On the subject of long-term care insurance, Orman called it "a must if you can afford it."
Long-term care insurance (LTC) is one of the most important insurances anybody can get, from the day you buy it to the day you use it. Average age of entry into a nursing home is 84. If you buy it at 60 and all of a sudden you are 75, you can’t afford it anymore. The insurance company took the correct bet that you’d drop it right around the time that it’s really important. My greatest advice to you would be that if you are going to buy LTC, you need to know that, without a shadow of a doubt, it is going to be an easy expense for you to meet every single year for the rest of your life.
Get insured. We’re living longer than ever before. And with that comes the hard truth that we don’t know how we’ll fare. “That’s why it’s important to get long-term-care insurance in your 50s,” says Orman. It will cover nursing home, assisted living or in-home health care costs, which can take a big chunk out of your bank account—or your kids’!—otherwise. Don’t wait until after 60 to purchase it, however. You’ll face higher premiums and may be denied coverage because of a preexisting condition. Act early and give yourself peace of mind.
Get a free quote:
Visit our site:
www.MintcoFinancial.com
Call us:
813-964-7100
716-565-1300
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anecamara@mintcofinancial.com
Showing posts with label 529 college plan. Show all posts
Showing posts with label 529 college plan. Show all posts
Monday, April 30, 2012
Wednesday, April 4, 2012
College Planning
Paying for a child's or a grandchild's college education has become increasingly difficult as the costs of college continue to increase. I am amazed at what it costs to attend college now.
Today, Section 529 plans seem to be the tool of choice to pre-fund and build a tax-favorable pool of money for college education. I put together my own brief list of the pros and cons of 529 plans:
Pros of 529 Plans
1. Once the plan is funded (after-tax), the money can grow tax-free and be removed tax-free for qualifying college education expenses.
Today, Section 529 plans seem to be the tool of choice to pre-fund and build a tax-favorable pool of money for college education. I put together my own brief list of the pros and cons of 529 plans:
Pros of 529 Plans
1. Once the plan is funded (after-tax), the money can grow tax-free and be removed tax-free for qualifying college education expenses.
2. If owned by the parent(s) or grandparent(s), and funded correctly, the plan's assets (including growth) are out of their estate for estate tax purposes.
3. If the plan is owned by the parent(s) or grandparent(s), and if the child or grandchild does not go to college, the money can be used by the owner(s) for other purposes and would act like an IRA (with similar income taxes and penalties).
Cons of 529 Plans
1. If the child does not go to college, the growth on the money becomes taxable and subject to potential penalties when withdrawn or otherwise used by the parent(s) or grandparent(s).
2. The money in a 529 plan is subject to loss due to market risk.
3. If the plan is owned by the parent(s) or grandparent(s), and if the child or grandchild does not go to college, the money can be used by the owner(s) for other purposes and would act like an IRA (with similar income taxes and penalties).
Cons of 529 Plans
1. If the child does not go to college, the growth on the money becomes taxable and subject to potential penalties when withdrawn or otherwise used by the parent(s) or grandparent(s).
2. The money in a 529 plan is subject to loss due to market risk.
3. 529 plans are not "self completing," should a parent or grandparent die prior to complete funding.
4. 529 plans have funding limits. Funding is limited by the $12,000 annual gift tax exclusion (although they can be super-funded in year one by pouring in the first five years' worth of gifts all at once, totaling $60,000).
Using Permanent Life Insurance as an Alternative Funding Vehicle
Why would anyone use permanent life insurance (universal life or whole life) as a funding vehicle to pay for college education? There are several good reasons. (I'll assume that the life insurance policy will be written on one of the parents.)
4. 529 plans have funding limits. Funding is limited by the $12,000 annual gift tax exclusion (although they can be super-funded in year one by pouring in the first five years' worth of gifts all at once, totaling $60,000).
Using Permanent Life Insurance as an Alternative Funding Vehicle
Why would anyone use permanent life insurance (universal life or whole life) as a funding vehicle to pay for college education? There are several good reasons. (I'll assume that the life insurance policy will be written on one of the parents.)
1. Life insurance is a "self-completing" plan. Let's assume dad is the breadwinner in the family. If he dies when a child is young without fully funding a 529 plan, there will be a significant shortfall when the child goes to college. But if dad owns life insurance, it would pay an income tax-free death benefit to the beneficiary (presumably the surviving spouse) who can use that money for the child's college education.
2. Cash value in a life policy will not only grow tax-deferred, but can be removed tax-free (within limits) for college expenses, through policy loans.
3. After borrowing from the policy, it will still have cash value that can grow for years to come. When the parent is in retirement, he or she can access that cash through withdrawals and policy loans. A 529 plan does not allow this.
4. Money in a permanent policy is not a countable asset when a child applies for college financial aid.
Contact us for more information: anecamara@mintcofinancial.com
2. Cash value in a life policy will not only grow tax-deferred, but can be removed tax-free (within limits) for college expenses, through policy loans.
3. After borrowing from the policy, it will still have cash value that can grow for years to come. When the parent is in retirement, he or she can access that cash through withdrawals and policy loans. A 529 plan does not allow this.
4. Money in a permanent policy is not a countable asset when a child applies for college financial aid.
Contact us for more information: anecamara@mintcofinancial.com
Florida: 813-964-7100
New York: 716-565-1300
Nationwide: 1-888-MINTCO-8
www.Mintcofinancial.com
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