How to Get an Online Loan for Your Business

The following is a guest post. Enjoy! 

Many small business owners need to borrow money to help their business grow, but they find that getting a traditional bank loan is too difficult. Banks have extensive applications, credit score requirements and often are reluctant to lend to new businesses without several years of an established track record of earnings. Also, many banks have limited the number of loans they make in smaller amounts of $200,000 or less, which is often the amount of money that truly “small” or startup businesses want to borrow.

With these challenges in mind, many small business owners are looking to new options to get small business loans. Fortunately, there are several alternatives now available, known as platform lenders, which offer online loans for small businesses.

If you are considering getting an online loan for your business, here are a few key points to keep in mind:

Do Your Research

Before choosing a lender for your online loan, it’s important to do your homework. Compare a few different lenders and the types of loans they offer; read customer reviews and Google each company that offers online loans to see if they have any complaints or regulatory issues. You should make sure you’re dealing with a legitimate company that has a good track record of solid business ethics. Read news coverage about the various online lenders that you are considering to see how their lending platform works and whether their model of online loans is right for your needs. Different online lenders serve different types of customers and offer different sizes and terms of loans – not every lender is the same and not all of them might be the right fit for your business.

Provide All Necessary Information

Many small business owners get frustrated with the traditional bank loan application process – filling out pages of forms and waiting a long time to get a decision. Many small business owners feel like banks are only interested in their credit score and income history, and are not paying enough attention to the bigger picture of what their business is about and how their business can become more profitable. This is one area where online loans for your business can be a great solution because most platform lenders look at a wider variety of information when deciding whether to issue you a loan. Instead of just looking at your credit score or track record of earnings, platform lenders will often assess your PayPal transactions, your social media following, your current cash flow and other factors that are often more favorable for startups and online businesses. Especially if you run a relatively young business and you do a lot of sales online, online loans might be the right solution for your borrowing needs.

Understand How Your Loan Works

Before you commit to getting an online loan for your business, make sure you understand the fine print of how your loan works – including the terms, repayment deadlines and total fees. Many online loans work like a “line of credit,” also known as a revolving credit account, which gives you a credit limit (similar to a credit card) that you can borrow from as much or as little as you need, and then pay back over time in flexible installments (either all at once or in smaller amounts, as long as you meet your minimum payments). But some online loans might require fixed monthly payments, so be sure that you understand exactly what is expected and can pay off your loan in whatever manner works best for your business.

What’s It Like Attending the Berkshire-Hathaway Annual Meeting?

The following post is by MPFJ staff writer, Marie. You can read more of Marie’s articles over at her own blog, Family Money Values. Enjoy! 

Annual company shareholder meetings are typically pretty boring and infrequently attended.  The Berkshire annual meeting has, to date, been an exception.  Nicknamed the Woodstock of Capitalism, this meeting has historically been a sell out event in Omaha, NE.  Specifically, hotel rooms have usually booked up months before the spring meeting.

I’ve owned some B shares (the cheap shares) of Berkshire for 3 years now and have attended the meeting each year.  My family lives just a 2.5 hour drive from Omaha, so for us, the meeting is close enough for a day trip.  B shares have only been sold since 1996.  Baby B’s, as they are called, currently sell for around $140 per share while the original A shares market price hovers around $220,600 per share.

Attendance History

The first year we attended the meeting, we invited our two grown sons to go with us and since one lives out of town, we all drove up Friday evening and spent the night in a hotel so we could attend the morning activities.  We arrived at the meeting well after the doors open (we didn’t relish the thought of standing in line for hours to get in) but prior to the opening ‘show’.  The show is just a movie that is played on the multiple large screens in the Centurylink Center in downtown Omaha, NE.  That first year it seemed to us to be primarily a promotional movie – entertaining yes, but not what we came for.

In subsequent years, my spouse and I left our home early Saturday and drove up, missing the overpriced hotel rooms and the long lines trying to get into the stadium.  But we did arrive in time to listen in on several hours of Buffet/Munger Question/Answer time as well as to peruse the exhibit hall were many of the Berkshire owned companies offer discounts or information about their products.

Over the years, the number of attendees at this annual meeting has risen, from about a dozen in the late seventies to the probably max at last years meeting.  Attendance at the event last year was around 40,000 – so not everyone fits in the stadium at the same time (it holds around 20,000).  Although the stadium looked pretty full when we headed in after the lunch break, there were empty seats this year (unlike last).

The meeting was live streamed for the first time this year, probably reducing the number of live attendees.  You can listen to it until the end of May on Yahoo Finance.  I’m betting that 2015 will be regarded as the height of attendance for this event.  Some journalists are theorizing that Buffett and Munger are starting a transition phase wherein their predominance at the meetings will begin receding, but most anticipate that for next year, at least, barring unforeseen circumstances, both will still be strongly involved in the meeting.

It’s a Marathon

I’ve been hoping to take my grandchildren to the meeting, but knowing they are too young to take much interest, have avoided it to date.  Next year may be their year – I want them to go while Buffett and Munger are still highly involved with it.  The kids will be 12 and 9 and may be able to sit still for an hour or so of the meeting itself, and will no doubt enjoy eating Dilly Bars with us in the exhibition hall.  I need to take them soon, after all Buffett is 85 in 2016 and Munger is 92, and they appear to be phasing out of the meeting.  Not that I blame them!

It’s got to be an endurance test for both – 3 days of being ‘on’.  At least 6 hours of impromptu (to them) question answering in front of crowds in the tens of thousands; plus one on one interviews; walking the expo hall; dropping in on Omaha BRK company events throughout the weekend; and more.  You can see the full weekend schedule here.  I wonder if they are sorry they ever started making such a big deal out of the annual meeting.  By the end of the Q &A, Buffetts voice is typically cracking.  I couldn’t do it and I’m 20+ years younger than they.

At least they don’t attempt the 5K race on Sunday!

 

Shopping the Exhibition Hall

Always before, we have waited until the meeting broke for lunch (an hour starting at noon) to hit the expo.  This year, my spouse and I went straight there after arriving in Omaha and hiking in from the parking lot ($8 to park plus gasoline was our only cost to attend).  It is a huge hall with 43 Berkshire companies exhibiting.  While still crowded before lunch (and was also on Friday – according to an employee – an insurance adjuster – of one Berkshire company we met standing in line to walk through the $300,000 Forest River RV), we could at least walk around without having to stop and wait for a break in the flow of people.

Some of the more popular exhibits included Justin Brands, which had a store sized exhibit with lots of different styles of boots available to purchase.  Fruit of the Loom was also well attended, with nice discounts on underwear and fun special products like t-shirts saying ‘Future Warren Buffett’ or “BRK Meeting’ or paper hand held fans with Munger’s face on one side and Buffett’s on the other.  If you want to wait in line you can walk through the inside of one of the Netjets plane models or (as we did), look inside luxury RVs; campers or mobile homes.  See’s candy, Nebraska Furniture Mart and DQ also had discounted wares for sale.  Not only were the Dilly Bars 50 cents cheaper, but it was also quick to get – and you could easily walk around with it while strolling through the exhibits.  We each had two!

While the BNSF model train exhibit was exciting (yes even for adults), knowing that you own a tiny share of a railroad is also exhilarating, even if maintenance costs still exceed depreciation costs as we learned during the Q & A.

Once the meeting let out for lunch, the floor gets so crowded that if you want to stay together, you’d better be holding hands!  We left to make our way to the meeting when the crowds got overwhelming.

 

The Q & A

Looking around the crowd, I saw mostly white folks, with a sprinkling of other races, evenly distributed between men and women, young and old.  Attire ranged from very casual to high heels, with dresses or suits and ties.  All of us had the ubiquitous lanyard with our blue plastic meeting credentials hanging around our necks.

Walking into the meeting arena you see at one end, a stage with 3 tables, the center one being where Bufett and Munger sit, the one one the left and right hold analysts and/or journalist who read or ask the questions.  Non participating press members sit high in the stands.  At the other end of the room this year, was the equipment to live stream the Q & A sessions.  On the floor in the middle there are folding chairs holding board members and other privileged attendees nearest the stage and other shareholders further back.  Bill Gates is a board member, so it is kind of a thrill to see him in person.

Across the other 20,000 or so seats you could see papers, bags, or signs taped to the backs of chairs or folks sitting in them – all reserving space for when the meeting started back up.  Multiple big screens are in place around the front of the arena, no need to bring your binoculars.  Taking pictures is prohibited, and you could lose your camera or cell phone by doing so.

Around the room there are 9 different microphone stations from which selected attendees ask questions.  The selection happens at 8:30 AM with a drawing.

Attendees get chummy – conversations spring up between folks in line, and folks sitting close by (as in most stadiums, the seats were cramped) and etc.  I sat next to a young man who looked like he might be Chinese. He was holding some equipment that I imagined to be a translation device. Some journalists estimate that there were at least 3000 people from China attending. On the other side of us was a young man from Omaha.  The folks in front were from New York.  It is fun and interesting to see where people are from and why they come to the meeting.

Security officers could be seen pacing the the floor, and yes, you do get your bag checked, and walk through a metal detector upon entry to the Center.  Attendees seemed quite comfortable leaving their possessions at their seat while they went elsewhere however.

After Buffett and Munger took their seats following lunch, the lights were dimmed and Warren casually said ” OK lets get started” and named the first person who was to ask a question.  He alternated letting questions come from journalist (reading ones pre-submitted by email from shareholders); analysts; or live selected shareholders (which he identified by the microphone station from which they were to ask the question).  One young shareholder from Arizona wanted to know what they thought of the cattle business – as his family had a cattle ranch in Arizona.  Although Buffett typically talks at length on each question before deferring to Munger, this time he passed it right along.  Charles Munger is nothing if not direct (he is also so very funny).  His response was something like “It’s among the worst businesses I can think of”.  Then there was this dead silence until Warren stepped in to attempt to soften the response just a bit.

For a nice summary of the questions, if you don’t want to sit through the saved feed on Yahoo, check out Market Watch.  Many with press credentials post live comments (like this Market Watch post) while they are attending the meeting.

Following the Q & A, the actual shareholder meeting part of the event takes place, again led by Buffett.  It has the typical format, do we have a quorum, election of board members, ratification of accounting and etc.  At this years meeting, however, a shareholder issue was presented.  I’ve seen these being voted on in other company’s proxy votes, but had never witnessed one in person.  This one was in favor of reporting by BRK on how climate change would affect the insurance part of the business.

In fact, it was an opportunity for activist to present a case to powerful board members in a highly public venue on why something should be done about climate change (specifically, they wanted carbon fees).  It was (as with many of these types of shareholder proposals) an attempt to draw attention to their cause.  The written proposal was projected on the screens and the proposers verbally made their case.

Speaking for the cause was a doctorate holder predicting that the seacoast cities would soon be destroyed by melting glaciers making the sea level rise, with multiple speakers following him who made a case for Buffett and Berkshire to get involved with the cause. After each speaker, Warren would comment – typically that yes, he knows that climate change is an issue and needs to be dealt with, but that it won’t be affecting the risk level of the BRK insurance arms in the next few years.  Although he probably personally would support the cause, he kept his eye on the mission of BRK and kept coming back to it.  The shareholders had already rejected requiring the report.

We enjoy attending this event in person.  It is interesting to see some of the other shareholders, knowing that they are probably among the world’s success stories (since we all own the stock) and to be in the presence of two of the countries financial ‘elders’ dispensing their wit and wisdom.  Attendees all appear to have a somewhat similar goal – learn from the best investors of our time – almost generating a cult like experience.  The shopping’s not bad either!

How about you all? Have you ever been to a stockholder meeting? What was it like? 

Share your experiences by commenting below!

***Photo courtesy of https://www.flickr.com/photos/e27sg/6725868673/in/

Reviewing Your Insurance Needs – Term Life Insurance

Over the past 1.5 years, I have experienced several significant life changing events (getting married in September 2014, moving, and had a baby in January 2016 – picture of Alex below!) that have given me the need to re-evaluate my current insurance needs. One of these potential insurance needs is life insurance.

The purpose of this post is to share my journey in to 1) discovering if this type of coverage is well-suited for my personal situation and if so, 2) how I went about obtaining life insurance from a provider.

Let’s get started! 

A brief side note: In a previous post, I looked at whether term or whole life (used for the Infinite Banking Strategy) insurance was better suited for me, discovering that term life was more appropriate. As such, the decision of using term vs. whole life insurance is outside the scope of this current post.

 

Do You Need Term Life Insurance?

A logical first step in this journey was to answer the question, “Do I need term life insurance?” Therefore, this is the first topic we will cover.

Eric Tyson in his book, Personal Finance for Dummies, provides the following concise bulleted list of the types of people who DO NOT need life insurance.

• “Single people with no children.”
• “Working couples who could maintain an acceptable lifestyle if one of the incomes were to disappear.”
  • This essentially means that both individuals in the relationship earn equal incomes and/or have the same amount of assets.
• “Independently wealthy people who don’t need to work” (ie people with rich relatives, people who have received a large inheritance, etc).
• “Retired people who are living off their retirement assets.”
• “Minor children who are dependent on their parents.”

Therefore, he suggests that anyone who falls OUTSIDE of these categories above NEED term life insurance coverage because you have others who are fully or partly dependent on your income.

In my case, I am not single, not (yet anyways) independently wealthy, not retired, and not a minor anymore. I am, however, married, and my wife and my incomes are pretty intertwined. Currently, we are essentially living off of my income and saving all of hers (she works from home and is self employed) for retirement and other purposes. In this regard, it could be argued that my wife is quite dependent on my income, and could not maintain our current state of living and working situation if I were to pass away. However, since my wife does have a master’s degree, I do believe she could find a non-self-employed job that pays a good income and providing an “acceptable” lifestyle within a couple years after me dying, if she needed to. Therefore, in the current state, it appears that I would need life insurance (but my wife would not), and that it would be of a reduced amount due to my wife’s future earning potential.

However, my wife and I also had a child in January of 2016, which will require support for a minimum of ~ 25 years, warranting a larger amount of life insurance for myself than if we had no children. Additionally, as David Bach recommends his book, Smart Couples Finish Rich (one of my favorites since it covers value-based financial planning!), a stay-at-home / working-at-home parent should also be insured, since if the working-at-home parent passes away, additional child care expenses would be incurred, which can be quite expensive if done full time.

My Decision: Because of the considerations above, it seems warranted for both my wife and I to have a term life insurance policy, in some amount.

 

What Type of Term Life Insurance Policy Should You Purchase?

So, you’ve decided that your personal situation is well-suited for obtaining a term life insurance policy. The next step is determining the type of term life policy that is best for you.

Below are the recommendations of from the books of several of my favorite PF authors:

• Dave Ramsey in his book, Total Money Makeover, recommends to purchase a 20 year level-term life insurance policy.
• Eric Tyson in his book, Personal Finance for Dummies, recommends to purchase a guaranteed-renewable policy that adjusts in price every 5-10 years over the period of time needed for life insurance coverage.
• Stewart Welch, in his book, The Complete Idiot’s Guide to Getting Rich, recommends to purchase a 15 or 20 year level-term policy, with the reasoning that after 20 years, that should allow enough time to have accumulated enough wealth to be independent.
  • He also recommends a smaller 10-15 year level-term policy for a stay-at-home / work-at-home parent.
• JD Roth in his book, Your Money The Missing Manual, recommends to purchase guaranteed renewable term life insurance.
• David Bach recommends his book, Smart Couples Finish Rich, to buy a level term policy for 20 years.

From the advice above, the consensus seems to be to purchase a 20 year level-term policy, meaning that you have the same death benefit and same premium for 20 years. This is almost akin to the the fixed rate loan of the mortgage industry.

My Decision: From the advice above, it seems that 20 year level-term policies are best suited for myself and my wife.

 

How Much Term Life Insurance Do You Need?

Having decided that you need one or multiple term life insurance policies, the next step is to determine the Dollar value of coverage you need.

In reading the literature, there seem to be two ways of doing this – 1) going for a ballpark figure and obtaining coverage X number of times your annual income or 2) actually calculating the amount of insurance to purchase by predicting future needs, current income, investment rate of return, etc.

Listed below is a summary of my literature findings:

• Dave Ramsey in his book, Total Money Makeover, recommends to purchase policy equal to about 10 times your annual income.
• JD Roth in his book, Your Money The Missing Manual, recommends to purchase life insurance somewhere between 10-20 times your annual income.
• David Bach recommends his book, Smart Couples Finish Rich, to buy a policy between 6 – 20 times your annual income.
• Eric Tyson in his book, Personal Finance for Dummies, provides a nice table correlating the desired number of years of income to replace with a factor with which your annual after-tax income should be multiplied by to determine how much life insurance needed.
  • To replace 5 years of income, multiply your annual after-tax income by 4.5.
  • 10 years –> multiply by 8.5.
  • 20 years –> multiply by 15.
  • 30 years –> multiply by 20.
• Stewart Welch, in his book, The Complete Idiot’s Guide to Getting Rich, provides a pretty simple 3-step calculation (shown below) for determining life insurance needs (He recommends a $200,000 – $400,000 policy for a stay-at-home parent).
  • Multiply your total annual family income by 0.80 discount factor.
    • = Total income needed by surviving family.
  • Total income needed by surviving family minus surviving spouse’s annual income.
    • = Surviving family income need from outside sources.
  • Surviving family income need from outside sources divided by decimal form of rate of return expected on life insurance proceeds and other investment assets (0.075 is a reasonable estimate here).
    • = Total amount of money needed to provide for your survivors.
  • Total amount of money needed to provide for your survivors minus current savings and investments
    • = Total life insurance policy needed for deceased spouse (this calculation repeated for surviving working spouse).

In my opinion, the best approach (without considering costs/premiums) to estimating life insurance needs seems to be a hybrid one. This means comparing the results of a “more detailed” calculation with a quicker annual income multiplication (a factor of 20 seems best given the literature findings above) estimate and then use the most conservative / highest number.

My Decision / Results:

As mentioned above, I ran the numbers for my wife and I, and I can came up with 3 life insurance policy values for her, and 2 for myself.

• Myself (not working from home)
  • First, I came up with a target life insurance value representing 20 times my annual gross income.
  • Next, I performed the calculation recommended in the book, The Complete Idiot’s Guide to Getting Rich, and came up with a value representing ~7 times my annual gross income, so much lower than the “quicker” 20 x estimate.
• My wife (self-employed, working from home)
  • As I did with myself, I came up with a target life insurance value representing 20 times my wife’s annual gross income from working from home.
  • Next, I performed the The Complete Idiot’s Guide to Getting Rich calculation, and actually came up with a negative number after we subtracted our current savings/investments.
  • Finally, we have the number of $200,000 – $400,000 policy recommended for a stay-at-home parent, which is lower than the 20 x estimate previously mentioned.

Ideally (not considering cost), the general rule of thumb is that you want to be as conservative as possible with life insurance, and the most optimal course of action for me is to obtain two policies, one that represents 20 times my wife and myself’s incomes, respectively. This is the most conservative course because the 20 x estimates yielded the highest life insurance values.

 

Where Should You Buy Term Life Insurance?

So, you’ve decided what type of term life insurance you want to buy and a ballpark estimate of how much you need in a policy. Great!

The next step then becomes determining 1) where you should buy your policy and 2) how much will it cost.

Employer / Group Plan vs. Individual?

The general consensus in the financial literature seems to be that it is best to purchase a life insurance plan as an individual policy (in other words, not through your employer) since it is about the same price (health and disability insurance, however, are much cheaper purchased through your employer). This also avoids having to worry about if your life insurance is “portable” in that it follows you when/if you change jobs.

However, it is important to note that employers often do provide some amount of life insurance for free to you. For example, my current employer provides life insurance in the amount of 1x my current annual salary without having to pay any premiums myself. Of course, this free insurance is likely too little for most people who need life insurance, but it is a nice freeby!

Online – Direct or Through an Independent Agent/Broker?

Having now decided to obtain an individual policy, the question becomes, “Do you purchase the policy online or through an independent broker?”

It is important to stress here the word INDEPENDENT, as an independent agent/broker can shop around among multiple companies to find you the best deal. This is much different than a “captive” agent, who only sells for one company (examples include your local State Farm agent, local Geico agent, etc).

My opinion is that you won’t go too wrong by choosing either online or an independent agent. If you like to do things quickly and are self-sufficient, online is probably the best way to go. If you value the guidance of a real person, on the other hand, an independent agent is probably a good idea.

For me personally, the way I will likely go is to use both – first obtaining quotes online and then buying the actual policy through an independent agent (and using the online quotes to ensure that I am getting the best price from the agent).

 

Where Do You Obtain Term Life Insurance Quotes Online / How Much Does Coverage Cost?

The following sites were recommended in the PF books I have previously mentioned in this post as good sources for term life insurance quotes:

• Reliaquote
• Selectquote
• Term4Sale
• Ameritas
• Einsurance
• Intelliquote
• Insweb
• Insure

However, having gone through the process of obtaining quotes from these websites, the most straightforward sites (which give you a immediate online quote the fastest and don’t require an agent to spam your phone 5 times per day) I found are listed below:

• Reliaquote
• Intelliquote
• Term4Sale (my favorite site)

My Results

For myself, the best premium quotes obtained from the 3 websites above for a 20 year level-term life insurance policy in the amount representing 20x my annual gross income were around $80 per month, or $960 per year.

For my wife, the best premium quotes obtained a 20 year level-term life insurance policy in the amount representing 20x her annual gross income were around $24 per month, or ~ $294 per year.

So, if I was to go the most conservative route and choose to obtain life insurance policies equal to 20x our annual income, we would be looking at spending almost $1,300 per year on life insurance premiums.

 

Reality Check Based on Online Life Insurance Quotes

However, looking at the $1,300 per year price tag for maximum life insurance sort of bothered my cheap side.

While I could definitely afford $1,300 per year in premiums, it makes me wonder if it is necessary / worth giving up the chance to invest that money. This seems more appropriate in my personal situation given that I have been saving since I was 18 and have accumulated a medium amount of assets for a 30 year old. In other words, I simply don’t “feel” that it is necessary to have the largest amount of life insurance possible (20x annual income).

What Is The Purpose of Life Insurance For You?

So, where do you go from here if like me, your reality check revealed that 20x annual income is too much of a premium to warrant the large amount of insurance?

Personally, I next asked myself how I would want my life insurance policy to be used if I were to pass away. I would essentially want my life insurance policy to 1) pay a lump sum, 2) be invested by my surviving family at a reasonable interest rate, and 3) provide enough income for my family to live off of without them having to touch the money I have currently saved for retirement (so it can be used for their retirement).

In other words, my desire for how life insurance should be used is quite similar to the policy value calculation method from Stewart Welch, in his book, The Complete Idiot’s Guide to Getting Rich, discussed previously. However, current savings and investments would not be subtracted at the end since I would want to preserve that.

Performing this calculation lands me at needing a term life insurance policy approximately equivalent to 10 times my current annual income, which coincidentally, is what Dave Ramsey recommended in his book.

Listed below are the premium quotes for 20 year level term life insurance policies for my wife and I equivalent to 10x our annual incomes:

• Wife – $17 per month, or $204 per year.
• Myself – $49 per month, or $588 per year.
  • Total for 10x annual incomes policies = $792 per year, which seems pretty reasonable.

 

Term Life Insurance Application Process – Independent Life Insurance Agent

Armed with the prices of the term life insurance quotes obtained online, I then approached an independent insurance agent (the same insurance agent through which we obtained our Acuity homeowner’s insurance) in our area to also provide me with quotes for the same type of life insurance coverage.

As expected based on my previous experience with this agent providing very competitive pricing, the quotes provided by the independent insurance agent for the same type of term life insurance coverage for my wife and I were either similar or cheaper than the quotes I found online. As such, I decided to proceed with obtaining life insurance through the agent.

Step 1 of the Term Life Insurance Application Process – The Application

Shortly after giving the go-ahead to my agent that we wanted to proceed with obtaining life insurance through him, my wife and I were contacted by a third-party hired by the insurance company (Protective Life) to handle the application process.

The questions they asked us to provide answers for were pretty straight-forward and expected (everything needed to assess when we would potentially die and our ability to the pay the annual insurance premiums):

• Current and past job information, including salaries.
• Checking, savings, and retirement account information.
• Information about what debt we currently are carrying.
• Current and past health information, including history of diseases in family, health problems, and doctor contact information.

Step 2 of the Term Life Insurance Application Process – Health Exam

After completing the paper/electronic application, my wife and I set up appointments for a comprehensive life insurance exam through another 3rd party (ExamOne, part of Quest Diagnostics).

The health exam included getting our physical vital signs taken (heart rate, blood pressure, etc), a question/answer interview session about our health history, and blood + urine samples submitted for an in-depth battery of tests for indicators of the function of our internal organs. Being a scientist myself, I was pretty impressed at the large number (approximately 30) of test endpoints that our blood/urine was measured for.

Step 3 of Term Life Insurance Application Process – Underwriting / Life Insurance Policy Approval

After we received the laboratory results from the health exam, our entire insurance application was reviewed by Protective Life’s insurance underwriters to determine our risk of death, insure-ability, and what level of premium to charge us.

In the end, my wife received the highest health rating (lowest premium pricing), and I received the 2nd highest health rating (2nd lowest premium pricing).  We then reviewed/signed Protective Life’s insurance offer to us. The finalized premium pricings are shown below. As expected, they were right on par with the online quotes and the preliminary quotes from the insurance agent prior to submitting our application.

• Cost of my policy – $49.49 per month
• Cost of my wife’s policy – $14.94 per month.

Protective Life – Universal Life Insurance Structured as Term Life Insurance

One interesting twist came up when I was doing the final review of the policy offers from Protective Life. Intriguingly, instead of issuing a straight-forward term-life insurance policy, Protective Life insurance issues term life insurance policies as Universal Life Insurance.

A usual universal life insurance policy features a portion of the monthly premium going towards building cash value in some sort of investment vehicle. However, the term-structured universal life policies we obtained from Protective Life had no dividend payments, and no premium goes towards building policy cash value. The policy is designed to have a level/constant face value and non-changing premium cost for the 20 year term that I requested.

After 20 years, the policy provides the flexibility to continue having life insurance coverage if I so choose. Each year after the 20 year period, the face amount of the life insurance coverage decreases, and after ~ age 80, the premium cost would increase. However, I don’t have any plans to continue the coverage after the 20 year period.

So, there you it – our journey of obtaining level-term 20 year life insurance policies. Overall, I was pretty satisfied with the process, and it wasn’t too much of a headache at all. We are happily paying our ~$65 per month of premiums through automated bank withdrawals, and we haven’t really noticed any significant difference on our monthly finances.

How about you all? Do you have life insurance coverage? If so, what type of insurance did you opt for? Did you purchase online or through an agent? 

Share your experiences by commenting below! 

Top Resources for Aspiring Investors

The following is a guest post by Ben Barlow. Enjoy! 

Whether you’re a novice trader or someone with a rich history of trading, it still remains a very difficult way to make money. Markets are difficult to predict and move quickly, meaning that you need to act fast when executing trades, spotting patterns before anyone else. As such, you need all the help you can get. Luckily, a number of tools are available. Here, we take a look at the top resources for aspiring traders.

• News Sites – Get to Know the Market

It may sound a little boring, but the best way to improve your trades is to read, read, read. Markets fluctuate based on world events so, by logic, the more you know about world events the easier it will be to make informed trades.

Start by continually reading reputable sites such as the BBC, which is widely used for technical analysis. When you have a good grip on the geo-political situation, expand your reading further to include more complex financial sites, such as the Financial Times. Here, going online is far better than buying a broadsheet, as the information is more up to date.

• Trading Calculators – Know the Rate Information

When you’re calculating your trades, it’s important to know exactly what’s at stake.

All you have to do is input your appropriate currency, account currency, leverage and position size. Once you’ve hit enter, you’ll have all the information you need to trade with. A good calculator should even be able to factor in the fees.

Calculators can be used to work out how much margin is needed to open a position, or you can use a profit calculator to see how much you stand to make from a trade. It’s simple and only takes a few clicks – there’s no need for pen and paper ever again.

• Apps – Trade on the Move

In the 21^st century, there’s absolutely no reason why you shouldn’t be monitoring your trades on the move. The markets move so quickly and with every second you’re away from the screen, you’re risking your profits.

To ensure you have all bases covered – even if you have stop-losses – ensure that you download as many trading apps as possible. Thanks to free public Wi-Fi and fast 4G networks, you should have no problems accessing them.

To conclude, tools are essential when you’re trading and they can prove a great help. Let us know about any of your favourites.

Parents Need to Know How to Teach Kids the Value of Money

The following is a guest post by Tina Roth. Tina is a personal finance blogger at Pro Finance Blog, who loves to write about money management and saving habits.

Children start learning from the age of 2 or 3; they learn from the environment they grow up. Responsible parents provide them with a healthy learning environment and instill an enthusiasm for learning into them.

But there’s something that even the most responsible of them tend to ignore, which is, teaching kids about money. According to child psychologists, kids should be taught about money from a very tender age.

 

A tabula rasa

Such is the mind of a child, and what’s intriguing is the initial scratch marks that disturb the blank state, stays there forever (Maybe not forever, but for a very long time). Whatever education a child receives, be it good education or bad education – stays with him.

If parents are extravagant or irresponsible with money, so would be their kids. The learning styles of children are unique, their learning circuits are more active than their parents could imagine. They learn from everything around them. So parents need to act responsibly with money, and follow the tips given below:

 

Play money games

One way to make kids responsible with money is playing games with them – games that are apparently silly but has a deep and sublime lesson to deliver, a lesson that relates to money.

One such game is coin identification. The game is played with toddlers, who learn to distinguish between nickel, dime and cents. Kids remember the names of the coins and the symbols on them. How can this game benefit them? By teaching them how to count money.

Games that involve savings are more helpful; those games should be played with 5-year olds. Kids should be given a target of savings. If they succeed in meeting the target, rewards should be handed to them. Rewards serve as motivation. Playing such games at an early age can turn kids into habitual savers when they grow up.

 

Affordability signals

Kids have an innate ability, they can sense anxiety, disapproval, anger and other negative emotions in adults. They even react to those emotions. If parents display negative emotions while dealing with money related matters, kids will learn it, which is why, parents should never give negative affordability signals.

What type of signal is negative affordability signal? Kids often ask for toys or superhero costumes, which are expensive; their requests meet with rejection. When they ask parents why are they not buying the stuff, parents reply they can’t afford it. Such replies are negative affordability signals.

Instead of giving such replies, parents should tell their kids that they can buy it, but choose not to buy because there are better and wiser ways to spend money. What are those ways? You may ask. This takes us to our next point:

 

Good and bad investment

Children should be taught about good and bad ways to invest money, so that they don’t take wrong investment decisions later in life. When conversing with an adult, you can describe an investment as good or bad investment in terms of the result it produces – profit or loss. But with kids, you need to take a separate route.

Describe safe investments as good investments and unsafe investments as bad investments. This is by far the most logical way to categorize investments. Tell stories to your kids and let them process those stories.

Tell them stories of stock market investments, how sloppy investors ended up broke overnight. Tell those stories to your kids painting risky investments as bad as safe investments as good. But there’s a risk that such stories will make them risk averse. How to eliminate the risk?

 

Struggle and wisdom

You can eliminate the risk if you connect money to struggle and wisdom. Teach your kids the truth about money, that earning money requires a lot of hard-work and wise investment decisions.

True, there are shortcuts, but shortcuts are either ethically wrong or legally wrong or both. Your kids may have a penchant for quick ways to earn money and the media and the pop culture may fuel it, but if you convince him that choosing shortcuts can never lead to financial freedom, then he might eventually suppress his proclivity for shortcuts.

Once again, tell him stories of successful people whose struggle and perseverance have led them to success. Such people are Warren Buffet, Bill Gates, Chris Gardener, Steve Jobs, etc. Buy your kids books that highlight on the motivational aspects of rich people, so not only their wealthy lifestyle but the ladders they climbed be known to your kid.

 

It takes time

The purpose of teaching kids about money is make them equipped to handle money-management in their adult life. This is a complicated process and will take time. Responsible parents need to act patiently and monitor the progress. The tips given above can be of help.

What Are The Benefits of a CEO Succession Plan?

When it comes to business, patience isn’t much of a virtue anymore. Companies are looking for rapid growth and success. More pressure is put upon employees and leadership to perform and produce at a high level immediately. Although expectations can be quixotic at times, that’s the world we live in. This concept is especially true for CEO’s with CEO departures numbers increasing dramatically over the past two years. In January, CEO departure increases reached a new peak with 131 CEOs departing their company, according to Challenger, Gray & Christmas Inc.

Some companies do require a change of leadership and others may be pulling the trigger too quickly, but no matter the reason, every company needs to have a CEO succession plan in place.

Why Disability Insurance Now?

The following is a post by Laura Hahn. Enjoy! 

None of us plan on becoming disabled, but the sobering reality is that nearly one in four Americans will become disabled before they retire. Most disabilities are not caused by accidents but by muscle, bone, and joint disorders, as well as cancer, heart disease, diabetes and other illnesses. And that’s precisely why individual disability insurance is an integral part of a comprehensive financial safety net, especially for people who are in their peak earning years and who might not be able to afford the financial impact of a serious disability.

Disability insurance helps replace income lost due to illness or injury, and buying disability insurance while young and healthy means the cost is less expensive than purchasing when older – much lower than what people believe. The cost goes up almost 40 percent when a 30-year-old waits until age 40 to buy disability insurance. Purchasing disability insurance young lets you lock in your costs so rates can’t be increased, and groups like students and medical residents may qualify for a discount.

In the Worker Disability Planning and Preparedness Study conducted by the Council for Disability Awareness, nearly nine in ten workers (86 percent) surveyed believe people should plan in their 20s or 30s in case an income-limiting disability should occur, however only half (50 percent) of all workers have actually planned for this possibility and fewer than half (46 percent) have even discussed disability planning. So why don’t they? Common beliefs that keep people from purchasing disability insurance:

• “I’m healthy, it can wait.”
• “No way I’d ever be unable to work.”
• “No rush, it’ll cost the same whenever.”
• “I have too many expenses already.”
• “I can depend on Social Security disability benefits.”

According to the Council for Disability Awareness (CDA) and the Social Security Administration, the occurrence of disability among young adults is high. They say one in four 20-year-olds will become disabled at some point before they retire. Average disability claims last from 31.6 to 34.6 months (nearly three years) and one in eight workers will be disabled for five years or more during their working careers.

A 2013 study by the National Research Council and Institute of Medicine (NAC/IOM) showed, not just that Americans are getting sicker, but that young Americans are getting sicker. For example, the overall rate of stroke is increasing for young and middle-aged people, those between 20 and 54 years of age. A study published in the Journal of Neurology looked at stroke trends in the Greater Cincinnati area between 1999 and 2005. It found that the rate of stroke in the 20-to-54 age range increased from about 13 percent to 19 percent.

For those in their 20s, about one-fifth of disabilities are caused by accidents. For people during their prime working years, 90 percent of disabilities are caused by illness or disease. Most disability claims fall into certain top areas, leading with musculoskeletal/connective tissue disorders, such as back and neck pain, joint, muscle and tendon disorders, or foot, ankle and hand disorders. Closely following is cancer, mental disorders such as depression and stress, and cardiovascular and circulatory disorders.

We’ve seen the stories of famous people who’ve had their careers derailed early due to disabilities caused by unexpected illnesses or accidents—but there are countless stories of average 20- and 30-somethings who are not famous, but suffered because they did not have the disability insurance that could have protected them financially.

Young adults in their 20s and 30s may be surprised how affordable disability insurance is when purchased early. Some insurance carriers even offer no-obligation online quotes.

The CDA notes that less than five percent of disabling accidents and illnesses are work-related, meaning it’s likely a disabling factor is something that could happen outside of work and it’s likely to be something unpredictable. Purchasing disability insurance when you’re young and healthy means costs are low and locked in, and you’re protected before anything urgent, such as a diagnosis, can have significant consequences—something 25 percent of workers will experience in their lifetimes.

Disability insurance can help reduce financial stress at a time in their lives when it’s really important—and it’s something that’s better to obtain as a young adult.

Tips for Paying Off Credit Cards

The following is a guest post. Enjoy! 

Getting control of your finances seems to be something on most people’s priority lists. After all, when you’re in control of your finances, you can have a better safety net and stop worrying about living paycheck to paycheck.

This year, you should turn your finances around and be more responsible. One way to do this is to start paying off old debt. Sometimes finding extra money is hard, but thankfully, the following tips will help you find ways that you can do that.

Make a budget.

The first thing you should do to pay off credit card debt is to make a budget. This will show you exactly when money comes in and when it goes out. You can then use this to determine how much extra money each month you can set aside toward your bill. Even if it’s only $20 extra per month, it’s still enough to make a successful dent.

Pay more than the minimum.

If you only pay the minimum amount due, you’ll end up spending so much more money in fees and interest, and you’ll feel like you never catch up. Instead of paying the minimum, always try to pay more. Even a few extra dollars a month can take a significant amount off the interest, so do what you can to go above and beyond the minimum.

Pay smaller cards first.

If you have more than one card, a good rule of thumb is to pay off the smaller balance first. This will be easier to do. Once it’s paid off, take that monthly payment you used to apply toward that card and put it toward the next smallest credit card bill. This is known as the snowball effect, and it’s a great way to pay off debt successfully.

Transfer funds.

Most credit cards will allow you to do a balance transfer from other cards. If you have a card with a very high interest rate, consider transferring that balance to a card with a lower interest rate. You’ll still need to work toward paying it off, but you’ll find that you don’t have to deal with losing money to a high rate.

Put any extra cash toward your cards.

Everyone struggles with finding extra money, but if you ever come across anything extra, whether from a bonus or a tax return, put it toward your debt. This will help you to pay it off more quickly, and you’ll find yourself free from the burden of credit cards more quickly.

Paying off credit card debt is important. Not only does it help you get a higher credit score, but it can also help you stay out of filing for bankruptcy or losing all your assets to debt collectors.

High Yield Investing – Gift or Curse?

Tough competition and bad publicity has created a negative image about high yield investing in the industry. If you believe that this is yet another scam to rob your money – then you couldn’t be more wrong. It is true that the credit risks are quite high when you put your money into these investments. However, the important question is, is it worth it? Definitely. Take a look at the following information to get a better, and accurate, idea about this investment plan.

Investment Portfolios

This plan is spotted in many investment portfolios over the recent years. There are two main reasons for this inclusion. First of all, they offer investors risk-adjusted returns that enables them to invest any amount of money. The feeling of investing money without having to worry about things such as security or profitability is definitely a gift. This plan has the ability to keep you informed about the future status of your investment. Moreover, it also enables you to diversify your investment portfolio. This diversification of investments eliminates any potential financial risk.

Global Trends

Although the market originated in the 1960s, it has grown to be popular only over the recent years.  As the original developer, the United States has 80% of control over the internal high yield market. This is not only because it was the first to develop the idea, but also due to the number of smart investors in the country. Although Europe and Asia have small capacities, they have shown a higher growth rate than the USA in the past few years. This indicates that the number of high yield investments in these continents are rapidly growing – especially in Europe.

Not a Curse

You might wonder, ‘then why are people calling it junk?’ The phrase ‘junk bonds’ was coined due to the low rankings such as triple C ratings given by investing sites due to the credit risks. However, the ratings have increased over recent times up to double B standards. This indicates that there has been a significant development in the field. This negative media has to be eliminated in order to create a stronger support for this investment plan.

Best Gift Ever

This investment plan has a number of benefits for investors. First of all, investors are exposed to lowwe interest rates and inflation risks. This is due to the fact that the trading takes place at shorter maturities. That is, their contracts are based on short periods of time in order to reduce the risk of financial threats. It has also been found that this plan has a higher return-on-investment. Moreover, it also enables portfolio diversification since they are much different to equities and government debts.

It is time you changed your opinion about high yield investing now that you have been exposed to the reality of it. It does not ruin your business or put you at risk. It is a profitable investment plan that offers value for you money by reducing your debt levels to a great extent.

How to Organize Your Freelance Taxes

The following is a post by MPFJ staff writer, CJ, who blogs at thesingledollar.com about personal finance, budgeting, frugality, and debt repayment.

Disclaimer: I’m not an accountant or tax professional!

I used to absolutely dread tax season as a freelancer. I worked on movies and plays; they usually only lasted a month or six weeks, so at the end of a year I would have had many employers. One year I had ten W-2s and 1099 forms to deal with, not to mention income from a few jobs that didn’t send me a form at all!

Getting organized makes all the difference in a situation like this. Don’t be a stressed-out mess by April 15 this year; instead, give these steps a try now.

 

1) Collect incoming paperwork.

Hopefully most or all of your employers will send you an official statement of your income from the previous year. In the United States they are legally required to do this by January 31. As each form shows up in the mail, put it into a folder marked “Tax Forms 2015” (or whatever year).

 

2) Check your income paperwork.

In early February, make a list of all your employers and other income sources for the year. Ideally you can check a calendar, budget, or other record you’ve been keeping — but if you haven’t done this, look at your bank statements online and look for large deposits to jog your memory. If all else fails, visualize each month of the preceding year and try to remember what you were doing! When you have the best list you can get, check to make sure that you have a tax form from each employer and that the total income numbers on it are accurate.

• If you see a mistake, call the employer (their number will be on the form) and ask for a corrected form. If you are missing a form, try to get in touch with the employer and ask about it.

 

3) Check Your Expenses.

If you’re a freelancer, you will also need a list of deductible business expenses. Ideally, you can make this list from a folder of receipts you’ve been keeping all year…but if not, you’ll need to figure out what you can claim. There are a lot of special rules about what is claimable, so it’s a good idea to consult a CPA who specializes in freelance workers (ask your friends who they use.) You will need proof of the expenditure to claim most expenses.

 

4) Research Which Forms You Need to File.

Many freelancers have both W-2 income and 1099 income. You can deal with your W-2s on the basic federal and state forms (1040 for federal). However, 1099 and other miscellaneous freelance income typically needs to be reported on at least one other form. The federal forms are Schedule C and Schedule SE, but your state will probably also have a separate form or three. An accountant or good tax software can help you with this, of course. The IRS has a site for self-employed/small business filers and your state department of revenue website should also have information for you.

 

5) Set Up a Better System for Next Year.

It’s too late to go back in time and keep really good records in 2015, but it’s not too early to start getting ready for next year’s taxes right now. If you’re a freelancer, I want you to go directly to your desk and label three folders:

•  Business expenses/receipts 2016
• Credit card statements 2016
• Paystubs 2016

Then, on your computer, make a spreadsheet labeled “Income 2016.” Every time you get freelance income, list it in this spreadsheet, and file any relevant paystubs in the right folder immediately. Then, when January 2017 rolls around, you’ll know exactly what happened in 2016!

Special Note: Quarterly Taxes. If you are a freelancer, you may be required to file quarterly taxes during 2016. (Your accountant can advise you about this.) If you have to file quarterly in 2016, your first payment and form will be due April 15 — the same day as your full tax return from 2015! If you think you might need to file quarterly taxes, it’s especially important to be organized now so that you’re not scrambling to do two sets of paperwork at once.

Good luck with tax season, freelancers! Do you have a freelance tax-filing horror story? Can anyone beat my record of 10 official employers in a year?

***Photo courtesy https://pixabay.com/static/uploads/photo/2015/02/23/20/12/taxes-646512_960_720.jpg