May is Disability Awareness Month

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May is Disability Awareness Month!

A recent study by the American Council for Life Insurers indicates that over 50 million households in the United States are without individual disability insurance. This is why every financial/estate plan must address the impact of a long term disability. Especially when you consider that you are four times more likely to suffer a disability than die prior to age 67. Without a plan in place, many families and individuals face severe financial difficulty.

The four most common reasons for a long term disability:

    • 1. Musculoskeletal disorders (29%)
    • 2. Cancer (15%)
    • 3. Pregnancy (9.4%)
    • 4. Mental health issues (9.1%)

The consequences of a long term disability can be alarming. A 2014 study of bankruptcy filings showed the primary causes as medical bills, lost job and illness, comprising over 60% of the filings.

Workers’ compensation and Social Security do not provide a significant benefit. In 2016, only 1% of American workers missed work because of a work-related injury or illness. Also, from 2006 through 2015, only 34% of claims submitted to Social Security claims approved. And the average social security benefit was $1,197/month.

Lastly, many are covered by a group disability policy through work. This is a valuable benefit but the benefit is taxable and most with higher incomes are not adequately covered. If you or someone you know is concerned about their disability program, please contact us for a review.

May is Disability Awareness Month – Become aware of what you have.

Best regards,
Greenberg, Wexler & Eig, LLC

Freedman Risk Management Joins Greenberg, Wexler & Eig as an Affiliate Partner

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Greenberg, Wexler & Eig would like to welcome their new affiliate partner, Mitchell Freedman and Freedman Risk Management, LLC. FRM provides an exhaustive array of personal lines insurance and risk management solutions for the affluent household.

Coverages and services provided by FRM include:

  • Homeowners (Domestic, Second Home, International Property)
  • Automobile (private passenger, collectables, motorcycles)
  • Watercraft/Aircraft (yacht, mega-yacht, personal boats, single engine, etc.)
  • Liability (Excess limits available up to $100 million)
  • Valuable Articles (fine art, jewelry, wine, etc.)
  • High Limit Umbrella

Mitch Freedman began his insurance career with Aon Corporation in 1999 in their commercial healthcare practice, providing risk management solutions to large integrated delivery systems and managed care organizations. In 2002, he launched, developed and managed the personal insurance brokerage operation for Aon Private Risk Management in Washington, DC. Starting in 2005, he launched, developed and managed the DC-area operation for NFP P&C Private Client Group (formerly Lane McVicker, LLC).

Since 2012, Mitch has been recognized by Washingtonian magazine as one of the area’s top insurance advisors and by Northern Virginia magazine as one of the areas most trusted risk managers as voted on by industry peers. He has also authored a number of articles on personal risk management over the years on topics such as high-valued home insurance, adequate personal liability insurance, and valuables coverage for wine and other collectibles. Mitch resides in Leesburg, VA with his wife, Audrey, and stepson William. He is an avid golfer, a fan of European football, and a proud supporter of Arsenal Football Club. Mitch is also an active Board Member of Loudoun Junior Golf Association, currently serving as Vice President. We look forward to Mitch joining us and providing exceptional advice and service to our clients.

New Year’s Resolution: Health Changes for better Life Insurance Rates!

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New Year’s Resolution: Health Changes for better Life Insurance Rates!

Eat less, exercise more, and help get yourself the best life insurance rate class possible! Make your new year’s resolution to evaluate your life insurance portfolio and make sure you are paying the lowest possible premiums. If you didn’t get the best rates at the time your policy was issued, you might be able to replace your existing insurance with a policy at a better rate. This could be possible if you’ve had significant health changes. Some examples:

Build: Most companies have strict build charts for height and weight. If you had a life insurance policy issued at Standard rates due your weight, but you have since lost 20, 30 or maybe even more pounds, let us know. This could help you get to the next rate class, or maybe even up multiple classes!

Smoking status: If you are a smoker, your life insurance premiums are typically double what a non-smoker would pay. Once you’ve quit smoking however, it is possible to get your premiums back down. Typically after 3 years of being smoke-free, you can get approved at a Preferred non-smoker rate.

Cholesterol, blood pressure, and other lab readings: Many people deal with high cholesterol, high blood pressure, and other lab values that can sometimes be higher than we’d like (A1C, liver function, glucose levels, etc). With medication control and doctor’s supervision, a person is often able to get these lowered. You might not be able to have the best lab results at the time of application, but if you are willing to get examined again, we could get new labs and shop the case around for you to see if there is room for an improved rate class.

Take some time to figure out if your situation has changed since you last purchased life insurance and we can look into if any premium savings are possible. Please feel free to reach out to us with any questions!

David Wexler Spoke During An AALU Webinar

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Categories: Community Involvement

David Wexler recently appeared on a nationally broadcasted webinar, hosted by the Association of Advanced Life Underwriting (AALU), a national advocacy organization dedicated to serve the needs of life insurance community. During this webinar, David was joined by Mark Teitelbaum, the current chairmen of AALU’s Wealth Transfer Committee and Justin Brown, the Vice President of Legislative Affairs at the AALU. Together, they analyzed the potential effects of tax reform and estate tax repeal on insurance advisors and their clients. In addition, the panel shared their recent experience with clients and others professional advisors about their responses to proposed changes by the new Administration.

Long Term Care Insurance – Get Covered

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November is Long Term Care Awareness month, which makes it a great time to prepare for the future, and for the possibility that one day care might be needed for ourselves or our loved ones. Long Term Care is the care provided to an individual who can no longer perform the activities of daily living by themselves. While it is common for people to think that they’re healthy and won’t need long term care in the future, the reality is that many of us will need some type of care.

Who pays for Long Term Care?

The common misunderstanding is that when you need long term care assistance, the costs will be covered by your health insurance, Medicare, or Medicaid. Health Insurance and Medicare both only cover a very limited portion of a nursing home stay, and with many conditions you’ll have to meet. Less than 5% of nursing home income is derived from Medicare. These two policies also don’t cover any costs for a nursing aide, unless they are providing rehabilitation services. Medicaid will pay for a larger portion of long term care services, but you must meet minimum income eligibility requirements first.

About 70% of people over age 65 can expect to need some form of long term care. Only a long term care insurance policy will pay for services needed for day to day assistance that you’ll need when you are not able to take care of yourself. The benefits can be used for care in your home or care in a facility.

Greenberg, Wexler and Eig, LLC offers several solutions to long term care insurance. Policy types include traditional long term care insurance, hybrid long term care/life insurance policies, and Universal Life insurance policies that include a LTC rider. Please contact us if you would like to further discuss which type of policy would be the best fit for you.

By: Sarah Quinn
#1867-2016

Long Term Care Insurance – The Devil is in the Details

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Categories: Industry Insights

November is Long Term Care Awareness Month and it is a great time to consider solutions for one of the most pressing needs of baby boomers. This group (born between 1946 and 1964) is beginning to retire and are challenged with planning for future health care costs. While Medicare provides most retirees with health insurance, it pays only a fraction (if any) on long term care costs.

Long term care insurance policies are available to address this concern. Over the last 20 years, we have seen much volatility in products and carriers in this market. The “dust has settled” and the three basic product types are: Stand alone, Hybrid and Life Insurance with LTC riders.

Stand-alone products are like term life insurance. You pay your premium each year and if you have a claim, the benefits begin. The main advantage of this approach is the flexibility in design. Disadvantages include premium increases and there is no value if the benefit is never used.

Hybrids products (combination of life insurance and long term care) have become popular as they provide a life insurance benefit and a long term care benefit. They also provide a premium refund feature so there will always be a benefit to the insured or their family.

Life insurance with long-term care riders have also become increasingly popular. For those who have a life insurance need, it is an inexpensive way of providing LTC benefits. And like the Hybrid products, a benefit (either life insurance, LTC or a combination of both) will be paid.

The way LTC riders work in a life insurance policy is that if the insured needs home or nursing home care, the policy allows for an “advance” of the death benefit to be used for the care. These riders do not significantly increase the cost of the policy as the insurance company has to pay the benefit either way.

However, there is a big difference in the riders. Not all long term care riders are created equally. Some are called long term care (LTC) riders and some are called critical illness (CI) riders. What is the difference?

LTC riders are very similar to LTC insurance when it comes to triggering the benefit. If the insured needs assistance with 2 out of 6 activities of daily living (ADL’s) or suffers from cognitive impairment, the benefits begin. If the client gets better, the benefits stop and the unused benefit can be used later. With CI riders, benefits are only payable if the condition is expected to be terminal. This could severely impact the insured and their understanding of their policy. Recently, some companies have removed the “terminal” requirement in order to trigger benefits, so it is very important for the insured to understand what he/she is buying. Another concern with CI riders is the waiver of premium provisions and how they affect the policy after a claim.

Long term care insurance is very complicated, especially when dealing with combination products. At Greenberg, Wexler and Eig, we can educate you on options and assist you through the entire process. This material is provided for informational purposes and should not be construed as a recommendation, legal or tax advice. You should consult with a financial professional before making and decisions.

1795-2016

Estate Planning and Life Insurance

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Categories: Estate Planning

A good estate plan is like a three legged stool. Each leg is constructed and positioned in such a way to give the stool stability and function. The three legs of any estate plan are the dispositional plan, the tax plan and the liquidity plan. This is true irrespective of the size of the estate.

The dispositional plan documents who gets what and when and who makes a decision when you cannot. The tax plan engages strategies and documents that can reduce any estate tax exposure through discounts, appreciation shifting or charitable planning. The liquidity plan directs how resources will be used to provide survivor income to families, finance education for children and grandchildren, pay off debts, finance Federal and State Estate taxes, provide for charitable dispositions, and fund the succession of an interest in a business.

The development of a liquidity plan involves the assessment of the objectives for all of the above, an examination of the resources and techniques that will finance these objectives and then determine any surplus or deficit. If a deficit is discovered, it can be made up with life insurance. The art of using life insurance as part of the liquidity plan is determining the right amount, determining the right duration and determining the right ownership and beneficiary arrangement. Further, if the right ownership and beneficiary arrangements are funded by annual or lifetime gifts and the gifts are insufficient to fund the life insurance needed for the liquidity plan, additional creativity will be warranted to find the resources to fund the fund the liquidity plan.

The hallmark of a good estate plan is the stability it creates for the family and other survivors combined with the resources to accomplish its function. A liquidity plan deficit that is financed with life insurance is often the best resource to create the liquidity needed and balance the estate plan, no matter the size of the estate.

What You Need to Know About Money Market Reform

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MONEY MARKET REFORM IS HERE! WERE YOU READY?

Money Market Reform went into effect on October 14, 2016. Do you know if your plan or your investments are affected?

 

WHAT IS MONEY MARKET REFORM?

Money market funds are open-ended mutual funds that invest in short-term debt securities such as US Treasury bills and commercial paper. They are widely accepted as a “safe investment” and are highly liquid investments. Money market funds seek a stable net asset value (NAV) of $1.00.

Money Market Reform, formally known as Rule 2a-7, is a law created by The Securities and Exchange Commission (SEC). These changes were enacted to protect money market funds from a “run” if there’s another crisis like we saw in 2008.

 

WHAT CHANGES WERE MADE?

The SEC’s amendments address three major topics:

  1. Categorizing money market funds
  2. Requiring a floating Net Asset Value (NAV) for institutional money market funds
  3. Allowing the imposition of liquidity fees and redemption gates in certain circumstances

 

CATEGORIZING MONEY MARKET FUNDS

 The SEC broke down money market funds into three categories.

 

Retail money market funds:

 These are funds with policies reasonably designed to limit its investors solely to “natural persons” or individuals.

 

Institutional money market funds:

 These are funds designed for beneficial owners who are not “natural persons” or individuals, but entities such as corporations, partnerships, governments, or fiduciaries. These funds require high minimum investments.

 

Government money market funds:

 These are funds with 99.5% of its assets invested in cash, US government securities, and/or repurchase agreements that are “collateralized fully” by cash or US government securities.

 

REQUIRING A FLOATING NAV FOR INSTITUTIONAL MONEY MARKET FUNDS

Retail and government money market funds can use the amortized cost method or penny-rounding method when calculating the money market fund NAV.

Non-retail money market funds are now required to use a four-decimal NAV. The non-retail funds will float based on the four decimal NAV.

 

ALLOWING THE IMPOSITION OF LIQUIDITY FEES AND REDEMPTION GATES

Money market funds are now required to maintain 30% of their total assets in weekly liquid assets. This means that 30% of the assets must be in investments that can be converted into cash within five business days.

Liquidity fees are an additional expense when taking money out of the money market fund. There are two reasons why a liquidity fee can be imposed.

  1. If the fund does not meet the 30% mark, the mutual fund board can impose a liquidity fee of up to 2% if it’s in the best interest for the fund.
  2. If weekly liquid assets are less than 10% of the fund’s total assets, an automatic liquidity fee of 1% is imposed, though it can be up to 2% max. The board can lift this at any time and will automatically stop when the fund reaches the mandated 30% mark.

Redemption gates are temporary suspensions on redemptions from the fund. A redemption gate can be triggered if the fund does not meet the 30% mark. There are two limitations to redemption gates:

  1. This gate can only be imposed for the shorter of 10 days or until the weekly liquid asset level returns to at least 30%
  2. Can only be used for up to 10 days during any rolling 90 day period

Redemption gates can be lifted by the mutual fund board at any time.

 

ARE YOU USING MONEY MARKET FUNDS?

If you have not reviewed your plan or your investments for money market funds yet, now is the time to do it. Be aware of the investments on your plan or your portfolio. If you have any questions, be sure to contact the advisor on your retirement plan. If you want to know more about money market reform, contact us!