Hunting Season is about to Start – (Home) Hunting

If you are thinking that this is the year to purchase your dream home, it’s time to get ready for the “season”.  Just like hunting or fishing season, there are checklists and things that normally need to be completed before the big Opening Day arrives.

Start by talking to a real estate professional – a Realtor® at the Coup Agency.  Many of our professionals have been guiding home buyers through the “process” for years.  Any Realtor® worth his salt will ask you to first talk to a mortgage lender to be pre-qualified for a loan.  Why?

It’s all about the financing.  Most of all of us need to finance the purchase, as we do not have the means to pay cash for our new home.

Why is the financing the first step?  First, it’s important to know how much money you have in your wallet to start your “shopping”.  Secondly, the type of financing will sometimes dictate type of home or the repairs that may need to be made to qualify for a particular financing program.  Your Realtor® will need to be aware of the financing, to be able to point out repairs that may be required to obtain the financing.  Third, if you are lacking in down payment money or needing assistance with the “closing costs” involved with financing, your real estate professional needs to know that so that when the Agreement of Sale (your offer to purchase) is written, all terms and conditions need to be contained in the offer and this would be one of them.

Fourth, a seller is going to want to know that the offer that you have presented to them (or actually your Realtor® has presented) is legitimate – that you can actually purchase the property.  For this reason, they will require that you submit a Pre-Qualification letter from a lender stating the type of financing and the amount that you have been qualified to purchase with contract.  Sellers are not interested in taking their home off the market for 4 or 5 weeks to find out if you have the financial means to purchase their home.  Thus to write the offer, this letter will need to be submitted with the contract.

There are many prospective buyers who call or come into our office and are ready to look at homes and are frustrated with our real estate professional’s response to refer back to the last paragraph, first, before we can proceed with looking for homes.  If you like a home and don’t have your Pre-Qualification letter, the whole process of making an offer will be slowed down until you have done the necessary steps – see the fourth point above.

It’s fine to start searching for homes online and letting your agent know of your interest in some homes, as long as you have done the first step – talked to the lender about financing.

Should you not have a bank/lender in which you have a current relationship, our Realtors® will have suggestions.  Rate is not the only thing to consider in choosing a lender.  Many lenders have great rates to entice you but their service and performance in getting the mortgage approved can be horrible.  Your real estate professional will be able to assist you in knowing which lenders are superior lenders that will make your “process” as easy and effortless as possible for you and explain everything to you.

Whether you are cleaning or sighting in your gun, getting the hunting clothes out, making sure you have the right lures, getting your waders ready or making sure you have enough beer along for the trip, there are always specific steps that need to be taken for any “season”.  The House Hunting Season is upon us – our Realtors® are ready to be your “guide” through the wild world of real estate and to help you “wade through” the process and paperwork.  Use them, ask them questions and rely on their knowledge.

Here’s hoping that you “catch” a great one!

Winter Snow Tips

You and the Snow on Your Roof:

To Shovel or Not to Shovel?

 

Here are some winter snow tips, thanks to Hancock Inspection Services.

Snowstorm after snowstorm, you watch the snow piling up on your roof, inch by inch, and foot by foot. You have icicles upon icicles hanging from the eaves.  Should you get up on the roof and shovel it off?  A very good question.  You must first understand the potential dangers of having excessive snow and ice on your roof. There are two primary areas of concern.

 

The first is structurally related damage created by the excessive amounts of wet heavy snow.  On older roofs there is an even greater danger of structural issues.  Excessive snow weight can also cause structural damage such as cracked walls and weakened framing.  Cracking of walls and unusual noises within the structure are also signs of a structurally stressed building.  In this case, immediate snow removal is required.  Obviously, lower sloped roofs are more susceptible to this kind of damage, than steeper roofs.  Older homes are also more susceptible to this kind of damage, since they were built prior to today’s more stringent building and engineering codes.  Whenever you are in doubt, you should contact a professional engineer or home inspector to review the situation.

 

The second area of concern, is the ice on the eaves of the roof.  Ice dams are often caused by the ice build up the gutters.  Heat loss through the roof of the house melts the snow close to the roof and a dam is created.  This water now freezes and thaws through the temperature changes of night and day.  This thawing and freezing activity creates abnormal wear and tear on the shingles and can cause leaks into the home as water backs up underneath the shingles.

 

Both areas of concern, are excellent reasons for removing the snow from your roof.  The decision to remove snow from the roof area should be done so with safety as the primary concern.  This choice to venture up onto a snow and ice covered roof, should be made understanding this is a very dangerous situation and certain precautions taken.  You should always ensure that someone else will be home while you are on the roof.  This is in the event an accident does occur.   When you are on steeper roofs of over a 6/12 pitch you should ensure your safety, by tying yourself to a large roof object capable of supporting your weight, such as a chimney.  If you choose to hire an individual to do the work, be sure they are carrying the proper insurances.  You may even choose to have them sign a waiver of release of liabilities in the even of an accident and prevent a potential lawsuit.

 

Wear the proper clothing to include rubber-soled boots.  Rubber soled boots will provide the proper footing while on the roof.  Utilize plastic shovels, over metal shovels as they have less of a tendency to rip and tear asphalt and fiberglass shingles.  Always shovel using top to bottom strokes.  The reverse will cause you to catch the edges of the brittle shingles and cause permanent damage.  Never chip or forcefully lift ice from the roof, as this is yet another great way to cause permanent damage to the roof.  Remember the purpose of shoveling the roof is to remove the excessive weight and expose the ice to a natural melting condition.  Always ensure that the ladder you are using to access the roof is secured to the house to prevent a falling incident while accessing or exiting the roof. The ladder should also be free of ice and snow to prevent a slipping hazard.  Use extreme caution when exiting the roof as your muscles will most likely be stressed and tired.  These are just a few of the most common areas often overlooked when venturing up onto the roof.

 

Again, if you are unsure about when and how your roof should be cleaned, the best thing to do is hire a professional who is experienced in this line of work.

Insurance coverage for children in college

A question parents and their college-aged children don’t ask, but need to ask, is, “Will my college student(s) be covered under the parents’ Homeowners’ and Personal Auto policies while they’re living away from home and attending school?” The answer may be, “Yes.” However, the answer may be, “No.” And, sometimes the answer could be, “Maybe….”

Here we review how the parents’ Homeowners’ and Personal Auto policies cover their children when they’re away at college. A word of caution: This discussion is based on the wording of the Insurance Service Office’s (ISO) Homeowners’ and Personal Auto forms. Many insurers have their own company-specific forms, and their policy provisions may not be identical to those found in the ISO forms. As always, consult your insurers’ forms to determine if their terms and conditions are the same, broader or more restrictive than the terms and conditions discussed below.

Scenario

The Millers’ 21-year-old son, Buster, and their 18-year-old daughter, Princess, have loaded their cars and are headed to college. Buster is entering his junior year, and Princess will be a freshman. Buster is sharing an apartment with three of his fraternity brothers, and Princess will live in the dormitory.

 

Homeowners’ policy

Will their “stuff” – clothes, computers, TVs, music systems, books, etc. – be covered under their parents’ Homeowners’ policy? Will they have liability coverage if they cause injury or damage to another person? The Homeowners’ definition of “insured” includes “a student enrolled in school full-time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of 24 and your relative.”

Therefore, as long as Buster and Princess satisfy three requirements – full-time student, resided at home before attending school, and under the age of 24 – they’re considered an insured under their parents’ Homeowners’ policy.

What if it takes Buster five or six years to complete his undergraduate degree or Princess decides to attend graduate school? If they reach the age of 25 before completing school, they’re no longer insureds. However, there is an ISO endorsement, Additional Insured – Student Living Away From the Residence Premises (HO 05 27), that can be used to extend coverage under the parents’ Homeowners’ policy to the student who is age 25 or older.

Since Buster and Princess are insureds, their “stuff” will be covered for the same perils as the personal property located in their parents’ home. However, it could be limited. The Homeowners’ policy’s limit of liability for “personal property usually located at an ‘insureds’ residence, other than the ‘residence premises,’ is 10 percent of the limit of liability for Coverage C, or $1,000, whichever is greater.”

Therefore, if the Millers’ home is insured for $200,000 and they have a personal property limit of $100,000, the “stuff” belonging to Buster and Princess is limited to $10,000. Again, there is an ISO endorsement to address this problem. The Personal Property at Other Residences endorsement (HO 04 50) allows you to purchase an additional amount above the 10 percent of Coverage C limitation.

One area where the Homeowners’ policy provides broader coverage for a student’s personal property than for their parents’ personal property is if the loss is due to theft. Under the peril of theft, the Homeowners’ policy excludes loss caused by theft “that occurs off the ‘residence premises’ of property while at any other residence owned by, rented to, or occupied by an ‘insured,’ except while an ‘insured’ is temporarily living there.” However, this exclusion then states, “Property of an ‘insured’ who is a student is covered while at the residence the student occupies to attend school as long as the student has been there at any time during the 60 days immediately before the loss.” This exception to the exclusion provides coverage for the personal property of college students when they’re home between semesters.

One last comment on Homeowners’ coverage for college students. If they’re living in an apartment rather than a dormitory or a fraternity or sorority house, and qualify, purchase a Tenant Homeowners policy (HO-4).

 

Personal Auto policy

Buster and Princess probably have their own cars. After all, it would be un-American to send a child off to college today without their own automobile. Are there any concerns here? Could be.

Who owns the cars? If titled in the kids’ names, then they need their own Personal Auto policies. What limits will they buy? Probably minimum. Since they’re “family members,” will they have any coverage under their parents’ Personal Auto policy? No. The Personal Auto policy excludes liability for “the ownership, maintenance or use of any vehicle, other than ‘your covered auto,’ which is owned by any ‘family member.’”

If the Millers have a Personal Umbrella, will Buster and Princess be insureds under that policy? Probably. However, in the event of a serious liability claim against Buster or Princess, there could be a major gap of no coverage since Buster and Princess did not purchase and maintain the underlying auto liability limits required by the Personal Umbrella insurer. This is a problem that frequently exists when the kids own the cars, buy the insurance and expect to have coverage under their parents’ Personal Umbrella policy.

What if the cars driven by Buster and Princess are owned by the parents?  No problem as long as they keep those cars listed on the Millers’ Personal Auto policy.

But, what if Mr. and Mrs. Miller are tired of paying those high premiums for the car driven by Buster and they tell him, “When you get settled in school, find a local agent and buy an auto policy in your name.” The Millers then remove that car from their Personal Auto policy.

What liability limits will Buster buy?  Minimum.  That’s guaranteed! Remember, the parents still own the car.  A good agent will probably discover whose name is on the title and list the Millers as named insureds on this minimum limits policy. A sorry agent may issue this policy in Buster’s name.

If Buster is involved in an accident, if the Millers are the named insureds, they will have those minimum limits. If the Millers are not named on the policy purchased by Buster, they could still be covered as “family members.” However, be careful here. Buster is probably insured with a nonstandard insurer whose terms are not as broad as the ISO Personal Auto policy.

What about coverage under their Personal Auto policy that has a liability limit of $300,000? No coverage there. The Personal Auto policy excludes liability for “the ownership, maintenance or use of any vehicle, other than ‘your covered auto,’ which is owned by you.” Again, a gap before the Personal Umbrella responds.

Too often parents of college kids think if they transfer the auto insurance to the kids, they’re getting rid of the exposure. Not true. In order to transfer the auto risk, you have to transfer the title.

Know Before You Owe

By: Santander Mortgage Development Officer, Derrek Fink

What is KBYO? New text speak? No – new mortgage speak!

Know Before You Owe – and here’s what you need to know!

For more than 30 years, we have been hampered by the “twos” under Federal law:

  • Two separate disclosure forms (Good Faith Estimate and Truth in Lending disclosure) when applying for a mortgage; and
  • Two separate forms (Final Truth in Lending disclosure and HUD-1 Settlement Statement) at or shortly before closing on the loan; and
  • Two different government agencies created these forms separately, under two federal statutes – RESPA and TILA

Because the language in these forms was sometimes inconsistent and in some areas covered the same information, consumers found them confusing and as lenders and realtors we often found them hard to explain.

We all admit applying for a mortgage can be daunting and sometimes confusing, so the Consumer Financial Protection Bureau, (CFPB) as required under the Dodd Frank Act, set out to create new forms, in effect taking the information in four previous forms and whittling it down to two new disclosures that are intended to be much simpler for consumers to understand. These two new disclosures are the Loan Estimate, which must be provided to customers no later than three business days after they submit a mortgage application, and the Closing Disclosure, which must be provided to customers at least three business days before closing.

The CFPB also sought to ensure that the Loan Estimate and the Closing Disclosure are designed to work with each other. Both disclosures are written in language that is clear and concise, and the overall layout is easier for the customer to navigate through to locate the interest rate, monthly payment amount and the actual costs of the mortgage loan they are seeking. One of the CFPB’s goals was to provide all of the financial information to the customer in the least amount of forms which would allow them to clearly decide whether they could ultimately afford the loan. These forms also make it easier for them to compare several offers side-by-side.

KNOW BEFORE YOU OWE!

Specific benefits:

  • Four forms merged into two concise ones – less paper = less confusion
  • Clear language and format that is easy to read and navigate through to find all important information – interest rate, monthly payments, total closing costs
  • Spelling out important information about taxes, insurance and how payments could potentially change in the future
  • Clearly highlighting any potential applicable penalties – such as early loan payoff
  • Explaining cost estimates for such services as appraisal or pest inspection fees

Requiring that the customer is provided the Closing Disclosure at least three business days before closing on the mortgage loan, should alleviate the anxiety caused when the consumer receives this information at closing! The three days will give consumers time to review and better prepare them for settlement.

Effective date

This rule is effective August 1, 2015. The final rule applies to applications submitted on or after August 1, 2015.

Go to these links to see the new Loan Estimate and Closing Disclosure

http://www.consumerfinance.gov/f/201311_cfpb_kbyo_loan-estimate.pdf

http://www.consumerfinance.gov/f/201311_cfpb_kbyo_closing-disclosure.pdf

A Checklist for First Time Buyers

RomigChrisOur thanks to Chris Romig, who is a Residential Mortgage Banker Team Leader Susquehanna Bank for writing this article for us. 

As a first time homebuyer, the entire process of buying a home can be overwhelming!  You will get a lot of advice from parents, friends, professionals, and even random people at the supermarket.  How can anyone possibly sort through all the information and make a sensible decision on what to buy, where to buy it, and who to use for financing?  Hopefully a few tips can help you through this process.

  1. Do your homework.  Before looking at homes and getting preapproved, do your own budgets.  I always tell my clients—“I can approve you for this number, but you need to be comfortable because you are the one making the payments.”  YOU need to know what you can afford.
  2. Get preapproved.  This is where you should make initial contacts with banks and determine where you feel most comfortable.  Rate is important—but the comfort you have with the person on the other side of the desk means a lot too!  Whatever bank you choose should be able to explain multiple options to you and put your mind at ease as you start the home buying process.  Getting multiple preapprovals is never necessary.

Your buyer’s agent is also going to want to see a copy of your preapproval letter for several reasons.  One is that the type of financing you are qualified for, may affect the type of home that may fit into that mortgage program.  Also, offers being submitted on a property need to be accompanied by a copy of your preapproval letter so that the seller and their agent know that you have the ability to purchase the home at your offering price.  This will be especially be true in a multiple-offer situation, which many times happens in a “hot market” or newly listed property.

  1. Choose a realtor.  Again, just as with the bank, do your due diligence and select an agent that you feel most comfortable with.  I don’t recommend calling a different agent depending who has the sign in the yard.  A buyer’s agent will answer all your questions, understand your home needs, and even more importantly, know your financing requirements.
  2. Be patient.  The entire process can be lengthy and frustrating at times.  With good people by your side (bank and realtor), you can feel comfortable guiding your way to that right fit in a home.  Buying a home is never a race—and the last thing you want to do is make a decision based upon a short sided need.  The right house is out there for everyone!
  3. Ask questions.  Never feel a question isn’t important.  If you don’t understand something, ask.  Whoever is your professional in the transaction should welcome all of your questions and want to make you feel secure in what you are doing.

Hopefully, these five tips can assist you as you enter the realm of homeownership.  Again, it can be quite a frightening endeavor and a huge financial commitment.  Having the right mindset and the right professionals on your side will make buying a home a happier experience!

Fed: Interest Rate Hikes Likely, SOON

The National Associate of Realtors (NAR) is reporting that the Federal Reserve is indicating that interest rates are about to tick upwards.

Per NAR, the Federal Reserve is signaling that it will likely take action on increasing interest rates in two months, despite recent data that shows a weakened economy. This would be the first rate increase since 2006.

How to address buyer concerns: ‘I’m Worried About Mortgage Rates’
Two central bank officials said Wednesday that disappointing job growth, manufacturing activity, and retail sales over the winter had pushed rate hike expectations to later in the year. For more than six years, the Fed has held rates near zero. But June is being viewed as the likely month for the Fed to start its rising of rates.

“I could imagine circumstances where a June rate hike could still be in play,” says William Dudley, New York Fed president, and a voting member on the Fed’s policy committee. “If the economy’s strong, the unemployment rate is dropping, wages are rising, and the outlook is good, you could conceivably get to that point. The bar is probably a little bit higher” for a June hike given recent data.

The minutes from the Fed’s mid-March policy meeting, which were released Wednesday, also indicated that June would be a likely start time for Fed officials to start hiking rates. The Fed also indicated that once they did start raising rates, they would do so gradually.

But even a slight rate hike could have ripple effects throughout the economy. The most obvious impact to the housing market would be a rise to mortgage rates. Rates have been near historical lows for years. An average 30-year fixed-rate mortgage averaged 3.70 percent last week, according to Freddie Mac. “The Fed cut rates to historic lows in 2008 in part to reboot the housing market, which collapsed when the housing bubble popped,” CNNMoney reports. “When the Fed likely raises rates this year, it will push mortgage rates and auto loans up. That said, it’s uncertain if that will cause home or car buying to slow down.”

Source: “Fed Officials Say June Rate Hike Still in Play, Hinges on Data,” Reuters (April 9, 2015) and “What an Interest Rate Increase Means for Real People,” CNNMoney (March 19, 2015)

FAQ: We’re Independent – Just Like You!

Here are a few things to consider when you are looking at purchasing insurance and from whom you are purchasing the coverage and peace of mind of being covered.

 

Q: What do you really know about insurance?

A: Do you fully understand why you have insurance, and how it’s supposed to work? When (or if?) you read your policy, do you understand what it means? Are you familiar with insurance law? If you’re like most people, you answered no to these questions. This is one reason why you need an independent insurance agent.

 

Whether you’re an individual or business, buying or shopping for insurance can be unwelcome and annoying – or simply taken lightly. To take it lightly is a mistake. Why? Because insurance is there to protect your most valuable assets – you and your home, cars, business and future. The worst time to find out you don’t have the right policy and coverages is when you need them the most, AFTER you’ve suffered a loss.

 

Q: What is an independent insurance agent?

A: Choosing the right kind of insurance agent can make a big difference in securing the best combination of price and value to fit your needs. Essentially, there are two kinds of insurance agents. One is the “captive agent”, such as those who work for Nationwide or State Farm. A captive agent represents a single company, and can only provide you with information or access to his company’s products. The other is an independent insurance agent. Independent agents have no exclusive relationship with any one company. With an independent agent, you get choices. Why? Because an independent agent represents many insurance companies at once, and works on your behalf to find the best possible rate and coverage to fit your specific needs.

 

Q: What about using a “direct writer” to purchase insurance?

A: “Direct writers” (such as Geico or Safe Auto), sell directly to consumers. As with captive agents, direct writers can only provide information and access to their company’s products.

 

Q: What does this mean for me? 

A: It means, without the experience of an independent agent to assist, inform and guide you, you’re taking on a level of risk you may not realize even exists.

 

Q: Why choose an independent insurance agent?

A: With an independent agent, in addition to having choices, you have the advantage of a licensed professional who will:

 

Evaluate and assess your individual risks and requirements;

Identify and tailor policies that are right for you;

Offer products to meet all of your insurance needs, including auto, home, business, life and flood;

Assist you when you have a claim;

Treat you like a person, and provide excellent, hands-on service.

 

An independent agent will help you understand what your policy actually covers, how much of a deductible to carry and how much coverage you need. When it comes to protecting your family, your assets and your future, you want to do it right, the first time!

 

Q: How do I know what I should do?

A: Making such a personal decision about your options is yours – and yours alone under the law.  As your independent insurance agent, I can help explain these options. Our agency’s job is to help provide you with information on these choices so you can make informed decisions.

Coup Agency Updates their Website

The Coup Agency recently updated their website (www.MiltonPaRealEstate.com) to assist buyers and sellers with their real estate needs.  The most notable change is to their Home Search tab and page.

Rick Coup, Broker, noted that “we are really excited about our new searching capabilities on our website.  Searchers will have many choices to make it easier to find the right property.”  Some of those search features include the ability to search by: community/area, school district, address, Multiple Listing (MLS) number, Coup Agency listings, foreclosures, short sales, price ranges and rentals.

Visitors will also be able to search by the type of property, such as: single family, multi-family, land, farms, commercial, and condo/townhouse listings.  “As soon as a property goes on the market, with any Realtor, it will be available on our website. Our website is so much more timely than the national websites that many use to search for real estate,” according to Coup.

The site also has the capability to search for all the new area listings for the last 24-hour period, as well as a weekly “Hot Sheet” that features all properties that came on the market in the past week.

Those that would like additional features will be requested to register for the ability to save searches and listings, get updates on new listings and price changes, add messages, and to track your favorite listings.  A person will have the ability to bypass the request to register for those additional features if they are not wanted.

Visitors to the site will also have the ability to sign up for the Agency’s monthly newsletter and can read testimonials regarding of the services of the Coup Agency real estate agents from their clients in their own words.  The agency’s blog discusses many different insurance and real estate topics to help buyers and sellers as well as the general public have better insight to the real estate and insurance practices.

These are just a few of the new features on the website.  For all your real estate needs, visit our website.

Most Popular Days for Closings

Fridays and the last business day of the month tend to be the busiest for closings, according to the National Association of REALTORS®. Researchers at NAR analyzed the top closing days of 2014 based on existing-home sales data.

The top seven closing days in 2014 were:

  1. Mon., June 30
  2. Fri., May 30
  3. Fri., Aug. 29
  4. Wed., April 30
  5. Thurs., July 31
  6. Tues., Sept. 30
  7. Fri., Feb. 28
  8. Fri., June 27
  9. Fri., Oct. 31
  10. Fri., Aug. 15

“Spring and summer days figure prominently in the top of the list, but all seasons are represented,” researchers note on NAR’s Economists’ Outlook blog.

The data confirms that, based on existing-home sales data, June and July were the top months for home sales in 2014, followed by August and May. June and July alone accounted for more than 20 percent of the sales that occurred in 2014.

Source: “Part 1: EHS in 2014 by the Numbers – Popular Closing Dates,” National Association of REALTORS® Economists’ Outlook Blog (Jan. 12, 2015)

Tax Planning With Life Insurance

Norm Jones A cash value life insurance policy is a product that helps to secure the financial futures of families upon the death of an individual and enjoys a very favorable tax status.

 

While payments into the policy are generally not tax-deductible (unless the policy is bought within a qualified
retirement program), the death proceeds are received by the policy beneficiaries free of income tax1.  This favorable tax treatment of the policy death benefit reflects the government’s acknowledgement that providing financially for one’s family is an undertaking that should be encouraged.

 

In addition, since the typical cash value life insurance policy is funded with equal payments over the lifetime of the insured, amounts paid in excess of the cost of insurance and other expenses in the early years of the policy are allowed to compound on a tax-deferred basis over the life of the policy.  This tax-deferred cash value growth may allow the policy to be “pre-funded” at reasonable amounts over the life of the policy, rather than requiring an increasing payment as the insured gets older and has a higher probability of dying – which is the way a typical term policy is structured.

 

The structure of a whole life insurance policy with level premiums helps to make a lifetime death benefit protection program work efficiently and remain in force until the insured eventually dies and proceeds can be paid to the family to meet its ongoing financial obligations.  Were the premium to increase each year, eventually the insured might find the cost of the insurance to be too much of a financial burden and discontinue making premium payments, perhaps leading to the lapse of the policy and loss of the needed insurance protection.

 

Another attractive feature of a cash value life insurance policy is the ability to take loans against the value of the policy2 which can be done without current income tax.  Proper policy design from inception is critical to having these intended tax advantages, which is why it is important to work with a knowledgeable life insurance professional.

 

Tax Form with a Man on topFor example, policy loans can be used for a number of purposes over the lifetime of the insured.  One typical use of policy loans is to pay for the increasing costs of attending college.  The death benefit of the policy also serves as a self-completing feature, were the insured to die prematurely, before the family has the opportunity to accumulate sufficient funds to send the children to college.   Life insurance cash values can also serve as a sort of “emergency fund”, which can be accessed when life throws the family a financial challenge.

 
Finally, policy cash values can be accessed income tax-free using policy loans and withdrawals in retirement as a source of supplemental retirement income.  Who among us could not use an additional source of retirement
income?  Of course, accessing policy funds during lifetime will decrease the total death benefit that will be paid out when the insured eventually passes on, and enough cash value must be left in the policy to keep it in-force until the death of the insured.  This is another reason why working with an insurance professional is so important.

 

Many families have come to recognize and appreciate the many tax advantages of cash value life insurance.  Structured properly, such a policy can offer both living and death benefits that complement well their other financial strategies.

 

To determine if the many tax-advantages of cash value life insurance should be a part of your financial strategy, contact a life insurance professional for a thorough review of your particular situation.  You may be surprised to find that you have a number of alternatives that may be able to help you and your family pursue greater financial security in these unsettled times.

 

 

  1. Internal Revenue Code § 101(a)(1).  There are some exceptions to this rule.  Please consult a
  2. qualified tax professional for advice concerning your individual situation.
  3. Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event.  Withdrawals up to the basis paid into the contract and loans thereafter will not create an immediate taxable event, but substantial tax ramifications could result upon contract lapse or surrender.  Surrender charges may reduce the policy’s cash value in early years.

The views and information contained herein has been prepared independently of the presenting representative.  It is presented for informational purposes only, and should not be construed as tax advice.  Please consult with a tax professional before acting upon any such information.

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