8 Tips for Getting a Life Insurance Quote in Texas

Posted on April 27, 2015 by

8 Tips for Getting a Life Insurance Quote in Texas

  1. Review Your Insurance Needs

Choose the kind of policy that has benefits that most closely fit your needs. Consider the number of people who are dependent upon you financially and whether or not you need life insurance. Will you have substantial debts and taxes owed after your death? Do you have alternatives to life insurance, such as savings accounts or other investments that could take care of expenses after your death?

  1. Know Your Options

There are two basic types of life insurance: term insurance and cash-value insurance. You may wish to combine cash-value life insurance with term insurance for the period of your greatest need for life insurance to replace income. Make sure the price is right. If the premium increases later and you still need insurance, will you be able to afford it?

  1. Comparison Shop

Life insurance is a competitive marketplace, and much of the competition focuses on price. After you have decided which kind of life insurance is best for you, compare similar policies from different companies to find which one is likely to give you the best value for your money.

  1. Know Your Company

You can check the financial stability of any life insurance company through several reputable national rating companies such as AM Best, S&P, and Moody’s. Check with your state insurance department to verify that the company is authorized to do business in your state.

  1. Read Your Policy Carefully before Signing

Never buy a policy you don’t understand – if you are given illustrations or booklets, save these materials with your policy. Make sure you understand the guarantees in your policy and the surrender penalties if you choose to drop the policy at any time. Ask your agent or company about anything that is not clear to you.

  1. Regularly Review Your Policy and Update Accordingly

Review your life insurance program with your agent or company every few years to keep up with changes in your income and your needs. This includes a review of your net worth to reconsider the prospects your survivors may face when you pass away.

  1. Consider Replacement Cost

It may be costly to replace your insurance if you change your mind during the early years of the policy. Don’t drop one policy and buy another without a thorough study of the new policy and the one you currently have.

  1. Get More Information

For further information regarding ordering a brochure of a particular life insurance company, you can contact us at www.allsureinsurance.com or by emailbanderson@allsureinsurance.com.

Posted in Texas Life and Health Insurance | 0 Comment

Types of Life Insurance-Texas

Posted on April 7, 2015 by

Types of Life Insurance 

Do you know the different types?

All insurance is not the same; nor are all agencies the same.  When choosing coverage to insure your life, it is important to understand the different types and how they would work for your lifestyle.  A trusted insurance agent can outline the various advantages for each insurance type.  This brief overview will present you with the basics. Allsure Insurance can give you specific information.

The purpose of insurance is to provide payment to a beneficiary in the event of your death.

The three major types of insurance are Whole Life (Straight or Permanent), Universal Life and Term Insurance.  The significant differences between the individual types of insurance are enough that they deserve closer inspection.

  •  Whole Life insurance, the insured pays a set premium payment.  The dollar amount of the policy is also a set amount. Payments are predictable and established.  The Whole Life Insurance policy accumulates cash value.  This cash value can be borrowed against; the insured can also  cancel the insurance policy and receive its surrendered value.
  •  Universal Life insurance, the insured gets a whole life policy with a lower net cost over the life of the policy and a non-fixed death benefit.   This insurance coverage also builds cash value and offers the insured a tax deferral advantage.  Universal Life insurance has three main criteria that determines the death benefits:  the insurer’s ability to make premiums, the insurer’s policy charges and the credit rating of the policy.
  • Term insurance, as its name implies, is limited to a specific time.  It is very similar to renting insurance as opposed to buying insurance.  Like the other insurance types, the policy’s beneficiary receives a  death benefit.  The premiums and benefits are fixed on a term insurance policy.

While researching the various types of insurance that might be beneficial for your life, become familiar with a trusted insurance agent who can give you more details.  A recommended agency, such as Allsure Insurance, will guide you through the selection process.  Having the resource of an established knowledgeable agent can give you the confidence to make an informed insurance selection.

For more detailed information, see our Life Insurance section.

 

Posted in Life Insurance, Texas Life and Health Insurance, Types of Insurance, Types of Life Insurance | 0 Comment

Life Insurance and Taxes

Posted on April 1, 2015 by

Life Insurance and Taxes

Is life insurance taxable?

Are insurance proceeds taxable?

Is life insurance taxable income?

The above questions are asked by first time and seasoned life insurance clients. It really isn’t surprising that they would wonder about their life insurance proceeds taxable amount.

So, are life insurance benefits taxable?

In short, there is sometimes tax on life insurance and there may be taxes on life insurance. There are some life insurance proceeds taxable by the IRS. Tax on life insurance proceeds, life insurance tax benefits, and life insurance taxable income do have some implication concerning the amount of income tax on life insurance.

Beneficiary Taxes

If your beneficiaries receive the proceeds of a life insurance policy, the benefits will not be included as part of their gross income on their tax reporting. Interest that has been received on that policy would need to be reported in the interest area of your tax report. The sooner you pay off your life insurance loan, the less interest you’ll have to pay.

When someone has a hybrid annuity or life insurance policy with a long term care insurance rider, where long term care benefits are left over, the heirs will get a tax free death benefit. Claims paid from these policies are tax free if the long term care expenses are qualified.

Irrevocable Life Insurance Trust (ILIT)

Life insurance tax is not a reality, but the amount of the proceeds of your policy may increase the amount of taxes payable by your estate unless you form an irrevocable life insurance trust (ILIT).

The ILIT owns your life insurance policy, thereby removing it from your estate.  You would not be able to put the policy back in your own name.  Since it is not “in” your estate, your estate taxes would be lower.

Whole life | Universal Life

Whole life and universal life policies both have deferred tax responsibilities.

Modified Endowment

In the case of a modified endowment contract, the amount of gain over and above the amount paid in is calculated as coming out first and will be taxed at 10% if the funds are taken out before the policy holder is 59 ½ years old.

If the insurance policy is not a modified endowment contract, you may borrow from the policy and not pay tax on the money that you have contributed to the policy.  If you cash out monies over and above what has been paid in, part of that that money is considered ordinary income.

Lapsed Policies

Some young adults allow their life insurance policy to lapse after they have taken a loan from the policy. The accumulated interest is considered taxable income.

Surrender Charges`

Surrender charges might happen if you withdraw cash from your life insurance policy. One of the best things to do is to take a policy loan from your insurance company. The cash value in the policy will be your collateral. If you repay the loan, the amount you borrow is usually not treated as taxable income. You will also avoid surrender charges since you aren’t withdrawing money. Interest on the loan is taxable.

Conclusion

The  subject of the taxability of life insurance is a complex one. The above is a sampling of what is involved in the tax liability for various types of life insurance. Please feel free to give me a call to set up an appointment, so that I can use my expertise to collaborate with you to find the perfect life insurance for you and your spouse.  Not only will you have an understanding of the worth of the policies, but you will also have a clear understanding of the tax situation involved with the various types of policies that you are considering.

Posted in Life Insurance, Tax on insurance., Taxes on Life Insurance., Texas Life and Health Insurance, Types of Insurance, Types of Life Insurance | 0 Comment

Life Insurance-Business Owners-Succession Plan-Selling Company

Posted on February 15, 2015 by

Based on my experience of handing life insurance for business owners throughout Texas, I have decided to share the following information as both a warning and an encouragement for my fellow business owners. I want you to be aware of  factors to consider concerning your life insurance policy.

As a business owner, you have worked hard to build your business or businesses. What will happen when you are no longer able to run your business either because of death or some debilitating health issue?

Your situation is much different for you than for an individual whose income is not determined by their actively running a business that produces most or all of their family’s income.

You need a life insurance policy that will insure that your family is taken care of, while at the same time making sure that they are able to take care of the ownership changes for your business.

There are many factors to consider, whether you need to consider succession planning, the transferal of ownership to the next generation, or the transferal of ownership to a person or persons outside of your immediate family.

Some Costs Involved…

  • Attorney
  • Court Costs
  • CPA
  • Financial Planner

How will you create a fund for your family to more easily deal with this situation? The only viable answer for your family having to deal with this is by providing them with the right life insurance policy.

At this emotional time, there is often friction between family members who are actively involved in the business and those members who are not involved.  By having a death benefit for un-involved family members equal to the value of the share of the business that you leave to involved family members will minimize that friction.

The right life insurance for you as a business owner will also protect your family from having to do what is referred to as a “distressed sale” of your business. If you have used your personal assets as collateral, the right life insurance policy will negate the necessity of your family having to quickly sell the business to cover loan obligations. This quick sale in many cases would cause the business to be sold for a sum that is considerably less than its actual value.

There may be other funding available, but the right life insurance policy will provide both the flexibility and tax benefits that are missing from other funding options.

Your life insurance policy should also provide uninterrupted liquid income during this time, to take care of …

  • Funeral expenses
  • Gratuity for Clergy
  • Estate Taxes
  • Meals for family and guests
  • Possible transportation for out-of-town children or other close relatives
  • Normal family bills.
  • And more unexpected out of pocket expenses

My hope is that this information has made you aware of factors that you, as a Texas business owner need to consider in choosing a life insurance policy.

Posted in Life Insurance, Small Business Insurance, Small Business Owner, Succession Plan, Texas Life and Health Insurance | 0 Comment

The Retirement We Imagine, the Retirement We Live

Posted on April 1, 2014 by

Examining the potential differences between assumption & reality.

 

Provided by S. Brett Anderson

 

Financially, how might retirement differ from your expectations? To some degree, it will. Just as few weathercasters can accurately predict a month’s worth of temperatures and storms, few retirees find their financial futures playing out as precisely as they assumed.

As you approach or enter retirement, you may find that your spending and your exit from your career don’t quite match your expectations. You may be surprised by these developments, even pleasantly surprised by some of them.

Few retirees actually outlive their money. If this was truly a crisis, we would see federal and state governments and social services agencies addressing it relentlessly. The vast majority of retirees are wise about their savings and income: they don’t spend recklessly, and if they need to live on less at a certain point, they live on less. It isn’t an ideal choice, but it is a prudent one. Health crises can and do impoverish retirees and leave them dependent on Medicaid, but that tends to occur toward the very end of retirement rather than the start.

You may not need to retire on 70-80% of your end salary. This is a common guideline for new retirees, but according to some analysts, you may not need to withdraw that much for long.

In the initial phase of retirement, you will probably want to travel, explore new pursuits and hobbies and get around to some things you may have put on the back burner. So in the first few years away from work, you might spend roughly as much as you did before you retired. After that, you could spend less.

Bureau of Labor Statistics data is very revealing about this. JP Morgan Asset Management recently studied U.S. household spending and found that it peaks at age 48. The average U.S. household headed by people aged 65-74 spends only 63% as much as a household headed by people aged 55-64. Additionally, the average household headed by people 75 and older spends only 72% as much as the average household headed by people aged 65-74.1

In the big picture, households run by those 75 and older typically spend about half as much per year as households headed by people in their late forties.1

 

Further interesting analysis of BLS statistics and retirement spending patterns comes from David Blanchett, the head of retirement research at Morningstar Investment Management. He sees a correlation between career earnings and retirement spending, one contrary to many presumptions. Comparatively speaking, he notes that higher-earning retirees commonly have to replace less of their income once their careers conclude. As he commented to Money Magazine, “the household that makes $40,000 a year might have an 85% replacement rate, and the household making $100,000 a year might need 60%.”2

Why, exactly? The upper-income household is watching its costs fall away in retirement. The home loan, the private school tuition, dining out due to convenience, the professional wardrobe, the car payment, the workplace retirement plan contribution – this is where the money goes. When these costs are reduced or absent, you spend less to live. Blanchett believes that the whole 70-80% guideline may “overestimate the true cost of retirement for many people by as much as 20%.”2

Your annual withdrawal rate could vary notably. Anything from healthcare expenses to a dream vacation to a new entrepreneurial venture could affect it. So could the performance of the stock or bond market.

 

You could retire before you anticipate. You may want to work well into your sixties or beyond – and the longer you wait to claim Social Security benefits after age 62, the greater your monthly payout. Reality, on the other hand, shows that most people don’t retire at age 66, 67 or 70: according to Gallup, the average retirement age in this country is 61. The aforementioned JP Morgan Asset Management study determined that less than 2% of Americans wait until age 70 to claim Social Security benefits. So if your assumption is that you will work to full retirement age (or later), you should keep in mind that you may find yourself electing to claim Social Security earlier, if only to avert drawing down your retirement savings too quickly.1

 

You don’t have to be a millionaire to have a happy retirement. In a 2011 Consumer Reports poll of U.S. retirees, 68% of respondents were “highly satisfied” with their lives irrespective of their financial standing. Backing that up, JP Morgan Asset Management found that retiree satisfaction increased only incrementally the more retirement spending surpassed $40,000 a year.1

 

The retirement you live may be slightly different than the retirement you have imagined. Fortunately, retirement planning and retirement income strategies may be revised in response.

S. Brett Anderson may be reached at (832) 230-1896 or banderson@allsureinsurance.com.

www.allsureinsurance.com

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – reuters.com/article/2014/03/12/us-column-stern-advice-idUSBREA2B1R020140312 [3/12/14]

2 – money.cnn.com/2014/02/26/retirement/retirement-spending.moneymag/index.html [2/26/14]

Posted in Texas Life and Health Insurance | 0 Comment

Guarding Against Identity Theft

Posted on March 22, 2014 by

Take steps so criminals won’t take vital information from you.

 

Provided by S. Brett Anderson

 

America is enduring a data breach epidemic. As 2013 ended, the federal Bureau of Justice Statistics released its 2012 Victims of Identity Theft report. Its statistics were sobering. About one in 14 Americans aged 16 or older had been defrauded or preyed upon in the past 12 months, more than 16.6 million people.1

Just 8% of those taken advantage of had detected identity theft through their own vigilance. More commonly, victims were notified by financial institutions (45%), alerts from non-financial companies or agencies (21%), or notices of unpaid bills (13%). While 86% of victims cleared up the resulting credit and financial problems in a day or less, 10% of victims had to struggle with them for a month or more. 1

Consumers took significant financial hits from all this. The median direct loss from cyberthieves exploiting personal information in 2012 was $1,900, and the median direct loss from a case of credit card fraud was $200. While much of the monetary damage is wiped away for the typical victim, that isn’t always the case.1

Tax time is prime time for identity thieves. They would love to get their hands on your return, and they would also love to claim a phony refund using your personal information. In 2013, the IRS investigated 1,492 identity theft-linked crimes – a 66% increase from 2012 and a 441% increase from 2011.2

 

E-filing of tax returns is becoming increasingly popular (just make sure you use a secure Internet connection). When you e-file, you aren’t putting your Social Security number, address and income information through the mail. You aren’t leaving Form 1040 on your desk at home (or work) while you get up and get some coffee or go out for a walk. If you just can’t bring yourself to e-file, then think about sending your returns via Certified Mail. Those rough drafts of your returns where you ran the numbers and checked your work? Shred them. Use a cross-cut shredder, not just a simple straight-line shredder (if you saw Argo, you know why).

 

The IRS doesn’t use unsolicited emails to request information from taxpayers. If you get an email claiming to be from the IRS asking for your personal or financial information, report it to your email provider as spam.2

   

Use secure Wi-Fi. Avoid “coffee housing” your personal information away – never risk disclosing financial information over a public Wi-Fi network. (Broadband is susceptible, too.) It takes little sophistication to do this – just a little freeware.

 

Sure, a public Wi-Fi network at an airport or coffee house is password-protected – but if the password is posted on a wall or readily disclosed, how protected is it? A favorite hacker trick is to sit idly at a coffee house, library or airport and set up a Wi-Fi hotspot with a name similar to the legitimate one. Inevitably, people will fall for the ruse and log on and get hacked.

 

Look for the “https” & the padlock icon when you visit a website. Not just http, https. When you see that added “s” at the start of the website address, you are looking at a website with active SSL encryption, and you want that. A padlock icon in the address bar confirms an active SSL connection. For really solid security when you browse, you could opt for a VPN (virtual private network) service which encrypts 100% of your browsing traffic; it may cost you $10 a month or even less.3

 

Make those passwords obscure. Choose passwords that are really esoteric, preferably with numbers as well as letters. Passwords that have a person, place and time (PatrickRussia1956) can be tougher to hack.4

 

Check your credit report. Remember, you are entitled to one free credit report per year from each of the big three agencies (Experian, TransUnion, Equifax). You could also monitor your credit score – Credit.com has a feature called Credit Report Card, which updates you on your credit score and the factors influencing it, such as payments and other behaviors.1

    

Don’t talk to strangers. Broadly speaking, that is very good advice in this era of identity theft. If you get a call or email from someone you don’t recognize – it could tell you that you’ve won a prize, it could claim to be someone from the county clerk’s office, a pension fund or a public utility – be skeptical. Financially, you could be doing yourself a great favor.

S. Brett Anderson may be reached at 832-230-1896  or banderson@allsureinsurance.com.

www.allsureinsurance.com

Citations.

1 – dailyfinance.com/2013/12/31/scariest-identity-theft-statistics/ [12/31/13]

2 – csmonitor.com/Business/Saving-Money/2014/0317/Tax-filing-online-Seven-tips-to-avoid-identity-theft.-video [3/17/14]

3 – forbes.com/sites/amadoudiallo/2014/03/04/hackers-love-public-wi-fi-but-you-can-make-it-safe/ [3/4/14]

4 – articles.philly.com/2014-03-18/business/48301317_1_id-theft-coverage-identity-theft-adam-levin [3/18/14]

 

Posted in Texas Life and Health Insurance | 0 Comment

The Sequester Looms

Posted on February 20, 2014 by

If federal budget cuts occur March 1, how might they be felt economically?

 

Provided by S. Brett Anderson

On March 1, $85 billion in federal budget cuts are supposed to take place – and it doesn’t look like they will be delayed any longer. Congress went on recess last week, so there was no concerted legislative effort to stave them off (in the manner of the fiscal cliff deal).1

At this point, the cuts seem inescapable. How might they impact Main Street and Wall Street?

Is Main Street all that worried about the cuts? A February Pew Research Center poll found that 29% of Americans didn’t even know about the sequester, while 40% said that they should be allowed to happen. Eyeing the poll results a bit more, a big picture emerges – 70% of those polled indicated that legislation to significantly reduce the deficit should be a federal priority.2

Will the cuts damage the economy as deeply as some fear? In the White House Budget Office projection, defense programs will take a 13% cut, with $34 billion in belt-tightening by the Army, Navy and Air Force resulting in layoffs or furloughs for at least 450,000 people. USA TODAY research forecasts nearly 35,000 jobs being lost in Texas, and Maryland, Virginia and Alabama each suffering between 20,000-30,000 job losses.3,4

In addition, the White House projects a 9% reduction in spending for other federal programs, with job cuts or furloughs anticipated for INS, FDA, TSA and FAA employees (and myriad other federal workers), reduced jobless benefits for the long-term unemployed, and layoffs of 10,000 teachers and school employees, including some with the Head Start program.1,3

Less abstractly, what could this hit to growth mean for the business and housing sectors? In a February 21 New York Times article, George Mason University School of Public Policy professor Stephen Fuller estimated that 1.4 million private sector jobs might disappear in the wake of the cuts. Fuller, who testified before the House Small Business Committee on the possible effects of the sequester, thinks that small businesses could let over 700,000 employees go and absorb 34% of the job losses projected for federal contractors. He reminded the Times that suppliers and vendors to those contractors could also be hit hard.5

HUD Secretary Shaun Donovan believes the sequester would be “deeply destructive” to the real estate market. If FHA staff is reduced by 9%, that could hurt the agency’s ability to originate loans, process refis and sell foreclosed homes in its possession. (By the way, the average interest rate on a conventional home loan was 3.78% last week, according to the Mortgage Bankers Association. That’s a high unseen since August 2012.)6

Or will the cuts have less economic impact than commonly believed? Some analysts think the fear is overblown. As CNBC columnist Larry Kudlow recently pointed out, the $85 billion haircut slated for March 1 is to budget authority, not budget outlays. Actual federal budget outlays, according to the Congressional Budget Office, will only shrink by $44 billion – which is but 0.25% of GDP and 1.25% of the $3.6 trillion federal budget.7

Kudlow notes that while the sequester would trim the growth of federal spending, “it’s clear that it won’t result in economic Armageddon.” He argues that the sequester might actually have positive effects, for as “the government spending share of GDP declines, so does the true tax burden on the economy. As a result, more resources are left in the free-market private sector, which will promote real growth.”7

As for the markets, opinion varies. If the cuts occur, Nomura thinks that they will be undone by Congress within weeks. A Wells Fargo analysis concludes that “in the end we are not looking for a significant cut in government spending this year.” On the other hand, Credit Suisse sees a 0.5% reduction in U.S. GDP to 1.5%, and Macroeconomic Advisors thinks the jobless rate will creep up to 7.9% by the end of 2013 – a projection matching that of many economists, who see unemployment rising 0.2-0.3% this year with payrolls slimming by about 500,000 jobs.8

March 1 could be a very big day on Wall Street. If the sequestration happens as scheduled Friday, it won’t be the only major economic news item on tap: the February jobs report, February’s ISM manufacturing index, the January consumer spending report and the final February consumer sentiment index from the University of Michigan will all be out that day. If some of these reports surprise to the upside (or downside), there is a chance that they may pull focus from the (assumed) budget cuts. Or, if the cuts occur as slated, perhaps the market will price them in more than some analysts believe.

If the sequester delivers a serious economic punch, it could deter the Federal Reserve from any notions of phasing out QE3 this year or tinkering with interest rates in 2014. We shall see how the drama plays out in March and the months that follow.

S. Brett Anderson may be reached at (832) 230-1896 or banderson@allsureinsurance.com.

www.allsureinsurance.com

Citations.

1 – online.wsj.com/article/SB10001424127887324449104578314113835559092.html [2/20/13]

2 – www.cbsnews.com/8301-250_162-57570484/poll-40-say-let-the-looming-budget-cuts-happen/ [2/21/13]

3 – www.cbsnews.com/8301-250_162-57570191/will-sequestration-really-be-that-bad/ [2/20/13]

4 – www.usatoday.com/story/news/nation/2013/02/19/army-state-by-state-sequester-details/1931051/ [2/19/13]

5 – boss.blogs.nytimes.com/2013/02/21/many-expect-budget-cuts-to-hit-small-businesses-hard-but-not-the-n-f-i-b/ [2/21/13]

6 – www.cnbc.com/id/100474955 [2/20/13]

7 – www.cnbc.com/id/100476675/The_ProGrowth_Sequester [2/21/13]

8 – www.cnbc.com/id/100475956 [2/20/13]

Posted in Texas Life and Health Insurance | 0 Comment

SOME FISCAL CLIFF SCENARIOS

Posted on February 20, 2014 by

What could play out in the near future?

Presented by S. Brett Anderson | Allsure Insurance

 

Will 2013 be as severe as some economists think? The fiscal cliff is getting closer and closer. How will Congress respond?

 

In the worst-case scenario, Congress argues and deadlocks. Tax hikes and roughly $109 billion in federal spending cuts take a bite out of GDP and another recession becomes a possibility.1

There are other possibilities, however. The fiscal cliff may yet be averted, or at least we might back away from its edge. One of several scenarios might come to pass.

Scenario A: Congress buys time. Many analysts think this is exactly what will happen. Congress is in a lame-duck session. The option for legislators to “pass the buck” may prove tantalizing. So we could see a short-term, stopgap deal with the idea that the next session of Congress will tackle the problem later in 2013. The debt ceiling could be raised, and a “down payment” might be made on longer-term liabilities.1

Scenario B: Congress can’t make a deal. This may not be so improbable; if you remember the “super committee” assigned to craft a deficit reduction plan in 2011, you will also remember that it didn’t accomplish the set task. In fact, we are facing the fiscal cliff because of that committee’s failure.2

The “fiscal cliff” already amounts to Plan B. When Congress and the White House reached an accord to raise the debt ceiling back in August 2011, $1 trillion in federal spending cuts were green lighted and Congress was told to find $1.2 trillion more to slash. As that didn’t happen, $1.2 trillion in automatic cuts are set to begin next year. So Congress would actually be following federal law if it did nothing to respond to the issue.2

Doing nothing seems unsuitable, but there is the risk that history could repeat itself. Election outcomes may alter political assumptions and interfere with consensus. If it looks like we will go over the cliff in the waning days of 2012, there is a strong possibility that the incoming 113th Congress could vote quickly to reinstate select spending levels and tax breaks. That might mute some of the clamor from global financial markets.3

 

Scenario C: Middle ground is reached. Some degree of compromise occurs that leaves no one particularly satisfied. Certain short-term provisions are phased out, such as the payroll tax holiday, the recent increases for small business expensing, and assorted tax credits and tax breaks for education. The Bush-era tax cuts are preserved (at least temporarily) for the middle class, but rates rise for those making $1 million or more per year. The clock turns back to 2009 with regard to estate taxes. The rich face higher taxes on capital gains and dividends. Perhaps some defense cuts are postponed.

Scenario D: The “Grand Bargain.” Congress and the White House boldly arrive at a something more than an incrementally enacted deficit reduction plan. They reach a “grand bargain,” a deal designed to cut the deficit by $4 trillion by the mid-2020s, after historic, long-range compromises are made to reach stability on assorted tax and spending issues. With a lame-duck Congress, this may be a longshot.1

 

Scenario E: The “Down Payment.” Legislators could always tear a page from another playbook in trying to solve this problem. The Bipartisan Policy Center, for example, thinks a “grand bargain,” or anything approximating a real deal on the fiscal cliff, is unlikely given the short interval between the election and 2013. It recommends a “down payment” of deficit cuts that could be approved by a fast-tracked simple majority vote. If Congress didn’t take further steps to cut the deficit next year, then certain tax breaks would disappear and cuts would hit social welfare programs (excepting Social Security).2

Whatever happens in Washington, this is a prime time to consider financial moves with the potential to lower your taxes and insulate your wealth. Explore the possibilities before 2013 arrives.    

S> Brett Anderson may be reached at (832) 230-1896 or banderson@allsureinsurance.com.

Http://www.allsureinsurance.com

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

  

Citations.

1 – articles.marketwatch.com/2012-10-25/economy/34719282_1_fiscal-cliff-tax-cuts-defense-cuts [10/25/12]

2 – thehill.com/blogs/on-the-money/budget/262893-bipartisan-policy-center-floats-fiscal-cliff-solution [10/12/12]

3 – www.salon.com/2012/11/01/a_look_at_3_scenarios_as_the_fiscal_cliff_looms/singleton/ [11/1/12]

Posted in Texas Life and Health Insurance | 0 Comment

THE BIG TAX QUESTIONS OF 2013

Posted on February 20, 2014 by

How will Congress resolve these issues?

Presented by S. Brett Anderson Allsure Insurance

 

Decisions must be made. In the next couple of months, Congress will address several major tax matters. Here are the big questions looming.

 

The Bush-era income tax cuts. Will the current 10%-15%-25%-28%-33%-35% federal tax rate structure give way to 15%-28%-31%-36%-39.6% tax brackets in 2013? After the election, some analysts feel a compromise will be struck to maintain some of the Bush-era cuts for another year. In 2013, you may see the 10%, 15%, 25% and 28% brackets being retained while the wealthy face higher taxes.1

 

Tax rates on capital gains & dividends. Right now, dividends and most long-term capital gains are taxed at either 0% or 15% (depending on the income tax bracket you fall into). In 2013, dividends are scheduled to be taxed as regular income (cf. 15%-39.6% tax brackets above) and the capital gains tax rates are set to increase to 10% and 20%. So will dividend taxes and capital gains taxes only increase for the rich in 2013? That may very well turn out to be the case.2

Estate & gift taxes. President Obama’s proposal has the U.S. returning to a top estate tax rate of 45% with a $3.5 million exemption. In other words, estate taxes would return to 2009 levels as opposed to 2001 levels (55% top rate, $1 million exemption), which is what would happen if the Bush-era cuts simply expired. While Sen. Orrin Hatch (R-UT) and others in Congress have called for an end to estate taxes, many analysts think they will return to 2009 levels as a byproduct of Obama’s re-election. Will we see a unified gift and estate tax in 2013? That is a possibility, though not a given. It could be that the lifetime gift tax exemption becomes $3.5 million in 2013 (it is currently $5.12 million per individual with the unused portion of an individual exemption portable between spouses) with gifts past the exemption taxed at 35%. That would be better than the alternative: a scheduled $1 million exemption, along with a 55% maximum gift tax rate.2,3

 

The payroll tax holiday. Months ago, the consensus was that this would not survive into 2013. Yet last month, Rep. Christopher Van Hollen, the top Democrat on the House Budget Committee, told C-SPAN that it should be extended. Former Treasury Secretary and Obama administration economic advisor Larry Summers agrees. So it may live on for another year.4

 

The marriage penalty. Our federal tax code has a longstanding quirk: occasionally, married couples pay more in tax than they would if they were single filers. The Economic Growth and Tax Relief Reconciliation Act of 2001 attempted to lessen the penalty in two ways. It made the standard deduction for married joint-filing couples twice what it was for singles, and it made the bottom two tax brackets for those married and filing jointly twice as broad as for singles. In 2013, the marriage penalty could become more severe: the standard deduction for joint filers will be only about 167% of the standard deduction for singles and those widened joint-filer tax brackets are slated to narrow. As middle-income couples will probably face higher payroll taxes in 2013, retaining the current softer penalty seems likely.2

 

Child & childcare tax credits. Both of these credits are set to shrink next year. The child tax credit is supposed to be halved to $500, and the maximum childcare credits available to most parents ($600 for one child aged 12 or younger, $1,200 for more than one) are poised to drop to $480 and $960. Extending these credits into 2013 could amount to good PR for a disdained Congress.5

The American Opportunity Credit. In 2009, the up-to-$1,800 Hope tax credit was supercharged into the AOC: an up-to-$2,500 education credit which could be claimed for four tax years that include college education rather than two. In 2013, the AOC is scheduled to disappear with an $1,800 (or possibly $1,900) Hope credit slated to reappear. The AOC may be extended into 2013; again, it would be a popular move at a time when Congress is riding a wave of unpopularity.5,6

 

College expense deduction. Back in 2011, you could write off as much as $4,000 in tuition on your federal return. Some legislators would like to see this deduction made available again in 2013 and perhaps even made retroactively available for 2012. It would be a popular move and it could prove a nice “sweetener” on any bill addressing tax issues for the coming year.5

 

Charitable IRA gifts. Universities and retirees found the IRA charitable rollover quite useful, but it faded away at the end of 2011. Many in the education community (and some in Congress) would like to see it return for 2013, and given that tax hikes seem to be imminent next year, a big tax break like this might be offered pursuant to a Congressional compromise.5

   

IDLs & PEPs. In 2010, itemized deduction limits and personal exemption phase-outs were repealed. In 2013, they may return as the federal government seeks much-needed tax revenues.2

 

S. Brett Anderson may be reached at (832) 230-1896 or banderson@allsureinsurance.com

http://www.allsureinsurance.com

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – money.usnews.com/money/blogs/the-best-life/2012/08/29/get-ready-for-5-key-money-changes-in-2013 [8/29/12]

2 – www.smartmoney.com/taxes/tax-policy/key-tax-issues-to-watch-postelection-1351019063876 [10/23/12]

3 – www.deseretnews.com/article/765589424/Sen-Orrin-Hatch-calls-for-end-of-estate-tax-as-Jan-2013-taxmageddon-looms.html [7/12/12]

4 – online.wsj.com/article/SB10000872396390444734804578066991225311524.html [10/18/12]

5 – www.marketwatch.com/story/14-tax-issues-to-watch-after-the-election-2012-11-01 [11/1/12]

6 – www.finaid.org/otheraid/hopescholarship.phtml [11/8/12]

Posted in Texas Life and Health Insurance | 0 Comment

BUILDING AN EMERGENCY FUND

Posted on February 20, 2014 by

Creating a financial cushion for stressful times.

Presented by S. Brett Anderson

How would you respond to sudden financial demands? We all define “emergencies” differently, but we are not immune to them. How can we plan to stay afloat financially when they occur?

 

Most households are not financially prepared for an emergency – not even close. A recent study from the National Foundation for Credit Counseling found that 64% of Americans had less than $1,000 in funds earmarked for a crisis.1

 

While the recession did its part to siphon emergency funds from families, attention must be paid to rebuilding those funds. It may be difficult; it may be inconvenient. That doesn’t make it any less of a priority.

 

Emergencies tend to be linked to long-term debt. Having a designated emergency fund can help you attack that debt. When most people think of financial emergencies, they think of medical problems and burdensome costs that their insurance won’t fully absorb – but there are other paths to long-term debt, such as a sudden layoff, a natural disaster, a family issue with financial underpinnings or even an abrupt need to move to another metro area, for whatever reason.

 

How large should the fund be? You decide. An old rule of thumb is six months of net income or six months of expenses. If you are snickering or laughing out loud at your chances of saving that much, you aren’t alone. If your prospects of building a five-figure emergency fund seem remote, try to create one equivalent to two or three months of net income. Any amount is better than none.

 

How do you do it without hurting your standard of living? Few of us have a lump sum we can just reassign for emergencies. So consider these subtle savings opportunities.

> You could pay cash whenever possible, opening the door to incremental savings that credit card companies would otherwise take from you. A few dozen bucks can become a few hundred bucks, then a few thousand bucks over time. Incidentally, in a nationwide survey conducted by Chase Blueprint and LearnVest, 31% of people polled cited credit card debt as a major barrier to achieving financial objectives. The credit card debt carried by this 31% averaged about $5,000. Clearly, living on credit cards will thwart your effort to build a rainy day fund.2

> You could vow not to spend frivolously, thereby retaining money you might be tempted to throw away on impulse.

 

> You could sell stuff – stuff somebody else, maybe down the street or across the country, might want. Incidental shipping and handling costs could seem irrelevant next to the cash you generate.

 

> You could arrange direct deposit or start a seasonal savings account. The psychology behind both moves is simple: you are less likely to spend money if it doesn’t pass through your wallet.

 

Here’s how not to do it. Try to avoid building a crisis fund through self-defeating methods. For example:

 

> Don’t start an emergency fund with a loan. Do it with your own accumulated savings, bonus money from your job performance, royalties – whatever the origin, use money you have made or and/or saved yourself, not money you have borrowed from lenders or relatives.

 

> Don’t do it using payday loans or cash advances. High-interest short-term loans and cash advances on credit cards are often pitched as rescues to struggling households. Thanks to their absurd interest rates, payday loans are not financial “life rafts” by any means. Cash advances on credit and debit cards come with disproportionately high fees. Sadly, people who go in for these loans and advances once commonly go in for them again.

 

> Don’t refrain from paying certain bills.Let’s say that you have eight debts you have to pay per month. If you only pay three of them each month and carefully alternate which debts get paid down, can you create an emergency fund with the money you avoid paying? Well, yes – but you may imperil your credit rating in the process.

 

If you don’t have a designated emergency fund, you can build it up in the same way that you probably invest: a little at a time, with relatively little impact on your lifestyle. It can be done. It should be done.

«representativename» may be reached at «representativephone» or «representativeemail».

«representativewebsite»

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – www.learnvest.com/knowledge-center/5-ways-to-start-an-emergency-fund/ [8/14/12]

2 – www.foxbusiness.com/personal-finance/2012/11/01/seven-reasons-why-need-to-create-emergency-fund-now/ [11/1/12]

Posted in Texas Life and Health Insurance | 0 Comment