What is Life Insurance?

http://www.newsadinsurance.com/

            As agents and advisors, our creed is to help society help itself.  We support the American public in the most personal and meaningful ways.  When everyone else is at the door with his or her hands out, we are there to give and aid those who need it most.  There is no doubt that the insurance industry is one of the solutions to America’s economic woes.  Let us not forget this as we go about our everyday business lives.

            Recently I delivered a death claim to a client.  This process was two parts: I met with my client in the comfort of her own home and was able to spend a few minutes with her discussing recent events, and I assured her not to worry, that I would process the claim in a timely manner.  Ten days passed and I received a check in the mail for the death benefit amount and interest.  I reconnected with my client and returned to her home the next day.  When I saw her she seemed to have shrunk, her face swollen with grief and sadness.  She had lost all of her normal happy glow.  She said that she loved her husband and never thought she would need to call me.  When I presented her with the check, all of her emotion came to a head.  I instantly hugged her and offered my sincerest apologies.  Her lips were barely able to move, but the words “thank you” came out.  Every situation in which I present a death claim, no matter if these are clients I have known for my entire career or for just a short time, lives with me every day.

            I am grateful to be able to offer my services to my clients.  An agent that I worked with many years ago told me that when an agent has a death claim, it is his or her “turn to shine”.  What I do is not just sell life insurance, but also provide a lifetime of security.

Thomas Newsad sells life insurance, annuities, long term care, and disability insurance and serves communities such as Middletown, Franklin, Monroe, Lebanon, Trenton, Hamilton, Oxford, Miamisburg, West Carrollton, Springboro, and more.  For more information, call Tom Newsad at 513-424-6871.

Indexed Annuity Magic: How Do They Do It?

http://www.newsadinsurance.com/ 

One of the greatest mysteries in the indexed annuity market is how insurance companies are able to offer market-linked gains on an annuity with a principal protection feature.  Many are familiar with the strong guarantees that fixed annuities offer, but it comes at the cost of low potential for gains.  On the other hand, variable annuities provide unlimited potential for gains, but you must be willing to stomach unlimited risk to achieve it.

The indexed annuity is a unique gem amidst a pebble-lined beach—but how is this awesome feat accomplished?  How can insurance companies offer purchasers market-linked interest without the risks associated with VAs and still afford to offer a guarantee?  It is actually pretty amazing and extraordinarily simple to accomplish.

For comparison, let’s explore what the insurer does with the purchaser’s money when offering fixed annuities.  When an annuity purchaser makes a premium payment into a fixed annuity, the insurance company turns around and uses that premium to purchase bonds.  Generally, the bonds are high quality and they mature at the same time the surrender charges expire on the purchaser’s annuity (i.e. I buy a 10 year surrender charge annuity and the insurance company then purchases 10 year Grade “A” bonds to cover my annuity’s guarantees).  This provides a relatively safe investment vehicle for the insurer to make enough interest off of in order to earn their spread/profit.

So, just for simplicity’s sake, let’s make the assumption that the bonds are paying 4% interest and the insurance company is crediting 3% interest on its fixed annuities.  This means that the difference of 1% is what the insurance company is using to cover its expenses and anything that is left of its spread/profit.  Makes sense, right?

OK, let’s move over and apply this to fixed annuities: instead of putting 100% of the purchaser’s premium payment in bonds, with an indexed annuity, the insurance company puts about 97% of the premium payment in bonds.  (Some companies might use 96%, 98%, etc. of the premium payment; you get the idea!)  The bond covers the indexed annuity’s annual 0% floor, which protects the annuity purchaser from market losses.  It also covers the minimum guaranteed surrender value, providing a return of premium plus interest to the beneficiaries in the event of death, in addition to providing the same benefit to the purchaser if the indexed crediting does not perform.

Now, let’s get to the other 3% of the purchaser’s premium payment, where the real magic happens: this portion of the purchaser’s premium payment is used to purchase options.  It is the options that provide the index-linked interest on indexed annuity contracts. Today, we might take that three cents of our one dollar to the options-seller and ask that he sell us an option for the S&P 500, using an annual point-to-point crediting method with a cap being used to limit the exceeded interest.  The option-seller might tell us that our three cents will buy our customers a cap of 3.85%, which isn’t so hot.  Then again, the S&P 500 is relatively low right now.

However, if the market suddenly goes back up, and the S&P 500 returns to 1500 the next month, that option-seller will likely offer a much higher cap for our three cents.  (After all, if it is already at 1500, what is the likelihood that the S&P 500 will increase tremendously over a one-year period?)

So there you have it, folks.  No tarot cards, no voodoo dolls—just plain and simple math.  And even though the logic behind indexed annuities is rather simple, it is magical nonetheless.

Author: Sheryl Moore, President and CEO of AnnuitySpecs.com and LifeSpecs.com

Taken from Annuity News.com from article posted 9/7/2011

Your Individual Life Insurance Needs

All clients interested in purchasing life insurance through Newsad Insurance Services will receive a free life insurance needs estimator, the DIME (Debt, Income, Mortality, Education).  Through a simple process of collecting data we are able to come up with a current level of life insurance needed.  At Newsad Insurance Services, we believe in custom tailoring your life insurance needs to your individual needs.

Tom Newsad offers life insurance, disability insurance, and fixed equity indexed annuities in Middletown, Trenton, Oxford, Hamilton, Monroe, Liberty Township, Dayton, Moraine, and Miamisburg.  Contact Tom at tom@newsadinsurance.com  or at www.newsadinsurance.com.

The Truth about Fixed Index Annuities: Misperceptions vs. Realities

www.newsadinsurance.com

When it comes to annuity products, fixed index annuities (FIAs) have been around for a relatively short amount of time.  Created in 1996, FIAs are insurance products, not investments, that offer the opportunity for some interest potential while protecting against market risk.  However, as with many new ideas, misperceptions abound.

Misperception #1:  FIAs are too complex to understand.

Reality:  Understanding FIAs involves learning some basic terms because interest earnings are calculated in various ways:

• FIAs offer the ability to earn interest based on changes in an external index, such as the S&P 500, while offering protection from loss of principal.  However, at no time is clients' money invested directly in the market because because they do not actually own any stocks, bonds, index funds, or other investments.
• When a person buys an FIA, the insurance company provides a guaranteed minimum value, and guarantees a minimum rate of interest.
• Insurance companies offer resources to ensure a full understanding of FIAs to help people make educated financial decisions.
• As with other fixed annuity products, FIAs offer additional benefits including tax deferral, a guaranteed minimum value, a death benefit, and the option for guaranteed lifetime income.

Misperception #2:  FIAs have high fees.

Reality:  Like many financial products, FIAs carry some fees.  The insurance company uses these fees to help support its guarantees and provide valuable benefits including:

• The potential for interest based on changes in an index.  FIAs provide purchasers with the opportunity to benefit from a portion of market index increases without directly participating in the market.
• Protection from loss of principal if the market index declines.
• A guaranteed minimum value, credited with interest at a guaranteed rate.
• Tax deferral.  Taxes are not paid on interest earned on an FIA until the money is withdrawn.
• Lifetime income option.  Like most annuities, FIAs can be converted into a stream of guaranteed lifetime income.

Misperception #3:  FIAs tie up your money for years.

Reality:  Many of today's FIAs have surrender periods of less than ten years.

• Some of today's FIAs have surrender periods as short as five years.
• Most annuities give you access to at least a portion of your money, such as 10%, after the first year with no surrender charges or other contract penalties.
• Many FIAs offer multiple ways to access funds without penalties..
• Features, such as penalty-free withdrawals, loans, nursing home provisions, and full accumulation value paid to beneficiaries at death before annuity payments begin, are now common.

Misperception #4:  FIA values must be annuitized.

Reality:  Most FIAs offer multiple ways to access accumulated values without taking annuitization.

• While some contracts have certain values that may be available only through annuitization, most current product designs allow for lump-sum access after the surrender charge period.  Many offer the option (either built into the contract or available as an optional rider with an additional cost) for a guaranteed lifetime withdrawal stream.

Misperception #5:  If you die, the insurance company keeps all of your money.

Reality:  FIAs let you choose a beneficiary.

• Your beneficiary will be entitled to receive your contract's death benefit if you die before you start taking annuity payments, or if annuity payments have been initiated, to receive any remaining guaranteed payments under certain annuity options, in lieu of a death benefit.
• The exact amount the beneficiary receives will depend on the terms of the contract, but most current product designs provide a death benefit equal to the accumulation value, which reflects the interest credited to the annuity as well as any previous withdrawals or amounts deducted from the annuity.

An FIA may be a good solution.

The reality is,  with the volatility of the financial markets in recent years-combined with the limited availability of retirement income sources such as pensions-Americans have a greater responsibility to prepare for their future.

FIAs can be a great addition to an overall retirement income plan, but they're not right for everyone.  Purchasing an annuity is an important decision-and one that should be made only after consulting with a financial professional.

-Information published by Allianz Life Insurance Company of North America, June 2011

Seven Wonders of Life Insurance

Seven Wonders of Life Insurance
Your clients can address their financial problems with these seven life insurance solutions.
Here are some disturbing facts from LIMRA about U.S. life insurance ownership and the attitudes of consumers toward our products.
7 Life Insurance Facts

1. LIMRA’s 2010 Life Insurance Ownership Study found that 30% of U.S. households (35 million) have no life insurance protection.

2. In 2009, insurance companies issued 9.4 million individual life insurance policies in the U.S.—about one million fewer policies than they did in 2004.

3. About seven in ten middle-market households agree that life insurance is the best way to protect against the premature death of a primary wage earner.

4. The two top reasons Americans have life insurance are to cover burial and final expenses and to help replace the income of primary wage earners.

5. One in four households plans to buy life insurance for themselves or another household member in the next 12 months, but many are unlikely to follow through with their plans.

6. Twenty-four percent of households with children who are under the age of 18 want to speak with a financial professional about their life insurance needs, but they may not proactively initiate contact with an insurance producer or with a life insurance company.

7. About one in four middle-market households (those with yearly incomes of $35,000 to $99,999) admit they don’t know how to obtain or reach their financial goals. But only 18 percent of them want to speak with a financial professional about life insurance.
These are the problems that we face. Here are the seven solutions:

1. Life insurance buys time: it allows loved ones to focus on their grief by helping to pay for the funeral and other costs.

2. It provides a fresh start: it lets loved ones start with a clean slate by helping to pay off credit card bills, outstanding loans, and even the mortgage.

3. It generates income: it helps replace lost income for years to come so that surviving family members can continue to pay for life’s necessities.

4. It offers flexibility: it gives a surviving spouse the chance to take time off from work or switch to a job that offers a more flexible work schedule.

5. It creates opportunities: it can provide funding to start a business, or pay for schooling so that surviving family members can train for new careers.

6. It funds the future: it offers a way to fund longer-range goals like a college education for the kids or a secure retirement for a surviving spouse.

7. It leaves a legacy: it gives parents the change to leave future generations with the legacy of long-term financial security.
Taking the first step
Problems and solutions go hand in hand, but if we want to use these solutions to help our clients and prospects, we must first start with digital marketing. This means taking your digit and using it to push the buttons on the telephone, because everything starts with a call to a prospect.
September is Life Insurance Awareness Month. Use the resources from the LIFE Foundation to reach out to your clients and prospects to educate and motivate them in their life insurance buying decisions. Go to LIFE’s website at www.lifehappens.org to learn what is available to you and your clients.
-article by Marvin Feldman, CLU, ChFC, RFC
-article taken from NAIFA’s Advisor Today July/August 2011 publication

http://www.newsadinsurance.com/

No More Excuses

Don’t let these five excuses stop you from getting the life insurance you need!


1. “It’s too expensive.” (Answer: not having adequate coverage could be more costly to your family.)

2. “I haven’t gotten around to it.” (Answer: there are no guarantees in life, so don’t procrastinate!)

3. “I prefer to put my money elsewhere.” (Answer: this might work if you are sure you’re going to live a long life…..)

4. “I worry about making the wrong decisions.” (Answer: a qualified insurance professional can answer all of your questions and guide through the buying process.)

5. “I have life insurance through my job.” (Answer: employer-provided coverage is a nice benefit to have but it often is not enough to cover all of your family’s needs and may end if you leave your job early.)

-taken from Real Life Stories, Life Foundation, Million Dollar Round Table Atlanta 2011

Insurance Agent in Trade Association

Tom Newsad has been accepted to the Million Dollar Round Table, an association of life insurance and financial services professionals.

He owns Newsad Insurance Services, 3121 Central Avenue, Middletown.

The Million Dollar Round Table is an international, independent association of more than 31,500 members, or less than one percent of life insurance and financial services professionals in 80 countries and territories, according to its website. To be a member, one must pay to apply, according to the organization.

According to Newsad, he will go to the Million Dollar Round Table’s meeting June 5 to June 8 in Atlanta, Georgia.
-staff report
Hamilton Journal News, 6/1/11
Middletown Journal, 6/1/11