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Special Report: Don’t Have a Bank on Yourself® Structured Policy?

Here’s what you might be missing…

If you are like many people, you may not know there is a time-tested and legal way to invest your wealth that provides you with liquid, predictable, tax-deferred growth; and allows you to control your money without the risk of stock market losses. This powerful tool will provide you with a LIFETIME income that you can’t outlive.

By Teresa Kuhn, JD, RFC, CSA
President, Living Wealthy Financial

People often ask me, “What is Bank On Yourself® and how does this amazing strategy compare to traditional financial planning?” In this short report, I’d like to take a look at how Bank on Yourself® compares to the ‘same old same old’, when it comes to growing and preserving wealth.

The typical financial plan hasn’t really evolved that much over the years. It usually goes something like this:

  1. Clients are told to ‘diversify’. They are advised to use a diversified asset allocation strategy to alleviate risks and take advantage of stock market growth.
  2. Advisors look for ways to maximize government-sponsored plans such as 401(k)’s, IRA’s, etc., to defer taxes.
  3. Clients are sold the illusion that taxes will go DOWN when they get older.

So, is old school financial planning actually working in the chaotic and volatile 21st century?

Well, according to the National Institute on Retirement Security (Read the report by clicking HERE) the median retirement account balance in the United States is a meager $3,000 for all working-age households and only $12,000 for households nearing retirement age.

The report states, “Two-thirds of working households age 55-64 with at least one earner have retirement savings less than one times their annual income, which is far below what they will need to maintain their standard of living in retirement.”

The Diversification Myth

I don’t deny that the stock market has occasionally been an engine of wealth creation for some people. Unfortunately though, the market’s ups and downs have included more downs than ups.
Although historically the stock market has averaged one down year for every seven up years, that hasn’t been the case recently. There have been three down years and one flat year over the last 13-year period.

People who have relied on equity markets for their retirement account growth have had a rough ride these past few years. My research leads me to believe that this trend will continue in the future. Sadly, it is more and more difficult to recover from market downturns, especially for those nearing retirement age.

Do you REALLY think taxes will go down in the future?

Many people incorrectly classify government-run programs such as Social Security as ‘entitlement’ programs when they are anything but. The idea that government can be held accountable for it’s promises would be amusing were it not for the fact that so many people have built their retirement plans with the idea that the government owes them Medicare or Social Security.

In reality, the U.S. government is not locked into paying a certain amount based on existing terms, as in the case of a mortgage for example. Nor are the terms themselves written in stone as demonstrated by numerous changes Congress has made to them over the years.

Government sponsored qualified plans are also flawed owing to their associated taxes and tax penalties. Your advisor or human resources person might have warned you when your plan was set up that if you need access to your retirement savings before age 59 ½, you will have to pay taxes based on your current income and an early withdrawal penalty of 10%.

Even if you wait until you are 60 years of age or older you are still subject to taxes at current rates. If you fail to take the ‘required minimum distribution’, which is the minimum amount of plan money that must be accessed after you reach age 70 ½, then
you will then be subject to taxes at the current rates plus a penalty of 50% on the money that should have been withdrawn.
Those who happen to be in one of the higher tax brackets rarely if ever retire in a significantly lower tax bracket. Thus, the argument for delaying taxes to some future date when tax rates are supposedly going to be lower is generally an unfulfilled promise.

So it looks as if future taxes will probably be higher for most, not lower, due to our exploding national debt as well as tens of trillions to fund Social Security and Medicare.

Naturally, the people who will be expected to pay for this will be people with taxable income. All monies taken out of qualified plans are taxable, at the then current rates when income is taken.

So, with taxes likely to go up in the future, paying them now looks like the best course of action for nearly all Americans.

It’s hard for most people to wrap their heads around a simple, but sobering fact:

Combined consumer and government debt is far larger than the total amount of money in existence!

If one were to empty every single bank account, coffee can, piggy bank, in the country, turn over every seat cushion and mattress, drain all the 401(k)’s and pension plans, there still wouldn’t be enough money to off the country’s massive debt.

Some economists and policy makers go so far as to predict that by 2025, interest alone on the national debt along with mandatory spending on programs such as Social Security, Medicaid, and Medicare will exceed total government revenue.

What can be inferred from all of this? I believe we can count on taxes going UP not DOWN in the future. Old-fashioned planning was built on the idea of ‘decreasing responsibility’ and attached to the notion that expenses will decrease as one ages, along with taxes.

Such planning also assumes that somehow government will miraculously pay down the debt. There is just no way that is ever going to happen, especially as our population ages and is replaced by smaller, poorer generations.

When you devote some time to studying this situation, it is easy to understand why relying on government programs and decreased taxes as the cornerstone of a sound financial blueprint is problematic, even highly risky.

At this point, you may be thinking, “If I can’t count on retirement solutions from the government, what are my alternatives?”

In my experience as a financial strategist, I have found that the life insurance industry has the best IRS-approved retirement savings plan today.

Many planners, especially those who are not insurance specialists usually have no knowledge about how these products really work. That’s why they either don’t recommend them to their clients or discourage their clients from looking into them.

What I am talking about here is not a qualified plan or an investment that goes inside one. It takes taxes and qualified plans out of the picture completely.

This ultimate cash management solution is called a ‘specially-structured whole life insurance’ policy. It offers a risk profile similar to that of a money market fund, but with the potential for higher interest, avoiding the risk of the stock market.

This custom-designed insurance policy is the engine that drives the Bank On Yourself ® concept and strategies. It allows you to put your money into a product that can grow tax free and never be subjected to downside market risks.

How does a Bank On Yourself ® plan work?

the-bank-on-yourself-book-coverBank On Yourself ® is a unique cash management system that uses a little-known ‘turbo-charged’ version of dividend-paying whole life insurance- an asset that has increased in value during every single market crash has proven resilient during every economic boom and bust cycle for more than 160 years.

This is not the same kind of policy your parents or grandparents may have had,or the type of policy many financial advisors and journalists claim is a bad investment that should be avoided.

Instead, with this particular strategy of structuring divindend-paying whole life insurance, you don’t have to die to win. The concepts behind Bank On Yourself ® are becoming more popular as people realize that Wall Street and the banking community are not usually on their side when it comes to protecting wealth.

In a Bank On Yourself ® plan, the majority of your premium goes into riders that make the money in the policy grow significantly faster than a traditional whole life policy. To accomplish this, all Bank On Yourself ® Authorized Advisors must also undergo thorough and rigorous training that prepares them to create custom plans that are tailored to their clients’ individual needs and situations.

Only 200 advisors nationwide have been able to meet the strict requirements of Bank On Yourself ® and they are the only ones with the expertise to structure your plan so that it retains all the tax advantages and achieves reasonable and reliable growth.

A Bank On Yourself ® policy is not invested in the stock market and it does not shift the risk and burden of managing the policy to the policyholder as do other insurance options such as Indexed Universal Life. With universal life and other types of so-called ‘permanent insurance’, a policy owner could find him or herself having to pay skyrocketing premiums just to keep the policy from lapsing. If they are unable or unwilling to pay these increased premiums, they may risk losing everything that has been paid into the policy over the years.

In a properly-designed Bank On Yourself ® whole life policy your costs, premiums, cash value, and death benefit are predictable. In this plan, everything except the dividend is known, guaranteed, and determined in advance. Your cash value is guaranteed to equal your death benefit when the policy matures. This predictability is one reason more and more people are choosing Bank On Yourself ® over other, riskier options.

Liquidity, control, and TAX advantages of Bank On Yourself ® structured policies

As I mentioned before, some of the major benefits of a properly structured Bank On Yourself ® policy are the ‘living benefits’. One of these is the tax advantage afforded by using whole life as a savings vehicle. In a whole life policy, you accumulate cash value which you can access, as needed, for large purchases such as cars, college tuition, vacations, income-producing property, etc. You could also use the cash value as a hedge against emergencies such as unforeseen medical issues, sudden loss of income, even natural disasters that might impact your quality of life.

When you access this cash, it is actually categorized as a loan against the cash value and uses the policy death benefit as collateral for the loan. In other words, if you don’t pay back the loan, it will be deducted from the death benefit (along with interest due) before the company pays the claim.

According to the policy contract, the policy owner may access the cash value and can borrow that money for any reason with no intrusive paperwork needed. With Bank On Yourself ® you won’t find yourself jumping through hoops or begging your banker to release your cash. You won’t have to worry about your credit score or feel as if your privacy is being violated every time you take out a loan.

Best of all, unlike some other permanent life insurance products, well-designed Bank On Yourself ® policies will have cash value the very first month. Other policies take 2-3 years or more to accumulate any significant amount of cash.

A qualified Bank On Yourself ® Authorized Advisor knows and understands the tax advantages of this amazing product. When you decide to access your cash through policy loans, there are no tax implications so long as your policy was set up correctly and you never have to pay back these loans.

The IRS has strict legal guidelines as to how cash values may remain tax-advantaged and Bank On Yourself ® policies are specifically designed with these guidelines in mind. This means you will not trigger a taxable event when you access your cash via loans (under current tax laws) in stark contrast to government sponsored qualified plans which have both taxes due and an additional 10% early withdrawal penalty if you decide to access your money before age 59 ½.

Should you find your circumstances challenging and you’re unable to make your loan payments, you don’t have to worry about getting calls from collection agencies or black marks on your credit report.

The greater peace of mind that having such increased flexibility and control creates is priceless, and for many clients, the very best thing about Bank On Yourself®. With the help of their Bank On Yourself ® Authorized Advisor, policy owners can design repayment plans that fit their unique situations and avoid having their policies collapse due to unpaid loans.

Summing it all up…

Why should everyone consider using Bank On Yourself ® to build a rock-solid financial cornerstone? There many reasons to consider starting a Bank On Yourself ® structured policy right now, including:

  • Bank On Yourself ® structured policies are custom-designed to fit each client’s particular needs. These aren’t ‘off-the-shelf’ one size fits all policies. Customizing a policy greatly enhances how well it will help clients achieve their goals.
  • Bank On Yourself ® keeps your hard-earned cash from winding up in the pockets of Wall Street con artists, bankers, and others who seldom have your best interest in mind.
  • Properly structured Bank On Yourself ® policies allow you to gain access to your money without tax liabilities
  • You never need to submit a credit report or divulge personal information in order to borrow from the cash value. Your ability to borrow isn’t predicated on the whims of someone in your bank’s loan department.
  • If you miss a repayment to your policy, you don’t need to worry about damaging your credit or being hassled by collectors.
  • You can use your money for any purpose you choose without having to answer to a loan officer or underwriter.
  • You get to work with qualified, competent Authorized Advisors who willingly give up standard commissions to help your account grow. Bank On Yourself ® Authorized Advisors are a different breed. They do this because they believe in the concept of financial freedom, not because they are looking for huge commissions.

With all this in mind, I can’t think of any reason that most people who are serious about controlling their own financial destinies would not want to have a Bank On Yourself ® structured policy in place. It will provide you greater peace of mind than you have ever experienced before and give you a cash management tool that is unrivaled in it’s flexibility and safety.

Regardless of whatever else you have in place with your current financial consultant, you should consider speaking with a Bank On Yourself ® Authorized Advisor to ensure that you don’t miss out on the benefits this extraordinary tool provides.

I am happy to answer any questions or concerns you may have, as well as provide a no-cost second option of your current financial plan or insurance policy.

Call our office at (800)382-0830 today to arrange a telephone consultation.

Together, we can discover whether Bank On Yourself ® is right for you and outline the steps you need to take to be well-planned now, and in the future.

Teresa Kuhn JD, RFC
President, Living Wealthy Financial Group

Like 2006 All Over Again? Could the U.S. Be Headed Into Another Housing Bubble?

house

This ‘micro-house’ in Brooklyn, NY built from a tool shed, was recently listed on Trulia for $500,000…

by: Teresa Kuhn, President/CEO, Living Wealthy Financial Group

Will 2016-2017 see a repeat of the housing meltdown that pulled our economy into a recession and destroyed millions of dollars of Americans’ wealth?

I’ve been looking at the trends lately and am seeing a disturbing amount of irresponsible practices creeping back into the marketplace; practices that directly contributed to the bursting of the last bubble.

The idea that a housing bubble is barreling down on us is controversial, to be sure.  Real estate industry insiders say that even though standards have loosened a bit lately, they are nowhere near what they were in the days of stated income and no down payments.  There is a lot more documentation and a whole new set of requirements and hoops that must be navigated prior to purchasing a home, they claim.

However, I have observed some unsettling trends that I believe will ultimately lead to another marketplace crash in the near future.

Loans are getting easier to get

Standards are once again loosening up with risky loans disguised as something innocuous. Many of these loans are, in fact, the same highly risky, subprime-style loans we had during the meltdown. The only real difference is now they are now being made with government (taxpayer) guarantees rather than originating with private investors. In spite of being coated with government promises, they reek of risk.

Mortgage software company Ellie Mae recently reported that the average FICO credit score of an approved home loan plunged to 719 in January, 2016 down from 731 a year earlier. This figure is well below the peak of 750 in 2011.  Lower FICO scores, of course, correlate directly to higher risk of loan defaults. This is a dangerous sign that lenders are continuing to loosen underwriting standards.

Home prices are rising a lot relative to income

For the past few years, home prices have been rising about 5%-6% a year, but incomes are growing at only about 2% or 3%.

What does this mean? It is a tell-tale sign that housing affordability is worsening. As fewer people can afford homes various players in the housing market have a lot to lose and are pressured into relaxing lending standards even further to preserve the illusion of growth.

On the other hand, construction of new housing units over the last four years is at around half the pace of the bubble year construction. This lack of supply pushes home prices well above people’s ability to pay.

Flipping is once again a hot pastime

Another sign that the real estate market is teetering on the brink of collapse is the resurgence in popularity of real estate speculation and home “flipping”.

Flipping is once again trendy and hitting levels not seen since just prior to the last mortgage crisis. In 2015, almost 180,000 homes were sold and then resold last year — the highest level since 2007. Frenzied flipping in metro areas such as New York, San Diego, and Miami is actually exceeding peaks set back in 2005. Low interest rates and easier credit once again make this possible.

Conclusion:

After researching current real estate market behaviors and seeing history repeat itself, I can’t help but side with economist and demographer Harry Dent.

Writing in Economy and Markets, Dent observed:

“… I’m predicting net housing demand will fall – even turning negative over the next two decades – especially starting later this year.

This critical demographic indicator shows it won’t turn positive again until after the year 2039 – 23 years from now. The same indicator explains why the echo boom in Japan never caused a bounce in housing even after its all-time bubble highs and 60% crash.”

Source: http://economyandmarkets.com/markets/housing-market-markets/the-dumb-moneys-at-it-again-always-the-last-sad-sack-to-the-party/

“Brexit” Triggers Wave of Nations Clamoring for Sovereignty. What Does This Mean for the U.S.?

by Teresa Kuhn JD, RFC

President/CEO, Living Wealthy Financial Group

Logo_brexit_new_size2One of the many unfortunate side effects of globalism is the inevitable market reaction to any unexpected event.  When a thread comes loose in one country, no matter how far away that country may be, it usually results in upheaval everywhere else.

Britain’s recent decision to exit the European Union was a shocker that blindsided everyone from policy pundits to betting parlor odds makers.  Most of the experts thought it inconceivable that Britain would ever decide to leave the European Union, no matter how unpalatable the bureaucracy was to the average Brit.

That’s why the vote to exit has sent most major markets into panic-driven slides, with Wall Street poised to have its’ worst month since January.

Markets are notoriously unpredictable so it’s hard to know what impact “Brexit” will ultimately have on Americans and how long will this impact last.

My own research indicates that Americans can expect the following as a result of the decision to leave:

1. A stronger dollar.

While this is great for tourists planning their European vacations, the long term effects of a strong dollar on the economy are not well understood. Even experts disagree on whether the return of a robust dollar is a good thing or a bad thing. One outcome that is nearly inevitable is that a strong dollar gives the Fed another reason to avoid raising interest rates. Fed Chairwoman Janet Yellen recently admitted that “Brexit” concerns were indeed a factor when she decided not to press ahead with plans to raise rates.

2. A potential re-finance boom.

Pressure to keep interest rates at historic lows could trigger a new wave of refinance as home owners scramble to lock in rates that will save them thousands on their mortgages.

3. Falling CD and Bond Yields.  

Another potential impact from the dollar strengthening against the pound is that yields from U.S. certificates of deposits and treasuries could drop significantly. Bond and CD yields move in the opposite direction of their pricing.  Since yields are already very low, further drops would be harmful to more conservative investors as demand increases and yields dry up.

These are only three of the most immediate economic results that I see coming from “Brexit”. There is no consensus among economists regarding the long term effects of this decision.

If you have optimized your Bank On Yourself policy, you have safeguarded your wealth against some of these negative impacts.  You also have the means to take advantage of opportunities to make solid investments and purchase quality stocks at lower prices.

Living Wealthy Financial will continue to monitor the situation overseas and give our clients insights and information to help them make the best possible financial decisions possible in this uncertain world.

If it has been a while since you’ve spoken with us, call (800)382-0830 today and make an appointment to discuss your questions and concerns.

Recent COI Increases Reveal the Weaknesses of Universal Life Insurance

By Teresa Kuhn, JD. RFC, CSA

President, Living Wealthy Financial

There’s a certain amount of trust and faith required when entering into a business relationship, as well as a fair amount of reliance on companies to follow accepted practices and do the right things for their clients.

And, while most of us realize that the way products are marketed may be the polar opposite of how they actually work, we continue to have faith that what we are being told about the things we buy is at least somewhat truthful.

As some of the most trusted and respected entities, American life insurance companies have been successful mostly because ordinary people have put so much faith in them and their promises.

Throughout our country’s history, people have bought insurance policies that last for years, often entire lifetimes.  They do this believing that the insurer would never violate their trust by failing to honor the original policy terms or by doing things that would harm them financially.

Most people, for example, never expect the company to suddenly exercise a provision in the contract that would have an adverse financial consequence for them.

Unfortunately, however, such trust may no longer be justified.

Except for whole life insurance policies, most other permanent life insurance policies have a right to increase the cost of insurance built into their contracts.

In the past, most people did not pay much attention to this particular provision simply because insurers realized it would be bad business for them to use it. Increasing the cost of insurance (COI) was just something that was seldom, if ever, done.

Recently, though, unprecedented types of premium increases have begun to hit consumers.  These rate hikes call into question the trustworthiness of some insurance companies and threaten the entire industry.

At least four major insurance carriers have published significant rate hikes with no warning to consumers.

These rate hikes result from increases in the cost of insurance (COI) companies charge their existing customers.

For those of you who may not know what COI is, it is the pure insurance protection portion of a policy and is tied to mortality risks.

In the past, COI increases have been unthinkable and consumers have relied on the implicit and explicit promises of  life carriers that they will never have COI increases.  The breaking of this promise by four big insurance companies virtually guarantees that others will follow.

There’s nothing subtle about these premium increases, either.  Policy holders are getting bills with anywhere from 40% increases in premiums to over 100 percent!   Such increases come at a time when health insurance, automobile, and other insurance premiums are also increasing.

The impact on older Americans, especially those over age 65, is tremendous.   This is because the highest COI rates occur as people approach and surpass their expected mortality.

So why are these carriers suddenly starting to raise these rates and what can you do to avoid having this happen to you?

To understand the reasons for this situation, you need to know a little bit about how life insurance works.

Nearly all permanent life insurance policies, including indexed universal life, whole life and variable life, use projected COI to help determine how the policy will be priced.

Even “guaranteed universal life” contains a mortality component  found on the company’s side of the risk equation.

If an insurance company’s projections are off and more insureds die than expected in a particular group, the company can pass those additional costs along to their policyholders.

This has always been a possibility, but until this year, COI rate hikes were very rare.  Insurance companies realized that doing this would create massive PR headaches and potentially tarnish their public image.

Now however, major insurers such as Transamerica say they can no longer afford to maintain public perception at the expense of profitability.

The company recently revised COI costs for a huge block of universal life insurance business written in the 1990’s and now requires all proposals for these policies to be illustrated at the guaranteed mortality rate, guaranteeing large rate increases.

Another large issuer of universal life insurance,

Voya Financial has also notified many of its’ universal life policyholders  about coming rate increases.

AXA , which is the largest insurance company in the world, also recently increased COI rates for a block its’ universal life policies.   These policies, in addition to being singled out due to bad mortality rates, were also chosen according to premium payment patterns.

Universal life and flexible premium policies let owners choose how much they pay each year, provided there is sufficient cash value in the policy.

In addition to adverse mortality rates, the Fed’s stubborn insistence on maintaining ZIRP (zero interest rate policies) has had a negative effect on customers’ abilities to fund policies.

If you have one of these types of policies and you’ve experienced rate increases such as those above, you should contact our office.  We’ll suggest alternate strategies that may help you offset some of these increased costs.

As an advisor and agent, I can’t believe that insurance companies would have such callous disregard for their loyal policy holders.  The consequences of increasing COI are not reflected in a bunch of numbers on the company balance sheet, but rather in the daily lives of people, especially older Americans who must somehow deal with this blow to their budgets.

On a positive note, I work hard to ensure that none of my clients will ever experience such devastating impacts on their budgets.  At Living Wealthy Financial we are extremely selective about the companies we use to implement our Bank on Yourself® strategies.

We know that other permanent life solutions shift the risk back onto the insured, which in effect means the INSURED is now responsible for making the insurance company’s guarantees work.  How crazy is that?

Sure, whole life might not seem as “sexy” as these other types of insurance, but how much of your savings can you afford to risk?  I would guess your answer is “none.”  If that’s the case, then you need a strategy that reflects the true purpose of insurance- to pass risk from the INSURED to the COMPANY, not vice-versa.

If you are working with a stock company, versus the mutual companies with whom I work, then you should know that those stock companies are geared toward making decisions designed to maximize their shareholder’s wealth…not yours.  That means that in the long run they are not too motivated to do what works best for policyholders.

PS: If you have a universal or variable life insurance policy that is with a stock company, or are thinking of purchasing one, and you’d like us to analyze it and make recommendations at absolutely no cost or obligation to you, then call our office now at(800) 382-0830.

Wall Street’s Trick or Treats: More Tricks than Treats?

pumpkin

 

by Teresa Kuhn JD, RFC

President, Living Wealthy Financial

“How would another drop of 49% or more in the market affect your current standard of living or your future security?”

– Pamela Yellen, Bank On Yourself.com

We’ve seen these signs before…

Extreme uncertainty and nervousness in the markets that translates to volatility and ultimately losses.

While no one knows for sure if these extreme ups and downs portend another recession, many experts are drawing attention to some nearly identical behavior patterns that occurred prior to the 2008 recession.

One of those experts, demographer Harry Dent, claims the stock market bubble we have today is the biggest ever.

His colleague David Stockman is even less optimistic, saying in a recent edition of his newsletter that, “The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.”

What is for certain in all of this, though, is that Wall Street’s trick or trick pumpkin is slowly rotting away, and having less of your money mingled with the rot seems like a prudent idea.

“Are you tired of worrying about his day in and day out?”

I continue to believe that building up cash in a well-designed Bank On Yourself policy is the only way to regain the peace of mind you may have lost being on Wall Street.

Having the the use, liquidity, and control offered by a Bank On Yourself policy can give you a lot more flexibility and the ability to take advantage of bargains when you find them.

Don’t have a policy yet or need a quick review?

Call our office at (800)382-0830 Monday-Friday to arrange a consultation.

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