Insurance Company Ratings

Lately, it seems that the headlines are filled with natural disasters – tornadoes in the Midwest, wildfires in the West and hurricanes in the Southeast and Mid-Atlantic are some of the most recent examples. We’ll leave the debate as to whether these events are happening in increasing frequency to others, but one fact that is not debatable is the destruction that these disasters leave behind. The aftermath can be devastating and, as always, our thoughts and prayers go out to those impacted.

From a financial planning perspective, we often hear a common question posed in light of these events: Is the insurance industry financially sound? The simple answer is yes. Overall, the insurance industry is on solid financial ground and has survived wars and conflicts, natural disasters and financial crises (including the Great Depression and the Great Recession). In an article from 2011 discussing the possible impact of a US Treasury ratings downgrade, the Insurance Information Institute stated insurance companies could not only meet their obligations, but had a cushion of $500 billion, sufficient to cover 12 Hurricane Katrinas – the costliest natural disaster in US history¹.

Special Needs Trust Part 2: Trustee Appointment

The following is Part 2 of last week's post titled Special Needs Trust Part 1: Planning Ahead.

In addition to the Special Needs Trust, there are other financial and legal considerations to be made concerning people with disabilities. As with any trust, a trustee must be appointed to oversee the assets held in trust. Often this is a parent of the individual with the disability. However, a growing concern for many is that the individual with the disability may outlive their parents thanks to improvements in treatment and care. So, decisions should be made as to who will serve as trustee in that scenario. 

Special Needs Trust Part 1: Planning Ahead

The following article is written in two parts – the first focused on the properties of a Special Needs Trust. Catch our blog next week for Part 2: Trustee Appointment.

Did you know that the largest minority group in the United States is people with disabilities?

For families affected by disability, especially physical and developmental disabilities, the care needed can be daunting – physically, emotionally and financially. While many government programs exist to aid these individuals, they still fall short in most cases and, in the current economic environment, face budget cuts.

Tax Brackets and Tax Rates

Do you know what your tax rate is? 

That’s a trick question as you really have two tax rates:  1) your Marginal Tax Rate and 2) your Effective Tax Rate.

To understand each, you need to understand our tax system. The U.S. tax system is not based on a single tax rate, but rather a series of tax rates known as tax brackets based on your amount of taxable income. Everyone pays the same tax rates at each income level, and the more taxable income you have, the higher your tax rate.

Life Insurance - Perceptions vs. Reality

Life insurance is often misunderstood by many retirees. In my many years as a financial planner, I have learned that most people (myself included) have some type of bias they bring to any situation, including their finances. It’s very challenging to step back, remove the emotion of these misconceptions and objectively evaluate a situation, especially when it comes to life insurance.

Recently, I had a client who was dissatisfied with their life insurance agent. Because of their bad experience with that individual, they had developed a negative bias towards life insurance in general. After much discussion, the client explained that one of their major concerns was that if either spouse passed away, the surviving spouse would only receive one of their two current Social Security checks. Their previous life insurance agent had attempted to take advantage of this concern for the surviving spouse by “selling a product” and it had left a bad taste in their mouths.