3 Reasons Flood Insurance Is So Important

Flood insurance might be one of the most important forms of protection the average homeowner ever purchases.

Unfortunately, it’s also one of the most easily overlooked.

Following are some of the reasons flood insurance should be at the top of your insurance portfolio:

1. Revised FEMA Maps

Millions of homeowners across America have been surprised to learn they need to purchase flood insurance for the first time. New homebuyers and even sellers should make a point of obtaining up-to-date plat maps to determine if they fall within the new  flood zones implemented by the Federal Emergency Management Agency. Otherwise, the mortgage company is likely to purchase a policy on your behalf.

2. High Risk

Even if your property doesn’t fall within a known flood zone, it’s often a good idea to purchase a flood insurance policy. Flooding is one of the most frequent high-dollar claims submitted. In fact, flooding is more likely to take place than is fire or other named hazards.

3. Big Damage Claims

Many homeowners make the mistake of thinking they are covered for flood-related damages when, in fact, they are not. Flooding is caused by more than merely rising water. Other common causes of flood-related damage are broken pipes, storm surge, rain and, of course, flash flooding. Unfortunately, the time to obtain flood insurance is before it’s needed. Don’t wait until storm season to obtain quotes, as it’s often too late. Most flood policies go into effect 30 days after purchase.

To determine if you’re fully covered in the event of flood-related damage, simply ask your agent.

Remember, flood-related damage is the single most common cause of additional property destruction after a hurricane, storm surge or even earthquake.

Nearly every item in your home is subject to water damage, including drywall, electrical systems, furniture, and other belongings and household items.

Why You’re Better Off With an Agent for Life

Staying with the same agent or broker simply makes sense when it comes to property and casualty insurance.

Following are some of the advantages of having a long-term working relationship with one agent:

1. Continuous Coverage: One agent will be better prepared to quote complete coverage without existing gaps, and you’ll be more likely to save money by eliminating duplicate coverage. One of the problems associated with buying multiple policies from various providers is the ease of duplicating coverage and inconsistency or gaps in coverage, especially among homeowner, car and umbrella policies.

2. Competitively Priced: Don’t assume that shopping around provides the best price. Instead, calculate the total cost of all coverage after rate reductions, elimination of duplicated provisions and other deductions such as multiple-policy discounts. Long-term clients often reap the benefits of low prices, rate reductions and convenience simply by staying in place. Stop shopping and stay in place for the best rates.

3. Single Point of Contact: Having a single point of contact for all your insurance needs is convenient for making payments and keeping contact information up to date. It’s also vital for quick response and individual attention in the event of a claim. Not only can all your benefits be easily coordinated by an agent who is familiar with your needs and coverage, but it reduces the stress and strain of trying to navigate the complex and confusing world of insurance when you need it most.

Avoid These 3 Critical Life Insurance Errors

Buying a life insurance policy is one of the most important steps you can take to protect your family’s financial future. It can also be one of the most confusing tasks.

The following are some mistakes to avoid when buying a life insurance policy:

Mistake #1

Procrastination is by far the most common mistake made by the majority of people. Most assume that it is either too expensive or that they don’t need coverage because they are young. Neither situation could be further from the truth. Term life insurance is especially affordable, with policies starting at under $20 per month. As for age, the best time to purchase a life insurance policy is when you are young and healthy. Not only does it ensure that you will get the best rates possible, but it provides valuable protection for growing families that are not yet financially secure.

Mistake #2

Purchasing the wrong policy is another common mistake. Life insurance is a complex topic with long-term implications, so it is a good idea to take your time and speak with an insurance agent about all your options. Cost, coverage, duration, tax consequences and other considerations should be addressed for your specific situation. Term, whole life, universal and variable are just a few of the options available, so weigh your options wisely.

Mistake #3

Not purchasing enough insurance can be a problem. It’s easy to underestimate the cost of living when initially purchasing a life insurance policy. In addition to replacing an income or paying down mortgage and other debts, it’s important to add in an inflation-adjusted cost-of-living increase plus extra expenses likely to be incurred in the event of a loss. Everything from yard care and maintenance to child care and tutoring may need to be supplemented in the event of the death of a spouse. Tally up the total cost – plus inflation – for all the services and support provided by the insured person and then use it as your starting place when obtaining a quote.

Nearing Retirement? Don’t Neglect Long-Term Care

More than half the nation’s population will spend time in a long-term care facility at some point in their lives, research shows. Unfortunately, very few people carry long-term care insurance.

Long-term care insurance is perhaps a necessity for the nearly one in five Americans nearing retirement age. To find out if you’d benefit from purchasing long-term care insurance, consider the following:

1. Do you or an immediate family member have a family history of Alzheimer’s disease, stroke or other condition that might make it difficult or even impossible to remain at home?

2. Can you financially afford an average of $50,000 or more for the annual cost of caring for a loved one in a long-term care facility? Experts expect the annual cost of care to rise faster than the rate of inflation and rapidly approach the $75,000 per year limit. By 2030, the average cost is expected to reach $300,000 per year – far beyond the reach of most retirees.

3. Can your children or family members afford the time and cost of providing in-home care, including skilled services for special needs? If not, long-term care insurance provides the protection you need to avoid becoming a financial burden on your loved ones. Remember, nearly one of every five workers will become disabled before retirement age, and more than 50% of people over the age of 65 experience some form of debilitating disease or illness that impedes their ability to perform normal activities of daily living.

Can You Put Annuity Surrender Proceeds Into an IRA?

As the stock markets plummeted in 2008 and 2009, many pre- and post-retirees withdrew all their funds from their annuities.

Many also took significant losses – something they’re still recovering from to this day.

As a result, many people may now want to know if they can deposit any proceeds in excess of the cost of purchasing the annuity into an Individual Retirement Account, known as an IRA.

The answer?

Well, you see, it depends.

And it depends on a lot of things.

Some annuity contributions are made with pre-tax dollars, and others are made with after-tax dollars.

If the annuity consisted of qualified funds, such as an IRA, it can be rolled into an IRA.

On the other hand, if the annuity consisted of non-qualified funds, it cannot be rolled into an IRA.

If the annuity consisted of non-qualified funds, though, there is one small bright spot.

According to the rules, if a non-qualified annuity is surrendered for less than its cost basis, you can use the full amount of the loss to offset ordinary income.

You’d do that with any capital loss, but in this case the loss should not be subject to the $3,000-per-year capital loss limitation.

Of course, the preceding information is just an overview.

It’s best to contact a professional investor.

A professional investor will be able to help you determine if you can roll your annuity surrender proceeds into an IRA.

The legal and tax information contained in this article is merely a summary of our understanding and interpretation of some current provisions of tax law and is not exhaustive.

Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither we nor our representatives may give legal or tax advice.

Annuities and Tax Deferrals: What You Need to Know

For many people, tax deferral is by far the most important benefit of choosing an annuity as a retirement savings vehicle.

Because of that, it’s important that people understand at least the basics of tax deferral.

Following is a brief overview of tax deferrals:

Tax deferral is a means by which the payment of taxes on certain assets can be delayed until some date in the future.

Tax-deferred assets grow untaxed – with interest, dividends and capital gains appreciating – until they are withdrawn.

This permits you to experience potentially higher overall returns, since returns are not reduced by income taxes every year.

Since you probably won’t withdraw the assets until later in life, when you could be in a lower tax bracket, you may also minimize the taxes you have to pay on withdrawals.

That’s also the case with annuities.

Any contributions made on an after-tax basis will be tax-free at distribution time, although the contributions that were made on a pre-tax or tax-deferred basis will be fully taxable at distribution.

The legal and tax information contained in this article is merely a summary of our understanding and interpretation of some current provisions of tax law and is not exhaustive.

Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither we nor our representatives may give legal or tax advice.