What Kind of Life Insurance Should I Have?

Picking the right life insurance is tricky.  Should you go with the absolute cheapest coverage, term? Or is it better to buy a cash value policy such as whole life?  What other choices do you have (such as return of premium) which may work better in your situation?  Like many personal finance decisions, the right type of life insurance depends entirely on your individual needs.  The purpose of this article is to help you assess your needs and find the right type of insurance.  As always, feel free to contact me directly if you seek professional help with this.

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5 Tips for Financial Success and Independence

Save Early and Often – It’s some of the most popular financial advice out there – start saving in your 20’s, and yet so many people don’t do it.  I understand that people have other obligations such as paying off debts and getting established in their careers which can interfere with implementing a savings plan.  However, most people don’t properly prioritize saving.  If you treat saving like paying a bill and you make it totally automatic, you’ll forget you’re doing it.  Create an automated savings plan when you’re young and get started.  Even if the amounts are low at first, it’ll be easy to increase the amounts as your income level rises and your debts disappear.

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Analyzing the Value of Life Insurance as an Asset

One of the more challenging aspects of advising clients about life insurance is helping them to recognize that life insurance is an “asset,” rather than an “expense”.  For many people, this view is a bit of a foreign concept in a world where other types of insurance (auto, homeowners, health, and liability, just to name a few) merely reimburse the policyholder for a contemporaneous, out-of-pocket, economic loss that the policyholder hoped would never occur – leaving the policyholder in the same economic position as he or she was in before the loss took place.  Life insurance is unique in the sense that it covers a loss that is certain to eventually occur:  It is not a question of whether the policyholder will have a claim, but instead when.  As long as the policy is maintained, the stream of premium payments will ultimately result in the policyholder’s receipt of the death benefit – which allows for a rate-of-return calculation that is inapplicable to other types of coverage.

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Simple Ratios and Rules of Thumb for Financial Planning

I often get asked quick questions such as “how much house can I afford?” or “how much life insurance do I need?”  Personal finance is a very subjective science and the answers can vary widely depending on who is doing the asking.  That said, it’s nice to have some basic rules of thumb which can be used to make sure you’re not totally off base when making a quick financial estimate.  Below are a few of these rules which apply to saving, spending, housing, and insurance.  Enjoy!

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3 Reasons to Rollover Your 401K

I’m a big fan of rolling over 401K plans into IRA accounts.  For many people, a 401K plan will represent one of their retirement income ‘prongs’ along with after-tax savings, pensions, and social security.  Many workers of various ages have money in 401K plans because they’ve learned that salary reductions into 401K plans will reduce one’s taxable income and grow those funds on a tax-deferred basis until those funds are withdrawn during retirement.  It’s a very widely used retirement savings vehicle.  So why not just leave those funds in your 401K if you switch jobs or retire?  I’ll give you my take on this below:

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2014 Mid-Year Market Recap and Outlook

2014 is looking smooth right now for stock and bond investors.  The year didn’t start off that way with a fairly steep decline in February, but like all the dips of 2013, it was ultimately another buying opportunity for those able to look past the noise.  Just this past Wednesday, Janet Yellen reiterated the Federal Reserve’s intent to end quantitative easing by this Fall – removing the economy’s training wheels –  and even talked about reducing the economy’s longer term “target interest rate” to 3.75% from 4.00%.  That’s good news for stocks and housing, and hopefully for the unemployed as well.

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Building a Standard for Financial Advice

There was a good article in Research magazine last month about the business of financial advice and how it needs improvement.  Research is an industry publication so it’s not the sort of article which would be distributed to the general public.  That said, I’ve read articles in consumer publications which comment on many of the same points.  Part of the problem is that the financial advice industry doesn’t really have an official designation, perhaps one that is state-issued, required for  inclusion in the industry, and that has a rigorous set of practice standards.  Accountants have the CPA, financial analysts have the CFA, lawyers have the JD, etc.  Some might say that people in the business of giving financial advice have the CFP (Certified Financial Planner) designation, which they do, but that isn’t a requirement for inclusion in the industry.   In fact, many people don’t know about or distinguish between the various financial planning designations which exist.

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Should You Buy Bonds at a Premium?

You buy a corporate bond at par or at a discount, right? It just seems like common sense. What would lead you to purchase a corporate bond at a premium? Actually, investors do sometimes buy fixed-income securities with coupon rates above current market rates. If interest rates are on the way up, buying a premium bond when interest rates are still relatively low represents a defensive play. The move does involve risk, however.
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When Should You Apply for Social Security?

When it comes to the question of Social Security income, the choice looms large. Should you apply now to get earlier payments? Or wait for a few years to get larger checks? The first thing you want to do is consider what you do and don’t know. You know how much retirement money you have; you may have a clear projection of retirement income from other potential sources. Other factors aren’t as foreseeable. You don’t know exactly how long you will live, so you can’t predict your lifetime Social Security payout. You may even end up returning to work again. In terms of your eligibility to receive full benefits, the answer may be found on the Social Security website. If you haven’t already created a profile, you should do that.

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New York Financial Planner – NYC Financial Advisor