Why People Buy Life Insurance

Life Insurance is one of the most important things to have in your financial life.  There is not another product that offers financial protection, flexibility, and in some cases tax-exempt cash growth over time. According to a recent study by LIMRA (Life Insurance Market Research Association), only 6 out of 10 Americans currently own life insurance. While this is a positive number, that still leaves 40% of Americans who are without protection not to mention the benefits offered by life insurance.  So let’s examine why people buy life insurance.

The first reason is the death benefit.  Every life insurance policy pays a benefit to your survivors.  This benefit can be used for many purposes besides paying funeral expenses. Life Insurance can replace the earning power of the policyholder. Many families rely on two incomes to meet their needs.  Imagine what would happen if one of those incomes would suddenly and permanently disappear due to the death of a “breadwinner”.  The family could lose their house, have difficulty paying monthly expenses, children could suddenly be denied the chance to attend college, and the list could go on.  Life Insurance benefit can also be used to meet expenses  such as paying off the mortgage, establishing a college fund, and make up for the lost income created by a death.  

Another reason people buy life insurance is to take advantage of the cash savings benefits that come with permanent life insurance policies such as Whole Life and Universal Life.  Whole Life and Universal Life  invest a portion of the premium payments into an interest bearing savings account inside the life insurance policy.  The build up in this savings account is called the policy’s cash value which in most cases pays a higher interest rate than a regular savings account. In addition, if the insurance company that issued the policy declares a dividend, it will be credited to the cash value. The policy owner may use the cash value to help pay for educational costs, supplement retirement income, or financial emergencies.*  

Life Insurance provides several tax advantages, a third reason why people purchase it.  

Death proceeds are received free of income tax.  This is a great benefit if estate taxes are involved.  In many instances, the death benefit will be used to pay estate taxes. Cash value accumulations inside permanent policies are tax deferred.  This means the policyholder will not pay income taxes on the interest or dividend received from the insurance company that issued the coverage.  In addition, cash value loans or withdrawals* are free of tax, as long as the policy stays in force.  

A final reason people buy life insurance is the flexibility to design coverage that fit the needs of the policyholder at little additional cost.  Individual riders can be added to a policy to protect against a variety of occurrences. The most notable riders are the accelerated death benefit, the waiver of premium for disability, and the accidental death benefit.  The accelerated death benefit rider allows the insured to access up to 50% of the policy benefit in the event of terminal illness**.  Accelerated death benefits are received free of income tax and in many cases are used to cover medical costs.  The waiver of premium rider is crucial in the event of disability.  If the insured were to become disabled, all future policy premiums are waived and coverage stays in force.**  The accidental death rider pays an additional benefit if the policyholder is a victim of an accident, not their fault.  

Life Insurance provides many benefits such as protection, savings potential, tax advantages, and flexibility.  A well-structured policy can provide peace of mind and be an important part of any financial plan, no matter what stage of life.  A knowledgeable life insurance agent and/or financial advisor can help obtain the appropriate coverage.  

Feel free to contact me at 252-515-0242, matthewdressel.ifsg@gmail.com , or http://www.independentfinancialsolutionsgroup.com/index.html   

* Withdrawals and loans will reduce the policy’s death benefit and cash value available for use.

** Certain criteria must be met for these riders to be used.

*** Death Benefit Payments are subject to the claims-paying ability of the insurance company.

Football and Your Investing Game Plan

Football Season has begun and training camp is in session.  All over the nation, our favorite high school, college, and pro teams are preparing for the season. Soon we will be cheering on the offense to score lots of touchdowns and exhorting the defense to protect the lead with the ultimate goal of winning a championship.  When you think about it, winning your investing game is similar.  You need “offense” investments that will generate money; “defense” products are also needed to protect your gains.  So, what is the financial offense and defense you need to win the investing game?

The goal of the offense in football is to score touchdowns. The goal of your financial offense is to increase your wealth by growing your portfolio and generating income. Investments such as individual stocks, stock mutual funds, and stock ETFs are used to grow the value of your account.  Their job is to provide big gains in value much like a football team’s quarterback  and receivers gain big yards by passing the ball. However, every effective offense has a running game to go with its passing attack. The running backs on the football team gain the yardage on the ground.  For your investing game plan, Dividend Paying Stocks, Dividend Paying ETFs, Growth and Income Mutual Funds, Balanced Mutual Funds are your running backs.  These investments pay quarterly income which adds value to your portfolio while providing consistent growth over time .  In addition, investments such as individual bonds, bond mutual funds, and bond ETFs are great short yardage performers.  They are usually solid performers that show little gains in value but provide a steady income. Taken together, these investments can provide the offense you need to score financial touchdowns and win your investing game.

The purpose of the defense in football is to protect your end zone. The goal of your financial defense is to protect your wealth by keeping you from using your investments. This is where insurance comes in.  Life, Disability, Health, and Long-Term Care Insurances are your defense.

Life Insurance pays funeral costs, pays off any debts, replaces income, provides a nest egg for your heirs, and pays estate taxes. Disability Insurance protects you by providing income if you should become incapacitated and cannot work. Health Insurance will offset the cost of medical care especially in the event of a serious illness. Long-Term Care Insurance will offset the cost of nursing home and home health care. Often overlooked and not considered glorious, a football team’s defense provides the backbone of championship teams.

As we cheer on our favorite high school, college, and pro teams, take some time to look at your investing football team. Make sure you have the right offense to win games and the best defense needed to win championships.  An advisor can help put together your roster to bring home the title.

Feel free to contact me at 252-515-0242, matthewdressel.ifsg@gmail.com , or http://www.independentfinancialsolutionsgroup.com/index.html

Disclosures:

1. I.F.S.G. is a fee-based registered independent advisory specializing in investments and life insurance solutions.
2. I.F.S.G. does not give tax advice. You should consult your tax professional before making any financial decisions. 
3. Securities provided by Trade PMR. Fixed income products provided to Trade PMR by Advisor Asset Management, Crew & Associates, and JBB Financial.
4. Investing Money in securities exposes investors to risks including loss of principal and past performance is not an indicator of future returns. Investors should carefully consider investment risks, objectives, charges, and expenses.

Green Thumb vs. Brown Thumb Investors

Have you ever noticed how some people make a lot of money from investing while others do not? There are some individuals who are like "master gardeners" when it comes to their portfolios.  They have a "green thumb" for picking stocks, bonds, mutual funds etc.  Where they put their money it grows.  On the other hand, there are individuals who are the opposite. These people have a "brown thumb" for picking stocks, bonds, mutual funds etc.  In my line of work, I hear from individuals who fall into each category but especially the latter.  So what is the difference between "green thumb" and "brown thumb" investors?  Here is what I have noticed.

Green Thumb individuals are long-term investors, who are not looking for a quick profit.  They buy quality investments and hold them.  During market downturns, they stay calm, look for opportunities, and in many cases put more money into their current investments while the price is low.  Green Thumb individuals diversify their investments.  They do not put their "eggs in one basket". Finally, Green Thumb investors stay on top of their holdings, reviews their statements, educate themselves and seek professional guidance if needed.

Brown Thumb individuals are not long-term investors. They are constantly buying and selling hoping to make a quick profit. They buy speculative or "hot" stocks that "can't miss".   During market downturns, they panic, sell everything, and sit in cash refusing to take advantage of low price buying opportunities.  A Brown Thumb investor's portfolio is rarely diversified and often sector heavy. Finally, a Brown Thumb investor rarely checks their holdings, reviews their statements, and insists they know everything about investing.

Investing money takes time, patience, understanding, and discipline.  If you want to be a Green Thumb investor, you will have to develop the character of this type of individual.  There are plenty of resources including plenty of financial professional who are willing to help you develop that Green Thumb.

Exciting Announcement

I am pleased to announce that I.F.S.G. has migrated operations to Google Apps. This change will streamline client service, improve communications, and allow for more collaboration between clients and advisor. I am excited about  the potential for the business and its clients which come from this switch.

The  following is a list of the apps being employed:

1. Gmail - I.F.S.G. has had a Gmail address as a backup for several years now.  It will now be the primary contact address.  It is matthewdressel.ifsg@gmail.com.  The contact@independentfinancialsolutionsgroup.com address still exists but it will be used to receive professional mailings from investing and business journals.  

2. Hangouts - is a video and voice app that can be used for individual and group appointments.  Hangouts allow for secure VOIP conversations and the ability to share my screen to review information as well as collaborate on client financial strategies.  Hangouts will benefit clients whose schedules make it difficult to come to the office for an appointment as well as those who live out of the area or the state.

3. Google Voice - has been in use for several years.  The number 252-515-0242 was provided by Google as a backup to the business’s toll-free number.  As time went on, this number was used for text messages to communicate with clients and provide account updates.  Over the past two years, it was being used more and more for phone calls to the point that it became the I.F.S.G. primary number.  This number will now be the only number for the business.  The 866-671-6896 phone number has been discontinued.  Please note, all incoming and outgoing calls and text messages are logged by Google Voice for record keeping purposes.

4. Google Docs and Google Sheets - are word processing and spreadsheet apps very similar to Microsoft Word and Excel.  What makes these apps unique is they are cloud based; document or sheet revisions are saved in real time and can be accessed through “File” on the menu bar. Documents can be shared for collaboration, comments, and further revisions without having to use “Save As”.

5. Google Forms - allows the advisor to create questionnaires to deepen client relationships and enhance communication. Questionnaires are created and stored online.  They can be completed at the office or sent via email to be completed and submitted in real time.  Client responses will be integrated into a personalized spreadsheet.  The client information form, risk tolerance test, and financial priorities survey have been converted to Google Forms.  In the next several weeks additional forms for requesting appointments, client follow up and others will come into use.

6. HelloSign - has proven to be a “paper saver”.  HelloSign allows for documents to be sent to clients for electronic signature in a secure setting.  This means no one has to print off a document, sign it, re-scan it, and email or fax it back. You just sign it on the screen.

7. Google Keep - is for taking notes. It is being used for appointments and daily record keeping.  Notes can be saved as a Google Doc and stored in Google Drive.

8. PDF Merger - is used to combine multiple documents from different sources without having to print them off individually and scan them as one file.

9. Google Drive - is being used for cloud based storage.  Documents created by Google Docs, Sheets, Forms, PDF Merge, and HelloSign are automatically saved to Google Drive. Attachments received through Gmail can be saved to Google Drive. In addition, notes taken on Google Keep can be saved to Google Drive as a Google Doc.   

I hope you are as excited as I am about this switch to Google Apps. I believe you will enjoy the most efficient service that these apps will provide. Feel free to contact me with any questions or suggestions at matthewdressel.ifsg@gmail.com, 252-515-0242, or reach out to me on Hangouts.

Happy Seven Years

On July 1 it will be seven years since the Independent Financial Solutions Group  opened its doors. It is hard to believe how fast time has gone by.  Truthfully it seems like yesterday.  I guess what they say is true.  "Time flies when you are having fun".

I won't go out and say owning a business is fun.  It is hard work which requires both dedication and commitment.  Still, business ownership has its rewards.  These rewards can be anything from bringing in your first client, to showing the first ever quarterly profit, to meeting your growth goals, to knowing you have helped people reach goals of their own. I remember all of these achievements. The hardest was meeting the first ever quarterly profit.  It was a grand total of $7.00.  Hey, you have to start somewhere.

What I have found most rewarding is the satisfaction that comes from knowing you built something on your own.  Everything about this business has my fingerprints on it.  I designed the marketing materials, investment strategies, developed the procedures that guide daily operations, the technology set up, and much more.  I did it all.  I am not saying it was easy.  It wasn't. However, I can now look back and say "I built this"!!!

As I enter the seventh year, I would like to thank everyone who has encouraged and stuck by me.