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  • Snail Mail What’s Going On?

    Snail Mail What’s Going On?

    The USPS (United States Post Office) is and has been facing a financial, service, and public relations crisis the past few years, before current Postmaster Louis DeJoy was appointed to run the Postal Service by its Board of Governors last May 2020. 

    It was an odd hire as Mr. DeJoy, unlike other postmasters, had no USPS experience and had been working in the private sector. Shortly after he started the position, he started imposing cost-cutting measures that many mail carriers had blamed for creating backlogs across the country. 

    I remember reading an article last year that he ordered 1 of the 5 Queens Super-Sorter Machines to cease operations, to reduce mail sorting expenses. Each one of these Super-Sorters can sort over 1,000,000 letters per day. As a business owner in Queens, last year I noticed my mail was taking 1-3 days longer than usual to arrive at their destination.

    As per Forbes and the Washington Post, The FBI (Federal Bureau of Investigation) is investigating Postmaster Louis DeJoy in connection with campaign fundraising activity, allegedly made by employees who worked for him when he was in the private sector.

    After last week’s USPS board meeting, it has become clear that the USPS will be changing its operations starting October 1, 2021. Mr. DeJoy presented a 10-year plan that he says “will reduce expenses by $170 million per year” and improve service by “intentionally” slowing down the delivery of first-class mail from 1-3 days to 1-5 days. It is estimated that 30% of first-class regular mail will take between 4-5 days instead of 1-3 days. This seems counter-intuitive and could change how many of us pay our bills and services. They will stop flying first-class mail and instead transport it by truck. 

    There are pluses and minuses to this strategy, trading time for money. In Arizona and parts of the west coast, driverless trucks are being tested.

    The USPS has been hemorrhaging financially for years and certainly can use a system overhaul as they lost $3 billion in the first quarter of 2021; however, I am not convinced that this is the answer. 

    The question is, what does this all mean to business owners and the “Regular Joe’s” across the country? I have been paying my bills (company and personal) through the internet for many years. There are situations where you receive a bill in the mail which is due in under 2 weeks. I do NOT see companies sending you paper bills 2-3 days earlier to offset these intentional slowdowns; hence, we must make the necessary changes to adjust. See my tips below as to how to save money and combat these changes:

    1.   Move Your Internet Bill Pay up 2-3 Days: For those who already pay online, consider having your mortgage and other important time-sensitive checks arrive on the 28th of the previous month instead of the first.

    2.   Consider Setting Up Auto-Bill-Pay Through the Internet: There are many people whether old-school, technology challenged or those concerned about bank account hacking that still write paper checks.  Some just do not trust the system. A definition of insanity can be “doing the same thing over and over and expecting a different result.” 

    3.   Buy Forever Stamps: The current price for a standard weight rectangular envelope is 55 cents. If you buy forever stamps, when the charges are increased in the future to say 70 cents, the USPS will still accept your 55-cent stamp using the “forever” style stamp hence, saving on inflation.

    4.   Plan Further in Advance When Paying Bills by Mail: If you write out or schedule your online bill pay on the 21st of the month, consider moving the date up to the 17th or 18th. 

    5.   Familiarize Yourself with Standard Priority Mail: If you have important mail that must get there in 1-3 business days, consider using USPS Standard Priority Mail which costs $7.95 and includes tracking. Keep in mind, if you wait until the last minute and your mail needs to be received overnight, the USPS “Priority Express” will set you back a hefty $26.25.

    Regardless of how you pay your bills, it is important to understand, as of October 1, 2021, there will be major changes to how your regular snail-mail is sent so it is best to be prepared! 

  • 6 Ways Olympians Can Earn a Living

    6 Ways Olympians Can Earn a Living

    Now that we are well into the summer, many persons (like myself) are looking forward to next week’s Summer Olympics in Tokyo, Japan, torches will be lit on Friday, July 23rd. 

    There are and will be many interesting stories, and new stars will be born.  The USA Olympic trials have already had interesting stories, such as Simone Biles’s quest to be the most medaled athlete of all time.   As per The New York Times, the charismatic track and field sprinter Sha’Carri Richardson (the fastest U.S. woman) has been denied a spot on the 100-meter and 200-meter individual races, (and 100-meter relay team) because she smoked marijuana to cope with the death of her biological mother.  The athletes are tested for marijuana, which Sha’Carri was well aware of, and for which she apologized.  How does smoking pot help you run faster?  I would think it would slow you down!

    Since USA professional athletes have been permitted to compete in the Olympics, there has been a misconception that athletes get rich from competing.  In some countries yes, however, in the USA only 50% of our track & field athletes ranked in the top 10 earns over $18,000 per year.  The following are some ways athletes are getting compensated:

    1. The USOC (United States Olympic Committee): Although the USOC takes in millions annually, they only compensate the athletes (based on 2018 data) $37,500 for gold, $22,500 for silver and $15,000 for bronze.  For US Olympians, gold medals come with a heavy tax bill on $38,100 of income per gold medal!  This covers both the $37,500 received plus the value of the actual gold estimated at about $600.
    2. Corporate Sponsorship: United States corporations spend millions sponsoring “the team” which is why athletes are wearing team logos.  In a typical Olympic Games, there are 15,000 athletes competing in 26 sports for only 1,000 medals, so it is difficult to get sponsorships.  This is different from endorsement deals.  Sponsorships (aside from endorsements) are usually the best way to get paid as training is time-consuming and expensive.
    3. Special Funds: USA swimming pulls in over $100 million per year (from fees from 300,000 members) and gives a $3,000 per month stipend only to swimmers who rank in the top 16.  This is called an APA (Athlete Partnership Agreement).  This money is not “Free” as athletes are required to make public appearances, attend charity events and banquets, etc.
    4. Government:  In some countries (like Cuba for example) the government takes care of Olympic medalists for life.  A client of mine does business in Cuba and gave me some inside information.  If the athlete earns a medal (can be a bronze or silver in addition to gold) in any sport, the government takes care of them financially for life.  However, he told me about a Cuban boxer he met who finished 4th and is now flat broke.
    5. Foundations and Private Funding:  In wrestling for example, LivingTheDreamMedalFund.com raises money that pays out $250,000, $50,000, and $25,000 for gold, silver, and bronze medals, respectively.
    6. Large Corporate Partnerships:  Some large US corporations partner with US athletes allowing them to work part-time while training.

    It is clear in the USA that Olympians are doing it for the “love of the sport!”  There is a bill pending that would eliminate taxation on income received by Olympians.  This would greatly benefit the next Michael Phelps, who holds the record for the most medals won by ANY athlete (28) including 23 gold medals and 13 individual golds.   Simone Biles would be happy as well as she holds the gymnastics record with the most World medals (25) and gold medals (19), hopefully with more to come!

    Times are changing in amateur sports, as there was just an NCAA (National Collegiate Athletic Association) rule change (after a unanimous Supreme Court Ruling) this month that the NCAA must provide compensation to athletes for “education-related” expenses, like paid internships and study abroad.  The lines between sports and money are clearly blurred!  One thing we can agree on is Let’s Go U.S.A.!

  • Inflation, The Silent Killer!

    Inflation, The Silent Killer!

    The Google definition of inflation is: “A general increase in prices and fall in the purchasing value of money over time.  Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages.  A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.”

    An example of inflation is the cost to cross the Marine Parkway-Gil Hodges Memorial Bridge.  When the bridge opened on July 3rd, 1937, the cost to cross the bridge was between 10-15 cents, depending on the type of vehicle.  The current cost is $5.09 by mail and $2.45 by E-Z Pass. 

    The Federal Reserve wants to keep inflation under the 2% benchmark.  Right now, inflation is running around 3% which is in the danger zone.  As per Barron’s, the FOMC (Federal Open Market Committee) released minutes from its June monetary policy meeting.  Fed officials signaled that interest rates would rise sooner and faster than Wall Street expected prior to the meeting, as inflation is rising at its fastest pace since 2008.

    What does this all mean?  This means that if you are on a fixed income, your money will not go as far during inflationary times.  This also means, if you have investments and/or money in the bank that is “netting after-tax” less than 3%, you are losing money (purchasing power).  These are important barometers that few people are paying attention to right now.

    People have been couped up (myself included) during the height of Covid-19 and many persons now have more spendable income.   A combination of inflation, the Suez Canal blockage, and higher demand for travel has skyrocketed travel costs in the past month.  Hotel costs in Miami Beach have risen 50% since the last week in June.  Rental cars are up 110% this year and are 70% higher since the pre-pandemic in 2019.  Oil prices could soon hit $100/barrel, which will also spike gas prices.

    There are options where one can position assets to fight inflation or at least break even, as interest rates are likely to rise over the next 12-18 months.  I have seen banks that are paying anywhere from .10% to .50% interest.

    Every situation is different, depending on one’s risk tolerance.  Some suggestions below can help you offset inflation’s eating away at your purse or wallet:

    1. Shop Your Bank Account rates: Take a look at your most recent bank statement.  The internet makes it much easier to shop interest rates and there are virtual banks (meaning they have no brick-and-mortar locations) that will pay a higher interest rate.
    2. Consider Credit Unions for Emergency Funds: Credit Unions will usually pay a higher interest rate than your typical bank.  For example, the Italo-American credit union is currently paying .75%.
    3. Fixed Interest Annuities vs CDs: Many conservative investors still have large sums sitting in CDs (Certificates of Deposit).  CDs can also stand for Certificates of Disappointment!  CDs are taxable (even if you do NOT withdraw funds).  If you have a CD earning 3% and you are in the 30% tax bracket, you are netting 2.1% after-tax.  A fixed annuity paying 3% is tax deferred (the same 30% tax bracket person is netting a taxable equivalent of 3.9%).  Many people are unaware that Fixed Annuities are protected by New York State up to $500,000, whereas banks are protected by FDIC (Federal Deposit Insurance Corporation) up to $250,000.  Insurance companies will usually offer higher interest rates.
    4. The Stock Market: Obviously, stock market returns can exceed inflation; however, there is the risk of loss that options 1,2,3,5 and 6 do not have. 
    5. Cash-Value Whole Life Insurance: Money that is inside your cash-value life insurance usually sits in the insurance company’s general account.  Many insurance carriers are still paying in the 4% range.
    6. Consider Buying Series I-Savings Bonds: The I stands for “Inflation” bonds.  These bonds may be purchased (up to $10,000) online by opening a Treasury Direct account.  The Treasury Direct account is linked to your personal checking account, and you can transfer up to $10,000 at a time.  Currently, Series I-Savings Bonds are netting 3.54%.  There is no risk of loss with these bonds.

    To summarize, these are important times to huddle with your advisors and make sure your money is working for you instead of being eroded by inflation!

  • Summer Camp = Big Dollars!

    Summer Camp = Big Dollars!

    For many sleepaway and day camps, this past Monday was opening day for the summer of 2021!  After 15 months of Covid-19, many kids will be happy to spend extended time out of the house and away from their parents.  For parents, absence makes the heart grow fonder.

    After we dropped off my nephew at basketball camp last Sunday, I started thinking about how big of a business camp has become.  Last year, many parents decided to skip sending their children to camp, and this year, demand has increased more than supply, especially for the higher-end camps.

    As a kid, you never think about how much your parents are paying for the camp you attend.  For this column, I decided to dig in deep and call my client and friend, Ken Barer.   Ken (KB) is the Athletic Director and part-owner of Camp Mohawk, a high-end day camp in White Plains for children ages 3-13.  Ken played Pro Basketball in France and is the former Men’s Basketball Head Coach at Umass Lowell.

    Early in the conversation, I learned that summer camps have come a long way since I went to (KSA) Kutcher’s Sports Academy many moons ago.  Back then, many of my friends went to Camp Anawana.

    It is clear to me that Camp Mohawk is different from the regular day camp.  Most of their counselors (known as Group Leaders) are teachers, some have been with the camp for as long as 30 years. 

    Each Group Leader gets a tablet, and they post daily pictures and a summary of what their campers accomplished that day.  The parents can download the Camp Mohawk app and can access the pictures as well as message the group leaders.  They can also request play dates for their children and request an introduction to other parents through the app. 

    Camp Mohawk is considered a full-service, general day camp and one of the “Big-5” of high-end camps.  Last year, due to Covid restrictions, they hosted 600 campers.  They are proud to say they had zero positive Covid tests last summer!  This year they will host approximately 800 campers, about 100 below normalcy. They have a staff of over 300 persons.   They have an acceptance process that includes an interview and a guided tour of their sprawling 45-acre campus. 

    Mohawk runs a full 8-week summer session and offers 6-week and 4-week options.  Camp Mohawk charges $10,000 for the full summer 8-week session for the first child.  They offer sibling discounts for the 2nd and 3rd child, and the 4th child is free!  Mohawk had a waiting list for this summer, and they suggest applying now for the summer of 2022.

    The pricing includes transportation, (they have bus pickup spots in Manhattan and Brooklyn) a snack in the morning and in the afternoon, a full lunch, 2 daily swimming sessions (instruction in the morning and free period in the afternoon) towels and daily bathing-suit laundering.  Their day runs from 9a-4p daily.

    In addition to traditional sports like basketball, their campus features:

    1. 8 Heated Pools
    2. A Farm with Animals, such as Alpacas
    3. 2 Wiffleball Stadiums, built like Yankee Stadium and Citi Field
    4. A Mountain Bike Course
    5. Zip Lining
    6. 3 Climbing Walls
    7. A Waterslide
    8. A Hydro Blast Water Balloon Launcher

    Covid-19 protocols include $20,000 of hand sanitizer and sink hand-washing stations across the campus and daily health and temperature checks that are logged online.  For more information go to CampMohawk.com.

    My takeaways are that I would like to wind the clock back to be a 10-year-old and go to Camp Mohawk for the next 3 summers.  Summer camp can be expensive and should be budgeted for.  To the kids who have suffered due to no fault of their own, have a fantastic summer!

  • Term vs. Permanent Life Insurance

    Term vs. Permanent Life Insurance

    You hear a lot in the media debating the merits of term life insurance versus the merits of permanent life insurance policies, including whole life and universal life insurance.

    Anyone who advocates 100% for or against any kind of life insurance structure is missing the point: The best type of insurance to own is the type that is in place when the insured dies!

    And here is the addendum to that rule: The best amount of life insurance to purchase is the amount you can easily afford.There is a place for term life insurance, and a place for permanent life insurance. The most important principles to bear in mind are these: Purchase the policy that:

    1.) You can afford, 

    2.) Best fits your need, and

    3.) Is most likely to be in force when you pass.

    Focus on these three things!

    Term Life Insurance

    Term insurance is designed to be affordable, with a large death benefit.  The trade-off is that term insurance, as the name implies, is temporary. It is valid for a set number of years, typically 10, 15, 20 or 30 years during the set time-period, if you have kept current on your premiums. 

    There are new term policies that can run up to 40 years just approved in New York State, so a 45-year-old non-smoker can purchase an inexpensive term policy up to his/her age 85.  This can be a game-changer!

    The younger you are when you purchase term life insurance the better, because your rates are locked in. Conversely, the older you are when you first buy the policy, the more expensive the premiums will be. Your health condition will be considered when premiums are set.

    Term life insurance can be a good fit for younger families who need a large death benefit at an affordable cost, to protect them against the potentially catastrophic loss of a breadwinner.

    Permanent Life Insurance

    Permanent insurance is designed to pay a death benefit even if you live to a ripe old age, and it does not expire if you keep paying the premiums. There are two basic varieties: whole life and universal life.

    Whole life policies feature a guaranteed death benefit for life, guaranteed-level premiums for life, and guaranteed growth in cash value. In other words, it has a death benefit, and the savings component has a fixed interest rate that builds cash value over time.  Usually, life insurance companies will pay a higher interest rate than banks, sometimes as much a 1-1.5% higher.

    Universal life policies feature a guaranteed death benefit, along with a cash-value component as well. They offer more flexibility than a whole life policy. For example, universal life policies allow you to increase or decrease your death benefit and the policy’s cash value can eventually grow and result in a zero-cost policy, in which all premiums are paid from the cash value you have amassed. 

    Also, the interest rate on the cash value component is not fixed. Instead, it has a guaranteed minimum interest rate, but the rate can change over time based on market conditions.

    Upon Review:

    Term life insurance is the most affordable protection for young people; however, term policies are actuarially designed to lapse. Only 2% to 5% ever pay a claim.

    Therefore, while term provides the most protection for new policy purchasers per dollar of premium, if it is secured later in life, it can be cost prohibitive.

    With permanent policies, it is quite the opposite. Whole life policies require a larger premium commitment for the same amount of death benefit. It is like owning vs renting a house.  Owning costs more/month; however, you are building equity and can turn a profit later. 

    A universal life policy costs less (it can be 20-40% less) out of pocket than whole life. If the policy owner contributes enough premiums into the policy, they can build cash value very quickly. In the long run, if you live to your actuarial life expectancy, you will receive more benefits from a whole life policy than you put into it, either via cash value or via the death benefit.

    In addition, the newer policies have living benefits (long-term care like riders) that you can access to pay for some health care needs later in life while you are still living.

    Are you confused yet?  We have access to more than 100 A-rated life insurance companies.  Newer policies have living benefits that older policies do not.  Do yourself a favor and review your life insurance.  Feel free to reach out to me for a free review at Rob@InsuranceDoctor.us!

  • Crime Pays… in some pro sports

    Crime Pays… in some pro sports

    In last week’s New York Times, the front-page article was titled, “Baseball’s Integrity Crisis: Doctored Balls.”  Cheating in sports has been bothering me for a long-time now!  It is one reason why I retired from all fantasy sports in 2019 and have not read any sports box scores (those that know me this is crazy) since 2019.

    The money is sports is so lucrative that it often “pays to cheat!”  Most sports do NOT have a clear policy against cheating, and those that do, do NOT take back performance bonuses earned due to cheating.  Baseball cheating is probably the worst of all sports, other sports are not far behind. 

    See some of the most memorable cheats below:

    1. Lance Armstrong: Lance, a former American bike racing specialist (and cancer survivor) won 7 consecutive “Tour de France” races from 1999-2005 and catapulted the sports global popularity.  Lance was investigated and stripped of all his medals; however, he earned over $125 million during his career.
    2. Bob Baffert: Arguably horse racing’s most famous trainer, his 2021 Kentucky Derby winning horse, Medina Spirit, was treated with an ointment containing a steroid, which caused him to fail the postrace drug test.  Medina Spirit’s failed drug test is the 5th medication violation in the past 13 months for Baffert.
    3. Ben Johnson: On September 24th, 1988, Canadian sprinter Ben Johnson ran the 100-meter dash in 9.79 seconds to win the gold at the summer Olympics in Seoul, South Korea.  He tested positive for steroids 3 days later and was stripped of the medal. 
    4. Tim Donaghy and Pete Rose: NBA referee Tim Donaghy was a gambling addict who made bets on the games he refereed.  Pete Rose, who was a player and manager also bet on games he managed.  Donaghy resigned from the league amidst an FBI investigation that he bet on games that he officiated.  Donaghy pled guilty and spent 11 months in jail.  Pete Rose was suspended from baseball for life!
    5. Serena Williams: Serena Williams received illegal coaching signals during her 2018 U.S. Tennis Open Finals loss to then 20-year-old Naomi Osaka.  Her coach, Patrick Mouratoglou, admitted to sending her signals saying, “all the coaches do it!”  She received a warning, then a one-point penalty for racket abuse, then a game penalty for verbal use of chair umpire Carlos Ramos calling him “a liar and a thief!”  She made $1.85 million as the 2018 runner-up.  She was NOT penalized for cheating, nor did she have to return any winnings from finishing 2nd!
    6. Barry Bonds, Roger Clemens, and Alex Rodriguez:  These 3 major league baseball players (and many others) have been accused of taking PEDs (performing enhancement drugs).  Clemens “misremembered” and only Alex Rodriguez was given a 1 season suspension.  Although these 3 may never make the hall of fame because of it, they have made many millions since those accusations.
    7. The Houston Astros:  The Houston Astros were caught using technology to steal signs from opposing teams during the 2017 and 2018 seasons.  They beat the Yankees, then the Dodgers and won the 2017 World Series.  No players were fined, nor did they lose playoff bonus money.  Instead, the league fined the Astros $5 million (the maximum allowed) and suspended the general manager and manager 1 season each. 
    8. New England Patriots: In what was called “Spygate,” the Patriots were disciplined by the NFL in 2007 for videotaping coaching signals during NFL games.  They were then caught illegally filming N.Y. Jet practices.  They even had a library of illegal videotapes from all teams across the league.  The NFL fined Bill Belichick $500,000 and the Patriots $250,000 and docked them a 1st round draft pick.  In 2014, Tom Brady was caught intentionally deflating footballs (which made them easier to catch) in the AFC championship game, which was known as “deflate-gate!” He was investigated but never fined.  In 2021, Bill Belichick is still coaching the New England Patriots!  

    To me, it seems that Professional Sports not only need to clean up their act, they also need to clearly define and set stiffer monetary penalties for offenders as there are double standards across the board!  Why should players and teams like the Houston Astros and New England Patriots stop cheating when they are making 100’s of millions of dollars from winning, bonuses, and endorsement deals when they will only get a “slap on the wrist?” 

  • Pet Insurance- Yay or Nay?

    Pet Insurance- Yay or Nay?

    Americans love their pets! Almost 7 of 10 households in America have a pet, many treat their pet like a family member.

    The number of pets has increased in the past year due to the pandemic.  There are health benefits (mostly with dogs) to owning a pet, such as more exercise and lower stress and depression levels.  Dogs have 60 times more sense of smell than humans.  This allows them to detect illnesses, such as epileptic seizures and the presence of some types of cancers. 

    It can be heartbreaking when a pet becomes ill or passes away.  Pet illnesses can also break your bank account!  I have seen Veterinarian bills in the thousands!  Just like shopping for your own health insurance, pet health insurance (PHI) can be complicated and expensive.  “Lassie,” America’s favorite canine TV star, was issued the nation’s first pet insurance policy in 1982.

    Pros to buying a pet policy include, but are not limited to:

    1. Eligibility: Cats and dogs are eligible for pet health insurance (PHI) as young as 8 weeks, up to 12 years old.
    2. Premiums: Premiums are lower when your pet is healthy (no pre-existing conditions) and the younger, the less expensive.
    3. Networks: Most policies (mainly reimbursement types) do NOT have networks, so you can choose your own Veterinarian.
    4. Coverages: Some policies cover up to about 90% of the cost of emergency care and unexpected illnesses. 
    5. Stop Loss: Having a (PHI) policy gives you piece of mind and caps the amount you would have to pay out of pocket when the unexpected happens to your beloved pet!  The worst scenario is called “economic euthanasia.”  This is when you must euthanize your pet because you cannot afford Veterinarian care.

    Cons to buying a PHI (pet health insurance policy) include:

    1. Pre-Existing Conditions: Your pet’s existing illnesses/issues will typically not be covered. 
    2. Coverages: Not all policies cover preventative care, such as routine visits and vaccinations, or they assess and charge extra.
    3. Costs: Older pets cost more as do purebred dogs and cats to insure.
    4. Dealing with Insurance Companies: Many policies are reimbursement so policyholders pay Veterinary costs upfront, then file a reimbursement claim with the insurer.

    Like any type of insurance, it is important to do your due diligence.  A great mentor of mine used to say, “the situation is the boss.”  One size does NOT fit all with pet health insurance, so doing the proper research is critical!

    Money magazine’s top picks for Best Pet Insurance by Category for 2021 include:

    • Healthy Paws– Best Overall Value
    • ASPCA– Best Budget Coverage
    • Figo– Best 100% coverage
    • Trupanion– Best for Hereditary Conditions
    • Embrace– Best for Dental Illnesses
    • Nationwide- Best for Exotic Animals
    • PetFirst- Best Preventative Care

    Things to look for when comparing policies are deductibles, annual benefit caps, coverages, waiting periods, and premiums per month.  PHI premiums can range from $25-$150 per month based on your pet’s age, size, breed, and pre-existing conditions.  Cats can cost up to 60% less to insure than dogs.

    For those people that do not want to buy a policy but would be interested in paying less for services, there are pet care monthly membership discount programs.  One interesting program (that we have access to) is the Pinnacle Pet Care Prime Membership Plan.  This “discount plan” offers unique discounted services with no forms, deductibles, or dealing with insurance companies.  Coverages include a discounted drug card, 24/7 telehealth, cashback shopping (with Target, Walmart, and Petco), dog sitters, special pet pharmacies, and lost pet recovery services.  The discount membership programs usually range from $25-$50/month.

    Pet health insurance (PHI) and discount membership plans are not for everybody; however, they can really come in handy when you and your pet need it most.  My suggestion is to contact your Vet and ask if they take pet insurance and/or participate in pet discount programs.  For those interested in the discount program, feel free to reach out to me at Rob@Insurancedoctor.us.

  • “Little Island,” Big Money!

    In 1946, Anna Intelisano (RIP), my grandmother, came to the USA by herself, speaking no English, and leaving her 4 year-son, (my Father Robert Sr.), and her husband Salvatore Intelisano in Sicily.  Anna was 29 and left a middle-class lifestyle in search of “The American Dream!” 

    It did not start well as she started as a maid cleaning floors, then worked her way up to be a sample dressmaker for a young upstart designer named Diane Von Furstenberg in the late 1970’s.  Anna was an outstanding cook and always made extra food which she would bring to work.  Diane was known to stop by Anna’s workstation on a regular basis and ask, “Anna, what are we having for lunch today?”  Diane, a Belgian designer, is best known for her wrap dress and found “The American Dream.” 

    Diane Von Furstenberg went on to do great things; however, this could be her best gift to the USA and the world!  Her foundation, The Barry Diller-Von Furstenberg Family Foundation gifted $260 million and earmarked another $120 million for the building and maintenance of the newest public park called “The Little Island!”  It is estimated that this $380 million investment will yield billions in tourist revenues over the years!

    The Little Island

    My sister, (in-law) Stacey Reiss, visited The Little Island opening week and described it as, “A beautiful gift to the city of New York… truly one of those special places that only happen once in a decade or so, like the Highline or Brooklyn Bridge Park.  It is what makes New York City so spectacular, public art and spaces that are accessible to all.”

    Photo credit: Flickr

    One of the ways New York can and will bounce back is with the return of tourism.  As we make a comeback, tourist books, websites and magazines will be re-written including “The Little Island,” and this is another reason why people will visit New York City!  

    My Top 10 Reasons to Visit the Little Island:

    1. It is FREE:  There is no charge so everyone can enjoy it!  Little Island is a public park that provides a one-of-a-kind relationship between nature and art!
    2. Sprawling Grounds: Little Island is a 2.4-acre island in the Hudson River built on water where Pier 54 used to be, off West 13th street.  It is an engineering marvel built on tulip-shaped pods, a wonder to behold.
    3. Entertainment: There is a 687-seat amphitheater built on the grounds.  At the same time and place every week, (starting in mid-June) artists fill the Little Island with music and dance.  There will also be events, such as concerts, solo, and small bands, teen open mic, comedy, puppetry, and culinary talks to name a few.  Events are recurring and FREE!
    4. Food and Soft Drinks:  The Little Island partnered with Savory Hospitality (based in midtown) to offer a wide range of fresh food made from scratch using quality ingredients.  Food offerings range from local baked goods, coffees, lattes to a variety of lunch sandwiches.  They have fun kid’s foods like fried mac and cheese, hot dogs, cupcakes as well as healthy foods.  All food is sourced from local vendors and there will be food trucks as well.
    5. Adult-beverages available:  There are 7 micro-brews offered as well as cocktails, hard ciders, seltzers, and wine.  The full menu is available at www.littleisland.org. 
    6. An Engineering Feat: A unique collaboration where the engineers worked directly with the contractor.  Little Island Park needs to be seen to be believed!  Trees are staggered at different heights making it look like they have been there for many years.  It took almost 10 years to build.
    7. Breathtaking Landscapes: Not only is the island built on tulip-shaped pods, but there are also over 350 different varieties of trees, plants, and flowers creating a stunning landscape!
    8. Pandemic Spacing:  There will be crowd control as there are “Timed Entry Reservations.”  The Park opens at 6am.  The advanced ticket reservation system will prevent overcrowding during peak viewing hours.   Advanced ticketing starts at 12 noon.  There is no time limit on how long you may stay once you have entered.
    9. Spaces to Chill and Talk: If you want to make a full day of it, there are many benches, quiet spots, and places to sit, chill and talk.
    10. Interesting Nicknames: I have read a few nicknames.  My favorite 2 are Dubai on the Hudson and The Park on Stilettos!

    There are many people and foundations that give to our city; however, this is the type of gift that keeps on giving.  Thank you to the Diller-Von Furstenberg Family Foundation.  This is what “The American Dream” is all about!

  • 6 Tips to find the RIGHT insurance broker

    6 Tips to find the RIGHT insurance broker

    One thing this pandemic has done is flush out poor advisors, as there is no hiding during Covid-19.  CPAs, Attorneys, Insurance Advisors, Stockbrokers and Financial Planners should be well-aware of the latest Covid-19 updates, income tax and estate tax rule changes to properly advise their clientele.

    I have been on many Zoom Panels, Seminars, Workshops, and Podcasts over the last 14 months, and it is disturbing how clueless many advisors are!  I feel bad for those that are taking their advice.

    Insurance brokers and agents are trusted with matching their clients with the most suitable life, health, homeowners, auto and business insurance policies.

    Every insurance company has a specialty niche product and pricing sweet points, they are not all the same!  It is important that your broker of choice is well-versed in policy differences from one company to another, and is informed of the latest news, trends, and new advanced products coming to market. Your broker should understand your needs and concerns and be capable of explaining your options in a simple and understandable fashion.

    Follow these tips on what to look for in finding the right insurance broker or agent:

    TIP 1: Knowledge and Experience:  There is no substitute for experience.  Look for brokers that have been in their field for a minimum of 5 years.  The better ones will also have advanced planning designations (higher education) next to their names.  Look for at least one of the following 3 designations: CLU (Chartered Life Underwriter) CFP (Certified Financial Planner) or CSA (Certified Senior Advisor).  The more designations, the more educated and well-rounded your broker will be.

    TIP 2: Independent Agents:  The following may be counter intuitive.  Brokers are in a better position to help you than “captive agents” thatIndependent only represent one company.  Independent brokers represent you client, and offer numerous insurance policy options.  They must be well-versed on all policies to find the best fit for you.  Captive agents (i.e. Allstate, New York Life etc.) are employees of their respective companies.  They usually offer proprietary products first to qualify for their company-sponsored trips and subsidized health insurance.  Make sure your agent places your needs before their own!

    TIP 3 Fee Structure:  Most of the established independent brokers do not charge a fee for time or services.  They receive compensation from whichever insurance company you decide to do business with.  Beware of agents, planners and advisors that charge steep upfront consultation fees! 

    TIP 4 Get a Second Opinion:  Most people are already working with an agent or broker.  Do yourself a favor and get a second opinion using the tips given in this article.  You will be surprised at what you can learn from a free consultation with an independent broker. 

    TIP 5 Due Diligence:  Invest the time to call several brokers.  Start a list and seek advice from friends, family, or colleagues that are satisfied with their broker. Check reviews on google business, the internet and gather as much information as possible. 

    TIP 6 Quality Service: Part of quality service is timely service.  When you call around, make a note of how long the advisor takes to get back to you.  Usually, like a first date, that first communication sets the tone for the relationship.

    President Biden has outlined his proposals for sweeping income and estate tax changes.  These proposals, if passed, can and will affect multiple generations of Americans going forward.  Not knowing about these rules while advising clients is a form of advisor malpractice.

    If these 6 tips fail, reach out to me at Rob@InsuranceDoctor.us!

  • Secret Codes 1031 and 1035 (exchange)

    Secret Codes 1031 and 1035 (exchange)

    Last week we talked about 4 ways to tap into the cash of your life insurance policy.  This week, we are taking it to the next level and will outline ways to exchange (or rollover) an existing annuity, life insurance or endowment policy for a better policy whilst deferring tax on the transaction.

    Since President Biden has proposed increasing capital gains from the current 20% to 39.6% (let’s call it 40%) for those in the top income bracket, tax loopholes like the 1035 and 1031 exchange become even more valuable.

    A 1035 exchange is defined as is a provision in the IRS tax code (1035) allowing for a tax-free transfer (or rollover) of an existing annuity contract, life insurance policy or endowment for another one of like kind.

    It is easier to understand the power of 1035 exchanges by using examples of when it is in a client’s best interest to take advantage of this tax loophole.  Scenarios when we used the 1035 exchange to improve client positions over the past 3 years include:

    1. Client has a 20-year old traditional whole-life insurance policy with a $100,000 cash value (earning zero interest) and is interested in a new policy with the long-term-care rider(chronic illness rider): RESULT: We rolled over the cash into a new policy so Mary can now access a portion of her death benefit for long-term care needs (by exercising the new chronic-illness rider while living) should she become ill without having to buy an expensive long-term care policy.  Mary paid NO TAX on her 1035 exchange!
    2. Client’s wife died of Covid-19, so we reviewed his 5 annuities, one of which was only paying 1.2%: RESULT: John had a 10-year-old annuity that had a 7-year rate guarantee of 3.5%.  Unbeknownst to him (John never read his annual statements) his annuity renewal rate dropped to 1.2% in 2018, so he did a 1035 exchange to a new annuity with a different company locking in his rate of 2.75% for 7 years.  John paid NO TAX on his 1035 exchange!
    3. Mark’s 2nd wife (15 years younger than him) just died from Covid-19 and he has a large life insurance policy on himself he feels he no longer needs or wants to pay for.  RESULT: Mark did a 1035 exchange (rolled over his cash value) from his life insurance policy to a fixed annuity paying 3% in New Jersey (where he has a summer home).  Now, he no longer has to pay his life insurance premium and all of his money (cash value) is earning 3% guaranteed (no fees in a fixed annuity) for 10 years instead of the 0% he was earning on his whole-life policy.  Mark paid NO TAX on his 1035 exchange!

    DISCLAIMER: The 1035 exchange check must go directly from one insurance company to another.  The policyholder cannot ever receive (called constructive receipt) the check!

    The 1035 exchange is a powerful tool for insurance and financial advisors that is under-utilized mostly due to ignorance or a lack of creativity.  There is a similar tool called a 1031 exchange available for real estate. 

    DISCLAIMER: Please consult with your realtor, financial advisor, and real estate attorney before deciding if a 1031 exchange is right for you. 

    I reached out to interview George Russo over the weekend as I know he has extensive 1031 exchange experience, for an explanation and some tips.

    In real estate, a 1031 exchange is a swap of one investment (or business) property for another (considered like-kind) that allows capital gains to be deferred, not eliminated.  It can work if you are looking to sell an investment property, you do not need the money and do not want to pay the capital gains taxes.  Savvy investors use 1031’s to defer capital gains and build wealth!

    George said, “it is critical to know the rules and work with experienced advisors when handling these sophisticated transactions.”  Steps he mentioned include:

    1. Sign a contract of sale of your property.
    2. Within 45 days you must “identify” 3 similar properties based on value.
    3. Choose an “intermediary” (remember, like the 1035 exchange you CANNOT ever receive the cash, so the intermediary holds it).
    4. Sell your property.  You now have 180 days to close on the new property.
    5. Close on the new property within 6 months and your basis gets transferred from the old to the new property with no taxation.

    Although Covid-19 has its challenges, there are also opportunities to improve your financial position and quality of life for the LONG-HAUL!  

    If you are interested in a life insurance or annuity policy review, feel free to reach out to me at Rob@InsuranceDoctor.us. 

    It has been a joy writing my “Financial Wave” column for The Wave as we approach our 1-year anniversary on May 1st, 2021!