6 Ways to Protect Yourself From Identity Theft and Fraud

The Bureau of Justice Statistics found that 16.6 million Americans were victims of identity theft in 2012. While the elderly and those for whom English is a second language are often specially targeted by scammers, anyone can become a victim of identity theft. Financial identity theft happens when fraudsters use personal information like a Social Security number, Medicare number, health insurance ID, or even just your name and birthdate to open financial accounts or access services in your name. Unfortunately, despite advanced security measures and credit protection services available to consumers, identity theft can be very expensive. One study found that the average cost of identity theft was $9,650. Here are a few things you can do to protect yourself from becoming a victim:

1. Unless absolutely necessary to complete an application, don’t give out your Social Security number even when it appears on a form. Many scammers target office trash and improperly secured documents for valuable personal information.

2. Never give out personal information in response to an incoming phone call. Scammers have become very adept at “spoofing” calls and your caller ID may show that the call is coming from an official agency. If someone calls you claiming to be from your financial institution, the IRS, or another government agency, ask them for an employee number or case number and call them back on an official number. You should be able to find these numbers online or in your phone book.

3. Never click a link in an email from a bank or financial institution. Always access your financial accounts directly from the known website. If you receive an email saying that your account has been blocked, call your financial institution directly using a public 1-800 number.

4. Unsolicited callers who become aggressive or use threatening language are always scammers. If you receive a threatening call, hang up and report the number. You can report IRS-related fraud to the Tax Fraud Hotline recording at 1-800-829-0433 and identity theft to the Federal Trade Commission at 1-877-ID-THEFT.

5. Never send money via Western Union or prepaid debit card to someone you don’t know. The IRS will never ask you to pay your taxes that way.

6. Check your credit report annually for free at annualcreditreport.com. Check financial statements, doctor’s bills, and insurance statements carefully to make sure that no fraudulent activity has occurred. If you suspect a fraud, contact the relevant company immediately.

1. http://www.bjs.gov/content/pub/pdf/vit12.pdf


4 Financial Lessons For Teenagers

Your child’s teenage years may be your last opportunity to teach valuable financial lessons before he or she heads out into the world. Today’s financial world is complex, and a solid financial base can help young adults adopt good behaviors and avoid costly mistakes like debt, overspending, and failing to save for the future. Here are four lessons that your teen should learn before leaving home:

1. How Credit Cards and Debt Work

Even if your teen doesn’t have a credit card, it’s vital that you teach him or her how credit cards and interest rates work. Understanding the true cost of debt can help him or her avoid taking on too many college loans or amassing loads of high-interest credit card debt.

2. How to Handle a Budget

Whether your teen is working or still receiving an allowance, now is the time to make sure that your child understands how to create and stick to a budget. Developing a written spending plan can be very helpful in teaching your teen to be financially responsible. Help your teen practice budgeting skills by making him or her responsible for personal expenses and giving any allowances on a monthly basis. Above all – avoid the temptation to bail your teen out of trouble when he or she inevitably goes over budget. Let your teen live with mistakes while encouraging him or her to come to you for advice and support.

3. How Compound Growth Works (and How to Leverage it to Build Wealth)

As financial professionals, one of the lessons we repeat over and over to our younger clients is that the younger you start saving, the less you have to save to meet your long-term financial goals. Teach your teen how even small amounts of savings can grow tremendously over time due to the power of compound growth. Help your teen start a savings or investment account to put the lesson into practice.

4. How to Automatically Save Money Each Month

No matter what your income, forcing yourself to save money can be hard. However, saving a portion of your income doesn’t have to be difficult if you’re used to doing it automatically each month. Teach your teen to save for the future by having him or her automatically defer allowance or wages into a savings or investment account each month.

Most high schools have removed personal finance education from the curriculum in favor of other subjects. Today’s teenagers may be among the least financially literate in generations. If you’re concerned about your child’s level of financial literacy, we can help. Contact our office for more information on raising financially savvy kids.

3 Financial Screw-ups You Want to Avoid

It takes most people a lifetime to build significant wealth, but a few mistakes can completely derail your progress. Usually, it’s not just a single bad decision or a few bad calls that hurt; instead, it’s often a pattern of mistakes or mismanagement that, together, can seriously harm your financial prospects. Here are a few of the most common pitfalls that you definitely want to avoid:

Not saving at least 10% of your income (15% would be better)
Too many Americans face the specter of running out of money in retirement. While uncertain markets present challenges, the biggest mistake most people make is failing to save enough while they’re working. When is the last time you increased your salary deferral into your workplace retirement plan? If you’ve never reviewed it, it could be set as low as 3% or even 5%. If your workplace plan offers it, consider auto-escalating your contributions each year so that you don’t even have to think about it. If you’re not putting at least 10% of your income toward short-term savings (like an emergency fund) and retirement, you could come up short later in life.

Letting other priorities derail retirement savings
Most people have many competing financial priorities. Whether you’re contributing to college expenses, supporting adult children at home, prioritizing current spending, or servicing debt, it can be hard to save for retirement. However, as you get closer to retirement, it becomes ever more critical to make sure that your nest egg is on track. We often tell our clients, “there’s no financial aid for retirement,” because we want to emphasize the importance of putting their own long-term financial success first.

Not knowing where your money is going
People who have trouble controlling debt or prioritizing savings usually don’t have a budget. Setting a monthly (or even weekly) budget and tracking your spending allows you to understand exactly where your money goes. It’s very common for otherwise-savvy savers to underestimate the amount of money that goes unaccounted for each month. Even small leaks like impulse purchases or excess financial fees can add up to a flood of lost money.

Terms vs. Whole Universal Life Insurance

Ever wondered about the differences between term and permanent life insurance options? Though every type of life insurance is designed to provide a death benefit, policies can differ in length of coverage, flexibility and timing of premiums, accumulation of cash value, and other factors. While specific details vary by company and policy, there are some basic differences between term, whole, and universal life insurance you should know:

Term Life Insurance

Term life insurance is designed to cover you for a stated number of years, transferring the risk of your death during that period to the insurance company. Term policies do not accumulate cash value and premiums are typically level or fixed for an initial period. Many people choose to purchase term policies to pay off a mortgage or provide for their family in the event of their unexpected death. Because term life insurance doesn’t accrue any value over time, the policy will expire at the end of the term. Generally, term policies have much lower premiums than whole or universal life, though premiums and benefits depend on factors like age, employment, and health status.

Whole Life Insurance

A whole life policy is intended to provide coverage for your entire lifetime – even if you should live to be over 100 years old. During your life, it accrues a cash value at a specified rate and provides a benefit at your death. The obvious advantage of a whole life policy is that it does not expire worth less at the end of a term, and can help you protect and provide for your family at every stage of life. The main drawback is that your policy’s cash value may not accumulate at the same rate as other investment options.

Universal Life Insurance

Universal life, also known as flexible premium or adjustable life insurance, is a variation of whole life insurance. Like whole life, universal life is a permanent policy intended to provide a death benefit at any point in your life and build cash value during your lifetime. The major difference is that universal life policies are eminently flexible: Premiums, cash value, and death benefits can all be scaled up or down (within limits) based on your needs. However, this flexibility also comes with additional risks and you must be mindful to manage your premiums carefully to avoid letting the policy lapse and losing your coverage. Because of the complexity of this type of insurance, we strongly recommend consulting with a qualified insurance expert who understands your overall financial situation before making changes to your policy.

Have You Considered These 4 Expenses in Your Life Insurance Calculations?

If you have life insurance, you probably sat down at some point and calculated how many years of income your family might need or what costs your death might incur for your loved ones. However, rules of thumb like “10 times your annual salary” or “enough to cover final expenses” might be ignoring a lot of important hidden expenses.

  1. Employee BenefitsIn addition to your salary, your employer might offer additional benefits like subsidized health insurance, 401(k) matches, and other perks. What would happen to your family’s health insurance bill if you passed away and that subsidy disappeared? Make sure that you consider all forms of compensation in your life insurance calculations.
  2. The Value of a Non-Working SpouseMany people think that life insurance is just for the family’s breadwinner. However, have you considered all the valuable work a non-working or stay-at-home spouse provides? Childcare, housekeeping, transportation, and other important family tasks can all become very expensive when you have to pay someone else. If you don’t currently have a life insurance policy for your spouse, consider the value of the unpaid work he or she provides and think about how you would pay for it in the event of his or her death.
  3. Estate TaxesIf you have a sizable estate, your beneficiaries may end up owing taxes on what you leave them, including life insurance proceeds. There are a number of strategies that can help shield insurance payouts from taxes and avoid leaving your heirs with a hefty tax bill. If you expect taxes to be an issue for your family, consult a financial professional who can help you understand your options.
  4. Selling CostsIf you’ve accumulated significant assets and don’t have a lot of debts, it might make financial sense to reduce your life insurance coverage. However, it’s very important to consider how easy it will be for your spouse or heirs to access cash after your death. For example, if a significant portion of your net worth is tied up in real estate, your heirs may have to sell the property in order to turn it into cash, potentially incurring fees and other selling costs. If you are including life insurance as part of your estate preparations, consult an insurance expert who can help you understand how issues like liquidity affect the total estate picture.

Traveling Abroad? Check Your Insurance Coverage

Suffering an injury or illness abroad can be extremely expensive, especially if it requires emergency medical care or unplanned evacuation. If you’re planning a cruise or vacation overseas, take some time to think about how you would deal with a sudden medical emergency. Although you can’t cover every contingency, it’s a good idea to check your insurance policies to understand exactly what’s covered while you’re out of the country.

While some countries offer free medical care to foreigners, evacuations or emergency medical services can end up costing thousands of dollars that may come out of your pocket. Statistics about medical costs abroad are hard to find, but one British study found that it cost an insurance company an average of £25,000 (about $39,000) to bring a vacationer home after a medical emergency. Many primary health insurance policies (including Medicare) limit or exclude coverage overseas, making supplementary travel medical insurance worth thinking about.

There are many types of travel insurance that may cover trip cancelation, lost or damaged luggage, medical services, or medical evacuation. Often, your homeowner’s or rental insurance policy will cover lost, stolen, or damaged belongings while you’re away. However, the coverage may be limited or have a high deductible, so read the fine print.

If you’re only going to be away for a few days or will be just a short flight away from home, travel medical insurance or evacuation insurance may not make much sense. However, if you’ll be away for an extended period or have ongoing health concerns, a supplemental policy may be worth considering. It’s always a good idea to check your current coverage to see what medical services are covered overseas before leaving home. Many policies will cover certain medical needs abroad, but only up to a threshold amount, and may not cover a medical evacuation at all.

For most people, travel insurance is supplementary to their existing insurance coverage with the purpose of extending the safety net while traveling. For that reason, it’s critical to understand which policy is “primary” and will kick in first, and which is “secondary” and designed to cover gaps in the coverage. If your current insurance policy doesn’t cover medical services abroad at all, you’ll want to consider purchasing a travel policy that will provide primary coverage.

As with any other type of insurance policy, travel insurance has a wide range of coverage, benefits, exclusions, and limitations, making reading the policy terms absolutely critical. Make sure you understand how the policy treats pre-existing conditions, exclusions relating to high-risk activities or travel in restricted areas, preauthorization for treatment or second opinions, and emergency transport or repatriation. Think carefully about the types of illness or injury you’re most at risk for, and look for a policy that offers the kind of coverage you need in the country you’re visiting.

If you do decide to purchase supplementary travel insurance that covers medical services while abroad, make sure that you keep the policy documents and company contact information close at hand while traveling. If you need medical care while abroad, notify your insurance provider as soon as possible (especially if preauthorization is required for treatment), and document the medical care thoroughly. Many travel insurance policies operate on a reimbursement basis, meaning that you pay out of pocket and send receipts for reimbursement.

Sticking To Your Financial Goals

Everyone has goals that they’d like to reach. Maybe it’s running a marathon, writing a novel, retiring early, or taking control of your finances. Whatever your personal goals are, reaching them takes commitment and forward progress. One of the benefits of working with a professional on your financial goals is that we can help you define your goals and act as your mentor and accountability partner in achieving them.

We recommend the following basic process for setting and achieving goals:

Identify Your Goal and Set a Due Date

What would you like to accomplish? For most people, action toward a goal doesn’t start until they’ve identified the goal and committed to an actual date. Rather than say, “I’d like to retire some day,” say something like, “I’d like to retire at age 63 with $300,000 more in my retirement savings.”

Create a Roadmap and Check In Regularly

Every goal requires intermediate steps and regular actions to achieve success. We help our clients break down their goals into annual (and often monthly) steps. Using the example above, we might add the intermediate steps of “contribute 15% of annual salary to 401(k)” and “put an extra $1,000 into short-term savings each month.” We check in with our clients as often as they need to stay accountable to their goals.

Prepare for Detours

Reaching your financial goals takes a lot of willpower and commitment, and deviations from your goals are normal. If you have a tough time sticking to your action plans, you’re not alone. Research into behavioral economics shows that many people struggle with forgoing short-term benefits (such as shopping and eating out) for long-term goals (like saving for retirement or a big family vacation)1. The trick is to get back on track quickly and not let a small bump derail the whole process.

We’ll leave you with some tips on changing spending behavior to help you reach your financial goals faster:

  1. Curb impulse buys by unsubscribing from marketing lists, staying away from your favorite stores, and instituting a 24-hour cool-down period for any purchase over a set amount.
  2. Reward yourself for completing financial tasks or reaching intermediate goals.
  3. Involve your family members in discussions about which financial choices will benefit you the most in the long run. Will eating out daily give you the most pleasure, or would you rather put that money toward a long-term goal like a family vacation?
  1. http://www.ssa.gov/policy/docs/ssb/v70n4/v70n4p1.html

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Should You Buy Life Insurance for Your Children?

Life insurance for children is a controversial issue. On one hand, most children are born healthy and will live long, productive lives. Since they don’t work and contribute income to your family, one of the primary reasons we buy life insurance – to protect a family from the financial aftermath of death – doesn’t apply. However, here are two reasons why it’s at least worth having a conversation about insuring your children.

Insurance can help your family deal with the aftermath of a child’s death

No one wants to think about the death of a child; it’s a tragic event that no one should ever have to face. However, if the unthinkable occurs, a life insurance policy can give you a financial cushion and help your family cope with:

  • Medical and funeral expenses that can cost thousands of dollars.
  • Time off work for bereavement and family care when paid leave expires, or isn’t available.
  • Counseling for the members of your family as they work through the emotional turmoil of a death.
  • Charitable gifts to memorialize a child and help him or her leave a legacy to others.

If you have substantial savings and don’t expect to need extra financial help, then juvenile life insurance may not be a good bet for your family.

Insurance can help protect your child’s future insurability

Another reason to purchase life insurance for a child is to help him or her hedge against future insurability issues. If your child develops a medical condition or participates in certain high-risk activities later in life, he or she may be unable to find an insurer willing to underwrite a life insurance policy. By purchasing a policy now, you can help ensure that your child has future coverage at a better rate. Once a life insurance policy is in force, adverse medical conditions, family medical histories, and lifestyle factors like adventure sports won’t affect premiums or death benefits.

There are many factors to consider when thinking about life insurance for a child. Since life insurance is a complex topic with many emotional and financial considerations, we recommend that you discuss your personal situation with an insurance expert who can help you understand your options and make a choice that’s right for your needs. For more information about life insurance for any member of your family, please contact our office for a complimentary consultation.

3 Insurance Mistakes You Don’t Want To Make When You Retire

Like many important life transitions, retirement comes with a host of emotional and financial changes. Though you may have a lot of other things on your mind when you retire, you don’t want to make these common mistakes that can cost you money (and peace of mind).

Dropping Your Life Insurance Too Soon

When you make the switch to retirement, you may discover that you need to make some changes to your life insurance strategies. If you have substantial savings and don’t expect to need to support children or other members of your family after your death, you may decide that you don’t need to keep your current life insurance policy. However, don’t drop that policy without asking questions like:

  • Is my family adequately protected in the event of my death?
  • Will I be able to qualify for life insurance again if my situation changes?
  • Is there any residual cash value that will affect my taxes?

Keeping Low Homeowners and Auto Insurance Deductibles

To avoid getting hit with a large bill when the unexpected strikes, many people choose homeowners and auto policies with low deductibles. However, if you have adequate savings, you may be better off raising your deductible by self-insuring and pocketing what you save on premiums. Once you know what your annual premiums would be with lower deductibles, consult an independent insurance expert who can compare rates across multiple insurance companies to help you get the best deal.

Failing To Get An Insurance Checkup

Retirement is a key point in life where getting an insurance checkup is a wise idea. Most people don’t think about insurance very often and changes in variables like age, occupation, marital status, and health situation can all drastically affect the cost of insurance and the types of coverage you’ll need. A qualified insurance expert can help you understand how insurance fits into your overall financial picture and analyze your insurance needs in light of the changes retirement and aging will bring. A comprehensive insurance checkup should help you answer questions like:

  • Do I have the right life insurance strategy for my family’s financial needs?
  • Do I have enough of a financial safety net?
  • Am I carrying enough insurance to protect my financial assets?
  • Am I carrying too much or unnecessary insurance?
  • Have I taken advantage of all discounts or cost saving opportunities?
  • How will I pay for healthcare in retirement?