The Insurance Doctor

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  • 5 Financial Moves to Make Now During COVID-19

    You do not need me to tell you these are crazy times!  They will be talking about 2020 for many years to come.  Although the last 6 COVID-19 pandemic-months have been long; in a way, blink your eyes and it is already the 4th quarter of 2020.

                What does this mean financially?  There are MAJOR OPPORTUNITIES AVAILABLE for ALL American’s to set up a better financial future NOW! Some of these opportunities need to be taken advantage of NOW, and over the next 60 days, since many laws and what I call “Covid-19 Special Rules” will be changing “sun-setting” on 12/31/2020. 

                These times are unique as we are in an historically low interest rate environment with low tax rates and a stock market near record highs!  In 2020, a married couple “filing jointly” can earn $325,000 (combined) and only be in the 24% tax bracket.  Our current level of spending is unsustainable, and most experts agree that taxes will be raised!

    September 30th closed our “fiscal year,” and our federal debt exceeds $23.4 Trillion.  It is estimated that this could grow another $13 Trillion by 2028.  Tax rates will likely go up and we/you can stay a step ahead by strongly considering these 5 financial moves NOW!

    1. Refinance Your Debt: Whether it is a home mortgage, business loan, and/or a student loan, there has never been a better time to refinance.  If you or your children have any loans over 4%, consider refinancing now.  Yes, interest rates should stay low next year; however, banks want to close new deals now to boost their 2020 year-end revenues. 
    2. Take Some Profit Off the Table:  Some advisors call this “tax harvesting.”  Remember, gains are only “paper gains” until you sell, and they are sitting in cash.  If you have doubled your money in an account, why not reposition half in cash and let the rest ride “on the house” so to speak?  With the upcoming election on the horizon, choppy waters lie ahead.  Double-check this with your investment professional and CPA.
    3. Consider Doing A Roth IRA Conversion: If you convert all or a portion of your IRA to a “ROTH IRA” in 2020, you are permitted to spread out the current tax burden over the next 3 years, your choice as to what percentage to declare each year.  Many people have less income this year, so you would be paying less tax this year in a lower tax bracket in 2020.  What is a little more pain for a big long-term gain?
    4. Consider Buying Life Insurance Now:  Consider buying before premiums go up (due to Covid-19 death rates) as many life-insurance companies have filed for rate increases with the state.  The NEW life insurance policies have “chronic Illness” riders that function similar to long-term care policies, allowing policyholders to tap into their death benefit while living, to pay current “qualified” ongoing chronic health issues and bills.  They are called “living benefits” which most OLD policies do not have.  There are 2 companies in New York State that include these critical riders FOR FREE on inexpensive term insurance policies which can now run to age 80.  Current cash-value life policies can be “rolled-over” into a new life insurance policy.  This is called a 1035 exchange, similar to a 1031 exchange in real estate.
    5. Revisit Your IRA’s, Trusts & Estate Plans NOW!: There are people sitting on their IRA’s, 401K’s (which can be converted to a self-directed IRA) thinking that they will pass the IRA down to multiple generations just like their parents did. 

    THINK AGAIN!  Beginning in the 2020 tax year, The 2020 SECURE ACT (Setting Every Community Up for Retirement Enhancement Act) made some positive changes such as the ability to make IRA contributions after age 70.5 (if you are still earning income) and deferring RMD’s (required minimum distributions) to age 72. 

    The 2020 “Secure Act” has eliminated the “Stretch Ira” also known as “Super Ira” or “Inherited Ira.”  Spouses can inherit this money then their heirs MUST TAKE IT ALL OVER 10 YEARS!  These changes will cost children and grandchildren dearly.  It also makes it a better idea to consider taking the IRA money now (with low current tax rates) and buying life insurance which goes TAX-FREE and LUMP SUM to named beneficiaries while bypassing probate.

    These tax changes can also render existing “Trusts” obsolete, so they should ALL be reviewed.   In addition, ALL existing wills and beneficiaries should be updated.  If this is the first you are hearing about the SECURE Act, perhaps it is time to change advisors.

    Feel Free to reach out to me at Rob@InsuranceDoctor.us for more information and to be added to our e-newsletter and briefing email list.

    Stay Safe and KEEP THE FAITH!

  • The Health Insurance Dilemma

    The Health Insurance Dilemma

    With the “Triple P” Paycheck Protection Program money mostly depleted, we are looking at major layoffs this fall.  The airline industry is said to be laying off 32,000 workers.  2.4 million workers have been out of work for 27 weeks, with another 5 million approaching the same benchmark.  With Covid-19 spikes here in the city and school closings by zip code, more businesses will shutter their doors.  What does this all mean?

    For starters, there will be a tremendous number of people losing their group health insurance.  This presents a problem due to ADVERSE SELECTION!  ALL HEALTH INSURANCE COMPANY DECISIONS ARE MADE TO AVOID “ADVERSE SELECTION!” ADVERSE SELECTION in the insurance industry, involves an applicant gaining insurance at a cost that is below the applicants “TRUE LEVEL” of risk.  A cigarette smoker obtaining life insurance as a non-smoker would be an example of “insurance adverse-selection.”  Many people get glazed-over when health insurance is mentioned.  If you can understand ADVERSE SELECTION, then you can understand how health insurance works, and why insurance companies avoid it at all costs.

    Employees that leave or are fired from large companies often get “sticker-shock” when they see the their “true” health insurance rates.  Most companies have been subsidizing a portion of the monthly premium.  Employees receive their COBRA notice (COBRA is the right to continue the group plan) and the premiums are often unaffordable, leaving them in the “Individual Health Insurance Dilemma.”

    The insurance industry is regulated by individual states, which is different from the banking industry (FDIC Federal Deposit Insurance Corporation) and the stock market (FINRA Financial Industry Regulatory Authority).  This means that while the banking and stock market industries have the same rules across the country, the insurance industry has different rules (and products) in each state.  There is no better example than New York State vs. New Jersey.  New York is a “COMMUNITY-RATED” state, meaning that everyone pays the same rate (with traditional Affordable Care Act insurance) regardless of age or health.  That means a 25-year-old man or woman pays the same rate as a 55-year-old.  Is this fair? 

    This leads to “adverse selection” in New York.  In New Jersey, rates are “age and experience-rated” so older people pay more as do unhealthy people.

    Obamacare plans (also known as traditional or fully-insured plans) are what are also known as “guaranteed issue” plans, meaning they have to accept ALL APPLICANTS into their plans.  These plans are ALL backed by New York State, who would step in if/when the health insurance company goes bankrupt.  This leads to “adverse-selection” which increases current claims and future premiums.  There is a whole cadre of non-traditional (also known as self-funded or “boutique”) plans that do not have to accept everybody.  They have a huge advantage because they can pre-qualify and exclude those with pre-existing conditions.  This avoids “adverse-selection” and keeps their claims and premiums down.  ALL licensed brokers have access to the same Obamacare plans; however, very few even know about non-traditional plans, which can be a better option for the right person. 

    In general, the larger the group/company, the better the plan, which is called “economies of scale.” A numerical example can best illustrate this.

    You have 2 groups, A and B.  A has 5 enrolled employees, all single, who pay $500/month each.  Group B has 52 enrolled, same as A with all single and paying $500/month each.  Both groups have 2 sick (unhealthy) people who are going to slam the insurance company, this is called “buying a claim,” with a $10,000 claim each the first month. 

    The way the insurance company looks at it, Group A is paying them $2500/month and they are going to have $20,000 of claims the first month, which wipes out the majority of the first year’s profit, because there are insufficiently monthly premiums coming in to cover the claim costs.

    Group B is paying $26,000/month in premiums ($500/month each for 52 enrolled employees).  Even though the health insurance company is going to get hit with $20,000 of claims in month one, they know that there is no way this will happen every month, and they can still be profitable because there are enough healthy employees paying monthly premiums to cover the sick people who are “buying a claim.”

    For individual plans, there are not enough healthy people paying premiums to cover 1 sick person.  Individual plans are fraught with Adverse-Selection, hence NO insurance companies want this business.  Remember, “Health insurance companies do everything they can to AVOID “ADVERSE-SELECTION.” 

    What is the best way for health insurance companies to do this?  By disincentivizing (penalizing) the broker!  If the insurance companies reduce or eliminate “insurance broker” compensation, brokers will not sell their products.

    This has been happening for years since Obamacare began.  Insurance companies know that most brokers sell using the cheapest plans on their spreadsheets.  For example:


    1. “Health Republic Insurance of New York” had the lowest premiums for individual plans and many unhealthy people flocked to them, creating an unhealthy pool.  New York State saw them hemorrhaging millions of dollars/per month and then shut them down with 1-2 weeks notice on 11/30/2015.  This created a “scramble” for both individuals and brokers.

    2. Most brokers then moved these individuals to Care Connect and to a lesser extend to Oscar.  Care Connect was a financially solid company who partnered with North Shore-LIJ Hospital.  This was a well-run company whose premiums were too low.  They were forced to shut down because of the money they had to kick in (the most profitable companies had to contribute to help the others) to the “shared-risk pool.”  New York state would not approve their rate hikes needed to cover this “extra” cost, so they eliminated individual plans then most individuals flocked to Oscar.

    3. Oscar just sent brokers a memo that they are “discontinuing” broker commissions on Oscar individual policies effective 1/1/2021. 

    What does this all mean?

    1. Consult With a Professional:  Start with your HR (human resources) professional if you are still employed, then go to an independent broker!
    2. Contact Your Important Doctors: If there are doctors you cannot live without, contact them and spreadsheet which Health Insurance companies they accept in-network.  Remember to also ask for the network name.  For example, Oxford has 3 different NY networks METRO, LIBERTY & FREEDOM.
    3. Be Proactive and Help Yourself:  Study this information as most brokers no longer work (for free) in the individual market.
    4. Consider Switching from a PPO to an EPO or HMO: After doing tips 1-3 above, consider going in-network only which can save between 25-40%.
    5. Consider Shopping Every Year:  Each year there are many subtle and not subtle plan changes.  Do not get caught off guard after a claim.

    During these Covid-19 times, people need to surround themselves with proficient insurance and financial advisors. 

    Are you confused yet?  Do not fret, we are here to help.  Feel free to contact me at 917-359-3985 or Rob@InsuranceDoctor.us.

    KEEP THE FAITH!

  • 5 Tips to Dress for Success

    5 Tips to Dress for Success

    “It is what it is!”  I think this is a “New York” phrase; however, I have my California friends saying it, so who knows!  After a unique summer to say the least, it is now the fall and time to get “Back to Business” and/or “Back to School.” 

    During this COVID-19 era, medium to large gatherings are frowned upon; however, if you are living your life, it is almost impossible to avoid small gatherings or 1-to-1 meetings altogether. 

    Fall is known for job interviews, school interviews, SAT testing, social events, and meeting the in-laws, just to name a few.  It is important to look your best!  People form their opinions of you based upon the way you look and speak.  “It is what it is,” so why not look your best to maximize your opportunities?

    Did you ever go into a car dealership and see the “frumpy guy” who has the baggy suit pants and jacket that don’t fit vs the sharply dressed salesperson?  I have and I when I see the “unmade bed,” I doubt this guy can be a good salesperson, so I will always gravitate to the better-dressed person no matter how vain this may seem. 

    I will never forget being on vacation visiting friends in Budapest, Hungary many years ago.  My friend, Zoltan, took us to his tailor friend.  Zoltan said something loud and forceful in Hungarian (something like you had better give these guys the best fabric and best price or I will slap you around) and pointed to us.  This fired me up, so I got measured and ordered my first 2 custom suits ever.  I still have them today, cashmere made by Rene Lezard.  The suit slid on like butter and I had a big smile on my face.  I could not wait to fly home and sport my new suits.  I noticed that people were making positive comments and I was getting more respect.  I also realized, looking in my closet, that there was no way I could go back to “off the rack” clothes.  My production went up because I knew I had to make more money to buy more custom suits and sports jackets. 

    Five years ago, I toured Southeast Asia visiting Myanmar (Burma), Cambodia and Thailand as well.  Through a client, I was introduced to the owner of Blanc Bespoke Tailors in Bangkok, Thailand.  They had pictures of their celebrity clients in the window like 6 foot 5 Dolph Lungren, who played boxer “Ivan Drago” in Rocky 4 and starred in “The Expendables” movies.  I knew I was in the right place.  I ordered 2 more suits and a cadre of shirts with ties with matching pocket squares which were shipped to me in New York.  The owner told me he visits the USA twice a year and does “custom suit events,” so now (before Covid-19) I host several custom clothes events called “suit and Thai,” usually in the spring and fall. 

    MY TOP 5 TIPS TO DRESS FOR SUCCESS:

    1. Wear Conservative and Professional Clothing: Look neat and clean cut.
    2. Make Sure Your Clothes are Pressed and Not Too Tight: Remember you are dressing for business success, not going to the dance club.
    3. Try to Cover Visible Tattoos and Remove Piercings: This avoids distractions and helps keep people focused on how you look and what you say.
    4. Wear Conservative Shoes:  Make sure your shoes are clean and polished.
    5. Choose Complimentary Accessories: This will compliment your attire, not distract from it.  No crazy patterned ties or funky handbags please!

    Heeding these tips should ensure that you will DRESS FOR SUCCESS!

    Best of Luck and KEEP THE FAITH!

  • 6 Tips for FREE College “Endowment” Money

    Over the last several months, college admissions have been in the news because of the “cheating scandal” including some high-profile Hollywood actresses Lori Laughlin (Full House) and Felicity Huffman (Desperate Housewives).  In 2019, they were accused of bribing college entrance-exam administrators to allow cheating on the exams and university athletic coaches to designate school applicants as athletic recruits, regardless of athletic ability or experience playing a sport. 

    Laughlin “allegedly” paid $500,000 so that her 2 daughters would be designated as recruits to the University of Southern California (USC) crew team, though neither girl ever participated in the sport.  Laughlin and Huffman were 2 of almost 50 prominent figures (mostly from the financial industry) who were charged in the scandal.

    Interviews with more than a dozen low-income students and college advisors suggest the scandal heightened questions about the fairness of the admissions process and shook the confidence of some who hope to beat the long odds of getting into a top school.  For example, Harvard and Yale had acceptance rates of 4.7% and 6.3% respectfully in 2019.

    These might sound like insurmountable odds; however, there are proven strategies that can increase the odds of both getting into a prestigious university and getting FREE ENDOWMENT MONEY while doing so.  There is a certain profile that Universities are looking for. 

    The well-rounded B student (who participates in sports, student council, fraternities/sororities, etc.) has a better chance of getting FREE MONEY than the straight-A student who studies 24/7.  Schools are looking for what is called THE GIVE-BACK GENE!  If your student can demonstrate giving back, the school knows the odds are better of that student contributing shortly after their graduation.

    Aside from buying a home, college is usually the largest expense a family will occur over their lives.  Most Americans have not saved enough for their first student, let alone a 2nd or 3rd, etc. 

                This fact puts families in a bind!  The ripple effects can include; taking out high-interest loans, borrowing money, or stealing from their own retirement plans.  The biggest mistake is to have their student ONLY apply to “schools they think they can afford.”  Wouldn’t it be great if parents could learn how to extract merit-based ENDOWMENT “FREE MONEY” from the school of their students’ dreams?  Keep reading to find out how!

    Colleges control roughly 90% of the money that students receive every year.  The balance comes mostly from various grants from churches, synagogues, and other charitable organizations, so it is important to concentrate on where the majority of the money comes from.

    Let’s first define ENDOWMENT MONEY, best understood by an example.  I graduated from Lehigh University many moons ago.  Lehigh’s investment office manages a $1.4 Billion “ENDOWMENT FUND”, which is the school’s largest tangible asset.  When I graduated and contributed to Lehigh, it was deposited into Lehigh’s “ENDOWMENT FUND,” which is not taxable.  The ENDOWMENT serves as a key source of funding for incoming student scholarships and academic programs.  Also known as GRANTS, ENDOWMENT money DOES NOT have to be paid back.  Usually, there are “strings” and/or requirements attached like maintaining a full course load (minimum amount of credits) and minimum GPA (grade-point-average) to maintain the scholarship.  The Government requires that colleges disperse a percentage of their ENDOWMENT FUNDS (about 5%) to maintain their TAX-FREE status. 

    Follow these 6 TIPS to help you obtain FREE MONEY:

    1. Apply to At Least 10 Schools:  The most efficient way to do this is through the Common-Application form.  The objective is the get into 6 schools, then leverage one school’s offer versus another.
    2. Go Visit Your Top 2–3 Schools After Acceptance:  More often than not, you will receive a letter or email offering more $$$$ after your visit. 
    3. Do NOT Accept Their First Offer:  Just like buying a pre-own car, DO NOT pay “sticker” price!  Many schools have BILLIONS in their ENDOWMENT FUNDS just waiting for you to extract the cash! 
    4. Apply to the Competitors of Your Top Choices:  Admissions officers know where you are applying.  They will give more $$$$ just to not let their competition win.
    5. Do Volunteering and Community Service:  Schools give money to those students who they think will contribute after graduating.  They call it “the give back gene”.
    6. Consult a Professional for EFC Planning: The EFC (Expected Family Contribution) score will dictate how much FREE MONEY your student will qualify for.  For example, if St. John’s tuition is $43,000/year and your EFC is $30,000, it is likely your student will not get more than the $13,000/year gap ($52,000= $13,000 X 4 years).  The key is to lower your EFC score, like golf, lower is better.  For every $1 your EFC is lowered, you can qualify for $4 of FREE ENDOWMENT MONEY.  Parental assets can be repositioned into “EFC Friendly” assets like annuities and cash-value life insurance, which are not includible on the FAFSA (Free Application for Federal Student Aid) form.   The FAFSA must be completed every year to determine your EFC and requalify annually for your students’ FREE ENDOWMENT MONEY.

    To learn more about these strategies (and/or for a book recommendation) feel free to reach out to me at Rob@InsuranceDoctor.us.  STAY SAFE!

  • The “Nobody CARES Act”

    The “Nobody CARES Act”

                Reflecting back on my childhood, the week after Labor Day was usually a time when I was feeling a range of emotions from excitement (to see many of my school friends whom I missed over the summer) to some apprehension about the new school year.  This year, the vibe for both students and parents is different because of COVID-19.

                When “The CARES Act” was enacted in late March everybody knew the $600/week unemployment bonus was expiring on July 31, 2020.  If politics were like golf, originally (in July) the Senate was playing for the “COVID” 19th hole, whereas the House of Representatives was playing for the next round.  The Senate said they would be willing to address the unemployment issue by itself, while the House of Representatives was holding out for a “new comprehensive package.” 

    RESULTS: Both parties went on vacation for the first 2 weeks of August.  President Trump then signed an executive order to cut these benefits in half ($300/week) with the states (most of whom are broke) expected to kick in an additional $100.  For New York State, Governor Cuomo’s office calculated that bill would add an additional $4.2 Billion to the $30 Billion we are already in the hole.  It is unlikely that most people will receive the extra $100 any time soon.  As of this writing, it is not clear if anyone has received the said $300/week which should be retroactive to August 1st.

                When the President made comments about the United States Post Office, the House of Representatives reconvened (and flip-flopped) that weekend to address just that Post Office issue, leaving The NOBODY “CARES ACT” dormant through the month of August.  Does this mean that “their votes” are more important than the people and families they represent?  It is time the leaders who represent us put our needs before their own!

                In addition, the $1,200 stipend and The Triple P (Payroll Protection Program) money from the NOBODY “CARES ACT” has mostly dried up (it ended in August) as business owners have been paralyzed due to conflicting rules and uncertainty as to when and how they can reopen.  To complicate matters, the Federal Government is facing a shutdown on September 30th and the USA’s cumulative debt is on schedule to eclipse the size of our economy next year.  We would be joining Japan, Italy, and Greece with debts larger than their economy.  It’s expected that U.S. debt will be equal to 98% of the nation’s Gross Domestic Product (GDP) by year-end. 

                The restaurant industry in New York City has felt the brunt of these political decisions.  Queens restaurants, in particular, have been hamstrung by this as Rockaway residents can drive 20 minutes and be on Long Island to enjoy alcohol and indoor dining.  New York City and New York State have had the lowest COVID-19 positivity rates (by the percentage of tests) in the country for some time now.  Alcohol (which I call truth-serum) has been a big factor in COVID-19 spiking, especially in colleges.  Why not allow city restaurants to reopen first with no alcohol?  Malls and Casinos are now opening (at 50% and 25% capacity, respectively).  The current explanation for not allowing city restaurants to open for indoor dining is because the SLA (State Liquor Authority) and the New York State “Task Force” does not have enough employees to inspect the restaurants.  Inspections could be easier (and take less time) if this short-term compromise is proposed.  Instead, lawsuits will bring longer delays before the cold weather is upon us.

                All these economic decisions have ripple effects and are interrelated.  Take the “school dilemma” for example.  What is now happening is that child-care needs are affecting jobs.  Families either cannot find or afford home care for stay-at-home students.  This is causing secondary wage earners (the majority are women) to give up their jobs even though they are in their prime income-earning years (ages 25-54).  For some households, that $300+ per week check could make the difference and save those jobs. 

                It is not all “gloom and doom!”  Although conducting business will be difficult this fall in many professions, there are planning strategies available to us in order to overcome these roadblocks.  Stay tuned to this column for more creative ideas on how to do so and KEEP THE FAITH! Feel free to reach out to me at Rob@InsuranceDoctor.us to continue these discussions, for a personal review, or if there are topics you want to learn about, do not hesitate to contact me!

    Rob Intelisano
    The Insurance Doctor

  • National Life Insurance Awareness Month

    National Life Insurance Awareness Month

    September is NATIONAL LIFE INSURANCE AWARENESS MONTH!  Now is the best time to evaluate your existing life insurance policy and/or what type of life insurance is best for you and your family and/or business.  Life insurance is the most flexible and leveraged product available to humankind!

                Let me cover some of the basics before getting into life insurance uses, scenarios and benefits.  In general, life insurance (ALL TYPES OF INSURANCE) is state regulated (not Federal), meaning, for example, that New York and New Jersey have different products and pricing.  One of the first questions I ask new clients is: “What state(s) other than New York do you have a property or business address?” 

    This is different than the stock market (FINRA: Financial Industry Regulatory Authority) and the banking industry (FDIC: Federal Deposit Insurance Corporation).  Federal rules are the same in every state.  It is important to work with an agent or broker that is licensed in multiple states.

    AGENT VERSUS BROKER!  Independent brokers are in a better position to help you than “captive agents” also known as “career agents.”  Independent brokers represent you, the client, and offer numerous insurance companies (we have over 100).  They must be well-versed on all policies to find the best fit for you at the right price point.  Captive agents (Allstate or New York Life etc.) are employees of their company.  They usually offer proprietary products first to qualify for their company-sponsored trips, subsidized health insurance benefits and 401k matches.  Make sure your agent places your needs before his or her own!

    BIGGEST MYTH: Life insurance ONLY benefits my heirs when I am deceased. FACT:  This is false!  MY TOP 10 LIFE INSURANCE SCENARIOS LIST:

    1. NEW PARENTS: Income replacement and financial protection for the loss of a parent, financial breadwinner or stay-at-home-parents.
    2. HOMEOWNERS: Mortgage protection for families to keep the family in the home after an unexpected loss.
    3. COLLEGE ENDOWMENT PLANNING: Cash-value life insurance is EXCLUDED FROM THE FAFSA (Free Application for Federal Student Aid)!  Life insurance cash-values (as well as annuities) do not count toward the FAFSA (known as FAFSA friendly assets) hence, lowering your EFC (expected family contribution).  For example, for every $100,000 a parent repositions from a (mutual funds, stocks, bonds, 529, CD’s, bank account etc.) this will lower your EFC about $5,500.  Lowering your EFC by $5,500 can qualify a student for an addition $22,000 (4 years X $5,500/year) of Merit-Based FREE Endowment Grant Money which you do not have to pay back. 
    4. LONG-TERM CARE FUNDING: Long-term care insurance is expensive.  It can cost over $5,000/year for someone in their 50’s.  Most people do not know that the newer life insurance policies have “chronic illness riders” that can function in a similar fashion to long-term care.  These riders allow you to access a portion of your death benefit (usually tax-free) to pay for your chronic illness needs while living.  We have access to 2 companies in New York that have these riders FOR FREE on low-cost term insurance policies.
    5. BUSINESS OWNERS: Key Person Insurance– Many businesses have a “key person” that makes the business go.  This insurance gives your business financial protection for the unexpected death of your business’ key person.
    6. BUSINESS PARTNERSHIP: This works very well when businesses (like law-firms for example) have partners.  BUY-SELL AGREEMENT/BUYOUT INSURANCE gives a business financial protection for both the business and that person’s family after an unexpected death.  For example, 2 male partners in a business worth $1 million.  Each partner A and B buys a policy worth $500,000 each.  Partner A dies.  Partner A’s wife gets the $500,000 death benefit (TAX FREE) and partner B inherits the business.  If there were no agreement or insurance, deceased Partner A’s wife is now Partner B’s new business partner. 
    7. TRADITIONAL BURIAL POLICY: These are small policies designed to cover the cost of burial, casket, funeral etc.  We have access to “GUARANTEED ISSUE POLICIES” for people between the ages of 50-80 regardless of health, if they are not currently in the hospital, assisted living or a nursing home.
    8. SYSTEMATIC SAVINGS PLANS: Cash-value life insurance policies can be set up as a pension plan or supplementary pension.  They work well to dovetail with 401k plans because 401k’s are 100% taxable upon distribution, whereas life insurance plans are tax deferred and can be tax free. 
    9. ESTATE PLANNING: Life insurance policies can be owned by a trust hence, not includable in your estate.  Life insurance is a great way to leverage off the insurance company (pennies on the dollar) to pay State and Federal Death Taxes, leaving a legacy for the next generation.
    10. PERMISSION SLIP TO SPEND MONEY: When I meet with clients who have multiple investment accounts, the first thing I ask is “What is the purpose of each account?”  Usually 1 or 2 accounts are “for the kids.”  Life insurance can replace the investments much cheaper allowing people to start spending those accounts because they now have the piece of mind knowing the kids will receive the tax-free death benefit instead of a taxable investment.  Life insurance cash-values are also protected from creditors.  The death benefit bypasses probate.

    WINDOW OF OPPORTUNITY: Due to Covid-19, most insurance companies have filed with New York State to raise premiums.  This is a great time to review NOW before the life insurance premiums rise!

    Are you confused yet?  You are not alone.  Feel free to contact me at 917-359-3985 or Rob@InsuranceDcotor.us for a review at NO COST for Wave readers. 

    Be Safe and Keep the Faith!

  • INCREASING CASHFLOW Heals All Wounds

    INCREASING CASHFLOW Heals All Wounds

    Are you or your parent(s) age 62 or older?  There is an expression called “CASH IS KING!”  During what I call “The COVID-19 era,” many employees and business owners have taken involuntary pay cuts.  This income-reduction is stressful and makes it difficult to pay bills as well as saving for retirement.  Unless you own a business, there are only so many ways to increase revenues and/or monthly income to generate more monthly cash flow.

                The older one gets, the more life becomes about making difficult decisions, and perhaps, having difficult and often emotional family conversations.  We ask ourselves questions like: Do I/we have enough money set aside for retirement?  Do mom and dad have enough money to stay in their home?  How do we finance long-term care?  If you have asked yourself these questions, perhaps you should consider looking into a reverse mortgage.  With a reverse mortgage, instead of you paying the bank every month, the bank pays you!  Also, because the money received is loan proceeds it’s tax-free*.

                Last week, we went in-depth on how to improve your FICO score and fix your credit.  FICO scores reflect your credit history among other factors. While not dependent upon a mere FICO score today a reverse mortgage borrower’s credit history is considered as part of the qualification process. Even at the height of the pandemic a record number of homeowners 62 and older are applying for the loan.  Not unlike life insurance the reverse mortgage is a misunderstood financial tool. I will go in-depth on life insurance in a future column.

                HOME EQUITY is the largest cache of savings for most households entering retirement; yet, it is typically the most underutilized retirement asset!  Reverse mortgages can help you enjoy greater financial flexibility, whether you are in retirement or still working if you are age 62 or older, should you qualify.  A reverse mortgage can help you; refinance existing mortgage debt eliminating the existing principal and interest payments, consolidate high-interest rate credit cards or student debt (to lower your monthly payments), make large cash purchases, fund home renovations, or pay for college etc.

                It is important to “know what you don’t know,” so I interviewed Bill D’Onofrio, a HECM (Home Equity Conversion Mortgage) loan specialist over lunch on Tuesday (Yes, I paid, LOL).  The first thing Bill told me is “Reverse Mortgages are no longer only for the needs-based borrower.  Many more affluent borrowers are seeing the benefit using home equity to fund a safe and secure retirement.  It is no longer about need; it is about efficiency and leverage.” 

                The top 5 REVERSE MORTAGE MYTHS mortgage are:

    1. The Bank Will Own My Home: FALSE: Like any mortgage or home equity loan, you will continue to own your home with YOUR NAME on the title.  Keep in mind, you MUST meet your loan obligations: keeping current with property taxes, homeowner insurance, and any homeowner association (HOA) fees.  Private homes (1-4 Family) and some condominiums qualify; however, NOT CO-OP’s!
    2. Reverse Mortgages Take Advantage of Retirees: FALSE: Reverse mortgages are designed to help retirees.  The biggest fear of ALL seniors is the “Fear of Living Too Long and Running Out of Money!” In some ways like an annuity, the reverse mortgage is designed to provide potential cashflow for life!  This industry is HIGHLY REGULATED to protect consumers.
    3. I Will NOT Qualify Because I Already Have a Mortgage on My House or Condo: FALSE: Your home does not have to be paid off in full to qualify..  The proceeds from your reverse mortgage are first used first to pay off your existing mortgage.  You could then take the loan proceeds from the reverse mortgage in the form of tenure payments each month. Tenure payments are paid as long as at least one named borrower lives in the home as their primary residence and continues to meet the obligations of the loan.

      While reverse mortgages provide loan proceeds not income, an applicant’s monthly income is part of the qualification process to ensure borrowers have the financial capacity to meet the financial obligations of the loan such as paying property taxes or homeowner’s insurance. For example, in the Northeast, a couple must have a residual income of at least $906 per month,” said Bill.
    4. I Will NOT Be Able to Leave My Home to My Heirs: FALSE: Your heirs can still inherit your home, but they must pay back the loan balance if they want to keep the house.  PLANNING OPPORTUNITY: In a situation where children don’t get along, or if one child has little money (meaning they need money now) and the others are affluent, I can envision selling the house at death, and using some (reverse mortgage) loan proceeds (while living) to buy a life insurance policy which the children can split on a TAX-FREE basis.  This way the decision is already made preventing “sibling bickering” which is not that uncommon.
    5. A Reverse Mortgage is a Loan of Last Resort: FALSE: Many savvy homeowners use a reverse mortgage as an “emergency-fund” meaning that they do not need to receive payments right away.  COVID-19 certainly qualifies as an emergency!  Financial planning 101 says to keep 3-6 months of income in an emergency-fund.  I see this being suitable when one has strong home equity with either a limited or no pension and a small or no social security payment coming in. 

    Reverse mortgages, like most annuities, can help borrowers set up a predictable cash flow stream.   My belief is that increasing your monthly cash flow can, over time, get you out of any bad financial situation hence, “CASH IS KING!”

    To continue these discussions, Bill D’Onofrio (Queens-based) can be reached at: BDonofrio@reverselending.com.  As always, I can be reached at Rob@InsuranceDoctor.us.  Be Safe and KEEP THE FAITH!


    * Always seek the advice of a tax professional.

  • FICO and Fixing Your Credit

    FICO and Fixing Your Credit

         In 1989, The FICO SCORE was released to the world by William R. Fair and Earl Isaac, who founded a computer software company.  They developed and sold their first credit system back in 1958.  FICO (short for the Fair-Isaac Co.) was the first credit-risk model that provided a universal and impartial tool for evaluating consumer risk.  The FICO SCORE is a three-digit number (between 300-850) based on credit data from your credit reports.   It helps lenders predict how likely a person is to repay a loan.  Over 90% of ALL credit decisions made in the USA today use the FICO SCORE!

         A good FICO SCORE can literally save you THOUSANDS of $$$$ in interest and fees to lenders.  A good FICO INSURANCE SCORE (FICO homeowners scores range from 200-997) can save you BIG $$$$ on your homeowner insurance premiums.   It can also save you BIG $$$$ on auto insurance premiums (FICO auto scores range from 250-900) depending on what state you live in.  Using credit scoring for auto insurance is banned in California, Hawaii, and Massachusetts.  Other states have restrictions but not an outright ban.  One should be over 700 on both scores.

        To improve your FICO SCORE, we must first examine the FICO “Scoring Formula.”  Fico data is grouped into 5 categories:

    1. PAYMENT HISTORY: (35%) Payment history refers to whether individuals pay their credit accounts on time. Credit reports show the payments submitted for each line of credit, and the reports details bankruptcy or collection items along with any late or missed payments.
    2. AMOUNTS OWED: (30%) Accounts owed refers to the amount of money an individual owes. Having a lot of debt does not necessarily equate to a low score. Rather, FICO considers the ratio of money owed to the amount of credit available.
    3. LENGTH of CREDIT HISTORY: (15%) As a general rule of thumb, the longer an individual has had credit, the better their score. However, with favorable scores in the other categories, even someone with a short credit history can have a good score. FICO SCORES take into account how long the oldest account has been open, the age of the newest account, and the overall average.
    4. NEW CREDIT: (10%) New credit refers to recently opened accounts. If the borrower has opened several new accounts in a short period of time, that indicates risk and lowers their score.
    5. CREDIT MIX: (10%) Credit mix refers to the variety of accounts.  For example, credit card, retail card, home loan, vehicle loan, etc.  It is helpful to have a few categories of debt; however, it is NOT necessary to have a card in each category to score well.  For more information go to MYFICO.com.

         Now that we have broken down the FICO “Magic Formula,” consider using these “Lucky 7” tips to improve your credit rating; hence, improving your FICO SCORE:

    1. DO NOT CLOSE OLD ACCOUNTS: While this might seem counterintuitive, closing a card may negatively impact your credit. It reduces your credit-to-debt ratio and credit history which lower scores.
    2. CONSIDER ASKING FOR AN INCREASE TO YOUR CREDIT LINE: For example, if you have a credit limit of $5,000 and you are using an average of $2,500, that is a 50% ratio.  If you asked and were granted an increase to a  $10,000 limit and keep your spending at $2,500, you lowered your “Credit-Usage” ratio to 25%, which will increase your score over time. 
    3. LIMIT THE TOTAL AMOUNT OF CREDIT CARDS: People are tempted by all the enticing initial credit card offers and frequent flyer points; however, applying for too many cards will lower your score.
    4. AVOID FEES: Credit card companies charge exorbitant fees (they can be as high as 36%, depending on what state you live in) for late payments, even if it is only by a day or two.  Making late payments may trigger a higher interest rate and will lower your scores quickly.
    5. PAY OFF 100% OF YOUR BALANCES EVERY MONTH: Carrying over balances from month to month is a costly way to do business.  If you have issues with this, I suggest enrolling into “auto-pay” on-line, one credit card at a time so you can stabilize your finances.
    6. REVIEW YOUR CREDIT AND FICO SCORES: Step one is to determine your starting point.  This is easy to do on-line.

  • Pro Sports, COVID-19, and Revenue Crash

    It is Tuesday August 5thas I write this article, and in Rockaway Beach, a big storm (Isaias) is brewing, and the ocean is rough.  As a surfer kid, we craved these “big wave” opportunities. 

    Another 2020 storm has been brewing in the COVID-Era for the “Big 4” professional sports teams; Baseball, Basketball, Football and Hockey.  The incoming “Financial Waves” have been rough and there is no calm in sight!  Are they doomed this year?  I will break this down as a fan and as a businessman.

    AS A FAN: Team sports have always been a huge part of my life. In my youth my father used to shuttle my brother Ross and I from game to game, sometimes attending as many a 3 games in one day.  As an adult, I have had season tickets to the Jets, the Brooklyn Nets and Yankees.  I have travelled to London twice, once to watch the Jets vs Dolphins at Wembley Stadium, and last summer to watch the Yankees sweep the Red Sox in a converted soccer stadium.  Until 2020 I had played in fantasy sports league every year since 1989.

    The bottom line is that pro team sports are in big trouble!  COVID-19 has upended our daily routines making team sports less relevant for many.  Instead of working 9-5 then watching sports at night, most of us are at home all day, and there is no need to watch live sports when we can simply stream it online.  We can DVR events to watch at our convenience.  I am starting not to miss it.  There is a chance all 4 sports will be shut down by October.

    AS A BUSINESSMAN: The average annual salaries of professional athletes in Pro sports are; NBA $7.7 Million, MLB $3.82 Million, NHL $2.58 Million and NFL $2 Million per year.  The average NBA player earns 140 times the average annual salary of an American worker which is roughly $55,000 per year.  If an NBA player decides to “opt out” or “sit out” one game, the player makes $93,000 per game in an 82-game season.  How can the average American struggling to provide during Covid-19, feel empathy for the NBA player? 

    The National Basketball Association has decided to mix politics and sports by painting “Black Lives Matter” on all courts.  To me, sports is “an escape” from politics, business, and everyday stresses that we deal with in our daily lives.

    Major league baseball, in my opinion, has handled this the worst of the Big 4 sports.  I call it the 2020 “Corona Beer League!”  Drastic rule changes and 7 inning doubleheaders, are you serious?  We played 7 inning doubleheaders in my fastpitch softball league when I played shortstop for Michael’s (of Brooklyn) Catering.  This reminds me of the movie “Bronx Tale” when Chazz Palminteri (aka Sonny) tells C (his protégé), “who cares about Mickey Mantle, does he care about you, nobody cares.”  Baseball took 10 years to recover from the strike-shortened 1993-94 season.

    This week there has been an outbreak on the St. Louis Cardinals, joining Derek Jeter’s Miami Marlins.  If there are one or two more team outbreaks, I see the season being scrapped before the end of September.  Players can “opt out” and still get paid 3 times more than the average American for “not playing.”  Can you imagine if we go tell our bosses we are “opting out” so give us a percentage of our salary and we will do something else in the meantime?

    I personally have been battling with “Bold Tickets” to get a full refund for the Yankee vs K.C. Royals tickets for the Tuesday June 10th game that was never played.  The boys were graduating on June 9th, so this was going to be special.  Instead, I have been double-talked by Bold Tickets, who are giving me 12 months to spend a $1500 “credit” to purchase a “donut hole.”  I will be reaching out to NBC’s “Better Get Baquero,” and let you know how that goes.

    If MLB is cancelled, think about the ripple effect for the support businesses and the ecosystems surrounding the ballparks.  Take the Yankees for example.  What happens to Stan’s and the other bars and restaurants surrounding the stadium?  What about tailgating, the vendors, memorabilia sellers and parking lot attendants etc.?

    The NHL (National Hockey League) has handled this the best, in my opinion.  Commissioner Gary Bettman has been in close contact with Dr. Anthony Fauci and all hockey games are being played in Canada.  They are being split between Scotiabank Arena in Toronto and Rogers Place in Edmonton.  Is this by accident, of course not!  They are unique because all of their support personnel are quarantining “in the bubble.”  Canada has handled Covid-19 much better than the USA and Rogers Communications has paid more money for NHL rights than NBC, which is why games are not being played here.

    I don’t see how the NFL (National Football League) has a fighting chance the way the game is played.  Both offensive and defensive lines are 2 feet apart and wearing a mask under a helmet will severely impact breathing.  Think about this. Fox Sports TV negotiated and put NFL MVP Patrick Mahomes and his Super-bowl winning Kansas City Chiefs into primetime for 6 weeks.  What happens if Mahomes decides to “opt-out?”  What type of quality football will there be? With the Washington Redskins and Canada’s Edmonton Eskimo’s changing their names, what happens to all their merchandise?

    This will all shake out over the next 2 months.  With New York State in a $16 Billion deficit, I see sports wagering and marijuana becoming legal very soon so the New York State can tax it! Hopefully, we get a vaccine and the 2021 sports season can get back to normal!

    I am very interested in your feedback regarding the Big 4 pro sports.  Feel free to reach out to me at Rob@InsuranceDoctor.us and Keep the Faith!!

  • 5 Reasons to Visit Northern California

    5 Reasons to Visit Northern California

    Since we are in the middle of the summer and a pandemic, it is not feasible for most people to travel overseas.  There has never been a better time to explore within the USA.  I recommend considering Northern California:

    1. Mount Shasta:  Beautiful mountain located between Redding and the Oregon border 3600 feet above sea level with hiking, museums, art galleries, and good cuisine.
    2. Sundial bridge: Built by Santiago Calatrava in 2004 this is the only sundial bridge in the USA.  It’s located in the turtle bay exploration park with a glass bottom, great trails, and a museum.  It’s a great stop if driving up to Vancouver and it’s also dog friendly.
    3. Pluto caves: These caves are not marked nor will you find them in any travel guide.  We were tipped off by a local and had an outstanding hike inside of them.
    4. Whiskeytown lake: It’s a reservoir in Shasta county and a big favorite of the locals.  Kayaking and all motorized boating are permitted.  Various levels of restaurants are available in the vicinity.
    5. In and Out Burger: My favorite burger chain.  Family-owned restaurants who unfortunately have stated they will not expand to the east coast.