should have between $360,000 (6 x $60,000) and $480,000 (8 x $60,000) in life insurance coverage.
Income plus expenses

This rule considers your insurance need to be equal to five times your gross annual income plus the total of any mortgage, personal debt, final expenses, and special funding needs (e.g., college). For example, assume that you earn a gross annual income of $60,000 and have expenses that total $160,000. Your insurance need would be equal to $460,000 ($60,000 x 5 + $160,000).

Several more comprehensive methods are used to calculate life insurance need. Overall, these methods are more detailed than the rules of thumb and provide a more complete view of your insurance needs.
Family needs approach

The family needs approach requires you to purchase enough life insurance to allow your family to meet its various expenses in the event of your death. Under the family needs approach, you divide your family’s needs into three main categories:

Immediate needs at death (cash needed for funeral and other expenses)
Ongoing needs (income needed to maintain your family’s lifestyle)
Special funding needs (college funding, bequests to charity and children, etc.)

Once you determine the total amount of your family’s needs, you purchase enough life insurance, taking into consideration the interest that the life insurance proceeds will earn over time, to cover that amount.
Income replacement calculation

The income replacement calculation is based on the theory that the family income earners should buy enough life insurance to replace the loss of income due to an untimely death. Under this approach, the amount of life insurance you should purchase is based on the value of the income that you can expect to earn during your lifetime, taking into account such factors as inflation and anticipated salary increases, as well as the interest that the lump-sum life insurance proceeds will generate.
Estate preservation and liquidity needs approach

The estate preservation and liquidity needs approach attempts to calculate the amount of life insurance needed upon your death to settle your estate. This includes estate taxes, and funeral, legal, and accounting expenses. The purpose is to preserve the value of your estate at the level prior to your death and to prevent an unwanted sale of assets to pay estate taxes. This method takes into consideration the amount of life insurance needed to maintain the current value of your estate for your family, while providing the cash needed to cover death expenses and taxes.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Health Insurance for Travelers

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 17 Jun 2011 22:42:48 +0000

John Jastremski Presents:

Health Insurance for Travelers

You were having a great time on your vacation–until your toddler woke up from her nap with a fever. If you were at home, you’d take her to the pediatrician right away and rely on your health insurance to pay for her care. But what do you do now that you are miles away? Here are some things you need to know about health insurance while traveling.
Will your health maintenance organization make it across the country?

Your individual or group health insurance policy typically covers you and your family if you are traveling within the United States. Still, it’s a good idea to check with your insurance company before you go. Make sure that you fully understand the coverage conditions, especially if you belong to a health maintenance organization (HMO) or preferred provider organization (PPO).

HMO members are generally required to obtain all treatment from HMO physicians, except in emergency situations occurring outside the HMO’s treatment area (a strict definition of what constitutes an emergency may apply). Although PPO members are not required to seek care from PPO physicians, you’ll have to pay more for care if you receive it from a non-PPO physician.
Some cards are not accepted everywhere

If you are traveling overseas, beware: Your individual or group health insurance may not cover you at all. Even if your policy does cover you, it may not provide the same benefits overseas as it does in the United States. For instance, some policies will cover only emergency medical care, while others will reimburse you or the medical provider for only a percentage of the total cost of treatment. Some policies will cover personal travel but not business travel, while others cover you only if you stay overseas for a short period of time (e.g., one to six months). Check the limitations of your policy carefully, and call your insurer’s customer service or claims department to find out whether you’re covered, and if so, which limitations apply.

Note: If you or your traveling companion is a Medicare recipient, you should be aware that Medicare does not provide coverage for medical treatment overseas.
Adequate health insurance–don’t leave the United States without it

If your health insurance won’t cover your family while traveling, consider purchasing a short-term supplemental health insurance policy from an insurance company, travel agent, tour operator, or cruise line. These policies typically include accident and/or sickness coverage. What’s more, they’re often combined with medical evacuation coverage, which pays all or part of the cost of medical evacuation back to the United States if you’re traveling overseas (something that most basic health insurance policies won’t cover). Policies usually offer a choice of deductibles and may be tailored to suit your needs. You can purchase these policies separately or as part of a travel insurance package that includes other types of travel insurance (e.g., trip cancellation, baggage protection).

Coverage, terms, and costs of supplemental health insurance vary widely, but it’s relatively inexpensive because the coverage is limited. Before purchasing it, ask to see a copy of the policy and get the answers to the following questions:

Does the plan pay the cost of medical care needed for sickness, accidents, or both?
What procedures must you follow to see a doctor or go to the hospital?
Will you have to get approval before you receive care?
Does the policy pay medical providers directly, or will you have to pay and wait to be reimbursed?
What are the deductible, co-payment, and/or coinsurance costs?
What exclusions and restrictions apply?
What is the maximum amount of coverage under the policy?
Are translator services available?

Travel tips

If you are traveling for an extended period of time, schedule checkups for all family members before you go
Carry your insurance card with you–it usually has a phone number you can call to check on health-care providers, and you may need to show it before receiving health care
If you belong to an HMO or PPO, bring a list of network physicians and hospitals in the area to which you are traveling
Pack an adequate supply of prescription drugs in your carry-on luggage
If you are traveling overseas, find out how you can refill prescriptions while you’re there, and take prescription drugs in their original containers to avoid trouble at customs
If you are traveling to a country where English is not widely spoken, have your physician’s instructions translated, especially if you or a family member has a serious medical condition–this will help avoid treatment mix-ups
Consider purchasing trip cancellation/interruption insurance that will reimburse you for any nonrefundable deposits you pay in case you can’t go or must leave early–check policy exclusions first (some policies won’t cover pre-existing health conditions)

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Investing in Bonds

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 17 Jun 2011 22:39:52 +0000

John Jastremski Presents:

Investing in Bonds

Bonds may not be as glamorous as stocks or commodities, but they are a significant component of most investment portfolios. Bonds are traded in huge volumes every day, but their full usefulness is often underappreciated and underestimated.
Why invest in bonds?

Bonds can help diversify your investment portfolio. Interest payments from bonds can act as a hedge against the relative volatility of stocks, real estate, or precious metals. Those interest payments also can provide you with a steady stream of income.
How bonds work

When you buy a bond, you are essentially loaning money to a bond issuer in need of cash to finance a venture or fund a program, such as a corporation or government agency. In return for your investment, you receive interest payments at regular intervals, usually based on a fixed annual rate (coupon rate). You are also paid the bond’s full face amount at its stated maturity date.

You can purchase bonds in denominations as low as $100 (though individual brokers may have a higher minimum purchase). Some are backed by tangible assets, such as mortgage contracts, buildings, or equipment. In many other cases, you simply rely on the issuer’s ability to pay. You can buy or sell bonds in the open market in the same manner as stocks and other securities. Therefore, bonds fluctuate in price, selling at a premium (above) or discount (below) to the face value (par value). Generally, the longer a bond’s duration to maturity, the more volatile its price swings. These factors expose bonds to certain inherent risks.
Bond risk factors

Although many bonds are conservative, lower-risk investments, many others are not, and all carry some risk. Because bonds are traded in the securities markets, there is always the chance that your bonds can lose favor and drop in price due to market risk. Much of this volatility in prices is tied to interest-rate fluctuations. For example, if you pay $1,000 for a 10 percent bond, that same $1,000 might buy you an 11 percent bond the following month, if interest rates rise. Consequently, your old 10 percent bond may be worth only about $900 to current investors.

Since bonds typically pay a fixed rate of interest, they are open to inflation risk. As consumer prices generally rise, the purchasing power of all fixed investments is reduced. Also, there is a chance that the issuer will be unable to make its interest payments or to repay its bonds’ face value at maturity. This is known as credit or financial risk. To help minimize this risk, compare the relative strength of companies or bonds through a ratings service such as Moody’s, Standard & Poor’s, A. M. Best, or Fitch. Finally, bonds also involve reinvestment risk: the risk that when a bond matures, you may not be able to get the same return when you reinvest that money.
Corporate bonds

Bonds issued by private corporations vary in risk from typically super-steady utility bonds to highly volatile, high-interest junk bonds. Also, many corporate bonds are callable, meaning that the debt can be paid off by the issuing company and redeemed on a fixed date. The company pays back your principal along with accrued interest, plus an additional amount for calling the bond before maturity.

Some corporate bonds are convertible and can be exchanged for shares of the company’s stock on a fixed date. You can also purchase zero-coupon bonds, which are issued at a discount to (below) face value. No interest is paid, but at maturity you receive the face value of the bond. For example, you pay $600 for a 5-year, $1,000 zero-coupon bond. At the end of 5 years, you receive $1,000. Corporate bonds have maturity dates ranging from one day to 40 years or more and generally make fixed interest payments every six months.
U.S. government securities

The securities backed by the full faith and credit of the U.S. government carry minimal risk. United States Treasury bills (T-bills) are issued for terms from a few days to 52 weeks. They are sold at a discount and are redeemed for their full face value at maturity. Other Treasury securities include Treasury notes, which have terms from 2 to 10 years, Treasury Inflation Protected Securities (TIPS), which have terms from 5 to 30 years, and Treasury bonds, which have a term of 30 years. Although the interest earned on these securities is subject to federal taxation, it is not subject to state or local taxes.

Various federal agencies also issue bonds. As with any investment, these bonds carry some risk. However, because the U.S. government guarantees timely payment of principal and interest on them, they are considered very safe. Some of these bonds use mortgages as collateral. Most mortgage-backed securities pay monthly interest to bondholders.
Municipal bonds

Municipal bonds (munis) are issued by states, counties, or municipalities, and are generally free from federal taxation (with some exceptions). Some may be completely tax free if you are a resident of the state, county, or municipality of issuance. Though municipal bonds generally offer lower interest payments compared with taxable bonds, their overall return may be higher because of their tax-reduced (or tax-free) status.

Munis come in two types: general obligation (GO) bonds and revenue bonds. GO bonds are backed by the taxing authority of the issuing state or local government. For this reason, they are considered less risky but have a lower coupon rate. Revenue bonds are supported by money raised from the bridge, toll road, or other facility that the bonds were issued to fund. They pay a higher interest rate and are considered riskier. Therefore, research the project being funded to the extent possible before you invest, to make sure that it will generate sufficient income to make payments.
How to begin investing in bonds

Thousands of books, newsletters, and websites can provide you with investment information that can help you evaluate and choose bonds. The major bond-rating services offer concise letter grades regarding the relative strength of a corporation or bond.

However, if you don’t want to go it alone, a brokerage firm or financial advisor can evaluate and recommend choices for you. Keep in mind that brokers or advisors may charge a fee for this service.

You can buy bonds from a broker, from a commercial bank, over the Internet, or (for Treasury securities) directly from the U.S. Treasury. Shares in bond funds can be purchased through a mutual fund or bond trust.
Monitoring your bond portfolio

Of course, you’ll want to keep an eye on your bond portfolio, as you should with all of your investments. Although other factors may affect them, bond prices are often closely tied to interest rates. When rates go up, the market price of your bonds tend to go down; when interest rates fall, your bonds generally rise in value.

Interest rates also tend to affect a bond’s current yield, which measures the coupon rate of your bond in relation to its current price. The current yield rises with a corresponding drop in the price of a bond, and vice versa. In addition, inflation, corporate finances, and government fiscal policy can affect bond prices.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

APPLYING FOR A MORTGAGE

John Jastremski - The Retirement Group (800) 900-5867 — Wed, 15 Jun 2011 17:51:41 +0000

John Jastremski Presents:

APPLYING FOR A MORTGAGE

With all of the paperwork and questions that you need to answer, applying for a mortgage can be stressful. But knowing what’s involved in the process can make things a lot easier. Here’s some information to get you started.
Before you apply

Do some homework before you apply for a mortgage. Think about what type of home you want, what your budget will allow, and what type of mortgage you might seek. Get a copy of your credit report, and make sure it’s accurate; dispute any erroneous information to get it corrected. Be prepared to answer any questions that a lender might have of you, and be open and straightforward about your circumstances.
What you’ll need when you apply

When you apply for a mortgage, the lender will want a lot of information about you (and, at some point, about the house you’ll buy) to determine your loan eligibility. Here’s what you’ll need to provide:

The name and address of your bank, your account numbers, and statements for the past three months
Investment statements for the past three months
Pay stubs, W-2 withholding forms, or other proof of employment and income
Balance sheets and tax returns, if you’re self-employed
Information on consumer debt (account numbers and amounts due)
Divorce settlement papers, if applicable

You’ll sign authorizations that allow the lender to verify your income and bank accounts, and to obtain a copy of your credit report. If you’ve already made an offer on a house or condo, you’ll need to give the lender a purchase contract and a receipt for any good-faith deposit that you might have given the seller.
Prequalification and preapproval

In many cases, you’ll want to know how much mortgage you can get before you look at homes so you won’t waste time drooling over places that you can’t afford. Your potential lender can either prequalify you or preapprove you for a mortgage.

Lenders use several standard ratios to determine how much mortgage you’re eligible for. Generally, if you’re applying for a conventional mortgage, your monthly housing expenses (mortgage principal and interest, real estate taxes, and homeowners insurance) should not exceed 28 percent of your gross monthly income. In addition, your total long-term debt (monthly housing expenses plus other debt payments that won’t be repaid within a year) should be no more than 36 percent of your gross monthly income. Government mortgage programs, such as FHA and VA mortgages, have higher qualifying ratios.

Keep in mind that qualifying ratios vary among lenders, and you may still qualify for a mortgage even if you exceed the ratios listed above. For example, some lenders will allow higher ratios if you have excellent credit, a large down payment, or substantial savings, or meet other conditions.

Prequalifying for a mortgage is simply a matter of a lender crunching these numbers to tell you how large a mortgage you’ll qualify for based on those ratios. Remember, what you qualify for may not be what you can afford–only you can determine that after examining your own budget and lifestyle. Because the lender has not verified your income or examined your credit report, prequalification promises you nothing; it simply tells you how much mortgage you might get.

Preapproval, however, means that the lender has checked out your income and credit. You’ll get a letter of commitment stating that you’ll be given a mortgage up to a certain amount. Preapproval lets you know exactly how large a mortgage you can get. In addition, it gives you more credibility as a buyer, since a seller can see in the lender’s letter that you’re going to get the mortgage if he or she accepts your purchase offer.
Finalizing the application

As your mortgage application is processed and finalized, your lender is required by law to give you several documents. Within three business days of applying for the loan, the lender must inform you of the mortgage’s effective rate of interest, or annual percentage rate (APR). If relevant, the lender must also give you consumer information on adjustable rate mortgages. In addition, the lender is required to give you an itemized good-faith estimate of your closing costs and a government publication that explains those costs.

Since the home that you’re purchasing will serve as collateral for the loan, the lender will order a market value appraisal of the property. The lender will not lend you more than a certain percentage of the value of the property. If your down payment will be less than 20 percent of the value of the property, your loan will require private mortgage insurance, and the lender will obtain insurer approval. If the lender has not already done so as part of a preapproval process, it will verify your employment and bank accounts as well as obtain and evaluate your credit report.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Designating a Beneficiary for Life Insurance

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 10 Jun 2011 17:08:14 +0000

John Jastremski Presents:

Designating a Beneficiary for Life Insurance

A beneficiary is the person or entity you name (i.e., designate) to receive the death benefits of a life insurance policy. Some states require that your beneficiary have an insurable interest in your life or be related to you (at least at the time the contract is initiated), while others have no such restriction.

If you do not want to name an individual or entity as your beneficiary, you can name your own estate. The proceeds will then be distributed with your other assets according to your will. You should note, however, that naming your estate as beneficiary may have disadvantages. For example, in many states, life insurance proceeds are exempt from the claims of your creditors when there is a named beneficiary, but not when your estate is your named beneficiary.
Revocable and irrevocable beneficiaries

The beneficiary can be either revocable or irrevocable. A revocable beneficiary can be changed at any time. Once named, an irrevocable beneficiary cannot be changed without his or her consent.
Primary and contingent beneficiaries

You can name as many beneficiaries as you want, subject to procedures set in the policy. The beneficiary to whom the proceeds go first is called the primary beneficiary. Secondary or contingent beneficiaries are entitled to the proceeds only if they survive both you and the primary beneficiary. It’s important to name a contingent beneficiary because if you and your primary beneficiary die simultaneously, the Uniform Simultaneous Death Act provides that the beneficiary will be presumed to have died first. By naming a contingent beneficiary, you avoid having the proceeds flow to your estate.
Multiple beneficiaries

You may name multiple beneficiaries if you choose. There are no legal restrictions (and few company restrictions) on the number of beneficiaries you can designate.

If you name multiple beneficiaries, you must also specify how much each beneficiary will receive. You may not want to give each beneficiary an equal share, so you must state how the proceeds should be divided. Because of the numerous interest and dividend adjustments that the insurance company must make, the death benefit check often does not equal the policy’s face value. So, it’s wise to distribute percentage shares to your beneficiaries, or to designate one beneficiary to receive any leftover balance.
How do you name or change a beneficiary?

When you buy life insurance, you will indicate your beneficiaries on the application. When changing a beneficiary, the insurer will provide you with a beneficiary designation form. Unless one or more of the beneficiaries is irrevocable, you only need to list the names of the beneficiaries, sign the form, and date it. This will automatically revoke any previous designations by writing this in on the change-of-beneficiary form. Be sure to check and update your beneficiary designations upon certain life events (e.g., divorce, remarriage, the birth of children).

Don’t make the mistake of thinking that you can change your beneficiary in your will. A change of beneficiary made in your will does not override the beneficiary designation of your life insurance policy. If you want to change the beneficiary of your life insurance, execute a change-of-beneficiary form. Do not rely on your will to do so.
Why designating the proper beneficiary is important

You should name both primary and contingent beneficiaries. If you have not named one or more beneficiaries, the proceeds pass to your estate at your death. Proceeds paid to your estate are subject to probate and will incur all of the expenses and delays associated with settling an estate. But named beneficiaries receive proceeds almost immediately after your death, and probate is bypassed. In addition, proceeds passing to your estate are subject to the claims of creditors. Most states exempt life insurance proceeds from creditors when there’s a named beneficiary.
Other considerations when designating beneficiaries

If you become incompetent, you cannot name or change a beneficiary. And you’re incompetent only if you are legally declared to be so. The test is similar to the test regarding the making of wills or any other legal contract (i.e., do you have the capacity to understand your actions?).

Do not name a minor as a beneficiary unless you also appoint a guardian in your will or use a trust. If you do name a minor as a beneficiary, and you do not appoint a guardian or use a trust, the probate court will appoint a guardian for you. In states that have adopted the Uniform Transfers to Minors Act, it’s possible to create a custodial account of the minor after the death of the insured to receive the child’s share of the death proceeds.

Your right to change a beneficiary may be limited by a divorce decree or settlement agreement. In some cases, divorce allows a policyowner to change the beneficiary, even if the beneficiary is irrevocable. In other cases, the policyowner may be prohibited from changing the beneficiary or may be required to name a divorced spouse or children as irrevocable beneficiaries.
If you’re a minor

In some states, if you (the insured) are a minor, you can name only a certain class of persons as beneficiaries. That class generally includes your spouse, parents, grandparents, and brothers or sisters. Your parents or legal guardians will also have to sign the application for life insurance.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Should You Self-Insure Your Business?

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 10 Jun 2011 17:01:37 +0000

John Jastremski Presents:

Should You Self-Insure Your Business?

If you’re like most business owners, insurance is part of your cost of doing business. Like any other business expense, though, insurance costs must be managed and controlled. When it comes to handling your business’s risk exposure, you basically have three choices: (1) transfer the risk to someone else (this is really what buying insurance does for you), (2) retain all of the risk within the business (self-insure), or (3) create some combination of these two strategies.
What is self-insurance?

In essence, self-insurance means that your business is shouldering its own risk in one or more areas. Your business will pay claims out of pocket in those areas you’ve chosen to self-insure because you have not transferred the risk to an insurance company.
What are some reasons to self-insure?

The decision to self-insure is both a philosophical one and a financial one. Every business situation is unique, but there are some common issues for any employer to consider regarding self-insurance:

Cost issues and control: When you self-insure, you pay only for the cost of your claims, not for insurance premiums. These premiums include administrative costs as well as profit margins for the insurer. Although you’ll still face administrative costs if you self-insure, you can eliminate the expense that pays for the insurer’s profits. Depending on the type of benefits you provide (e.g., medical or dental care), self-insurance also allows you to set your own deductibles, co-payments, and maximum benefits. Finally, you can monitor your business’s costs more easily.

Cash management: With traditional insurance, you pay roughly the same premium every month, regardless of the number or size of claims. If you self-insure, and your claims end up being low, you can keep more of your operating capital at work for your business. For instance, your business (instead of an insurance company) can be earning interest on unspent funds that you’ve earmarked for loss claims.

Benefit flexibility: As your own insurer, you have complete control over which benefits you want to offer your employees. This means that you can design and customize your employee benefit package to be very attractive to your current and future employees. In the area of health care, for example, you can give your employees the choice to see any doctor or specialist they want. You can also choose which risks to keep and which to transfer by combining a program of self-insurance with traditional insurance. Your business could self-insure for dental and vision benefits, for instance, but purchase medical coverage from an insurance carrier.

Company size: In general, larger companies with hundreds of employees get more benefit from self-insurance than small employers. These larger companies are able to spread their risk over a larger pool of employees. But depending on the area of coverage, even small businesses can benefit from self-insurance.
What are some drawbacks of self-insurance?

Administrative costs: With any type of insurance or benefit plan, someone must handle the claims and make payments. That often means additional staff and more payroll expense for your business. Another alternative is to hire an outside firm, known as a third-party administrator (TPA), to administer the program for you. A TPA will typically cost you 4 to 7 percent of your total insurance program costs.

Employee privacy concerns: If you do not hire a TPA, your staff will be processing claims for their coworkers. This can create tensions regarding the confidentiality of medical issues. Also, this puts you in the position of potentially having to deny coverage for an employee, rather than having the insurance company make that decision.

Cash-flow fluctuations: With a self-insurance program, your business’s claim expenses may be low one month and much higher the next. These wide variations can certainly make business planning a challenge. Even if you choose to self-insure, it makes good sense to pay your self-insurance bill (just like paying an insurance premium) by regularly setting aside funds to handle claim expenses as they come up. Cash-flow problems can also affect your employees. For instance, your plan may require an employee to pay a doctor for treatment and then get reimbursed from your fund. If a doctor bill is substantial, the employee may not have the funds immediately available to pay the bill in full.

Note: You can purchase separate insurance coverage, usually called stop-loss insurance, to handle large or catastrophic losses. This is one way to combine self-insurance with outside insurance. There are two lines of stop-loss insurance. Specific coverage deals with claims for one employee, while aggregate coverage handles all of your employees as a group. For example, you might self-insure medical expenses up to $10,000 per employee and use specific stop-loss insurance to pay claims over and above that limit by any one employee.

Government regulation: Depending on your state’s requirements and the type of self-insured plan you have, you may face some government regulation. Your state may require you to post a bond or set aside a certain amount of funds in escrow for potential claims. Even if you avoid restrictions like these, you may still have to provide some type of reporting about your plan to your state government.
What areas of risk can you self-insure?

Some employers, both public and private, use self-insurance for workers’ compensation. But almost any type of risk can be self-insured. For example, you may want to self-insure chiropractic benefits because your employees do lots of heavy lifting. You can also offer dental benefits, vision benefits, life insurance benefits, medical benefits, or even long-term care benefits.

You make the decision based on what you want for your employees and the potential costs and benefits of your choice. If self-insuring certain risks by offering benefits directly to your employees makes sense for your business, you should consider doing it. Just remember that you may want to guard against potential catastrophic claims by using a mix of self-insurance and stop-loss insurance.
What else should you consider about self-insurance?

You should certainly review your past claims experience over the last several years. If your claims have been low, self-insurance may make sense. You should also examine your employee demographics. For example, if your employees are mostly young and healthy, it might be cost effective to self-insure their health-care expenses.

To the best of your ability, project what may happen to your business in the future. How stable are your revenues? What is your employee turnover rate? What will happen to your plan costs if you add a significant number of employees in the future? How might future changes in the organization itself, such as the loss of a key employee, affect your self-insurance plans?

Realize that if you decide to self-insure all or some of the risks faced by your business, it’s in your best interest to reduce those risks wherever possible, because that will help lower your business’s out-of-pocket costs. So, you may want to offer safety classes, emphasize preventive health care, and pay for employees to attend nutrition or nonsmoking classes. Spending a few dollars now on preventive measures like these may save your business big dollars in future claims.

For many businesses, a combination of traditional and self-insurance will make sense in terms of economics, employee satisfaction, and risk management. With prudent planning, the decision to self-insure can save your business money on insurance expenses. And that can mean a healthier bottom line for your business over the long run.

Nursing homes are expensive. If you need nursing home care in the future, do you know how you will pay for it? Will you use private savings, or will you rely on Medicaid to pay for your care? If you have time to plan, consider purchasing long-term care insurance to pay for your nursing home care.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Five Things to Watch Out for When Buying Long-Term Care Insurance

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 10 Jun 2011 00:32:42 +0000

John Jastremski Presents:

Five Things to Watch Out for When Buying Long-Term Care Insurance

You’ve researched long-term care insurance (LTCI) and are seriously thinking of buying a policy. Just make sure you’re doing it for the right reasons–don’t be swayed by unsubstantiated sales pitches. Here are some claims you’ll want to think twice about.
A long-term care policy is a great tax write-off

Though it’s true that premiums paid on a tax-qualified LTCI policy can reduce your tax burden, you must itemize deductions to be eligible. When you’re older, perhaps you’ll no longer itemize deductions. And even if you do, LTCI premiums fall under the write-off for medical and dental expenses, which is limited to expenses that exceed 7.5 percent of your adjusted gross income. So, for example, if your adjusted gross income is $60,000, you are able to deduct only that portion of your unreimbursed medical and dental expenses (including LTCI premiums) that exceeds $4,500.

And there’s another caveat. Even if your LTCI premiums exceed 7.5 percent of your adjusted gross income, you can’t include all of the premiums in your deduction for medical and dental expenses. Instead, your premiums are deductible according to a sliding scale that depends on your age. So what might look like a great tax write-off at first glance may not be so great after all.

Note: Starting in 2013, the threshold to deduct medical expenses will be raised from 7.5 percent of adjusted gross income to 10 percent. The threshold increase will be delayed until 2017 for those age 65 or older.
You should buy a policy now so you can lock in the price forever

With most LTCI policies, your age at the time you purchase the policy is a factor in determining your premiums. However, this doesn’t mean that your premiums will stay the same as long as you own the policy. In fact, your premiums can increase if your insurance company establishes a rate increase for everyone in your class, and that increase is approved by the state insurance commissioner.

As a relatively new type of insurance, LTCI may be particularly susceptible to rate increases, because insurance companies lack a sufficient amount of underwriting data to predict the number and size of claims they can expect in the future. And unfortunately for you, if your insurance company does raise your premium, it may not be so simple to take your business elsewhere. Any premium on a new LTCI policy will still be based on your age, which will be higher, and your health, which may be worse. So no matter when you buy your policy, make sure you can afford the premiums both now and in the future.
It doesn’t matter how the policy defines “facility”

Currently, there are no national standards on what constitutes a long-term care facility. This means that an “assisted-living facility” or “adult day-care facility” may mean one thing in a particular policy or state and another thing in a different policy or state. This can pose a problem if you buy the policy in one state and then retire to another state–there may be no facilities in your new state that match the definitions in your policy. To protect yourself, make sure you understand exactly what types of facilities the LTCI policy covers before you buy it.
It’s not necessary to check the financial rating of the insurance company

A large number of unexpected long-term care claims could potentially devastate an insurance company that isn’t financially strong. So before you buy an LTCI policy, it’s always a good idea to check the company’s financial rating by using a rating service like Standard & Poor’s, Moody’s, A. M. Best, or Fitch. You can also check with your state’s insurance department for more specific financial information on particular companies.
You should get rid of the policy you have now and buy a new one

Although in some cases a new LTCI policy might have an attractive added benefit that your old policy doesn’t, red flags should go up if an insurance agent encourages you to ditch your old policy for a new one without providing a clear explanation of the added benefits. For one thing, your premiums are based on your age and your health at the time you purchase the policy, so all other things being equal, your new policy will be more expensive. For another, you run the risk that a pre-existing condition won’t be covered under the new policy.

If you’re unhappy with your current policy, an alternative may be to upgrade it rather than replace it (though the agent earns a larger commission if you replace it). Unfortunately, there are unethical agents who make misleading comparisons of LTCI policies in an attempt to get you to switch policies for no reason other than their commission. If you’re considering switching policies, make sure you understand exactly what the new policy offers, whether this additional coverage is important to you, and what you’re giving up.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Shopping for Auto Insurance

John Jastremski - The Retirement Group (800) 900-5867 — Wed, 08 Jun 2011 23:09:15 +0000

John Jastremski Presents:

Shopping for Auto Insurance

Shopping for auto insurance isn’t much different from shopping for anything else. Your goal is to find a quality product that suits your needs–and at a good price. Here are some guidelines to help get you started.
Get your ducks in a row

Before you start shopping around, lay some groundwork. Your first step is to figure out what you need for coverage. To a certain extent, you don’t have a choice–most states require you to carry minimum levels of liability coverage. Many states also require you to have certain amounts of medical payments and/or uninsured motorist coverages. Other types of coverage (e.g., collision coverage for your vehicle and extra endorsements) are generally optional. Find out what your state’s requirements are, but realize that these minimums probably won’t provide adequate protection, especially in the area of liability coverage. The types and amounts of coverage you should have really depend on your circumstances. Some factors to consider are the assets you wish to protect, the value of your car, your family status, and whether you live in a state with no-fault insurance laws.
Size up the coverage you have now

If you’re buying a new car, you may be starting from scratch with your insurance shopping. But what if you currently own a car and already have insurance on it? Then you should first look at the coverage you have in place now and decide if it still meets your auto insurance needs. Maybe it did at one time, but things have changed since you bought the policy. Or maybe you simply chose the wrong types and amounts of coverage to begin with. Even if your coverage still seems appropriate, are you pleased with the insurance company? Does the premium seem reasonable, or do you suspect that you could get a better deal elsewhere?

A thorough review of your coverage and related issues will help you answer these types of questions. You may decide that it’s best to keep your existing policy and just change your coverage limits or make other adjustments–or maybe nothing needs to be changed. If so, it may be unnecessary to explore other options. But don’t stick with what you have just to avoid a tough choice–it’s often wise to shop the market and check out what other companies can offer you. It may be in your best interest to make a change if you can find a lower price, better service, or both.
To seek help or not to seek help?

How do you want to shop for auto insurance? One option is to shop on your own by using on-line quote services or by dealing with insurance companies that sell directly to consumers. You may save money by cutting out the middleman, but this approach has its drawbacks. An on-line service or a company’s customer service representative will give you a price quote, but you may not get much advice about your coverage needs, appropriate deductibles, and other issues. Plus, with so many companies and policies to choose from, it’s hard to be sure that you’re really getting the best deal.

Your other option is to work with an insurance agent or broker. Among other things, a good agent or broker can help you (1) figure out the types and amounts of coverage you need, (2) shop the market for companies and policies, (3) identify the policy that’s best for you, and (4) tailor your policy by adding extra features (known as endorsements). All of this can save you a lot of legwork and maximize your chances of finding the right policy at a good price. Plus, if you choose the right person, the relationship will pay long-term dividends. The service duties of an agent or broker include filing claims, resolving complaints, and updating your coverage if needed.
Shop for value, not price

Whether you’re shopping alone or with professional help, your goal is the same–to get the best overall value for your money. Sounds easy enough, but many unsophisticated consumers make the mistake of shopping for price alone. They assume that if they can find the lowest-priced policy that meets their needs, they’ve gotten the best deal. The problem with this approach is that it ignores other important issues. If you’re not careful, a so-called great deal on auto insurance could come back to haunt you.

To find the best value, you have to balance cost against coverage and service. Once you know what you need for coverage, obtain price quotes from at least three different insurance companies. Don’t be surprised if some of the quotes vary by quite a bit. You can eliminate any that are out of your price range, but it will take some work to narrow down the rest. Try to find out about each company’s reputation and claims-paying practices. For example, does the company frequently deny or delay customer claims? You should also see if the company offers the discounts and endorsements you want. Finally, read each policy over to make sure that the exclusions, limitations, and other features are similar.

Don’t be afraid to pay a little more for coverage if you find a company you really like. Over the long haul, quality service and other intangibles may be more important than saving a few bucks. If you’re lucky, you may even find that a good company’s rates are competitive with those of cut-rate insurers.

This material was prepared by Peter Montoya Inc, and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

its the4�utȜ��you have to notify your insurance company.

If you have a car loan, make sure that your insurance company has notified the lienholder. If your vehicle is declared a total loss, it’s likely that the insurance company will issue a check to the lienholder, not to you.
Some states have laws requiring that individuals involved in an accident resulting in injury or property damage report it to the Department of Motor Vehicles (DMV). Check with the police, the DMV, or your insurance company to find out if your state or the state in which the accident occurred has such a requirement.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Group Health Insurance

John Jastremski - The Retirement Group (800) 900-5867 — Tue, 07 Jun 2011 23:04:16 +0000

John Jastremski Presents:

Group Health Insurance

With group health insurance, a single policy covers the medical expenses of many different people. Unlike individual insurance, where each person’s risk potential is evaluated to determine insurability, group health insurance allows all eligible members of the group to be covered by one policy, regardless of their age or physical condition. The premium for group insurance is calculated based on the characteristics of the group as a whole, such as average age and degree of occupational hazard.
A note about health-care reform

Although the health-care reform laws passed in 2010 do not require employers to provide health insurance coverage, starting in 2014, an annual penalty of $2,000 per full-time employee will be assessed against large employers (i.e., employers with 50 or more full-time employees) who do not offer health benefits and who have at least one full-time employee enrolled in an insurance exchange receiving a premium tax credit. Large employers that offer “unaffordable” coverage will pay an annual penalty of $3,000 for each of their employees enrolled in an insurance exchange and obtaining subsidies to buy insurance. However, the first 30 full-time employees will not be included in either calculation. Employers with 50 or fewer full-time employees are exempt from any penalties.

Also starting in 2014, employers who offer health coverage (and pay a portion of that coverage) will be required to provide free choice vouchers to employees whose household income does not exceed 400 percent of the federal poverty level and who do not participate in the employer’s health plan. An employee will qualify for the free choice voucher if the cost of his or her premium under the employer’s coverage is between 8 to 9.8 percent of his or her household income. The voucher will equal the amount the employer would have paid on the employee’s behalf under the employer’s group health plan. The employer will not include the amount of the voucher in the employee’s compensation, but will be entitled to a deduction in the amount of the voucher. Employers providing free choice vouchers will not be subject to penalties for any month in which a qualifying employee receives premium credits in the exchange.
When you apply, timing is everything

Many employers offer group health insurance as part of their employee benefits package. Other groups that may offer such coverage include churches, clubs, trade associations, chambers of commerce, and special-interest groups.

Although your individual health is generally not evaluated when you apply for group health insurance, you must apply during the specified eligibility period. For employer-sponsored health insurance, this is often the first 30 days of your employment or the first 30 days following your initial probationary period. For insurance offered by an association, this may be the first 30 days of your membership in the group. Both employers and associations may also have an open enrollment period each year, during which you may sign up for coverage, modify your existing coverage, or add dependents to your coverage. There are also time limits for adding dependents (e.g., within 30 days of marriage or the birth of your child).

The purpose of the eligibility period is to reduce insurance costs by preventing people from waiting until after they discover a health problem to sign up for coverage. If you fail to enroll during this period, the insurance company has the right to treat you as though you were applying for individual insurance. This means you’ll probably have to answer extensive health questions and submit to a physical examination. The insurance company can then decide whether or not to insure you.

Starting January 1, 2013, employers must provide written notice to employees of the existence of the state insurance exchange program and their right to purchase insurance through an exchange, the employee’s eligibility for a premium tax credit, and the implications with respect to employer contributions for those employee’s who elect coverage through an exchange program.

Starting January 1, 2014, group health plans offering health coverage may not contain any waiting period in excess of 90 days.

And, effective upon the issuance of regulations by the Department of Labor, employers with more than 200 full-time employees will be required to enroll (subject to permitted waiting periods) new full-time employees automatically into health insurance plans offered by the employer. Employers must provide employees with adequate notice regarding the auto-enrollment and the opportunity to opt out of such coverage.
The benefits of group coverage

Under a group health insurance plan, the insurance company agrees to insure all members of the group, regardless of their current physical condition or health history. The only requirement is that group members apply for insurance within the specified eligibility period. Clearly, group health insurance is beneficial for those with chronic health conditions who otherwise might be unable to get individual insurance.

Group health insurance is somewhat less risky for insurers than individual insurance, since the risk is spread out among a larger number of people. Within a fairly large group, it’s almost certain that the good insurance risks will equal or exceed the bad ones. Because only one policy is issued for the entire group, the cost of establishing and administering group coverage is lower than the cost of issuing an individual policy to each person. This means it generally costs less for you to purchase. And in many cases, your employer or association will pick up some or all of the premiums, making group insurance even more affordable.

Under the health-care reform laws passed in 2010, starting in 2014:

Group health plans that provide dependent coverage for children must continue such coverage for the participant’s dependents until the child reaches age 26 regardless of the child’s marital or student status.
Group health plans are prohibited from imposing any preexisting condition exclusions on plan participants who are under the age of 19.
Group health plans must provide full coverage (i.e., no deductibles or co-payments) for certain preventative-care items, including immunizations, child and adolescent health screenings, breast cancer screenings and mammograms.
Group health plans are prohibited from establishing annual limits on the dollar value of benefits for any participant or beneficiary.
Group health plans are prohibited from retroactively cancelling health coverage except when the plan participant engages in fraud or intentional misrepresentation of material facts. In such limited instances, coverage may only be cancelled upon prior notice.
Employers are permitted to offer employees enhanced rewards (in the form of premium discounts, waivers of cost-sharing requirements, or benefits that would otherwise not be provided) of up to 30 percent of the cost of employee-only coverage for participating in a wellness program and meeting certain health-related standards.

And, starting June 1, 2014, all health plan policies, individual or group, must cover “essential health benefits”. These benefits include the following: (1) ambulatory patient services. (2) emergency services. (3) hospitalization. (4) maternity and newborn care. (5) mental health and substance use disorder services, including behavioral health treatment, (6) rehabilitative and habilitative services and devices, (7) prescription drugs, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.
The drawbacks of group coverage

In a group insurance situation, the provisions of the policy are negotiated between the insurer and the master policyowner (usually an employer or association). Therefore, you can’t customize your policy. You don’t have the freedom to pick and choose provisions, and your deductible amount and co-payment percentage are determined in advance. In some situations, however, you may be able to choose between two or more insurance plans.
What you should look for in a group policy

Sometimes you have to take what you can get, but if possible, look for an insurer that’s financially stable–one with an “A” or “A+” rating from A. M. Best, Moody’s, or Standard & Poor’s. It does you no good to have a great insurance policy if your company goes belly-up.

You’ll also want to find a policy with the highest lifetime payout possible. Policies with unlimited payouts are less common these days, but anything less than $1 million may be insufficient to cover you in the event of a catastrophic illness.

If you do have a choice between two offered plans, you’ll want to think about the limits you set on your out-of-pocket costs. Also, most employer groups review and compare differences in the health policies they provide to their employees, so check with your benefits or compensation manager to get comparable information about the different plans and covered benefits offered. Many managed care companies and other insurance carriers will send you free marketing brochures about the plan benefits. Lower deductibles and co-payments mean that your costs will be lower if you actually do get sick, but you’ll pay dearly for this protection. By agreeing to higher deductibles and co-payments, you can cut your insurance premiums dramatically. As long as youretain a reasonable out-of-pocket maximum, you shouldn’t have to worry about your medical costs getting out of hand.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

What Do Long-Term Care Insurance Policies Cover?

John Jastremski - The Retirement Group (800) 900-5867 — Tue, 07 Jun 2011 23:01:59 +0000

John Jastremski Presents:

What Do Long-Term Care Insurance Policies Cover?

Long-term care refers to a broad range of medical and personal services designed to assist people who’ve lost their ability to function independently. If you’re thinking of buying long-term care insurance (LTCI), you’ll want to make sure it covers the services you may need.
Types of long-term care

Because some LTCI policies subsidize only certain forms of care, it’s important to understand the terms. Long-term care may be divided into three levels:

Skilled care may be continuous round-the-clock care designed to treat a medical condition; it’s ordered by a doctor and administered by skilled medical workers, such as registered nurses or professional therapists, as part of an established treatment plan
Intermediate care is intermittent nursing and rehabilitative care provided by registered nurses, licensed practical nurses, and nurse’s aides under a doctor’s supervision
Custodial care helps the patient perform daily living activities (e.g., bathing, eating, and dressing); it can be provided by someone without professional medical skills, but it’s supervised by a doctor

Generally, LTCI policies will, for a specified period of time (called the benefit period), pay a selected dollar amount per day toward skilled, intermediate, or custodial care in nursing homes, assisted-living facilities, or the insured’s home. Typical benefit periods run from two to five years, and most policies pay $40 to $150 per day or more in daily benefits.
Where it’s happening

LTCI policies sometimes limit the facilities where you can choose to receive such care. Generally, though, LTCI will pay for care in nursing homes, assisted-living facilities, and at home.

Many nursing homes provide all three levels of long-term care. When a patient no longer needs skilled care, he or she can be transferred to an intermediate or custodial care section within the same facility, or perhaps released to an assisted-living facility or to home care. Assisted-living facilities generally provide rental rooms or apartments, housekeeping services, meals, social activities, and transportation; some, most notably continuing care retirement communities, also provide long-term nursing care and guaranteed lifetime services.

Home health care makes sense when you’re recovering from an injury or an illness and don’t need 24-hour care. If you have a medical condition that requires nursing care, daily monitoring, or therapy, you can hire a nurse or an aide to help you. You may also need custodial care and perhaps household help with cleaning, laundry, or shopping. In some instances, you might live with a relative who works and cannot care for you all day. Home health care might then be coupled with adult day care in centers that provide social interaction, therapeutic activities, preventive health services, and nutritious meals.
What long-term care insurance policies don’t cover

To know what a particular LTCI policy covers, be sure to check the details of the policy.

Do you have any medical conditions from which you experienced symptoms, or for which you sought medical advice or treatment, within one to five years before applying for LTCI? If so, check what the policy covers. Some ignore pre-existing conditions, while others refuse to pay for treatments related to them–it might all depend on how long ago the condition first appeared. Many companies impose a waiting period (up to six months) before coverage for pre-existing conditions goes into effect. In all cases, you should disclose your true medical history to the insurance company on your application. If you do not disclose a pre-existing condition and the company discovers this later on, it may not pay for treatment related to that condition or may even cancel your policy.

Check to see what, if anything, isn’t covered. Alzheimer’s disease, senility, and Parkinson’s disease are common reasons for needing long-term care; make sure your policy doesn’t exclude paying for care associated with these conditions. Also, most policies won’t pay benefits for a person with an alcohol or drug addiction, an injury caused by an act of war, or injuries that were self-inflicted or the result of an attempted suicide.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Dealing with Divorce

John Jastremski - The Retirement Group (800) 900-5867 — Mon, 06 Jun 2011 23:19:06 +0000

John Jastremski Presents:

Dealing with Divorce

Divorce can be a lengthy process that may strain your finances and leave you feeling out of control. But with the right preparation, you can protect your interests, take charge of your future, and save yourself time and money.You certainly never expected divorce when you cut the wedding cake–you and your spouse planned on spending the rest of your lives together. Unfortunately, the fairy tale didn’t work out, and you’re headed for a divorce. So where do you begin?
First things first: should you hire an attorney?

There’s no legal requirement that you hire an attorney when divorcing. In fact, going it alone may be a sensible option if you’re young and have been married only a short time, are childless, and have few assets. However, most divorcing couples hire attorneys to better protect their interests, even though doing so can be expensive. Divorce attorneys typically charge hourly rates and require you to submit retainers (lump sums) up front. The charges will depend on the complexity of the case, the reputation and experience of the divorce attorney, and your geographic location.

You should know that if you’re a homemaker or earn less income than your spouse, it’s still possible to obtain legal representation. You can submit a motion to the court, asking a judge to order your spouse to pay for your attorney’s fees.

If you and your spouse can agree on most issues, you may save time and money by filing an uncontested divorce. If you can’t agree on significant issues, you may want to meet with a divorce mediator, who can help you resolve issues that the two of you can’t resolve alone. To find a mediator, contact your local domestic relations court, ask friends for a referral, or look in the telephone book. Certain attorneys, members of the clergy, psychologists, social workers, marriage counselors, and financial planners may offer their services as mediators.
Save time and money by doing your homework before meeting with a divorce professional

To save time and money, compile as much of the following information as you can before meeting with an attorney or other divorce professional:

Each spouse’s date of birth
Names and birthdates of children, if you have any
Date and place of marriage and length of time in present state
Existence of prenuptial agreement
Information about parties’ prior marriages, children, etc.
Date of separation and grounds for divorce
Current occupation and name and address of employer for each spouse
Social Security number for each spouse
Income of each spouse
Education, degrees, and training of each spouse
Extent of employee benefits for each spouse
Details of retirement plans for each spouse
Joint assets of the parties
Liabilities and debts of each spouse
Life (and other) insurance of each spouse
Separate or personal assets of each spouse, including trust funds and inheritances
Financial records
Family business records
Collections, artwork, and antiques

If you’re uncertain about some of these areas, you can obtain the necessary information through your spouse’s financial affidavit and/or the discovery process, both of which are mandated by the court.
Consider the big questions, such as child custody and alimony

Although your divorce professional will help you work through the big issues, you might want to think about the following questions before meeting with him or her:

If you have children, what are your wishes regarding custody, visitation, and child support?
Whose health insurance plan should cover the children?
Do you earn enough money to adequately support yourself, or should alimony be considered?
Which assets do you really want, and which are you willing to let your spouse keep?
How do you feel about the family home? Do you feel strongly about living there, or should it be sold or allotted to your spouse?
Will you have enough money to pay the outstanding debt on whatever assets you keep?

In addition to an attorney, you may want to see a therapist to help you clarify your wishes, express yourself more clearly, and deal with any child-related issues. Such counseling is typically covered by health insurance.
Some dos and don’ts when divorcing

Keep the following tips in mind:

Do prepare a budget and a financial plan to sustain you until your divorce is final. Get help if you don’t currently have the skills and energy to do this on your own.
Do review monthly bank and financial statements and make copies for your attorney.
Do review all tax returns that have been filed jointly or separately by your spouse.
Do make sure all taxes have been paid to date.
Do review the contents of any safe-deposit boxes.
Do get emotional support for yourself–talk to friends, join a support group, or see a therapist.
Don’t make large purchases or create additional debt that might later cause financial hardship.
Don’t quit your job.
Don’t move out of the house before consulting your attorney.
Don’t transfer or give away assets that are owned jointly.
Don’t sign a blank financial statement or any other document without reviewing it with your attorney.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Comparing Long-Term Care Insurance Policies

John Jastremski - The Retirement Group (800) 900-5867 — Mon, 06 Jun 2011 23:13:37 +0000

John Jastremski Presents:

Comparing Long-Term Care Insurance Policies

Because long-term care insurance (LTCI) is a relatively new product, policies are not standardized. This can make it especially difficult to compare policies when you’re shopping for this type of insurance. However, comparing LTCI policies is a lot easier when you know what to look for and follow a few simple guidelines.
Compare insurance companies

One of your first steps should be to compare and evaluate insurance companies. But since there are many companies that sell LTCI, how do you narrow the field down to a few good ones? You can start by talking to friends, family members, or anyone else you know who’s bought LTCI. How satisfied have these people been with their companies’ handling of claims and overall customer service? To learn more about company reputations, check out consumer websites and publications. You can also contact your state’s insurance department for information about different companies, such as customer complaints lodged within the last year.

In addition, there are private firms that make a business of rating insurance companies, usually on a letter-grade scale. Some of the well-known rating service firms are A. M. Best, Moody’s, The Street.com (formerly Weiss), Fitch, and Standard& Poor’s. You can contact one of these firms directly, though their ratings may be available at your local public library. The ratings are typically based on a company’s financial strength and other factors. Financial strength is particularly important because it tells you whether a company is likely to meet its future claims payments and other obligations.
Compare policy ins and outs

As mentioned, there is no standard LTCI policy or contract–specific benefits and features often vary widely from one policy to another. That’s why detailed policy comparisons are more important with LTCI than with any other type of insurance. Once you’ve narrowed your list of insurance companies down to a few (e.g., three or four), ask each company for some sample policies to review. Each sample should include an Outline of Coverage section at the beginning of the policy. This section briefly summarizes the policy’s benefits and highlights the major features. After you read this section, read through the entire policy to make sure you understand all of the provisions. Here are some key items to look for:

Waiting period: This is the period of time that must pass before the insurance company will begin to pay benefits. It can be anywhere from 0 to 365 days. You’ll be asked to select a waiting period–the shorter the period, the more the policy will cost.
Duration of benefits (known as the benefit period): You’ll also be asked to select a benefit period (e.g., two years or a lifetime)–the longer the period, the more costly the policy. Watch out for caps placed on the total lifetime benefits you can receive if the policy lets you carry over unused daily benefits beyond the scheduled benefit period.
Nursing home and home health-care daily benefit: This is the amount of coverage you select as your daily benefit limit (e.g., $50, $200).
Cost-of-living rider: This feature provides protection against loss of purchasing power due to inflation. It increases your coverage every year to keep pace with inflation (either based on the Consumer Price Index or at a fixed percentage rate).
Range of care: A policy may provide coverage for different levels of care, such as skilled, intermediate, and/or custodial. A good policy should cover all levels of care.
Pre-existing conditions: A waiting period (e.g., six months) may be imposed before you can receive coverage for any pre-existing conditions you might have.
Other exclusions: Some policies may not cover certain medical conditions (e.g., Alzheimer’s or Parkinson’s disease). Others may specify that you have to be in certain types of facilities.
Premium increases: Some policies may have a level premium for the period that the policy is in effect. In other cases, the premium may increase during the policy period.
Waiver of premium: Most policies waive your premium after you’ve received benefits for a certain number of days, but sometimes only if you’re receiving care in certain types of facilities.
Guaranteed renewability: Most policies give you the option to renew the policy and maintain your coverage, despite any changes in your health.
Grace period: Most policies give you a grace period if you’re late with a premium payment (usually 30 days). This means that the policy will remain in effect during that period.
Restoration of benefits: This is a feature that restores your benefits if you recover from your condition and do not require care for a consecutive period (e.g., 180 or 365 days).
Return of premium: You may be entitled to a return of premiums paid (or a nonforfeiture of benefits or a continuation of benefits for a limited period of time) if you cancel your policy after paying premiums for a number of years.
Prior hospitalization: Some policies require a hospital stay before you can qualify for benefits under the policy. This requirement is less common than it used to be, and you should probably avoid policies that include this provision.

How do the policies you’re considering stack up against each other? Which benefits and features mean the most to you? How much can you customize each policy to your needs? These are very important questions. Knowing how to evaluate LTCI coverage in light of your own needs is the key to comparing and weeding out policies. Your final list of policies should include only ones that can offer exactly what you’re looking for.
Compare premiums

Because LTCI policies vary so much, simple premium comparisons usually don’t provide useful results. You run the risk of comparing premiums for policies that don’t provide comparable coverage. For example, suppose you’re comparing two LTCI policies with different premiums. If the more expensive policy has a larger daily benefit and longer benefit period, it may be difficult to tell which policy is the better buy. Variations in the length of the elimination period and other features may further muddy the waters. The point is that you want a policy that gives you the best total value, and the premium is only one part of the equation.

Still, the premium is important because you don’t want to pay more for coverage than you have to. And you want to be sure you can afford the premiums as time goes on. Once you know your coverage needs and find a few policies that offer a good fit, you should then compare premiums. The price of an LTCI policy typically depends on the specifics of the coverage, your age at the time you buy the policy (most companies won’t sell you a policy if you’re under 40 or over 84), your medical history, the cost of long-term care where you live, and other factors. Note that premiums may vary widely between companies, even for policies that provide comparable coverage. The more similar the policies you’re comparing, the more the premium will tell you about a policy’s true value.
Consider getting help

Because LTCI is complicated, comparing and evaluating policies is no easy task. You can do it alone if you choose, but you’re probably better off getting professional help. A qualified insurance professional, or financial professional can assist you with this entire process. To find the right person to help you, seek word-of-mouth references and be very selective.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Handling Market Volatility

John Jastremski - The Retirement Group (800) 900-5867 — Sat, 04 Jun 2011 15:44:59 +0000

John Jastremski Presents:

Handling Market Volatility

Conventional wisdom says that what goes up, must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when it’s your money at stake.

Though there’s no foolproof way to handle the ups and downs of the stock market, the following common sense tips can help.
Don’t put your eggs all in one basket

Diversifying your investment portfolio is one of the key ways you can handle market volatility. Because asset classes often perform differently under different market conditions, spreading your assets across a variety of different investments such as stocks, bonds, and cash alternatives (e.g., money market funds, CDs, and other short-term instruments), has the potential to help manage your overall risk. Ideally, a decline in one type of asset will be balanced out by a gain in another, though diversification can’t guarantee a profit or eliminate the possibility of market loss.

One way to diversify your portfolio is through asset allocation. Asset allocation involves identifying the asset classes that are appropriate for you and allocating a certain percentage of your investment dollars to each class (e.g., 70 percent to stocks, 20 percent to bonds, 10 percent to cash alternatives). An easy way to decide on an appropriate mix of investments is to use a worksheet or an interactive tool that suggests a model or sample allocation based on your investment objectives, risk tolerance level, and investment time horizon.
Focus on the forest, not on the trees

As the market goes up and down, it’s easy to become too focused on day-to-day returns. Instead, keep your eyes on your long-term investing goals and your overall portfolio. Although only you can decide how much investment risk you can handle, if you still have years to invest, don’t overestimate the effect of short-term price fluctuations on your portfolio.
Look before you leap

When the market goes down and investment losses pile up, you may be tempted to pull out of the stock market altogether and look for less volatile investments. The small returns that typically accompany low-risk investments may seem downright attractive when more risky investments are posting negative returns.

But before you leap into a different investment strategy, make sure you’re doing it for the right reasons. How you choose to invest your money should be consistent with your goals and time horizon.

For instance, putting a larger percentage of your investment dollars into vehicles that offer safety of principal and liquidity (the opportunity to easily access your funds) may be the right strategy for you if your investment goals are short-term (e.g., you’ll need the money soon to buy a house) or if a long-term goal such as retirement has now become an immediate goal. But if you still have years to invest, keep in mind that although past performance is no guarantee of future results, stocks have historically outperformed stable value investments over time. If you move most or all of your investment dollars into conservative investments, you’ve not only locked in any losses you might have, but you’ve also sacrificed the potential for higher returns.
Look for the silver lining

A down market, like every cloud, has a silver lining. The silver lining of a down market is the opportunity you have to buy shares of stock at lower prices.

One of the ways you can do this is by using dollar cost averaging. With dollar cost averaging, you don’t try to “time the market” by buying shares at the moment when the price is lowest. In fact, you don’t worry about price at all. Instead, you invest the same amount of money at regular intervals over time. When the price is higher, your investment dollars buy fewer shares of stock, but when the price is lower, the same dollar amount will buy you more shares. Although dollar cost averaging can’t guarantee you a profit or protect against a loss, over time a regular fixed dollar investment may result in an average price per share that’s lower than the average market price, assuming you invest through all types of markets. Please remember that since dollar cost averaging involves continuous investment in securities regardless of fluctuating price levels of such securities, you should consider your financial ability to make ongoing purchases.
Don’t count your chickens before they hatch

As the market recovers from a down cycle, elation quickly sets in. If the upswing lasts long enough, it’s easy to believe that investing in the stock market is a sure thing. But, of course, it never is. As many investors have learned the hard way, becoming overly optimistic about investing during the good times can be as detrimental as worrying too much during the bad times. The right approach during all kinds of markets is to be realistic. Have a plan, stick with it, and strike a comfortable balance between risk and return.
Don’t stick your head in the sand

While focusing too much on short-term gains or losses is unwise, so is ignoring your investments. You should check up on your portfolio at least once a year, more frequently if the market is particularly volatile or when there have been significant changes in your life. You may need to rebalance your portfolio to bring it back in line with your investment goals and risk tolerance, or redesign it so that it better suits your current needs. If you need help, a financial professional can help you decide which investment options are right for you.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

What Employers Need to Know about Workers' Compensation Insurance

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 03 Jun 2011 22:53:36 +0000

John Jastremski Presents:

What Employers Need to Know about Workers’ Compensation Insurance

All states and the District of Columbia have workers’ compensation laws designed to protect employed individuals who get sick, injured, or killed on the job. Employers pay the cost of workers’ compensation by purchasing private insurance or state-sponsored insurance, or sometimes by self-insuring. Each state has its own workers’ compensation system, so the rules vary. As a business owner, you should know the following facts about workers’ compensation.
Workers’ compensation is a mandatory state-based insurance program

Workers’ compensation is a mandatory state-based social insurance program that provides workers with insurance protection against disability or death that occurs while at work. In most states, the workers’ compensation laws are compulsory and require businesses to accept the laws’ provisions and provide the specified benefits. In some states, coverage is elective, and employers can opt out of the state workers’ compensation system in exchange for the loss of certain liability limitations. Some states exempt businesses with fewer than three or four employees from workers’ compensation insurance requirements.
It provides employees with benefits in the event of a workplace injury

Workers’ compensation protects workers from workplace injuries, repetitive stress injuries, and occupational diseases. It pays four types of benefits:

Medical benefits
Disability benefits
Survivor’s benefits
Rehabilitation benefits

Employees who are injured or disabled on the job receive a fixed monetary award. In exchange, they give up the right to sue the business. If an employee dies as a result of a workplace injury, benefits are paid to the employee’s family.
Your business is responsible for providing coverage

Businesses are, by law, 100 percent responsible for providing workers’ compensation benefits. Your business can’t charge a worker for benefits provided under workers’ compensation or for any portion of the business’s workers’ compensation insurance premium.

Keep in mind that your business may be required by the laws of your state to post a notice in the workplace that provides the name of the workers’ compensation insurance carrier.
The rules for coverage vary by state

Your state mandates how much coverage you must buy, which employee classifications must be covered, and what percentage of an employee’s salary you’ll pay if he or she misses work due to a work-related injury.

Failure to carry workers’ compensation coverage, when required, may be punishable by fines, civil penalties, criminal penalties, exclusion from public contracts, and cease and desist orders. The rules and penalties vary by state.
All employees generally must be covered

Generally, all employees must be covered under state workers’ compensation systems. However, each state excludes certain classifications of workers from among the following:

Business owners
Independent contractors
Casual workers
Domestic employees in private homes
Farm workers
Unpaid volunteers
Maritime workers
Railroad employees (benefits are received under a separate federal law)
Federal government employees (benefits are received under a separate federal law)

Most workplace injuries are covered on a no-fault basis

Most on-the-job injuries are covered by workers’ compensation on a no-fault basis. That is, benefits are paid regardless of who is to blame for the accident or injury–the employer does not admit liability for the injury or illness, and the employee receives workers’ compensation benefits without having to sue. There are exceptions, though. For example, coverage may be excluded for injuries suffered when an employee’s conduct violates company policy.
Some accidents outside the workplace are covered

In most cases, your business is not liable for accidents occurring outside the workplace. However, there are situations when an employee is covered outside the workplace. Employees are covered if they are injured while:

Traveling on company business
Running a work-related errand
Attending a required business-related social event

Injured employees have the right to file for benefits

It is an injured worker’s right to claim benefits under workers’ compensation for a job-related illness or injury. When a worker is injured on the job, his or her claim is filed with the insurance company (or self-insuring employer). Medical and disability benefits are paid by the insurer according to a state-approved formula.

Your business can’t interfere with, coerce, discriminate, fire, or force the resignation of an employee for filing a claim under workers’ compensation. Your business can’t tell an employee not to file a claim. If an employee can prove that a business in any way harassed or fired him or her for seeking benefits, the employee can file a civil lawsuit seeking substantial damages.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Understanding Long-Term Care Riders and Options

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 03 Jun 2011 22:51:04 +0000

John Jastremski Presents:

Understanding Long-Term Care Riders and Options

There’s no such thing as a standard long-term care insurance (LTCI) policy. Some policies are comprehensive (including most group LTCI policies), building many important features into the base plan–while charging a higher premium. Other lower-priced policies provide only basic coverage but offer you the choice of buying greater benefits at an additional cost. That’s why it’s important when comparing policies to look at both the basic coverage an LTCI policy offers and the optional benefits you can add.
A quick look at long-term care insurance basics

Most LTCI policies today cover a full range of services, including full-time nursing home care (skilled care), part-time nursing home care (intermediate care), or assistance with daily living activities (custodial care). Coverage for mental incapacity (including Alzheimer’s disease) is now standard in most policies. Also, a good basic policy won’t require you to spend time in a hospital before receiving long-term care benefits. And nearly all LTCI policies are renewable, as long as premium payments continue. You should be able to find a basic LTCI package that includes many of these features. If not, find out how much it will cost to add these provisions.

Now that you have an idea of what a good basic LTCI policy should include, consider some of the following options and riders. But because they can significantly increase your LTCI premium, you’ll need to balance the cost of these options with their importance to you.
Home health care and other alternative care options

Most LTCI policies will cover care in alternative care settings, such as the home, adult day-care facilities, and assisted-living facilities. But this important option is not standard in every policy. Alternative care makes sense when you don’t require the constant skilled nursing care that a nursing home provides but still need the services of a health aide at least a few times a week. It can also help you transition from a hospital or nursing home and become self-sufficient. So what’s the price tag? Home care and other alternative care coverage that provides half the benefit of full nursing home care can increase your premium by 30 percent. Coverage that equals the nursing home benefit could raise the premium by 50 percent.
Inflation protection

When you buy an LTCI policy, you choose a daily benefit level–the amount the policy will pay for your daily care if you need it. But how do you know this will be enough to adequately cover your costs? An inflation rider automatically increases your benefit amount by a specific percentage each year, either by simple interest or compound interest to help your benefit amount keep pace with rising costs. Five percent is a typical inflation factor. The younger you are when you buy an LTCI policy, the more important inflation protection may be. Keep in mind, though, that a simple-interest inflation rider can increase your premium by 20 to 30 percent or more, while a compound-interest inflation rider could more than double your premium. A possible alternative is to buy a policy with a larger benefit amount today in anticipation of rising nursing home costs in the future.
Nonforfeiture of premium feature

Should you decide you no longer need LTCI or if you are unable to keep up the premium payments, you may be able to salvage a portion of the policy’s benefits. Some contracts contain a return-of-premium option whereby the insurer returns all of the premiums you have paid beyond a certain date, minus any benefits used up to that point. Others may pay a stipulated percentage of the paid premiums, depending on the number of years you’ve held the contract. Aside from the cash option, another method of preserving the benefits of your LTCI policy is through a nonforfeiture conversion. This involves changing your policy to one with a lower coverage amount or coverage for a shorter period of time compared with your original policy. These reduced benefits will be available when needed, and no further premium payments are necessary.
Waiver of premium

This provision allows you to stop paying premiums once you are in a nursing home and the insurance company has started paying benefits to you. Depending on the provisions of your contract, the insurance company may waive the premium as soon as it makes your first benefit payment, or you may have to wait 60 to 100 days after the onset of your nursing care. Note that the waiver of premium might not apply if you are receiving home care.
Guaranteed insurability

With this rider, you may increase your level of coverage without submitting to further health questions. This may be important to you if you’re concerned that your health condition may change after you purchase your LTCI policy and you may want to purchase more insurance in the future. This option is particularly attractive if you’re buying your LTCI policy when you’re young.
Third-party notification

This benefit allows you to name a third party who would be notified by the insurance company if your policy is about to lapse because of your nonpayment of the premium due to mental or cognitive impairment. Many states require that insurance companies offer this option at no additional cost to you.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Making Policy Loans and Withdrawals

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 03 Jun 2011 00:13:34 +0000

John Jastremski Presents:

Making Policy Loans and Withdrawals

Cash value life insurance refers to a wide variety of insurance policies that provide both a death benefit and a cash value component that may build tax deferred over time. Many cash value policies let you borrow or withdraw from the cash value. This can sometimes be a good way to raise funds for expenses or emergencies. However, before you take a loan or withdrawal from your policy, make sure you explore all of your options and understand the issues involved.
Give me an L-O-A-N

You may be able to borrow against the cash value in your life insurance policy. Unlike obtaining a bank loan, policy loans don’t require a credit check or bank approval. That’s because the cash value that has built up in the policy is the collateral for your loan. Another advantage is that the interest rate on the loan may be determined in advance and may be lower than rates offered by banks. The interest on policy loans may also be tax deductible if the policy is owned by a business.

If you take out a loan against the cash value of your insurance policy, the amount you borrow is not taxable income to you, except in the case of a modified endowment contract (MEC). This is the case even if the loan is larger than the amount of the premiums you have paid. But keep in mind that the policy must remain in force for the loan to maintain its tax-free status. If the policy is surrendered or lapses, the loan is considered a distribution from the policy and may be taxable income to you.

So what are the drawbacks? First of all, interest accrues on the unpaid loan balance (though in some cases, part of the interest paid may be credited back to your cash value). If you choose not to repay the loan, the accruing interest could erode your cash value and eventually result in a policy lapse. There also may be an opportunity cost with policy loans, because the amount you borrow may miss out on tax-deferred growth. Finally, if you die before the loan is fully paid off, the policy death benefit will be reduced by the outstanding loan and interest balance. That could jeopardize your beneficiary’s financial security.
Making withdrawals–take it out and keep it out

You may be able to withdraw some of the cash value from your life insurance policy. However, the amount you can withdraw is generally limited to a percentage of the cash value and varies by policy and company. As long as you maintain enough cash value in the policy, you can withdraw the cash from the policy and still keep the life insurance in effect to provide a death benefit for your family and loved ones. Also, unlike a loan, a withdrawal doesn’t have to be paid back.

When you begin to withdraw from an eligible cash value life insurance policy, the amount of withdrawals up to your basis in the policy will be tax free. Your basis is the amount of premiums you have paid into the policy minus any previously paid dividends or tax-free withdrawals. Any withdrawals in excess of your basis will be taxed as ordinary income.

The main disadvantage of cash value withdrawals is that such withdrawals will lower your death benefit, possibly putting your beneficiary at risk. And, as with a loan, there’s an opportunity cost when you take money out of a tax-deferred account.
A dash of loan with a pinch of withdrawal

Cash value withdrawals and policy loans are not mutually exclusive events. You can use a combination of withdrawals and loans to maximize the tax-free benefits. You might choose to make a cash value withdrawal up to the amount of your policy basis and then take a policy loan. This strategy can give you the money you need while keeping taxes and interest payments to a minimum.
A crash course in modified endowment contracts

Before the MEC rules were passed, it was possible to place large amounts of cash into a single premium life insurance policy where a large portion could grow tax deferred, and at the death of the insured, the proceeds passed tax free to the beneficiary. If the money was needed, the policyowner could access the cash value through tax-free lifetime loans or withdrawals. These policies were being used in place of other investment vehicles, the earnings on which were subject to income tax.

However, the law relating to withdrawals from life insurance policies changed in 1988. Since then, if the total premiums paid during the first seven years of the policy exceed a maximum amount set by the IRS (called the 7-pay test), then the policy becomes a modified endowment contract, or a MEC. A MEC isn’t treated any differently than a non-MEC life insurance policy regarding tax-free death benefits and tax-deferred cash accumulation. But pre-death withdrawals from the cash accumulations of a MEC are taxed differently. Any withdrawals (including loans and partial surrenders) taken from cash accumulations are taxed as ordinary income to the extent there is gain in the policy. A tax penalty of 10% on the amount withdrawn from the MEC also may have to be paid if the policy owner is under the age of 59½, unless an exception applies.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Understanding Probate

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 03 Jun 2011 00:08:47 +0000

John Jastremski Presents:

Understanding Probate

When you die, you leave behind your estate. Your estate consists of your assets–all of your money, real estate, and worldly belongings. Your estate also includes your debts, expenses, and unpaid taxes. After you die, somebody must take charge of your estate and settle your affairs. This person will take your estate through probate, a court-supervised process that winds up your financial affairs after your death. The proceedings take place in the state where you were living at the time of your death. Owning property in more than one state can result in multiple probate proceedings. This is known as ancillary probate.
How does probate start?

If your estate is subject to probate, someone (usually a family member) begins the process by filing an application for the probate of your will. The application is known as a petition. The petitioner brings it to the probate court along with your will. Usually, the petitioner will file an application for the appointment of an executor at the same time. The court first rules on the validity of the will. Assuming that the will meets all of your state’s legal requirements, the court will then rule on the application for an executor. If the executor meets your state’s requirements and is otherwise fit to serve, the court generally approves the application.
What’s an executor?

The executor is the person whom you choose to handle the settlement of your estate. Typically, the executor is a spouse or a close family member, but you may want to name a professional executor, such as a bank or attorney. You’ll want to choose someone whom you trust will be able to carry out your wishes as stated in the will. The executor has a fiduciary duty–that is, a heightened responsibility to be honest, impartial, and financially responsible. Now, this doesn’t mean that your executor has to be an attorney or tax wizard, but merely has the common sense to know when to ask for specialized advice.

Your executor’s duties may include:

Finding and collecting your assets, including outstanding debts owed to you
Inventorying and appraising your assets
Giving notice to your creditors (e.g., credit card companies, banks, retail stores)
Filing an estate tax return and paying estate taxes, if any
Paying any debts or other taxes
Distributing your assets according to your will and the law
Providing a detailed report of how the estate was settled to the court and all interested parties

The probate court supervises and oversees the entire process. Some states allow a less formal process if the estate is small and there are no complicated issues to resolve. In those states allowing informal probate, the court may be involved only indirectly. This may speed up the probate process, which can take years.
What if you don’t name an executor?

If you don’t name an executor in your will, or if the executor can’t serve for some reason, the court will appoint an administrator to settle your estate according to the terms of your will. If you die without a will, the court will also appoint an administrator to settle your estate. This administrator will follow a special set of laws, known as intestacy laws, that are made for such situations.
Is all of your property subject to probate?

Although most assets in your estate may pass through the probate process, other assets may not. It often depends on the type of asset or how an asset is titled. For example, many married couples own their residence jointly with rights of survivorship. Property owned in this manner bypasses probate entirely and passes by “operation of law.” That is, at death, the property passes directly to the joint owner regardless of the terms of the will and without going through probate. Other assets that may bypass probate include:

Investments and bank accounts set up to pass automatically to a named person at death (payable on death)
Life insurance policies with a named beneficiary (someone other than the estate)
Retirement plans with a named beneficiary
Other property owned jointly with rights of survivorship

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Motorcycle Insurance

John Jastremski - The Retirement Group (800) 900-5867 — Wed, 01 Jun 2011 20:56:35 +0000

John Jastremski Presents:

Motorcycle Insurance

OK, a motorcycle’s a lot more fun than a Sunday drive in the family car, but it’s still a motor vehicle on a public road. So before you ride off into the sunset, make sure your motorcycle is properly insured.
What you’ll need

Buying motorcycle insurance is very similar to buying automobile insurance. Typically, you’ll need the following coverage:

Liability insurance to cover you (and perhaps your passengers; some states require it) for bodily injury or property damage resulting from an accident with your motorcycle. Ask your agent about the amount of coverage you need. Some states have a minimum required level of coverage, but you may need more to protect your assets.
Collision insurance to cover you for the value of damage to your bike, after deductibles, that results from an accident. If you’re making monthly payments for your motorcycle, your lender will require collision coverage.
Other-than-collision (also known as comprehensive) insurance to cover you for loss due to fire, theft, vandalism, and other events not resulting from an accident. This coverage also involves a deductible.
Uninsured motorist coverage to pay your medical bills and other expenses related to bodily injury, including lost wages, if a driver without insurance hits you. It may also cover damage to your bike. Check with your agent to see if property damage is included in your uninsured motorist coverage. If it isn’t, you may be able to purchase it separately.
Underinsured motorist coverage to pay your medical bills and other bodily-injury-related expenses if you are hit by a driver with minimal insurance and your damages exceed the limit of that driver’s coverage. Your underinsured motorist coverage will pick up balances up to your limit for underinsured motorist coverage not covered by the underinsured driver’s policy.

How to save money on motorcycle insurance

Perhaps the best way to save money on motorcycle insurance is to maintain a safe driving record and to shop around for the best prices. Some companies will give you a discount if you attend a motorcycle safety class or if you have multiple vehicles covered under one policy. In many northern regions, you can buy a policy that discontinues coverage during the winter months when you won’t be riding the motorcycle anyway. During these months, you pay no premium or a reduced premium.

Eliminating physical damage (collision and other-than-collision) coverage or increasing your deductibles will also lower your premiums. However, if your bike is financed, your lender may not let you do this. Special safety or antitheft equipment can also reduce your premiums in many cases. The number of miles you drive, the place where you store the bike, the size and style of the bike, and the horsepower and age of the bike may all affect your policy premiums.

If you’re having difficulty with the price of motorcycle insurance, discuss these issues with your agent or insurer. You may be able to make some changes to lower your premiums without taking on unacceptable additional risk.
Where to buy motorcycle insurance

If you are purchasing a motorcycle, look into the availability and price of motorcycle insurance before you buy. It’s often less expensive to buy motorcycle insurance from the same company that insures your automobile. By simply adding a miscellaneous-type vehicle endorsement to your regular policy, you may benefit from multiple-vehicle discounts and have the advantage of dealing with only one agent.

However, many companies that underwrite automobile insurance consider motorcycle operators high risk and refuse to underwrite policies for them. Alternatively, they may assign a motorcycle policy to the high-risk pool where you will pay the same high premiums as the riskiest drivers on the road. In such cases, it might be better to seek out a separate insurer that specializes in motorcycle insurance. Such a company may be more willing to cover you and may have a better understanding of your needs and requirements.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Variable Life Insurance

John Jastremski - The Retirement Group (800) 900-5867 — Wed, 01 Jun 2011 20:53:57 +0000

John Jastremski Presents:

Variable Life Insurance

If you want the assurance of a death benefit and level (unchanging) premium payments for the life of your policy, coupled with the possibility of enhancing your death benefit through the use of investments, then variable life insurance may be the answer you’re looking for. You don’t need to worry about monitoring the amount of money in your policy. Your coverage remains in force so long as you pay your premiums. On top of that, you have the chance to build additional benefits in a tax-deferred separate account.
How a variable life insurance policy works

Although other types of whole life and universal life insurance policies offer a (relatively) low return on your cash value account, a policy with a variable account has the potential for greater appreciation. Here’s how a variable life insurance policy works: Each time you make a premium payment, the insurance company deducts its sales and administrative expenses related to your policy. The remainder of the money is credited to a cash value account from which the company deducts its monthly costs for insuring your life. Your cash value is placed into an account separate from the insurance company’s general account.

You can choose from a variety of accounts known as subaccounts, including stock, bond, and money market accounts, into which to invest your cash value. You may generally allocate your money to as many subaccounts as are in the variable life insurance portfolio, and you may change your allocations at any time without charge, up to certain limits.

Because these subaccounts are securities-based, they have the potential to grow faster than the cash value accounts contained in nonvariable insurance policies. But, of course, with this potential for rapid growth comes greater volatility and the possibility of loss. Growth is not guaranteed, and your cash value will fluctuate on a daily basis. You’ll need to pay close attention to the performance of your subaccounts and may wish to consult an investment professional. Also, because the cash value of your variable life insurance policy is regulated as an investment product by the Securities and Exchange Commission, you should receive a prospectus. The prospectus contains detailed information about investment objectives, risks, charges, and expenses, so read it carefully before purchasing a policy.
Risk versus return

Placing your money in any type of securities-based product offers the chance for big gains, but also carries the risk that you may lose your entire principal. The dollar amount of your cash value will fluctuate on a daily basis. Because you control your investments, you must decide how much risk you are able to tolerate before purchasing a variable life insurance policy. But remember, no matter how well or how poorly your subaccounts perform, most variable life contracts are designed so that your level premiums pay for a minimum death benefit equal to the face amount of your policy.
Accessing the money in your policy through loans

As with any type of permanent life insurance, your cash value can be used as collateral to obtain (generally) tax-free loans from your insurance company. If you do take out a loan, that portion of your cash value designated as collateral is transferred to the company’s fixed interest account. This is because the chance exists that the balance of your variable subaccounts may fall below the amount of your loan due to market fluctuations. The company charges interest on loans at a rate a few percentage points higher than the return you receive in the fixed account. Consequently, loans have a permanent effect on the performance of the subaccount investment return. At the time of your death, the company will deduct all outstanding loan balances, plus accumulated interest, from the death benefit paid to your beneficiary.
Surrendering your variable life policy

If you no longer need insurance coverage or if you need to access all of the cash values of the policy, you can surrender (cancel) your policy. The company will return your accumulated cash value, minus outstanding loans and interest and any deferred sales charges, known as the surrender charge. Any gain above the premiums (less any dividends received) that you have paid into the policy will be taxed as ordinary income. Keep in mind, however, that surrendering your policy will end your insurance coverage completely.
Buying a variable life policy

Because variable life insurance policies contain portfolios holding stocks, bonds, and other investment instruments, they are regulated as securities. The insurance professionals who sell variable life must be properly registered with the National Association of Securities Dealers, as well as your state’s insurance division. As a policyowner, you receive periodic statements of your policy death benefit and cash value amounts, as well as (at least) annual reports describing in detail the composition, performance, and other information regarding the subaccounts and subaccount advisors. If you’re uncomfortable with your statements or reports, consult your agent or an investment professional.

Note:Variable life insurance policies are offered by prospectus, which you can obtain from your financial professional or the insurance company issuing the policy. 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 insurance policy.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Annuities and Retirement Planning

John Jastremski - The Retirement Group (800) 900-5867 — Sat, 28 May 2011 15:05:52 +0000

John Jastremski Presents:

Annuities and Retirement Planning

You may have heard that IRAs and employer-sponsored plans (e.g., 401(k)s) are the best ways to invest for retirement. That’s true for many people, but what if you’ve maxed out your contributions to those accounts and want to save more? An annuity may be a good investment to look into.
Get the lay of the land

An annuity is a tax-deferred investment contract. The details on how it works vary, but here’s the general idea. You invest your money (either a lump sum or a series of contributions) with a life insurance company that sells annuities (the annuity issuer). The period when you are funding the annuity is known as the accumulation phase. In exchange for your investment, the annuity issuer promises to make payments to you or a named beneficiary at some point in the future. The period when you are receiving payments from the annuity is known as the distribution phase. Chances are, you’ll start receiving payments after you retire.
Understand your payout options

Understanding your annuity payout options is very important. Keep in mind that payments are based on the claims-paying ability of the issuer. You want to be sure that the payments you receive will meet your income needs during retirement. Here are some of the most common payout options:

You surrender the annuity and receive a lump-sum payment of all of the money you have accumulated.
You receive payments from the annuity over a specific number of years, typically between 5 and 20. If you die before this “period certain” is up, your beneficiary will receive the remaining payments.
You receive payments from the annuity for your entire lifetime. You can’t outlive the payments (no matter how long you live), but there will typically be no survivor payments after you die.
You combine a lifetime annuity with a period certain annuity. This means that you receive payments for the longer of your lifetime or the time period chosen. Again, if you die before the period certain is up, your beneficiary will receive the remaining payments.
You elect a joint and survivor annuity so that payments last for the combined life of you and another person, usually your spouse. When one of you dies, the survivor receives payments for the rest of his or her life.

When you surrender the annuity for a lump sum, your tax bill on the investment earnings will be due all in one year. The other options on this list provide you with a guaranteed stream of income (subject to the claims-paying ability of the issuer). They’re known as annuitization options because you’ve elected to spread payments over a period of years. Part of each payment is a return of your principal investment. The other part is taxable investment earnings. You typically receive payments at regular intervals throughout the year (usually monthly, but sometimes quarterly or yearly). The amount of each payment depends on the amount of your principal investment, the particular type of annuity, the length of the payout period, your age if payments are to be made over your lifetime.
Consider the pros and cons

An annuity can often be a great addition to your retirement portfolio. Here are some reasons to consider investing in an annuity:

Your investment earnings are tax deferred as long as they remain in the annuity. You don’t pay income tax on those earnings until they are paid out to you.
An annuity may be free from the claims of your creditors in some states.
If you die with an annuity, the annuity’s death benefit will pass to your beneficiary without having to go through probate.
Your annuity can be a reliable source of retirement income, and you have some freedom to decide how you’ll receive that income.
You don’t have to meet income tests or other criteria to invest in an annuity.
You’re not subject to an annual contribution limit, unlike IRAs and employer-sponsored plans. You can contribute as much or as little as you like in any given year.
You’re not required to start taking distributions from an annuity at age 70½ (the required minimum distribution age for IRAs and employer-sponsored plans). You can typically postpone payments until you need the income.

But annuities aren’t for everyone. Here are some potential drawbacks:

Contributions to nonqualified annuities are made with after-tax dollars and are not tax deductible.
Once you’ve elected to annuitize payments, you usually can’t change them, but there are some exceptions.
You can take your money from an annuity before you start receiving payments, but your annuity issuer may impose a surrender charge if you withdraw your money within a certain number of years (e.g., seven) after your original investment.
You may have to pay other costs when you invest in an annuity (e.g., annual fees, investment management fees, insurance expenses).
You may be subject to a 10 percent federal penalty tax (in addition to any regular income tax) if you withdraw earnings from an annuity before age 59½, unless you meet one of the exceptions to this rule.
Investment gains are taxed at ordinary income tax rates, not at the lower capital gains rate.

Choose the right type of annuity

If you think that an annuity is right for you, your next step is to decide which type of annuity. Overwhelmed by all of the annuity products on the market today? Don’t be. In fact, most annuities fit into a small handful of categories. Your choices basically revolve around two key questions.

First, how soon would you like annuity payments to begin? That probably depends on how close you are to retiring. If you’re near retirement or already retired, an immediate annuity may be your best bet. This type of annuity starts making payments to you shortly after you buy the annuity, typically within a year or less. But what if you’re younger, and retirement is still a long-term goal? Then you’re probably better off with a deferred annuity. As the name suggests, this type of annuity lets you postpone payments until a later time, even if that’s many years down the road.

Second, how would you like your money invested? With a fixed annuity, the annuity issuer determines an interest rate to credit to your investment account. An immediate fixed annuity guarantees a particular rate, and your payment amount never varies. A deferred fixed annuity guarantees your rate for a certain number of years; your rate then fluctuates from year to year as market interest rates change. A variable annuity, whether immediate or deferred, gives you more control and the chance to earn a better rate of return (although with a greater potential for gain comes a greater potential for loss). You select your own investments from the subaccounts that the annuity issuer offers. Your payment amount will vary based on how your investments perform.

Note: Variable annuities are long-term investments suitable for retirement funding and are subject to market fluctuations and investment risk including the possibility of loss of principal. Variable annuities contain fees and charges including, but not limited to mortality and expense risk charges, sales and surrender (early withdrawal) charges, administrative fees and charges for optional benefits and riders.

Variable annuities are sold by prospectus. You should consider the investment objectives, risk, charges and expenses carefully before investing. The prospectus, which contains this and other information about the variable annuity, can be obtained from the insurance company issuing the variable annuity or from your financial professional. You should read the prospectus carefully before you invest.
Shop around

It pays to shop around for the right annuity. In fact, doing a little homework could save you hundreds of dollars a year or more. Why? Rates of return and costs can vary widely between different annuities. You’ll also want to shop around for a reputable, financially sound annuity issuer. There are firms that make a business of rating insurance companies based on their financial strength, investment performance, and other factors. Consider checking out these ratings.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

If Long-Term Care Insurance Isn't for You: Other Options

John Jastremski - The Retirement Group (800) 900-5867 — Fri, 27 May 2011 23:53:08 +0000

John Jastremski Presents:

If Long-Term Care Insurance Isn’t for You: Other Options

Long-term care insurance (LTCI) isn’t for everyone. Not only is it expensive and sometimes hard to qualify for, but there’s no guarantee you’ll ever use the benefits. But if you decide not to buy LTCI, what are your alternatives?
You saved for a rainy day–it’s here

Should the need arise, you could use your personal savings to pay for long-term care (self-insurance). If you choose this option, you’ll have to estimate how much money you might need to cover long-term care expenses and start an appropriate savings plan. And though there’s a good chance that the amount you’ll have to put aside each month to cover future medical expenses will equal (or exceed) what you’d pay in LTCI premiums, buying LTCI is not an option in some cases (e.g., if a pre-existing condition prevents you from qualifying for coverage). Keep in mind, however, that if you do choose to self-insure, there’s always the chance that your savings won’t be enough to cover your actual long-term care expenses.
Did you hear? Medicaid pays for long-term care

Medicaid is a government-sponsored program that pays for medical treatment. People with low incomes who are elderly, disabled, or blind may be eligible if they meet the financial and medical requirements. These eligibility decisions are primarily based on:

Income
Net worth
Need for nursing or custodial care

In most states, Medicaid subsidizes care in nursing facilities and at home (for those who meet Medicaid guidelines). Unfortunately, meeting Medicaid’s financial requirements is difficult. Many people are forced to exhaust their life savings to qualify for Medicaid. A comprehensive LTCI policy may prevent this from happening.
Life insurance–it’s not just for estate planning anymore

If you have a cash value life insurance policy, familiarize yourself with the rules on policy loans and cash withdrawals. Most policies allow you to access your cash value in one of these ways, but the amounts may be limited, and there may be interest and tax consequences. Also, find out if your policy allows you to use part of the death benefit for medical expenses or long-term care while you are alive. (Policies with an accelerated benefits rider typically allow this.) Should you become terminally ill, you may also have the option to sell your life insurance policy to a viatical settlement funding company and use the money to pay for your care. You will typically get 40 to 85 percent of the policy’s face value from a viatical settlement.
Get paid to live in your home

If you own your home outright or have a lot of equity in your home, you could consider a reverse mortgage. Basically, a reverse mortgage gives the lender a lien (or mortgage) on your home, and you receive either a lump sum or prearranged monthly payments. You typically don’t have to repay the loan as long as you live in the home. However, if you move or if the house is sold, the loan must be repaid out of the proceeds of the sale. A reverse mortgage can be an easy source of cash, but it could also complicate matters if you plan on leaving your home to your heirs.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Six Keys to More Successful Investing

John Jastremski - The Retirement Group (800) 900-5867 — Tue, 24 May 2011 21:39:39 +0000

John Jastremski Presents:

Six Keys to More Successful Investing

A successful investor maximizes gain and minimizes loss. Though there can be no guarantee that any investment strategy will be successful and all investing involves risk, including the possible loss of principal, here are six basic principles that may help you invest more successfully.
Long-term compounding can help your nest egg grow

It’s the “rolling snowball” effect. Put simply, compounding pays you earnings on your reinvested earnings. The longer you leave your money at work for you, the more exciting the numbers get. For example, imagine an investment of $10,000 at an annual rate of return of 8 percent. In 20 years, assuming no withdrawals, your $10,000 investment would grow to $46,610. In 25 years, it would grow to $68,485, a 47 percent gain over the 20-year figure. After 30 years, your account would total $100,627. (Of course, this is a hypothetical example that does not reflect the performance of any specific investment.)

This simple example also assumes that no taxes are paid along the way, so all money stays invested. That would be the case in a tax-deferred individual retirement account or qualified retirement plan. The compounded earnings of deferred tax dollars are the main reason experts recommend fully funding all tax-advantaged retirement accounts and plans available to you.

While you should review your portfolio on a regular basis, the point is that money left alone in an investment offers the potential of a significant return over time. With time on your side, you don’t have to go for investment “home runs” in order to be successful.
Endure short-term pain for long-term gain

Riding out market volatility sounds simple, doesn’t it? But what if you’ve invested $10,000 in the stock market and the price of the stock drops like a stone one day? On paper, you’ve lost a bundle, offsetting the value of compounding you’re trying to achieve. It’s tough to stand pat.

There’s no denying it–the financial marketplace can be volatile. Still, it’s important to remember two things. First, the longer you stay with a diversified portfolio of investments, the more likely you are to reduce your risk and improve your opportunities for gain. Though past performance doesn’t guarantee future results, the long-term direction of the stock market has historically been up. Take your time horizon into account when establishing your investment game plan. For assets you’ll use soon, you may not have the time to wait out the market and should consider investments designed to protect your principal. Conversely, think long-term for goals that are many years away.

Second, during any given period of market or economic turmoil, some asset categories and some individual investments historically have been less volatile than others. Bond price swings, for example, have generally been less dramatic than stock prices. Though diversification alone cannot guarantee a profit or ensure against the possibility of loss, you can minimize your risk somewhat by diversifying your holdings among various classes of assets, as well as different types of assets within each class.
Spread your wealth through asset allocation

Asset allocation is the process by which you spread your dollars over several categories of investments, usually referred to as asset classes. These classes include stocks, bonds, cash (and cash alternatives), real estate, precious metals, collectibles, and in some cases, insurance products. You’ll also see the term “asset classes” used to refer to subcategories, such as aggressive growth stocks, long-term growth stocks, international stocks, government bonds (U.S., state, and local), high-quality corporate bonds, low-quality corporate bonds, and tax-free municipal bonds. A basic asset allocation would likely include at least stocks, bonds (or mutual funds of stocks and bonds), and cash or cash alternatives.

There are two main reasons why asset allocation is important. First, the mix of asset classes you own is a large factor–some say the biggest factor by far–in determining your overall investment portfolio performance. In other words, the basic decision about how to divide your money between stocks, bonds, and cash is probably more important than your subsequent decisions over exactly which companies to invest in, for example.

Second, by dividing your investment dollars among asset classes that do not respond to the same market forces in the same way at the same time, you can help minimize the effects of market volatility while maximizing your chances of return in the long term. Ideally, if your investments in one class are performing poorly, assets in another class may be doing better. Any gains in the latter can help offset the losses in the former and help minimize their overall impact on your portfolio.
Consider liquidity in your investment choices

Liquidity refers to how quickly you can convert an investment into cash without loss of principal (your initial investment). Generally speaking, the sooner you’ll need your money, the wiser it is to keep it in investments with comparatively less volatile price movements. You want to avoid a situation, for example, where you need to write a tuition check next Tuesday, but the money is tied up in an investment whose price is currently down.

Therefore, your liquidity needs should affect your investment choices. If you’ll need the money within the next one to three years, you may want to consider certificates of deposit or a savings account, which are insured by the FDIC, or short-term bonds or a money market account, which are neither insured or guaranteed by the FDIC or any other governmental agency. Your rate of return will likely be lower than that possible with more volatile investments such as stocks, but you’ll breathe easier knowing that the principal you invested is relatively safe and quickly available, without concern over market conditions on a given day.

Note: If you’re considering a mutual fund, consider its investment objectives, risks, charges, and expenses, all of which are outlined in the prospectus, available from the fund. Consider the information carefully before investing.
Dollar cost averaging: investing consistently and often

Dollar cost averaging is a method of accumulating shares of stock or a mutual fund by purchasing a fixed dollar amount of these securities at regularly scheduled intervals over an extended time. When the price is high, your fixed-dollar investment buys less; when prices are low, the same dollar investment will buy more shares. A regular, fixed-dollar investment should result in a lower average price per share than you would get buying a fixed number of shares at each investment interval.

Remember that, just as with any investment strategy, dollar cost averaging can’t guarantee you a profit or protect you against a loss if the market is declining. To maximize the potential effects of dollar cost averaging, you should also assess your ability to keep investing even when the market is down.

An alternative to dollar cost averaging would be trying to “time the market,” in an effort to predict how the price of the shares will fluctuate in the months ahead so you can make your full investment at the absolute lowest point. However, market timing is generally unprofitable guesswork. The discipline of regular investing is a much more manageable strategy, and it has the added benefit of automating the process.
Buy and hold, don’t buy and forget

Unless you plan to rely on luck, your portfolio’s long-term success will depend on periodically reviewing it. Maybe your uncle’s hot stock tip has frozen over. Maybe economic conditions have changed the prospects for a particular investment, or an entire asset class.

Even if nothing bad at all happens, your various investments will likely appreciate at different rates, which will alter your asset allocation without any action on your part. For example, if you initially decided on an 80 percent to 20 percent mix of stocks to bonds, you might find that after several years the total value of your portfolio has become divided 88 percent to 12 percent (conversely, if stocks haven’t done well, you might have a 70-30 ratio of stocks to bonds in this hypothetical example). You need to review your portfolio periodically to see if you need to return to your original allocation. To rebalance your portfolio, you would buy more of the asset class that’s lower than desired, possibly using some of the proceeds of the asset class that is now larger than you intended.

Another reason for periodic portfolio review: your circumstances change over time, and your asset allocation will need to reflect those changes. For example, as you get closer to retirement, you might decide to increase your allocation to less volatile investments, or those that can provide a steady stream of income.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

Beyond the Basics: Disability Income Insurance Riders

John Jastremski - The Retirement Group (800) 900-5867 — Mon, 23 May 2011 22:55:32 +0000

John Jastremski Presents:

Beyond the Basics: Disability Income Insurance Riders

Riders are policy add-ons that enable you to customize an individual disability policy to fit your needs. By using riders, companies do not require every policyowner to pay for every optional feature, whether they want it or not.

Some benefits and features normally sold as riders will be included as base coverage in some policies, but more often they must be purchased in addition to the policy, and will substantially increase the policy’s cost. Generally, you must purchase riders when you buy the policy–they typically can’t be added on to the contract after the policy is issued. Here are details on some (but not all) of the optional benefits and features that can be purchased as riders and added on to a disability income insurance policy.
Future increase option rider

This is one of the most common riders, and one that may be particularly important to younger policyholders (typically, those under 40). A future increase option rider protects your future insurability by guaranteeing you the right to purchase additional amounts of disability insurance at specified dates in the future. The premium for any additional coverage purchased in the future will be based on your age at the time of purchase. Future purchases are generally limited to half the original benefit amount, and you will be required to prove that your earned income warrants additional coverage. This rider generally cannot be added after you reach age 45, although some insurers make it available through age 50. The future increase option may also be called a guaranteed insurability option or a guaranteed purchase option.
Cost-of-living rider

A cost-of-living rider protects the purchasing power of your disability benefits against the effects of inflation. After you have received benefits for a year, this rider automatically increases the amount of your benefits to offset cost-of-living increases. Typically, increases in benefits occur annually and are tied to an established index that measures the cost of living, such as the consumer price index (CPI), or are a set percentage of your benefit. Some companies cap the increase amount to one or two times the original benefit. The insurance company lets you choose the CPI index or a fixed percentage at the time you purchase the rider. The cost-of-living rider is often very expensive, but it may pay off if you suffer a long-term disability.
Social Security rider

The Social Security Administration has a very narrow definition of “total disability,” and consequently about 60 percent of all initial applications for Social Security disability benefits are denied. (Source: Social Security Administration, Disabled Worker Beneficiary Statistics.) Even those that are approved must wait several months before Social Security benefits begin. Because of this, companies have introduced the Social Security rider, which provides additional benefits during the first year of your disability while you are waiting for your Social Security benefits to kick in. This rider may be structured in one of two ways:

All-or-nothing rider: If Social Security approves your application and provides any benefit, this rider pays nothing. If you do not get Social Security benefits, the rider pays out the specified benefit.
Offset rider: The benefit paid by the rider will be reduced (or offset) by any amount you receive through Social Security.

Hospital income rider

This rider, which is losing popularity, provides a set payment for each day you are hospitalized because of your disability. Payments can last up to 12 months, which can be especially beneficial if you have elected a long elimination period. However, this rider typically is not a good value, as most hospital stays are relatively short these days.
Lifetime extension rider

The lifetime extension rider extends your benefit period beyond age 65. In other words, if you are totally disabled as a result of an injury or illness that occurs before age 65, benefits will continue throughout your lifetime as long as you remain totally disabled. The insurance company may specify that the injury or illness must begin before a certain age (usually 45 or 50) in order for you to receive a full benefit under this rider. If the disability begins after this specified age, you would typically receive a reduced benefit until age 65, at which time the benefits would end. The amount of your reduced benefit would be based on your age at the time you became disabled.
Waiver-of-premium rider

The waiver-of-premium rider allows you to stop paying premiums in the event that you are disabled. This rider provides that you will not be required to pay any further premiums once you have been disabled for a certain period of time. Once you are able to return to work full-time, the rider requires you to begin paying premiums on your policy once again.
Accidental death and dismemberment rider

This type of rider provides an additional benefit if you die or suffer a combination of loss of limbs, sight, and hearing as a result of accidental bodily injury. When you purchase this additional coverage, the insurance company provides a schedule that assigns a benefit amount to each specific type of injury.
Automatic benefits increase rider

This rider stipulates that the monthly benefit amount will be adjusted automatically every year (provided you are not disabled) to account for pay raises or increased income you are likely to receive after you purchase a disability policy. The rider provides annual increases for a certain term (often five years). During this time, you won’t have to provide any proof that your income has gone up. However, if the rider is renewable and you want to renew it, you may have to show evidence that your income has increased at that time, although the increased benefits you already have cannot be taken away from you. In most cases, there is a corresponding increase in premium, so most companies allow you to decide whether you want to accept the higher benefit level and premium each year as it is offered.
Partial disability benefits rider

A partial disability benefits rider will pay you benefits in the event that you are unable to perform some or all of the duties of your occupation on a full-time basis. However, a partial benefits rider doesn’t pay benefits based on the percentage of earnings you’ve lost. Instead, it simply states that you will receive a percentage of your monthly benefit for a specified period (usually three to six months). A partial benefits rider may require you to have first qualified for total disability benefits before being able to collect under this rider.
Return-of-premium rider

The return-of-premium rider might appeal to you if, like most people, you don’t believe that you will actually become disabled, but you are buying a disability policy just in case. The return-of-premium rider entitles you to get back the premium money you pay in the event you don’t need to use the policy benefits. Depending on the type of rider you choose, you will get either a portion of the money back at certain ages or after a certain number of years, or all of your money back at age 65 when the rider expires. Any claims payments made to you will reduce the amount of premium that you get back. Also, this rider will substantially increase your premium. Because of this rider’s high cost and limits on potential premiums return, you should be wary as it may not be the best value for your premium dollar.

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.