If you’re like most people, you probably own a variety of insurance products. Life insurance is the most widely held financial services product in the country, but did you know that there are also over 20 million annuities in existence? If you own a life insurance policy or an annuity, you need to be aware that there are features and benefits to these contracts that you can use to enhance your financial situation. But beware; there also are fees and expenses associated with these products that could threaten future benefits for you and your family. Let me explain.
When it comes to life insurance, most of us own it as a way to protect our family. If we were to die unexpectedly, our spouse and or dependents would have enough money to replace lost income, pay down debt or pay for college expenses. These are the typical reasons why we buy life insurance. Most people own term life insurance, which covers you over a specified time period (usually when our dependents rely on us most). In this situation, you want to make sure you have the right amount of coverage, and that you are paying a reasonable cost for what you need.
Action Item No. 1:If you have a term life insurance policy, you need to review that policy’s coverage to make sure it serves your family’s needs. You also need to see if what you’re paying for that coverage is reasonable.
In addition to term life insurance, there’s also a type of life insurance that allows you to merge a savings account with a policy to help achieve your financial goals. For example, you can create a personal pension plan with a permanent life insurance policy. This type of policy allows you to save for retirement while also generating a future income stream from your savings. This strategy works well for high income earners who aren’t able to save enough of their income via a 401(k) or other retirement savings plans. These life insurance policies allow you to invest for retirement and family protection WITHOUT downside risk, and they come with full tax deferral and tax free withdrawal, IF they are properly structured.
Action Item No. 2:If you’re concerned that your current retirement savings vehicles may not be enough, or if you have concerns over the amount and cost of your current life insurance coverage, take steps to find out what kinds of life insurance may fit one or both of these needs.
If you have an annuity, you should be looking at your contract in terms of investment performance and costs. Annuities are valuable tools for retirement savings and income generation, but there are complicated options and contract language that are vital to understand. Annuities also carry many internal fees and expenses, and insurance companies traditionally do a poor job of explaining those costs. When it comes to investment options, you need to make sure your annuity is in sync with your overall retirement plan.
Action Item No. 3:If you own an annuity, you need to conduct a review of the investment options, fees and expenses associated with your policy, and you need to compare those with the latest product offerings from the industry.
At Fabian Wealth Strategies, we offer our clients a full service wealth management experience. We know that life insurance and annuities play a key role in our clients’ financial plans, and that’s why we have experienced team members here to help our clients make the most of these financial products. Because there are so many varied aspects to life insurance and annuities, you simply must have an experienced professional on your side to make sense of it all.
Today, I am offering you a FREE insurance and annuity consultation. If you would like to have one of our experienced professionals research and analyze your life insurance policy or annuity contract, then simply call our offices at (800) 391-1118, and we’ll set you up for your FREE life insurance and annuity review.
Make the call today, and find out how you can better protect yourself and your family.
All the best,
Doug Fabian
President, Fabian Wealth Strategies
3070 Bristol St, Suite 610
Costa Mesa, CA 92626
(800) 391-1118
NOTE: Fabian Wealth Strategies, Inc. is a registered investment advisor with the U.S. Securities and Exchange Commission. Doug Fabian is a registered investment advisor representative. The information expressed in this email is for educational purposes only and should not be construed as a recommendation to buy, sell, or hold any specific insurance product. Fabian Wealth Strategies, Inc. is licensed by the California Department of Insurance (License #0G87212).
If you want more details on what is discussed in this video update, please listen to the full podcast here.
Despite the markets continuing to march higher, we are still encouraging caution in your investments. We want to keep an eye on our economic fundamentals, which we believe are not strong, and will soon force what looks like a bull market into a downturn. For this reason we advise keeping a high volume of cash in your portfolio.
Even with a high stock market here in the U.S., Europe is still in a serious debt crisis. Every day we hear about another country that is entering a recession, depression or instability due to this economic crisis. Because the European Union is the largest economic power in the world, it’s crucial to understand the risks and continue to face these problems with a defensive posture.
Speaking of a defensive posture, this week we are discussing our last installment of our personal finance exercise series, which today deals with life insurance, health insurance and annuities. For deeper information about our personal finance exercises, please check out our in-depth blog-post from yesterday on this topic.
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We believe that the most successful people are on top of the issues of the day. Being well-informed and staying well-organized will help you to succeed, so for the next few weeks we will be outlining six exercises for you to stay informed and ready to make good decisions. Those six exercises are:
Making a calculation of your net worth
Taking inventory of financial assets
Understanding your cash flow projections
Examining your expenses
Making sure you have an updated estate plan and living trust
Taking stock of all insurance policies – health, life, long term care, annuities, etc.
This week, we are talking about insurance: health insurance, life insurance and annuities. Insurance is an essential expense, and we encourage everyone to take a look at what you own, what you have and what you need.
There is such a thing as being “over-insured”. Sometimes life insurance can move from being an asset to becoming a liability, so getting a professional to look over your life insurance and what you need is essential. Todd Clucas is our insurance expert on staff and can help with any issues at 888-300-3684.
Annuities are a very powerful tool, but we believe that they are sometimes over-sold. Not everyone needs an annuity, but it’s important to know if you do need that option, and whether it’s worth the investment. Again, please get in touch with us if you have any questions about this or any other part of our personal finance exercise series.
Once you know what you have to can set clear, reachable goals. Tune in next week for more on Doug Fabian’s Monday Market Update. (Also, if you read this blog and enjoyed it, listen to Doug’s podcast this week for even more details on these topics, and please share this information with others who might benefit from our perspective.)
Insurance can take many forms, and the need for insurance is a very personal one. The most common reason to have a good life insurance policy in place is to replace lost income due to the death of a spouse, and to provide survivors with the financial stability necessary to not worry about fiscal issues.
For high-net-worth individuals, life insurance can be used to defer capital for retirement, and to help protect and grow that wealth for their dependents. As for annuities, they also can be very good financial instruments—if they fit your overall financial goals.
The final personal finance exercise I want you to conduct here is to do a complete review of all of your insurance products, including any annuities you may own. Ask yourself the following questions:
1) What policies do I have, and what’s the benefit amount in each policy?
2) Where are my policies, and am I dealing with more than two companies? If so, you may want to consolidate these.
3) Do I have sufficient insurance to take care of my dependents? Many people bought policies when they first were married. Now, you may have children, you may be making a lot more money than you used to, and you may have significant assets such as a home to protect.
4) What kind of premiums are you paying for your policies, and how much are you paying in annuity fees? The latter can be substantial, so if you are paying substantial annuity fees, it’s time to see if those fees can be reduced.
Performing an insurance and annuity review will give you a good idea of what you have, where you stand. It also allows you to address any flaws in your overall financial plan.
At Fabian Wealth Strategies, my investment advisory firm, we’ve set up a webpage to help you address some of the common questions involved when assessing your life insurance picture. I invite you to pay a visit to this page before you conduct your own insurance review.
If you’d like to hear more about this, as well as other personal finance exercises, and if you’d like my take on all of the market action, then sign up here for my weekly audio podcast.
