>Wealth Restoration

>Did you know?
“US Household wealth fell by a record $5.1 trillion from October to December, 2008″1 Between home values, stocks and 401(k)s plummeting, it’s no wonder that many families are in desperate need of wealth restoration strategies, fast.

The Indexed Universal Life Solution – “Triple Duty Dollars”

Single Duty: IUL death benefit protection for family. Death benefit calculated to replace lost asset values.

Double Duty: IUL to protect insured and their family from a catastrophic illness. Accelerated Benefits Riders to provide that protection.2

Triple Duty: IUL as part of a diverse retirement portfolio using tax-free distributions to supplement retirement.3

IUL 6% fixed bucket today to get back on track
Plus, index strategies for potential upside returns tomorrow.
Only life insurance can provide this per dollar value.3

The Case
47 Year Old Male, John, is a successful attorney with a young family that has lost considerable wealth due to the declining value of his retirement accounts and his home. He estimates the combined loss at $500,000. The Solution
John elects to purchase an Index Universal Life Insurance contract to provide “Triple Duty” protection for him and his family.
Triple Duty Dollars
Single Duty: $500,000 of benefit to protect his family.
Premium: $1,000/month.
Double Duty: Accelerated benefits1 to protect against an unexpected illness. Example: $226,563 total benefit amount for a Chronic Illness at age 75.
Triple Duty: Supplemental retirement income stream2 illustrated at $36,000 for 15 years through age 80.
Plus: $165,911 of tax-free death benefit at attained age 85 available to beneficiaries.

>When would you want to be told that there’s a better way?

>If everything you had thought was true about saving retirement was wrong when would you want to know about it? So many people today have experienced negative changes in their retirement plan and feel like they have no choice to stay with the plan, especially if it is from a previous employer. What if your old 401k was like an “ugly baby”.

Most of us will never have to complete such an absurd task of telling a lady that her baby is ugly. But suppose that you did? How in the world would you go about doing that…and manage to keep all of your limbs where they belong? That mother is so emotionally attached to her baby that no matter what you say, you will never convince her that her baby is ugly.
People today have a similar emotional attachment to the way in which they choose to manage their finances. Let’s face it, no one wakes up in the morning and says to themselves, “I’m going to put myself into a financial hole today!” Or, “I know that my current financial strategy will cost me in the long run, but I’m going to stick to it anyway.” But they continue to adhere to the same financial strategies because they believe that it’s the best strategy.

So how do you answer the question “If everything you had thought was true about saving retirement was wrong when would you want to know about it”?

>What does a Tax increase really mean??

>Are you puzzled when you hear that there will be tax increases in the future? Do you have a good idea of how that really impacts you and your family? And what about this “tax the wealthy” idea, what does it all mean?

I am going to outline the current 2010 Tax schedules that may help you understand more.

If you are a single taxpayer in the US and make under $8,375 you will pay 10% federal income tax
When you income is above $8,375 but under $34,000 you will pay 15%.
$34,000 to $82,400 is at 25%
$82,400 to $171,850 is 28%
$171,850 to $373,650 is 33%
$373,650+ 35%

A married couple file joint returns who make under $16,750 are at the 10% bracket

416,750 to $68,000 is at 15%
$68,000 to $137,300 is at 25%
$137,300 to $209,250 is 28%
$209,250 to $373,650 is 33%
$373,650+ 35%
People who make the average income in a community are in the 25% federal tax bracket, these figures do not include the state and local tax figures.
What can we do to have more money when we need it instead of having Uncle Sam tell us how much he wants to take? As you can see from the figures above a 2%-3% increase across the board brings in substantial revenue to the government.
Assume a married couple earning $68,000 of taxable income. They give uncle same an additional $1360 just from a meager 2% increase. A couple earning $150,000 will pay $3000. That amount does impact us today but now consider the next example.
A married couple age 35 puts $6,000 in a 401k that is invested in mutual funds. The $6000 grows to $250,000 when they reach retirement age 65. When they draw the money out of they fund assuming there is no more changes in the tax rates they could be paying 17% federal income tax on their withdrawals. They need $20,000 annual to live on. That is $3400 of tax on that money alone. And in 12.5 years the money is gone assuming no additional growth.
What if the couple paid tax on the $6,000 today and it grew to the same $250,000 level at retirement. The same $20,000 is drawn out of the account but depending on how they planned for the retirement years the tax owed is only on the growth and not the whole amount, or there may be no tax at all.
Would it make sense for this couple to pay tax on the $250,000 at the future tax rates? Would it be better for them to pay tax on the $70,000 growth or possibly no tax at all?
I am not a tax adviser but I do know of programs that can lessen the blow that the federal government can impose on your retirement account. To learn more let me know, Your comments are greatly appreciated

>Buying term and investing the difference.

>If you have spoken with people in the life insurance industry you have no doubt been given the options of whole life, universal life, and term insurance. Are you as surprised as I am that here are so many opposing opinions on the concept? Even people in the media have opinions?

The bottom line is that there is coverage when death occurs on the life insurance and in the event of needing income for the retirement years, there is adequate money to sustain those years. How this is accomplished is subject to personal needs, goals and risk tolerances.

Consider the following points when weighing out your options:
* What is my family history? Do I have longevity on my side or did my parents and grandparents die young?
* Do I want to have a partner participate in my retirement? Who will be investing my money? Will it grow? Will I pay taxes on the growth, Principal or both?
* Do I need to know that my insurance costs will not change when I am older?
* What happens with my money when I die? Will there be taxes that need to be paid by my heirs or will it pass tax free?
*Will I outlive my retirement money or will I have to work in my later years?

>Rebuilding your estate for future generations


Preparing for retirement and managing income during retirement remain a major concern for most Americans. Terms like “the new face of retirement”, “bridge job” or “working retired” have taken on new definition as Americans labor past the traditional retirement age and continue to work into their late 60’s and beyond.
The economic crisis continues to be a wake-up call; with typically low savings rate already an issue and as stock and mutual fund holdings decline, U.S. household net worth has fallen to new lows. With unexpected health care costs, inflation concerns and managing or reducing current debt, pre-retirees are making tough financial decisions that will impact their current as well as their future financial lives as many expect to work on average a full decade longer than those already in retirement.
Are you one of the many consumers who are experiencing similar effects on your retirement savings and are looking for answers? Even if you have actively planned and saved, you may be witnessing your hard-earned nest egg cracking right in front of your eyes.  It is no wonder that many Americans are feeling financially unstable and are looking for ways to provide financial protection and future security for their family.
Fortunately, there are a number of strategies that may help you get you back on track with your plans. One possible strategy may include permanent life insurance. Life Insurance provides more than just family protection through the death benefit, it can help restore your financial legacy – and make it easier to keep your goals on target.
In addition to the death benefit permanent life insurance provides, there are unique living benefits, including the policy’s cash value that may be especially useful today. The cash accumulated inside the policy can be a source of cash to pay the mortgage or the car loan, improve a home for sale, start a business, pay for college or to supplement retirement income. The policy loans do not need to be paid back – any loan amount and interest due, is deducted from the policy death benefit amount that is paid out at death this reduces the death benefit. Another benefit of permanent life insurance is as a source for long term care health needs; for an insured with a terminal or chronic illness, some or all of the death benefit can be used*, during lifetime, to pay for costs associated with a long term illness.
These benefits help make permanent life insurance even more important to families in the current environment where there is an increased desire for a stable, dependable way to protect loved ones.
* Receipt of accelerated of life insurance benefits may affect your, your spouse or your family’s eligibility for public assistance programs such as medical supplementary social security income (SSI) , and drug assistance programs.  You are advised to consult with a qualified tax advisor and with social service agencies concerning how receipt of such a payment will affect you, your spouse and your family’s eligibility for public assistance.  Riders are optional and may not be available in all states.
Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event.  Surrender charges may reduce the policy’s cash value in early years.

Why Rolling over your previous employers 401K makes sense

As I was driving in today I was thinking about the Indianapolis Stamping plant vote and how once again more people will be left without employment. With 10% of the people in the area currently looking for work I have to assume that many of them have money they put in accounts for retirement with their previous employers.

The same employers that put these people out of work are managing the assets that these out of work people have put back for future needs.

Taking the money from that plan and putting it in a place where it can grow and never shrink,(unless a withdrawal is taken)is a great way to preserve the cash that was put back with good intentions and staying in control of the money.

I am amazed at the thought of people who are paying a money manager every year to keep tabs on their accounts only to watch the balances decrease. Does the thought of not having control of your accounts bother you? When you get your 401K statement and it shows your balance going backwards instead of forwards, does that make you happy? If I were managing your accounts and you kept losing money would you keep me as your account manager?

Today is a great day to consider your own risk tolerance and what you are willing to give up in an effort to have a stress free retirement. I hope to hear from you on your thoughts.

What Is the Difference Between a Fixed Annuity and a Variable Annuity?

An annuity is a contract with an insurance company in which you make one or more payments in exchange for a future income stream in retirement. The funds in an annuity accumulate tax deferred, regardless of which type you select. Because you do not have to pay taxes on any growth in your annuity until it is withdrawn, this financial vehicle has become an attractive way to accumulate funds for retirement.

Annuities can be immediate or deferred, and they can provide fixed returns or variable returns.


A fixed annuity is an insurance-based contract that can be funded either with a lump sum or through regular payments over time. In exchange, the insurance company will pay an income that can last for a specific period of time or for life.

Fixed annuity contracts are issued with guaranteed minimum interest rates. Although the rate may be adjusted, it will never fall below a guaranteed minimum rate specified in the contract. This guaranteed rate acts as a “floor” to protect a contract owner from periods of low interest rates.

Fixed annuities provide an option for an income stream that can last a lifetime. The guarantees of fixed annuity contracts are contingent on the claims-paying ability of the issuing insurance company.

Immediate Fixed Annuity

Typically, an immediate annuity is funded with a lump-sum premium to the insurance company, and payments begin within 30 days or can be deferred up to 12 months. Payments can be paid monthly, quarterly, annually, or semi-annually 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 a deferred annuity, you make regular premium payments to an insurance company over a period of time and allow the funds to build and earn interest during the accumulation phase. By postponing taxes while your funds accumulate, you keep more of your money working and growing for you instead of paying current taxes. This means 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.


A variable annuity is a contract that provides fluctuating (variable) rather than fixed returns. The key feature of a variable annuity is that you can control how your premiums are invested by the insurance company. Thus, you decide how much risk you want to take and you also bear the investment risk.

Most variable annuity contracts offer a variety of professionally managed portfolios called “subaccounts” that invest in stocks, bonds, and money market instruments, as well as balanced investments. Some of your contributions can be placed in an account that offers a fixed rate of return. Your premiums will be allocated among the subaccounts that you select.

Unlike a fixed annuity, which pays a fixed rate of return, the value of a variable annuity contract is based on the performance of the investment subaccounts that you select. These subaccounts will fluctuate in value and the principal may be worth more or less than the original cost when redeemed.

Variable annuities provide the dual advantages of investment flexibility and the potential for tax deferral. The taxes on all interest, dividends, and capital gains are deferred until withdrawals are made.

When you decide 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 receiving 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. Variable annuity subaccounts fluctuate with changes in market conditions and, when surrendered, the principal may be worth more or less than the original amount invested.

Annuities have contract limitations, fees, and charges, which can include mortality and expense risk charges, sales and surrender charges, 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 claims-paying ability of the issuing insurance company.

Variable annuities are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal income tax penalty. You are encouraged to seek tax or legal advice from an independent professional advisor.

Investment Idea I wanted to share

Fixed Annuity

With fixed annuities, premiums accumulate at rates of interest set by the company, and the amount of each annuity payment is determined when payments begin. A new type of fixed annuity contract is the indexed annuity. In indexed annuities, accumulation values are based not on the investment experience of the insurance company issuing them, but on the changes in value of a major stock index. Like traditional fixed annuities, the insurance company issuing them guarantees the principal less any withdrawals or surrenders, and the amount of each payment is determined when payments begin.*

Deferred annuities are designed for long-term accumulation purposes. Early withdrawals may be subject to surrender charges and if taken prior to age 59 1/2, a 10% federal penalty may apply. Money distributed from the annuity will be taxed as ordinary income in the year the money is received.

National Life Insurance Company and Life Insurance Company of the Southwest, both members of National Life Group, offer various types of annuities, each designed to help meet specific personal and business needs and objectives. If you would like more information, please contact us.

National Life Group© is a trade name of National Life Insurance Company and its affiliates. Each company of National Life Group is solely responsible for its own financial condition and contractual obligations. All companies referenced are affiliated unless otherwise noted.

* Guarantees are based upon the claims paying ability of the insurer.