Get an Early Start on Retirement

Think you can’t afford to save in your 401(k) when you make $50,000 or less?  You can’t afford not to.

Whether or not you’ve just thrown your graduation cap in the air or you’ve been building a career for a few years now, you’ve probably had more pressing financial concerns than saving for retirement.  Like how you’ll make the rent and also eat.  Or whether you’ll ever get out from under the crush or your student loans.  No wonder that a recent Wells Fargo survey found that fewer than half of millennials ages 22 to 32 were socking away cash for retirement—and that nearly 90% of those who weren’t said lack of money was the reason.

Waiting until you’re more secure financially, though, will cost you plenty.  Contribute steadily to your company savings plan starting in your twenties, and you have a good shot at being a millionaire by the time you retire.  Hold off, and that seven-figure stash gets more elusive.  How can you swing it?  These tips will help.

Get Some Perspective

Eight in ten of the nonsavers in the Wells Fargo study said they needed to pay down debt first.  A worthy goal, but one you should pursue simultaneously with, not ahead of, saving for retirement.  For one thing, most employers kick in $0.50 for every dollar you put in, up to the first 6% of your salary.  That’s an automatic minimum of 50% return versus, say, a 6.8% return whey you pay down student loans at that interest rate.  Plus, as Wharton professor Olivia Mitchell notes, “The money you put into a 401(k) or IRA benefits from a lifetime of tax-free compounding.”  That is, you not only earn money on your investment, but your earnings earn money.  The sooner you start, the greater the magnifying effect.  The bite from your paycheck may also be more manageable than you think, since you contribute with pre-tax dollars.  The after-tax cost of saving $3,000 a year, or 6% of a $50,000 salary: just $43.00 per week.

Free Up Cash

To come up with that scratch, eat a brown-bag lunch a couple of times a week, and drink the office swill instead of caramel macchiatos.  Opting for income-based repayment of your federal student loans instead of your standard plan can also help—if you make $50,000 and owe $30,000 you’d reduce payments by $68 a month, says financial aid advisor Kal Chany of Campus Consultants.  Sure, that will extend the life of your loan, but it’s worth it if you put the cash in your 401(k) and get an employer match.

Take Baby Steps

Start contributing a modest amount—say, 3% of your salary—then bump up by a percentage point a year, until you’re up to the recommended savings rate of 10%.  Time the hikes to your annual raise, and you won’t even feel the pinch.  Or, if your employer offers this feature, elect automatic annual increases.  Research shows that workers who use this set-it-and-forget-it approach end up with substantially bigger balances.

Article by Zain Asher in the September, 2013 issue of Money Magazine.

Tom Newsad has been building relationships in the Middletown area for over 20 years.  Newsad Insurance Services offers life, health, disability and long term care insurance as well as fixed and fixed index annuity products.  Tom serves clients in Butler, Hamilton, Montgomery, Preble, Miami, and Warren counties and beyond.

What is Life Insurance?

            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 or check out www.newsadinsurance.com

Executive Bonus Plans: Rewarding Employee Performance

Executive Bonus Plans: Rewarding Employee Performance

Rewarding employee performance strengthens the stability of a business and reduces employee turnover among the ranks of valuable employees.  Losing an important employee to a competitor can disrupt current and future business profitability.

Privately-held businesses entities have limited options when designing compensation packages for their employees.  Many small companies are unwilling to establish qualified retirement plans because of the high cost of the plans and because they have to include all eligible employees.

Nonqualified deferred compensation plans are an option but participation is restricted to certain highly paid management employees.  Having benefits in addition to normal compensation is a proven method for improving employee morale and job satisfaction and thereby reducing costly employee turnover.

An Executive Bonus Plan (also known as a Section 162 plan after the section of the Internal Revenue Code that permits an employee to deduct compensation paid to employees) offers the opportunity to reward any employee.  It could be a one-off bonus for exceptional work in any year or, more commonly, an on-going arrangement to provide additional compensation annually.  To enhance the future value to the employee and the employee’s family, the payment is usually paid as the premium for a cash value life insurance or annuity contract owned by the employee.

Attaching conditions, such as job performance or continued employment, to the right to continue receiving this additional compensation increases the attractiveness of such a plan to the employer and further increases the likelihood that the employee will remain with the company. 

The employee is responsible for payment of income tax on the bonus paid by the employer.  In some cases, the employer will pay an additional amount to cover the associated income tax liability in which case the plan is known as a “double bonus” plan.

As long as the bonus represents “reasonable compensation”, the business can deduct the bonus used to pay the life insurance policy premium.  The employee owns the life insurance policy and names his or her beneficiary.

An employer can place certain restrictions on the policy as an incentive to the insured employee to remain with the company.  One such restriction can be limiting access to policy cash values by the employee for a selected period of time, such as the employee’s expected date of retirement.

Additional Considerations

Employers should seek legal counsel regarding creating a formal agreement between the employer and the employee governing the Executive Bonus Plan.  Any corporate records notation or agreement should spell out who will participate in the executive bonus program, why such employee or employees were selected for participation, and the nature of the benefit these employees will receive.  Any restrictions on an employee’s rights to access insurance policy cash value, or any “golden handcuffs” arrangement, should be spelled out in the written agreement between employer and employee.

Actual restrictions on the policy itself, such as limiting the employee’s access to cash values, can be enforced using a policy endorsement filed with the insurance company. The endorsement should indicate the time period during which policy restrictions will remain in effect, and list the conditions for removal of any restrictions on the employee’s access to the policy.

The purposes of a permanent cash value life insurance Executive Bonus Plan include growing funds on a tax-deferred basis to be made fully available to the employee for supplemental income in retirement.

From an employee’s perspective there are two concerns with this type of arrangement.  If this is not a “double bonus” plan, the employee may be concerned about having the funds to pay the income tax liability.  Also the employee may be concerned about the viability of the life insurance contract if the employer does not pay the bonus each year.  To address some of these concerns, the employer and the employee could agree to establish the plan for a limited period and make payments in an amount sufficient to sustain the policy after the payment period.

With a properly structured executive bonus plan, both the employer and the employee win.  The employer benefits from greater employee loyalty and lower staff turnover; the employee benefits from expanded compensation options.

Article written by Columbus Life appeared in Columbus Life Advanced Market Insights October 2011 edition.

Tom Newsad has been building relationships for over twenty years in his community.  Newsad Insurance Services offers life insurance, fixed index annuities, health insurance, and disability and long term care insurance.  For more info see www.newsadinsurance.com . Tom serves clients in the Butler, Hamilton, Montgomery, Warren, Miami, and Preble county areas and beyond.

Low Interest Rates Raise Term Life Prices 

Term life is becoming costlier and a bit harder to find.  Following a decade in which prices fell to all-time lows, premiums for new term policies last year rose on an average of 3%, according to Tom Newsad of Newsad Insurance Services.  Newsad forecasts more increases for the coming year.  The culprit?  Sickly yields on bonds in which insurers invest most of customers’ premiums.  Hit hardest are policies offering longer term plans such as those for twenty and thirty years.  Term rates are up 5% on those carriers offering those rates.  Shopping your rates with an independent agency such as Newsad Insurance Services will give you the best chance to shop rates across the board.  One should only consider buying policies with A rated companies or better.

Tom Newsad offers insurance and financial services in Middletown, Monroe, Franklin, Trenton, Hamilton, and West Chester, Ohio.  See www.newsadinsurance.com for more information or contact Tom directly at tom@newsadinsurance.com .

Annuities

Annuities

In a recent Gallup Poll, people who had been asked about annuities believed:

• Annuities have a competitive rate of return
• Annuities provide a long term savings plan
• Annuities are important sources of retirement planning
• Annuities can ensure that a surviving spouse has a continuing income
• Annuities provide payout  flexibility
• Annuities offer tax deferral
• Multiple beneficiaries can be named on annuities

Annuities can only be purchased through life insurance companies. Prior to purchasing an annuity with a life insurance company it is important to check the company’s ratings.

Annuities purchased through Newsad Insurance Services will give you the peace of mind of knowing that you are investing in a safe plan. At Newsad Insurance Services we believe in knowledge, trust, and service. Let us help you prepare for the future!

Tom Newsad has been building relationships for over 20 years and is based in Middletown, Ohio.  Newsad Insurance Services offers equity indexed annuities as well as life, health, disability, and long term care insurance and serves Hamilton, Butler, Warren, Montgomery, Clermont, and Preble Counties and beyond.

Life Insurance Begins at Age Fifty

Life Insurance Begins at Age Fifty

            If your term life insurance policy is ending but your needs continue, consider the cash value alternative of permanent life insurance.  One way to continue your life insurance is simply to renew your term protection; however, if your health has changed, you may be limited on the type of policy you can buy.  A permanent life insurance policy, or whole life policy as some call it, may provide a steady investment.  In contrast, many people believe whole life insurance as an investment is controversial, but that is because it takes many years for a policy to show value.  The first years’ premium goes largely toward commission and other expenses, so your cash value will lag the amount paid in premiums in the early years.  It typically takes eight to ten years for your cash value to exceed the premiums you pay.  If you carry on, however, the results improve—sometimes dramatically.  This is a long term proposition.  Do not buy it if you cannot keep it.  From 1991 to the start of 2011, according to Blase Research (a life insurance data provider from Easton, PA), annualized cash value returns for representatives from major companies such as Northwestern Mutual and New York Life in private range from 2.62% to 4.44%.  This amount is tax deferred and includes the part of your premiums that go to pay for death protection and company expenses.  It is also a good idea to see whether you can convert your term policy to permanent insurance without changing insurers and without a new physical exam, especially if you have developed medical conditions that were not present when you purchased the life insurance originally.  Clearly earnings on life insurance policies will not keep up with stocks over a lifetime and certainly not with an extended bull market.  This is why just about every financial advisor, including well-trained life insurance agents, emphasize that life insurance is not meant to be your primary investment.  Tom Newsad advises everyone to have a comfortable emergency reserve savings or tax deferred investment.  Remember that permanent or whole life insurance has a few strong suits, the first of which is safety.  With the exception of AIG, life insurers survived the credit crisis and the recession in excellent financial condition.  The next strong suit mentioned is that falling costs, competition, and longer life expectancies are driving the cost of all life insurance policies down, including those for people aged fifty and older.

            Permanent life insurance also appeals to risk-adverse people who do not have time to recover investment losses in the event of another financial crash.  Another form of whole life or permanent life insurance protection is a type of whole life policy called limited pay.  You may pay higher premiums for fewer years, but it is an option that has become popular among pre-retirees who want to time the end of their premium obligations with their retirement date.  Cost could range perhaps twice as much per year versus regular premiums paid over one’s lifetime, but by putting more into the pot earlier cash value also compounds quicker.

            Cash value life insurance can also be a good portfolio diversifier.  That is because a whole life policy is unconnected to the securities market.  You can think of it as cash or bond allocation in your overall investment nest that allows you to become more aggressive with stocks, commodities, or real estate in your IRA and 401(k) or taxable brokerage accounts.  Cash value life insurance is also one alternative to home equity line of credit or other sources of borrowed money.  That is because the money you usually borrow from your whole life insurance policy is not taxed (remember, whole life insurance policies are the only vehicle that you can borrow money out of and not have to pay taxes on).  A policy loan is instant credit.  You can borrow up to your total premiums paid with no questions asked, simply by sending a fax or sending the insurance company a check at the office of Newsad Insurance Services.  A simple phone call or email starts this process for you.  Besides speed, there are two huge advantages to CDs and conventional loans, and that is that nobody runs a credit check or ties the interest rate to your credit score, and that you do not have to repay the money on any schedule.  There is also no penalty if you want to make a withdrawal at or before age 59 ½ because it is not a taxable event like a withdrawal from an IRA or a 401(k).  Policy loans are not a totally free ride, however.  They tend to acutely accumulate interest at 5% to 8% in your unpaid principal and accrued interest is deducted from the death benefit paid to your survivors, or from the cash value taken away if you discontinue the policy. 

            Ultimately, what is most important here is that the money accumulating in your policy is your money.  You also will not have to beg a banker to approve a loan after you have retired and have a lower income.

Tom Newsad has been building relationships in the Middletown, Ohio area since 1994.  Newsad Insurance Services offers life, health, disability, and long term care insurance as well as fixed indexed annuities and serves clients in Middletown, Franklin, Trenton, Liberty Township, Hamilton, Cincinnati, Dayton, and beyond.  Click on www.newsadinsurance.com or call 513-424-6871 for more information

Objectives of Estate Planning

Objectives of Estate Planning

The property found in most estates generally falls into one of five categories: personal property, real estate, business interest, life insurance, and government benefits. Unfortunately, at death there is often a great deal of conflict due to different ways in which assets pass to the family and other heirs. These conflicts, together with a generally slow probate process, can easily result in a lengthy delay of the estate settlement process, as long as one to two years or more in some cases. Considerable expenses may also be incurred if there is a delay in the estate settlement process. However, a custom tailored life insurance strategy can ease the handling of these important financial matters.

Consult an independent life insurance expert to discuss further.

-Tom Newsad

Tom Newsad of Newsad Insurance Services does estate planning and more in Middletown, Hamilton, Trenton, Franklin, Carlisle, Monroe and surrounding areas. Contact Tom at www.newsadinsurance.com or email him at tom@newsadinsurance.com for more information.

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

Tom Newsad and Elaine Dominy of Newsad Insurance Services offer life, health, disability, and long term care insurance and equity indexed annuities to the Trenton, Oxford, Middletown, Monroe, Liberty, West Chester, Miamisburg, and Centerville areas and beyond

Insure Your Love

Insure Your Love

Many people work to create a legacy of love by protecting and providing for our families, businesses, or favorite charities.  People usually choose to buy life insurance because they “love” someone or want to protect someone that they love financially.  Other products that can be used in this spectrum of financial services are annuities, which are also sold by life insurance companies.  An annuity is a flexible retirement planning tool that allows your retirement savings to grow on an income tax-deferred basis option that best meets your needs for income when you retire.  Many people choose to purchase annuities because an annuity allows savings to grow without any current tax, since earnings on an annuity are not taxed until payout begins.  Many others say they like annuities because an annuity provides a steady stream of income they cannot outlive.

At Newsad Insurance Services, we believe in custom tailoring life insurance products around the needs of our clients.  Tom Newsad believes in “customer relationships built on knowledge, trust, service, and love”.  Not until one sits down with one’s clients and listens to their concerns can one help them fill their needs.  As Tom believes, “your clients look at you and see what they want to see…their hope!”

Tom Newsad has been selling financial services products including life insurance and equity indexed annuities for over 20 years.  Newsad Insurance Services provides service to the Dayton, Middletown, Franklin, Hamilton, and Oxford areas and beyond.

Avoiding Gaps in Life Insurance Coverage

Avoiding Gaps in Life Insurance Coverage

In a recent meeting with a client it was discussed that most people are not aware of what happens to their life insurance benefits when they retire. Most group term policies, which are generally low cost term life insurance protection, simply end when employment ends. In some cases you may “convert” your existing insurance into a permanent style policy. If this is not an option, the coverage ends leaving a gap in life insurance protection.

You should always consult with a life insurance agent for help reviewing the insurance jargon in your group policy. In some group policy cases term benefits decrease in face amount, declining vastly after age 70. Some larger companies have even eliminated coverage for spouses’ life insurance policies. For these reasons it is very important to review your life insurance and retirement plan with a financial advisor, especially when you decide to retire or separate from employment. Purchasing an individual life insurance policy can give you peace of mind and fill in gaps left by your group insurance policy.

At Newsad Insurance Services we believe in knowledge, trust, and service for each of my clients to ensure that each client is prepared for the present and the future.

Tom Newsad and Elaine Dominy of Newsad Insurance Services serve Middletown, Monroe, Franklin, Trenton, Oxford, Dayton, and surrounding areas.

Where to Turn for Help

Where to Turn for Help

About one in four middle-market households admit they do not know how to obtain or reach their financial goals, including buying life insurance.  One of the biggest obstacles is lack of information.  At Newsad Insurance Services, product education is vital to helping clients find the best product for their needs.  Almost eight in ten households do not have a personal life insurance agent or broker to turn to when making important financial decisions.  Most individual life insurance policies are sold by insurance agents, as sixty percent of baby boomers prefer to buy their policies from agents in a face-to-face meeting.  In newer trends, younger generations often gather information about life insurance from the internet and from their place of business.  Whether one buys from an agent, has coverage through an employer, or makes an online purchase, the most important thing is to make sure life insurance coverage is place to protect your needs and the needs of your loved ones.

-Article from 2010 LIMRA report

 http://www.limra.com/newscenter/newsarchive/archivedetails.aspx?prid=145

Newsad Insurance Services has over 20 years of life insurance experience.  Tom Newsad and Elaine Dominy serve Middletown, Franklin, Monroe, Hamilton, Trenton, South Dayton, and surrounding areas.

Save Money...Plan Ahead

Save Money…Plan Ahead

I was recently thinking about the amount of planning and preparation that people put into a vacation or a wedding or purchasing a car or a home in order to make sure that they are getting what they want at an affordable price. Yet, many people do not make any plans for one of the most expensive purchases that they will ever make…their funeral and final expenses. Unless you plan in advance and shop around you are most likely going to have to pay top dollar. The average funeral in the United States costs about $6,500 according to the National Funeral Directors Association. Although the cost of final expenses can vary from state to state, the total sum can easily reach $10,000 according to the AARP.

3 Major topics need to be discussed when considering funeral and final expense funding:

           

1.)    Plan ahead

Talk about your plans with your family members. Be sure to discuss your wishes and find out what is important to them as well

2.)    Know your rights

The Federal Trade Commission (FTC) Funeral Rule requires that mortuaries present a price list of services, like a shoppers’ guide, to consumers before their death

3.)    Shop around

Make sure that you are not spending too much money. It is a good idea to purchase life insurance to fund this important expense

While families should make decisions about funeral arrangements in advance, they should NOT pay for them in advance. Over time prices may go up and businesses may close or change ownership or a person could change their mind about their desired arrangements.

People who favor a traditional funeral and burial can save hundreds or even thousands of dollars by taking these simple steps. Many people say that they have found great meaning and peace in being able to carry out thoughtful funeral plans that honored their family members in an appropriate and affordable way. Purchasing life insurance is a great way to make sure that you will have the funds to cover your funeral and final expense plans. Be sure to meet with your financial representative to discuss this and all of your important financial needs.

-Tom Newsad

Tom Newsad and Elaine Dominy from Newsad Insurance Services can meet with you. Tom and Elaine serve Middletown, Franklin, Trenton, Monroe, Liberty Township, Hamilton, Dayton, and Oxford.

Reaching Retirement Age

Reaching Retirement Age

It is a good idea to review your portfolio with your financial services provider more frequently as you reach retirement age.  Being sure not to draw out more than 6-8% per year in retirement savings can be beneficial in preventing you from spending down your account too quickly.  You may also want to consider moving your risky investments to more secure or fixed investments.  This could help prevent you from losing money in market downturns.  It is also important to have adequate life insurance to offset any losses in your portfolio and to provide your spouse with lost income.


Tom Newsad is a life insurance and financial services provider serving Butler, Warren, Hamilton, and Montgomery counties in Ohio. 

Smokers vs. Non-Smokers

Remember, life insurance companies base their issuing of life insurance on age, sex, and health status. Smoking has been proven to increase your health risk as you age and to make it more expensive to purchase life insurance. For these reasons, finding an independent agent to sell you life insurance is even more important for smokers. Some companies do specialize in writing life insurance for smokers at lower rates, so be sure to always shop around for the lowest rates when buying life insurance on smokers and non-smokers. When agents are captive to their carriers they may not always find the best rates for their clients. For this reason, independent agents offer the best avenue for “shopping."

- Tom Newsad