Read Martha Stokes’ answer to How is it the stock market keeps going up even though half the businesses in America are closed down and unemployment rate is skyrocketing due to coronavirus?

“You have asked an excellent question. Thank you for asking. The Stock Market is in a Bear Market even though the Financial Services Industry would prefer that the average American not know this reality.

Below is a chart of the S&P500 which is an index of the largest and most important corporations in the US. There are actually 505 companies issues in this index. It is formulated and averaged so it is not the total price of all of these but a value based on this quantitative formula. This is a Monthly Chart so that you can see that this is indeed a Bear Market and that is is just beginning. The monthly chart provides enough data so that you can see the prior two most recent Bear Markets also. The Bear of 2000–2003 and the Bear of 2007–2009. And at the far right hand side, the current bear of 2020 -______.

There were also the SARS epidemic of 2002, and the H1N1 Flu Pandemic of 2009. So all 3 Bears had either had a serious new novel virus develop at some point in the bear cycle. Now, please remember that technical analysis is NOT a predictive tool. It is a graphical tool that uses historical data to study prior market activity to understand the current situation. Every Bear Market is unique but every bear market has similarities to past bear markets. Studying 120 years of bear markets, the average bear loss is 50%. The duration is average 1.9 years depending on the speed of the loss. Slower bear declines last longer, fast steep bears are shorter in duration.

The Stock Market LEADS the economy. In other words, the stock market reflects the corporate and business health at growth potential BEFORE the economy goes into a recession AND before the economy begins to recover and later expand. Studying the history of the past two bears we can see that the stock market recovered well ahead of the economy. The recessions lasted longer but the stock market was already bottoming and moving upward as the recessions continued. It is common for Bear Markets to have 3 phases: Denial, Disbelief, and Capitulation. The recent rebound occurred (indexes and components moving up) occurred precisely at a strong technical support level. Technical indicators signaled early that a rebound aka fake rally was likely as the indexes hit that support level.

Banks acting as Market Makers supported the major index components which are heavily weighted to specific corporations deemed most important to the economy by the banks, financial industry and government. Then the Financial Services Industry, needing inflows of money to stay in business launched a massive promotion to new investors and inexperienced investors telling them that the recent market crash was an “opportunity to buy stocks at bargain prices!”

So many younger investors, or new investors who know nothing about how all of this works as the educational system in the US doesn’t provide education about the financial markets even for college students unless their degree is in financial services. Many new franchises also started recently from the popular neighborhood broker franchises. You see them in the strip malls. These smaller funds managers are new too and trust their corporate statements which tell them how to promote to get more money to place to stay in business. There has been a massive amount of money taken out of the stock market over the past 2 years. Money Market Funds are holding a vast quantity of funds in safety while this bear is still going on. These are the wise, experienced, educated investors who wisely sold during the speculative activity in 2019 to January 2020. The first quarter earnings season starts April 14th. The professional side of the market knows that the earnings reports are going to be the worst since 2008–2009, perhaps worse.

The recent runs up are technically very fragile. There is no longer billions of corporate cash to continue buybacks which fueled the 2018 -2020 speculative bubble. Therefore, this bear market is just on pause for the moment. The market is not in a rally. Stocks are not near their previous all time highs. This is just a bear market bounce. These happen periodically during a bear and mislead the average investor into buying stocks into a bear market…” April 24th, 2020

Her analysis underscores the fragility and the uncertainty many retirement conscious people are experiencing in the markets right now. Contact us today for a free quote about using an indexed annuity to protect 100% of your principal and to create guaranteed, lifetime income.

Originally published at Life Cycle Financial Planners, LLC.

Why is the stock market going up even though businesses are closed and unemployment is skyrocketing? was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

The purpose of an IRA is to create future, guaranteed income in retirement. Investing your IRA assets into an income annuity creates the most guaranteed lifetime income, WITHOUT PRINCIPAL RISK.

IRA assets are being transferred from risky equities to guaranteed income annuities, in record numbers. These annuities are contracts that guarantee the principal will never be lost in down markets and they guarantee income that is payable for life.

Most of the people we speak with are more interested in being invested in the right strategy that guarantees maximum future income without risking principal. Billions of dollars every year are being moved out of brokerage firms and into annuity contracts because a diversified portfolio of equities leaves your retirement assets exposed to risk. As a result, these brokerage and wealth management firms respond with aggressive campaigns designed to discredit annuities. One brokerage firm, Ken Fisher, rails against annuities as their main marketing campaign.

You are required to take annual distributions from your IRA at age 72. These income payments are pre-determined by IRS guidelines, known as Required Minimum Distributions, and the IRS does not require that your distributions must be payable for life. That responsibility falls on the IRA owner. Even though most people WANT guaranteed lifetime income from their IRA, most are not invested for that outcome. Most people have their IRA assets invested in a high percentage of equities.

A simple comparison tells the story.

Assume that two 65 year olds have identical IRAs, currently worth $500,000. The primary goal at retirement is to provide guaranteed income for life. At 72, they must begin taking income payments (RMDs). The two IRAs are identical except for how the $500,000 is invested in each.

• Traditional IRA #1 is invested in diversified securities.
• IRA #2 is invested in a guaranteed, income annuity that will pay income FOR LIFE. It can NEVER LOSE PRINCIPAL and the INCOME is contractually guaranteed. It will share in market gains when the markets are up.

The IRA with the income annuity is better because it provides the HIGHEST GUARANTEED PAYMENTS FOR LIFE, without assuming any risk. The IRA with diversified securities can lose principal at any time. Losses are devastating in retirement considering that there is no future income to offset them.

If you agree that important goals in retirement are to preserve principal and make sure you don’t outlive your money, then Few things create guaranteed lifetime income like an annuity. Some critics say the tax deferred status of an annuity is wasted inside an IRA but this is not so. It is a classic red-herring argument designed to confuse people. The IRA’s primary objective is to create maximum retirement income for retirement and the indexed annuity does exactly that.

If you are unfamiliar with how these special annuities strengthen your IRA distributions, I offer a complimentary discussion to help give you a better understanding of these vehicles.

Economists and professors from Harvard, Wharton, Duke and Stanford all agree about the undisputed advantages and benefits of indexed annuities.

Says Michael Kitces, investment planning expert: “Given these changes, it is perhaps time to abolish the ‘annuities should never go into an IRA’ rule and recognize that it has become more a myth and remnant of old than proper advice in today’s environment.”

Please contact me at 561–771–4647. Complete the contact form on this page or anywhere on the site to schedule a complementary discussion. For a list of Tribune articles I have written, click this link.

income annuities in your ira.

Originally published at Life Cycle Financial Planners, LLC.

Why You Should Have An Income Annuity In Your IRA. was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Does it make sense to buy a new life insurance policy even though you are older?

If you currently own life insurance, this article is specifically meant for you. The focus of this information will help you get better coverage than what you have now and the justification behind it.

For all the uninsured people with families and/or businesses that are unprotected, the first several hundred pages of google results about the benefits of owning life insurance are filled with articles that you may find useful.

You have existing life insurance coverage, here is the good news…

It is important to address an issue that is negatively affecting millions of life insurance policyholders.

There continues to be inadequate consumer messaging from our industry about just how beneficial it can be for life insurance owners to upgrade inforce policies. Undoubtedly, better messaging would help to reinforce the wisdom in considering better policies. I am not suggesting everyone run out and replace their life insurance policies. I am suggesting we do away with the negativity around the consideration of upgrading inforce coverage.

Life insurance is not a “one and done” acquisition and owners of life insurance benefit from this knowledge.

Over the past 30 years, the terms “switching” or “replacing” have become “dirty words” within the life insurance industry. They are not.

There was a time when unscrupulous agents churned business, but those agents are long gone. The industry did a nice job of policing itself. I would argue that now the pendulum has swung too far considering that some life insurance applications include replacement paperwork with dozens of pages that are nearly impossible to complete. To be clear, I am 100% for consumer awareness and consumer-oriented replacement guidelines.

Would you shop a mortgage rate if a better one seemed possible? Would you get a better car if the cost was comparable? Most people want the benefits of technological improvements. It always depends on analysis and the details. The same applies to your life insurance coverage!

Innovation is the force behind better life insurance products.

People with existing life insurance deserve to hear from us that replacing, changing or switching one policy for another may be a smart thing to consider.

It is simply not good enough for agents to be solely responsible for creating this awareness. Policyowners must get consistent messaging from insurance companies, agents, associations, industry pundits and advocates. It is imprudent to keep a life insurance policy without knowing if better coverage is available.

It begins with a current assessment of one’s health. Fortunate consumers are the ones in similar or better health compared to the time of their last purchase. They will find there are meaningful innovations for them to consider. Jumbo policies should routinely be reviewed as there are several insurance companies competing for this business.

The fact is, innovation is happening in the life and annuity industries, especially benefitting permanent life insurance products. We tend to think that because we are older, we have no sensible options for trading up. But that is not the case.

The key to enhancing coverage is health. Since life insurance companies are competing on price, being older does not preclude you from better coverage. For example, older life insurance policies DID NOT allow policyowners to take an advance from the face amount of a policy for a critical or chronic illness. New policies do because of accelerated benefit riders.

Quite frankly, accelerated benefits alone make a strong case for trading up. The advance comes from the face amount, not the cash value account. Many term policies now have accelerated or living benefits too.

There is no downside in taking advantage of better rates, lower premiums, more benefits and more flexibility.

When does it make sense to keep existing coverage? When there has been a significant change in health or surrender charges apply, it may not be possible to benefit from new life insurance. Until a policy or policies have been properly reviewed, it is impossible to know.

If your health is equal to or better than the last policy you bought, it is likely that you can upgrade. Buying life insurance today is a much simpler process and depending on the amount of coverage, it can all be done online, without a medical exam.

Please contact us at 561–771–4647 or use the form on this page. I offer a complimentary consultation to discuss anything you wish about life insurance or annuities. I am proud of the things many clients have chosen to say about us and perhaps they will give you additional insight about how we do business.
You can visit us at www.facebook.com/lifecycleplanners

https://en.wikipedia.org/wiki/Whole_life_insurance https://en.wikipedia.org/wiki/Life_insurance#Permanent_life_insurance

Originally published at Life Cycle Financial Planners, LLC.

Trade In Your Life Insurance Policy For A Better One. was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Most wealthy people want to preserve and protect their assets from additional government taxation when they are transferred to their heirs. High net worth people own large amounts of life insurance to create guaranteed, low cost liquidity to minimize the impact of estate taxes. Jumbo life insurance coverage, often financed, is a critical element in state-of-the-art succession planning.

Wealthy people pay many types of taxes while they are accumulating their wealth. Sure, we’ve all heard the stories about Amazon’s Jeff Bezos or Facebook’s Mark Zuckerberg paying virtually no taxes. True or not, most high net worth people know they’ll pay an additional 50% in estate tax. Minimizing the burden of taxation on transferred wealth is sensible planning.

For these reasons, properly structured permanent life insurance is a necessary part of sophisticated estate planning strategies. To support and enhance these planning techniques, life insurance guarantees that liquidity is available upon death. Highly regarded income and estate planning attorneys are among the biggest proponents of life insurance because it creates the immediate liquidity which binds these intricate plans. The life insurance proceeds are there when wealth is transferred and the estate taxes are due.

Use your existing wealth to make it immune from unnecessary taxation and risks.

The cost of using jumbo life insurance policies is reasonable and it is very important to understand how the jumbo life insurance definition affects pricing. For example, a couple in their 50’s can purchase $10,000,000 of permanent insurance for $50,000 annually. The cost of life insurance is a fraction of the return generated by the death benefit. As people become more wealthy, it is even more difficult, without insurance, to successfully protect the majority of their assets from estate, gift and inheritance taxation.

The combination of cutting edge estate planning strategies with permanent life insurance coverage is state-of-the-art succession planning.

Once the decision to own jumbo life insurance coverage has been made, the question of how to best pay for the insurance is evaluated. This is an issue that is dependent upon many factors and why customization is always best. Should the premiums be accelerated? Should the coverage be whole life or indexed universal life? Does premium financing make sense?

Borrowing the Premiums to Pay For the Life Insurance Policy.

Premium Financing:

• Borrowing the premiums from a bank can be an optimal way to fund permanent life insurance while offering great flexibility in the future.
• Uses well managed loans to drive down out of pocket costs.
• Non recourse design requires minimal collateral other than the life insurance policy.
• Results in fully funded policies with many options to pay off the loan (always dependent on projections).
• Minimizes out of pocket costs in all years until the anticipated exit strategies pays off the loan.

Work With Me To Help You Structure The Right Policy.

For 30+ years, I have been working with individuals, families and businesses facing many of these issues. Typically, my clients work with cutting edge professionals. Whether it be estate planning attorneys, CPAs and wealth managers, my clients are people who appreciate expertise and professionals who bring great value from their respective fields. I have helped my clients acquire more than $1B of permanent life insurance coverage and I have placed policies in excess of $50M. I work with my clients to create value in many ways.

One way is to reduce the amount of compensation built into the policy. Driving down the commissions in jumbe life insurance policies has a direct correlation to better policy performance. Further, I use my experience in this market to help ascertain the best underwriting offers possible. This requires extensive underwriting knowledge to help insurance company underwriters properly evaluate an applicant’s medical history without increasing the rates.

Testimonial:

“After spending several years working with top tier estate and tax advisors to put a succession plan in place, our counsel put us in touch with Ted Bernstein for the purpose of getting life insurance. I can’t say it any simpler than by saying, after working with Ted, I became aware that there is a real difference between insurance people. Ted is approachable and good at making insurance relatable.” Jake Garlick, Virginia

Please contact me at 561–869–4500 or email me. I offer a complimentary consultation to discuss anything you wish about life insurance or annuities. I am proud of the things many clients have chosen to say about us and perhaps they will give you additional insight about how we do business.

Originally published at Life Cycle Financial Planners, LLC.

Wealthy People Own Jumbo Life Insurance Policies. was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Protect Your Retirement Assets.

We sell security, not securities.

We all wish we could make money when the markets are up and avoid losing it when markets are down. Conservative and aggressive investors alike — nobody wants losses!

As investors, we want the best of both worlds. When markets are up, we want to stay invested with minimal risk and we want to protect our gains. It is tempting to let it ride just a little longer and to stay fully invested, often against our own, better judgment. It seems like a manageable strategy. The problem is that markets take sudden turns for the worse. Then, it can be paralyzing and difficult to minimize losses or perhaps to even get out at the right time. It is difficult to consider changing course during these times and it is equally difficult to watch your assets plunging. With retirement assets, a sudden move down can be very costly. Waiting for the markets to cycle back up again is a different experience at age 67 than it is at 45.

The Good news.

The best time to consider alternatives is at the top of a market cycle. Instead of being too heavily invested in equities that offer no protection, a balance of income generating assets and equities will protect your retirement assets. The income generating vehicles are state-of-the-art, with indexes that participate in rising markets. Since they are not investments, there is no investment risk. Your principal and any growth is always guaranteed. While there is nothing inherently wrong with risky investments; they should not be the foundation of a retirement plan. They are either complicated and guarantee nothing, or both.

What I am asking you to consider are known as guaranteed income contracts or Fixed Indexed Annuities. Think of them as market indexed annuities because returns are partially based on how markets perform.

Need an alternative to 0% savings rates? Get 2.45%

“ROI is Reliability of Income in retirement, not Return on Investment. The goal of retirement security is achieved through a shift in focus from asset accumulation to income and asset protection.

Annuities are over 200 years old. THERE IS NO LOSS OF PRINCIPAL which is the PRIMARY ATTRACTION of an indexed annuity. During the 2008 Financial Crisis and the Coronavirus bear market, none of our clients lost a dollar in fixed indexed annuities. Today, there are millions of indexed annuities inside IRAs and other retirement plans. People want gains when the markets are rising and they want guaranteed income for life with downside protection against.

The world’s leading economists all agree about the value of annuities in retirement. Consider what they say because they are unbiased and impartial. It makes no personal difference to them whether we invest our retirement assets in hedge funds or annuities. When Olivia Mitchell from Wharton (check out her incredible resume) says that annuities are key assets to own in retirement, she is saying so because she’s spent her entire career studying these issues. Nobody explains why mortality credits are the most valuable asset in annuities, better than Tom Hegna. When Professor Wade Pfau at The American College, or Roger Ibbotson from Yale write books about the advantages of annuities, their pro-annuity positions are credible because they don’t sell products.

Professor Pfau stresses that “investors typically fall into the ‘trap’ of depending on investment portfolios as the chief way to fund their retirement. Now, many of these folks in retirement find themselves needing a life raft…acquiring an annuity would have prevented such a dire scenario”, he argues.

HOW CAN YOU DO THIS?

What about the upside? Fixed indexed annuities have been designed to modestly beat the performance of other fixed income products and typically, they do just that. There are also times when they do much better. These are important years that really boost the overall performance. For example, many of our clients earned as much as 14% from January, 2019 to January, 2020. Those were extraordinary returns because the market was experiencing extraordinary growth during that same period. I will share more about how to maximize your gains when we speak.

More Good News: The gains credited to an annuity contract can never be lost. The upside potential of an indexed annuity is determined by the participation arrangement and caps selected at inception. You are protected by a contract, offering an additional level of security.

Personally, I do not like to hype the upside of market indexed annuities. We sell security, not securities. .

Let no one with a financial interest in your assets dissuade you from making a financially sound and prudent decision, especially one that may be in your best interest. When you move money away from stock brokerage firms or wealth management firms, they’re losing significant, recurring revenue that is earned from your assets. I have no problem with fees charged by professionals. But, it should come as NO SURPRISE if they make you second guess a decision to move your assets away from their firm. To keep this simple, if you pay an annual fee of 1.5% on $1,000,000 of assets, that is $15,000 per year, or $150,000 of your money over 10 years.

When markets tumble and the assets in your account go down, so too does the revenue for the investment firm and the investment manager that is managing your money. Can you trust the advice of an advisor who loses annual income if you liquidate or move your account? Is that structure in your best interest? Most investors are not aware of these potential conflicts and many are surprised when they finally understand them.

Who doesn’t want more guaranteed, lifetime income? Market indexed annuities and single premium immediate annuities will pay you for as long as you live, while indexed annuities guarantee the principal — forever. If the market drops 30%, you lose nothing. If you want certainty, predictable outcomes and no financial anxiety, this is for you.

“With a market-indexed annuity, you pay no commission from your assets. Instead of paying “forever fees” that are directly reducing your retirement fund each year, there are no annual fees*. The one-time commission is paid from the assets of the insurance company, never from your assets! The interest calculations, participation rates and all of the contract terms are regulated by the Department of Insurance in your state.”

*Some people choose riders that may have annual, disclosed fees.

Guaranteed annuities are ideal for those of us who can’t stomach the volatility while watching our retirement assets evaporate in a crash or during a bear market. Hearing an advisor tell you “not to panic” or “it always comes back, be patient”, doesn’t help. That’s never easy to hear.

From 2000 to 2020, there have been three major bear markets and if you owned a market-indexed annuity, you avoided all three. That’s “peace of mind” — not a dollar of loss over 20 years. Market indexed annuities are only available from major insurance companies because only insurance companies are financially strong enough to provide these guarantees. They face regulators and rating agencies each year with open books.

The numbers say it all. In the chart below, the market-indexed annuity has performed nearly as well as the S&P 500 total return index (including dividends). WITH NO RISK!

Are annuities safe? If you are a conservative to moderate investor, why not let a market-indexed annuity take some of the most important guesswork out of your retirement planning? When the indexes are up, you can make money. If markets crash or if volatility takes over like this year, you will never lose money. Keeping this simple, if you had put $500,000 in a market-indexed annuity in January or February of 2020, you still have $500,000 of principal today, plus possible gains. Your principal is always intact — always at the highest level it has achieved, called the high water mark! Let’s talk more about the advantages of keeping ALL of your “stacked gains” when we speak.

You want the best of all possible worlds.

What’s the catch? Since the insurance company guarantees to never lose your principal, they share in some of the upside, when the markets are up. For example, one possible choice is a 50% participation rate. If we assume the S&P moves up by 30%, you would receive a 15% return. If the S&P is up 8%, you would receive gains of 4% credited to your account. There are many possible participation rates and cap rates to choose from and this is where you want to be working with the best insurance companies and a professional with knowledge of indexing strategies. Please complete the following form to request a proposal and additional information.

“Don’t compare annuities to what might have been if interest rates had been higher, compare them to what is possible and available now. Now we are stuck with low rates. Trying to wait for rates to increase is going to eat away at your assets in the meantime, and there is nothing you can really gain from the effort. Low interest rates strengthen, not weaken, the case for purchasing a single premium immediate annuity.” Wade Pfau

Ken Fisher hates annuities. Why do some financial “experts” criticize annuities? Everytime a Ken Fisher client liquidates and moves money to an insurance company for the purchase of an annuity, Ken Fisher’s firm loses annual recurring revenue. Maybe that is why Ken Fisher hates annuities?

Which Is The Best Annuity?

There are thousands of annuities in the market and it is our job to know them and to know which one suits you best. To do that, we get to know your goals and objectives. Some contracts are too expensive and some carry hidden fees and charges. You want to make sure to buy the right indexed annuity from an experienced professional only representing insurance companies with high ratings.

Ready to start protecting your retirement assets and never losing money in the market again?

Contact us and allow us to answer all your questions? You have nothing to lose by taking a complimentary phone call. Time does matter. A low interest rate environment forces insurance companies to lower the rates for new clients. Safety is what drives their investment decisions and in order to properly respond to lower interest rates, they will change their offers accordingly.

Start the ball rolling and call us or fill out the simple contact form on this page or any page of the this site. We can be reached at 561–771–4647 or 561–869–4500

Originally published at Life Cycle Financial Planners, LLC.

Never Lose Money In The Markets Again: was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

We sell security, not securities.

Millions of Americans are frustrated by record low interest rates and how they are affecting your savings and your retirement plan. Whether you have money in CDs, money market accounts or government bonds, there are better options. Instead of accepting 0%, we can help you can get at much higher guaranteed interest, without giving up safety or liquidity.

Get Better Returns During This Prolonged Period of Low Interest Rates.

Why not consider a 200 year old option where everything is guaranteed and currently offers fixed rate near 2.5%? It is short term, liquid and the income is not taxable until it is withdrawn, unlike other investments which tax the minimal growth each year. This option gives you a real chance of getting tax deferred, compounding interest.

With the Federal Reserve signaling that benchmark, short term interest rates would likely be held near zero until 2023, many may be reminded of the period following the last recession, which lasted for seven years. The Wall Street Journal, September, 2020

Zero percent rates are punishing savers. CNBC predicted that rates will not rise until 2025! At this point, we have to believe the Fed about rates. Some banks have announced they will soon be at NEGATIVE RATES.

We help consumers locate better solutions. For example, indexed annuities are liquid and currently paying GUARANTEED ANNUAL RATE near 2.5%. The advantages are:

• 100% guaranteed.
• More than 2.5% is possible by allocating to the indexed funds, without taking any principal risk. The index rates are NEVER less than 0%.
• All gains are kept and can never be lost.
• No principal risk; no market risk.
• Minimal surrender charges; small market value adjustment on early year surrender can be positive, or negative.
• Tax deferred.
• Protected by a contract from highly rated insurance companies.

Financial Engineering: Instead of using indexed annuities with built-in commissions, we utilize fee based alternatives to boost the returns and the early year liquidity. This is state-of-the-art value creation, leading to better returns. Alternatives like these minimize the individual risks and maximize safe, upside potential.

Annuity Alternative Money Market Savings Account CDs Bonds
Bond Fund ~2.5% Less than .02% Less than .02% Less than .02% Variable Liquid Liquid Liquid Less Liquid Less Liquid Tax Deferred Taxable Taxable Taxable Depends Guaranteed Guaranteed Guaranteed Guaranteed Not Guaranteed Up to 5% with no risk. Current rate Less than .02 Current rate Less than .02 Depends on Duration Depends on Duration

What makes this annuity alternative so much better?

Individual investors can not match the investment skill or the investing scale of insurance companies. With the brightest investment people working 24/7 to grow and protect your money, insurance companies are investing billion dollar portfolios. As individual investors with far less to invest, we cannot commit the necessary attention to safeguard our own investments in the same way. It’s win/win money management because you share in the upside when markets are up, without taking any principal risk.

How Much Interest Can I earn? Many people choose the fixed account rate that is currently paying 2.45%. Others choose one of the indexes linked to the S&P which puts you in position to earn as much as 5%. And others choose a blended approach that creates some guaranteed income plus potential for double the guaranteed rate. Higher interest rates are achieved without any principal risk. Net of fees, the returns are far superior to savings accounts, money markets and fixed income products. Furthermore, taxes are deferred and principal is creditor protected.

We are facing the real probability of negative savings rates. Imagine paying a bank to hold your money? It doesn’t seem possible but neither did zero percent interest rates seem possible a few years ago.

If you find better rates in the future, you can liquidate without surrender penalties. However, higher rates elsewhere will likely mean that insurance companies are also increasing their fixed rates in order to remain competitive.

Let us help you plan for this low yield crisis. Learn about these successful strategies by taking a complimentary phone call or requesting a customized quote. For more information about short term solutions, click here:

Start the ball rolling by simply filling out the contact form on this page or any page of our website. You can reach us at 561–771–4647 or 561–869–4500.

How long will interest rates remain low, click here:

Originally published at Life Cycle Financial Planners, LLC.

Are Low Interest Rates Stopping You From Getting Competitive Interest? was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

If you’re in good health at conversion time, there are much better options to consider first. For healthy people, converting is usually an option of last resort, but there are exceptions.

The overwhelming majority of people do not convert their term life insurance to a permanent policy, for many reasons. The most obvious one is that the majority of life insurance buyers are not good candidates for permanent life insurance. But for those people who need and want permanent coverage, it makes sense to shop the entire market for a new policy. Most insurance companies DO NOT expect healthy people to convert a term policy. They assume only unhealthy policyholders will convert and based on that fact, converting can be a very expensive proposition.

In a perfect world, everyone would like to have a permanent policy for the cost of term insurance. When we are young, term is easy on the budget and reaching fifty years old seems a hundred years away. Young insurance buyers are often told they won’t need life insurance in the future, that their kids will be grown, other assets will make life insurance unnecessary and spouses won’t need protection any longer. In reality, we get older quickly and our feelings about life insurance change — ask anyone over 50. Or ask anyone who has been divorced or has grandchildren. Others see the value of lifetime coverage and even though they may have initially opted for temporary term insurance, they should be advised to replace the temporary coverage with a permanent one, as soon as cash flow permits and well before the term policy ends.

There is a small number of life insurance companies with great term insurance products. These companies have low rates, they allow conversion in ALL YEARS and they allow the term policy to be converted to every available product they offer.

The decision to convert a term policy depends on your health and your current goals and objectives. If you are going to convert term insurance, you hopefully have the right kind of term policy. If not, the choices may not be ideal, making conversion a critically important issue when buying a new policy or reviewing inforce policies. Too many term life insurance agents want you to believe that price matters more than anything else when choosing a policy. Nothing could be further from the truth. For example, accelerated benefits add no cost to a policy but add critical value.

We hear from people when they are shopping for new coverage or searching for information about conversion options, usually near the end of the guaranteed period. Like many financial planning issues, help from a professional is your best bet. Getting current policy information about the conversion options will provide clarity about the best possible course of action. Life insurance is not one size fits all, there are no simple answers that apply to each individual. The end of a term insurance policy is an important deadline that brings the question of life insurance coverage into focus again.

Instead of converting, healthy people have better options for buying new insurance. An expiring term insurance policy should be treated just like the purchase of a new one. How much coverage is needed now and how has that changed? How long do you want the coverage to last? This is one of the most important considerations as duration determines not only the type of policy to consider, but it’s premium too.

The longer you want coverage, the higher the premium will be and the sooner you lock in a permanent insurance rate, the less it will be over the long run. For people who prefer to control and minimize future costs, permanent insurance has a much lower net cost than term.

If you purchased a 20 year term policy 10 years ago, today you only have a 10 year term policy without living benefits and the conversion deadline may be right around the corner.

Things are changing. Life insurance buyers today are benefiting from education, innovation, technology and medical science. However, your current policies are not receiving any of these improvements. For example, new policies allow people to take an accelerated benefit against the face amount of the policy, at no cost, when they have a health emergency. A person with a $2,000,000 policy is eligible to take as much as a $1,000,000 advance from the face amount, under the illness rider. Even if there is zero value in the policy, it remains eligible for an advance because these special advances come from the face value, not the cash value. Ask an experienced agent to compare your existing policies against today’s market.

To take advantage of these innovations, please contact me at 561–771–4647 or complete the contact form on this page to schedule a complementary discussion.

Originally published at Life Cycle Financial Planners, LLC.

Should You Convert Your Term Life Insurance Policy? What You Must Know. was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

There is no consensus on the definition of a fiduciary these days. Nor is there agreement on who should be held to a fiduciary standard. I don’t see the debate getting settled any time soon.

There are many differing views about the most effective way to help and protect investors from abuse. I am not convinced this type of additional legislation would help determine if an advisor will have a client’s best interest in mind. Can we really regulate intent or unethical people to prevent them from acting unethically? Ethical professionals act ethically without checking the definition first.

In my opinion, a fiduciary relationship applies to any situation where one person justifiably places confidence and trust in someone else and seeks that person’s help or advice about something meaningful and important. Fiduciary responsibility is one of the most revered and powerful aspects of being a life insurance professionals. Having this responsibility requires us to act in the best interest of our clients at all times.

Is it reasonable to expect that we can regulate intent or unethical people from acting unethically?

Without doubt, there are unethical financial advisors just as there are unethical insurance agents, stock brokers, nurses, general contractors, drug manufacturers, surgeons and attorneys. The list goes on and on. There are unethical people in every profession and they typically don’t check the current fiduciary standard definitions before preying on consumers, in my opinion. They tend to act unethically no matter what. Attempting to regulate this seems like nothing more than a litigation attorney’s dream come true.

Consumers don’t want to get bogged down in litigation at 70 years old, that’s for sure. There are better ways to determine if a financial advisor acts in a fiduciary capacity.

For those who want absolute certainty, there is only one way to know for sure and that is by separating advice from everything else. In order for consumers to have 100% certainty about the advice they are receiving, they must pay fees for advice from fee only advisors who accept nothing other than fees from their clients. However, I do believe that with a reasonable amount of front-end due diligence, most people are quite capable of finding the good eggs in the financial services world. Earning an impeccable reputation takes a long time. There are many reliable ways to validate a person’s reputation.

Complaints is one way to gain insight about the reputation of a professional. If complaints about an advisor are chronic and from multiple consumers, this is usually a red flag, worthy of caution and further investigation. Are there complaints filed at the local, state and federal levels against an advisor? If so, how many? Does the person maintain good relationships with partners such as insurance companies or former employers? In my experience, I have found that most advisors and insurance professionals do everything possible to represent the best interest of their clients. Most professionals are willing to provide names of other clients and other professionals such as attorneys and CPAs who will report honestly when asked. I encourage my prospective clients to do an exhaustive search. Deep searches should be welcome by professionals working in the best interest of their clients.

A pattern should emerge about a person, one way or another.

What Are Fee-Only Advisors? Fee only advisory firms are compensated only from fees paid by their clients. They accept no soft dollars, no commission sharing, weekend getaways, notepads, playoff tickets to events, etc. This should be promoted and stated in their fee contract where everything is transparent and disclosed. They will not sell or recommend products, participate in any kind of fee sharing arrangement, or make referrals. The Fiduciary — Advisor Best Interest Standard — Can it Work for You?

There are 2000 total billable hours in a professional’s year. When advisors bill $200 per hour for 50 weeks, 8 hours per day, that generates a maximum of $400,000 of gross annual revenue. With breaks, vacations, sick days and personal days, 1500 billable hours is more reasonable. But overwhelming data tells us that people will NOT pay $200 per hour or $50 for a 15 minute phone call. They will not pay $10,000 for an initial assessment of their goals and objectives. Additionally, there are other fees to review current portfolios and fees for working with other professionals on the team. To boot, most people will be hard pressed to find a fee-only advisor at $200 per hour. Don’t be surprised to see hourly rates starting at $300 per hour.

Finally, there are annual recurring fees to manage the plan and provide ongoing service. To run a successful fee only practice, the advisor will incur expenses for employees, rent, phones, taxes, insurance, equipment and supplies. The advisors have to allocate and change time for customer acquisition and client retention. These costs cannot be billed to existing clients and these tasks will further reduce the gross number of billable hours. The net income for most of these advisors is too low, resulting in an unsustainable model.

Ask For References.

Is it possible to know if a financial services professional will act ethically and have your best interest at heart? I believe it is. To determine if an advisor is ethical and meets a fiduciary standard, contacting their existing clients is helpful. I suggest you check out their experience, existing or past complaints, their references and your instincts. With a little bit of due diligence, relying on a combination of these options will serve you best.

Originally published at Life Cycle Financial Planners, LLC.

Fiduciary — Advisor Best Interest Model — Can it Work for You? was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Annuities and investments are not the same things. Here are some key differences and similarities between annuities and investments:

Other than variable annuities, 100% of the principal and the growth of an annuity is guaranteed, no matter what. Even when the stock market was down 40% in 2007, the principal in these annuities was protected from any loss. Below is a discussion of some of the pros and cons of annuities versus investments.

Annuities create GUARANTEED, INCOME FOR LIFE. If you use the right annuities, the amount of guaranteed, future income will be more than any other strategy you can choose to generate future income. Many people describe annuities as private pension plans.

Annuities are contracts with some of the strongest guarantors in the world. Investments are not.

Annuities are guaranteed. Everything in the annuity contract is spelled out, providing total transparency. This creates safety, security and predictable outcomes. This is quite different from investments, such as equities in the stock market, which is a good example of speculation and risk. There are no contracts when buying equities because there is no certainty. There is nothing wrong with that, it’s just different. One is not better or worse and they all have their places in a financial plan. Annuities are known for being precise, transparent and dependable. The insurance companies make everything in the contract available for policyholders to understand.

Tax Deferral: Not having to pay any tax on any gains during the growth phase can be very meaningful. Taxes will ultimately be paid on distributions. Annuities are not tax shelters but the advantages of tax deferral is significant for retirement purposes.

Rather than exposing lump-sum legacy assets to loss, mismanagement and other risks, annuities are often used to create lifetime income for beneficiaries. Grandparents are increasingly using annuities for their children and grandchildren. The income is protected and safe from divorce.

Some annuity companies offer generous bonuses to new clients. They do this by crediting the incoming account value with as much as 10%. Many people consider the bonus as an offset to surrender charges.

Most annuities have NO FEES and there is NO COMMISSION paid from your assets. The one time commission is paid from the balance sheet of the insurance company, NOT YOUR ASSETS. For example, when you pay a single premium of $200,000 into an annuity, the amount earning interest from day one is $200,000. In comparison, a 1% “forever fee” for the same investment is reducing the account value each year, by $2000. At the end of 10 years, it adds up to $20,000. At 1.5%, the total fee you pay is $30,000 over 10 years.

Some annuities and some investments have surrender penalties. CDs are examples of investments with surrender penalties. Annuities have surrender penalties which allow the insurance companies to make investments with longer durations and better returns.

For a quote, please call us at 561–771–4647 or email Ted Bernstein, about a complimentary phone consultation.

Originally published at Life Cycle Financial Planners, LLC.

How Are Investments Different From Annuities? was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Permanent life insurance (sometimes known as whole life insurance) offers much better value for life insurance buyers who can afford to pay higher premiums and capitalize on better net cost. Comparing the net cost of permanent life insurance to the net cost of term insurance is the true measure of determining which type of life insurance costs less over time. The Net cost is the total premiums paid minus the total cash value. For example, if $80,000 of premiums were paid into a policy over 10 years and the cash value of the policy now has $100,000, the net cost would be a net gain of $20,000. The longer you own permanent insurance, the better its net cost will be. With net cost, the lower number is better and net gain means the policy has more cash value than premiums paid. The longer you own term insurance, the worse the net cost will be. Based on this important fact, switching from term insurance to permanent insurance is a necessary step in optimal life insurance planning. Incidentally, there are only two types of life insurance — permanent insurance and term life insurance.

What is the difference between term insurance and permanent life insurance?

Permanent life insurance provides lifetime coverage or to a point in time selected by the policy owner, not the insurance company. Some permanent life insurance policies build equity or cash value in the policy. The out of pocket cost of permanent coverage is more than the out of pocket cost of term insurance. But that is only in the early years. As a result of paying lower premiums in the early years, many people incorrectly assume that term life insurance is “better”. Since the definition of better is not the lowest price, a meaningful disconnect sets in which catches many people off guard.

Permanent life insurance offers far better value for lifetime coverage.

How long does permanent insurance stay inforce? The simple answer is that a permanent policy remains inforce for as long as the policyowner wants to keep it. Term insurance is the ideal name for temporary coverage because it stops at a certain age. It was never intended to compete with permanent coverage. Permanent insurance puts the insurance owner in control of when the coverage ends, not the insurance company. Term life insurance can feel like musical chairs. The music goes faster and faster in musical chairs, just like increasing term premiums as you’re getting older. When a term policy expires, you may find yourself without coverage or options when you need them most.

What Nobody Tells You About Term Life Insurance.

“Millions of people were sold a theory called “buy term and invest the rest”. They were told they could invest better than insurance companies and the plan was to invest, each year, the difference between the term premium and the higher premium for permanent coverage. This amount would be invested, accumulated and used when the term policy expired later in life to pay for escalating term premiums. In reality, the only thing that held true is term premiums are escalating. “But term and invest the difference” has proven to be a costly mistake and many people are paying dearly.”

The right prospects always buy permanent life insurance when it is properly presented to them. “But Dave Ramsey and Suze Orman don’t like permanent life insurance”. It’s true, they don’t. But they are not insurance professionals and they do not offer advice to individuals, which would require them to put their reputations on the line. It’s easy for pundits to make general claims for which they have no personal responsibility. Many young families do not have the financial means to purchase anything but term life insurance.

Buying life insurance is a building process, not a one-time event. Term insurance can be the right decision for families without coverage. When is the right time to consider buying permanent insurance? There are several common triggers leading people to consider upgrading:

When moving from the “paycheck to paycheck” lifestyle, we become potential permanent life insurance buyers. Since ninety seven percent (97%) of all term policies do not pay a claim, then 97 percent of ALL term premium were wasted. High Net Worth (HNW) consumers and high income earners choose permanent life insurance because it has better value:

Replacing Your Income: If your family or business indefinitely depends on your income to run smoothly, permanent life insurance is the right product if you can handle the higher premiums.

Immediate Liquidity: Very wealthy people own life insurance. They want the guaranteed liquidity it provides at death and they purchase only permanent insurance for this purpose.

Permanent Life Insurance Solves Succession Planning Problems:

• The value of people’s assets fluctuate significantly and death is always the worst time to sell a business or other assets.
• Many people have children working in a family business. Life insurance is the great equalizer for those children who do not work in the business. Without liquidity in these cases, there is great risk to a smooth succession of the business.
• Many clients own a life insurance policy for each of their grandchildren. The insurance policy is straightforward, inexpensive and a “feel good” asset knowing how it will impact the grandchildren.
• Premium Financing. Wealthy people have the ability to finance life insurance. When it makes sense, it is a very effective tool to create tax free wealth.

Please contact us at 561–771–4647 or email me at TB@LifeCyclePlanners.com about a free review.

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https://en.wikipedia.org/wiki/Whole_life_insurance l https://en.wikipedia.org/wiki/Life_insurance#Permanent_life_insurance

best life insurance. what is term insurance?

Originally published at Life Cycle Financial Planners, LLC.

Why Do High Net Worth People Own Permanent Life Insurance? was originally published in Retirement Planning, Income Replacement, Wealth Preservation on Medium, where people are continuing the conversation by highlighting and responding to this story.