I’ve been working with two general contractors this week. One is a custom home builder and remodeler in Dallas, and the other is a roofing company in Frisco. Both are getting general liability policies with a blanket coverage option for additional insured’s, and both wanted to understand what an additional insured is and why it matters to them.
I’ve been driving for 40 years which sounds a lot longer than it actually feels. I’ve seen a lot of interesting driving scenarios during that time; people making turns from the wrong lane, cars driving the wrong way on a one way street, people moving across 4 lanes of traffic to make an exit, others who stopped on an entrance ramp, deer crossing a highway, people drifting into my lane, and much more. It continues to amaze me how fast a driving situation can change and how equally fast I’ve had to respond to what’s happening around me.
Roofs are one of those things that keeps coming up when I talk with people about home insurance in Texas. This is because roofs impact homeowners and home buyers in so many ways: they can cause the home insurance to cost more, cost less, or impact it in how a weather related claim is paid (see http://50.87.248.161/~wiseinsu/home-insurance-roofs-impact/).
Discovering you’re going to have a baby is one of the most exciting things ever experienced. It may seem like the day will never arrive, but the time passes very quickly in getting the nursery ready, picking out names, getting clothing, finding the right stroller, and beginning to plan what hopes and dreams you have for your son or daughter.
None of us lives forever, but our presence in social media may go on forever after we take our last breath. Planning for what we want the end of our life encompasses many things; wills, medical directives, HIPAA releases, cremation versus burial, and even what kind of a ceremony we may want. I’d like to add one more item to your list, what do you want to happen to your digital assets?
There are two broad types of coverage which can be included in a car insurance policy. Coverage is available to protect you from financial loss if you’re involved in an accident and it’s your fault. Coverage is also available when you’re involved in an accident and it’s not your fault. The first is required by Texas state law, the second is strictly an option.
Two huge data breaches made front page news in the past two weeks. Home Depot discovered its systems were compromised in September exposing the data of 56 million credit and debit card holders. The good news, at least for now, is there’s no evidence the personal identification numbers for customer debit cards were compromised.
A storm rolled through Dallas last Thursday with straight line winds between 75 and 90 miles an hour. The rain fell sideways and the wind snapped tree limbs, toppled trees, and knocked out power to 300,000 homes and businesses. 85,000 homes and businesses were still without power as of late Saturday.
Annuity Considerations
Last week, I wrote a post introducing the two basic types of annuities, deferred and immediate, as well as the two ways they can be structured, fixed or variable (see http://50.87.248.161/~wiseinsu/introduction-annuities/). The big question is, are annuities right for you? Some financial writers, bloggers, and advisors hate them, others sing their praises, and yet others are more in the middle. With that in mind, let’s examine what you should consider before buying an annuity.
Fixed Annuities: One of the advantages of a fixed annuity, is that it provides a steady income stream in retirement, you know exactly what you’ll receive each month for the duration of the annuity. There are, however, a number of things you should consider before buying one on that basis alone.
We are currently enjoying relatively low rates of inflation. If inflation begins to rise at a steady rate, it will eat away at the buying power of your steady income, meaning you’ll be able to buy less with each dollar you’re paid. This is the same dilemma many retirees are facing who rely exclusively on social security income.
If interest rates go up, will you be able to take advantage of the higher interest rate or will you be locked in at the current lower rate? If you’re locked in at the lower rate, making a change could subject you to surrender charges which would take a huge bite out of the money you’ve invested in the annuity. If you’re able to adjust to the higher rate, it’s important to know when you may take advantage of them, how frequently this can be done, if there are any fees or expenses that will be charged for the change, as well as any other stipulations that may come back to bite you.
There are some companies advertising fixed annuities offering up to an 8% interest rate. Before buying one, find out if the interest rate is for a year or some other term. Look closely at the fees too; a bigger interest rate usually indicates higher fees and expenses.
Variable Annuities: One of the advantages of a variable and equity index annuity, is that when the market rises, as it has for the past few years, your annuity grows with it. As the market declines, so does your annuity. There is a higher risk / reward aspect which should be examined to ensure it fits with your financial personality.
Variable annuities usually have higher fees and expenses associated with them than fixed annuities, and in many cases, than comparable indexed mutual funds. In a recent Dallas Morning News article by Scott Burns, indexed mutual funds were earning almost 2.5% more with fees averaging half that, or lower, than comparable variable annuities.
In addition, some variable or indexed annuities will have participation fees. In return for guaranteeing a minimum return if the market takes a severe downturn, they impose a cap on the maximum return you can make. For instance, if a similar mutual fund were to earn say 14% for the year, your annuity would be capped at somewhere between 8% and 12% with the insurance company holding onto the difference.
In both cases, survivor and death benefits should also be closely examined. For married couples, what happens to the annuity when you or your spouse dies? Will they be able to receive income from the annuity? Will it be at the same or a lower monthly amount, or will it be paid in a lump sum similar to a life insurance policy? Are you able to leave any unused funds to your heirs or will this go to the insurance company?
Based on these considerations, I do not recommend annuities as an exclusive retirement vehicle for anyone. I believe better returns are available with lower fees in mutual funds, and that a steady income can be achieved with a couple of rental properties. That said, I also believe an annuity can provide one of the pieces of a sound retirement strategy.
What do you think? Share your thoughts, questions, and opinions with us in the comments section of our blog or on our Google + and Facebook pages. I’d love to hear from you!
Autonomous or driverless, cars have been in the news a lot in the past few weeks. General Motors CEO Mary Barra announced in early September Cadillac will introduce a model in 2016 which will be equipped with its Super Cruise technology. Super Cruise provides, at least initially, the ability for the car to drive itself on the freeway by handling the duties of accelerating, braking, and steering the car.
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