Announcer:
It’s time now on KROS for Financial Focus brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representatives, securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated. A registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s financial focus program.
Nate Kreinbrink:
Good morning. And welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. Well, this is Nate. James joining me again today. Brisk, bitterly, cold temperatures driving home last night. I didn’t know it was supposed to blow quite that much heading outside of town there. You can hardly see there for a little while.
James Nelson:
Yeah. Yeah. Exactly. But at least today and tomorrow sounds like decent temperatures. Get that sun out here and get rid of some of the snow.
Nate Kreinbrink:
Start melting and some of that stuff off of there. And I think, we’re to that point in winter, January, February ish, where that snow stuff is done.
James Nelson:
Yeah. We’re sick of it already. Yeah. We’ve had enough.
Nate Kreinbrink:
I know we have some clients that we’ve talked to over the last couple of weeks or whatever, and that snowbird down to warmer temperatures, whether it’s Florida, Arizona, some places like that. And they’re saying that it’s chilly down there and it’s 60 degrees. And they have to put a sweatshirt on. And I don’t really feel too sorry for them at times.
James Nelson:
Yeah. Yeah. We feel real bad for them. Right.
Nate Kreinbrink:
So getting into today’s program. I know we cover a bunch of different topics on the program when James and I are on here. Andy Ferguson with NelsonCorp Tax Solutions, we cover taxes pretty heavily. He’s going to be joining us the third Wednesday of every month, going forward as far as to start talking taxes.
Nate Kreinbrink:
A topic that James and I kind of came up with that we do talk about every once in a while, but probably not as often as we should. And that’s life insurance. We’ve had a couple cases recently, as far as either one, someone has passed away and how that impact of those death benefits come into play. But also talking, when having that discussion with individuals and couples, as far as the need for life insurance. I think sometimes people hear the word insurance, it kind of gets a bad rap a little bit, but when you break it down and you go over these things with it, if one of the unfortunate thing happens and a spouse passes away, one income’s gone. How is that surviving spouse going to be able to pay the remaining bills that are still there, whether it’s mortgage, if there’s kids, continuing to have that income in order to provide for the kids in the same way that they were able to do when they were both alive.
Nate Kreinbrink:
And understanding the need for insurance. Obviously we don’t want to over insure, but having that there and having that discussion, I think is something that people need to do more often. And seriously take a look at the different options.
James Nelson:
Yeah. Nobody likes insurance, nobody likes paying for the premiums, but oftentimes it’s needed. And it’s something that people don’t like thinking about. Just like the estate plan you and I always talk about Nate, the wills, trusts, powers of attorneys. Generally not fun topics to discuss, but if something were to happen to an individual, hey, we need to take care of some debt. We need to take care of the kids, what have you, very important and probably underserved in most cases. And again, it’s just a topic people don’t like discussing. There’s also something to consider when discussing life insurance is all the different types of life insurance policies. It’s not just one size fits all. There are a lot of different types of policies, whether it’s permanent or term. And the cost difference between those can be a pretty significant. So understanding what type of policy you own or what type of policy you’re considering purchasing is a very big deal.
James Nelson:
And then having the flexibility of kind of bidding that out to a lot of different insurance companies, is a huge advantage to get the most competitive pricing. So that’s kind of where we come in and have those discussions. And can offer the insurance to many different companies. And it’s a big deal. Now, a lot of the older policies too, I mean, this is a topic that comes up fairly often where, hey, I’ve got this older insurance policy, is it still intact? Is it still in good shape? And that’s oftentimes where we see a lot of opportunity where we could potentially do something there, whether it’s cut the premium, save somebody a few bucks on a monthly basis if they’ve got enough cash value buildup in some of those old permanent policies. Or potentially get more insurance, if that’s of interest, and roll that into a new one.
James Nelson:
So there’s a lot of options there. And it’s something that, again, you purchase oftentimes and then kind of forget about it and hope you never need it. But there are a lot more options these days. And a lot more flexibility these days where those insurance policies can kind of be tied with some other features as well.
Nate Kreinbrink:
Right. And I think that you hit that on the head there as far as just understanding the different types. And then usually it’s either term or permanent, they’re the two most common things and the two most common terms that people associated with. Term, obviously as the word states is, you buy a certain amount of insurance, whether the death benefit is a $100,000, $250,000, $500,000, whatever the case it may be. And then you locked in your premium payment every month or annually for the length of that term, whether it’s a 10 year term, a 15 year term, a 20 year term. So your premium stays the same over the length of that term. Usually, it’s associated with term insurance that you can get a little bit more bang for your buck, as far as the amount of death benefit that you can get versus what you’re paying in premium. But understand that at the end of that term, oftentimes you can still keep that policy. But your premium is going to increase annually after that every year as you continue to age on your anniversary date of that contract.
Nate Kreinbrink:
So again term insurance is a great thing for usually associated with younger couples, younger individuals, maybe not have a lot of disposable income, but know they have some type of need for insurance. Or for individuals that are a little bit later on in life that have a specific need that they need to be insured. Having a couple where they still have a little bit of debt. One of the individuals is the primary income of the household. What would happen if that unfortunate circumstances and that individual passes away? How is that surviving spouse going to be able to do it? So maybe take out a term policy for the length of maybe a mortgage leftover, some ongoing debt, as far as to be able to do that.
Nate Kreinbrink:
On the flip side, permanent insurance is usually a little bit higher premiums. Usually you build up some type of a cash value inside of the plan where your monthly premiums, a little bit goes to pay the insurance costs, a little bit goes into the cash value plan. And that continues to go on forever. I mean, that insurance is yours. You continue to pay those same premiums. Obviously usually a little bit more expensive because of the cash value and the permanent aspect of those insurances. And sometimes it’s a coordination of two of them, where you get a little bit of permanent insurance, you get a little bit of term insurance to cover those needs over a certain phase of your life. The phase, you get a mortgage paid off, you get some debt paid off, you don’t necessarily need the term, so that one drops off. But you still keep that little bit of permanent insurance going on. So again, understanding the different ways, how you can utilize the strengths of both types of insurances and put them to good use. And really cover those needs in your individual situation.
James Nelson:
And I think that’s probably the biggest thing is just knowing that there’s a lot more options out there today. I know I’ve already said that, but it’s important. I mean, the policies back 20 years ago are not the same type of policies that are offered today. Heck there’s even life insurance policies that offer long-term care riders where, a client may be getting up there in age or retiree that has a long-term care fear that, hey, I may go into a facility at some point, what can I do? There’s even riders that you can put on existing insurance policies to help cover that potential expense if that were to come about. So again, that didn’t exist 10 years ago, 15 years ago, 20 years ago.
James Nelson:
And then there’s also some other policies that are fairly new where they’re permanent coverage, but don’t build any cash value. So they almost act like a term policy by not building cash value, but they are permanent insurance where you’re going to keep it as long as you want. So again, just a lot of flexibility out there. A lot of new features to life insurance that again, makes it more competitive. And a lot more doable from a lot of people standpoint. And again, some of those added features can really be a nice feature going into retirement or in the later years. Nice to have that option.
Nate Kreinbrink:
Right. And I think a keyword that you just said there was long-term care insurance. And I won’t get into it a lot because long-term care insurance, I think could be a program in and of itself as far as.
James Nelson:
Definitely.
Nate Kreinbrink:
The discussions of the important, different types out there. But one thing I do mention with that term is long-term care insurance, is understand that as James mentioned, with life insurance, they’ve kind of evolved over the years. Long-term care insurance is a prime example of how these insurance companies and these policies continue to evolve. When Long-term care insurance first came out, it was basically a use or lose it type of insurance policy. So a home insurance, you pay your home insurance premium. If nothing ever happens to your home, you’re just out that money. But you had that there in case of it.
Nate Kreinbrink:
That’s how long-term care insurance was when it first came out, wasn’t quite as marketable. And people decided that eh, I’m not really going to take that risk as far as adding it on. Now you evolve now to where we have hybrid products. As James mentioned, you can have a life insurance policy, add long-term care onto it. So in one way, shape or form, you’re either going to use the long-term care insurance rider on it. If you never go into a nursing home, someone’s going to get paid a death benefit. So those premiums that you’re paying in isn’t that use it or lose it, type of example anymore. You’re paying those premiums, somebody’s going to get some type of benefit, whether it’s through life insurance or whether it’s through death benefit.
Nate Kreinbrink:
So again, I think when people start understanding the different types that are out there and saying, oh, okay, maybe I’m a little bit more apt to pay these premiums. I know long-term care insurance is a glaring need in this industry. You look at the cost of long-term care costs anymore in these facilities, and it’s continuing to go up. So let’s look at the income streams that we have coming in. Where’s that gap and try to look to maybe insure some of those aspects too. And you’ve mentioned using old policies. Taking an old policy, if there’s a cash value, exchanging that into something newer and maybe more adaptable to where your situation is.
Nate Kreinbrink:
Insurance needs change over the phases of our life. Individuals that are younger, that are just getting married, maybe have college debt, just bought their new house, have a couple kids at home. Their insurance needs are a lot different than an individual or a couple that are approaching retirement or in retirement where that stands. So again, a lot out there. We hit very broadly on a bunch of these topics. We can go on and on for a couple of different shows on these individual ones specifically. But if you’ve got questions, give us a call. We’d be happy just to, again, sit down, go over the different options with you, and let you know what’s out there.
James Nelson:
Yeah, definitely. A complicated world and we’d be happy to help.
Nate Kreinbrink:
Do want to mention real quick that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of January will be donated to the Victory Center Rescue Mission here in Clinton. As always James, appreciate you joining me.
James Nelson:
Absolutely.
Nate Kreinbrink:
Again, Nate and James with NelsonCorp Wealth Management, bringing you this week’s Financial Focus. Thanks again for tuning in. And have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only. And are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representatives, securities offered through Cambridge Investment Research Incorporated. A broker dealer member, FINRA SIPC. Investment advisor, representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.
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