Blogs

Monday March 11, 2019

What is an Indexed Annuity?

An indexed annuity is a special class of annuities that yields returns on contributions based on a specified equity-based index. One can purchase this annuity from an insurance company, and similar to other types of annuities, the terms and conditions associated with payouts depend on what the original annuity contract says.

BREAKING DOWN Indexed Annuity

Indexed annuities offer annuitants the opportunity to earn higher yields based on stock market performance with protection against market declines. However, it is also common for an annuitant to experience lower-than-expected yields due to the combination of caps on the maximum amount of interest earned and fee-related deductions. The real challenge is in understanding how an indexed annuity works, as it is much more complex than a standard fixed annuity.

How is the return calculated?

One element of indexed annuities that is often misunderstood is the calculation of the investment return. To determine how the insurance company calculates the return, it is important to understand how the index is tracked, as well as how much of the index return is credited to you.

Index tracking. The amount credited to your account depends, in part, on how much the index changes. Insurance companies use various methods to track changes in the index value. For example, they may use different time periods, such as a month, a year, or even longer periods of time. It is important to understand how the index is tracked, as it will have a direct impact on the return credited to you.

The amount an insurance company credits to you depends on a variety of factors (any of which can potentially be combined), such as:

•          Cap, which is an upper limit put on the return over a certain time period. For example, if the index returned 10% but the annuity had a cap of 3%, you receive only a maximum 3% rate of return. Many indexed annuities put a cap on the return.

•          Participation rate, which is the percentage of the index’s return the insurance company credits to the annuity. For example, if the market went up 8% and the annuity's participation rate was 80%, a 6.4% return (80% of the gain) would be credited. Most indexed annuities that have a participation rate also have a cap, which in this example would limit the credited return to 3% instead of 6.4%.

•          Spread/margin/asset fee, which is a percentage fee that may be subtracted from the gain in the index linked to the annuity. For example, if an index gained 12% and the spread fee was 4%, then the gain credited to the annuity would be 8%.

•          Bonus, which is a percentage of the first-year premiums received that is added to the contract value. Typically, the bonus amount plus any earnings on the bonus are subject to a vesting schedule that may be longer than the surrender charge period schedule.2, 3 Given the typical vesting schedule, the bonus may be entirely forfeited upon surrender in the first few contract years.

•          Riders, which are extra features, such as minimum lifetime guaranteed income, that can be added to the annuity for additional costs, further reducing the return.

 

Before purchasing an indexed annuity, make sure you not only understand each feature, but also how the features work together, because this combination can have a significant impact on your return. You should also understand any fees or expenses that come with a particular product. Indexed annuities can be expensive and have been known to have substantial surrender charges if you surrender the policy early, and you may incur a tax penalty that could reduce or eliminate any return. Be prepared to ask your insurance agent, broker, financial planner or other financial professional specific questions to determine whether an indexed annuity is right for you. 

 

 

Monday March 11, 2019

Major Veteran Benefit Programs

The VA has a number of programs providing financial, medical and other assistance to veterans. For veterans who received an honorable or general discharge, there are 4 major benefit programs:

Important Documents:

If you are applying for a VA benefit for the first time you must submit a copy of your service discharge form (DD-214, DD-215, or for WWII veterans, a WD form), which documents your service dates and type of discharge, or give your full name, military service number, branch and dates of service.

Your service discharge form should be kept in a safe location accessible to the veteran and next of kin or designated representative. Your preference regarding burial in a national cemetery and use of a headstone provided by VA should be documented and kept with this information.

The following documents will be needed for claims processing related to a veteran's death:

  1. veteran's marriage certificate for claims of a surviving spouse or children;
  2. veteran's death certificate if the veteran did not die in a VA health care facility;
  3. children's birth certificates or adoption papers to determine children's benefits;
  4. veteran's birth certificate to determine parents' benefits.

Many veterans know about the basic health care and education benefits available to them through the Department of Veterans Affairs: Tricare and the GI Bill.­­­ While these benefits alone are substantial, numerous other programs help provide more benefits to veterans and their families. Even within the health care and education programs are little-known benefits to improve the lives of veterans and help ease the financial burden of medical care or other expenses. Here are 10 veterans benefits you haven’t heard about that all veterans should see if they qualify for.

  1.      Long-term Care
    Long-term care is expensive, but often necessary to provide care for aging relatives. Through the Aid and Attendance program, many veterans are eligible to receive money to cover the cost of nursing homes, assisted living programs and other long-term care options. With the ability for couples to receive up to $25,020 a year, the Aid & Attendance benefit will help take care of a significant portion of long-term care costs. Surviving spouses of veterans are also eligible to receive up to $13,560 a year to cover their long-term care costs.
  2.   Caregiver Support
    Should you choose to take care of an ailing Veteran at home, the Department of Veterans Affairs offers a caregiver support program. While this program does not offer any monetary support to caregivers, they are provided with a free support line and a caregiver support coordinator to help navigate military benefits and the stress of care giving.
  3.     Death Benefits
    When a veteran dies, families have a few unique benefits available to them. A U.S. flag may be requested to drape over the casket and families may request a Presidential Memorial Certificate to honor the deceased loved ones service. The Department of Veterans Affairs also provides free headstones or grave markers.
  4.      Certification Programs
    In addition to receiving credits to use toward a college degree, the GI Bill offers up to $2,000 to help cover the cost of certification courses or other vocational training programs. This benefit will work well for veterans who wish to change careers or pursue a career path that does not require a college degree.
  5.    Transferring GI Bill® Credits
    Unused credits through the GI Bill may be transferred to spouses and dependents of veterans. There are service limits required to transfer the benefits.

6.    Free Tax Preparation
Veterans and their family have access to free tax preparation services through the Volunteer Income Tax Assistance offices on military bases. The individuals who work in the offices have expertise working with the complicated nature of military-related tax issues.

7.    Life Insurance
Many veterans have trouble obtaining traditional life insurance, particularly if they sustained an injury during their time of service. Through the Servicemembers’ and Veterans’ Group Life Insurance program, veterans may receive up to $400,000 in life insurance. This program also offers competitive premium rates.

8.    Mortgage Help
Veterans having trouble making their mortgage payments are eligible for repayment assistance through the Department of Veterans Affairs. Options for help include special repayment plans, loan forbearance and loan modification programs. Additional benefits are available for veterans with VA loans and for homeless veterans.

9.    VA Foreclosures

The VA maintains a list of homes serviced by VA loans that have gone into foreclosures. Veterans have the ability to search the list of VA acquired properties and purchase homes at a discount. You do not have to be a veteran to search the properties, but all properties qualify for VA financing.

10.    American Corporate Partners
American Corporate Partners connects veterans with top companies to help them obtain a job after their time of service. Along with being connected to job opportunities, veterans have the opportunity to receive one-on-one mentoring and other career development services.

 

 

 

Friday February 8, 2019

Announcing the National Senior Discount Benefit Program

(NSDBP) pays 100% of funeral expenses up to $40,000, regardless of your health condition, giving you peace of mind. No medical exam is required, and one nice benefit of the program is coverage builds cash value which can be used for family emergencies, such as medical bills, long term illness etc. Unlike term insurance which does not offer cash value and expires after the specified time period, whole life insurance protects you up to age 121 and gives you access to cash if you need it.

How does the NSDBP Work?

(NSDBP) is meant to cover the cost of funeral and burial services. However, unlike burial insurance and preneed or prepaid funeral packages, the program can also help cover outstanding debts, probate fees, and other remaining expenses. This also allows you to choose your beneficiary, unlike burial insurance and preneed plans. While a preneed plan is usually payable to the funeral home, a final expense benefit goes straight to the beneficiary you choose. It works like a savings account, with the balance going up as you pay in.

  • It allows you to select a beneficiary, which means you can choose an agent who’s legally responsible for the allocation of benefits. Commonly, people choose a partner or relative to act as a beneficiary to ensure instructions are followed and funds are properly distributed.
  • You won’t be required to take a medical exam to receive coverage, and your policy won’t be cancelled due to changes in health. It is also available to those in poor health with graded benefits, meaning only a portion of your policy will be available for the first few years of coverage.
  • Additional benefits can be awarded in the case of an accidental death.
  •  This allows loved ones to use the benefits for the expenses they need to pay, as opposed to just covering burial costs. This coverage includes common final costs, such as medical bills, probate or legal fees, and other expenses other policy types don’t cover.
  • The flexibility also extends to your choice of service providers. This means you can allocate funds without being tied to a certain provider, geographic area, or plan. It leaves your options open, a great benefit given the length of time that may pass between choosing and using a policy.

The National Senior Discount Benefit Program (NSDBP) is designed to help with final expenses and more. It can provide affordable protection that pays benefits directly to the person you choose to take care or your outstanding medical bills, unexpected expenses or debt that you leave behind.

  • For ages 50-85
  • Face amounts from $2,000 to $40,000
  • Accelerated Death Benefit for Terminal Illness or Nursing Home Confinement Rider included in the policy at no additional cost
  • Optional: Accidental Death Benefit Rider
  • We offer competitive premiums that fit many budgets
  • The life insurance cannot be cancelled for any reason as long as the premiums are paid.
  • There is no medical exam; coverage is based on answers to a few health questions
  • Paid benefits do not decrease
  • Premium rates never increase
  • Benefits are paid to your beneficiary.

 

Thursday January 10,2019

Should I save now or save later?

 
 
Should I save now or save later?
 
Fact of the matter is, the longer you put anything off, harder it is to get started on it later. Though you may feel that today’s expenses are a lot to take one with your current salary, there are still ways you can save for your retirement. if you wait to save for retirement, you risk not saving enough for retirement.
If you choose to save even a small amount each month, you may be able to save a great amount over time. One useful method is to choose a dollar amount or percentage of your salary every month to pay into your retirement savings. With this method, you will be essentially treating your retirement as a required expense.
Here’s a hypothetical example of the cost of waiting. Two friends, Chris and Leslie, want to start saving for retirement. Chris starts saving $275 a month right away and continues to do so for 10 years, after which he stops but lets his funds continue to accumulate. Leslie waits 10 years before starting to save, then starts saving the same amount on a monthly basis. Both their accounts earn a consistent 8% rate of return. After 20 years, each would have contributed a total of $33,000 for retirement. However, Leslie, the procrastinator, would have accumulated a total of $50,646, less than half of what Chris, the early starter, would have accumulated ($112,415).
This example makes a strong case for an early start on saving so that you can take advantage of the power of compounding. Your contributions have the potential to earn interest and so does your reinvested interest. This is a great example of having your money work for you.
Suppose you have trouble saving money on a regular basis. Try savings strategies that take money directly from your pay check on a pre-tax or after-tax basis. Examples of this include employer-sponsored retirement plans and other direct payroll deductions.
Which ever method you choose, it’s extremely important to start saving now and not later. Even small amounts can grow to large amounts in the future. Another saving strategy you could try is to increase contributions by as little as 1% each year as your salary grows.
For more information on saving for retirement, click here or call us today at 201-342-3300. One of our associates will be happy to speak to you.

 

 

 

 

Refinancing Methods

 
 
 
 
Refinancing Methods
 
As you may know, fixed mortgages were almost at their lowest in almost 30 years. If you are one of the many people who took out mortgages a few years prior to that, you may be wondering if you should look into refinancing.
If you have a mortgage that was taken out within the past five years, it may be worthwhile to if you can get the financing at least one or two points lower than your current interest rate. You should plan on staying in the house long enough to pay off the loan transaction charges.
Based on your situation, you will have to see which type of mortgage suit you best. For example, if you plan on staying in your home for several years, and the current interest rate is rising, your best bet is a fixed-rate mortgage. Conversely, if you will be moving within a few years, an adjustable mortgage would be best. Please make sure that you will be able to cover the increasingly higher payments in the event that interest rates rise.
One way to use refinancing to your advantage is to take out a new mortgage for the same duration as your old one. The lower interest rate will result in lower monthly payments.
For example, if you took out a $150,000 30-year fixed-rate mortgage at 7.5 percent (including transaction charges), your monthly payment is now $1,049. Refinance at 6 percent with a 30-year fixed-rate mortgage of $150,000 (including transaction fees), and your payment will be $899 per month. That’s a savings of $150 per month, which you can then use to invest, add to your retirement fund, or do with it whatever you please.
Another option is to exchange your old mortgage for a shorter-term loan. Your 30-year fixed-rate payment on a $150,000 loan was $1,049 per month. If you refinance with a 15-year fixed mortgage for $150,000 — including transaction costs — at 6 percent, your monthly payment will be $1,266. This payment is only $217 more than your previous mortgage, but your home will be fully paid for several years sooner, for a savings of more than $150,000! And some banks around the country are beginning to offer 10- and 20-year mortgages.
If you are considering refinancing your home, please consider speaking to one of our financial advisors at Federal National Funding by calling 201-342-3300.
 

Tuesday December 18, 2018

 

Effects of Inflation

 
 
 
Effects of Inflation
 
If you have long term savings goals such as saving for your children’s college education, or retirement, you’ll want to read today’s blog on the effects of inflation.
To put it simply, inflation is the increase of the price of products over time. The rate of inflation fluctuates over time, sometimes it can run high, other times, it’s so low we don’t notice. But all these fluctuations are generally short term, what we need to focus on is the long term.
Over the years, inflation can chew away at the purchasing power of your income and wealth. This means that even as you save and invest, your wealth buys less and less as time goes on. Those who put off investing and saving will feel this impact even more.
While one cannot deny the effects of inflation, there are ways to fight them. For starters, you should own at least some investments whose potential return is greater than the inflation rate. For example, if a portfolio earns 3% when inflation is at 4% the investment will lose purchasing power over time. While past performance isn’t an indicator of future results, stocks have provided higher long term returns than cash alternatives or bonds. Still, one has to be aware that even with that potential, there is greater risk and potential for loss. Because of this volatility stocks may not be the best option for the money you count on being available in the short term. You will also have to think about whether you have the financial and emotional capacity to ride out these ups and downs as you pursue higher returns.
Diversifying your portfolio — spending your assets across a variety of investments that may respond differently to market conditions — is one way to help manage inflation risk. However, diversification does not guarantee a profit or protect against a loss; it is a method used to help manage investment risk.
Remember, all investing involves risk, including the potential loss of principal. There is no guarantee that any investment will be worth what you paid for when you sell.
For more information about the effects of inflation, or for more strategies to fight against it click here, or call Federal National Funding today at 201-342-3300. One of our associates will be happy to speak to you.

 

 

How long will it take to double my money?

 
How long will it take to double my money?
 
 
The simplest way to figure this out is by utilizing the Rule of 72. The Rule of 72 is a tool that investors use to determine how long it will take for their investment to double in value.
How does the Rule of 72 work?
Let’s lay it out with an example, if you invest $10,000 at 10 percent compound interest, then the Rule of 72 states that in 7.2 years you will have $20,000. You divide 72 by 10 percent to get the time it takes for your money to double. The Rule of 72 is a rule of thumb that gives approximate results. It is most accurate for hypothetical rates between 5 and 20 percent.
I just figured out how long it will take to double my money with the Rule of 72. Is that all?
While to rule of 72 is a great ally to investors in helping them figure out how long it will take to double their money, one needs to remember inflation.
Compound interest is a good tool for investors, but it does not erase the effects of inflation. The real rate of return is the key to how quickly the value of your investment will grow. If you are receiving 10 percent interest on an investment but inflation is running at 4 percent, then your real rate of return is 6 percent. In such a scenario, it will take your money 12 years to double in value.
To learn more about the Rule of 72, click here. If you would like to learn more about us at Federal National Funding, click here, or call us at 201-342-3300. One of our associates will be happy to speak to you.

 

Wednesday November 21, 2018

Difference Between Annuities

 
 
What is an annuity?
To put it simply, an annuity is a contract with an insurance company in which you would make one or more payments in exchange for a future income stream in retirement. Funds in an annuity accumulate tax deferred regardless of which type is selected. Because you do not have to pay taxes on any growth in your annuity until it is withdrawn, this vehicle is an attractive way to accumulate funds for retirement.
For more information on the basics of annuities, watch this video.
There are a several types of annuities, but for now we will focus on the four most common ones: fixed, immediate fixed, deferred fixed, and deferred variable.
Fixed Annuities
With a fixed annuity, you can fund it either with a lump sum (say, with the proceeds from a large gift) or with regular payments over time. In exchange, the insurance company will pay and income stream that will last a specified period of time.
Fixed annuity contracts are issued with guaranteed interest rates. Although this rate may be adjusted, it will never fall below a minimum rate that has been specified in the contract. This guaranteed rate acts as a “floor” to potentially protect a contract owner from periods of low interest rates.
Additionally, fixed annuities provide an option for an income stream that could last a lifetime. The guarantees of fixed annuity contracts are contingent on the financial strength and claims paying ability of the issuing insurance company.
Immediate Fixed Annuity
Usually, an immediate annuity if funded with a lump sum premium to the insurance and payments begin within 30 days or can be deferred up to 12 months. Payments can be made monthly, quarterly, annually or semiannually for a guaranteed period of time or for life (whichever is specified in the contract). Only the interest portion of each payment is considered taxable income. The rest is considered a return of principal and is free of income taxes.
Deferred Fixed Annuity
With this type of annuity, you can make regular payments to an insurance company over time and allow the funds to build an earn interest during the accumulation phase. During this process, taxes are postponed, and you get to keep more money to work and grow for you. This means that an annuity may help you accumulate more over the long term than a taxable investment. Any earnings are not taxed until they are withdrawn, at which time they are considered ordinary income.
Deferred Variable Annuity
Rather than fixed returns, a variable annuity provides fluctuating returns instead of the usual fixed ones. The key feature is that you get to choose how to control and invest your premiums by the insurance company. Therefore, you decide how much risk you want to take on and you also bear the investment risk.
Most variable annuity contracts offer a variety of professionally managed portfolios called “subaccounts” (or investment options) that invest in stocks, bonds, and other vehicles. A part of your contributions can be placed in an account that offers a fixed rate of return. Your premiums will be allocated with the subaccounts you select.
Unlike a fixed annuity, with pays a fixed rate of return, the value of a variable annuity contract is based on the performance of the investment subaccounts you choose. These subaccounts will fluctuate according to market conditions, in fact, the principle may be worth less than you the original cost of the annuity when surrendered.
Another great thing about variable annuities is that they have the double benefits of investment flexibility and potential for tax deferral. The taxes on all interest, dividends, and capital gains are deferred until withdrawals are made.
When you reach a point where you want to receive income from your annuity, you can choose a lump sum, a fixed payout, or a variable payout. The earnings portion of the annuity will be subject to ordinary income taxes when you begin to receive income. Annuity withdrawals are taxed as ordinary income and may be subject to surrender charges plus a 10% federal income tax penalty if made prior to age 59½. Surrender charges may also apply during the contract’s early years.
Annuities have contract limitations, fees, and charges, which can include mortality and expense risk charges, sales and surrender charges, investment management fees, administrative fees, and charges for optional benefits. Annuities are not guaranteed by the FDIC or any other government agency; they are not deposits of, nor are they guaranteed or endorsed by, any bank or savings association. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company.
For an annuity quote, click here. If you would like to learn more about annuities, click here, or call us at 201-342-3300. One of our associates will be happy to speak to you. 

Depression in Seniors

 
 
Depression in Seniors
 
 
Is your elderly loved one more tired or irritable than usual? Are you noticing that they are eating less than normal? Have they lost interest in things they would normally enjoy and indulge in?
These are not typical signs of old age. These are common signs of depression.
 
Depression among seniors is unfortunately, more common than you might think. About one in five seniors in America have either full blown depression or a form of depression.
You may be asking yourself, what is depression? Depression is a common but serious mood disorder that effects millions of people around the world. It causes people to be less active in many areas of life, (eating less, going out less, sleeping more) and it can also be coupled with worry and anxiety. Depression is often considered synonymous with sadness, but it is a stretch. Often, people who are depressed often cannot pinpoint why they are depressed, because it’s caused by an imbalance of chemicals in the brain.
 
Sometimes symptoms of depression in seniors are confused with that of dementia. For example, slow movements and memory might be off with both dementia and depression affected elderly people. However, seniors with depression have no problem with remembering dates, places or things.
As for treatment, there are options. First off, there’s psychotherapy. This is where a social worker, or psychologist worth in hourly sessions with the client with proven methods to overcome the depression and to develop healthy coping mechanisms. Depending on the cause of the depression, solutions might vary. For example, if the depression is caused by loneliness, the solution might be to visit friends and family and community involvement. Another option is medication. Antidepressants are designed to regulate the chemical imbalance in the brain.
Unfortunately, there is a stigma associated with mental illness that is a greater among older people. Thus, many seniors will refuse to initially admit that they have depression. But if left untreated it can deteriorate the quality of life for a person. If you suspect that your loved one may have depression we recommend that you see a geriatric health care specialist.

 

Wednesday October 17, 2018

College Financial Aid

 
College Financial Aid
 
If you are getting ready for college or have children who are nearing the end of high school, today’s blog will be well worth the read as we will discuss financial aid for college.
Financial aid can consist of the following: loans, grants, scholarships and work study. Grants and scholarships are preferred because they do not have to be paid back, unlike student loans which does have to be paid back with interest or work study which requires a work commitment. In general there are three main sources for college grant aid: the government, state higher education agencies, and colleges.
 
To be considered for any type of grant aid, you or your child should file for the federal government’s financial aid application (FAFSA). In addition private colleges, usually require the CSS Profile form of their own individual aid form. The FAFSA and CSS Profile can be filled out and submitted online (is free but the CSS Profile has a fee). Please note that these forms do take some time to fill out, but it will be worth it. Not only are these forms a prerequisite to various types of grant aid, but some colleges may require them in order for students to be eligible for college merit scholarships. Keep in mind that students must reapply for financial aid annually.
U.S. Government Grants
There are two main federal grants for college; Pell Grants and Federal Supplemental Educational Opportunity Grants (FSEOGs). Both are based on financial need.
The Pell Grant program is the United States’ largest financial aid grant program. Pell Grants are made available to undergraduate students with exceptional financial need and are the foundation of every undergraduate student’s financial aid package (for those who qualify). Graduate students are not eligible. Pell Grants are administered by the federal government and awarded on the basis of college costs and financial need. Financial need is based on factors such as family income and assets, family size and the number of college students in the family.
The second largest program is the FSEOG and it is available to students who present the greatest financial need. Priority is given to Pell Grant recipients. The FSEOG is a campus based program, meaning the financial aid office of each college administers it. Every college receives a certain amount of FSEOG funding from the federal government every year. Even if a student is eligible based on their financial need, the college may have already used up all the funds for that year.
State Grants
Many states offer programs as well, each one is different, and they tend to prefer state residents attending in-state schools. For more information, please contact your state’s higher education agency.
College Grants
Many colleges offer specialized grant programs. This is true for older schools with many alumni and large endowments. These grants are usually based in scholastic ability or financial need.
For more information on college financial aid, college funding click here or call our office at 201-342-3300. One of our associates will be happy to speak to you.

 

 

Friday, September 14, 2018

Avoiding Probate

Avoiding Probate
 
Many people will have their estate go through probate after they pass on. But what is probate? Why should we be concerned about it? And how can we avoid probate? On today’s blog we will answer all these questions and more.
Probate refers to the court proceedings that conclude all of your legal and financial matters after your death. The probate court distributes your estate according to your wishes—if you left a valid will—and acts as a neutral forum to settle any disputes that may come up regarding your estate.
There are a number of problems with the probate process that make it worth avoiding.
First off, the probate process may take a great deal of time. Often, it will take months or even more than a year—complex or contested estates can take even longer. With few exceptions, your heirs will have to wait until probate is over to receive their inheritance.
As for the cost of probate, it can vary from state to state depending on where it is carried out. Though all states require the payment of the court fees (which may only be a few hundred dollars), attorney fees will add significant amounts to this cost. Typically, attorney fees are based no what is reasonable for the tasks at hand. These fees can go up dramatically if the will is contested or when something extraordinary arises.
Depending on your state, probate and administrative fees can take up between 6 and 10 percent of your estate. That percentage is calculated before any deductions or liens are taken out.
Fortunately, there are strategies you can use to help avoid the probate process altogether. A trust may enable you to pass your estate on to your heirs without ever going through probate at all. While trusts offer numerous advantages, they incur upfront costs and ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional and your legal and tax advisers before implementing such strategies.
To learn more about avoiding probate, click here, or call our office at 201-342-3300. One of our associates will be happy to speak to you.

 

Friday, September 14, 2018

What is Asset Allocation?

 
What is asset allocation?
 
 
 
Asset allocation is about not putting all your eggs in one basket. It is a systematic approach to diversification that can help you determine the most efficient mix of assets based on your risk tolerance and time horizon.
What asset allocation seeks is to manage investment risk by diversifying a portfolio among the major asset classes (stocks, bonds, and cash alternatives). Each one has a different level of risk and potential return. At any given point, one asset may be increasing in value while another may be decreasing. Diversification is a way to help manage investment risk. And although asset allocation and diversification do not guarantee a profit or protect against a loss, it can help cushion the blow when one asset class drops in value.
You may protect your portfolio from a major loss from a single asset and ride out market fluctuations by dividing your assets this way. It is also important to understand the risk versus the return trade off—the greater the potential return, the greater the risk.
As a result, your portfolio should be based on your risk tolerance. Generally, you should not place all your assets in those categories that have the highest potential for gain if you are concerned about the prospect of a loss. It is essential to find a balance of asset classes with the highest potential return for your risk profile.
Other important factors to consider creating an asset allocation strategy are investment goals and time horizon. Ask yourself: what do I want to accomplish? Do you want to buy a new house or car soon? Do you want to pay for your children’s college education? When you retire, do you aspire to travel or buy a vacation home? You should consider all your aspirations when outlining an asset allocation strategy.
If you would like to learn more about asset allocation, click here, or for a more personal assessment to see what’s best for you, call our office at 201-342-3300. 

 

Wednesday, March 21, 2018

Auto Insurance

 
 
Today’s article on the types of auto insurance may serve as a great tool to learn about the types of car insurance available. There are four main types of auto insurance: liability, uninsured or underinsured motorist, collision and comprehensive and personal injury. It is required by most states to carry certain types of auto insurance.
 
Liability Insurance
Liability insurance is usually considered a necessity and many states have a minimum legal requirement for liability coverage. This type of insurance helps protect against injury claims and property-damage suits (up to policy limits) brought by other drivers, pedestrians or property owners if you are at fault in an accident. Your liability policy helps pay for injuries suffered by others and the cost of damage to other people’s property, as well as legal costs if necessary, up to a dollar limit.
 
You can choose a policy with an overall limit for all liabilities or you can select one with separate limits for (1) individuals injured in an accident, (2) all injuries in the same accident, and (3) property damage.
 
Uninsured or Underinsured Motorist Coverage
A policy with an uninsured motorist provision will pay damages if an uninsured motorist or a hit-and-run driver injures you and/or your passenger(s). you cannot buy more coverage against an uninsured driver than you carry yourself in liability. For example, if you carry $25,000 coverage per person and $50,000 per accident, you can buy only up to those amounts of coverage against an uninsured driver. You can also add protection against inadequate insurance coverage by another driver who injures you or damages your property in an automobile accident. This provision means that your policy will pay for injuries or damage that the other driver's policy does not.
 
Collision and Comprehensive Coverage
Collision insurance reimburses you for repair costs to your vehicle that were caused by a collision. While this coverage is great, please note that it can also be the most expensive. Comprehensive coverage helps pay for damage due to fire, storm, vandalism, or theft. If a lender holds a lien on your car, the lender will likely require you to pay for both collision and comprehensive insurance. To lower the cost, of this insurance, you may choose a higher deductible. Although this increases your out of pocket expenses in the event of an accident, it may result in lower premiums.
 
Personal Injury Protection
Residents of states with “no fault” insurance, must buy personal injury protection. Personal injury insurance will pay your medical expenses in the event of a car accident, regardless of who was at fault. When you purchase this protection, you agree not to sue for any suffering or injury you may sustain.
 
If you would like a quote for auto insurance, click here.
 
For more information on auto insurance, click here, or call our office today 201-342-3300. One of our associates will be happy to speak to you.

 

Monday, March 19, 2018

Life Insurance for Business Owners

 
 
Did you know that life insurance is not just for individuals? Life insurance can be bought by a business owner to insure the business in the event of the death of a key employee. On today’s blog we would like to discuss life insurance policies for business owners and what one can do with the benefit money.
 
Purchase a buy-sell agreement
Generally, with a buy sell agreement it is determined before hand what will happen if the owner or a key person dies, or leaves due to a personal decision or disability. The death benefit from a company-owned life insurance policy can be used to purchase the decedent’s interest in the company from their heirs.
 
Replacing lost income
In the event the business continues, there may be a time where the business closes doors for a bit while survivors make a new plan to move forward. If this were to happen, the death benefit could be used to replace lost revenue or pay for costs associated with keeping the doors open it may also help the surviving owners avoid borrowing money or selling assets.
 
Replacing lost income
Most likely, any business owner has family members that are dependent on income from the business. If they were suddenly gone, the proceeds from the death benefit could replace the family’s lost income for a little while until they figure things out.
 
For a more in-depth article about life insurance for business owners, click here, or for personalized attention, please feel free to call out office at 201-342-3300. One of our associates will be happy to speak to you.

 

Wednesday, March 14, 2018

529 Plans

 
 
If you’re like most parents, chances are you would like to find the most suitable way to save for your children’s college education. On today’s blog, we at Federal National Funding would like to introduce you to the 529 plan.
 
A 529 plan (also known as a qualified tuition plan) is a popular way to save for higher education. Perhaps you have heard of the original form of the 529, a state operated prepaid tuition plan that allows you to purchase units of future tuition at to today’s rates with the plan assuming the responsibility of investing the funds to keep pace with inflation. Many state governments guarantee that the cost of an equal number of units in the sponsoring states will be covered regardless of investment performance or the rate of tuition increase. Remember, each state has different rules and restrictions. Prepaid tuition programs will typically pay for future college tuition at any sponsoring state’s eligible colleges or university—some will even pay an equal amount for out of state or private institutions.
 
The other type is the savings plan. It’s close to an investment account but the funds accumulate tax deferred. Withdrawals from state sponsored plans are free of federal income tax as long as they re used for qualified college expenses. Many states also exempt withdrawals from state income taxes for qualified for higher education expenses. Unlike prepaid tuition plans, contributions can be used for all qualified college expenses (tuition, fee, books, equipment, supplies, room and board) and the funds can be used at all post-secondary schools in the United States. Remember that there is a risk associated with this plan—investments may not preform as well as anticipated and may even lose money.
 
In many cases, 529 plans place investment dollars in a mix of funds based on the age of the beneficiary with account allocations becoming more restrictive as the time for college draws closer. Recently, states have hired professional money managers to actively manage and market their plans, so a growing number of investors can customize their asset allocations. Some states enable account owners to qualify for a deduction on their state tax returns or receive a small match on the money invested. Earnings from 529 plans are not taxed when used to pay for eligible college expenses. And there are even consumer-friendly reward programs that allow people who purchase certain products and services to receive rebate dollars that go into state-sponsored college savings accounts.
 
An advantage to the 529 is that contributions are considered gifts to the beneficiary, meaning that anyone can make contributions of up to $14,000 a year without facing gift tax consequences. Additionally, contributions can be made in monthly installments or be paid in a lump sum.
 
For more information about 529 plans click here or call us today at 201-342-3300. One of our associates will be happy to help you.

 

Monday, March 12, 2018

Long Term Costs

 
 
If you have been meaning to learn about long-term care costs, today’s blog is just for you.
 
The majority of Americans don’t have a plan when it comes to paying for long-term care. In fact, many Americans simply live their lives hoping they won’t need it. But in the event that you or your loved ones do need long-term care, there are options for covering the costs.
 
Self-Insurance
When a person self-insures, they pay for the costs themselves and have sufficient income to cover the costs. Keep in mind that although a person may be able to pay for long term care out of pocket now, they may not be able to in the future due to rising costs.
 
Medicaid
Medicaid is a joint federal and state program that covers medical bills for the needy. If you qualify, it may help you pay for long-term care costs. But, to qualify for Medicaid, you need to have few assets or have to spend down your assets. The state laws determine income and resource limits.
 
To get Medicaid assistance, you may have to transfer your assets to meet those limits. But this can be complicated because there are laws made to discourage asset transfers for the purpose to qualifying for Medicaid. We highly suggest meeting with an advisor such as us at Federal National Funding to discuss new Medicaid rules. If you would like to learn more about Medicaid, click here.
 
Long-Term Care Insurance
This type of policy can help transfer some of the economic liability of long-term care to an insurance company in exchange for regular premiums. Long-term care insurance can help pay for skilled care, intermediate care, and custodial care. Most policies pay for nursing home care, and comprehensive policies may also cover home care services and assisted living. Insurance can help protect your family financially from the potentially devastating cost of a long-term disabling medical condition, chronic illness, or cognitive impairment.
 
A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the policy.
 
Long-Term Riders on Life Insurance
A number of insurance companies have added long-term care riders to their life insurance contracts. For an additional fee, these riders will provide a benefit — usually a percentage of the face value — to help cover the cost of long-term care. This may be an option for you.
 
To learn more about long-term care costs, Medicaid, or long-term care riders on life insurance, click here or call us at 201-342-3300. One of our associates will be happy to speak to you.

 

Thursday, March 8, 2018

Homeowner's Insurance

 
 
Your home is one of your greatest assets, thus, you should make sure it is protected. This is where homeowner’s insurance comes into the picture. Homeowner’s insurance can protect against liabilities—when someone is injured on your property—damage to the structure of your home, and/or personal belongings and theft.
 
Though policies vary, a typical homeowner’s policy covers damage from certain “perils”. However, you may need to purchase a separate endorsement or policy to cover disasters such as floods, earthquakes, and tornadoes if you live in a high-risk area.
 
When reimbursing you for a loss, an insurance company will use one of two methods to determine the value of the property: replacement cost and actual cash value. With replacement cost, the insurance company pays you the cost of replacing the damaged property; there is no deduction for depreciation, but there is a maximum dollar amount. With actual cash value, the insurance company pays you an amount equal to the replacement value of damaged property minus a depreciation allowance. Keep in mind that before you are reimbursed, you'll need to satisfy a deductible.
 
Additionally, the typical homeowner’s policy includes liability protection that provides coverage damages caused by your negligence. Medical expenses to third parties your legal costs to any lawsuit brought against you are also included. Most policies provide a standard amount of liability coverage (usually $100,000) per accident.
 
If you re looking for a quote on homeowner’s insurance, click here.
 
For more information about homeowner’s insurance click here, or call us today at 201-342-3300. One of our associates will be happy to speak to you.
 

 

Monday, March 5, 2018

Diversification

 
As a financial firm, we consider it our duty to educate the public on various topics. Today we would like to discuss the benefits of diversification in one’s investment portfolio.
 
But what is diversification?
 
Diversification is an investment strategy used to manage risk by having investment money spread across various investment vehicles. Such investment vehicles may include stocks, bonds, real estate, and cash alternatives. Please note, diversification does not guarantee a profit or protect against loss.
 
The main philosophy of diversification is as follows: don’t put all your eggs in one basket. You can spread the risk among investments, as well as over different industries—this can help offset a loss in any one investment.
 
Likewise, the power of diversification may help smooth your returns over time. For example, as one investment goes up, it covers for one that may be going down. This may allow you to ride out market fluctuations which is helpful for more steady performance under various economic conditions. Diversification can be very helpful as it can bring you more comfort as you invest.
 
For a modest initial investment, you can purchase shares in a diversified portfolio of securities. You have “built-in” diversification. Depending on the objectives of the fund, it may contain a variety of stocks, bonds, and cash vehicles, or a combination of them.
 
If you want to start with a more modest investment, a good start would be to purchase shares in a diversified portfolio of securities. With securities, you have “built-in” diversification. And depending on the objectives of the fund it may contain stocks, bonds, and cash vehicles, or a combination of them.
 
Whether you are investing in mutual funds or are putting together your own combination of stocks, bonds or other investments vehicles it is a good idea to keep in mind with the importance of diversifying. The value of stocks, bonds, and mutual funds, change along with market conditions. Shares when sold, may be worth more or less than their original cost.
 
 
If you are interested in starting your investment portfolio, you can start by reading this article on annuities here, or read up on mutual funds here. Or if you would like personalized attention, feel free to call our office at 201-342-3300. One of our associates will be happy to speak to you. 

 

 

Wednesday, February 28, 2018

How Much Do I Need To Save For Retirement?

 
How much do I need to save for retirement?
 
Fact of the matter is, it depends on several factors, and there is no one size fits all answer. But today we are going to review important factors when calculating how much you need to save for your retirement.
 
Retirement Age
The first step will be figuring out when you will retire. Keep in mind that the reality is that many people retire earlier than they expect. The reason for this is because unexpected issues such as new disabilities, work place changes or health problems may get in your way of working as long as you like. Thus, it’s best to keep that in mind when calculating how much you need to save.  And remember, the earlier you retire, the more money you will need to save.
 
Life Expectancy
We know you can’t know for sure how long you will live. However, you can check your family history and see how long your relatives lived and what diseases are common among your blood relatives. On the other hand, consider that with medical advances many more people are living past their seventies, eighties and even nineties.
 
Future Health Care Needs
Another important factor to keep in mind is the cost of health care. Costs for healthcare have been on the rise faster than general inflation and less employers are offering benefits to retirees. Consider Long Term Care Insurance.
 
Lifestyle
Take a few moments to imagine the retirement lifestyle you want. Was it your dream to travel in your later years? Do you plan on working part time? What are some hobbies you’d like to pursue? Would you rather live a simpler life and donate large amounts of money every now and then? Are you going to remain living in the same place you are now?
 
Consider the expenses needed to live the life you want, when adding up expenses for retirement.
 
Inflation
If your savings do not keep up with the rate of inflation, the value of your savings might not fully cover your retirement costs. This is because with inflation the purchasing power of your savings will gradually go down as the years go on. If your retirement savings are based on an investment vehicle, make sure that the interest rate is greater than the inflation rate.
 
Social Security
The reality is, Social Security is in a bit of a strain—more baby boomers rely on it and there are fewer people available to work to pay for their benefits. Additionally, Social Security pays about 40% of the total income of Americans aged 65 and over, which leaves around 60% to be paid in other ways.
 
The Grand Total
After considering all these factors you should have a much better idea of how much you should have to save for retirement.
 
For more information about how much you should save for retirement, click here. For a cost of retirement calculator click here. Please note that the calculator alone cannot factor in everything in your personal situation. It is only meant to illustrate a rough estimate.
 
 
If you are still unsure of the dollar amount you should have saved for retirement, feel free to call us at Federal National Funding at 201-342-3300 and set up an appointment or teleconference with our financial advisors. 

 

Monday, February 26, 2018

Property and Casualty Insurance

 
Today we at Federal National Funding would like to discuss property and casualty insurance.
 
For starters, property and casualty is designed to help protect your possessions from theft or destruction and your assets from being used up in the event of a disaster or litigation claims brought against you.
 
The side that handles property side of a policy insures physical items, such as your home, commercial buildings, vehicles, personal items or business inventory. Some forms of property insurance include homeowner’s insurance, fire insurance, flood or earthquake insurance, and automobile insurance.
 
Insurance contracts such as these may include “open perils” or a “named perils” clause. An open perils clause covers losses for reasons that are not specifically listed in the policy. Typical exclusions are earthquakes, floods, and acts of terrorism or war. A named perils clause on the other hand, requires the actual causes of the loss to be listed in the policy.
 
Also called liability insurance, casualty insurance covers losses that you may cause to other individual or business. For example, if you have liability insurance on your car and another party is injured in a collision caused by you, your liability insurance will take care of the other person’s medical and repair costs. In addition, if someone sues you because of harm you may have caused to him or to his possessions, your casualty insurance may cover the cost.
 
Individuals and businesses alike can purchase property and casualty insurance. Personal policies include homeowner’s insurance, renter’s insurance, and automobile insurance. Meanwhile, commercial policies are written specifically for businesses and other organizations.
 
 
If you are interested in protecting your assets with property and casualty insurance and wish to learn more, click here or call our office at 201-342-3300. One of our associates will be happy to speak to you. 

 

Wednesday, February 21, 2018

Effects of Inflation

 
If you have long term savings goals such as saving for your children’s college education, or retirement, you’ll want to read today’s blog on the effects of inflation.
 
To put it simply, inflation is the increase of the price of products over time. The rate of inflation fluctuates over time, sometimes it can run high, other times, it’s so low we don’t notice. But all these fluctuations are generally short term, what we need to focus on is the long term.
 
Over the years, inflation can chew away at the purchasing power of your income and wealth. This means that even as you save and invest, your wealth buys less and less as time goes on. Those who put off investing and saving will feel this impact even more.
 
While one cannot deny the effects of inflation, there are ways to fight them. For starters, you should own at least some investments whose potential return is greater than the inflation rate. For example, if a portfolio earns 3% when inflation is at 4% the investment will lose purchasing power over time. While past performance isn’t an indicator of future results, stocks have provided higher long term returns than cash alternatives or bonds. Still, one has to be aware that even with that potential, there is greater risk and potential for loss. Because of this volatility stocks may not be the best option for the money you count on being available in the short term. You will also have to think about whether you have the financial and emotional capacity to ride out these ups and downs as you pursue higher returns.
 
Diversifying your portfolio — spending your assets across a variety of investments that may respond differently to market conditions — is one way to help manage inflation risk. However, diversification does not guarantee a profit or protect against a loss; it is a method used to help manage investment risk.
 
Remember, all investing involves risk, including the potential loss of principal. There is no guarantee that any investment will be worth what you paid for when you sell.
 
 
For more information about the effects of inflation, or for more strategies to fight against it click here, or call Federal National Funding today at 201-342-3300. One of our associates will be happy to speak to you. 

 

Monday, February 19, 2018

Withdrawing Before Age 59 1/2

 
What happens if I withdraw money from my tax deferred investments before age 59½?
 
Generally, withdrawing from a tax deferred retirement account before age 59 ½ triggers a 10% federal income tax penalty on top of any other federal income taxes due. However, there are certain situations where you can make early withdrawals from a retirement account and avoid the tax penalty. Before we list the types of distributions, please note that you should check your specific plan to ensure that such withdrawals are allowed.
 
IRAs and employer sponsored retirement plans have various exceptions though the rules are generally similar.
 
IRA Exceptions
 
  •          Death of the IRA owner: distribution to your designated beneficiaries after your death (beneficiaries are subject to annual required minimum distributions).
  •          Disability: distributions can be made due to a qualifying distribution. 
  •          Unreimbursed medical expenses: distributions equal to the amount of your unreimbursed medical expenses that exceed 10% of your gross income in a calendar year.
  •          Medical insurance: distributions made to pay for health insurance if you lost your job and are receiving unemployment benefits.
  •          Substantially equal periodic payments (SEPPs): Distributions you receive as a series of substantially equal payments over your life expectancy, or the combined life expectancies of you and your beneficiary. You must withdraw funds at least annually based on one of three rather complicated IRS-approved distribution methods. You generally can't change or alter the payments for five years or until you reach age 59½, whichever occurs later. If you do, you'll again wind up having to pay the 10% penalty tax on the taxable portion of all your pre-59½ SEPP distributions (unless another exception applies).
  •          Qualified higher education expenses: these distributions can be made for you and/or dependents.
  •          First home purchase: this distribution can be up to $10,000 (lifetime limit).
  •          Qualified reservice distributions: certain distributions to qualified military called to active duty.
 
 
 
 
 
 
 
 
 
Employer Sponsored Plan Exceptions
 
  • Death of the plan participant: upon your death, your designated beneficiaries may begin taking distributions from your account. Beneficiaries are subject to annual minimum required distributions.
  • Disability: distributions made due to your qualifying disability.
  • Part of a SEPP program (see above): distributions you receive as a series of substantially equal payments over your life expectancy, or the combined life expectancies of you and your beneficiary. You generally cannot modify the payments for a period of five years or until you reach age 59½, whichever is longer.
  • Attainment of age 55: distributions made to you upon separation of service from your employer. The separation must have occurred during or after the calendar year in which you reached the age of 55 (age 50 for qualified public safety employees).
  • Qualified Domestic Relations Order (QDRO): payments made to an alternate payee under a QDRO.
  • Medical care (see above): distributions equal to the amount of your unreimbursed medical expenses that exceed 10% of your adjusted gross income in a calendar year.
  • To reduce excess contributions: distributions made to correct excess contributions you or your employer made to the plan over the allowable amount.
  • To reduce excess elective deferrals: distributions made to reduce amounts you deferred over the allowable limit.
  • Qualified Reservist Distributions (see above)
 
 
To learn more about withdrawing before age 59½ click here, or for personalized attention, feel free to call the office at 201-342-3300. One of our associates will be happy to speak to you. 

 

Monday, February 12, 2018

Unforgettable Birthdays

 
While we like to think and treat every birthday as special, there are special, there are certain birthdays later in life that can affect your tax situation, health care eligibility, and retirement benefits. On today’s blog, we would like to list them and outline what happens as you reach certain birthdays.
 
Age 50
If you are a qualified public safety employee, you can begin to take out penalty free withdrawals from your qualified retirement plan after leaving your job if your employment ends after of the year you turn 50.
 
Age 55
If you're not a qualified public safety employee, you can take penalty-free withdrawals from your qualified retirement plan after leaving your job if your employment ends during or after the year you reach age 55.
 
Age 59½
At this point, all withdrawals from qualified retirement plans are penalty free after you reach this age regardless of whether you are still employed or not.
 
Age 62
When you reach age 62 you are eligible for a reverse mortgage. For more information on reverse mortgages, you can click here. You may also start collecting Social Security Benefits, though please note that they will be reduced by 30%. For full benefits you must wait until “full retirement age”, which can range from 66 to 67 depending on the year you were born.
 
Age 65
At age 65 you are eligible to enroll in Medicare. One should note that Medicare Part A hospital insurance benefits are automatic for those eligible for Social Security. Meanwhile, Part B benefits are voluntary and have a monthly premium. We recommend that to get coverage as early as possible, you should enroll about 2-3 months before turning 65.
 
Age 70½
You must start taking minimum distributions from most tax-deferred retirement plans or face a 50% penalty on the amount that should have been withdrawn. Annual required minimum distributions are calculated according to life expectancies determined by the federal government.
 
 
To learn more about important birthdays, click here, or call our office at 201-342-3300. One of our associates will be happy to speak to you. 
 

Wednesday, February 7, 2018

Biweekly Mortgages

 
Typically, homeowners will make monthly payments for their mortgage and are under the impression that there aren’t other options. But did you know that paying your mortgage biweekly can reduce the amount of interest you will pay over time?
 
It’s true! With a biweekly mortgage, instead of making one payment every month, you can pay half and half ever two weeks. For example, if your mortgage is $2,000 per month, you will pay $1,000 every two weeks under a biweekly system.
 
If you maintain the biweekly payment schedule you’ll end up making an extra month’s payment each year (26 payments per year, which is the equivalent of 13 full monthly payments rather than 12). You’ll also pay less interest because your payments are applied to your principle balance more frequently.
 
The effects of biweekly mortgages can be dramatic. For example, if you currently have a $150,000 loan at 8 % fixed interest, you will have paid approximately $396,233 at the end of 30 years. However, if you use a biweekly payment system, you would pay $331,859 and have it completely paid off in 21.6 years. You would save $64,374 and pay the loan off 8.4 years earlier!
 
For many, paying off their mortgage earlier can take a great financial load off their shoulders. Plus they can enjoy more of their income or even use the excess money to for investing.
 
 
If you are looking to save money and pay off your mortgage faster, call us at Federal National Funding at 201-342-3300 today to get started with setting up biweekly mortgage payments. One of our associates will be happy to speak to you. 

 

Monday, February 5, 2018

Wealth Replacement Trusts

 
Today’s blog is centered around wealth replacement trusts. You may find this blog helpful if you choose to gift your property to a charity after you’re gone.
 
Charity Remainder Trusts
To create a charitable remainder trust, you first have to transfer appreciated property to an irrevocable trust and list the charity of your choice as the remainder beneficiary of the trust. Later, the property is sold and reinvested to provide income. Generally, you can retain a lifetime of interest in the income generated by the trust, and when the trust expires at your death, the remaining property is transferred to the charitable organization.
 
While subject to certain limits, you are entitled to a current income tax deduction for the charitable gift. And because the property was sold within the charitable trust, you will not have to pay tax on any capital gains (although any distribution you get from the trust is generally subject to income tax). This allows the value of the property to be reinvested, which will increase the income generated by the trust.
 
One major drawback is that since the beneficiary is listed as a charity, any heirs you have will not be receiving anything.
 
Replacing Gifted Assets
Another solution to a gifting situation could be a wealth replacement trust.
 
When you use a wealth replacement trust, you use a portion of the income from a charitable remainder trust to buy a life insurance policy. Then you get to decide how much of the charitable gift tot replace. You may purchase enough insurance to replace only a portion of the property that will pass to charity, or you may prefer to replace all of the property in the charitable remainder trust.
 
 
If you are interested in wealth replacement trusts, learn more about them by clicking here, or call our office today at 201-342-3300. One of our associates will be happy to speak to you. 

Wednesday, January 31, 2018

HMOs and PPOs

 
Conventional health insurance is expensive, are there alternatives that cost less?
Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) are types of managed health-care plans and can cost much less than comprehensive individual policies.
 
 
Through the use of managed care, HMOs and PPOs are able to reduce the costs of hospitals and physicians. Managed care is a set of incentives and disincentives for physicians to limit what the HMOs and PPOs consider unnecessary tests and procedures. Managed care generally requires the consent of a primary care physician before a patient can see a specialist.
 
What is an HMO?
HMO stands for Health maintenance organizations. And an HMO can provide a comprehensive health care services to the insured for a fixed periodic payment. With an HMO, you may also pay a nominal fee when you visit a health care provider. Generally, HMOs have various relationships with hospitals and physicians. Plan physicians may be salaried employees, members of an independent multi-specialty group, part of a network of independent multi-specialty groups, or part of an individual practice association.
 
 
One notable thing about HMOs is that since they combine heath care providers with insurance, they can provide better health care delivery. Often, this allows for lower costs of service.
 
What is a PPO?
PPO stands for preferred provider organizations. Much like an HMO a PPO has relationships with hospitals and doctors to provide healthcare services. However, a key difference from an HMO is that with a PPO you aren’t limited to these doctors. If you do choose to go with an out of network healthcare provider, you will have to pay more. Usually, PPO plans have a deductible, which is the amount the insured must pay before PPO starts to pay. At a certain point the PPO will begin to pay, but only at a percentage, you are responsible for paying the rest. This is called “coinsurance”.
 
Fortunately, most plans have an out of pocket maximum, meaning that per year, you will never pay more than a given amount. When you exceed the out of pocket maximum, the PPO will pay 100% of the costs for the rest of the year.
 
 
To learn more about HMOs or PPOs, click here, or call our office at Federal National Funding today. One of our associates will be happy to speak to you. 

 

 

Monday, January 29, 2018

Why Purchase Life Insurance

 
Why should I consider purchasing life insurance?
 
Life insurance is a way to financially protect children and other dependents in the event of the primary household earner’s death. The benefits from life insurance can not only pay for funeral and burial costs, it can also create a stream of income for dependents. Furthermore, the life insurance death benefit can pay for financial obligations such as state taxes, and a mortgage.
 
Many people purchase life insurance because they prefer to plan for risk. Most people, would rather be prepared and have their loved ones protected.
On our website, you can even get a quote for life insurance, just click here!
Please note that health, age, and type of insurance purchased will be factors in how much a policy will cost.
 
What types of life insurance are there?
 
There’s whole life, term, variable, and universal life insurance. These are all different and come with their own sets of pros and cons.
 
In general, having a whole life policy means that you will pay regular premiums as long as the policy is enforced or as long as you live. Then, in exchange, the insurance company will pay a set death benefit upon your death. Whole life insurance is popular because it builds cash value that is tax deferred. You can surrender the policy for its cash value or take out a loan against the policy. Under federal tax rules, loans taken out are free of income tax as long as the policy is still in effect until the insured’s death. Once a whole life policy is purchased, the terms are set and cannot be changed.
 
Term life insurance is less expensive than other types of insurance, especially when the insured is younger. Unlike other types of insurance, it only offers protection for a certain period of time. At the end of the period, the policy expires, and one does not receive a refund. The main drawback with term insurance is that premiums increase every time coverage renews. This can eventually make coverage too expensive for when you need it most—in later years. Still, there are versions of term insurance that offer level premiums for up to 30 years without proof of insurability (this is called renewable level term life insurance).
 
Variable life insurance gets its name for the variety of investment subaccounts you can have within your policy. A few examples of subaccounts include: stock; bond; and fixed interest options. These subaccounts allow you to build your investment portfolio as a bonus. A disadvantage of variable life is if your subaccount preforms poorly, your death benefit will not be as high as you might like. Fortunately, your death benefit will never go below a specified dollar amount.
 
Most universal life policies pay a minimum guaranteed rate of return. Any returns above the guaranteed minimum vary with the performance of the insurance company’s portfolio. The policyholder has no control over how these funds are invested; funds are managed by the insurance company’s professional portfolio managers. The big advantage with universal life is that coverage and premiums are flexible. For example, you can at any point choose to increase your cash value by paying higher premiums or if you happen to be at a financial strain, you can pay less for a while.
 
To learn more about whole, term, variable and universal life insurance, please click on the links provided below for a comprehensive article on each type. Or for one of our associates at the office to answer your questions, please call us today at 201-342-3300.
 
·         Whole Life
·         Term
·         Variable
 
·         Universal

 

 

Wednesday, January 24, 2018

Retirement Planning

 
 How much do I need to save for retirement?
 
That depends on several factors such as: retirement age, life expectancy, future healthcare needs, lifestyle, social security and inflation. 
 
For instance, the earlier you retire, the more money you will need. And although we all want to believe that we will retire and 65, that might not be your case. One reason you may retire earlier than planned is because you might develop a disability which may prevent you from working.
 
There is no one size fits all answer, everything is dependent on the factors of your life. However, once all factors are considered, we recommend you visit an experienced financial adviser to assist you further.
 
 
Though it is not intended to replace seeing a financial adviser, we do have a retirement cost calculator on our website here.
 
Finally, for more factors that can help determine how much you need to save, read our article here.
 
What are some living benefits to annuities?
 
In many cases and for an added cost, you can add guarantees regardless of the account value.
 
For example, adding a guaranteed minimum withdrawal benefit to a variable annuity contract could allow the contract owner to withdraw a fixed percentage (about 5% to 7%) of the premiums paid until 100% of the premiums paid had been withdrawn. This will still be possible even if the underlying investments were to lose money.
 
Another benefit available is the guaranteed minimum income benefit. When the contract owner is ready to collect retirement income payments, they would be based on a minimum payout. In the event of poor investments minimum payout would still be provided by the company.
 
Thirdly, a guaranteed minimum accumulation benefit can help ensure that the contract value will not fall below a certain minimum after a specified term. This is usually equal to the premiums made.
 
If you have questions about annuities or their living benefits, take a look on our articles here and here.
 
What is an IRA rollover?
 
If you leave a job, or you retire, you might want to transfer the money you’ve invested in one or more employer sponsored retirement to an individual retirement account (or an IRA). An IRA rollover is an effective way to keep your money accumulating tax deferred.
 
When using an IRA rollover, you transfer your retirement savings to an account at a private institution of your choice, with the bonus of choosing how to invest the funds. To protect the tax deferred status of your retirement savings, the funds must be deposited within 60 days of withdrawal from an employer’s plan. To avoid potential penalties and a 20% federal income tax withholding from your former employer, you should arrange for a direct, institution to institution transfer.
 
You are able to roll over assets from an employer-sponsored plan to a traditional IRA or a Roth IRA. Because there are no longer any income limits on Roth IRA conversions, everyone is eligible for a Roth IRA conversion; however, eligibility to contribute to a Roth IRA phases out at higher modified gross income levels. Keep in mind that ordinary income taxes are owed (in the year of the conversion) on all tax-deferred assets converted to a Roth IRA.
 
An IRA can be fitted to your needs, goals and can incorporate various investment vehicles as opposed to the limited options of many employer-sponsored retirement plans. Additionally, tax deferred retirement savings can later be consolidated.
 
Over time, IRA rollovers may make it easier to manage your retirement savings by consolidating your holdings in one place. This can help cut down on paperwork and give you greater control over the management of your retirement assets.
 
Lean more about IRA rollovers on our website here.
 
To learn more about estate planning or to find out about what options best suit you, please call our office at Federal National Funding, at 201-342-3300. One of our associates will be happy to speak to you and will schedule a free consultation. 

 

Monday, January 22, 2018

Roth IRA

 
What is a Roth IRA?
A Roth IRA is one of the many investment vehicles available to investors that aim to save for retirement. One key bonus that Roth IRAs have is that they are tax favored. This means they are not taxable, which is advantageous because you would then get to keep more of your money.
 
What are other advantages to a Roth IRA?
One advantage of a Roth IRA is that you can continue to make contributions after age 70½ as long as you have earned income. Additionally, you do not have to start mandatory distributions due to age as one has to with Traditional IRAs. However, beneficiaries of Roth IRAs must take mandatory distributions.
 
Roth IRA withdrawals of contribution can be made at any point for any reason. These are also considered tax free and not subject to the 10% federal income tax penalty typically associated with withdrawals. In order to make a qualified tax-free and penalty-free distribution of earnings, the account must meet the five-year holding requirement and the account holder must be age 59½ or older. If your withdrawals do not meet this requirement, they are taxed as any other withdrawal with some exceptions that include: death, disability, unreimbursed medical expenses in excess of 10% of adjusted gross income, higher-education expenses the purchase of a first home ($10,000 lifetime cap) substantially equal periodic payments, and qualified reservist distributions.
 
 
To learn more about Roth IRAs, or to learn how you can qualify, click here. Or for personalized attention, call our office today at 201-342-3300. One of our associates will be happy to speak to you.

 

Wednesday, January 17, 2018

Estate Planning

 
What are some estate planning tools I should be aware of?
For starters, there are wills and trusts. Wills allow you to determine how you would like your property to be distributed, they also allow you to appoint guardians for minor children. While wills are completely optional, one should have one because otherwise the courts will have power over how property is distributed and who will be your children’s guardian. One more thing to keep in mind is that property distributed through a will is subject to probate—they may require time to be considered valid—which can be a time consuming and costly process.
 
Trusts, on the other hand are actual legal entities. Like a will, a trust can be customized to determine the distribution of an estate with the bonus of avoiding probate because it is a legal document. However, they do incur upfront costs and ongoing fees. You should also know that a trust exists in a complex web of rules and regulations. For your benefit, please consider seeing an experienced estate planning professional before getting a trust.
 
In the event that you become incapacitated—or unable to speak for yourself—you should also have a durable power of attorney. A durable power of attorney is a legal agreement that avoids the need for a judge to decide who should be responsible to make legal and financial decisions for you. Unlike the standard power of attorney, durable powers remain valid if you become incapacitated.
 
Much like the power of attorney, the health-care proxy is a document used to designate a trustworthy person with making health care decisions on your behalf if you become incapacitated. Such decisions can include: choosing a hospital, medical treatments, and authorizing surgeries.
These are common and very useful options, you can learn about even more options on our article on our website here.
 
What is a living trust?
A trust is a legal arrangement you can make to control what happens to your estate upon your death. When you set up a trust, you transfer the ownership of all the assets you would like in the trust from yourself, to the trust. As a result, you no longer own any of the assets in the trust, the trust itself does. But, as the trustee, you have complete control of the trust: you may buy or sell as you please and even give assets away.
 
An advantage to a living trust is no probate, which saves money and time. Shortly after your death, according to the trust, your assets will be distributed to your heirs.
For more information about living trusts, feel free to call our office or click here.
 
What is joint ownership?
Another way to distribute your estate is through jointly held property — specifically, joint tenancy with rights of survivorship. When you hold property this way, it will pass to the surviving co-owners automatically, “by operation of law.” Because title passes automatically, there is no need for probate.
 
If you happen to have more questions about estate planning, living trusts, or joint ownership, we would be more than happy to assist you in finding answers at Federal National Funding. For more information about estate planning please call our office at 201-342-3300. One of our associates will be happy to speak with you. 

Monday, January 15, 2018

Reverse Mortgages

 
What is a reverse mortgage and how can it help me?
A reverse mortgage turns the value of your home equity into usable cash, which can be used to supplement income, pay for college, finance home improvements and more. Instead of making monthly payments, the lender pays you in the form of fixed monthly payments, or as a lump sum, or as a line of credit that can be tapped when needed (up to a certain limit).
 
To be eligible for a reverse mortgage you must be age 62 or older and the home must be your primary residence. Even though this is a home loan, you do not have to repay the principle, interest, and fees for as long as you live in your home or the house is sold.
 
With a reverse mortgage you can annuitize your home. The monthly payments you will receive is computed using standard annuity methods that take into account your age and life expectancy (and your spouse’s if you are joint borrowers), the appraised value of the property, current interest rates, the type of distribution you use, and the amount of equity you decide to assign to the loan company.
 
For instance, you may choose to take the loan against only 50% of the equity stake in your house. This will result in the reduction of the potential monthly check compared with a higher equity percentage. If property prices decline after you take out a reverse mortgage, it will not affect the remainder of your estate; should something like this happen, the lender bears the loss. This like in a traditional annuity in which the insurance company bears the loss of continuing annuity payments in the event that you live past your life expectancy.
 
Although you will never owe more than the value of your home when the loan becomes due (upon your death or until you no longer live in it), keep in mind that home values tend to increase over time. However, if the remaining equity is lower than the appraised value, of the property, your heirs might have a hard time paying back the loan if they want to keep the home rather than sell it.
 
Before getting a reverse mortgage, we stress that you exercise some caution. You will still be responsible for paying property taxes, homeowner’s insurance and all repairs. As for the fees associated with the reverse mortgage, it is generally higher than that of a traditional mortgage. Costs may include, an origination fee, closing costs, and servicing fees over the life of the mortgage. Typically, reverse mortgages have variable interest rates which could rise over time.
 
The Home Equity Conversion Mortgage (HECM) is a federally insured reverse mortgage that is generally less expensive than private-sector reverse mortgages, though you typically are charged mortgage insurance premiums.
 
 
For more in-depth information about reverse mortgages, check out our article on our website here. Or if you would like, call us today at 201-342-3300, one of our associates will be happy to speak to you. 
 

 

 

 

 

 

Wednesday, January 10, 2018

Medicare

 
Today we at Federal National Funding would like to provide introductory information about Medicare.
 
Medicare, not to be confused with Medicaid, is a government health care insurance program for the elderly as well as certain disabled people. This program has four basic parts: A, B, C, and D. Part A provides basic coverage for hospital care as well as limited skilled nursing care (up to 100 days), home health care, and hospice care. Part B can assist can with covering physician services, inpatient and outpatient medical services and diagnostic tests. Lastly, part D covers prescription drugs.
There’s also Medicare Advantage; this is a type of private insurance that includes Medicare-approved HMOs, PPOs, fee-for-service plans and special needs plans. Some of these plans offer prescription drug coverage. In order to join Medicare Advantage plan, you need to have Medicare Part and Part B, pay the monthly premium for Medicare Part B to Medicare and the Medicaid Advantage premium.
 
Costs
Every time you go to the hospital you would have to pay for a part of your hospitalization costs, unless your visits are separated by less than 60 days. If that is the case, you would only have to pay the deductible the first time. Now if you were to stay in the hospital longer than 60 days you would have to pay a copayment every day from day 61 to 90.
 
Skilled Nursing Care
Medicare will pay for the first 20 days of skilled nursing care, but only after you’ve been in the hospital for three days. This means you’ll have paid at least the deductible for that three-day stay. From the 21st day through the 100th day, Medicare will cover some of the costs of skilled nursing care, but you still have a copayment. After 100 days, Medicare will not pay for skilled nursing care, and you must bear the full cost. The 100 days are per benefit period.
 
Medigap
To put it simply, Medigap is Medicare supplemental insurance that is made to cover the costs Medicare does not. Usually, it pays for the deductibles and copayments required by Medicare. Please note that coverage will vary according to individual policies.
Medigap insurance may not pay for any additional procedures that aren’t specifically addressed by Medicare. Most policies will only help to cover the deductibles and copayments imposed by Medicare.
 
Long Term Care
Be aware that Medicare only provides limited coverage for skilled nursing care and only pays for up to 100 days of care following a three-day hospital stay. Medigap will not fill in the gaps for this coverage.
 
 
For more information regarding Medicare or Medigap, please call our office at 201-342-3300 or click here. To learn more about us at Federal National Funding, feel free to call our office or click here

 

Monday, January 8, 2018

Medicaid

 
On today’s blog we would like to break down the basics of Medicaid. Often, we get calls from families who aren’t able to pay for the average of $8,500 a month for nursing home care for their loved one. If they do not happen to have Long Term Care Insurance already, we need to determine their eligibility for Medicaid and other alternative means.
 
But what is Medicaid?
Medicaid is a benefits program that is primarily funded by the federal government and administered by each state. Rules tend to vary from state to state. The primary benefit of Medicaid is that unlike Medicare (which only pays for skilled nursing) the Medicaid program will pay for long term care in a nursing home once a person has qualified. Medicare does not pay for treatment of all diseases or conditions. For example, a long term stay in a nursing home may be caused by Alzheimer’s or Parkinson’s disease and even though the patient receives medical care, the treatment will not be paid for by Medicare. In that case, one will have to pay privately (e.g. using long term care insurance or other funds) or they’ll have to qualify for Medicaid.
 
To qualify for Medicaid, applicants must pass some fairly strict tests on the amount of assets they can keep. To understand how Medicaid works, we first need to review what are known as exempt and non-exempt (or countable) assets. Exempt assets are those which Medicaid will not consider (at least for the time being). In general the following are primary exempt assets:
 
 
  •         Home, (equity up to $800,000). The home must be the principle place of residence. The nursing home resident may be required to show some “intent to return home” even if this never actually takes place.
  •         Personal belongings and household goods.
  •         One car or truck.
  •         Income producing real estate.
  •         Burial spaces and certain related items for applicant and spouse.
  •         Up to $1,500 designated as a burial fund for applicant and spouse.
  •         Irrevocable prepaid funeral contract,
  •         Value of life insurance if face value is $1,500 or less. If it does exceed $1,500 in the total face amount, then the cash value is countable.
 
 
 
 
 
 
 
All other assets are generally non-exempt and countable. Basically all money and property, and any item that can be valued and turned into cash, is a countable asset unless it is listed above as exempt. This includes:
 
  •         Cash, savings, and checking accounts, credit union share and draft accounts.
  •         Certificates of deposit.
  •         US savings bonds.
  •         Individual Retirement Accounts (IRAs), Keogh plans (401K, 403B).
  •         Nursing home accounts.
  •         Prepaid funeral contracts that can be cancelled.
  •         Trusts (depending on the terms of the trust).
  •         Real estate (other than primary residence).
  •         More than one car.
  •         Boats or recreational vehicles.
  •         Stocks, bonds, or mutual funds.
  •         Land contracts or mortgages held on real estate sold.
 
Why seek advice for Medicaid?
As life expectancies and long term care costs continue to rise, the challenge quickly becomes how to pay for these services. Many people cannot afford to pay $8,500 per month or more for the cost of a nursing home. And those who can pay find their life savings to be wiped out in a matter of months, rather than years. Fortunately, the Medicaid Program is there to help. In fact, within our lifetime, Medicaid has become the long term care insurance of the Middle class. But the eligibility to receive Medicaid benefits requires that you pass certain tests on the amount of income that you have. The reason for Medicaid planning is simple. First, you need to provide enough assets for the security of your loved ones. Second, the rules are extremely complicated and confusing. The result is that without proper planning and advice, many people spend more than they should and their family security is jeopardized.
 
 
Many of our clients have expressed peace of mind knowing they have taken the necessary steps to protect their assets and not to leave their loved ones with the burden of responsibility. If you are in need of suitable facilities and don’t know where to begin, inquire about our senior placement services. For Medicaid application assistance, Medicaid planning advice, or to learn more about us, click hereor feel free to call our office today at (201) 342-3300. 

 

 

 

 

 

 

 

Monday December 18, 2017 

Business Bank Statement Loans

 

There may be several reasons to consider a small business loan. Such reasons can include using the funds for an expansion, emergencies, inventory and much more. A great way to fund your business is through the National Business Bank Statement Loan Program. On today’s blog, we’d like to discuss the advantages of this program.

 

Fast Working Capital

In most cases it may take more than a month or two to be approved for a loan. But with this program, one can get their working capital in as little as three to five business days.

 

Less Documentation

With a bank statement program, one does not have to provide their tax returns or their profit and loss statements. In fact we take the information from a business owner’s business bank statements. Given that there is much less paperwork involved, the process is streamlined.

 

Large Range

This particular program offers loans ranging from a $5,000 to $500,000!

 

Minimum Credit Score of 500

Don’t have the best credit? That’s fine as long as it’s above 500. If one is able to meet this requirement and a few more other things we can get started.

 

At Federal National Funding, we are more than happy to help you with business bank statement loans. For more information about business bank statement loans, please feel free to call us today at 201-342-3300 or click here. An associate will be happy to speak to you. 

 

 

Wednesday, November 1, 2017

High Nursing Home Costs

 

Since 2011 there has been a steady rise in the cost of nursing home care of nearly 19%. Many experts agree this trend isn’t going to change due to the increased demand of nursing care and the rising cost of medical care. In fact, the current national average is $8,500 a month. The average American family simply cannot cover this tremendous cost

 

However, there is applying for Medicaid as an option. Medicaid is a federal and state funded program that has helped the middle and working class pay for nursing home and assisted living costs. Many families have found that applying for Medicaid takes a huge load off their shoulders—they can now send their loved one to any number of Medicaid certified nursing homes or assisted living facilities without worrying about the costs.

 

As great of a solution this is, it does not come easily. Applying for Medicaid alone can be confusing as the language is a little tricky and errors can lead to disqualification.

 

Still, there is another solution. At Federal National Funding we have been helping families cut down on nursing home costs by assisting them with Medicaid applications and planning. We help simplify the process for you by handling the paperwork.  Plus, if your loved one happens to be a veteran, we know of other government programs that can assist with nursing home costs and assisted living.

 

Our initial consultation is free, so if you’d like to learn more please call us today at 201-342-3300. A representative will be happy to speak to you. 

To learn more about us at Federal National Funding, feel free to visit our website here.

 

Tuesday November 14, 2017

 

Senior Placement

 

When a loved one needs nursing home care, it can be an emotionally and mentally straining experience. It may be difficult to accept that someone we look up to may need assistance with everyday tasks to the point where they need to enter a nursing home or an assisted living facility. Furthermore, with so many nursing homes and assisted living facilities the process of finding a suitable place for your elder loved one. Each one with different—it raises the question, which one is best?

 

As a senior placement providers and elder care advisors, we are in regular contact with our network of nursing homes and assisted living facilities. Thanks to this network and constant communication, we know which places accept Medicaid and which places are private pay only. Additionally, we also keep in mind the specific programs and extra services they have.

 

Consider this case study: Ralph and Alice.

 

Ralph and Alice were high school sweethearts who lived in Saddle River, NJ, their entire adult lives. Two weeks ago, Ralph and Alice celebrated their 51st anniversary. Yesterday, Alice, who has Alzheimer’s wandered away from home. Hours later she was found sitting on a street curb, talking incoherently. She was taken to a hospital and treated for dehydration. Ralph comes to see you after their family doctor tells him he needs to place Alice in a nursing home. He tells you they both grew up during the Depression and have always tried to save something every month. Their assets, totaling $100,000, not including their house, are as follows:

 

Savings Account……………………….$15,000

CDs…………………………………………..$45,000

Money Market Account……………$37,000

Checking Account……………………..$3,000

Residence (no mortgage) .………..$650,000

 

 

Ralph gets Social Security and Pension Checks totaling$1,500 each month. Alice’s check is $450. His eyes fill with tears, as he says, “At 8,500 to the nursing home every month, our life savings will be gone in less than three years!” What’s more he’s concerned he won’t be able to all their Social Security checks. There’s good news for Ralph and Alice. It’s possible he will get to keep his home and most of their assets… and still have the state Medicaid program pay Alice’s nursing home costs. While the process may take a little while, the end result will be worth it. To apply for Medicaid, he will have to go through New Jersey Family Care. If he does things strictly according to what FSD tells him, he will only be able to keep about ½ his assets (or about 50,000) plus he will keep is income. But the end results can be better than the traditional spend down, which everyone talks about. Ralph might be able to turn the spend down amount of roughly $50,000 into an income stream that will increase his income and meet the Medicaid spend down virtually right away. In other words, if handled properly Alice may be eligible for Medicaid from the first month that she goes into the nursing home. That’s why it’s important to have an Elder Care and Special Needs Advisor to guide you through the system and the Medicaid Process to find the strategies that will be most beneficial in your situation. So, he will have to get advice from someone who knows how to navigate the system. But with proper advice he may be able to keep what he and Alice have worked so hard for. This is possible because the law does not intend to impoverish one spouse while the other needs care in a nursing home. This is certainly an example of where knowledge of the rules and how to apply them can be used to resolve Ralph and Alice’s dilemma. Of course, proper Medicaid planning differs according to the relevant facts and circumstances of each situation as well as state law. 

To learn more about Federal National Funding click here or to have your questions regarding senior placement answered personally by one of our associates, please call out office at 201-342-3300. One of our associates will be happy to speak to you. 

 

Monday  November 6, 2017

 

Veterans's Benefits 

 

Since they aren’t advertised, most Veterans aren’t aware of their entitlements or the benefits available to them. On today’s blog we wish to introduce you to some of them.

 

First off there’s a monthly Veteran’s pension benefit. This benefit may help single and married Veterans as well as surviving spouses in the event that they are deceased. As for the eligibility, it’s based off the following three factors:

·         Service: the veterans has served 90 consecutive days in the service with at least one day during a war time period;

·         Discharge: the veteran received a discharge other than dishonorable; and

·         Health: the veteran is disabled and unable to work OR 65+ and in need of daily assistance.

 

Unfortunately, with Veteran’s Benefits planning becoming more widely known, so have scams to take advantage of unsuspecting seniors. If you meet with an adviser that recommends you transfer your life savings to your children and then recommends that the children invest the money into illiquid insurance products, be wary. This type of plan is rarely beneficial in the long run.

 

Second, let us go over some common myths about the Veteran’s Pension Benefit to dispel some doubts and answer some questions.

·         “I retired from the military and am receiving military retirement from the Department of Defense. I won’t qualify for Veterans pension benefits.” There is no offset between pension and military retirement, it’s treated as any other income.

·         “I have more than $80,000 in assets, I won’t qualify for Veterans pension benefits.” Certain assets aren’t included in eligibility determinations. Regardless of the assets you have, you aren’t immediately, disqualified.

·         “I’m not in a VA-certified nursing home. I won’t qualify for Veterans pension benefits.” Qualifying medical expenses may include home health care, assisted living, and non-VA certified nursing homes. 

·         “I didn’t retire form the military, I won’t qualify for Veterans pension benefits.” Eligibility isn’t based on whether you retired from the military or not.

·         “I didn’t receive an honorable discharge. I won’t qualify for Veterans pension benefits.” As long as the discharge wasn’t dishonorable, you aren’t immediately disqualified.

 

In addition to the Veterans Pension Benefit, there are many other benefits and entitlements designed to assist veterans in their everyday lives. Such as:

·         Free hearing aids, hearing aid batteries, and eyeglasses

·         Agent Orange claims for living Vietnam Veterans who served in country Vietnam

·         Spousal aid and attendance under disability and compensation, up to $146 extra income a month

·         And much more!

Because our veterans have stood for us, we feel that as a firm we must stand by our Veterans by letting them know of their entitlements. At Federal National Funding we have helped countless Veterans over the years with great success. 

 

For more information about veteran’s benefits, veteran’s entitlements, or us click here.  If you would like personalized attention please don’t hesitate to call our office at 201-342-3300. One of our representatives will be happy to speak to you. 

 

Wednesday, January 3, 2018

 

Gifting Strategies

 

 

Why can’t I just give my assets away?

No one is saying you can’t give them away, but there are tax laws that will deplete the amount you would originally want to gift. Without a proper strategy the gift tax can take a bite out of your gift.

What is the gift tax?

The gift tax is a federal tax that applies to property or money that is gifted while the donor is living. On the other hand, there is also the federal estate tax which applies to property received by others (with spouses as an exception) after a person’s death.

The gift tax applies to the person giving the gift. Thus, the recipient is under no obligation to pay the gift tax, however other taxes may apply. Meanwhile, the federal estate affects the estate of the deceased and can reduce the amount given to heirs.

Though any gift can be considered taxable, there are some exceptions. For example, gifts that pay for tuition or medical expenses that you pay directly to a medical or educational institution for someone else aren’t considered taxable. If you give a gift to a spouse who is a U.S. citizen, to a qualified charitable organization, and gifts to a political organization those are not considered taxable.

More details on the gift tax and be found here.

What gifting strategies are available to me?

Luckily, there are several gifting strategies you can utilize, each with its own unique features and drawbacks.

For example, instead of making an outright gift, there is the option of using a charitable trust. With a charitable trust, you gift is moved to a trust. The recipient of the gift draws the income from this trust. Then, upon your death, your heirs will receive the principal with little or no estate tax.

If you would prefer to retain an income interest in your gift, you could use a pooled income fund, a charitable remainder trust, or charitable annuity trust. With these strategies, you can receive income generated by your gift and the recipient gets the principal upon your death.

And lastly, you could purchase a life insurance policy and name the charitable organization as the owner and beneficiary of the policy. This would allow you to make a large future gift at a lower cost.

For more in-depth information about the advantages of each option, please check out the chart on our article here.

If you would like more information about the gift tax, or gifting strategies please call our office today at 201-342-3300. We would be happy to discuss it with you.