Why You Should Purchase Life, Disability and Long-Term Care Insurance - Early Spring 2014
It’s important to prepare for the unexpected, and life, disability and long-term care insurance can all help you ensure a secure financial future for yourself and your loved ones. Insurance plans can cover unexpected expenses, estate taxes and pay off debts. Consider the following benefits and guidelines when choosing the right plans for you and your family.
Benefits: Life insurance can help you ensure financial security for your loved ones and help offset the impact of estate taxes upon death. Life insurance can help your family maintain their current lifestyle, continue paying the home mortgage, help pay off debts or estate taxes or go towards future education costs. As long as you pay premiums, permanent life insurance provides coverage throughout your life, regardless of whether your health or personal situations change.
Guidelines: To determine how much life insurance you need, consider what your beneficiaries would need to cover expenses in the event of your death, and also to live comfortably. Keep in mind education and retirement savings. Also, decide if you need permanent or term life insurance. Permanent life insurance offers protection for your entire lifetime while term life insurance offers coverage for a certain time period, from 10 to 30 years. Choose a longer-term policy if you have young children. If your children are adults supporting themselves, a short-term policy may be acceptable.
Benefits: If you are unable to work due to an illness or injury, disability insurance can help you maintain your standard of living. It can allow you to continue to pay your expenses, including car and mortgage payments and additional living expenses including food, gas and utilities. It will help replace any income lost while you recover from your illness or injury.
Guidelines: Check with your current employer to see if there is group disability coverage available to you. If you are considering purchasing your own policy, be sure to receive quotes and policies from at least three different insurance companies to compare pricing, coverage and whether the policy is noncancelable or guaranteed renewable. Noncancelable policies are the best option as the insurance company is not able to cancel your policy or change your premiums as long as you are paying your premiums on time. Also, purchasing a policy at a young age can save you money as insurance costs typically rise with age.
Long-Term Care Insurance
Benefits: Long-term care insurance differs from traditional health insurance and is available to help you cover long-term personal and custodial care services and support, whether its in your own home or another facility. Policies can be used to cover daily living expenses such as nursing home or assisted-living services, bathing, dressing or eating. It’s never too early to start planning for your long-term care.
Guidelines: Review the average costs for long-term care to estimate how much coverage you may need on your long-term care insurance policy. Keep in mind that any long-term care insurance policies have limits on how long or how much they will cover. You should designate an individual to be the decision-maker for your long-term care in the event that you are medically or mentally unable to make your own decisions. Consider consulting an eldercare attorney for advice and guidance on selecting the right policy for you and your family.
Starting a Family Tradition of Giving a College Education - Winter 2013
Why saving for college is so important
While almost everyone wants their child to go to college, according to a 2013 study by Sallie Mae, only 38% believe they will save enough. The same study indicates that 54% of middle income families don’t have a plan to save, yet research shows children who have a savings account in their name are seven times more likely to go to college. According to Education Pays 2013, a study by the College Board, the typical bachelor’s degree recipient can expect to earn about 60% more during a 40-year working life than the typical high school graduate earns in the same period, and that gap is widening. This research also shows many other effects a college education can have on the success and happiness of a child in their future. College graduates earn more and have a greater sense of well-being.
The cost of borrowing versus the cost of saving
65% of college graduates have some amount of student loan debt. It is more economical to save for college and have your money work for you by creating earnings rather than paying back interest on a loan. The Sallie Mae study indicates 27% of enrolled families pay for college by taking out parent or student loans and 11% rely on student income and savings.
How much to save
Any time is the right time to begin saving. Even when only investing $100 a month, the earlier you save the more you will have to help pay for college costs. If you start saving when a child is in third grade with $100 a month, earning 5% per year in a 529 account, you might accumulate over $13,000 by the time the child is ready for college, but if you start when the child is newborn, that amount could be over $34,000.
Give a gift that can last a lifetime
Many families are starting a feel-good family gifting tradition. They are opening Section 529 college savings accounts and contributing in a meaningful way – both in an ongoing basis and for special occasions. This doesn’t necessarily mean in place of the beloved doll, truck or gaming system. But, it means keeping these moments in mind as a time to also make a contribution to a college savings account. Think, birthdays, preschool graduation, beginning of Kindergarten, and of course, throughout the holiday season. Every family has different ways they celebrate, and if part of those celebrations includes a gift into a college savings account, they really start to add up. Grandparents, aunts, uncles and important family friends can give the gift that truly will last a lifetime. They can open their own 529 account, or they can contribute to an already established account. It’s never too early or too late to begin saving for college, it’s important to just get started.
First National Bank is the program manager for Nebraska’s 529 Plan, NEST, Nebraska Educational Savings Trust. NEST is consistently recognized as a top-rated plan in the industry and offers easy ways to open and manage accounts online. The plan is open to residents of any U.S. state, even if that home state offers its own plan. When the time comes, the money you’ve invested can be spent at almost any college in the country including private colleges, public universities, community colleges, graduate schools and trade schools and some abroad programs. Investing in NEST 529 offers tax advantages, both now and in the future. Earnings are tax free if used for qualified higher education expenses. And you can take advantage of unique gift and estate tax benefits.
1 Journal of Children and Poverty, 2010, Center for Social Development, Washington University in St. Louis, study by W. Elliot and S. Beverly
1 Education Pays 2013 The Benefits of Higher Education for Individual and Society, 2013, College Board
1 Investors should consider whether their home state offers state tax or other benefits for investments in such state’s qualified tuition program.
Why Do I Need an Investment Planner? - Fall 2013
An investment planner can help you plan for a successful financial future, and help you prepare for retirement, education and estate planning or for managing (help you manage) mutual funds, stocks & bonds or IRA's. Having a 3rd party evaluation of your situation can help you make the most suitable decisions to stay on track reaching financial independence.
Selecting an Investment Advisor
You may benefit from an investment planner if you have little experience with finances, don’t have an interest in learning the in's and out's of investments, or have a complex financial situation. It takes time to plan and manage investment accounts, but it’s important to make the time for it regardless if you seek out a professional planner or not. When selecting an investment advisor, you should ask for their main areas of expertise, professional designations, services offered and payment structure. It's important your goals align with the past experience of your planner. No two investment strategies are alike as every investor has his or her own unique goals and plans for the future. First National Investments and Planning advisors will work closely with you to develop a successful, customized investment plan.
Developing Your Plan
Once you have selected an investments advisor, you will work closely with them to outline your current financial situation to better address your goals. You will need to share certain information; including net worth and earning statements, and tax returns, as well as the risk level you are comfortable with. You will then discuss what barriers may exist to reaching your goals, such as inflation or taxes. A First National Investments & Planning advisor will help you identify these obstacles and find a way to get past them and develop a comprehensive financial plan to reach your goals.
Benefits of an Investment Advisor
By working closely with an investments planner, your plan will be continually monitored as your personal and economic situations change. The best-laid plans can be thrown off course if not monitored on a regular basis. Having an advisor who is aware of your situation and your end goals can help you make revisions to your plan, when needed.
Securities products and advisory services provided by First National Capital Markets, Inc. (FNCM), a registered broker/dealer and registered investment advisor. Member FINRA & SIPC. Advisory services may only be offered by Investment Advisor Representatives in connection with an appropriate FNCM Advisory Services Agreement and disclosure brochure as provided. Investment products are: Not a Deposit • Not FDIC Insured • Not Insured by any Federal Government Agency • Not Guaranteed by the Bank • May Go Down in Value