Bengt's Life Planning Blog

Be Your own Banker

2011-01-17T12:59:00.001-08:00

There is a way to become your own banker, and avoid paying interest to banks, credit cards, and other financing programs. This money accounts for a large part of the money slipping through the household of the average American.

You can establish a Whole Life Insurance policy, and it grows tax deferred, and gets dividend payments of 4-6%. When you do this, you build your own bank, and put these advantages to work for you:

+ Access to your money anytime (like a savings account)
+ Guaranteed return, with protected principal (like bonds)
+ Tax-protected growth (like a Roth IRA)
+ Collateral for a loan (like real estate)
+ Creditor protected (like a 401(k))
+ Not counted in financial aid applications (like annuities)
+ Bypasses probate (like a trust)
+ Leaves a legacy to your heirs (like life insurance)
+ Option to pay into the account if you are disabled (like disability insurance)

How is having a Financial Advisor like Going to school (Part II)

2011-01-17T12:41:00.000-08:00

The article from Bachrach and Associates continues:

"You might be thinking, "But I'm not a kid!" -not any more. Yet, you probably have the same challenges: scattered, fragmented, distracted, too many choices, and under-performing your potential. You get to the end of the day and compare what you actually did to what you know would have produced the best results for your clients and your business; and, you can only shake your head hoping tomorrow will be better.

Wouldn't the same things that Principal Perry says are important for kids be valuable for you and your professional success: consistency, structure, monitoring, follow-through; and someone to hold you accountable?

As an adult it's up to you to recognize your own need and choose to opt into a community where you can get this structure and support. Your mom and dad are no longer in a position to make you do it. Everyone is more successful when they have structure and someone to "hold their feet to the fire." It's not a kid thing or an adult thing. It's a human thing.

The most successful people recognize this and take action."

I think we all can benefit from the structures we put in place in school, or that coaches give us when we join a team. In your financial life, with goals you want to accomplish, this is done by a professional advisor.

How is having a Financial Advisor like being a student? (Part I)

2010-09-08T14:48:00.000-07:00

Here are some thoughts from Bachrach and Associates, a firm who trains quality financial advisors they like to call Trusted Advisors. Do you agree that we all need continued coaching and training? See if you can guess their answers in Part II.

"Principal Steve Perry, renown for his success in helping parents help their kids succeed in school and in life, says that parents who have the most success with their kids:

Are consistent
Have a structure in place
Monitor the structure
Follow through

According to Perry, one of the biggest mistakes parents make is giving their kids too many choices. Another mistake parents make is spending too much time being friends with their kids. They are too nice. Perry says, "Parents are not holding their kids feet to the fire to do what's necessary for them to be successful." According to Perry, kids actually value consistency, structure, and parents who follow-through with monitoring and accountability. They know they need it and no matter how much they may rebel in the moment, they recognize this as a sign they have parents who care and love them.

Without consistency, structure, monitoring, and follow-through kids become adults without the habits required to create predictable, recurring, and lasting success.

What does this have to do with being a successful Financial Professional? Everything."

Let me know your opionions, and guesses on their ideas in Part II.

Want to live a long, happy life? Do this...

2010-05-06T08:46:00.000-07:00

So here is a video with Bob Proctor, talking about how he found his passion, courage, and life calling.
He also notes that "retirement" is not in his vocabulary, because he is doing every day what he loves to do.
You'll see in the video how vibrant and healthy he looks.
How do you compare to this man who could be collecting social security?

Check him out here: http://www.bobproctor-training.net/?

Tell me, how close are you to doing what you truly love to do?

Why do I have an Extra Screw?

2010-05-03T13:21:00.000-07:00

When I purchase a piece of furniture from Ikea and I don't follow the directions I almost always end up with an extra screw. Can you imagine what would happen to your loved ones if you did not leave specific instructions?

In my experience I see people putting off planning for next year, and when next year comes they put it off for -- you guessed it -- another year.

The only time to get it done is NOW.

Even the wealthiest individuals have made estate planning blunders. The estate of James Brown is going to be contested for years to come by various people because he left none or in some cases conflicting instructions.

You need to have a will that gives instructions for when you pass away. You also need to have a living will with directions on what to do when you become incapacitated.

Then your loved ones will be able to follow your wishes, instead of guessing or fighting about them. And there won't be any extra screws.

Can you Pay The Bills from Heaven?

2010-02-09T08:45:00.000-08:00

This may sound harsh but it is true. Why is it that we don’t think of dying? We don’t like to imagine our own death, and so we put off planning for it…until it is too late.

I was once introduced to a young couple; the husband was a new realtor and the wife a stay-at-home mom with a 9 month old baby. I spoke to them about life insurance and he said he would consider it and get back to me. Unfortunately one sunny afternoon in West Seattle the husband was involved in a motorcycle accident and was hit head on and died instantly at the scene. I am sure you know many stories like this. They should be your motivation to act. You need to have enough life insurance to support those you are going to leave behind.

I agree with Suze Ormond, “Should every parent have life insurance? You can’t afford ‘not’ to get it.”

What do you need to cover with your life insurance? Start with a calculation of at least 10 times your salary, more if you want to take care of your family for a longer period. Using a calculation of 20 times your salary would support the surviving family members for about 16 years at their current lifestyle, after inflation, according to the Insurance Information Institute.

In addition, add your other large expenses coming up to that amount. These could include college tuition; medical expenses if someone in your family has special needs, a chronic illness, or a medical condition. Or do you want your surviving spouse to never have to go back to work? Or would you like to provide a gift to a church or charity that is important to you?

#4: Not Having It When You Need It.

2010-02-05T08:34:00.000-08:00

If cost has become an issue, or if you no longer have as many expenses to cover with your insurance, look into lowering your insurance instead of letting it lapse. Because of health or other issues, people can become uninsurable as they age, making it impossible to get an insurance policy ever again.

Do you think you have no one else to take care of? Then consider keeping a policy that will at least cover burial costs. Why should your family have to borrow money to take care of your final remains?

Burial costs are, on average, $10,000 dollars; some less expensive options are available, but others can cost as much as double that amount. Your family will thank you if you have decided what kind of burial you want, and have also provided the funds to get it done.

#3 Living Longer Can Benefit You.

2010-02-04T08:48:00.000-08:00

People are living longer today than they were even ten years ago. For example, in 1994 the mortality tables predicted a 41 year old would live 38.2 more years. In 2004 the tables show a 41 year old living 39.9 more years.

These mortality facts determine how much life insurance costs, and when we are living longer, the cost of life insurance goes down. If you have had a policy for a few years, you could benefit from having an advisor do a comparison with new pricing.

There are other reasons why your life insurance policy needs a regular check-up. What if you did quit smoking a few years ago, but you are still paying the tobacco rates on your policy you have had for 10 years? You would have been paying an enormous extra amount.

What if you got a divorce, but forget to take your ex off the policy? If anything happens to you, your family or new spouse would seriously regret this oversight!

#2 Are you living on the Edge?

2010-01-27T08:25:00.000-08:00

Does having an occasional smoke with old college buddies make you a high risk candidate for life insurance? How about a glass of wine with dinner? Bungy jumping while on vacation? Skydiving?

I love Krispy Kream Donuts. They are light, fluffy, and delicious. If only a person could live on them…ok, maybe not. In fact, after I had children, I started to look at my eating and other habits with a goal of living a long life and being there for my children. And I realized that to live to 100, I would have to eat right and limit my intake of donuts.

The first question on a life insurance application is about tobacco. Do you smoke, or use any tobacco products? If you haven’t smoked for 2-3 years, you can get non-smoker rates with most companies, which are much less than smoker rates. And that occasional cigar? You’re still considered a non-smoker.

Hobbies like skydiving and piloting your own airplane are considered parts of a risky lifestyle, and could affect your premium on life insurance. We all know that putting ourselves in certain situations increase our chances of dying prematurely.

For some of us it is worth it; others will decide that they are living for another purpose. Either way, getting life insurance can be a wake-up call, and cause you to consider what you are really living for.

Ten Life Insurance Pitfalls to Avoid: #1

2010-01-10T13:37:00.001-08:00

This is the first in a series of ten tips on getting and correctly maintaining life insurance.

1. Getting quotes that are not real.

If you are getting a quote from an online quoting tool, or an agent who has not qualified you in any way, you may be getting preferred quotes that the insurance company will not actually issue. You don’t want your experience getting insurance to feel like a bait-and-switch. A knowledgeable agent will ask a few pertinent questions to figure out where in their rating scale you really belong.

My Grandmother’s Family Business

2009-12-30T08:09:00.000-08:00

My grandmother turned 95 this November.

She lives in a nursing home in the town where she spent her whole life, and stays active in the community. Her husband and many of her friends have passed on, but she has many friends left, and lots of family.

She and my grandfather were family farmers. So they ran their own business all their lives. He learned all about crops and animals and machinery, and she managed the household and their affairs.

When they retired in the 80s and sold their farm and equipment to their son, my uncle, they had enough for a comfortable retirement.

My uncle has done well for himself farming, but now his children have moved on and made their own careers. Neither of them wanted to take over the farm.

Why?

It is so difficult to start and run a business, and especially a farm which is dependent on weather and crop prices and other unknowns.

But I believe we should be supporting small family businesses, including farmers, and helping that independent spirit in this country. Something is lost if everyone needs to work for a large corporation rather than running their own small business.

Plus, people like my grandmother are not only productive and independent, but active and giving members of their community. She is a beautiful person, and has made our country a better place.

Executive Bonus Plan

2009-12-15T08:52:00.000-08:00

How can a company give a powerful, additional benefit to its key employees, and at the same time get an additional tax deduction?

That can be accomplished through an executive bonus plan.

A life insurance policy is taken out on an owner or key employee. The premiums are paid by the company, and are considered a bonus to the employee. The company can also deduct the premiums as a business expense.

This provides owners and key employees with a life insurance policy that gives their beneficiaries a tax free death benefit; but it also gives them cash value they can access tax free during their life.

It also provides companies a way to give a great benefit selectively to their key employees at a reduced rate because of the tax deduction.

When is the best time to act? The poet says...

2009-12-09T13:31:00.000-08:00

A poet in India called Kabir said,

“Do Today, what you plan to do tomorrow;
Do Now what you plan to do today;
In fraction of a second the world can end,
so when will you do what you have to?”

Enjoy your blessings today,
and don't take them for granted!

“We’re Not Getting Any Younger”

2009-12-09T08:28:00.000-08:00

I am honored to be let into people’s homes, their stories, their lives.

Recently I was with a couple who had thought about long term care for a few years, but never got it yet. I had come over to discuss it.

He has had a kidney transplant and a heart valve replacement as well. He joked that he was going to use up all of the shared long term benefits they were purchasing.

When I asked why they were considering long term care insurance, she said that she wasn’t sure if they kids would be willing or even able to take care of them.

I told her about my parents moving into a retirement community with an assisted living component, and that they proudly told us kids that we wouldn’t have to worry about them. That let us live our own lives and dreams.

And really, who could foot a $4,000 a month nursing home bill?

This couple has been building up a nice retirement plan for themselves. But they know that could all be unraveled by an extended need for long term care.

Plus, as she pointed out, “We’re not getting any younger.”

She’s Telling Everyone to get Life Insurance

2009-12-07T08:17:00.000-08:00

I met a woman this weekend whose husband and boys are travelling in the country he grew up in.

He was going now, to bring his sons and see his extended family, “on his terms.”

You see, he had been diagnosed with colon cancer.

Last year he had been on chemotherapy, and now it was in remission.

His wife said one of the first things she did was go check their life insurance policy. She was so relieved that they already had one, she said, because now it would be very difficult for him to get one.

And she added, “Now I am telling everyone to go and get life insurance – before they need it!”

Long Term Planning

2009-12-04T08:39:00.000-08:00

This is a sobering fact: more than half of those who need long term care will use up their savings within one year.

Having long term care insurance can prevent the unraveling of many long years of saving and planning.

How long could your portfolio sustain the costs of long term care?

Or if something happened that made you unfit to make decisions, who will decide for you? And what do you want them to do?

Using a combination of long term care insurance, annuities, and life insurance, instead of having to spend down all your assets when you require care, you can build peace of mind, guaranteed lifetime income, and tax-free death benefits.

How do you attain Security?

2009-11-30T09:20:00.000-08:00

Sometimes, on the road to greater security, we have to go through a place of vulnerability.

When you go through “security” at the airport, what do they make you do?

You have to take off your shoes and belt. You have to let them look through all your bags. You have to walk in your socks through a metal detector and let them scan your body. You feel exposed.

When it is time to do estate planning, to make a will and financial plans for the future, we have to do the same thing – take an open, honest look at ourselves and our situation.

This is not always easy. Perhaps we are not where we wanted to be. (Especially after the last year or two!) And there is work to do.

This open evaluation is the launching pad for growth, however. It leads to a clarification of our values, and can get us focused on our goals again.

We often avoid discussions of what could happen in the future. But we are not in control of everything, and we cannot predict what will happen.

Better to go willingly to the place of vulnerability through planning for our future, and set up defensive measures like insurance to take care of the worst case scenarios. Having honest discussions and renewing our commitments to loved ones and doing what we can do now is the surest way to security.

Heroes on CNN

2009-11-27T09:25:00.000-08:00

Last night, after a big Thanksgiving dinner, we happened onto the CNN all-star tribute to everyday heroes.

It made me ask, what am I doing? It made me want to open my eyes to what is around me.

Because these were ordinary people who noticed a need and were stepping into the breach and lifting people up.

I saw two avenues that got them there.

Some had experienced a tragedy, and then realized from their depths that they had to reach out to others in similar situations, like an amputee, or a victim of rape, or someone with cancer.

The other kind had seen something, and asked a simple question.

In Iraq, "What do all these maimed children need the most?"

To day laborers in Queens, "Are you hungry?"

In East Timor, "What can we do for these orphans?"

And then they started small, with what they had, and attracted other people and resources when people saw what they were doing. But they would have kept on doing it by themselves.

It was a great lesson on that day focused on gratitude, how much we all can do for others right now, right where we are.

Rebuild Your Retirement

2009-11-25T09:11:00.000-08:00

According to a white paper by Principal, “one baby boomer [is] reaching retirement age approximately every 8 seconds.”

The paper discusses the recent finding of the Employee Benefit Research Institute (EBRI), a private, nonprofit research institute based in Washington, D.C.

Their study found that only 13% of workers are now (2009) confident that they will have enough money to retire comfortably.

Most of us are now wondering how long it will take to rebuild our retirement accounts, and whether we will have to delay retirement, and what kind of standard of living we will have.

The white paper concludes that the first step to rebuilding is level-headed thinking; the second step is becoming more active in your choices of retirement funds, and reviewing your accounts more often; the third step is to continue to focus on the long term goals of your retirement assets, to avoid panicking and making mistakes during market extremes.

One crucial step to becoming more proactive is putting your funds into vehicles that are guaranteed and will not lose money, such as annuities, the closer you are to retirement. And when you consider leaving assets to the next generation, leverage the assets you do have with single premium life insurance.

The Planning Pyramid

2009-11-24T09:37:00.000-08:00

Smart baby-boomers who are preparing for retirement are going to plan in a way that looks like a pyramid.

On the foundation comes the well being of the couple – generation 1. They need to prepare for their own retirement income, long term care needs, and the income needs of the surviving spouse.

Next, in the middle, comes the chance to take care of their immediate family – children, and possibly some extended family. If they have a sizeable estate, they’ll need insurance to cover the costs of their estate taxes; if they have a business they’ll need to do succession planning and exit strategies.

After all this is in place, the top level is where people can plan a legacy and give back to the community. And if they have cash on hand, this gift can be leveraged and multiplied by using a survivorship universal life policy.

In one example cited in the article, “Using SUL to Lengthen a Boomer’s Legacy” a man wanted to contribute $500,000 to his church. However, he learned that he could instead fund a SUL policy with that money, which had a 3 million dollar death benefit. He still gets the tax deduction of the $500,000, but in this case the church will receive 2.5 million dollars more from his gift.

This is a powerful way for proper planning to make the maximum contribution to the community.

Rising Cost of the Uninsured in Washington

2009-11-20T08:36:00.000-08:00

Soon there will be 1 million people with no health insurance in Washington.

That is the finding of a report issued by Mike Kreidler, the state’s Insurance Commissioner, according to the Insurance Journal.

And he says the cost of treating people with no insurance will rise to 1 billion a year by 2011. This number has nearly doubled since 2002, going from $457 million a year to about $830 million a year in 2009.

Who pays for the uncollected medical debts and charity care by hospitals?

According to the report, these costs are quietly passed on to the insured, and cost the average Washington insured family about $917 a year.

So it is in all of our interests to try to get a system where everyone is insured. We are all connected through our health care system and the finances that support it. Having 14 to 19 percent of Washingtonians uninsured hurts them as well as the insured population, whether they know it or not.

I have helped families as well as small businesses get health insurance, and it feels great knowing we are taking steps to keep them healthy and protect their families. It is just not responsible to go without the coverage, so if you know someone without health insurance, urge them to talk to an agent and find a plan they can afford.

Happy Health Savings Account Owners

2009-11-18T09:01:00.000-08:00

I have written about HSA’s on this blog before, and I am working with a company right now that appreciates their HSA plan. One owner said that after the first year, when they have built up money in their savings account, the employees are then in a comfortable position to cover all their medical expenses. And that company helped them start the account so the transition would work well.

Yesterday I saw a poll that confirmed this anecdotal evidence. According to OptumHealth, 91% of HSA owners are satisfied and want the option to remain. Their ability to save for future health care expenses is the primary reason to deposit money into their HSA account.

The survey found that HSA owners are engaged in their financial well-being, and take responsibility for their medical treatment. They look into generic medications, and ask their care providers about charges. And 83% agree that people should research health care options and become more engaged in their own health care.

I believe that both employers and employees will benefit by becoming more knowledgeable consumers of health care, and by taking responsibility and focusing on prevention, we can lead healthier, richer lives.

Generous Grandparents

2009-11-17T09:01:00.000-08:00

About two-thirds of grandparents in America have given financial support to their grandchildren in the last 5 years, according to a poll by the Mature Market Institute.

I know that is true in my family – my cousins and I have received gifts from our grandmother, who will soon be 95, and my children have received gifts from their grandparents.

Of the 1077 grandparents polled, 78% said it is more important to help with smaller gifts throughout their life than to wait to give a lump sum at death.

One third of the gifts were given for education purposes, half of which set up a college fund.

This shows that we are still a culture of family and community that helps each other, and while the older generation is helping the younger ones get on their feet, it is also important for all of us to support and cherish our grandparents, and thank them for their generosity.

Build A Personal Pension

2009-11-16T09:45:00.000-08:00

Do you remember the pensions of your father or grandfather? After working for years in a company, they would pay retirees a guaranteed income for life.

Few companies offer traditional pension plans anymore, but there is a way you can create your own pension plan and receive steady, guaranteed payments for life.

A fixed income annuity will provide consistent payments that won’t change, even with any fluctuations in the market. They can be set up at an amount to cover specific, fixed, monthly expenses.

They also can be set up to pay out for the rest of your life, no matter how long you live. This takes away the fear of your assets running out during your lifetime. Some examples in this article show how you can leverage your retirement assets. Along with other tools, the income annuity can provide a lifetime income stream and peace of mind.

401(k) Post Mortem

2009-11-13T09:25:00.000-08:00

A recent Wall Street Journal Article has this shocking news about 401(k)s: they dropped 24% in 2008.

The author goes on to say that this could have been worse – because the S&P 500 declined by 37% in the same year.

BUT – be careful. She later writes that doesn’t mean 401(k)s did any better than the market average. Why? Because that data includes worker contributions! So the losses were actually worse than 24%, but people kept adding to their accounts!

Someone with a small 401(k) could have lost much of its value in the market, but if she contributed that same amount during the year her account would have shown no change.

Is that how we are going to prepare for retirement? Contributing more and more every year and not knowing if the money invested will grow or shrink?

No wonder author Garrett Gunderson (see Wednesday's blog on Retirement Myths) says, “A 401(k) is not the "safe" and "smart" plan that you have been told it is; in fact, it's an extremely risky investment for most people.”

No wonder people worry if they will have enough money for retirement. It is not secure money. Why lose money? There is no need to lose money – you can have no downside risk and still have upside potential in an annuity.

Roth IRAs

2009-11-12T08:52:00.000-08:00

Did you know that on January 1, 2010 the Roth IRA conversion rules are changing? For one year only, people who make over $100,000 may convert their traditional IRA’s into a Roth IRA. (See an example in Advisor Today.) People under that threshold may convert at any time!

Why Consider a Roth:

1. There are no required minimum distributions in a Roth.
2. Assets in a Roth grow tax free, not tax deferred.
3. Beneficiaries can inherit the accounts tax free, and also start a “stretch Roth” to provide tax-free cash flow for life.

If you plan on using your IRA funds soon (within 10 years), or you expect to spend all of your IRA funds during your lifetime, the conversion may not be right for you. When you convert to a Roth, you have to pay the taxes on the money at that time. However, if you convert during 2010, you will be allowed to stretch the tax payments over 2 years.

To find out if a Roth is right for you, ask at least these 3 questions:

1. Do you believe taxes will be higher or lower for you in the future?
2. Do you plan on growing your retirement account for at least 10 years?
3. Do you want to avoid required minimum distributions so you can accumulate your money longer?

If you answered “yes” to the 3 questions, a Roth conversion may be right for you.

To find out what to put in your Roth that will have potential for growth without any chance of loss, click on the button to the right to consult with me today.

Retirement Myths

2009-11-11T10:20:00.000-08:00

We have grown up thinking certain things about planning for our retirement, and some of these are just not true. Garrett Gunderson, in his book Killing Sacred Cows, dispels some of these myths.

I also just read a very concise article that made some of the same points, which I’ll summarize here.

Myth #1: You will not need as much income in retirement. But who wants to work hard and save money only to scrimp during retirement? And some costs, notably medical expenses, can go up.

Myth #2: Taxes will be lower in retirement. However, after the current recession and bailout, the government will continue to need more, not less, revenue in the future.

Myth #3: My house can provide retirement savings. With the downturn in housing values, this will no longer work for many people.

Myth #4: I can make larger returns in the stock market. The stock market has lost money in the last decade, and many experts think it could be volatile for years to come.

There are ways to leverage your savings with tax-deferred compounding interest that is guaranteed, and at retirement can provide income for life.

Click the button at the right to contact me about preserving your retirement money today!

Exceptional Personal Service

2009-11-05T12:07:00.001-08:00

When I find someone who does what they promise, and is quick to return a phone call or email, what a joy that is! I want to work with them more, and I go out of my way to send business their way.

ON the other hand, dealing with someone who doesn’t take responsibility, who doesn’t act quickly and treat each matter as an important one – or perhaps with an entire company that has this attitude – that is the worst! I want to run, not walk, away and wash my hands.

I recently took the Strengths Finder test online, after buying the book, and found that the theme of Responsibility is one of my strengths. I understand: this means that I hate to let others down, I like to follow through, and I like others to do the same.

Recently I dropped the ball myself and forgot to change an appointment with a colleague when I found out I couldn’t make it. Luckily he checked ahead of time, but I still felt terrible, and had to call him and apologize and make it right.

So I know I personally put a premium on being responsible and dependable, and enjoy working with others who do the same. You may want to take the Strengths Finder test and find out if responsibility is in your top five. And even if it is not, you may likely be working with people for whom it is – and it will help you to keep that in mind.

Health Care Reform From the House

2009-11-04T08:14:00.000-08:00

Last Thursday the House of Representatives rolled out their Health Care Reform bill, with sweeping changes proposed for our health care system.

Obama praised it for including a public health care option, and being fully paid for.

This would be accomplished through 4 primary measures:

1. Offering subsidies to help the uninsured purchase insurance through newly created exchanges.
2. Requiring individuals to buy insurance and all but the smallest employers to offer health coverage to workers.
3. Taxing individuals making more than $500,000 and couples earning more than $1 million; this would bring in an estimated $460 billion over 10 years.
4. Expanding eligibility for the government's Medicaid health insurance program for the poor to people with incomes up to 150 percent of the official poverty level, which is cheaper than providing subsidies.

According to the Insurance Journal, debate could start as soon as this week, and the sides are splitting right down party lines.

A Flexible Health Insurance Option for Small Business

2009-11-03T10:40:00.000-08:00

Going forward, and anticipating the future with Health Care Reform, many small businesses are looking for creative options to save money and yet offer good coverage for their employees.

Here is one such creative solution.

United Health has a new plan called Multi-Choice, and it has been getting positive press, such as this article in the Puget Sound Business Journal.

The company can purchase one of two packages, each of which has multiple benefit options. The employees can choose their coverage from a variety of copay and deductible levels. The employer contribution is a set amount for each employee; the employee contribution will vary depending on the plan that they chose.

New employees can come to the company and elect a plan that is similar to their old plan. The business can grow and change, and within this one package offer options to all of their employees.

This is a win-win for both companies and their workers. It provides predictable health care costs for the company, and choice of the amount of coverage to each and every worker.

Seattle Officer Slain

2009-11-02T08:34:00.000-08:00

If you live in Seattle, you have heard the news of policeman Timothy Brenton being murdered on Halloween night. (You can read about it the Seattle Times.)

In a random, ruthless, drive-by shooting the 39-year old officer was killed and the student officer who was with him was wounded.

This kind of horrible violence is completely senseless, and has no place in a civilized society.

And in fact it is relatively rare in Seattle – the last time a police officer was shot in the line of duty was in 1994.

Timothy Brenton was a dedicated husband and father of two, and today our thoughts and prayers go out to his family.

Do You Have an Illness, or Does it Have You?

2009-10-31T10:18:00.000-07:00

Do You Have an Illness, or Does it Have You?

After yesterday’s blog about health care reform needing to address bankruptcy caused by medical expenses, I wanted to make clearthat you have hope and you can be in control of your future. There is nothing inevitable about having a major illness send you to financial ruin.

Careful planning can cover these exposed gaps – and this is an example of where the “Living Benefits” solution I discussed in an earlier blog could prevent this ruin.

Then yesterday my dad sent me an article about Bill Trewin, a Canadian man with Parkinson’s disease. He had been running marathons before he was diagnosed with PD, and found that he was in danger of stumbling if he kept up his normal running.

Did he give up and go crawl in a hole? No, as Bill says in the article, “I have Parkinsons…it does not have me.”

He moved on to a different sport, Nordic walking, which allows him to get the same great exercise, but also gave him the stability of using poles while he walks. If you check out the Nordic walking site, you’ll learn how great this is for your bones, back, and posture, and can provide a workout of any intensity level.

It is important to find solutions with the help of a team or community. Working with others, often experts in the fields, we can have problems and not let them have us.

Most Bankruptcies caused by Medical Bills

2009-10-30T16:29:00.000-07:00

Outrageous Stories

This is an amazing number, and hopefully will be one thing addressed by any health care reform: in America 62% of people who are declaring bankruptcy are having to do it because of their medical bills.

Are all of these people without health insurance?

No.

Fully 75% of them do have health insurance, but needed costly measures that weren’t covered in their policy.

This New York Times article tells of a computer security specialist who had to go to the hospital and found that most of his treatment was excluded by his insurance. He and his wife had to declare bankruptcy.

Or look at the case of a middle-class couple who had to declare bankruptcy after she had breast cancer and he had bypass surgery, on this CBS The Early Show with Harry Smith. Their health insurance only covered about 10% of the bills.

The first thing we need to do is read the fine print of our health insurance policies!

If they are not enough to cover a catastrophic accident or critical illness, we need some additional insurance to cover those catastrophes.

A Comprehensive Insurance Solution

2009-10-29T10:56:00.000-07:00

“Living Benefits”

What is wrong with life insurance?

Traditional life insurance has the drawback of covering only 1 emergency – your passing away. And with term insurance, the vast majority of policies will never be paid because they are outlived. But the leading causes of death in America are also the primary causes of disability, the need for long term care, and ultimately most cases of financial struggle.

Every 29 seconds someone suffers from a coronary event, and 45% of heart attack victims are under the age of 45.

Every 45 seconds someone suffers from a stroke.

The chance of developing cancer during your lifetime is 1 in 3 for women, and 1 in 2 for men.

Of all Americans who reach age 65, about 60% will eventually need some form of long term care.
There are so many challenges a family faces long before the worst possibility of losing a loved one. What is wrong with life insurance is that it doesn’t address all these risks.

What is wrong with disability insurance and long term care insurance?

Disability insurance is very important for the breadwinner of the family to have, for how many months can your family live without that income? And yet, disability insurance will never pay the full amount of the income, and often comes with waiting periods.

Long term care insurance is another valuable protection, because the costs of long term care are so high that it protects your assets from being depleted in the event you need this care. However, many people hesitate to get it because they don’t know for sure that they’ll use it. Or what if you have a heart attack or stroke, but recover enough that you do not trigger the long term care because you can still perform the activities of daily living?

A Comprehensive Solution

The solution to these shortcomings of traditional, separate insurance policies is to get one policy that will provide “Living Benefits” as well as death benefits.

It is now possible to get such a policy through a 150-year-old, A-rated mutual company. The one policy will pay in three ways:
· Acceleratd living benefits
· Retirement income benefit
· Death benefit.

We can design a policy to cover disability, chronic and terminal illness, and long term care. In addition, you will be able to access the value for retirement or other needs.

We all have multiple risks to insure against, and it is hard to know which one we will need first. A “Living Benefits” life insurance policy provides one combined, affordable solution to all of these needs.

Quality Time or Mess & Stress?

2009-10-23T10:16:00.000-07:00

How do you make Quality Time out of your Final Moments?

I was sitting in my client’s living room and we were laying out the map to start planning his estate. Legal documents need to be signed, insurance needs to be set up, and most of all, basic values need to be clarified.

In this case, I didn’t need to remind him how so many people procrastinate making these decisions and clarifying their values. He told me a story himself that made the point.

He had recently been at the funeral of his friend’s mother. She had been on her deathbed when the family realized that she hadn’t left a living will. The doctor was asking the family for a decision, and soon, about how long to maintain her life artificially. They had to make that difficult decision right there. Next, they realized that she had never said what she wanted done with her remains. They started asking her, and her mute reaction at the mention of cremation led to their decision to have her buried. That was just the beginning. Dealing with the estate after she died became messy too.

To illustrate the point of how common this is, I met two people at a workshop the very next day and when I mentioned this story they both quickly recited similar tales from their own family. Their frustration at the chaos and hurt feelings and wasted time was still palpable. One family was still arguing over who was responsible for what. Another saw the breadwinner pass away and leave the spouse, who needs assistance, without long term care insurance.

Why not make even your last moments quality time? Instead of the pressure to make difficult decisions, leave your heirs with clearly written wishes and directions. In fact, be creative, and write in your will and fund with your life insurance a big family reunion in your honor to celebrate your life! Or set up a trust for your heirs and fund their education. Or leave a gift to a charity that is close to your heart. And spend your last moments with your family without the stress of having to get all these decisions made.

Take some time, before it is too late, to clarify your values, what you stand for, and then pass on to your heirs some of who you are as well as what you accumulated.

Guard Thy Treasure

2009-10-13T09:52:00.000-07:00

Rule #1: Do Not Lose Money

In his book The Richest Man in Babylon George Clason describes how someone could become wealthy by saving and investing 10% of his earnings every year. However, what was done with that money was very important. The vehicle for the money had to be safe. In the book he tells the story of one man who gave his money to someone pretending to be an expert investor and he never saw the money again. He was the Bernie Madoff of Babylon! So if you work hard to be able to put that 10% aside, the first rule has to be: do not lose the money. Or as he put it in step 4, “Guard thy treasures from loss.”

Their Investments Were a Waste of Time

Have you lost money in the market? You are certainly not alone. And yet, it may not be as bad as you think, for your investments are not what will create your wealth. Instead, look at the last lesson in Clason’s book: “Increase thy ability to earn.” In a study done at Harvard Business School that followed a group of people who wanted to become millionaires, they found that their investing was largely a waste of time. Those who did become wealthy did so not in the market but by continually increasing their earning potential. They made themselves more valuable and earned more, or they grew their business; ultimately their cash flow, not their investing, made them wealthy.

Rule #2: Refer to Rule #1

This bit of wit and wisdom is attributed to Warren Buffett, who detests risk, and has carefully built up a track record of strong returns. Yet even he, a full-time investor in the market, has lost money. So what can we do? Look for a place to put your money that cannot lose money, and yet has potential for making gains when the market goes up.

The Power of Zero

One solution that has these qualities is the equity-indexed annuity (EIA), which offers returns tied to a market index, such as the S&P 500. It also features a minimum return rate guarantee like traditional fixed annuities. In the past this minimum, or floor, was often 0%, and so the insurance companies used the phrase “the power of zero.” That is, when the market goes up, you participate in the gain. When the market goes down, your annuity holds it’s value. Now, however, many annuities have a floor not at 0% but somewhere between 1 and 3%. Indexed Annuities are popular with investors who want to benefit from the upside potential of the market without forfeiting the security of a guaranteed return.

So to follow the path of the richest man in Babylon – to guard and increase your treasure – consider indexed annuities as one vehicle to get you where you want to go.

A Tale of Two Startups

2009-10-01T08:41:00.000-07:00

The Bust
Recently I got a call from a woman who needed to talk about health insurance for her family.

“My husband’s company is folding, so we are not going to have health insurance through the company anymore. It was a high-tech, mobile communications company, and he helped to start it. They have a great product, and they were doing well, but the economy just hit them hard.”

It turned out that she was not as worried as I thought she might be. He had been doing these types of ventures for 15 years, and she was used to the changes. Also, he knows a lot of people in the industry so she sounded confident that he would land on his feet somewhere.

However, we did have to do a bit of research to find a solution to their family’s health insurance. She needs certain prescription drugs, but to get a family plan that has a rich prescription drug coverage would cost double what she was budgeting to pay. We found out that she could order her medication from Canada at a fraction of the cost of covering it here, and her doctor confirmed that this would work fine. The important thing was that her family did not have a gap in coverage, so there won’t be any questions of pre-existing conditions.

The Boom
Soon after that, another call came in, from a friend involved in a new startup.

“Bengt, I volunteered to be the one in the group to take care of the health insurance. Can you look into it for me?” he asked.

“Sure,” I answered, “I’ll do the work for you. And it doesn’t cost you anything extra!”

These are six guys on the other end of the cycle, with a big idea, full of hope, some angel financing already in, and working out of the founder’s home. While some companies are cutting back on health insurance, they are setting it up before they had even turned a profit.

Their big idea is to help people maximize the profitability of their websites (check them out at http://www.bigdoor.com/ ). Since they already had become members of the Washington Technology Industry Association, I was able to get them a great deal for their health insurance through the employee benefit trust run by the WTIA. So now all these young guys have great health benefits and some life insurance as well.

With all the other challenges and changes they are facing to build their new startup, at least they have the peace of mind that having health and life insurance provides. I look forward to them doing great things in the near future!

How Life Insurance Can Save your Business

2009-09-24T08:31:00.000-07:00

A Casual Request
We were sitting in the second floor office, overlooking the water, discussing the company’s commercial insurance. At the end of a productive discussion, the one business partner said, “Oh, by the way, we are also going to need some key man insurance.”

The Surprising History
At the next visit, we learned that there had been three founding partners, and one of them had a sudden heart attack in his mid-fifties. The other two partners had to set up a payment plan to buy out the survivors of the deceased partner. As it turns out, they are still paying large amounts of money every quarter. “We have had a buy-sell agreement from the beginning,” they said. “And as you can see, we have had to use it. That determined how much each partner’s share of the company was worth. But now we want to fund it with life insurance, so it doesn’t become a huge operating expense.”

The Solution
They are now setting up cross-purchase life insurance to fund their buy-sell agreement. Each partner is the owner of a life insurance policy on the other one. If one partner were to die, the other would receive the death benefit, and would have to use that to buy out the family or estate of his partner. He would then own the business, and it could survive.

Final Piecees of the Puzzle
As it turns out, they decided to purchase key man and disability insurance as well. Key man insurance is a life policy taken out by the company on a key employee to help the company continue with normal operations in the event of their passing away. And disability is the most common cause of businesses and families alike running into serious trouble.

A Common Sense Investment in the Business
Life insurance is the most economical way to ensure a business can continue operating smoothly in the event that something happens to a key employee or partner. It is a small investment in the security and stability of a company, and to future thinking businessmen like my clients, it just makes sense.

Your Health is your own Choice

2009-08-19T13:46:00.000-07:00

Make a Decision
How long do you plan to live?
What steps are you taking to get there?
And will you be healthy and wealthy, or decrepit and broke?

Placebos
The first thing that you need to realize is that you are responsible for your health. The mental attitude comes first, because all else flows from that. There have been too many placebo studies to have any doubt that our beliefs have a very powerful effect upon our health. Even medicine that itself is quite potent will often only be as useful as the patient thinks it will be. So you need to think healthy all the time. Picture yourself as completely healthy, and as acting only as a completely healthy person would act.

Action
The next thing you need to do is act on your beliefs – otherwise you will consider yourself a fraud and erode those very beliefs. Begin by moving more. Movement is the key to life. Muscles, blood, oxygen, and waste – everything needs to move. I have done Aikido, a Japanese martial art, where we move our bodies, our breath, and our ki (or chi/energy). In fact, in the East, they measure your health by the movement of your internal energy. When you are ill they say you have a blockage. So move. Take a walk. Climb the stairs. Do some gardening. Slow and steady is the safest, and will keep you living the longest.

Eating
Again, many studies confirm that you will live longer if you simply eat less. Digestion is the largest single expense of energy your body has to make during the day. We literally wear ourselves out with our large plates of food. Also, another handy guide to eating that is less well known is to compare the acidity and alkalinity of your food more than the calories. Your body and blood need to be slightly alkaline to make the most energy out of your oxygen. Foods like avocadoes and almonds may have a lot of fat, but they are alkaline foods, very healthy. Green foods are alkaline. Meats and dairy and breads are acidic foods. Eat them in moderation and make sure that you have a lot of vegetables and water to go along with them. If you are really serious, check out apple cider vinegar, the elixir of the Greeks, & favored by the Braggs.

How will you feel?
When you reach your target age, whether it is 75 or 100, how are you going to feel? Of course our health care system has serious problems – but what if every individual took it upon himself to think, act, and be completely healthy? It will be a small consolation when you end up feeble and diseased to be able to blame the poor health care system. Instead, take control of your destiny, and choose today to think, act, and live as healthy as you possibly can.

Health Savings Accounts

2009-08-12T09:02:00.000-07:00

Is a Health Savings Account for you?
A Health Savings Account can be a great option to consider as more and more employers are cutting back on their health care offerings. The health care industry also recommends that employees understand the true cost of their health care, and having to pay for more of their health care certainly is doing that. But a Health Savings Account is one way to take more responsibility for your family’s health care that has a number of benefits.

How it works.
An HSA can only be created alongside a high-deductible health insurance option. The idea is that the savings in your account will cover your first health care costs until you reach the deductible in your plan. The insurance companies can charge much lower premiums for the coverage because they don’t have to pay for all the small charges that fall under the deductible.

The benefits:

· The high deductible health plans save on premiums
· The HSA belongs to the individual, even when he changes jobs
· HSA contributions – and growth – are non-taxable
· Qualified withdrawals (for health care expenses) are non-taxable
· No limits to the amount that can accumulate in an HSA
· HSA’s roll-over; they are not “use it or lose it.”
· Employer and employee can both contribute.
· Contribution limits are released on June 1 every year, so you can plan ahead. And if you start mid-year, you can still contribute the maximum amount.

Healthy, Wealthy & Wise
Having more financial responsibility for your health often leads to making healthier lifestyle choices. And as you become healthier, your Health Savings Account could grow wealthier.

Charitable Giving

2009-08-11T09:38:00.000-07:00

Leveraging Life Insurance for Charity

Are you aware you can donate your life insurance to charity? This can work with an existing policy, or can be accomplished with a new policy. The irrevocable gift of an existing policy puts the charitable organization in full possession of the life insurance policy. Or you can purchase a new life insurance policy, give the charity ownership of the policy and name the charity as your beneficiary.

Life insurance is an excellent choice for making a gift because it multiplies the amount you are able to give. When you are committed to giving an annual gift to your favorite charity, you can use this to fund an insurance policy. Then your contributions are leveraged – payments that add up to thousands of dollars get turned into a gift of hundreds of thousands or even millions of dollars to support your charity.

In addition, your annual premiums paid into the life insurance policy are tax-deductible.

Another solution provided by life insurance is to allow someone with wealth replacement. A person with land, stock, or other property that would be heavily taxed upon their death donates their property to the charity, and receives a tax deduction. At the same time, the donor purchases a life insurance policy equal to the gift, which would create an inheritance that is liquid and tax free, since life insurance benefits can be received income and estate tax free if properly structured.

Life insurance provides a gift that is flexible, free of market risk, and has no delay or transfer costs. It can be done without diluting your business or investments, and can be done in ways that enhance rather than subtract from the assets you leave to your heirs.

For anyone with a long-term perspective and an interest in philanthropy, life insurance provides a powerful tool that should be considered as a way to leave a serious legacy to a cause or organization that you believe in.

Business Planning

2009-08-07T09:23:00.000-07:00

Why an Exit Strategy?

In the now classic book, The E Myth, by Michael Gerber, he recommends that business owners move away from seeing their business as something they work in, and see it as something they work on. Instead of selling products or services, he counsels them to see the business itself as the product they are creating, and to get it to the point where it could be sold. This causes the owner to truly build a business, rather than just creating a job for himself.

Imagining that you are going to franchise your business accomplishes two goals – you gain a future-oriented vision, and you adopt an outside perspective.

When you make a clear vision of your future business, you no longer only see the day-to-day operations as your only goal, but you also focus on the long-term smooth functioning of your business. You envision where you want your business to be, and you put structures and systems in place to support that future entity, even if you don’t quite need them now.

Secondly, you see your business from an outside point of view. In your mind you prepare to sell the entire business itself, not just the products or services that the business sells. Imagining the business as operating without you someday, you work to get it more and more to the point where it can operate without you already.

And what if something were to happen to you while the business still needs you? Could your partner keep it up? Could your family run the business? What resources would they need to be able to keep the business together and carry on your legacy? This is where insurance can help prepare your exit strategy for your business.

In the case of a partnership, a buy-sell agreement should be drafted, laying out the terms of what would happen in the case of one partner retiring, walking away, becoming disabled, or dying. Life insurance policies provide the funding so that in the worst case scenarios the surviving partner can buy out the estate of a deceased or disabled partner. In the case where the business depends upon a very important employee, key-man insurance will provide a payout if that key employee passes, so that the business can continue to function smoothly.

In any case, to build a business you are proud to put your name on and leave behind takes vision and planning. Then you will be putting in place the structures – including insurance – to take you from where you are to where you want to be.

We Can All Feel Lucky

2009-08-05T08:52:00.000-07:00

Do You Feel Lucky?
My father has Parkinson’s disease, and his father before him had Parkinson’s disease.
In the words of Michael J. Fox, I am a lucky man. Fox titled his book “Lucky Man” because he felt he grew as a family man and human being because of his Parkinson’s disease. If you can believe it, he is grateful to the disease.

I may or may not get Parkinson’s disease, but I need to be aware of it. That awareness alone makes me grateful for what I have – a healthy family and time to enjoy with them.

Thinking Ahead
I am also lucky because my father acted in time to take care of himself. He did his research, and before he was at a stage in the disease where he would not be admitted, he and my mother moved into a life care community or a CCRC (continuing care retirement community) which offers three levels of living: independent, asssisted, and skilled nursing care. They are now ready for all the possible developments with the Parkinson’s.

Buying into the facility essentially provided them with long term care insurance. And now as his condition progresses it would become more difficult for him to buy into such insurance. They were wise to act when they did. They have secured their future care and peace of mind for our whole family.

Read the Warning Signs
Now I too am doing my research and will act before it is too late to secure my own family into their future, when I may or may not be able to do everything I can now. I am lucky to have such a clear warning sign in my family history.

Peace of Mind
We can all consider what is in our history that should be prompting us to act. But then, some things come without such clear warning signs, and we can all take steps to insure our family against those unknown events as well. My wish for you is that you have peace of mind about your family’s future, and you can enjoy each day you have with them, and feel lucky.

Long Term Care

2009-08-04T09:45:00.001-07:00

Who can benefit from Long Term Care Insurance?

In the 90’s my grandmother had to go to a nursing home, and had no choice in which home to go to because she had no long term care insurance. She used up all of her assets very quickly, and then was covered by Medicaid. She was never quite happy in the nursing home, and I always wished we had other choices available.

Long term care insurance is a tool for those who want to remain independent and desire the ability to choose the setting for their care. While it was begun in the early 80’s as nursing home insurance, it has changed a lot since then. Now the coverage includes not only nursing home care, but services in assisted living facilities and adult day care centers, as well as home health care, and respite care for the care giver.

As we live longer, more people will need some form of long term care. Yet most of this care is increasingly provided at home. Over 12 million Americans (of any age) need long term care, but only 2.4 million live in nursing homes. Further, younger people often have need of this care as well. It is estimated that 40% of the people receiving long term care are between ages 18 and 64.

What triggers long term care insurance? Usually a policy pays benefits when you cannot do two or more “Activities of Daily Living” (ADL’s), either because of old age, mental or physical illness, or injury. There are six activities of daily living, developed through years of research: eating, bathing, dressing, toileting, continence, and transferring (getting out of a chair or bed). Many policies also pay benefits for cognitive impairment – for example, if you develop Alzheimer’s disease, but can still perform the ADL’s.

If you have significant savings, long term care insurance is a way to protect those assets in the case that you need long term care. Consider the costs of care in a 2008 survey. In Seattle a room in a nursing home cost $277 a day, and the rest of the state averaged $189 per day. A one bedroom unit in an assisted living facility cost $3,340 per month in Seattle, and $2,890 in the rest of the state. A home health aid costs $22 per hour, or just over $45,000 per year. These costs could quickly consume a very healthy savings account.

When looking for long term care insurance, keep in mind these questions. What services are covered, and how much would be paid for each service? How long would the benefits last, and does the policy have a lifetime maximum benefit? Will it pay benefits based on expenses incurred, or a set dollar amount? How many days would you wait before benefits begin? Does the policy offer an inflation feature? Is there a waiver-of-premium provision for once you enter a care facility?

Then, based on your age, and family situation, you can map out your goals for long term care insurance with an insurance professional, and craft a policy that works best for you.

Six Reasons to get Life Insurance

2009-08-03T17:03:00.000-07:00

Why do I need life insurance? Here are 6 fundamental reasons…

Since life insurance is something many of us put off for another day, let’s think about reasons why we should act now. And ask yourself, how much is it about me?

Reason #1: to pay for final expenses. Even if you are single, your passing will put a burden on others if you don’t have any life insurance. Do you know how expensive those costs can be now?

Reason #2: to replace your income. If you have a spouse, and especially if you have children too, your life insurance can take care of them for some time after you pass on.

Reason #3: Create an inheritance. Even if this is your only asset you leave, life insurance is a leveraged way to leave an inheritance tax-free to whoever you name as beneficiaries.

Reason #4: Pay your estate (“death”) taxes. By paying these taxes with insurance, your heirs won’t have to liquidate assets to pay the taxes on your estate.

Reason #5: Make a large charitable contribution. Here again, the leverage of life insurance comes in. If you choose a charity as the beneficiary of your policy, you can leave them a much larger contribution than the amount you pay in premiums.

Reason #6: Savings. Permanent life insurance builds up a cash value, which you can access, tax free, by taking a loan on the policy. Plus, the interest credited to the policy as it grows is tax deferred.

6 key reasons to act today. And what do you think? Who is your life insurance really for?

Clear Vision, Decisive Action

2009-07-29T11:44:00.000-07:00

When is a good time to provide for your future?

When I got out of college, I wanted to see the world. My friends were on the fast track to become lawyers and doctors and teachers, and they advised me that if I followed my dream, I would get behind. Well, I went, telling them that I would take my retirement then, and if I was behind I would just have to work in my later years when they were all retired.

You know what? I was behind them, and am still working to catch up. But I wouldn't exchange my two-and-a-half years living in Hawaii, Asia, Australia, and the Middle East for anything. I grew up, and gained a global perspective. I made friends I connect with to this day. I am grateful for that early retirement.

And who knows which of us will enjoy a full retirement? One of my classmates got on a cross-country flight out of Boston on 9/11, and we never were able to see him again. Others have contracted serious diseases, even in their 30's.

Adolescents typically think that they are invincible, and take risks. It is in their wiring, and they cannot help it. But after about age 20, when our brains have finished growing, we realize full well that we are not invincible. And if we're smart, we begin to take steps to prepare for our future; we calculate the risks; we take responsibility for the little ones in our lives who now depend on us.

Why do sensible people still procrastinate and put off taking action? In the back of our minds, we know we should take action to provide for tomorrow. But we think tomorrow will never come, and that is where surprises and even tragedies can occur.

You can be smart and take action before tomorrow comes. Think about your future needs and those of your family, take steps with an insurance professional to plan for them, and then enjoy your present moments with the ones you love. You may not be able to predict exactly what the future will bring, but you'll have the peace of mind of knowing, come what may, you provided for your family.