Life Insurance Part 1 – A Little History

by Glenn J. Downing, MBA, CFP®

The fundamental reason to buy life insurance is that someone else is depending upon you for a living.  Plain and simple.  It is risk transfer:  in exchange for premium dollars, the insurance company will make a payout at your demise.

The life insurance industry is one that responds to market demands.  In Part I of this series I’m going to give you a little history.  What kind of policy should you buy – term?  whole life?  In Part II I'll discuss the other jobs life insurance can do for you, and talk a little about underwriting. In Part III I'll examine some common reasons for procrastination.  

Yearly Renewable Term Insurance

Original insurance contracts were for one year only – term policies, in other words, which renewed each year.  As the insured ages, year-by-year the premiums would rise, reasonably enough, as one’s mortality age comes closer.  So fundamentally we...

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Life Insurance Part 3 – Why Haven't You Bought the Coverage You Know You Should Have?

by Glenn J. Downing, MBA, CFP®

If you dropped dead tomorrow your family would be in a world of hurt.  You know this.  Yet you haven't purchased life insurance.  Why not?  Before you get into it, check out Part I and Part II of this 3-part series.  

Why Haven't You Purchased Your Life Insurance?

Theory I  

You think you have enough insurance coverage through work.  Do you know how much is there?  Typically anywhere from $50K to $250K.  Is that anywhere near sufficient?  

Theory II

It isn't the product that bothers you but the process.  You put the life insurance agent/broker in the same category as a stereotypical used car salesman. He’s got greasy hair, you’re his newest best friend in the world, and he wants to know, What do I need to do to get you into a policy today? You think he’s out solely to earn a commission. You have nothing against anyone making a living, but you just don’t...

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How Much Investment Return Do I Need to Make?

by Jonathan G. Cameron, CFP®

Having great investment portfolio returns may not get you to your retirement goals. You could have (in theory) spectacular returns every year for 20 years and still not realize the retirement you want. Do we like strong investment performance? Sure. Should stellar performance be your goal? Not necessarily. Goals-based investing should be the approach. The investor starts from the endpoint and works backward toward today.

What is Goals-Based Investing?

In doing retirement planning, first begin with the lifestyle you want to enjoy. Then figure out how much it’ll cost you. Then evaluate your current investments to see if they’ll do the job. Your portfolio return in this approach becomes the means, not the end. In other words, start with your goals, figure out how much it’s going to cost you, and determine how you should invest to accomplish those goals.

Performance-Based Investing

This approach is very different from performance-based...

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401k Retirement Plan Basics

 

By Glenn J. Downing, MBA, CFP®

It used to be the case that you went to work for one employer and remained with that employer for the entirety of your working life.  You received a pension from that employer when you retired – in other words, you continued to get paid a lesser amount even though you’d stopped working. 

This arrangement is no longer the norm – people expect to change jobs several times during their working lives.  A 401K retirement plan suits this kind of work environment.  When you leave one employer, you can move your 401K funds into the 401K of your new employer, or over to a Traditional IRA.  In any event, the responsibility for providing a retirement income lies firmly with the worker!

How much can I contribute?

Contributions are limited by IRS regulation.  The maximum deferral that a plan participant can make in 2020 is 100% of salary up to $19,500.  If you are age 50 or older, you may be able to make an...

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Life Insurance Part 2 – Uses Of Life Insurance Policies

by Glenn J. Downing, MBA, CFP®

In Part I of this 3-part series I gave a brief history of the life insurance industry.  

Here in Part II I'll go over the main applications for life insurance policies.  Next, in Part III, I'll discuss some of the behavioral issues in obtaining coverage.  

 Uses of Life Insurance

So what are some of the uses of life insurance?  First and foremost, a death benefit to one’s survivors.  It is a risk transfer mechanism.  If you die before you've been able to financially provide for those financially dependent upon you, the life insurance policy will do so.  Other common applications:

To secure a loan

It is not uncommon for a commercial lender to require that a borrower take out a life insurance policy in the amount of the loan payable to the lender.  

For tax-free income

Many cash value policies can be structured to be over-funded in earlier years, and pay out a tax-free stream of income...

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You Knew All Year the Holidays Were Coming!

by Glenn J. Downing, MBA, CFP®

I came to financial planning as a profession in my 40’s, having made a mid-life transition from retail management.  I worked in both department stores and specialty retail and generally enjoyed the work. I always enjoyed Christmas in the stores – the music, the new fragrances, the decorations, and generally upbeat anticipatory atmosphere.  

Working Christmas in Retail

Christmas time was grueling, however.  The amount of merchandise that comes into a store through its loading dock, and then out the doors in the customers’ shopping bags, is enormous.  It is very physical work, in that all that merchandise needs to be unpacked, displayed, and stocked around the store. The associates who wait on you generally have competing priorities imposed upon them:  great customer service, while getting the new merchandise out of the bins and on the racks, and looking out for thieves. 

You knew all year this was...

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