How Can I Upgrade My Insurance — Tax-Free? by Joe Swanson, CRPS of www.joeswanson.com
Responding to the changing needs of consumers, the life insurance industry has developed some exciting alternatives. These alternatives go much further in satisfying a variety of financial needs and objectives than traditional types of insurance and annuities.
Advancements
Modern contracts offer much more financial flexibility than traditional alternatives. For example, universal life and variable universal life insurance policies allow you to adjust premiums and death benefits to suit your financial needs.
Modern contracts can also provide you with much more financial control. While traditional vehicles like whole life insurance and fixed annuities provide returns that are determined by the insurance company, newer alternatives enable you to make the choices that will determine your returns. For example, variable annuities and variable universal life insurance allow you to allocate your premiums among a variety of investment subaccounts. These subaccounts range from conservative choices, such as fixed-interest and money market portfolios, to more aggressive, growth-oriented portfolios. Your returns will be based on the performance of these subaccounts.
Withdrawals made from a variable annuity prior to age 591/2 may be subject to a 10 percent penalty. Generally, a surrender penalty will apply if the withdrawal is made during the early years of the policy. Variable annuity subaccounts fluctuate with changes in market conditions. When surrendered, your principal may be worth more or less than the original amount invested.
There are many differences between variable- and fixed-insurance products. Variable universal life insurance offers several investment subaccounts that invest in a portfolio of securities whose principal and rate of return fluctuate. Also, there are additional fees and charges associated with a variable universal life insurance policy that are not found in a whole life policy, such as management fees. Whole life insurance offers a fixed account, generally guaranteed by the issuing insurance company.
A Dilemma
So what do you do if you’ve accumulated a substantial amount within your old life insurance policy or annuity? If you cash out your existing contracts and trade up to one that better suits your financial needs, you will have to pay income taxes on what you’ve saved.
One solution to this problem is known as the “1035 exchange,” found in Internal Revenue Code Section 1035. This provision allows you to exchange an existing insurance or annuity contract for a newer contract without having to pay taxes on the accumulation in your old contract. This way, you gain new opportunities for flexibility and tax-deferred accumulation without paying taxes on what you’ve already built up.
The rules governing 1035 exchanges are complex, and you may incur surrender charges from your “old” policy. In addition, you may be subject to new sales and surrender charges for the new policy. You’ll need the help of a financial professional. But it may be worth it. If you want to take advantage of today’s modern alternatives, consider a 1035 exchange.
Joe Swanson Minnesota Financial Planner
© 2006 Emerald Publications
Joe Swanson, CRPS
• Principal Financial Group,
• 11100 Wayzata Blvd, Suite 161
• Minnetonka, MN
• 55305
• Phone: (952) 277-4259 Toll Free: 800 277-7095
• Fax: (952) 277-4301
• www.joeswanson.com
• swanson.joe@principal.com
Sunday, December 31, 2006
Saturday, December 30, 2006
Minnesota Financial Planning Advisor www.joeswanson.com
Retirement Overconfidence?
by Joe Swanson
How confident are you that your retirement savings will last the duration?
In a 2006 survey, even though 73 percent of retirees indicated that they think they will have enough money for a comfortable retirement, 42 percent admitted that they are more concerned about their financial future than they were when they first retired.1
Many workers have unrealistic expectations about how much income they will need to maintain a comfortable lifestyle in retirement. These survey results illustrate why some people may be overconfident about their retirement preparations.
Nearly 70 percent of workers expect to continue working in their retirement years to supplement their income. But it's possible that some people might have to stop working earlier than they expected as a result of downsizing, disability, or other unforeseen events. Only 27 percent of the retirees surveyed said they have actually worked for pay in retirement.2
Only 42 percent of workers have tried to calculate how much money they will need in order to retire comfortably. About 73 percent of workers who have not done a calculation simply guess.3
Sixty percent of retirees do not have employer-sponsored health care. Of those who do, 27 percent have to pay for either part or all of the insurance coverage that their employers offer.4
Two-thirds of retirees believe they will live longer than expected, and half of retirees think that either they or their spouse will need long-term care or assisted living.5
Living on a fixed income becomes more difficult when inflation is on the rise. Seventy percent of retirees believe it is likely that inflation will rise by 7 percent or more a year during their retirement.6
Your retirement, like any other time in your life, may be marked by financial ups and downs. A well-thought-out strategy can help you adjust to unexpected bumps and stay on the path toward a comfortable retirement.
1–6) 2006 Retirement Confidence Survey, Employee Benefit Research Institute
Joe Swanson, Financial Advisor Minnesota CRPS 401k www.joeswanson.com
• Principal Financial Group,
• 11100 Wayzata Blvd, Suite 161
• Minnetonka, MN
• 55305
•
• Fax: (952) 277-4301 Phone: (952) 277-4259 Toll Free: 800 277-7095
• ww.joeeswanson.com
• swanson.joe@principal.com
PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of these web-sites provided here, you are leaving this site. Princor makes no representation as to the completeness or accuracy of information provided at these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising
Joe Swanson is licensed in Minnesota Wisconsin Oregon and Ohio (additional states can be made available) to offer insurance products, and life insurance (including variable life), annuities (including variable annuities), securities and if applicable - investment advice. This site is not a solicitation of interest in any of these products in any other state. IMPORTANT CONSUMER INFORMATION: Joe Swanson may only transact business in a particular state after licensure or satisfying qualifications requirements of that state, or only if (s)he is excluded or exempted from the state's registration requirements. Follow-up, individualized responses to consumers in a particular state by Joe Swanson that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, shall not be made without first complying with the state's requirements, or pursuant to an applicable state exemption or exclusion. For information concerning the licensure status or disciplinary history of a broker-dealer, investment advisor, BD agent or IA representative or any financial institution (s)he represents, contact your state securities law administrator. Principal Life Insurance Company, Des Moines, IA 50392. Principal Life maintains certificates of authority to transact insurance in all 50 states. Its NAIC identification number is 61271.
http://www.joeswanson.com/location.cfm
by Joe Swanson
How confident are you that your retirement savings will last the duration?
In a 2006 survey, even though 73 percent of retirees indicated that they think they will have enough money for a comfortable retirement, 42 percent admitted that they are more concerned about their financial future than they were when they first retired.1
Many workers have unrealistic expectations about how much income they will need to maintain a comfortable lifestyle in retirement. These survey results illustrate why some people may be overconfident about their retirement preparations.
Nearly 70 percent of workers expect to continue working in their retirement years to supplement their income. But it's possible that some people might have to stop working earlier than they expected as a result of downsizing, disability, or other unforeseen events. Only 27 percent of the retirees surveyed said they have actually worked for pay in retirement.2
Only 42 percent of workers have tried to calculate how much money they will need in order to retire comfortably. About 73 percent of workers who have not done a calculation simply guess.3
Sixty percent of retirees do not have employer-sponsored health care. Of those who do, 27 percent have to pay for either part or all of the insurance coverage that their employers offer.4
Two-thirds of retirees believe they will live longer than expected, and half of retirees think that either they or their spouse will need long-term care or assisted living.5
Living on a fixed income becomes more difficult when inflation is on the rise. Seventy percent of retirees believe it is likely that inflation will rise by 7 percent or more a year during their retirement.6
Your retirement, like any other time in your life, may be marked by financial ups and downs. A well-thought-out strategy can help you adjust to unexpected bumps and stay on the path toward a comfortable retirement.
1–6) 2006 Retirement Confidence Survey, Employee Benefit Research Institute
Joe Swanson, Financial Advisor Minnesota CRPS 401k www.joeswanson.com
• Principal Financial Group,
• 11100 Wayzata Blvd, Suite 161
• Minnetonka, MN
• 55305
•
• Fax: (952) 277-4301 Phone: (952) 277-4259 Toll Free: 800 277-7095
• ww.joeeswanson.com
• swanson.joe@principal.com
PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of these web-sites provided here, you are leaving this site. Princor makes no representation as to the completeness or accuracy of information provided at these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising
Joe Swanson is licensed in Minnesota Wisconsin Oregon and Ohio (additional states can be made available) to offer insurance products, and life insurance (including variable life), annuities (including variable annuities), securities and if applicable - investment advice. This site is not a solicitation of interest in any of these products in any other state. IMPORTANT CONSUMER INFORMATION: Joe Swanson may only transact business in a particular state after licensure or satisfying qualifications requirements of that state, or only if (s)he is excluded or exempted from the state's registration requirements. Follow-up, individualized responses to consumers in a particular state by Joe Swanson that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, shall not be made without first complying with the state's requirements, or pursuant to an applicable state exemption or exclusion. For information concerning the licensure status or disciplinary history of a broker-dealer, investment advisor, BD agent or IA representative or any financial institution (s)he represents, contact your state securities law administrator. Principal Life Insurance Company, Des Moines, IA 50392. Principal Life maintains certificates of authority to transact insurance in all 50 states. Its NAIC identification number is 61271.
http://www.joeswanson.com/location.cfm
Saturday, December 9, 2006
Tax Season Leads to Increased Risk for Identity Theft
Tax Season Leads to Increased Risk for Identity Theft
Joe Swanson, Financial Advisor Minnesota www.joeswanson.com
(ARA) - Each year consumers spend many hours preparing taxes hoping they don't owe the government money. But what many fail to realize is that the government isn't the only one who may collect their hard earned cash -- so may identity thieves.In a time where one man's trash is another man's treasure, it's important to ensure that the multitude of documents used to prepare taxes are appropriately stored or destroyed. In 2005, consumers lost nearly $57 billion to criminals who stole their identities. Although this statistic is alarming, there are ways to protect yourself from the crime, especially during tax season.While it may appear easier to file everything, paper trails are still an identity thief's dream. Recent research conducted by Fellowes, Inc., the leading shredder manufacturer; shows nearly 40 percent of Americans believe identity theft is most likely to occur through online exchanges. In reality, Internet fraud represents only nine percent of the crime. The majority of identity theft crimes occur through paper documents and stolen information, making it crucial to properly store or destroy the sensitive documents used during tax season."Tax season can leave consumers with mountains of paperwork, which makes them more vulnerable to identity theft," says Kristen Gehrig, director, global marketing for Fellowes, Inc. "Shredding is one of the easiest ways to ensure your information doesn't end up in the wrong hands, but you also need to be conscious about what documents are important to keep." Simply knowing what needs to be filed or shredded will quickly alleviate potential problems.* Tax returns: The IRS has three years to challenge information in your return and six years to conduct an audit based on unreported income. Keep tax returns and supporting records, like W-2s and 1099s for at least seven years.* Investment statements for taxable accounts: Most brokerage firms and mutual fund companies send annual statements summarizing the year's transactions. Once you have these, you should shred your monthly and/or quarterly statements. * Bank statements: Keep statements that back up information on your tax returns for up to seven years. Other bank statements can be shredded after reviewing for errors.* Credit card statements: Keep statements for big purchases like jewelry or large appliances. You might need them for warranties. If you put charitable contributions on your credit card, keep the statement for your tax records. Other monthly statements can be shredded once you've reviewed them for errors or unauthorized purchases.* Pay stubs: While many people say to save these, it's a huge mistake. They contain everything an identity thief needs to open an account. Keep three months of history only if you are applying for a mortgage. * ATM receipts: Shred all receipts after you balance your bank statement. * Canceled checks: With no significance for tax or other purposes, these should be destroyed after one year. * Retirement plan contributions: Keep records of contributions to non-deductible individual retirement accounts, such as a Roth IRA, indefinitely. Without them, you may find yourself paying taxes again when the money is withdrawn. Some financial institutions keep records of IRA contributions, but it's best not to count on it. * Insurance policies, wills and other legal documents: These documents should be kept indefinitely. For documents you need to keep, consider storing them in a safe and accessible place, such as a fireproof box that is well hidden in your home. When destroying records, it's best to use a shredder that can slice credit cards and CDs and has confetti-cut capabilities, such as the Fellowes PS-77Cs. Confetti-cut shredders ensure that private information is reduced to small, unidentifiable pieces, making it nearly impossible for a would-be identity thief to piece the information back together.As shredders become a necessary household product, it's important to choose a shredder that not only protects your family's identity, but also its safety. The Fellowes PS-77Cs alleviates shredder safety concerns with its SafeSense technology, which shuts down the shredder when it senses that hands are too close to the paper opening.Additionally, a few more protective measures against identity theft should be taken during tax season. If you're filing your tax returns over the Internet, make sure your computer has updated anti-virus, anti-spyware and firewall software. It is also imperative to shred all paperwork used to calculate taxes such as receipts, bank records and various forms. Finally, pay particular attention to W-2 or 1099 forms because they contain your Social Security number, which is a would-be thief's dream. A missing form may leave you vulnerable to the crime. For additional identity theft prevention tips and information on how long to keep financial records, visit www.IDconfidence.org or check with your tax professional.Courtesy of ARA Content
Joe Swanson www.joeswanson.com swanson.joe@joeswanson.com
Joe Swanson, Financial Advisor Minnesota www.joeswanson.com
(ARA) - Each year consumers spend many hours preparing taxes hoping they don't owe the government money. But what many fail to realize is that the government isn't the only one who may collect their hard earned cash -- so may identity thieves.In a time where one man's trash is another man's treasure, it's important to ensure that the multitude of documents used to prepare taxes are appropriately stored or destroyed. In 2005, consumers lost nearly $57 billion to criminals who stole their identities. Although this statistic is alarming, there are ways to protect yourself from the crime, especially during tax season.While it may appear easier to file everything, paper trails are still an identity thief's dream. Recent research conducted by Fellowes, Inc., the leading shredder manufacturer; shows nearly 40 percent of Americans believe identity theft is most likely to occur through online exchanges. In reality, Internet fraud represents only nine percent of the crime. The majority of identity theft crimes occur through paper documents and stolen information, making it crucial to properly store or destroy the sensitive documents used during tax season."Tax season can leave consumers with mountains of paperwork, which makes them more vulnerable to identity theft," says Kristen Gehrig, director, global marketing for Fellowes, Inc. "Shredding is one of the easiest ways to ensure your information doesn't end up in the wrong hands, but you also need to be conscious about what documents are important to keep." Simply knowing what needs to be filed or shredded will quickly alleviate potential problems.* Tax returns: The IRS has three years to challenge information in your return and six years to conduct an audit based on unreported income. Keep tax returns and supporting records, like W-2s and 1099s for at least seven years.* Investment statements for taxable accounts: Most brokerage firms and mutual fund companies send annual statements summarizing the year's transactions. Once you have these, you should shred your monthly and/or quarterly statements. * Bank statements: Keep statements that back up information on your tax returns for up to seven years. Other bank statements can be shredded after reviewing for errors.* Credit card statements: Keep statements for big purchases like jewelry or large appliances. You might need them for warranties. If you put charitable contributions on your credit card, keep the statement for your tax records. Other monthly statements can be shredded once you've reviewed them for errors or unauthorized purchases.* Pay stubs: While many people say to save these, it's a huge mistake. They contain everything an identity thief needs to open an account. Keep three months of history only if you are applying for a mortgage. * ATM receipts: Shred all receipts after you balance your bank statement. * Canceled checks: With no significance for tax or other purposes, these should be destroyed after one year. * Retirement plan contributions: Keep records of contributions to non-deductible individual retirement accounts, such as a Roth IRA, indefinitely. Without them, you may find yourself paying taxes again when the money is withdrawn. Some financial institutions keep records of IRA contributions, but it's best not to count on it. * Insurance policies, wills and other legal documents: These documents should be kept indefinitely. For documents you need to keep, consider storing them in a safe and accessible place, such as a fireproof box that is well hidden in your home. When destroying records, it's best to use a shredder that can slice credit cards and CDs and has confetti-cut capabilities, such as the Fellowes PS-77Cs. Confetti-cut shredders ensure that private information is reduced to small, unidentifiable pieces, making it nearly impossible for a would-be identity thief to piece the information back together.As shredders become a necessary household product, it's important to choose a shredder that not only protects your family's identity, but also its safety. The Fellowes PS-77Cs alleviates shredder safety concerns with its SafeSense technology, which shuts down the shredder when it senses that hands are too close to the paper opening.Additionally, a few more protective measures against identity theft should be taken during tax season. If you're filing your tax returns over the Internet, make sure your computer has updated anti-virus, anti-spyware and firewall software. It is also imperative to shred all paperwork used to calculate taxes such as receipts, bank records and various forms. Finally, pay particular attention to W-2 or 1099 forms because they contain your Social Security number, which is a would-be thief's dream. A missing form may leave you vulnerable to the crime. For additional identity theft prevention tips and information on how long to keep financial records, visit www.IDconfidence.org or check with your tax professional.Courtesy of ARA Content
Joe Swanson www.joeswanson.com swanson.joe@joeswanson.com
Friday, December 1, 2006
When Is Term Life Insurance A Good Choice?
When Is Term Life Insurance A Good Choice?
Term life insurance is pure insurance. When you purchase a term policy, you are buying coverage for a specific period of time. If you die within the time period specified in your policy, the insurance company will pay your beneficiaries the face value of your policy.
Term insurance offers temporary protection. This differs from the permanent forms of life insurance, such as whole life, universal life, and variable universal life, which generally offer lifetime protection. And unlike other types of life insurance, term insurance accumulates no cash value. You don’t receive a refund at the end of the policy period if you haven’t died. Term life insurance maybe appropriate for temporary life insurance needs or when your cash needs make permanent life insurance unaffordable.
Term insurance is sold for a specified period of time. Annual renewable term life insurance is renewable every year, without proof of insurability. The main drawback associated with annual renewable term, as well as other types of term insurance, is that premiums increase every time you renew your life insurance coverage. The reason is simple: As you get older, your chances of dying increase. And as the likelihood of your death increases, the risk that the insurance company will have to pay a death benefit goes up with it. Unfortunately, term insurance can become too expensive right when you need it most – that is, in your later years.
There are several variations of term insurance that allow for level premiums. For example, you may be able to obtain 5-, 10-, 20-, or even 30-year level term, or level term payable to age 65. In addition, you can buy decreasing term life insurance, for which you pay level premiums for a death benefit that decreases every year. Each of these types of term life insurance has its own particular uses. For example, decreasing term insurance is often used to provide the funds to pay off a home mortgage if a spouse dies.
Life insurance can be used to achieve a variety of goals.The cost and availability of the type of life insurance that is appropriate for you depends on factors such as age, health, and the type and amount of insurance you need. If you are considering purchasing life insurance, consult a professional to explore your options.
© 2006 Emerald Publications
Joe Swanson
• Principal Financial Group,
• 11100 Wayzata Blvd, Suite 161
• Minnetonka, MN
• 55305
• Phone: (952) 277-4259Toll Free: 800 277-7095
• Fax: (952) 277-4301
• www.joeswanson.com
• swanson.joe@principal.com
Term life insurance is pure insurance. When you purchase a term policy, you are buying coverage for a specific period of time. If you die within the time period specified in your policy, the insurance company will pay your beneficiaries the face value of your policy.
Term insurance offers temporary protection. This differs from the permanent forms of life insurance, such as whole life, universal life, and variable universal life, which generally offer lifetime protection. And unlike other types of life insurance, term insurance accumulates no cash value. You don’t receive a refund at the end of the policy period if you haven’t died. Term life insurance maybe appropriate for temporary life insurance needs or when your cash needs make permanent life insurance unaffordable.
Term insurance is sold for a specified period of time. Annual renewable term life insurance is renewable every year, without proof of insurability. The main drawback associated with annual renewable term, as well as other types of term insurance, is that premiums increase every time you renew your life insurance coverage. The reason is simple: As you get older, your chances of dying increase. And as the likelihood of your death increases, the risk that the insurance company will have to pay a death benefit goes up with it. Unfortunately, term insurance can become too expensive right when you need it most – that is, in your later years.
There are several variations of term insurance that allow for level premiums. For example, you may be able to obtain 5-, 10-, 20-, or even 30-year level term, or level term payable to age 65. In addition, you can buy decreasing term life insurance, for which you pay level premiums for a death benefit that decreases every year. Each of these types of term life insurance has its own particular uses. For example, decreasing term insurance is often used to provide the funds to pay off a home mortgage if a spouse dies.
Life insurance can be used to achieve a variety of goals.The cost and availability of the type of life insurance that is appropriate for you depends on factors such as age, health, and the type and amount of insurance you need. If you are considering purchasing life insurance, consult a professional to explore your options.
© 2006 Emerald Publications
Joe Swanson
• Principal Financial Group,
• 11100 Wayzata Blvd, Suite 161
• Minnetonka, MN
• 55305
• Phone: (952) 277-4259Toll Free: 800 277-7095
• Fax: (952) 277-4301
• www.joeswanson.com
• swanson.joe@principal.com
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