Month: September 2019

Whole Life vs. Universal Life Insurance

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Which Policy Is Best For Me: Whole Life Vs. Universal Life Insurance?

Life insurance is one of the most important purchases you can make in your life. Due to its significance, individuals make decisions on what type of life insurance to buy seriously, wanting to protect their loved ones as much as possible, and not leave them with a financial burden.

Despite these best intentions, the world of life insurance can be quite intimidating. A crucial decision when purchasing life insurance is choosing between whole life vs universal life insurance.

Need help getting started on this decision? Read on.

What is the difference between whole life vs. universal life insurance?

When purchasing life insurance, a whole life insurance policy is guaranteed and locked in. Upon signing the paperwork, your monthly payment rates will remain the same throughout your life, and the amount paid out to your beneficiaries is preset. There is no guesswork involved with whole life insurance, and the terms are spelled out clearly.

Comparatively, universal life insurance includes more grey areas. For starters, people with universal life insurance can choose to adjust their monthly payments. If the budget becomes constrained, they can choose to pay less. If they decide they want to increase their payments, this is an option as well. However, these payment adjustments will affect the amount paid out at the end of the policy. So, with that added flexibility comes variability in the actual benefits.

Which is best for me?

Choosing between whole life vs. universal life insurance is an inherently personal choice, based on your preferences. Some individuals like the stability in knowing exactly what they’ll have to pay each month, planning for exactly how much their beneficiaries would receive upon their passing.

For those individuals who require more flexibility in making payments, the universal life insurance option may be more beneficial. Once retirement funds have been filled, and mortgages have been paid off, reducing your monthly payments later in life with less of a payout may make more sense. Of course, these decisions would be best made with the appropriate guidance if you feel you need a more objective perspective.

To find out more information about your life insurance options, contact Schechner Lifson Corporation. Discover how we can make sense of the world of insurance, providing you with the best and most affordable coverage possible.

Qualified Vs. Non-Qualified Deferred Plans

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Know The Difference: Qualified Vs. Non-Qualified Plans

As soon as you enter the workforce, you’re told it’s important to start planning for retirement. While retirement may seem like it’s a long time coming, one of the most critical things you can do early on in your career is to start building your nest egg. However, what do you really know about your retirement plan? And do you know if it’s the best possible plan for your situation?

When analyzing potential retirement plans, it’s essential to understand the difference between qualified vs. non-qualified plans.

Qualified Plans

First, let’s start with qualified retirement plans. When people talk about qualified plans, they’re referring to a plan that specifically qualifies with the guidelines of the Employee Retirement Income Security Act (ERISA) from 1974. If your plan is a qualified one, that means it gets all of the benefits spelled out by ERISA, which include tax benefits. These plans, which include 401(k) plans, 403(b) plans, profit-sharing arrangements, and HR-10 plans, work by deducting funds from an employee’s paycheck before tax and funneling them into one of these plans. The employee will not have any tax obligations to the funds they put into these plans until they withdraw them later in life, ideally by retirement.

Non-Qualified Plans

Next, non-qualified plans are the types of plans that do not meet ERISA guidelines, such as deferred compensation or executive bonus plans. Because those ERISA guidelines aren’t met, such as those that don’t meet requirements of participation, vesting schedules, or others, the funds that are sent to the retirement plan are taxed beforehand. This difference means employees aren’t putting as many funds away into the non-qualified plan, but it also means that when they withdraw them later in life, they aren’t subject to taxes at that point.

Which is better: qualified vs. non-qualified plans?

Both qualified and non-qualified plans have their inherent advantages and disadvantages.

For qualified plans, employers must offer them to all eligible employees at the same rate, while your money put into these qualified plans are able to grow with a greater investment due to lack of taxes upfront. Ideally, when you withdraw the funds later in life and do get hit with the taxes, you’ve spent a lifetime saving and can afford to pay those taxes. If you’re young and just starting out in the workforce or had a late start to your career, these taxes may be less affordable.

Regarding non-qualified plans, there’s no ceiling on how much you can contribute to them (compared with the less than $20,000 in funds the IRS allows you to put into qualified plans today). Further, if you’re a higher-paid employee, non-qualified plans might be available to you because they don’t have to be offered at the same rate (or at all) to all employees. The downside is that you are taxed right away on these funds and you’re not covered by the required protections of ERISA.

To find out more information about retirement plans, contact Schechner Lifson Corporation today!

HOA Fees Insurance Coverage

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Do HOA Fees Cover All Property Insurance Bases?

Homeowner’s Associations (HOAs) are an increasingly common component of the home purchasing experience across the United States. HOAs are private associations, typically set up by neighborhood real estate developers to help market, manage, and sell homes in a residential subdivision. Owning property overseen by an HOA will come with mandatory monthly fees, which can range from tens to hundreds of dollars each month. Thankfully, these fees are intended to benefit you as a homeowner. HOA fees typically cover costs for security, amenities, maintenance, and even some forms of property insurance.

What’s included?

New homeowners or those who are paying HOA fees for the first time may think that the included property insurance with their HOA means they can forgo purchasing additional homeowner insurance.

An HOA’s master insurance policy is intended to ensure a minimum level of protection, usually applied to common areas and public amenities. This coverage, however, does not apply to what is inside a homeowner’s individual unit, whether it be a town-home, condo, single-family home, etc.

Typical master insurance policies included with your HOA fees will only cover damage to the exterior of your house, or “walls out.” This coverage will include the structure of the home, the roof, lobbies, stairways, amenities, and the surrounding yard. The idea from the HOA’s perspective is these are the areas that need to be covered and repaired in a timely manner so that the rest of the neighborhood will maintain its curb appeal to visitors and potential home-buyers. As such, the HOA fees that go to property insurance will ensure these aspects of your home are repaired efficiently.

Your responsibility

Anything inside the home is not covered by the HOA fees and its master insurance policy. As a property owner within an HOA community, you’ll still need full home insurance to ensure your belongings inside the house are covered. Check your HOA bylaws and governing documents to get an in-depth understanding of what’s included and what the exclusions are.

To find out more information about home insurance and supplementary property insurance, contact Schechner Lifson Corporation. Discover how we can make sense of the world of insurance, providing you with the best and most affordable coverage possible.

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