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Financial Awareness Day

September 1, 2021 • By Kevin Alvarez

September is Life Insurance Awareness Month!

September serves as Life Insurance Awareness Month. We all want what is best for our families and life insurance provides our loved ones with peace of mind as well as security from any end-of-life and final expenses. Before we begin to learn about what exactly life insurance is and how beneficial it is for our family, let's understand some terminology used in life insurance policies.

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Life Insurance Terms

Administrator: The person (usually the spouse, domestic partner, or close relative) that the court appoints to manage the estate of person who dies with a Will. The administrator is also called the personal representative of the estate.

Beneficiary: The beneficiary of a life insurance policy is the person, organization or trust that you define as receiving the life insurance payout. If you take out a $10,000 policy and name your child the sole beneficiary, when you die, they get $10,000. You can also assign multiple beneficiaries to your policy and define just how much of the policy they’ll receive. For example: John takes out a $25,000 life insurance policy. He names his wife and his two sons as the beneficiaries of his policy, but he specifies that his wife will receive 50% of the payout and each of his sons will receive 25% of the payout. John dies, and his wife gets $12,500, while each son gets $6,250.

Cash Value: For most whole life insurance policies, when you pay your premiums some of that money goes into an investment account. The money in this account is the cash value of that. If you cancel a policy, you can receive the cash value of the policy as payment instead of the face value.

Death Benefit: A death benefit is the money paid upon the death of the insured. It’s usually a payout of the full coverage amount defined in the policy (a $10,000 policy pays a $10,000 death benefit).

Decedent: The person who has passed.

Estate:  All liabilities as well as assets like your home become your "Estate". You would have to take inventory of all things you own and decide how your heirs and creditors would receive assets.

Executor: A person named in a Will and appointed by the court to carry out the dead person's wishes. The executer is also called the personal representative of the estate.

Face Value: The face value of the policy is simply the coverage amount the policy is worth. So, the face value of a $10,000 policy is $10,000. This is usually the same amount as the death benefit.

Living Trust:  A trust set up during the life of a person to distribute money or property to another person or organization.

Personal Representative: The administrator or executor that the court appoints to manage the estate.

Probate: The court process for distributing a dead person's assets, paying debts owed and settling the financial affairs of people when they pass.

Successor: Anyone who has the legal right to receive property of a person who dies, either under the Will or the Probate Code.

Trust: An agreement where property is given to someone to be held for the benefit of another person.

Will: A legal document with Instructions about what will happen to their property after death.

"Do I really need life insurance?"

"If you were to die, would your family struggle to pay for

your funeral, mortgage or daily living expenses?"

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What End of Life Expenses to Expect

A study done by Experian in 2016 determined 73% of Americans are going to die in debt. Unless a family member cosigned with the person who passed, debt is typically not inherited by any of the surviving family members and is paid off by the estate.

What may come out of pocket for the living family members (with no insurance policies in place) may be the following:

  • Funeral Expenses - The California average is about $11,777.  
  • Nursing Home Care/Hospice Care - This can easily reach $1,000 for 24 hour care, BUT Medicaid may be able to cover 100%. 
  • Medical Bills - Depending on medical conditions and treatment, this cost only adds stress to an already difficult time.

"How much life insurance do I really need?"

"The amount of insurance depends on the standard

of living you wish to assure your dependents."

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The Two Basic Types of Life Insurance:

  • What is Term Life Insurance?
  • What is Whole Life Insurance?
What is Term Life Insurance?
  • Available terms can range from 10 to 30 years 
  • Beneficiaries receive larger death payouts than whole life insurance policies
  • Benefits transfer to beneficiaries tax-free
  • Can easily be converted to Whole Life Insurance
  • Lower payments based on how young you are
  • May be a challenge to renew your policy upon expiration
  • No ability to cash out for end of life expenses
  • Protects your family from a loss of income
  • Temporary policy with an expiration date 
  • Typically costs less than Whole Life Insurance
What is Whole Life Insurance?
  • Burial costs and other final expenses are covered
  • Builds cash value, which could be used while you are alive
  • Coverage will continue as long as payments are made
  • Death Benefits transfer to beneficiaries tax-free
  • Death benefit amount can never decrease
  • The cost (Premiums) do not increase as long as payments are made
  • Smaller death payout
  • Typically higher in cost than Term Life Insurance

"I'm pretty healthy, I'll wait until I am older to get Life Insurance."

"You pay less if you get insurance when you are younger and besides

you'll be covered should any unexpected health issues arise."

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Think of Life Insurance as a Form of Investment

Just as some invest into the stock market and/or the real estate market, whole life policies build cash value through a portion of the money used for premiums through interest. Over time, this sum slowly grows to the point where you can borrow from it tax-free. Keep in mind, you will have to pay interest on this loan and any remaining balance will be deducted from the death benefit your loved ones are set to receive.

If the above-mentioned funds become big enough, you may have the option to trade the policy for an annuity. This would provide you with monthly payments for the rest of your life or when the funds are exhausted. While this may sound like a great idea, you would have to keep in mind, there is a chance your insurance policy will not pay out the death benefit to your loved ones.

Another option available with Whole Life Insurance is being able to surrender (sometimes known as "selling") your policy to the insurance company. By doing so, you void your insurance coverage and while you will get a sum of money, it would not be as much as the amount the insurance company would have paid out when you pass. While thinking of life insurance as an investment, understand this should not replace your savings or 401k.

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How To Pick the Right Policy

Which policy best aligns for your own goals and/or family's goals? When it comes down to figuring out which policy is best, most will initially pay for term life insurance until their career reaches an established point in-which more of their earned money is used towards converting their term policy to whole life.

SafeAmerica Credit Union has partnered with Trustage® Life Insurance to help credit union members like you protect the people who matter most in their lives. Any amount of coverage can make a difference.

TruStage® Life Insurance can help give you peace of mind today and provide an income-tax free cash benefit for your family. It can help pay expenses you might leave behind like funeral costs, mortgage payments or unpaid debts. TruStage helps make it easy to compare insurance and explore options you can afford—so you can make a good decision today for your family:

  • Compare life insurance options
  • See instant quotes based on your budget
  • Apply online or over the phone
Get an Instant Quote
Understanding Insurance

TruStage® Life Insurance is offered by TruStage Insurance Agency, LLC and issued by CMFG Life Insurance Company, PO Box 61, Waverly IA 50677‑0061. The insurance offered is not a deposit and is not federally insured or guaranteed by your credit union.

© 2020 TruStage Insurance Agency

DTCG-2947101.1


Sources:

https://www.courts.ca.gov

https://www.debt.org

https://educationdata.org

https://www.forbes.com

http://www.insurance.ca.gov

https://www.investopedia.com

https://www.investopedia.com

https://www.trustage.com

https://yahoo.com

August 11, 2021 • By Kevin Alvarez

National Financial Awareness Day – August 14th

August 14th marks National Financial Awareness Day. This day serves as the perfect opportunity to go over your finances and see what habits could be addressed to provide financial freedom.

The concept of financial education/awareness can be traced back to Benjamin Franklin’s 1737’s Poor Richard’s Almanack. There, Mr. Franklin wrote a column called “Hints For Those That Would Be Rich.”

It was with this article, he coined the phrase and ended his column with “A penny saved is twopence clear.” This piece of advice has somehow been lost through time and has had many people believing Franklin said “A penny saved is a penny earned.” While equally sound advice, some may argue it’s the modern interpretation of what Franklin had originally said.

Read Benjamin Franklin's Article below.

Hints For Those That Would Be Rich

Hints to those that would be rich 1
Hints to those that would be rich 2
Hints to those that would be rich 3

Benjamin Franklin’s “Hints For Those That Would Be Rich” was the closest, formal piece of financial education the American people had at the time. It wasn’t until 1849 where James William Gilbart published his article, “Ten Minutes’ Advice about Keeping a Banker.” Through this, Gilbart shared in detail, the many advantages of having a bank account along with a personal banker.

Elements of Banking 1

We’ve come a long way in a short amount of time and with the ease of access regarding information, we can learn timeless financial concepts, habits and tips rather instantly.

Hints For Those Who Are SafeAmerica Members

Just like Mr. Benjamin Franklin wrote his column about financial education back in 1737, SafeAmerica Credit Union too has hints for those that would be rich.

Budgeting For Short And Long Term Goals

Setting a budget and developing a spending plan is a great way to relieve uncertainty and stress while also helping to figure out how to meet both your short-term and long-term financial goals. Use this worksheet to calculate your monthly expenses and income to get an idea of what you have to work with, what your commitments are, and what you have remaining to devote to your goals.

Budgeting your finances allows you to become better prepared for those unwanted and unexpected expenses when they arise (i.e. car maintenance, home repairs, and medical costs). It also allows you to have a “true” budget when it comes to where you are spending.

Understanding Your Credit And How To Build It

From getting approved for a loan to lower interest rates, there are many benefits to improving your credit. Use this tip sheet to learn about the factors that affect your credit score and how you can improve your score (and overall financial health!) Reviewing your credit cards’ limits, interest rates and history put you into a position to space out purchases which would have less of an impact on your overall savings/checking accounts. You may find after your review, you could open a new line of credit to assist with expanding your Credit Utilization, thus improving your credit score. However, you won’t know until your make time to review your credit situation.

Building and maintaining your credit history are both an important part of everyone’s financial journey and having a reliable credit history shows lenders you are capable of making payments and on time. When first starting your credit journey there are a few options one can take to build their credit in a safe and controlled manner with one example being a youth credit card. Establishing and understanding good credit habits especially at an early age allow youth to grow into lives with responsible financial decision making.

Setting Financial Goals

Do you remember the last time you ironed out the details for your next financial goal(s)? Whether it’s for a new car, vacation, home or even education. Understanding how much money needs to be saved allows for a clear path towards reaching your goals all while staying within your budget.

Utilizing Online Banking to Be Aware of your Finances

Online Banking allows you to monitor all your transactions in a safe and timely manner. Your account activity is almost instantly displayed for your review, whether you made a payment, used your debit card, transferred funds or even paid a bill. So many things can be done with online banking, your own monitoring and peace of mind is definitely one of them.

What You Can Do Now

Education.  Financial awareness does not have to be a difficult or daunting task for anyone, especially with the many resources readily available for members to take advantage of.  Through our partnership with GreenPath Financial Wellness, we provide our members financial education, free financial counseling, credit report reviews, student loan counseling, and much more!  We invite you to utilize this free service made available to you as a SafeAmerica Credit Union member.

GreenPath Financial Wellness

Start young.  Being aware of money management, no matter how simple, at an early age can only set you up for success in the future.  You can start the process of teaching your little ones healthy financial habits, as well as becoming even more financially aware yourself, by looking into youth savings programs.  SafeAmerica Credit Union offers a robust youth program that can help them on the path to financial success.

Youth Program

August 10, 2021 • By Kevin Alvarez

Increasing Your Financial Awareness: Recorded Webinar

Learning about personal finances can feel overwhelming or out of reach. This webinar recording provides discussion and tips for more easily manage our finances.

What You'll Learn

  • Ways to take control of your finances
  • Money mistakes you can learn from
  • Practical steps to increase your financial awareness

As a member, we provide you with access to certified experts who will empower you to eliminate financial stress, get out of debt, increase savings, and achieve your financial goals.

Click below to learn more on how GreenPath Financial Wellness can play an important role towards your financial freedom.

GreenPath

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