Personal Finance and Tax Tips

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What is Term Life Insurance?

by Donn J. Sinclair, MBA – November 5, 2018

This is the most basic form of life insurance, and term life insurance is normally the best value for your life insurance dollar. Term life insurance provides life insurance coverage for a specific period of time or term.   This term period can be a 1-year term, 5-year term, and as long as a 30-year term.

The policy owner pays a premium normally monthly, quarterly, semi-annually, or annually. As long as the premium is paid on time, then the life insurance policy is in effect until at least the end of the term.

The term life insurance period selected should be long enough to provide life insurance coverage for the years when the insurance proceeds would be needed to replace money or income lost due to the insured’s death. If the insured(s) dies during the term life insurance period, then the insurance amount or beneficial proceeds are paid to the beneficiaries. After the term period expires, if the term life insurance was not extended, then there is no longer any insurance, and no beneficial proceeds to be paid. Most term life insurance policies have maximum issue ages. If you are in your sixties or early seventies, then plan ahead with a term life insurance period to match or exceed your insurance needs.

There are three basic types of term life insurance. Annual renewable term insurance premium rise as you age; however, these policies normally have the lowest early year premiums. These policies are best suited to provide a large amount of insurance coverage at low premiums in the early years; with the expectation that you will have increased income or lower other expenses in the years ahead. Another consideration is that you purchase a 20-year annual renewable term life insurance policy, expecting to need the coverage for less than the full term. Should the insurance need continue longer than expected, then you still have coverage years remaining.

The second type is level premium term life insurance. Here both the insurance amount and the premium are locked in for the life of the term life insurance period. You have the peace of mind of the term life insurance and guaranteed not to rise premiums.

The third type is decreasing term life insurance. This type is quite popular for providing mortgage protection for a surviving spouse. The premiums stay level, and the insurance amount decreases to reflect a decreasing mortgage balance. If the insured dies during the term life insurance period, then the beneficiary receives insurance proceeds which should be sufficient to payoff the mortgage balance.

Decreasing term life insurance may also be beneficial for those with no mortgage, yet child(ren) responsibilities. As children grow and the accompanying financial responsibility decreases, the term life insurance coverage decreases to reflect lower financial responsibilities.

Donn J. Sinclair, MBA (803)329-0609
Charlotte NC/Rock Hill SC and Charleston SC
November 5, 2018
Donn J. Sinclair, MBA is SC insurance licensed in CT, GA, IL, NC, SC, and VA (NIPR #125783). SC Real Estate License #76530, and NRDS #554027312.. @Sinclair Financial Solutions is independently owned and operated. Securities offered through Fortune Financial Services, Inc, Member FINRA/SIPC.

 

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What is Term Life Insurance?

by Donn J. Sinclair, MBA – November 5, 2018

This is the most basic form of life insurance, and term life insurance is normally the best value for your life insurance dollar. Term life insurance provides life insurance coverage for a specific period of time or term.   This term period can be a 1-year term, 5-year term, and as long as a 30-year term.

The policy owner pays a premium normally monthly, quarterly, semi-annually, or annually. As long as the premium is paid on time, then the life insurance policy is in effect until at least the end of the term.

The term life insurance period selected should be long enough to provide life insurance coverage for the years when the insurance proceeds would be needed to replace money or income lost due to the insured’s death. If the insured(s) dies during the term life insurance period, then the insurance amount or beneficial proceeds are paid to the beneficiaries. After the term period expires, if the term life insurance was not extended, then there is no longer any insurance, and no beneficial proceeds to be paid. Most term life insurance policies have maximum issue ages. If you are in your sixties or early seventies, then plan ahead with a term life insurance period to match or exceed your insurance needs.

There are three basic types of term life insurance. Annual renewable term insurance premium rise as you age; however, these policies normally have the lowest early year premiums. These policies are best suited to provide a large amount of insurance coverage at low premiums in the early years; with the expectation that you will have increased income or lower other expenses in the years ahead. Another consideration is that you purchase a 20-year annual renewable term life insurance policy, expecting to need the coverage for less than the full term. Should the insurance need continue longer than expected, then you still have coverage years remaining.

The second type is level premium term life insurance. Here both the insurance amount and the premium are locked in for the life of the term life insurance period. You have the peace of mind of the term life insurance and guaranteed not to rise premiums.

The third type is decreasing term life insurance. This type is quite popular for providing mortgage protection for a surviving spouse. The premiums stay level, and the insurance amount decreases to reflect a decreasing mortgage balance. If the insured dies during the term life insurance period, then the beneficiary receives insurance proceeds which should be sufficient to payoff the mortgage balance.

Decreasing term life insurance may also be beneficial for those with no mortgage, yet child(ren) responsibilities. As children grow and the accompanying financial responsibility decreases, the term life insurance coverage decreases to reflect lower financial responsibilities.

Donn J. Sinclair, MBA (803)329-0609
Charlotte NC/Rock Hill SC and Charleston SC
November 5, 2018
Donn J. Sinclair, MBA is SC insurance licensed in CT, GA, IL, NC, SC, and VA (NIPR #125783). SC Real Estate License #76530, and NRDS #554027312.. @Sinclair Financial Solutions is independently owned and operated. Securities offered through Fortune Financial Services, Inc, Member FINRA/SIPC.

 

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Asset Allocation in Your IRA

by Donn J. Sinclair MBA   November 3, 2018

Asset allocation refers to the mix of investments inside your IRA portfolio. That is, how much of your IRA portfolio you invest in stocks, bonds, cash, and other asset classes. The IRA could be a Traditional IRA, IRA Rollover, Roth IRA, SEP-IRA, or SIMPLE-IRA. Your allocation should also consider your investments within each asset class and your temperament for risk.

Finding Your Mix
The concept behind asset allocation is very simple: Don’t put all your eggs in one basket. But the implementation may be somewhat complex. The mix of assets you choose for your IRA depends largely on your personal financial situation and your time horizon. Personal financial considerations include: will you and/or your spouse continue to work seasonally or part-time during retirement; how much you have saved to date for retirement; whether your retirement savings are post-tax or pre-tax(IRA, 401k, etcetera).   Your time horizon is the length of time you have to invest before you need your retirement funds. Several financial goals may require that an IRA portfolio have several time horizons; and these different goals may actually be in conflict.

Your Risk Tolerance

This is your financial ability and emotional willingness to take risk in pursuit of reward with your IRA. Calculating your risk tolerance requires you to examine your income, your assets, your responsibilities, and your ability to cope with stock and bond market ups and downs. When you pursue IRA financial goals as a household, then you must also consider your spouse’s risk tolerance.

Rebalance Your IRA Portfolio

Once you calculate an IRA asset allocation that feels right for you, then periodically you should monitor your allocation. A portfolio that starts out with 60% stock funds and 40% bond funds may shift to 50% stock funds and bond funds, if bond funds outperform stock funds for a length of time. Conversely, if bond funds outperform stock funds, then your asset allocation portfolio may be overweight in bond funds. Should your IRA get out of alignment, then you may rebalance your portfolio by selling or exchanging assets in one category, and buying or exchanging assets in another. Within your portfolio be aware of any rebalancing costs. You should establish regular time periods to review your IRA portfolio, and rebalance your asset allocation as necessary.

 

Changing Times and Course

As you get closer to your financial goal and you time horizon shortens, then your ideal asset allocation could change. Generally you should pursue a more conservative asset allocation when you have less time to reach your financial goals. Life changes including: having children, caring for aging parents, loss of employment, and adverse health may also impact your financial goals and risk tolerance.

 

A Few Words About Risk and Reward in Your IRA

You should carefully consider any savings and investment vehicle’s objectives, risks, expenses, and rewards. Not all savings and investment vehicles may be appropriate for everyone. Every individual is unique, has their own set of financial circumstances, and comfort level with saving and investment risk. Also, prior to any decisions or IRA investing, you should carefully read the available material to better understand the specifics of your selected IRA savings or IRA investment vehicle.

You should consult your tax advisor or www.IRS.gov for more information. The above information is intended as educational information and not as investment advice. This is a great time to check and update the beneficiary designations on your Traditional IRA, Roth IRA, and any IRA Rollover.

 

Donn J. Sinclair, MBA    November 3, 2018    (803)329-0609

@Sinclair Financial Solutions is independently owned and operated. Donn J. Sinclair, MBA is SC insurance licensed in CT, GA, IL, NC, SC, and VA (NIPR NPN#1722815). SC Real Estate License #76530, and NRDS #554027312. Securities offered through Fortune Financial Services, Inc,3582 Brodhead Road, Suite #202, Monaca, PA 15061;branch office of record located at 948 Myrtles= Drive Rock Hill, SC 29730, Member FINRA/SIPC. @Sinclair Financial Solutions and Fortune Financial Services, Inc are separate entities. Updated in Charleston SC and Rock Hill SC