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Van's Blog ~ Advice 4 Life

A blog about health, lifestyle, retirement, and things that make people think.

Bouncing Back after a Hurricane

If you sustained financial and personal losses from a hurricane, one of the most difficult challenges you face is to get your life back to normal. Storms destroy thousands and thousands of homes. Businesses are upended. Sometimes it even takes lives. Even thinking about the losses can make the strongest person melt down and cry. If you are facing this situation, you deserve a time to come to grips with the magnitude of the situation.

But after a while, you have to face the reality of the situation and make plans to continue your life, your job, your family, and if you own a business, you must get on with that too. Before discussing financial and business plans, it is important to talk about people that have a family with young children living at home. It is so important to be their guiding light. Help your kids to feel safe and understand that the future is bright.  If you do not believe this, dig deep within yourself and put on a brave face. Find someone to talk to about turning your life around. You might need to find a family member, a minister, a social worker or a mental health professional. Do not feel bad about asking for help or needing to talk to someone. Recovering from a natural disaster can be as difficult mentally as a loved one’s death. If you did lose a loved one in a natural disaster, my heart goes out to you. You too should work to live life to its fullest. There are people that care for you and want to help.

There is no perfect step-by-step method to getting your life back in order. With that thought in mind, the following information is in an outline form. Use it as a guide. It is up to you to fill in the details that best fit your personal and financial recovery. The first step in any disaster recovery is to assess your financial situation.

Where do you have available cash?

Savings

If you have CD’s and you need to access them, ask if your bank or credit union will waive their early withdrawal fee.

Mutual funds, stocks, and bonds.

If you have any funds that are losing, this may be time to take the tax loss and use the cash value. Tax loss harvesting can be a complicated matter. Ask a financial adviser or accountant if you need more detailed help. The key to this aspect is keeping track of your losses and gains so it can be reported when you file your income taxes.

Life insurance cash value

If you have a whole life insurance policy, see if you have a dividend cash value. This may be cashed in without a loan. Note that loans on life insurance policies do have interest and some life insurance companies pay lower dividends to customers that take loans.

Retirement accounts

Many retirement accounts do have special hardship provisions. Although remember that if you do take retirement cash values, it may seriously affect your future retirement. If you must take money out, by all means, do take it. Just be aware of the consequences. If you would like more information on retirement plan loans and hardship withdrawals, read my blog post “Don’t let Harvey take a bite out of your retirement.”

What insurance do you have and what will it cover. What is your deductible?

a.     Liability insurance

b.    Flood insurance

c.     Wind damage insurance

What are your expenses right now?

a.  Current expected living expenses

b.  Can you live in your home?

c.  Do you need to make arrangements to live with a relative or rent a home? How will you pay for those expenses?

d.  Food budget – this can be one of your biggest expenses. Eating out may have been a necessity after the hurricane, however, make a food budget and stick to it. Your family will be healthier, and you will save money.

e.  Transportation – Does your vehicle need repair? Did your vehicle sit in water that came to the bottom of the door? When water is high, it can seep into vital working components and cause expensive damage. Your vehicle needs to be inspected by a mechanic even if it appears to be running well. Do you have insurance and what is the deductible? Do you need a rental car or can you borrow a car?

f.  Child expenses – Do you have education expenses or child care expenses? After a natural disaster, you may need to find different child care if your previous child care business is not operating. What are your children’s extracurricular activity expenses and will they continue?

What do you owe?

a.  This must be one of the hardest aspects of rebuilding after a hurricane. If your home has major damage and you have a mortgage on it, you still must pay the mortgage.

b.  Make a list of what you owe along with the contact numbers of the creditors.

c.   If you can continue to pay payments, do so. If you need an extension, contact your creditor first. Do not wait for them to call you. Creditors that have customers in disaster areas know people are hurting financially and most will be willing to work with you. Perhaps you can work out a lower payment or a delay in payment.

d.  If you can continue making payments to your creditor, do it. Many student loan creditors have already contacted student loan holders to let them know that they have an automatic grace period on paying back their loan. However, one important point is not mentioned. The interest continues to add up. Do not take an automatic extension if you do not need it.

Do not forget your taxes. 

Property taxes still must be paid. If you pay quarterly income taxes, you can adjust your payments based on your expected income. If you can foresee that you will need an extension, take what is available. However, as with most creditors, do not use the hurricane as an excuse to put off what must be done. Interest will continue to grow on what you owe.

Do not overlook taking personal and business casualty tax losses. The floor for personal liability losses is 10% of your adjusted gross income. There is no limit for business losses. If you are not sure how to take tax losses, it is important to talk to a tax professional.

One item often overlooked for personal losses is clothing. Most garments that are damaged from flood water need to be thrown out because they will become contaminated with mold. Document every item, it all has a value. If you are not sure what value to use, refer to the IRS’s clothing valuation for donations. That may give you some idea as to what valuation to use for a loss.

Detail everything that is a loss of from your home and business. Taking pictures of every item may be labor intensive however it may save you a lot when it comes time to file your taxes. You must be able to prove any loss you claim.

Getting back to work.

After you have accessed your readily available assets, you should consider your employment status. Is your employer open and is your job continuing? If you are a small business owner and you are rebuilding, this may seem like a crazy idea. However, ask yourself, is it time to get another job while you rebuild your business? If you can get a second source of income going, this is the time to do it. An additional job does not have to be in your current line of work. One of the most readily available jobs will be sales, even if it is telemarketing. Just make sure it is not straight commission (unless you consider yourself a selling wiz). This is supposed to be a second income, not a head and heart ache. Every job or career has something to do with sales, so a second job in sales may help you get your small business back on track.

Make a budget

If you had a budget, it probably needs a lot of revision. If you do not have a budget now is the time to start. Trying to pay off debt and rebuild your finances after a disaster without a budget is like running east and looking for a sunset. You will work yourself to death and never know if what you are doing is working.

Creating a budget is easy. The simplest budget tool I have found is an app called Mint, and it is at the right price, it is free. If you are electronically challenged, I would still suggest you try Mint. You have nothing to lose but a little time. If computer apps are outside of your comfort zone, then make a written budget. It does not need to be complicated. List what you owe and your sources of income. If what you owe is bigger than your income, go back and rework the list of what you owe. Contact the creditors and cut expenses if necessary.

Budgeting is an ongoing process, not a once a year exercise. At least once a month, take the time to review what is working and what is not. Do you need to be more mindful of spending in one area of your life?

As you look for ways to cut expenses, remember that there are some costs that you need to keep. Insurance is one of those areas. If you have more than one vehicle that was damaged by water, will you replace each one immediately? If the answer is no, then suspend the coverage on vehicles that are just sitting. I would not recommend dropping coverage. However many liability carriers will allow you to suspend coverage for vehicles that are not being driven. Contact your insurance agent and ask for help in making this determination.

If you have life and disability insurance, do not drop it if possible. If you have cash value policies, talk to your agent to see if the premiums can be lowered. Universal life policies may allow you to make lower payments and whole life policies may permit you to pay premiums with cash value or policy loans. Do not drop coverage to start a new policy until you have a replacement. Older permanent policies cannot be repurchased at the same rate, and you will more than likely lose some value. If you must make a change, ask your agent if there is a commission to be paid on the new policy. Some life insurance carriers will waive commissions on internal replacements. Although if your new policy is not cheaper than what you can purchase on the open market, they are not doing you any favors. You may need to find a new life insurance carrier. If your income has changed and you need to get a cheaper policy that is a good reason to change policies, however, be comfortable with any changes you make. The same goes for term life insurance. If it is a policy you have had for a long time, there may or may not be something cheaper available. You may need to do some shopping for coverage.  This is an important point that bears repeating, do not if you are applying for new insurance, do not discontinue your existing insurance until the new insurance is delivered and paid.

Everybody’s situation is a little different, so it is impossible to detail every aspect of rebuilding your finances after a big loss like a hurricane. The details of dealing with insurance companies, contractors, and a mortgage company could fill a book. However, good advice is to be patient and persistent. And if you are a God-fearing person, prayer helps a lot too.

Posted by: Van Richards

Van is the founder of Advice4Retirement and Advice4LifeInsurance.

You can contact him at van@advice4retirement.com Follow on Twitter @VanRichards or Facebook at Advice4Retirement or Advice4LifeInsurance

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Hurricane Harvey Financial Recovery

Hurricane Harvey may throw some peoples’ finances into chaos.

This is a natural disaster that may affect peoples’ finances in abnormal ways. Here are several important items that may help you or others you know get through this difficult time. Click on the links for more details.

Information for Now

  1. If you are forced to seek medical or dental attention and the provider imposes a penalty because you are out of the network that penalty should be waived if you are affected by the storm disaster.Communicate with your medical provider and your insurer concerning your status.
  2. If you have prescriptions that are due for renewal, however, a new insurance company approval is required, that requirement should be delayed for 90 days. Communicate with your insurer to clarify your status.
  3. If you are an employer and you have commercial vehicles that are participating in the storm relief effort, commercial insurance should extend to cover those vehicles during their relief activity.

Information for After the Storm

  1. If you are displaced because of the storm and your employer is still operational, contact them to let them know your status if you cannot make it into work.
  2. If you are forced to leave your home for an extended period, let your property insurer know and ask them to waive the occupancy requirement because of the disaster.
  3. If you experience a financial hardship and cannot make payments that are due, contact your creditor and let them know you will be delayed. If your area is part of that which is considered a natural disaster, delays should not affect your credit rating. It is important that you communicate with your creditors.
  4. If you have insurance renewals that change or increase and the change is attributed to your status as a storm victim that change is inappropriate. Contact your insurer to clarify the reason for any changes to your policy.
  5. If you have insurance premiums due and are unable to make payments because of a hardship from the current disaster, insurers have been encouraged to allow extra time to pay. It is important to communicate with your insurer and let them know your status.

The key to making it through this difficult time is communication. 

There are a lot of people that are eager to help. However, be aware that there are also unscrupulous people that may attempt to take advantage of your situation. If you have an issue that is related to insurance coverage, call your agent or insurance company. If you cannot get the answer you need you can turn to the Texas Department of Insurance.

Posted by: Van Richards

Van is the founder of Advice4Retirement and Advice4LifeInsurance you can contact him at van@advice4retirement.com Follow on Twitter @VanRichards or Facebook at https://www.facebook.com/Advice4Retirement/ and https://www.facebook.com/advice4lifeinsurance/

Set Retirement Plan Expectations

Expectation is the conflict between frustration and reality. The first step to creating a low stress company retirement plan is a common understanding of everyone’s expectations. This includes all the entities involved in the retirement plan process. From the employees’ perspective, they see only the processes listed below in blue. However, the employer must look at a retirement plan from a very different perspective. The process in orange is a typical list of the people involved in the management of a retirement plan.

customer-service

Knowledge of a customer’s needs is where satisfying expectations begins. Knowing the process necessary for a low stress company retirement plan is critical to fulfilling expectations. This is an outline of the operation of a company retirement plan.

  • Develop a retirement plan strategy
  • Design a plan to fit the business
  • Create a method of choosing and monitoring investments
  • Have a plan that is competitive within the company’s industry.
  • Manage the vendors that interact with the retirement plan.
  • Stay compliant with fiduciary standards
  • Provide education to employees that satisfies fiduciary requirements.
  • Manage employee communication.

Developing a strategy that will accomplish this process and be reasonably flexible is important. Businesses change, employee demographics changes, and regulations change so the operation cycle of a retirement plan must be able to change. The result is that customer expectations change too. The next step to fulling customer expectations is developing a retirement plan strategy.

To see the next step, check back for the next post in this series, The Company Retirement Planning Process or visit www.advice4retirement.com

Posted by: Van Richards

Van is the founder of Advice4Retirement and Advice4LifeInsurance you can contact him at van@advice4retirement.com Follow on twitter @VanRichards or Facebook at https://www.facebook.com/Advice4Retirement/ and https://www.facebook.com/advice4lifeinsurance/

 

Buying Sight Unseen

Purchasing a car and life insurance online have many similarities.  People buy cars regularly sight unseen. You can go to Ebay or a national dealer like CarMax and find a car and have it shipped to you from anywhere in the United States. One of the most attractive aspects of buying a car online is you do not have to see a salesperson.  Like a purchase of a car online, buying life insurance online does not require you to see a salesperson either.   There are some lessons to be learned from car buying online that can help you when shopping for life insurance online.

If you purchase a car online, you want to see a picture.  How do you see a picture of a life insurance policy?  What you are insuring is your family’s financial well-being, that is the picture of a life insurance policy.

family-car

Let us put it into numbers.  With cars and life insurance, size of your family matters.  If you have a family of four, you probably will look for a four-door family vehicle.  If you have a family of four, your life insurance will need to settle your debts and replace your income if you are not in the picture any longer. Let’s add up a few numbers as an example for a young couple, both earning $50,000 a year.

$30,000 car note. The average new light vehicle priced by Kelly Blue Book is $34,372 [i].

$14,000 household debt. The Federal Reserve[ii]  says the average household debt is $14,452

$157,000 average mortgage. Business Insider reported this information from Experian [iii]

$28,950 average student debt. Reported by the Institute for College Access & Success [iv]

$490,680 cost of raising two children. Reported by The Department of Agriculture [v]

$10,864 Final expense cost as reported by CSG Actuarial & LIMRA [vi]

$ 253,622 Cost of educating two children at an in state four-year college [vii]

Using the life insurance calculator from the non-profit organization Life Happens and this average debt information you can estimate that one parent’s life insurance needs at $356,278[viii].   If you fill the calculator in with your personal information, you will probably come out with a different number.  The $356,278 gives us a point to use as an example.  Here is a screenshot of the calculations page so you can see how I arrive at the recommended life insurance amount.  This calculator is available for free at www.Advice4LifeInsurance.com

life-happens-calculator

To make our conversation easier, let us round the number up to $360,000.  In comparison, if you know you need a four-door car, you now want to look at the reliability of the manufacturer.  In selecting life insurance, if you know you need a $360,000 policy, this would be the point where you want to look at the suitability of the policy and the financial strength of the life insurance company.

There are dozens of websites on the internet to select life insurance companies.  Most of them require that you provide your personal information before you decide what life insurance company you want.  That is why I designed the life insurance calculator on Advice4LifeInsurance.com to offer life insurance company options before you enter your personal information.  If you enter in some basic information, you can see which life insurance companies offer the policy for which you are shopping.

life-insurance-quotes

If you are shopping for a car, you do not stop at the price.  You look at manufacturer reports and surveys.  Most life insurance sales sites on the internet stop at this point and ask you to sign up.  Not so fast.  There are more questions to answer.  In buying a car, you look at the dependability of the manufacturer.  In life insurance, you look at the financial strength of the life insurance companies you are considering.  In some instances, there may be several life insurance companies that are only a few dollars apart.  If you see a life insurance company that you have questions about, the next step is to visit our ratings page at Advice4LifeInsurance.com [ix]

On that page, I list three of the most prominent financial rating services and the Comdex rating along with their rating of dozens of insurance companies.  The Comdex rating takes all four of the most prominent financial rating services and cumulates them into a scale that goes from 0 to 100. The theory behind the Comdex rating is the higher the financial rating, the better the financial strength of the company.  Rating services charge a substantial fee for their rating, so not all insurance companies choose to be rated by all four rating services.

You can buy a car and life insurance online, however, that does not mean that you should not speak with the person from whom you are buying. If you found the right car at the right price, the next step that most people take is to call and inquire about the car.  That is the same thing that you should do when buying life insurance online.  After you have determined the amount of life insurance that you want, found the price that is within your budget, and narrowed the selection of the company down, it is time to complete the application and talk to the person from whom you are buying.  You do not have to submit payment to begin the application and you can back out of the application at any time.  Even after you buy the policy you have 30 days to change your mind and get a refund.  The attractiveness of buying online is that you do not have to meet with a salesperson.  It is much easier to say no thank you on the phone.  However, remember not to rush through the process. Verification and communication are vital. If you do both, you are well on your way to a smooth transaction and purchase that will protect your loved ones for many years.

References

[i] Kelly Blue Book. “New-Car Transaction Prices Increase Nearly 3 Percent Year-Over-Year In September 2016, According To Kelley Blue Book – Oct 3, 2016.” MediaRoom. Last modified September 2016. http://mediaroom.kbb.com/2016-10-03-New-Car-Transaction-Prices-Increase-Nearly-3-Percent-Year-Over-Year-In-September-2016-According-To-Kelley-Blue-Book

[ii] Federal Reserve Bank of St. Louis. Households and Nonprofit Organizations; Credit Market Instruments; Liability, Level – FRED – St. Louis Fed. Board of Governors of the Federal Reserve System, 2016. Accessed October 17, 2016. https://fred.stlouisfed.org/graph/?id=CMDEBT

[iii] Kiersz, Andy, and Libby Kane. “Mortgage Balance State Map.” Business Insider. Last modified October 14, 2014. http://www.businessinsider.com/mortgage-balance-state-map-2014-10

[iv] Institute for College Access & Success. “State by State Data 2015.” Project on Student Debt. Last modified 2015. http://ticas.org/posd/state-state-data-2015.

[v] U.S. Department of Agriculture. “Parents Projected to Spend $245,340 to Raise a Child Born in 2013, According to USDA Report | USDA Newsroom.” Newsroom. Accessed October 18, 2016. http://www.usda.gov/wps/portal/usda/usdahome?contentid=2014/08/0179.xml.

[vi] CSG Actuarial. “Final Expense Insurance Sales Nearly $400 Million in 2013, Life Insurers Council and CSG Actuarial Report.” CSG Actuarial. Last modified September 8, 2014. https://www.csgactuarial.com/2014/09/final-expense-insurance-sales-nearly-400-million-in-2013-life-insurers-council-and-csg-actuarial-report/.

[vii] College Board. “Average Published Undergraduate Charges by Sector, 2015-16.” Trends in Higher Education. Last modified 2015. https://trends.collegeboard.org/college-pricing/figures-tables/average-published-undergraduate-charges-sector-2015-16.

[viii] Richards, Van. “Life Happens Life Insurance Calculator.” Advice 4 Life Insurance. Last modified October 18, 2016. https://www.advice4lifeinsurance.com/

[ix] Richards, Van. “Ratings.” Advice 4 Life Insurance. Last modified October 14, 2016. https://www.advice4lifeinsurance.com/ratings.html

 

Good Financial Advice

When was the last time that you asked for a second opinion on your finances?  Money is one of those subjects that is hard to bring up in conversations.  If you talk about money with friends it may open your life more than you want or more than your friends, want to know.  The hesitation to discuss money also brings up the problem of trust. Just where does a non-financial person go for financial advice that can be trusted?  Here is the short answer:

Employee benefits education at work

CPA’s and attorneys

Fee-based financial planners

Stockbrokers

Investment product providers

Life insurance companies

Life insurance agents

Credit union

Banks

Robo-advisers

The internet

What are the pros and cons of the various sources of information? Here is some brief insight into the different sources of financial advice.  This is not meant to be the end-all of financial information sources, but rather enough information to point you in the right direction.

Employee benefit education is a major source for many people, and its reliability is getting a big boost.  In April of 2017, new laws go into effect mandating that all employer retirement plan information be in the best interest of the employee (Department of Labor, 2016).  That does not mean that all employee benefit information will be equally informative.  It also does not mean that employers are entirely responsible for employees’ financial lives.  It does mean that the financial advice concerning the retirement plan should be dependable.  How you relate that information to other aspects of your finances is up to you.

Stockbrokers have changed over the past fifty years.  Stockbrokers used to be just what their name implied, someone that bought and sold stock.  They did not offer much unbiased advice because they usually worked for an investment banker that was organizing the sale of a company’s stock.  As time has progressed, stockbrokers have become less sales-oriented and more concerned about if they are offering financial products that are in the best interest of their clients.

Investment product providers are mutual funds purchase directly from the provider or a unit investment trust sometimes shortened to UIT’s.  There are some providers that offer good advice, but remember that they still do not have a high responsibility to sell the products that are best for you.  They have certain regulations that they have to follow. For example, they are not supposed to say things that are blatant lies.  Moreover, they are not supposed to sell their products to people that they find are financially unqualified.  However, your overall best interest is not their legal duty.  To some degree, it is still buyer beware.

Life insurance companies have some similarities.  Like the investment product providers, they are not supposed to stretch the truth.  However, the average person is far from qualified to understand some of their products, making the need for an experienced agent more important.

Life insurance agents are separate from the life insurance companies in this information because there are many life insurance agents that are independent.  The autonomy of an independent agent does give their financial advice less likelihood of being biased. However most financial advice from life insurance agents will be compartmentalized to deal only with the financial aspects related to their products.

Credit unions remain a good source for financial products and information.  They sell credit union and life insurance products.   Nevertheless, just like any product provider, it is up to the customer to be sure that they are buying a product that they understand and can afford.

For a long time, banks were perceived as the gold standard of safety.  Recently that image has fallen because one big bank let its branches get out of control and cost its customers millions of dollars.  It gives the impression to the average person that they cannot trust banks any longer. Time will tell how that circumstance gets resolved and if their image will improve.

Fee-based financial planners are perceived as one of the most unbiased parties when dealing with money.  They do not sell products so their primary incentive is client fees.

CPA’s and attorneys are listed together.  However, it has been my experience that many more CPA’s deals with financial issues than attorney’s.  If you are looking for financial advice, a CPA or attorney will be very straight forward in telling you if they will or will not be able to help you. Some of these professionals have expanded their practice to include fee-based financial advice.  Because of their level of fiduciary duty, I would not have any reservations in stating that if a CPA or attorney provides financial advice as part of their service, it is dependable.

Robo-advisors have become a new option available for financial advice, and some are trustworthy sources of financial information.  The creators of robo-advisor services have taken the modern theories that are used to manage investments and put them into a computer program.  Plug in the parameters of your financial situation and the program will produce what is considered to be an appropriate investment allocation.  As the economy changes or personal financial circumstances change the program can alert customers of changes automatically or prompt customers to manually make changes.  Do robo-advisors work?  The reliability of robo-advisors is as good as the creator, person, or team that is managing the program.  Just as in the quality of investment advice that you obtain from real people depends upon the individual you are entrusting.  According to a study done by pollster Gallup, only 5% of U.S. investors use robo-advisors and an astounding 80% state that “they are not likely at all to use a robo-advisor” (Gallup, Inc.,2016).

flashing-red-lightIf I could post a big flashing red warning light on the page, this would be the place to put it.  The internet is an option that most people will turn to for financial advice however we should all be wary of internet financial advice because of the prevalence of scams.  It takes no financial experience, education or certification to start a website.  That is reason enough to be cautious. You may have found this article by surfing the internet for financial advice.  How do you know you can trust it or me?  The fact is you do not.  Ask yourself, does the source sound rational and can you research the advice?

When judging the quality or usefulness of any financial advice there is a reliable standard.  If a circumstance sounds too good to be true, it probably is.  People get caught up in scams because they find an answer to a problem or concern that they have and the solution they find seems to fit just right.  We all have some degrees of trust in us.  We could not live daily without some trust.  We believe a total stranger when we ask them the time of day.  Trust gets a little more away from personal control when we ask for information that will impact part of our life.  The education system teaches students to trust one another in projects.  Everyone’s grade in a group project depends on each other.  We trust colleagues at work when we share responsibilities.  However, even in these examples, you can see there is room for lapses in confidence.  As we broaden the circle of trust to encompass other aspects of our lives such as finance, reasons to mistrust widens.  There are people in our world that are putting their personal interest ahead of your best interest.  The cold hard fact is that there are people in our world that set out to deceive others.  How can you be sure that you are not getting advice for your money from a con-artist?

In her book, The Confidence Game, Maria Konnikova tells the fascinating story of Dr. Joseph Cyr, a surgeon in the Royal Canadian Navy (Konnikova, 2016).  Dr. Cyr was outstanding, he did surgery in the toughest conditions at sea, with little or no help.  The only problem was the Dr. Cyr was not a doctor at all.  He was Ferdinand Waldo Demar, a young man that had not even graduated from high school.  Konnikova’s captivating book looks at the reason why people fall for things that are not real.  She describes the people that commit these charades like this, “Their genius lies in figuring out what, precisely, it is we want, and how they can present themselves as the perfect vehicle for delivering on that desire” (Konnikova, 2016).  The thing we can learn from Konnikova’s insight is that when we are looking to find financial advice, be careful that the solution has not been created to prey on our needs.  If it is too good to be true, it probably is not true at all.

How do you make sure that you are getting sound financial advice?  Over the years I have worked for large firms and even though the firms had billions and billions of dollars under management clients did not rely as much upon the credibility of the institution as much as they did with the person that was in front of them.  Investment firms know this and try desperately to tie their employees to their company.  For the average everyday person or the CEO of the multi-billion-dollar corporation, knowing if you can trust the financial advice of your advisor boils down to work experience, life experiences, references, education, and last but not least common sense.

As people begin their careers, education is paramount.  As the years go by the value of classroom teaching is replaced with the work experiences encountered. Do not take me wrong, education is valuable, especially financial education.  My point is that life experiences have a significant impact on a person’s abilities.  If you are presented with financial recommendations, don’t be shy about asking for references of the advisor’s work.  Don’t be put off if there are not a lot of Yelp, Google or Angie’s List reviews. How some financial advisors interact online is regulated either by the government or their self-regulatory organizations making online research more difficult. If the circumstance warrants, ask for a referral.  Understand this too.  If you are asking for advice on a $35 per month life insurance policy, you probably are not going to get the phone numbers of the advisor’s top ten clients.  Samples of the advisor’s work can also serve as a good standard for trust.  I have mentioned it a several times, and it is worth saying again, the common sense factor is crucial.  If the service or results of services sound too good to be true they probably are not real.  Follow these guidelines, and it will help you in finding good financial advice.

References

Department of Labor. (2016). Conflict of interest rule—retirement investment advice (Volume 81, Number 68). Retrieved from National Archives and Records Administration website: http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=28806

Gallup, Inc. (2016). Robo-advice still a novelty for U.S. investors. Retrieved from Gallup Poll website: http://www.gallup.com/poll/193997/robo-advice-novelty-investors.aspx

Konnikova, M. (2016). The confidence game: why we fall for it … every time. New York, NY: Penguin Random House.

 

Van Richards is the owner of Advice4LifeInsurance.com and Advice4Retirement.com he can be contacted at van@advice4lifeinsurance.com or on twitter @VanRichards

Securing the American Dream

Steven and Ngoc Anh Tang left Vietnam to pursue the American dream: They wanted their children, Jimmy and Nancy, to have a better life. The elder Tangs were responsible and honorable parents.  They knew they wanted to secure a future for their children. However, they needed guidance to assure their dreams would come true.  With the direction of an experienced insurance professional, they were able to make plans for their future and make plans for the welfare of their children if the worst happened.  The couple purchased permanent life insurance for both Steven, who worked for an hourly wage, and for Ngoc Anh, who was mainly a stay-at-home mom.

It was on a trip with her mom and sister that Ngoc Anh was involved in a car accident. Her life-threatening injuries meant she was in and out of the hospital, but because her policy had a disability waiver of premium, she no longer had to pay for the policy. However, Ngoc Anh never fully recovered, and later died of a stroke. Again, her life insurance policy came through. Their insurance professional had advised the Tangs to get an accidental death rider, and because Ngoc Anh’s heart condition was a result of the accident, the family was entitled to double the original amount of the policy.

Now that he was a single father, Mr. Tang’s insurance professional encouraged him to get additional life insurance to protect his children, which he did. Unfortunately, tragedy struck just three years after his wife had passed away. Mr. Tang learned he had liver cancer and died soon after his diagnosis. Nancy, a senior in high school, and Jimmy, who had graduated from college, were now on their own.

Thankfully, the Tang’s insurance professional and the money from the life insurance were there to shepherd the children on their way. Nancy is now attending college, and the siblings have bought a house near campus so Jimmy can help his sister as they start a new chapter in their lives. They credit life insurance for that opportunity. “It’s vital for parents to have life insurance,” says Jimmy. “It means if you do die, your loved ones can go on without worrying about money while they get back on their feet.”

To see the Tang family’s story visit my webpage at:

https://www.advice4lifeinsurance.com/securing-the-american-dream.html

Love Insurance

If you have a business with a partner and/or you are a physically disabled business person, you can learn something from Christy and Daryel Dunaway.  Their story is one of love, commitment, and understanding.  Their love story began as a friendship and stayed that way for more than a decade until, as Christy says, “I understood that love was about having someone who loves you as you are—heart and soul.”

Daryel also knew at a deep level that he needed to protect his love for Christy on a financial level, as well as an emotional one. He and his friend John had started a business together, Handicapable Vans, which adapts vehicles for people with disabilities. It is something both men knew about from firsthand experience. Daryel had become paralyzed from the chest down in a diving accident at 15; John was a quadriplegic as well.

The partners arranged legally for the business to pass to the other if one were to die with a buy-sell agreement.  However, Daryel knew he also needed to ensure his wife would be taken care of financially. You might not believe insurance is available for a quadriplegic yet with the help of an experienced insurance professional, Daryel got the life insurance he needed and made sure he increased it as his business grew.

It was fortunate that both men were so adamant about getting—and increasing—that coverage. Daryel faced his life with joy and optimism, despite his physical limitations, but it was eventually his body’s inability to shake off a series of infections that took his life at 57.

Christy was overwhelmed with grief in the wake of his death. She credits Daryel’s life insurance with giving her time to grieve and then being able to move on with her life. “It meant I didn’t have to sell our home, which we had adapted to meet our needs,” says Christy. Also, she has opened her consulting firm, which had been a joint goal for the couple. “Life insurance has allowed me to take action on our dream,” she says.

To see Christy’s story visit my website at : https://www.advice4lifeinsurance.com/christy-dunaway–love-insurance-1.html

 

Could you afford a $400 unexpected expense?

Every year the United States Federal Reserve Board conducts a survey to gauge the public’s financial health. “a number of adults still indicate that they are experiencing financial challenges” (BOG, 2016). Here is a highlight of the problems faced by many:

47% could not cover an emergency expense costing $400.
31% put off medical care because they could not afford it.
20% spend more than they make
37% do not save money
32% cannot qualify for a credit card
44% that have a credit card carry a balance
20% have no bank account
23% have student loans
31% have no retirement savings or pension

I have a solution. I would like to give you a financial tool to get started solving your money problems. When you request the financial tool you will also receive regular information to help you better control your finances. Sign up for your free financial tool here

https://www.advice4lifeinsurance.com/free-financial-tool.html

Thank you,

Van Richards

Reference
Board of Governors of the Federal Reserve System. (2016). Report on the economic well-being of U.S. households in 2015.

ADHD and Life Insurance

Can ADHD sufferers get life insurance?

The perception that ADHD usually conjures up is the picture of a frazzled person who is fidgety and has a lack of concentration. It is a condition that is often misunderstood, and even some make jokes. Everyone becomes anxious at some point. Everyone forgets something now and then. Just because a person becomes anxious or forgets something does not mean they have Attention Deficit Hyperactivity Disorder or ADHD. It is important that life insurance companies understand this too. Incorrect labeling of mental health conditions by life insurance companies due to company protocol or misinterpretation of medical records can cause applicants to be charged more for life insurance coverage. Medical records are usually brief. If a doctor states that a patient appeared to be giddy, what does that mean? Does the patient have anxiety, depression, ADHD or does it mean something else? The person reviewing the information for a life insurance company is called an underwriter. How is an underwriter to interpret that statement? My doctor wrote that I was giddy in my file, and I have none of those conditions. However, an underwriter may take that to mean that I have a mood disorder.

When applying for life insurance, a history of ADHD can be interpreted in several ways. That is why it is important that you have an experienced advocate. In most instances an experienced life insurance agent is your best advocate. When the medical conditions are complicated, and the life insurance amounts are large, a life insurance medicine doctor is helpful in clarifying conditions and communicating risk levels to the life insurance company. A life insurance agent should be able to help identify if a physician consultant would benefit your life insurance application.

How to find the right company.

Mislabeling mental health conditions can occur because some life insurance companies lump mental health disorders like ADHD, bipolar disorder, depression and anxiety all together and classify them as mood disorders. Insurers that follow this practice will often charge those they classify with mood disorders higher rates or decline to offer them coverage. However, not all life insurance companies follow this strategy. Some life insurers methodically categorize different mental health disorders and charge people rates based on that categorization. Most of the time, these insurers offer life insurance to those with mild to moderate mental health disorders at lower rates than companies that generalize many mental health conditions together.

Insurers that definitively categorize mental health disorders are more likely to consider treatment outcomes rather than protocol when it comes to determining the cost of life insurance. A typical example is an adult with ADHD that has received treatment and medication since childhood. Even though they are in excellent health, they may be charged higher rates because they are treating their ADHD with a single or multiple drugs. Some insurance companies have strict protocols for offering coverage. Their rating methods may call for decreasing their rating by one level for any mental health related medication and declining a person for life insurance if they take two medications.   The key to giving yourself the best chance of being offered the lowest cost life insurance coverage is to avoid life insurance companies that generalize mental health conditions. Seek those insurers that are more specific about how they offer coverage to those with ADHD and other mental health disorders. To find the best life insurance at the most competitive rates it is important for those with ADHD to work with a life insurance agent that has an understanding of which life insurance companies categorize mental health conditions rather than generalize.

How to get the best rates.

Once you have found a life insurance provider that will consider mental health disorders on a categorical basis the next step to getting the best rates is presenting your application. When someone applies to a life insurance company for coverage, the company considers medical history, lifestyle, and habits to determine if that person is an acceptable risk.   How the facts surrounding a person’s ADHD are presented to the life insurance company can significantly affect the life insurance policy that is offered. A complete description of a person’s ADHD plus a chronological representation of how the condition has been treated can help in getting a lower cost. Communicating how you have been managing your ADHD will help show that your condition is under control, and it does not inhibit your day-to-day life.

NEJM CT Scan 1990

It may be helpful to take a moment and give a basic overview of how ADHD is viewed. The aspect of ADHD that is commonly overlooked is a person with ADHD has different biological brain functions. The accompanying image shows the difference between a person with ADHD and without. The condition can be treated with therapy, medication or both. This is a condition that does not go away over a person’s lifetime, so presenting how it is managed will help show that it does not make you a higher life insurance risk. The image on the left shows “white, red, and orange [which] indicate areas of relatively high glucose metabolism, whereas [on the right] blue, green, and purple indicate areas of lower glucose metabolism” (NEJM, 1990).   Glucose was given to the people tested immediately following skill test. The person on the left shows a higher degree of brain chemical activity immediately following sessions where they were asked to complete a task that was to challenge their thinking skills.

From a life insurance company’s perspective, they are not as concerned about why there are biological differences in brain function as they are concerned about the effect it has on a person’s life expectancy. Non-controlled ADHD usually accompanies other life risk conditions or activities. Individuals with non-controlled ADHD are more liable to have depression, alcoholism and drug abuse (Coltar, 2003).  Controlled ADHD is a non-life event. In the best of controlled situations and the absence of other complications, some life insurance companies will offer their lowest rates.

How to apply.

If you know you have ADHD; there are two ways you can apply for life insurance. The process begins with a discussion of your situation with an experienced life insurance agent. Ask what their experience has been with life insurance companies that best work with applicants that have ADHD. Then go with their recommendation of a life insurance company. If your medical situation is not too complicated, this may be the best approach. A critical service that your life insurance agent should include as part of submitting your life insurance application is a cover letter to the underwriter. The cover letter details and clarifies any information that may be pertinent to your application. If your medical situation appears to be complicated, you may have a better chance of getting the best policy at the lowest cost by submitting an informal inquiry.

An informal inquiry is the best way to avoid being declined for life insurance coverage. An informal inquiry is where we take all of your health history information and anonymously submit that to several life insurance companies. Without disclosing who you are the life insurance companies will look at your circumstance and tell us if they are willing to consider a person with your health history. Also, they will say what they expect the cost will be. You can take advantage of the best offer that is made. This process gets you the best life insurance policy at the best possible price without having to bounce between life insurance companies. It is also the best way to avoid a denial for ADHD. Could you still be denied? Yes. This is not a foolproof process. However, if we can completely answer all of the questions up front and there are no unexpected circumstances, it is your best chance. It is the best process because you are getting the benefit of shopping many different life insurance companies at the same time.

For most people the following step will not apply. For those special cases where a life insurance applicant has a complicated medical history, and they are applying for large amounts of life insurance, it is prudent to engage the services of a life insurance medicine doctor to review the medical history and clarify any potential problems. Consider this example. I am applying for a ten-million-dollar life insurance policy, and the consultant perceives that I could be rated as having anxiety because the doctor stated that I was giddy. The consultant would then communicate with my doctor and ask him to add a note to my file clarifying his statement and diagnosis. The clarification of the diagnosis could make a significant difference in the cost of a life insurance policy.

No matter what size of life insurance policy you are considering, if you have health concerns, you will need guidance in the application process. I have been helping customers find life insurance coverage to protect their families for twenty-eight years. I’d be honored to begin helping you. The best way to start is by completing the quote request form on our website, or you can call, email or text too.

Thank you,

Van Richards

P.S.

Usually I recommend term life insurance and when you request a quote you will get the cost from several highly rated term life insurance companies. After reviewing your information, I can guide you toward the option that will give you the best opportunity to obtain low cost term life insurance.

Get a quote now.

References

Cotlar, M. J. (2003). Attention deficit hyperactivity disorder (adhd)— life insurance implications. Journal of Insurance Medicine, 51-56. Retrieved from https://www.aaimedicine.org/journal-of-insurance-medicine/jim/2003/035-01-0051.pdf

New England Journal of Medicine. (1990, November 15). Cerebral glucose metabolism processing [CT Scan]. Retrieved from http://www.nejm.org/action/showImage?doi=10.1056%2FNEJM199011153232001&iid=f004

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