Investment Resources for Members

Do you have questions about investing?  It's difficult these days to keep up with those Bulls and Bears.  Take a look at some questions commonly asked of our financial advisors.  We're sure you'll learn something.  We did!

If you have questions that aren’t asked below, give our advisors a call. They’ll be happy to help. Or if you’d like a bit more information than one phone call can answer, set up an appointment. It’s FREE and there is no obligation! Our advisors will sit down with you and review your current financial plan, or help you prepare one – all at no cost to you. You can meet in one of our offices, your home (if in the local Mid-South area), or any other public place of your choosing. Simply call (901) 266-5115.

Q.  Do you have any ideas on how I can start saving so that I can meet my financial goals?

Q. I have heard there is a new savings plan to help save for my child’s college education. What is it and how can I take advantage of it?

Q. I have been reading a lot in the paper about estate planning. Is this something I should consider?

Q. I am planning on changing jobs or perhaps even retiring. What could happen if I take my 401-k distribution at once, in cash?

Q. If I want some of the money from my 401-k, not the entire amount, what are my options?

Q. My spouse recently passed away leaving me his 401k. What can I do with it? Also, how do I know what investments have been made?

Q. I understand that I can borrow against my 401k. Is this a good plan when paying off debts?

Q. I am investing in a 401k, how do I know that I am making the most of it?

Q. How can my Tax Returns Help me Achieve my Financial Dreams?

Q.  Do you have any ideas on how I can start saving so that I can meet my financial goals?

A.  Close your eyes and visualize your dream vacation or the shiny new car that you’ve always dreamed of having. Sure, looks great! Unfortunately, for many of us the planning stops right there. With a little planning and discipline the likelihood of achieving our goals can be dramatically improved. Consider implementing one, if not all, of the strategies listed below to improve your financial picture.

• Write down your financial goals and objectives and include deadlines. This will help you stay focused. 
• Use credit cards as little as possible. Financing your lifestyle with credit cards is a trap. Reach for your checkbook instead. 
• Payoff your credit cards each month. A minimum payment on a $2,000 credit card bill at 18% interest will still leave you paying 19 years from now. The interest will cost you over $4,200 on the $2,000 charge.

Q. I have heard there is a new savings plan to help save for my child’s college education. What is it and how can I take advantage of it?

A. The newest weapon in the high-cost college arsenal is the 529 Savings Plan. This alternative offers several advantages that others (like Education IRAs, UGMAs and UTMAs) do not. The benefits may vary from state to state, but the following may be used as general guidelines:

• Unlimited eligibility requirements
  Anyone, regardless of age, may be named as beneficiary to the account. And if the original beneficiary does not attend college, a new one, who must be related to the first, can be named.
• Flexible contribution limits
  Anyone can contribute on behalf of a specific beneficiary, including parents, grandparents, other relatives and family friends. Depending on which plan is chosen, total combined contributions for each beneficiary can be as little as $25 or as much as $246,000. Individuals can generally contribute up to $50,000 of that amount in a single year. For married couples, contributions can be up to $100,000 without tax consequences, provided other financial gifts are not given in a five-year period.
• Tax-deferred earnings
  These plans offer potentially lower tax rates on withdrawals, as they are generally taxed at the beneficiary’s federal income tax rate, which may be as low as 15%.
• No income limits
  Investors can contribute to the plan regardless of their income.
• Controlled disbursements
  Benefits do not automatically transfer to the beneficiary when he or she reaches a specified age. The owner of the account controls all withdrawals, ensuring the funds are used for educational purposes.
• Unlimited choice of colleges
  Assets can be used at any accredited institution of higher learning in the United States, regardless of where the beneficiary lives. Accredited institutions may include colleges, graduate schools, vocational schools and other types identified by the plan.
• Choice of beneficiary
  Should the beneficiary not need the funds, or if an excess of funds remains after paying for college, the account may be transferred to certain specified relatives of the original beneficiary.

Of course, with any type of college-savings program, there are considerations. As mentioned above, each state has its own plan limits. Some states allow residents of any state to enter their plan giving access to higher contribution limits or for studies abroad. Assets placed in a 529 Savings Plan should be used for higher education as nonqualified withdrawals can be penalized up to 10% on earnings. And, in order to transfer the account, another beneficiary related to the original must be named.

If you have questions about 529 Savings Plans or other investment questions, please call us at (901) 266-5115.

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A. Developing a personal financial plan begins with accumulating much of the same data needed to prepare your income taxes. It is the perfect time to start on a financial plan. Taxpayers can use their income tax information to form the plan’s foundation.

1.  First, you will need lists of assets and liabilities, copies of tax returns, insurance policies, wills, trusts and pension plans. This involves getting a handle on where you are in your financial life before you plan for where you want to be.

2.  The second step in the financial planning process is identifying both financial and personal goals. The three objectives cited most often are security in retirement, providing for children’s education and developing an estate plan. While these are a little vague, they’re a start.

3.  The third step is identifying problems that might prevent financial independence, such as too little or too much insurance, a high tax burden, inadequate cash flow or current investments that are losing money. It is important at this point to have a financial advisor assist in developing a plan.

A professional advisor can provide objectivity and expertise. It’s hard for people to be objective regarding their own finances, and most do not have the financial experience necessary to make wise decisions.

4.  The fourth step is structuring a plan to meet financial needs and objectives, followed by implementation of agreed-upon recommendations. A financial advisor can help develop and implement the plan, but the decision to implement, modify or reject recommendations remains the individual’s ultimate responsibility. Many advisors provide a checklist to help clients implement their plans themselves.

5.  A final and often most important step is periodically reviewing and revising the plan to account for changes in personal and economic conditions. The advisor and client can then review goals and problem areas and fine-tune the plan as needed.

Be sure to check with your financial advisor how your tax return can serve as your starting point and progress report on achieving your financial planning goals. If you have questions about saving for your future or any investment questions, please call us at (901) 266-5115.

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Home Owners/Renters Insurance Benefits


True or False? Homeowners insurance is mandatory for anyone with a mortgage.
True or False? If you rent, your belongings are covered by the landlord's insurance policy.

All homeowners with a mortgage are required to insure their home, but not its contents. And if you rent, your belongings are NOT covered by the landlord's policy. That's why there is homeowners and renters insurance. Renters insurance is relatively inexpensive and covers all of the contents of your apartment. Homeowners insurance can cover a wide variety of items within your home, on your property, and even on your person when you're away from home. Talk with our partners at Collier Insurance. They can give you a no obligation quote and discuss just what items are or are NOT covered by your current policy and suggest what level of coverage may be best for your situation. They can also offer quotes on other personal insurance needs such as scheduled personal property or personal umbrellas. Don't pay more than you have to or get caught insuring items you don't even have! Collier can be reached by calling (901) 529-2900 or 1-800-511-1548.

The Facts of Life
(Insurance)


Simply put, life insurance is money that is paid to anyone you designate upon your death. A life insurance policy can be a very inexpensive way to replace your income in the event of your death. 

However, it is not an investment and should not be used to fund retirement or savings plans for your children's future college expenses. There are much better investment options for those needs. 

Do you need life insurance?
That depends on your answers to two more questions.

1. "In the event of my death, will anyone experience an economic loss or hardship?" If the answer to that question is "yes," then you're ready for the second question:  
2. "Do I care?" If you do, then you've determined that you need life insurance. 

How much insurance do you need?
 
Once you've decided that you need life insurance, you'll want to determine how much insurance you need. That, of course, is a very personal decision. A general rule of thumb is that you should have at least six times your annual income in life insurance.  But in determining what is best for you, you'll also want to consider other obligations you may have and whether or not you want to have them completely or partially paid for upon your death. Such expenses include your mortgage, outstanding debts and future college expenses for your children. There are dangers associated with underestimating the amount of life insurance you'll need.  If you have inadequate life insurance, your survivors may be unable to maintain their current standard of living without your financial support. In more extreme cases, your family may find it difficult to cover your funeral and other expenses that may arise as a result of your death.

Comparing Policies
No two companies will offer you identical term life insurance policies. That's why it's a good idea to think about which policy features are important to you. Here are some features to consider when comparing policies: 

• Guaranteed Level Premium
  ensures the premium you pay stays the same for the entire term of your policy  
• Guaranteed Renewable
  obligates the insurance company to renew your insurance policy at the end of its term 
• Guaranteed Convertible
  offers you the option to "convert" your term life policy into a "cash value" policy  
• Cost
  annual premiums will vary widely across policies   
• Availability of optional riders such as: 
  Disability Waiver Rider allows you to waive payments if you should become disabled 
  Accelerated Death Rider allows you to receive death benefits during your lifetime if you become terminally ill
  Child rider
  insures the lives of your children through your policy 

Since features vary from policy to policy, make sure you take the time to learn exactly what a policy you are interested in offers.  

How much does it cost?
Term life insurance is the least expensive type of life insurance. That's because you only pay for the insurance coverage - not funding and management of an investment as you do with cash value policies. Choosing term life makes financial sense since there are much better ways to save and invest than through an insurance policy. Exactly how much a term life policy will cost depends on a number of factors, including:

• Who you are - your age, sex and health  
• How long the policy will last (the policy's term)  
• The amount of insurance coverage you request

Click here for your no obligation quote on term life insurance up to $150,000. You can also get information on guaranteed term life insurance.

Are You Getting the Insurance Discounts You Deserve?


Did you know that many insurers offer discounts on policies if you show that you're safety-conscious and responsible? It's true. Check out some of the possible discounts available to you (varies by state and insurer) and be sure you're getting all of the discounts you deserve.

Auto

• Car's Make and Model. Whether it's the higher level of protection from injury offered by your car or the lower cost to repair it, the type of car you drive does make a difference when you go to insure it.
• Anti-Theft Devices. Alarms, "kill" switches and locator units like the LoJack are all items that may reduce your premium. Items that simply lock onto your steering wheel are not.
• Defensive Driver. Most states allow a discount to those who voluntarily enroll and successfully complete an authorized defensive driving course.
• Good Student.If you have a student on your policy who makes good grades, chances are you can get a discount. But you'll have to verify the minimum grade requirement - typically B average.
• Superior Driver.Most insurers award those who have an outstanding driving record automatically.
• Preferred Youthful Driver.If you qualify for the Superior Driver discount and have a young driver on your policy who maintains a clean driving record - no accidents or traffic violations - you may also qualify for this discount.
• Passive Restraints. Based on the safety system of your car, discounts may be available for airbags, automatic seatbelts, anti-lock brakes (for factory-installed system only), or combinations of the above.
• Student Away. If you have a student away at a school (boarding school or college) over 100 miles from home who does not have access to your insured vehicle, yet they are on your policy, you may qualify for a discount.
• Multi-Car. If you have more than one car insured by the same company, chances are there will be a discount available to you.
• Multi-Policy. And if you place both your auto and homeowners/renters insurance with the same company, you can also save.

Homeowners/Renters

• Protective Devices. By installing items such as smoke alarms, burglar and/or fire alarms, sprinkler systems, or 24-hour security guard, you may be able to save as much as 20% on your premium.
• Higher Deductible. When you increase your deductible, your premium typically decreases.
• New Home. If your home is less than 10 years old, you may qualify for discounts.
• Mature Retirees Credit.If you and your spouse use the insured property as your primary residence and you are both at least 50 years old, you may qualify for a special credit.

Not all states or insurers offer all of these discounts. Please check your current policy and check with your agent about which discounts you may qualify for. Or call our partner, Collier Insurance, and get a free, no-obligation quote. They can be reached at (901) 529-2900 or 1-800-511-1548. Let them know you're a Southern Security member and ask for a credit union insurance counselor.

Driving Discounts for 55+

Did you know that for spending just $8 you may be able to save up to 5% on your auto insurance? If you're at least 55 years of age you can enroll in the AARP 55 Alive defensive driving class. The class consists of two four-hour sessions. 

After successful completion (no, there is not a test!), you'll be awarded a certificate to present to your insurance company.

 Depending on the state where you live and your insurance company's policies, you may be eligible for an automobile insurance premium reduction or discount. The course helps refine existing skills and develop safe, defensive driving techniques. The course is renewable every three years.

For more information on the course or to find one in your area please contact our partner, Collier Insurance, and ask for a credit union representative at (901) 529-2900 or 1-800-511-1548. They'll also give you a free, no obligation quote on auto insurance, upon request!

Are You Prepared with Long Term Care?

Not Nursing Home Insurance but Asset Protection Insurance!

True or False?  Government programs will pay for any long term care need.  False. Medicare currently pays for 16% of all long term care in the U.S.
True or False?  Long term care costs only include skilled or acute nursing care in a healthcare facility.  False. 80% of all long term care services are provided outside a nursing home.
True or False?  About 60% of the U.S. Population will need long term care assistance at some point in their lifetime.  True.
True or False?  Medicare recipients are required to spend down their assets to poverty levels to qualify for assistance.  True.
Is that how you intend to spend your life’s savings?  In order to avoid that, you should consider long term care insurance.

But how much do you need?
In today’s dollars, a year in a nursing home can cost anywhere from $35,000 to $80,000 (the national average us $41,000 per year and Memphis area about $46,000) and home care averages more than $12,000 annually.  A long term care policy will help protect you and your estate against the catastrophic cost of long term care when an individual is unable to function independently due to a loss of activities of daily living or a severe cognitive impairment. Premiums are rated at the age of purchase and usually remain level.  Typically, they can only be increased on a class basis (i.e. all policies sold within a certain time period where claims incurred exceed premiums paid on a certain block of business). 

The bottom line is the earlier you purchase the insurance the lower the premium will be. Also, it will be easier to obtain the coverage. And the premium will be much more reasonable than the future uncertain costs of extended long term care!

For more information on long term care insurance offered through Member Resources, Inc., Southern Security’s wholly-owned subsidiary, please contact Jeff Lee at Collier Insurance at (901) 529-2900 or 1-800-511-1548.

Will Cancer Strike Your Family?

Did you know that cancer strikes one in every two men and one in every three women in the US*? Two out of every three families will be affected by cancer*. And while your major medical insurance covers most of the direct charges to treat cancer, such as hospital and doctor bills, it does not cover such things as: transportation to a non-local treatment center, loss of wages while caring for a family member, experimental treatment, extended at-home care or special dietary needs for the patient.

Southern Security now offers Member Care Gold, a cancer and specified disease program that pays benefits directly to you if you are stricken with cancer or one of 30 other dread diseases. This program goes above and beyond typical cancer insurance plans. Other benefits include coverage for chemotherapy/radiation treatments; organ transplant benefits; cost of airline tickets and hotel room for treatment at a non-local center; $100 per year for cancer screening exams [pap smear, chest x-ray, prostate (PSA) test, colon, etc.], plus 100% actual charges of mammograms (based on patient's age). And if that's not enough, there is no lifetime maximum on many of the benefits offered.

For more information on this cost-saving product, call our partner at Member Service at 1-800-537-9035 and request a complete information kit. If your company is interested in offering this product to employees (credit union members AND non-members), please call us at (901)452-7900 or 1-800-633-4128, ext.35 or email us at mycu@southernsecurity.org

SMILE With Our Dental Program

Q. How much do you think the average family of four spends each year on dental cleanings and checkups?

A. The average family spends $560 per year at the dentist.

Q. How often is dental insurance requested by employees?

A. It is the second most requested employee benefit. If your company does not offer a dental plan, we want you to know your credit union does! Through Member Resources, Inc., Southern Security's wholly-owned subsidiary, you can get dental insurance for $22 per month and cover your entire family (no matter how many children). That's an annual savings of almost $300! Individual plans are as low as $10 per month (less than $2.50 per week). There is a comprehensive list of participating dentists in the Memphis metro area. This program is offered to all Memphis-area members. For more information on this cost-saving product for your family OR your company, call our partner at Member Service, 1-800-537-9035 and request a complete information kit.