Volume 3 of the Most Important Newsletter Series That You Will Ever Receive

Advisor’s Journal:

Over the last two newsletters, we tailored our auto and homeowner’s policies to create a barrier between our assets and potential lawsuits and negative consequences.  In doing so, we have created an environment where our wealth can grow in safety, without fear of plunder.

Now the fun begins, but first let us learn a lesson from Joe Anybody who is currently age 61.  Joe worked hard and saved religiously his entire life using typical investment products: 401K, IRA and mutual funds.  Joe was physically and mentally ready to retire in 2008 but he was heavily invested in the stock market. When the market plunged 38%, so did his life savings.  In addition, his nest egg was built on investment products that were tax deferred, which sounded good, but now the taxes that he will pay on the money he will withdraw from his qualified plan, coupled with the 38% loss of his portfolio from the market collapse, left Joe with the harsh reality that he could not afford to retire. Worse yet, unless the market performed tremendously well over the next couple years, Joe might not ever have the quality retirement on which he had planned. 

Susan Anybody is Joe’s twin sister.  She also had some money in typical investment products. However, before she put money into investments that she hoped would be there for her in retirement she first  guaranteed her retirement.  Years ago when she first sat down with a Dynes Insurance advisor, they carefully put  together a plan that would: 1) offset any weaknesses in her other investments; and 2) guarantee a tax free nest egg that would allow her to retire comfortably, regardless of how her other investments performed.  If her mutual funds and IRA where ready to retire when she was they would be gravy on top of her financial assets.  If they weren't ready like Joe’s investments, Susan would not be held hostage to market volatility or unfavorable tax consequences.  In fact, she has four times as much money as she put into her plan, and she won't pay tax on a dime of interest.  All achieved through guaranteed return products and compound interest.

In typical qualified retirement plans such as an IRA or 401K, do you know what is the most overlooked “thief” of your wealth? It is inflation.  The average American has a “working life” (actively earning) of approximately 45 to 50 years. During those years they put money away in investments where the bulk of their money can’t be used without financial penalty prior to age 59 1/2.  In doing so they lose out on the ability to use that money to enhance their lives or to seize additional investment opportunities as they arise. 

Would you purchase a dream home without putting insurance on it to guarantee its replacement? Before you allocate money to speculation and the unknown, first, lay a rock-solid foundation for your retirement that will provide guaranteed wealth accumulation and beneficial tax treatment.  Next month we’ll discuss the product that will lay the foundation to your retirement portfolio. 

Grandparents and parents looking for the perfect gift...for themselves too!

If you have a grandchild or child, nothing can guarantee a solid financial future for them like a dividend paying whole life policy.  The cash value in the policy grows tax free and the dividends paid to the policy help purchase more life insurance.  With you as the owner of the policy, you can use the cash value in the policy to purchase a car for the child at 16, or help them pay for higher education.  If you desire, when the child is responsible enough, you can transfer ownership of the policy to your grandchild, son or daughter and it will continue to be a solid financial base for them for the rest of their lives.  Meanwhile, as owner of the policy you can use the cash value that builds in the policy to help the child financially every step of the way.

*I recently opened a $150,000 dividend paying life insurance policy for my 3 year old daughter.  The cost is $46 a month. By the time she is 65 there will be approximately $147,000 of cash value in the policy and $285,000 of  life insurance. Best of all, we have tax free access to this cash value anytime we need it without penalty. It’s a wonderful present for her...and me.

 

 

Child’s Age	Amount of Insurance (Dividend paying whole life)	Monthly Premium
2	$25,000 $50,000 $100,000	$15.00 $23.00 $32.00
5	$25,000 $50,000 $100,000	$16.00 $24.00 $36.00
10	$25,000 $50,000 $100,000	$17.00 $26.00 $43.00

Child’s Age	Amount of Insurance (Dividend paying whole life)	Monthly Premium
2	$25,000 $50,000 $100,000	$15.00 $23.00 $32.00
5	$25,000 $50,000 $100,000	$16.00 $24.00 $36.00
10	$25,000 $50,000 $100,000	$17.00 $26.00 $43.00

Volume 2 of The Most Important Newsletter Series That You Will Ever Receive.

Advisor’s Journal:

I hope that you and your family had a wonderful Thanksgiving.  Its is hard to believe that the new year is only a couple of weeks away.

Today we add another block to the wall that protects our wealth.  No castle worth building is without a curtain wall or moat: protective barriers against plunder. Last month we tailored our personal auto liability to keep   potential auto-related pitfalls away from our savings, assets and future earnings.  We are going to do the same for our personal liability.  The primary source of your personal liability comes from your homeowner’s or renter’s insurance policy.  Your personal liability coverage follows you wherever you go. When the golf club flies out of your hand, when a child gets injured in your swimming pool, or your son or daughter cause property damage or injury at school, it’s your personal liability that will  provide insurance coverage.  A typical homeowner’s policy will provide $300,000 to $500,000 in personal liability.  Is that enough coverage? I recommend adding a $1,000,000 umbrella policy on top of your homeowner’s and auto insurance.  Doing so will give you $1.5 million auto liability coverage and $1.3 to $1.5 personal liability coverage.  Your umbrella should also provide an additional $1,000,000 in uninsured and underinsured motorists coverage.  Why?  Consider this example. Joe Smith is 40 years old, married, and makes $50,000 a year.  While driving to work he is struck head-on by a driver who does not have any insurance.  Joe’s injuries are so severe that it is doubtful that he will be able to ever work his job again.  He had planned on working until age 60, which means that he and his family have lost out on at least $1,000,000 of future income. Because Joe has uninsured and underinsured motorists coverage on his umbrella policy, he can make a claim on his own policy to collect on his lost income, pain and suffering and loss of lifestyle.  As a result, Joe and his family do not have to miss out on the quality of retirement they had planned.

Best of all, we can typically add the umbrella for little to no cost.  How? Most insurance companies will provide a 5 to 10% discount on your homeowner’s policy if you have an umbrella.  In addition, consider   raising your auto and homeowner’s property deductibles.  Often times the combination of these three will  allow you to purchase a liability umbrella for little to no cost.  Without experiencing a significant increase in premium, you now have a solid liability barrier between your assets and possible judgments or negative consequences.

These layers of liability protection are essential to protecting you wealth.  Next month we’ll discuss how you can start turning your insurance portfolio into a wealth accumulator.  Wealth protection and accumulation should be the result of every properly tailored insurance portfolio.

This guy loves his whole life policy as much as I do.

http://www.youtube.com/watch?v=HQX_wuhPtAM

Volume 1 of The Most Important Information That You Will Ever Receive

     Often times when I am visiting with an individual for the first time or reviewing an existing client’s insurance portfolio, I am asked, “What would you do?” It’s quite possible that the next four newsletters could be the most important that you receive from me because they will change your life for the better. I will be discussing exactly how I structure my insurance policies to:1) Protect my future earning power; 2) accumulate wealth; 3) and achieve financial independence.  When structured correctly, your insurance portfolio should not only protect your current assets, but also create an environment that allows your wealth to grow. That statement sounds bold.  Sometimes facts are bold. I’ve watched it happen to every client who follows this model.

     In this first installment we are going to discuss the structure of your auto insurance policy.  If you are a contractor and only have a commercial auto policy don’t feel left out because the principles apply to your policy as well. First, ignore all of the insurance commercials that you see on TV.  Most insurance companies and agents miss the mark completely on auto insurance.  I recently heard a Farmer’s Insurance advertisement that said that their agents are trained to slash your auto premium. Great, are they trained to manage my liability limits when my truck hits a patch of ice and slides into the other lane? Another company promises 15% savings in 15 minutes or less.  Last month I had a client come to me with a GEICO policy that was missing uninsured motorist coverage.  That’ll save 15% for sure, but any way you cut it these insurance companies are selling auto insurance at a cost to their policy holders. Their focus is on the price alone.  We will make up that price many times over when this is all complete. 

     The most important coverage that your auto policy provides is the liability.  When you hit that patch of ice and slide into the other lane and injure a family, what is protecting your life savings and future earnings from being taken away? The answer is your auto liability insurance.  Keep those limits high.  I recommend a limit of $500,000. Contractors, if your commercial auto policy is at $1,000,000, keep it there. On a personal auto  policy the difference in premium between $500,000 and $100,000 is very small.  An equally important coverage is your uninsured and underinsured motorists coverage.  Your uninsured and underinsured motorists coverage should be equal to your liability limits.  Again, I recommend $500,000. Uninsured and underinsured motorists coverage is for you and your family.  If you are injured by an at-fault driver and lose your ability to earn a living, your can collect on your own insurance policy, up to your limits to help pay for your loss of earnings and pain and suffering if the at-fault driver does not have enough insurance, or no insurance to pay for your losses.  We will discuss the importance of a liability umbrella in another installment.

     When most people think of auto insurance, they think of physical damage coverage for their vehicle in the event it is damaged in an accident.  “Full Coverage” “as the public refers to it” can be important, especially if you have a newer vehicle with a loan.  If you carry a $250 deductible, raise it to $500, $750 or $1,000.  Raising the deductibles will lower your premium, however be careful that you do not select a deductible limit that is higher than you have reserves to pay.

      If your vehicle is older than 10 years and its not a “classic” vehicle, you may want to consider dropping physical damage coverage altogether. There are several other coverages that may come with your auto policy, such as towing, rental reimbursement, glass coverage, etc.  These coverages are nice to have (I have them on my own auto policy) but they are not essential.  

Summary: Your liability limits should be high; your uninsured and underinsured motorists coverage should match your liability limits; and your deductibles (if you carry “full coverage) should be as high as you have the reserves to pay. 

      Have we protected our earning power, accumulated wealth and gained financial independence? Not quite, but we’re well on our way.  We’ve helped protect our earning power with high auto liability limits.  We have a nice solid wall between our assets/future earnings and possible negative consequences.  Read next month’s newsletter to see how we take one more step forward towards our goal of financial independence.  We will achieve it. If you can’t wait that long, call me.

November Checklist

November Checklist

Time Change: Sunday, November 7th at 2 a.m.  Set your clocks back one hour.

Medicare open-enrollment time: November 15 to December 31.  Review Medicare Advantage plans carefully.  For assistance, contact our office.

Business Perpetuation

Protecting your business with a buy/sell agreement

Mike Smith is the sole owner of Smith Quality Construction.  Mike’s family depends on the business for their stream of income. To protect his business and family, Mike took out a life insurance policy on himself and named his key employee as the beneficiary.  If Mike dies unexpectedly before retirement, the benefit of the life insurance will be paid to the Smith Quality Construction’s key employee, who will then under contract of a buy/sell agreement, purchase the business from Mike’s wife.  Doing so insures that Mike’s family will get the fair value of his business and  Smith Quality Construction will continue with the key employee as the new owner.  Buy/sell agreements are not only important for an unexpected death of a business owner, they are also vital for transition when a business owner retires.  Did you know that in addition to providing a death benefit, the cash value in a life insurance policy can also be used to help buy a business from a partner or sole owner. Running a successful business requires careful planning.  Taking care of your business’s perpetuation plan today will save your family unduly distress later on.

Preventing Frozen Car Doors

It’s a rookie mistake to wash your car in the evening and leave it sit out all night in the winter.  Chances are you’ll be greeted by frozen car doors in the morning.  Frozen doors in the winter can be a problem.  One way to prevent this is by applying a silicon spray to the car door’s rubber door gaskets.  This reduces the odds that the gaskets will freeze to the frame and prevent entry or exit.  It is also a good idea to spray aerosol lubricant into the car door’s locks.  Doing so will make it less likely that the locks will freeze shut too.