Life Insurance at Various Life Stages

August 9, 2017
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Your need for life insurance changes as your life changes. When you’re young, you typically have less need for life insurance, but that changes as you take on more responsibility and your family grows. Then, as your responsibilities once again begin to diminish, your need for life insurance may decrease. Let’s look at how your life insurance needs change throughout your lifetime.

Footloose and fancy-free
As a young adult, you become more independent and self-sufficient. You no longer depend on others for your financial well-being. But in most cases, your death would still not create a financial hardship for others. For most young singles, life insurance is not a priority. Some would argue that you should buy life insurance now, while you’re healthy and the rates are low. This may be a valid argument if you are at a high risk for developing a medical condition (such as diabetes) later in life. But you should also consider the earnings you could realize by investing the money now instead of spending it on insurance premiums.

If you have a mortgage or other loans that are jointly held with a cosigner, your death would leave the cosigner responsible for the entire debt. You might consider purchasing enough life insurance to cover these debts in the event of your death. Funeral expenses are also a concern for young singles, but it is typically not advisable to purchase a life insurance policy just for this purpose, unless paying for your funeral would burden your parents or whomever would be responsible for funeral expenses. Instead, consider investing the money you would have spent on life insurance premiums.

Going to the chapel
Married couples without children typically still have little need for life insurance. If both spouses contribute equally to household finances and do not yet own a home, the death of one spouse will usually not be financially catastrophic for the other. Once you buy a house, the situation begins to change. Even if both spouses have well-paying jobs, the burden of a mortgage may be more than the surviving spouse can afford on a single income. Credit card debt and other debts can contribute to the financial strain.  To make sure either spouse could carry on financially after the death of the other, both of you should probably purchase a modest amount of life insurance. At a minimum, it will provide peace of mind knowing that both you and your spouse are protected.

Your growing family
When you have young children, your life insurance needs reach a climax. In most situations, life insurance for both parents is appropriate. Single-income families are completely dependent on the income of the breadwinner. If he or she dies without life insurance, the consequences could be disastrous. The death of the stay-at-home spouse would necessitate costly day-care and housekeeping expenses. Both spouses should carry enough life insurance to cover the lost income or the economic value of lost services that would result from their deaths. Dual-income families need life insurance, too. If one spouse dies, it is unlikely that the surviving spouse will be able to keep up with the household expenses and pay for child care with the remaining income.

Moving up the ladder
For many people, career advancement means starting a new job with a new company. At some point, you might even decide to be your own boss and start your own business. It’s important to review your life insurance coverage any time you leave an employer.

Keep in mind that when you leave your job, your employer-sponsored group life insurance coverage will usually end, so find out if you will be eligible for group coverage through your new employer, or look into purchasing life insurance coverage on your own. Business owners may also have business debt to consider. If your business is not incorporated, your family could be responsible for those bills if you die.

Single again
If you and your spouse divorce, you’ll have to decide what to do about your life insurance. Divorce raises both beneficiary issues and coverage issues. And if you have children, these issues become even more complex. If you and your spouse have no children, it may be as simple as changing the beneficiary on your policy and adjusting your coverage to reflect your newly single status. However, if you have kids, you’ll want to make sure that they, and not your former spouse, are provided for in the event of your death. This may involve purchasing a new policy if your spouse owns the existing policy, or simply changing the beneficiary from your spouse to your children. The custodial and noncustodial parent will need to work out the details of this complicated situation.

Your retirement years
Once you retire, and your priorities shift, your life insurance needs may change. If fewer people are depending on you financially, your mortgage and other debts have been repaid, and you have substantial financial assets, you may need less life insurance protection than before. But it’s also possible that your need for life insurance will remain strong even after you retire. For example, the proceeds of a life insurance policy can be used to pay your final expenses or to replace any income lost to your spouse as a result of your death (e.g., from a pension or Social Security). Life insurance can be used to pay estate taxes or leave money to charity.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

Planning Ahead for Life Insurance Proceeds


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Why did you purchase life insurance? If you’re like most people who buy life insurance, you’re looking to provide a source of income for someone (e.g., a spouse, parent, or child) after you die. Buying the policy was the first step. Now you’ll need to do a little more work to ensure that the money you leave behind lasts.

You can never leave too…Or can you?
First, make sure what you’ll leave behind is enough. Review your insurance needs annually, or more often if necessary. After a major life event (e.g., birth, death, marriage, divorce, job loss), it is also a good idea to review your coverage. If you think that you may need more life insurance or that you have too much, talk to your insurance professional, who can advise you on the right amount of insurance for your situation–remember that you’re planning for your family’s future.

Also, if you’ve chosen a cash value life insurance policy that allows you to make investment decisions, you may want some advice from a financial professional. These experts can show you how to allocate your cash value account so that it fits in with your overall financial plan.

Can we talk?
If you’ve bought life insurance to ensure a bright future for your children, sit them down and talk about it. It’s always a good idea to talk to your children about the value of money, but serious talks about life insurance proceeds and the family estate should wait until they’re older. Eighteen is probably a good age, or slightly younger if you think your youngsters are mature enough to handle it. Although you don’t want to dwell on the fact that Mom and Dad won’t always be around, you do want to make them understand:

  • How much money they’ll receive at your death, or at least that there will be sufficient funds for them to carry on, go to college, and so on.
  • Who will be in charge of the money.
  • When it will be accessible and for what purposes.
  • What restrictions will be set in place.
  • Why all this planning is necessary.

Do you have specific desires as to how you want the money to be spent (e.g., college education)? Explain your reasons. You may find that your children want to respect your wishes instead of trying to find ways around them. If you have young children, you’ll need to appoint a guardian(s) in your will to care for them and manage their assets (including insurance proceeds), in case something should happen to you and/or your spouse. Small children won’t understand all of the financial lingo, and you don’t want to frighten them with talk of death. So, talk to the person(s) you have chosen as guardian(s) about your plans and wishes.

Did you name your spouse, a parent, or someone else as a beneficiary? Talk to them now–don’t wait until a crisis arises. Among other things, you’ll want to discuss how the insurance proceeds might be invested and what they should be used for (e.g., home mortgage, children’s education, your final expenses). You should also talk about any financial plans you’ve already made (or plan to make) and tell them what life insurance policies you have and where all the important paperwork is located. That way, your beneficiaries will be prepared when the time comes.

Revocable and irrevocable trusts
If you’re concerned about your beneficiaries’ spending habits, or that they might need help managing their inheritance, a trust may be the appropriate tool for you. If the right type of trust is used, this can be an excellent way to plan for your beneficiary’s financial future. Two basic types of trusts are used in conjunction with life insurance: revocable trusts and irrevocable life insurance trusts (ILITs). Revocable trusts come in many varieties and can be used for many purposes. Revocable trusts allow you to retain control over the trust and its assets, and even to terminate the trust if you so choose. You would generally name yourself as the trustee of a revocable trust while you’re alive and appoint someone else as a successor trustee to carry out your wishes after you die. The trustee is legally obligated to pay out the proceeds of the insurance policy, and any other assets in the trust, as specified in the trust agreement. The benefit to you is knowing that your wishes will be carried out. Your beneficiaries won’t be able to get around the trust agreement. The downside for you is that your estate will have to include assets in a revocable trust when calculating estate taxes.  With an ILIT, however, you’ll enjoy certain tax benefits–the insurance proceeds and other assets in the trust aren’t typically considered part of your taxable estate.  However, you must give up all rights and control over the trust–you can’t act as the trustee or make any decisions about how assets are invested. If it appears that you have influence over the trustee, or that the trustee is carrying out your wishes, the ILIT will be added back into your estate tax calculation. If you have a sizable estate, you may be able to minimize the potential tax burden with an ILIT.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

Long-Term Care Insurance:  How does it work and is it right for your family?


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Whether you’ve had a long-term care insurance (LTCI) policy for years or you’re thinking of buying one, it’s critical to understand exactly what set of conditions will trigger coverage. Your chances of requiring some sort of long-term care increase as you age, and long-term care insurance (LTCI) can help you cover your long-term care expenses. Although tax issues are probably not foremost in your mind when you buy LTCI, it still pays to consider them. In particular, you should explore whether your premiums will be deductible and your benefits taxable.

But who should buy the coverage and when? Many experts use net worth as a purchasing guideline. On one end of the spectrum, individuals with lower net worth will quickly exhaust their assets when funding long term care and qualify for Medicaid. At the other extreme, you may be able to pay for any potential long term care costs yourself. Keep in mind “self-insuring” requires investing a portion of your assets in a conservative fashion to cover possible long term care expenses.

If you fall in between these two categories, it’s worth weighing the trade-offs between the peace of mind a long term care policy might bring you and the premiums you will pay. Most experts suggest beginning this analysis around age 50. If you wait until your 70’s, it may be too late to purchase insurance as some long term care insurance companies place restrictions on the age and health status of buyers.

What determines if you’re entitled to benefits?
LTCI policies differ on how benefits are triggered, so it’s important to examine your individual policy. Here are some ways you can become eligible for benefits:

  • You’re unable to perform a certain number of activities of daily living (ADLs) without assistance, such as eating, bathing, dressing, continence, toileting (moving on and off the toilet) and transferring (moving in and out of bed). Look in your policy to see what ADLs are included, the number you must be unable to perform, and how your policy defines “unable to perform” for each ADL, as criteria can vary from one company to another (e.g., does the definition require someone to physically assist with the activity or simply to supervise the activity?).
  • Your doctor has ordered specific care.
  • Your mental or cognitive function is impaired.

The best policies let you qualify for benefits if your own physician orders specific care, rather than require that you be examined by an insurance company physician. Most LTCI policies have a waiting period, commonly known as an elimination period, before you can start receiving benefits after you’re judged medically eligible. Common waiting periods are 20, 30, 60, 90 or 100 days.

Though it’s true that premiums paid on a tax-qualified LTCI policy can reduce your tax burden, you must itemize deductions to be eligible.  LTCI premiums fall under the write-off for medical and dental expenses, which is limited to expenses that exceed 10 percent of your adjusted gross income. And there’s another caveat. Even if your LTCI premiums exceed 10 percent of your adjusted gross income, you can’t include all of the premiums in your deduction for medical and dental expenses

Long term care can be an emotional issue, but it’s best to evaluate the product as a risk management tool, like your homeowners, life, and auto insurance. Finally, because policy language can be ambiguous and insurance companies seem to introduce new riders on a daily basis, it’s beneficial to consult with us before purchasing long term care insurance.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

Teaching Your Heirs to Value Your Wealth

July 26, 2017
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Values can help determine goals & a clear purpose.

Some families are reluctant to talk to their kids about family wealth. Perhaps they are afraid what their heirs may do with it.  It can be awkward to talk about such matters, but these parents likely postponed discussing this topic for another reason: they wanted their kids to grow up with a strong work ethic instead of a “wealth ethic.”

If a child comes from money and grows up knowing he or she can expect a sizable inheritance, that child may look at family wealth like water from a free-flowing spigot with no drought in sight. It may be relied upon if nothing works out; it may be tapped to further whims born of boredom. The perception that family wealth is a fallback rather than a responsibility can contribute to the erosion of family assets. Factor in a parental reluctance to say “no” often enough, throw in an addiction or a penchant for racking up debt, and the stage is set for wealth to dissipate.

How might a family plan to prevent this? It starts with values. From those values, goals, and purpose may be defined.

Create a family mission statement. To truly share in the commitment to sustaining family wealth, you and your heirs can create a family mission statement, preferably with the input or guidance of a financial services professional or estate planning attorney. Introducing the idea of a mission statement to the next generation may seem pretentious, but it is actually a good way to encourage heirs to think about the value of the wealth their family has amassed, and their role in its destiny.

This mission statement can be as brief or as extensive as you wish. It should articulate certain shared viewpoints. What values matter most to your family? What is the purpose of your family’s wealth? How do you and your heirs envision the next decade or the next generation of the family business? What would you and your heirs like to accomplish, either together or individually? How do you want to be remembered? These questions (and others) may seem philosophical rather than financial, but they can actually drive the decisions made to sustain and enhance family wealth.

Feel no shame in exerting some control. A significant percentage of families seek to define a purpose for transferred wealth. Some parents may want to specify what their heirs could use their inheritances for.

You may want to distribute inherited wealth in phases. A trust provides a great mechanism to do so; a certain percentage of trust principal can be conveyed at age X and then the rest of it Y years later, as carefully stated in the trust language.  By involving your kids in the discussion of where the family wealth will go when you are gone, you encourage their intellectual and emotional investment in its future. Pair values, defined goals, and clear purpose with financial literacy and input from a financial or legal professional, and you will take a confident step toward making family wealth last longer.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

Are Your Children Financially Literate?


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New Approaches to a Changing Problem.

How bad is financial illiteracy today? So bad that your children may be at risk of making some serious financial mistakes. Some are finding that talking to children about finances has become less about the nuts and bolts of money and more about putting money’s importance to our daily lives in the correct context.

Women at particular risk.  It should be noted that more women work in part-time jobs, and are more likely to interrupt their careers to take care of family, whether that be raising children or looking after parents. Some of these patterns are just luck of the draw, but others may come from what parents teach children about money, and how they teach it.

Start at a young age. New York Times money columnist Ron Lieber’s book, The Opposite of Spoiled, discusses ways to prepare children for dealing with financial issues. The title refers to the author’s search for an antonym to the word “spoiled” in the context of an entitled and demanding personality. Lieber suggests focusing on values like graciousness in communication, which can lead to more openness in discussing money. Money can be frightening or mysterious to many, even well into adulthood, and Lieber encourages approaching the topic with fewer facts and figures and more as an emotional issue. The reasoning for this is that money is, for children and adults, an emotional topic.

The emotional toll of money issues. While most people have experienced money worries at one time or another, the science surrounding this phenomenon is compelling. Many mental health organizations have special literature dealing with the emotions that surround money troubles, while money is always an uncertain and fluid factor in our lives, how we deal with these stresses may be strengthened through early experiences and developing good emotional habits early on. Frank talk about these emotions may demystify money and, in the process, boost financial literacy.

Education is still needed. Of course, money is far more than an emotional issue; being comfortable with a topic doesn’t guarantee proficiency, it merely makes it easier to learn.

Prescriptions in progress. There are a number of online sources for financial education, helpful to both teens and young adults. The Ad Council and the American Institute of Certified Public Accountants have a national campaign, Feed the Pig™, to try and correct this dilemma (learn more by visiting www.feedthepig.org). The National Council on Economic Education has also helped launch www.TheMint.org to acquaint young adults with vital financial principles.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

Gap year: What parents need to know


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High school graduation is nearly here, which means families with students entering their senior year need to start thinking about what their student will do after graduation.  One often overlooked option is having the student attend a gap year program before entering college.

HFG Wealth Management Director of Client Services and Financial Planning, Donnie Carpenter, answers the top three questions about gap year programs.

What is a gap year program?
Gap year programs have been growing in popularity for some time, but the concept has almost always been around. The idea is that most students have no idea what career they want to enter on the other side of school, and thus what they should study. Instead of going from high school straight into college, they can get some experience that will help them understand more about themselves and what careers may be a good fit.

Some students do this by getting a job and staying at home, building up their savings and learning if a retail or service job is where they want to land. Other students attend a local community college to explore different fields at a fraction of the cost of a four-year college, but most community colleges have far fewer fields of study than traditional universities. Still other students may want to join the army, Greenpeace, a mission agency, or take some other opportunity to travel and gain life experience.

A relatively new option is to attend a gap year program. There are generally three types: traveling, volunteering, and working.

Why should we consider a gap year program?
Many 18-year-olds are not ready to decide what they want to do with the rest of their life. A gap year program gives them time and space to consider their options, as well as obtain experiences that may help shape their future career.

For example, a client’s son was interested in doing something involving the ocean, so his parents sent him on a gap year program that had him spending a semester at sea. He is now an oceanographer, having found a career he is passionate about, while his wife, whom he met on the ship, became a school teacher after learning she wasn’t as interested in the sea as she thought.

Is there a cost to gap year programs, and if so, how do we pay for it?
Gap year programs are businesses that sell education and experiences, so there is a cost involved. It can run from a few thousand dollars to tens of thousands of dollars. One program involves traveling to multiple countries over 9 months and costs $55,000, while another has the student live 20 days at sea for 3 credit hours and costs $6,000. Depending on the type of program, you may be able to use financial aid, or even your 529 account to pay for the gap year. To be eligible for financial aid or to get tax-free withdrawals from your 529, a program must be affiliated with a university.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

Could Insurance Save Your Retirement?

July 19, 2017
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The right coverage might help to insulate you against a money crisis. 

Most people begin insuring themselves when they marry or start a family. They buy coverage in response to two potential calamities – disability during their working years, and death.

Somewhere between youth and death comes retirement, and in retirement, the role of insurance is often downplayed. Does a retired multimillionaire really need a life insurance policy? Now that he or she is not working, what is the point of having disability coverage?

Make no mistake, insurance can play a vital role in retirement planning. It may help to keep a retiree household financially afloat in a money crisis. It can also be used creatively to address other financial concerns.

What can life insurance do for a retiree before he or she dies? Many permanent life insurance policies accumulate cash value over time. Potentially, that cash value could be tapped to pay off medical expenses, education debt, mortgage debt, or debts owed by a business. It could fund a buy-sell agreement. It could go into an investment vehicle that could later pay out income. While the death benefit of a policy may be reduced as a consequence, the trade-off may be worth it for the policyholder.

What else can life insurance do for a retiree household? It can help the kids. Sometimes a retired dad or mom is 20-30 years older than his or her spouse, and the kids are minors. If the older spouse dies, the death benefit can help to provide for these minor children, who could have special needs

There is also the matter of income replacement, even in retirement. When a retiree receiving a pension dies, the surviving spouse may subsequently get far less pension income. A life insurance death benefit may help to make up for it. In another scenario, a widowed spouse may elect to live on a life insurance policy’s lump sum death benefit for a year or two, as an alternative to drawing down tax-advantaged retirement savings accounts.

How about disability insurance? In some households, one spouse retires, but another spouse keeps working well into his or her sixties and earns a large income. A couple or family would definitely miss that income if it went away. Keeping disability insurance coverage may be very wise in such instances.

Long-term care coverage is expensive, but not compared to the cost of eldercare. Imagine paying for a semi-private room in a nursing home. Outrageous? Financially speaking, that kind of expense could break the back of a retiree household. Medicare and disability insurance will not absorb the cost – one that could deplete a retiree’s entire savings, with the next step being Medicaid or turning to adult children (who will be retired or approaching retirement themselves). When eldercare is needed, the daily benefit from long-term care coverage can feel invaluable. That benefit can also fund home health care and assisted living services.

Liability insurance may come in handy. In certain states (such as California), retirement accounts are not protected against creditor lawsuits. So if a judgment against a retiree in one of those states is large enough, retirement account assets may be seized to satisfy it if liability limits on an auto or homeowner policy are too low. This is why an umbrella liability policy may have merit for some retirees.

Insurance should not be a “missing piece” in your retirement plan. You may need life, disability, long-term care, or liability coverage more than you think.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

Travel Insurance: Necessary Or A Waste?


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Soon you’ll be on your way, taking that trip you’ve looked forward to for ages-but suppose something happens. If you get sick, lose your suitcase, or have to cut your trip short, will any of your existing insurance policies cover your expenses or reimburse you for your losses? If not, you might want to purchase travel insurance, which is available from insurance companies, travel agents, tour operators, and cruise lines.

If you can’t make it after all or have to cut it short-trip cancellation/interruption insurance
You’re ready to go, but the cruise line has gone under financially. Or perhaps you’ve arrived at your hotel only to be handed a telegram informing you that Uncle George is seriously ill and you must return home immediately. If your trip is canceled or cut short, will you be able to get any of your money back?

Trip cancellation/interruption insurance protects you if you must cancel your travel plans before you leave or cut your trip short due to an unforeseen event. Covered contingencies can include bad weather, the financial failure of a service provider such as a cruise line or a travel agency, your illness or that of a family member while on the trip, or an illness or death at home. But coverage varies widely from policy to policy, so check the exclusion section carefully. Your definition of an unforeseen event may differ from that of the insurance provider. For example, some companies don’t recognize a recurrence of your pre-existing medical condition as unforeseeable.

Under the policy, you’ll be reimbursed for your nonrefundable prepaid expenses, such as tour deposits, airline tickets, or hotel rooms. To determine what the insurance covers, you may need to check the terms of your travel agreements and find out what guarantees are offered by the carrier, travel agent, or tour operator. Cruise lines, for instance, may refund most of your money if you cancel several weeks before your scheduled departure, but they’ll give you less or none back if you cancel a few days before you’re supposed to leave. In that case, you’d get nothing back unless you purchased trip cancellation/interruption insurance.

Trip cancellation/interruption insurance is different from cancellation waivers offered by cruise lines and tour operators. These waivers are not insurance; they’re simply company guarantees that your money will be refunded under certain circumstances. They usually won’t cover your last-minute cancellation and they won’t protect you if the company goes out of business.

If that fever isn’t just excitement-short-term supplemental health insurance
Your individual or group health insurance policy typically covers you if you’re traveling within the United States. Still, it’s a good idea to check with your insurance provider before you travel so that you fully understand the coverage conditions. If you’re traveling overseas, beware-your health insurance policy may not cover you at all. Even if it does, it may not provide the same benefits overseas that it does in the United States. Check the limitations of your policy carefully, and call your insurer’s customer service department if you have questions. If your health insurance doesn’t provide you with adequate coverage while you’re traveling, consider purchasing a short-term supplemental health insurance policy from an insurance company, travel agent, tour operator, or cruise line. These policies often combine accident and/or sickness coverage with medical evacuation coverage, which pays all or part of the cost of getting you back to the United States if you’re traveling overseas (something most basic health insurance polices won’t cover). The terms of supplemental health policies vary widely, so before purchasing this insurance, ask to see a copy of the policy and get the answers to the following questions:

  • Does the plan pay the cost of medical care needed for sickness, accidents, or both?
  • What procedures must you follow to see a doctor or go to the hospital?
  • Will you have to get approval before you receive care?
  • Does the policy pay for care upfront, or will you have to pay and wait to be reimbursed?
  • What are the deductible, co-payments, and/or coinsurance costs?
  • What exclusions and restrictions apply?
  • What is the maximum amount of coverage under the policy?
  • Are translator services available?

If you lose your shirt-baggage insurance
Baggage insurance reimburses you if your personal belongings are lost, stolen, or damaged while you’re traveling. Before you purchase it, however, find out if you already have adequate protection. For instance, airlines may be liable for damage caused by their negligence, and they’re liable for lost or stolen baggage after check-in, up to their stated limit per passenger. Some credit card companies and travel agents also provide supplemental baggage insurance at no charge to you. Your homeowners or renters policy may protect your personal belongings against theft when you travel, as well.

Purchasing baggage insurance may be appropriate when you want 24-hour protection, not just protection after your bags are checked in with an airline. Baggage insurance may also offer higher liability limits than those offered by an airline. However, check the policy’s fine print. If you carry expensive items, you may not be fully reimbursed if they’re lost or stolen, and benefit limits may apply to certain items like electronics (e.g., laptop computers) or jewelry. You also may not be reimbursed for anything covered under another policy; if your bags are lost or damaged by an airline, you may need to seek reimbursement from the airline first.

If you lose more than that-accidental death and dismemberment insurance
Accidental death and dismemberment insurance (AD & D) is inexpensive coverage that compensates you if you lose a limb or an eye, or that compensates your beneficiary if you die in an accident. You can purchase this coverage as a separate policy, as a rider to an existing policy, or as part of a travel insurance policy. You may also receive this coverage as a “free” benefit when you purchase airline, train, or bus tickets using your credit card. AD & D policies usually cover, up to certain limits, medical expenses associated with an accident.

Before you purchase this coverage, make sure you don’t have duplicate coverage elsewhere. You may already have AD & D coverage if you have adequate life insurance, or through a group insurance plan sponsored by your employer or credit card company.

 

Helping the Arts with Life Income & Life Insurance Gifts


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The downturn has forced many of your favorite theatre companies, opera companies, symphonies and ballets to amend their programming. They need your help.  Fortunately, private money can make a big difference. Patrons are coming to the rescue of these organizations with life income gifts and gifts of life insurance – financial moves that have perks for donors as well as ensembles.

Gift annuities. A life income gift, also known as a gift annuity, offers an arts donor some potentially superb benefits. A gift annuity is a simple agreement with an arts organization, by which you make an irrevocable gift of cash, appreciated securities or real estate. In return, you (and/or one other person you select) receive a fixed annual income that the arts organization is obligated to pay to you.

  • Usually, some of this income is tax-free. If you make a cash gift, part of the fixed income payments will be taxed as ordinary income and the remainder will be untaxed. If you contribute securities or real estate that you have owned for a year or more, percentages of the income you receive may be taxed as ordinary income or capital gains, while some of it may not be taxed.
  • You may also claim an income tax deduction in the year you establish the gift annuity – and if you fund your gift with an appreciated asset, you may eliminate a portion of your capital gains tax.
  • As a gift annuity can be immediate or deferred (i.e., income payments to you can start this year or in a future year), you have potential for enhanced annual income later in life if a gift is funded today with low-yielding assets.

Life insurance. A gift of life insurance is often welcomed by an arts organization, as it is self-completing – the funding objective linked to the gift is fulfilled when the donor passes away.

If you make yearly planned gifts to a non-profit arts group, you can assign a percentage of your annual donation to a life insurance policy, therefore guaranteeing the perpetuation of your gift. You can actually make life insurance gifts in several different ways. Here are just a few options:

  • You can gift a life insurance policy you now own to an arts group, donate a new policy you buy, or even have the arts organization purchase a policy on your life and pay the annual premiums (some states don’t permit this last option). You may claim an income tax deduction in the year you do this.2
  • You can name an arts organization as the primary beneficiary of your policy. While that move won’t bring you an income tax deduction this year, it will bring you a federal estate tax deduction for the full amount of the proceeds payable to the non-profit arts group.
  • You could assign policy dividends to an arts organization. This creates a deduction as dividends are paid. You also have the chance to amplify the magnitude of your contribution: the dividends could buy a new policy, with the arts group as irrevocable owner and beneficiary.
  • Have you accumulated a great deal of assets in a deferred compensation plan or a supplemental retirement plan (SERP)? If so, you face the chance that your heirs might only receive about a quarter of that wealth after income and estate taxes. Some executives and business owners in this situation have exchanged a SERP or deferred comp plan for a split-dollar life insurance policy, which has let them legally avoid the above-mentioned income and estate taxes and direct substantial wealth to the arts.

Four things to remember with life insurance gifts. One, if you want to receive an income tax deduction in the year you make the gift, the gift has to be irrevocable – you must surrender ownership of the policy. Two, if you make an irrevocable life insurance gift within three years of your death, the amount of the gift will be included in your gross estate. Three, there is a ceiling on the annual charitable deduction you can take – 30% of adjusted gross income (AGI) for gifts to private non-profit organizations, and 50% if the non-profit happens to be a public organization. Four, remember that you can carry excess deductions on charitable gifts forward for up to five tax years.

With summer and fall being ideal times to revisit your tax strategy, you might want to look into these useful ways of gifting great arts organizations.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage.

For more information, please visit www.hfgwm.com or call 832.585.0110.

Larry Harvey Named Five Star Wealth Manager Six Years in a Row

July 17, 2017
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The Woodlands-‐ HFG Wealth Management, a fee-only, locally owned and based, fiduciary, comprehensive
wealth management firm, announced Founder and CEO, Larry A. Harvey received the 2017 Five Star Wealth
Manager award by Five Star Professional. This award is the sixth year in a row Mr. Harvey has been
recognized by Five Star Professional. This award is limited to less than 250 advisors in Houston, according to
Five Star Professional and recognizes financial professionals who provide quality and exceptional service to
their clients. This award will be featured in the August 2017 issue of Texas Monthly magazine (Houston
edition).

“I’m honored to be recognized by Five Star Professional for the sixth year in a row,” said Larry Harvey. “It is a privilege and pleasure to work with clients locally and nationally to define their financial goals. I have been fortunate to serve our clients in a way that they truly deserve and I look forward to our continued team
growth and helping more individuals, families and small businesses achieve their financial objectives. Our
team truly is committed to placing our client’s best interest first and providing outstanding, personal service,” Harvey said.

Harvey is a Chartered Financial Consultant (ChFC) and an Investment Advisor and planning consultant with
over 30 years of experience providing comprehensive and wealth management strategies for individuals,
families and small business owners. Harvey holds degrees in Accounting and Business Management from the
University of Tampa and earned his ChFC designation from American College in Bryn Mawr, Pennsylvania. He
is a member of the Financial Planning Association and the Society of Financial Service Professionals and serves
on the boards of various companies as a sought-after advisor, lending his vast knowledge and years of
experience to their firms. Harvey and his wife reside in The Woodlands with their sons.

The Five Star Award program candidates are evaluated against 10 objective criteria to determine the Five Star
Wealth Managers in more than 40 major markets. The Five Star Wealth Manager award process includes
nominations by wealth managers, financial planners and advisors, CPA’s and estate planning attorneys.
Participants in the survey were asked to evaluate only those wealth managers they knew through personal
experience and rated that individual according to criteria such as integrity, service value for fee charged and
quality of recommendations. The Five Star Wealth Manager Award is given to less than two percent of the
wealth managers in the Houston market. The award recognizes service professionals who provide exceptional,
quality services to their clients.

For more information about HFG Wealth Management, please visit www.hfgwm.com or call 832.585.0110.