A Short Lesson on Whole Life & Term Life Insurance

When faced with the wide range of life insurance coverage available, you may wonder what type fits your needs now and what coverage you should consider for future needs. A good first step is to look at two basic types of insurance coverage: whole life and term life. Whole Life Insurance—Cash Value for Your Dollar Whole life insurance helps to provide not only security from financial hardship in the case of a death, but also a cash value component of the policy. Under a cash value life insurance policy, premium payments cover the cost of pure insurance coverage first, including the expenses and mortality factors of the insurance company; the insurance company then accumulates “leftover” dollars to build the cash value of the policy. In addition to cash value buildup in the policy, some insurance companies may provide whole life insurance policyholders with dividend payments—due to lower expenses, lower mortality …

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Nonqualified Plans – Baiting the Benefit Hook

Attracting and retaining qualified employees and managers is always a challenge for companies of all sizes. Most employers realize competitive salaries are not the only things desired by the best workers. Sought-after employees also expect compensation packages to include valued benefits. A qualified retirement plan is a traditional component of many employee benefit packages. As a business owner, you’re likely to appreciate the advantages: Your contributions are tax-deductible and accumulate on a tax-deferred basis. However, these plans can be difficult to administer and contain many regulations restricting employee eligibility, participation, vesting, and employee contributions. What’s the alternative? Nonqualified plans offer the flexibility to selectively choose whom you’ll cover and how much you’ll contribute for each individual. Many companies use them to supplement or replace their qualified plans. Although there is a wide range of nonqualified plans from which to choose, executive bonus plans and deferred compensation plans are among the …

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4 Ways to Best Utilize Your Financial Advisor

What is the value of a financial advisor? The personal touch. Here are four stories of how flesh-and-blood advisors you meet in person (that’s opposed to a robo advisor, where your contact is digital or over a phone line) benefited their clients. These good advisors helped clients to overcome emotionally based decisions, stop them from making mistakes, figure out whether to make a big purchase and decipher arcane retirement plans. We’ll have separate articles throughout the summer describing in greater detail how they helped their clients. Planning is so very vital for your future. According to a study by insurer Northwestern Mutual, a large majority (72%) of U.S. adults believes that the economy will suffer future crises. But two-thirds of them don’t have a financial plan. Plans are not static. Once you have a plan in hand, ongoing contact with your advisor is vital to make the plan work. In …

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Window Dressing Your Mutual Funds

To many of us, this time of year means stringing holiday lights outside, bringing out the inflatable candy canes and decorating windows with frosty snowflakes highlighted by fake candlelight. To financial advisors, this time of year brings another type of behavior: “window dressing” of mutual funds by portfolio managers. Let’s examine what mutual fund window dressing is, how you can spot it and what you should do. As you probably know, all mutual funds must list their actual holdings four times a year at the end of every quarter and many fund companies send investors copies of these reports (or they can be found online too). But what you might not know is that the list of fund holdings is only a snapshot on one particular day – not all the actual holdings that were owned throughout the quarter. Knowing this fact, some portfolio managers will sell certain stocks and …

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