The difference between term and whole life insurance

The Difference Between Term and Whole Life Insurance

The difference between term and whole life insurance is a matter of time.

Specifically, Term Life Insurance is what we call “IF” life insurance, Whole Life Insurance is what we call “When” Life Insurance. Meaning that Whole Life pays into your 80’s or beyond when you would pass away as opposed to term life insurance which pays if you die prior to your statistical mortality when you are young.

The main difference between term and whole life is that term will pay in the unlikely event that “if” you die within the 20 or 30 year term of coverage you take out assuming that you took the term out in your 20’s 30’s or 40’s.

Whole life will pay “when” you are more likely to die in your 70’s, 80’s or beyond.

This is why there is a big difference in cost between term and whole life insurance, whole life will statistically pay and it is unlikely that the term life insurance will ever pay.

This is not to say that either is a bad investment. Term is crucial for anyone wanting to protect spouses and children against the loss of a primary income earner. Buy term and invest the difference is the motto of many financial planner and it is a good one. Buy a minimum of 8-10 times your annual income worth. It is cheap and well worth it. 62% of individuals say they need more life insurance, don’t leave your family unprotected. For what it costs it is foolish not to have term life insurance.

Some argue that term life insurance is a waste of money. Maybe so. But think of your family without an income or you to help them. Buy term invest the difference, or if you don’t like the thought of wasting money on something you are very unlikely to use consider a return of premium policy. This is a term policy wherein you get all of your money back at the end of the term, it is more expensive but some of them actually have decent returns for a guaranteed product.

Whole or permanent life insurance is more suitable for people subject to either the estate tax or in very high tax brackets, don’t buy whole life unless you are one of these individuals.

Go to http://termratequote.com/ for all of your term life insurance needs. They have great rates on Term Life Insurance and can get you covered quickly with a minimum of hassle.

If you need whole life insurance a 412 I Fixed Defined benefit plan or financial planning? Go to http://fpaspen.com/

Need a Life settlement? http://lifesettlementaspen.com/

If you are charitably inclined and want to know more about planned giving go to http://centerforplannedgiving.org/

Need Aspen Real Estate http://searchaspenrealestate.com/

TermRateQuote.com

Hello all, I am very excited to announce my new Term Life Insurance site, http://termratequote.com/

I think it is going to be great because it eliminates some of the confusion that many term life quotes have.

Most term quotes tend to be innacurate. Our site does away with that.

If you are looking for Term Life Insurance or the difference between Term and whole life insurance check http://termratequote.com/

Don't leave your family unprotected!

Frying Pan Fishing report

Hello all,

I Fished the mid section of the river this weekend and it is coming alive.. Midges behind prince nymphs or pts as usual flows are up but still clear. Do note that the Frying Pan River is one of the few rivers not affected (or affected much less severley) by runoff condidions during May and June. They recommend 7 X but I prefer 6X frogs hair as 7X just seems too small for the large trout that we have. It hurts my heart to leave flys in fish.


This particular Frying Pan River Fishing Report courtesy of Taylor Creek Flyshops

http://tayorcreek.com

Go see Will and the boys for great gear and advice.

April 28, 2009

UPPER FRYING PAN

FLOW: 219 cfsWATER CLARITY: Perfect! The water is clear and we are loving these flows! OVERALL RATING: 8.5 OUT OF 10 THE SHORT AND SWEET: It's all about the Baetis/BWO's right now. Look for good hatches to take place from noon up till 3pm. Small fluorocarbon tippets of 6X, 7X and even 8X are necessary. 6X and 7X is standard fare for nymphing on the Pan while 7X and 8X are needed for fishing dries especially in the soft/flat water. Flag Dun BWO's, No Hackle BWO's and CDC Comparaduns in sizes #20-#22 are ideal dry flies. Subsuface imitations should include the following: Poxyback Baetis, PT's, Biot Emergers, RS-2's and Barr Emergers. All in all, this is easily some of the best fishing in the West right now, plus the Frying Pan is very rarely affected by runoff conditions. If you really want to see just how good the Frying Pan is we strongly encourage you in joining one of our superb guides on this renowned tailwater.

FOOD SOURCES PRESENT: Midges (Gray and Black) #20-24, BWO's #20-22 (Gray,Olive, and Black) Mysis Shrimp (Clear and White) #16-20, Huevos (Yellow and Orange) #14-18, Sculpins/Streamers (Olive, White, Brown, Black) #6-10 IN DEPTH REVIEW: The fishing has been off the charts and because of that crowds are increasing especially on weekends. Keep in mind that 90% of the crowds will be tucked into the top mile or two below the dam, despite the fact that the remainder of the river is just as good (and probably even better). Look for most of your morning fishing to consist of nymphing the deeper sections of river. Small (#20-24) Baetis nymphs are best, with equally small Baetis emergers as droppers trailing behind. Keep in mind the Pan is a relitively small river, thus keep your indicator only about 4-6 feet above your split shot/weight. As the day progresses start focusing on fishing pocket water and below the riffles as the Baetis begin to get active. Right around the noon hour you should count on seeing plenty of fish up on the surface sipping BWO's and the random Midges. Just remember this, if the day is bright and sunny you will generally only find fish rising in any overhanging shade. Obviously, if the day is overcast.....well, count your blessings and enjoy fishing to hordes and pods of risers. After the hatch fizzles out concentrate on fishing deep again or going dry/dropper/dropper. The BWO's generally peak during late April and through May thus why the fishing is so good and only getting better. Egg and Mysis patterns are also effective. Eggs have been good throughout the entire river while Mysis have been fishing well in the Toilet Bowl and Flats. As always, don't rule out slinging some streamers when times are slow, or even for that matter at any time. Just be sure that you are covering water!

Appropriate Patterns Dries: Flag Dun BWO, No Hackle BWO, CDC Comparadun BWO, Para Quill BWO, Para. Emerger BWO, Sparkledun BWO, Spent Midge, Bills Midge Emerger, Hi Vis Griffiths, Sprout Midges Nymphs: Pheasant Tails, Poxyback Baetis, Barr Emerger BWO, Jujubees, RS-2's, Biot Baetis, Batwings, Johnny Flashes, Mojo Midges, Black Beauty Emerger, TC Red Midge Larva, Zebra Midges, Epoxy Mysis, Tims Mysis, Flashtail Hot EggStreamers: Tan and Olive Stingin' Sculpins, Black and Olive Slump Busters, Stingin' Clousers, Tan and Olive Ziwi's, EP Micro Minnow, Sculpzilla's, Mini Sculpins, Autumn Splendors Hints: 7X Tippet!!! For any of your dry fly fishing 7x is mandatory. At times, 8X will be needed if you are fishing flat water coupled with bright sun. Even when nymphing, we fish 6x going to our lead/point fly and 7x going to our dropper. For streamers, tippet size is irrelevant.

If you need a place to stay check with Kim at the Frying Pan River Rentals 970-379-4559 for great deals on fantastic Basalt Co vacation rentals, take a look at http://fryingpanriverrentals.info

Basalt Colorado Vacation Rental

Basalt CO- Frying Pan River rentals now offers a charming 3 bedroom 2 bath Basalt Vacation rental home for fantastic rates!

Listen to the sounds of the river in the master bedroom as you retire from your big day landing many fat rainbow and brown trout. Come to our Basalt Vacation rental property for either a fantastic Frying Pan river fly fishing vacation or a romantic getaway that is within 45 minutes of Aspen as well as the # 1 rated Colorado vacation spot of Glenwood Springs. Family friendly property has a trampoline as well as a swing set.

This property has unbelievable views, and it is private, quiet, yet close to Basalt for fine dining on par with Aspen but at prices that are more favorable. Gold Medal fishing for Rainbow and Brown Trout is just steps from the front door. If winter sports are more your bag, come on down, the property is within 45 minutes of 5 major ski areas including Aspen Mountain, Snowmass, Buttermilk, Highlands and Ski Sunlight. Additionally there are many opportunities for Nordic skiing as well.

Just 10 Minutes to Ruedi Reservoir where boating, water skiing and all the fun activities that a high altitude lake has to offer are including large lake trout. Hiking, biking, and mountain biking all await just out the door. Come relax with your family and/or friends.Several fantastic golf courses are in the area the closest of which is The Roaring Fork Club within 20 minutes, plus experience the cultural and culinary delights that Aspen has to offer with Food and Wine and the Aspen Music Festival.Book your Frying Pan River Fly Fishing Basalt vacation rental Home now by calling 970-379-4559 or go to http://fryingpanriverrentals.info

The Truth about Life Insurance

Myth: Cash value life insurance is a great investment for the masses.

Truth: Cash value life insurance has a very poor rate of return historically and an investor would most likely be better served in mutual funds or other investments.

Don't let a life insurance agent try to tell you otherwise. Cash Value Life Insurance policies for the most part have terrible returns. Again, for the average investor, cash value life insurance is a waste of money.If an investor is not high income earner and/or subject to the estate tax, all they need is term life insurance and they should buy term and invest the difference.

Another thing that anyone considering Cash Value Life Insurance needs to know is that the beneficiary only gets the death benefit and none of the cash value back. If the insured dies young and there is $100,000 cash value in a policy with a $125,000 death benefit the beneficiary gets $ 125,000.

So to summarize... There are three types of people who need three specific types of Life Insurance, and never buy any Life Insurance that is not right for your specific situation.

1. If you are a regular Joe – buy term and invest the difference. The mantra of financial advisors like Suze Orman and David Bach who preach to the regular Joe is “Buy Term and invest the difference”. Term is the right tool for this job. The suggested death benefit for most is 10-15 times income depending on age for working individuals, and 5 -10 times income for a non working spouse.2. However if you are a high net worth individual subject to the Estate Tax either now or in the future the most efficient wealth transfer tool available today is Guaranteed Universal Life Insurance held within an Irrevocable Life Insurance trust.

Simplistically put, when a Trust is drafted and the Beneficiary is the trust, the death benefit is then considered outside of the estate by the IRS, meaning the death benefit is not subject to the Estate Tax. If the Grantor is in good health Guaranteed Universal Life contracts from A + rated insurers are paying 10+% at statistical mortality. When the estate tax of 45% is factored in as well these contracts can be paying a very substantial rate of return that may reach potentially into the teens. These returns can be spectacular especially given the guaranteed nature of the contract.

The only drawbacks to this strategy are: 1. Grantor must pay premiums 2. The Grantor must pass away for the trust to collect. 3. Grantor must pay to have the trust drafted. Also do note for Estate Tax Mitigation purposes the Guaranteed Universal Life contracts we use have relatively little or no cash value especially at statistical mortality thus we avoid the cash value trap described above.3. Alternately, High income earners that own a closely held company may greatly benefit from a 412i Fixed Defined benefit plan. This is the sweet spot for the cash value life insurance. By the way this is the only sweet spot that this Financial Advisor can find for Cash Value Life Insurance; however it is a super one for investors that can take advantage of it. For investors in high tax brackets a 412i Fixed Defined Benefit plan allows the MAXIMUM tax deduction possible of any qualified plan, allowing investors to put up to $300,000 in per year as opposed to the paltry $6000 in an IRA.

$ 300,000 per year in qualified money?? What is not to like?

Well, what rates of return are these Fixed Defined benefits going to pay? That depends on the insurer , and the insured’s health, however expect 3.5% to 4.5%.

Not too exciting you say?

Hold on a moment, keep in mind that much like the Estate Tax issues that high net worth individuals can mitigate by taking out Guaranteed Universal Life Insurance policies inside trusts the Tax man makes investing in 412 i Fixed Defined benefits a very profitable endeavor by avoiding paying taxes until withdraw. You will have to pay taxes eventually barring you use your qualified assets to pass to charity through planned giving. Do keep in mind that this is a guaranteed investment which is subject to the viability of the insurance company, however, the main benefit is the fact that the IRS allows such HUGE qualified contributions.

How most 412i Fixed Defined benefit plans work is a combination of a Cash Value Life Insurance policy with a Fixed Annuity. One other nice thing about these is the fact that they are much easier to administer than a standard Defined Benefit program as the returns are fixed and there is no chance of over or under funding. The exit strategy is clear, rollover the funds into a traditional IRA within 4-6 years, thus avoiding cash value trap described above.

The result? The investor sheltered up to $ 1.8MM in a qualified tax environment at positive (albeit conservative) rates of return to rollover into a traditional IRA after six years…

Yes, Cash Value Life Insurance is a terrible investment for most. However for investors with either a substantial estate subject to the Estate Tax or who are in a high tax bracket with a closely held corporation may want to seriously consider the appropriate type of Permanent Life Insurance. Due to IRS regulations it is hard to go wrong!

For more on life insurance or if you are not a regular joe and you need insurance call 970-925-9600

Or check online at http://fpapsen.com or http://forlifeinsurance.info

This is neither tax nor legal advice. Please consult your tax or legal advisor.

More Frying Pan River Fishing reports

Nice, after work I went out to Fly Fish the Frying Pan river. I fished pt’s and a red emerger midge dropper to no avail, with the ensuing darkness switched to the ubiquitous pink worm. Four casts later…… boom the hit. Thinking I must have butt hooked a decent fish as he is taking me upriver at a swift pace straining the tenuous 6x. hmm really far upstream into the rapids powerful sloping back coming out in the shallow spots, then the brief look……. yee haw big powerful bow. This one is worth bringing in. So imagine me in Dockers sweater and dress shoes slogging upstream through rapids trying for the better part of 15 minutes to land this beautiful specimen. Finally he tires and I manage to get him in, from the tip of my finger to my elbow in length and nice girth with beautiful coloration, and most importantly POW right in the kisser! One of the best non Taylor fish I have ever caught. Can’t wait for office run at lunch tomorrow.

Lunch the next day was fairly productive with about a 16" bow on copper midge emerger. But still somehow shockingly hungry!!! Imagine that.

Later an overcast blustery spring evening, the water is up and a little darker. Office run has its usual tree menace, as well as more than its share of rig problems. The trout however are rapacious devouring C.E.’s with a vengeance, two on in an hour, but one takes the opportunity to run me downstream into some sticks escaping unscathed by spitting the barbless hook after couple of good runs. The other, a bruiser of formidable size reminds me to check my knots before every session and escapes with $2.75 worth of facial piercings much to my (not to mention his) chagrin. Heading back to check the fax machine for Donnie deadbeat’s credit report I revel in the blessings of life!

Welcome to Colorado, frigid micro blizzard conditions gives way to sun and cold. Erie yellow spooky death light. Fishing is spotty with a definite increase in flows, and the water very cold. Fish spotted but the dreaded skunk on the day. I might have to go back out in these suckey conditions, I don’t know what hurts more me hands or I pride! The neighbor’s kids eye me suspiciously as I jump up and down from the cold, they don’t particularly care for my love of my new found hole. East coast bastard cold, god dammit!


One must take a day off here and there or even the funest activities can seem like work.
My fly and rig habit Is becoming large enough to fund food and medicine for the whole 1st grade at an elementary school in the third world. Good luck today however as the skunk snap is broken 2 good bows on a 14 gold ribbed hare’s ear fished wet and one on a cue. Did a little surgery on the last nice 18 in bow that fell for the ear, the jewelry seemed fairly fresh and was barbless with about 12in of 5x tailing. Does not make me feel so good about the few long distance releases of late. Hmm wedding crafts or fishing? What would any sane angler do with 1 hr left of daylight! Nice day little windy though.

After fishing the pan for the last week or so I moved downstream catching a couple through motel flats. Damn you forget how powerful the big water is. Working down to the main bridge a hook something… you forget the large effect that the heavy current has even on smaller fish. Spring is here and there is storm clouds of Baetis, not pesky or murderous like the bugs in Alaska but like soft malleable clouds of flying trout food. The other telltale sign of spring is the heavy bodied rocky mountain white fish that festoons my line somewhat like a grocery bag half full of water. Not fighting like a trout, but a load to bring in anyhow.

Success with something new prince nymph in size 14, also secret weapons the new highly touted super nymph seemed magic today. One fish jumped three feet in the air. More smaller browns today with one good rainbow. Tired and going home but one day closer to the 100 water days

Fished four rivers Friday, including Pan, Fork Crystal, and The Gunnison. Gunnison early sat. Was productive with streamers... North Platte specials (cone heads) big buggers copper and black. Hares ears and micro black midges were the order at the east portal below the roller dam. Cross below roller dam and hang on to your ass. Went for a nice refreshing Giardia chocked swim later in the day. Dude on the bank says “I’ve seen some other people swim there but you’re the only one I've seen made it!” I reply I was all state in high school, choking and spitting water. Partner JW falls over laughing. Sunday morning tied into monster bow fishing with Size 4 Space Invader on a sink tip on a downstream he spat me with two super spectacular upstream jumps. Jw is impressed and highly motivated. Hiking and wading is murderous, with dislocated knees and ankles a distinct possibility. Keep moving downstream on the far side to the up and over we go ‘up’ but not over as time and water are both tight and my knee is throbbing like mad. Good camping right before it gets ugly boating wise, before the up and over. If one had a jet boat or raft with motor it would go. Tried to go fish the north fork and the smith fork on the way home but neither had any water in them. North fork was silty tepid cesspool; smith fork had promise at Crawford but no water.

If you need lodging for fishing the Frying Pan River check with Kim at Frying Pan River Rentals 970-379-4559 or aspenbroker at gmail dot com she has a great place for rent or check it out at http://fryingpanriverrentals.info

Frying Pan Fishing report

Howdy all,

I fished the Frying Pan this weekend. Good luck mid river with small midges under a Prince Nymph.

6X fluro delicate presentation yielded a couple of nice rainbows.. Weather was a bit crappie though.

Skiing is GREAT still, just wish that the areas were open!!

But if you want to earn your turns, it should be good still, we got eight inches at Snowmass last night (the day after closing) I think that Highlands still has almost a 100 inch base.

Going up tomorrow, will advise.

If you need a river or ski in ski out property check http://searchaspenrealestate.com

Eulogy to Derek Reese

All,

Recent events around the shocking death of Derek Reese have come to make me appreciate life more fully.

At any time any of us can be cast off like a Red Shirt Extra on Star Trek. Why the senseless nature of his death? Just a hollow feeling and most likely a cancellation. Wait, did that just happen like I thought it did? Bummer.

B.A.G. did a great job with the moody dark introspective character that was definitely a must watch. Unceremonious BS.

Speak out, let the world know that this senseless abhorrent tragedy could have been prevented!

Check out my site Financial Partners of Aspen if you have Life Insurance or Planned Giving needs or if you need Aspen Real Estate go here

Obama and the estate tax

Take a look at this post in the WSJ.

Qutoed from the WSJ

"President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010, suggesting the levy might outlive the "Death Tax Repeal" movement that has tried mightily to kill it.

The Democratic stance on the estate tax contrasts with Mr. Obama's reluctance to press forward with his campaign pledge to raise income-tax rates on top earners, which he worries could have an adverse economic impact during a recession.

But Democrats are determined to act quickly to prevent the estate tax's scheduled repeal. Elimination of the levy on big inheritances was approved by Congress under President George W. Bush in 2001, with rollbacks phased in slowly and its full elimination slated to take effect next year.
The Senate Finance Committee will move within weeks on legislation to reverse that law, and Mr. Obama is expected to detail his estate-tax preservation proposal in his budget next month, congressional tax writers said.

Under the Obama plan detailed during the campaign, the estate tax would be locked in permanently at the rate and exemption levels that took effect this year. That would exempt estates of $3.5 million -- $7 million for couples -- from any taxation. The value of estates above that would be taxed at 45%. If the tax were returned to Clinton-era levels, it would exclude $1 million from taxation with the rest taxed at 55%.

In making their case for the restoration, Democrats contend that such a large additional tax break for the rich shouldn't go into force halfway through Mr. Obama's proposed economic-recovery package. They argue that the deficit is already in record territory, while their plan wouldn't have any impact on the economy since it would merely keep the estate-tax rate at its current level. Mr. Obama and his party also say that the affluent already have benefited handsomely from the Bush tax cuts."

I would not be suprised if we saw the 1MM threshold put back into place. The government needs money, badly..

For more on the exemptions, exclusions and more information on the estate tax head on over to http://centerforplannedgiving.org/

Guaranteed Universal Life Challenges!

Gee whiz...




Working as an Aspen insurance broker doing high level advanced estate planning utilizing guaranteed universal life insurance in Aspen Colorado sure can get complicated!




I recently worked on a fairly large replacement policy for an out of town client that is substantially cheaper than the original policy by reducing the death benefit in addition to better health ratings. The initial insurance co that shall remain nameless has stated to me that they will not allow the insured to surrender their policy to less than 65% of the current face value. Zoinks I said, that was not in the original contract, nor was it ever represented as such to either the client or myself, "well that is company policy", policy my behind! If it is not in the illustration you can not force the insured to abide by it, a contract is a contract.






The new coverage is thousands per year cheaper and the investor needs far less coverage than previously because of significant market declines in the estate.




Said insurance company got a heavy duty earful from me and my team and the matter has been escalated then satisfied and now all will be safe for democracy in the land of skiing, fishing and snow sports, Aspen CO!



Have a great one. I will advise and check out The Center for Planned Giving also look for another article in the Aspen Times shortly.

BIG Powder at Snowmass!

Great Day to be alive.

18 inches of fresh powder really revitalized the waning ski season here. I managed to ski Snowmass with out of town clients most of yesterday and really showed them a good time.

Garrets gulch, Powerline, and a host of other runs were spectacular.

Today back to focusing on helping others with financial guarantees. The market is really tough despite the recent bounce, with huge dividend cuts the fixed income set is suffering greatly. Hoping for a rebound in banking and a couple of other sectors, but news continues to be grim..

Question, do you think that advisory or fee only advice is going out the window with this market. Who wants to pay 1% to loose 40%??? People say annuities are expensive. Not really compared to 40%!!

Call me if you want a guarantee on your money.

Stay safe, be well, diversify and do not pay an IAR 1.5% to watch your money go away.

Published in the Aspen Times

I am kind of proud of my article that was printed recently in the Aspen Times on Feb 24th at http://tiny.cc/d1Eso check it out. I think that it is pretty great. Also you could check out my press release at http://tiny.cc/sM7lT

Things are going well with several large cases pending. Also selling a lot of annuities... A 7% compound interest guarantee seems like a lay down in this market.

Hope things are good with you.

Skiing is going away at a rapid clip, trying to do a hut trip this year but may or may not pan out.

Fishing season is upon us! I will keep you posted.

Sleds to the moon

Hey dear readers,

Have you ever watched anyone flip not once but twice a 450 pound machine? At the X games I was amazed and thrilled to watch these young whippersnappers do all manner of flips with snowmobiles sometimes even landing with no hands!!

Amazing. If you can ever see it live it has a much more guttural feel to it than watching on TV.

http://searchaspenrealestate.com

Commercial Lending Blues

It is too bad that commercial loans are very hard to get now. I am hearing of 6 to 8 month turn times and if you dont show enough income to personally qualify (even if the income off of the business is great) you may have a very hard time getting a loan, especially if you need $ 30MM.

However, I am still having sucess with very well qualified buyers on the commercial front but gee whiz it is hurry up and wait then wait some more, oh and wait some more. Hopefully it will loosen up shortly however I dont have a whole lot of hope as stated in previous posts banks are just using TARP funds for CY-ing their A. Mostly.

All for now, check my commericial lending site at http://commercialmortagebrokerage.com

It may have some interesting stuff on it to keep you busy thinking about.

Banking system problems

The following quote from Bridgewater Associates succinctly puts the current problems that we are having in focus.

"The root problem is that debts that were incurred to finance assets at high price levels remain in place at their original amounts even though the assets that they financed are now worth far less. Debt that was incurred to finance extrapolated high incomes remains in place at its original amount even though incomes are now much lower. And, debts that were incurred to finance loans remain in place at their original values even though the loans that were made cannot be repaid. Until the debts are brought in line with the assets and the income, there is no moving forward no matter how much liquidity is provided or how eloquent the speech. And, until this happens, the self-reinforcing nature of the debt squeeze will only reduce incomes and asset values further.

"There is no easy way out of a debt restructuring. Someone will have to bear the cost of prior bad decisions. The people who should bear the cost are those who made the bad decisions to make the loans or those who financed the people who made the loans. They intended to profit and would have profited if they were right. But they were wrong, so they should lose. The government needs to allow the losers to lose and focus their actions on minimizing the knock-on effects of their failure on people who didn't do anything wrong (to minimize systemic risk). They should then take action to minimize the future exposure of the innocent to the future dumb decisions of the small minority, because no amount of regulation will ever eliminate dumb decisions, so you have to plan for them (through much lower bank leverage limits to cushion losses, bank size limits and non-bank entities playing bank-like roles to improve diversification, safety nets to prevent losers from poisoning the whole system, etc.)."

I really do like the part about there being no regulation possible that will eliminate dumb decisions. The government needs to be very careful to not overstep and cause more problems than the market has created already.

Banks shoring up their balance sheet with TARP 1,2,3,4 will continue to act in their own best interest which includes NOT LOANING money. Regulators are all over them, and they need to save their money as a hedge for future defaults. How to fix it, I do not know for sure, however as my first post alludes to and explains, the free money party went on for a long time and there is going to be a whale of a hangover for those that drank the most at the liquidity fountain of the FED's creating.

Cheif of Police

You know you live in a small town when the chief of police is also the crossing guard for the elementary school.

Hmm do you still think oil $USO is too low, I do. I am a buyer.


One geopolitical shock away from $75 or $ 100 a bbl.

Madoff and his paid blog

Do you believe this, our buddy Bernie Madoff has his blog as a paid spot with google!?!?!

http://bernard-madoff-scam.blogspot.com/

Hello...

He has many hits and is also selling ad space, anything to make a buck!

Obscene.

Why annuities make sense in this market

What recent events have reinforced to me is that you want to diversify your holdings if at all possible, and generally try to stick to what works. Hedge funds were hot as were some local money managers, however in all but a very few cases this market has humbled even the most veteran traders… How the mighty hath fallen. So what does that leave us, where do we turn?

Treasuries at 2%? Do you want to investing in an entity (the government) that is overburdened, overleveraged, printing money at an absurd pace, miss-stepping, and frankly I believe posses significant credit risk ? If I ran my personal financial situation (or yours) like they do I most likely would be put in Jail.

CD’s at the bank? Again 2% to maybe 4% at best if you give them a lot of money and they like you (IE you give them a lot of money.)

Savings or money markets? Same deal at 2% plus these are starting to have credit risk as well, not to mention that you only have a 250K guarantee.

Munis ? Laddered munis can be attractive especially for the high tax bracket investor, but credit risk is seeping in there as well, tax equivalent yields can be OK here, but many of us are a bit light on the income currently thus in a tax bracket that does not indicate the use of Muni’s. I belive interest rates are going to go up, and that they are being held artificially low. Demand destruction in Treasuries from lack of Chinese and international purchasers will eventually take its toll. Muni’s carry both interest rate risk as well as credit risk currently.

So what is the solution for the Aspenite on the go without time to be constantly glued to the depression channel (CNBC)?

For many a good solution to consider may come in the form of Annuities, or for those of us still lucky enough to be in a high income tax bracket, Fixed Defined Benefit plans.

I know, I know, some annuities blew up in the 80’s. Well so did Ford Pintos and you probably own a car now, correct? The contracts that we have today generally offer several types of guarantees, most of which can be combined in one fashion or another, this is in addition to the intrinsically attractive tax deferred nature of annuities.

Three of which are the most common, Living benefit or income guarantee, Death benefit guarantee, or what is called a step up.

With a living benefit the annuitant (you) gets a guaranteed rate of return for some period of years, usually 10. Some of these can guarantee up to 7% simple interest, net of fees. The flip side of this is you are required to give them your money for a period of several years, if you take your money out there will be penalties and fees, also note the IRS will asses a 10% penalty if you remove this money before age 59 ½. So they are not short term or liquid investments and the primary risk is the insurance company going out of business. You can take this money out for your use during retirement or use as a Living Benefit.

The death benefit is structured very similar however the guarantee goes towards a death benefit as opposed to an income benefit. People who choose this option are attempting to maximize death benefit and are less concerned with income.

How a step up works is like a floor under your investment. IE if you put in 1M and your account goes to 1.5 that is your guaranteed withdraw benefit. If it goes down to 900k 1.5 is your guaranteed withdraw benefit.

I will cover Fixed Defined benefit programs in a later submission, but for now what they buy the high tax bracket investor is guaranteed returns with maximum tax deductions, some times as high a 200-300K.

The primary knock against Annuities is their fees which can be up to 3% depending on how many bells and whistles you put on them, however most guarantees are net of fees, so you really only get dinged in years where you make more than the guarantee. Also they can be complex and do have risk as aforementioned, but all in all I believe that they are suitable for many investors who want a decent rate of return with a guarantee on the downside.

Drew Kitchell is an Aspen Local Financial Advisor and can be reached at dkitchell at FPaspen.com or his blog about things Aspen and things financial is at http://www.resorttownblog.com/

Twitter: resorttown

Looking for Aspen Real Estate ... Check with my wife at http://www.searchaspenrealestate.com/ or aspenbroker at gmail.com

More on Whole Life Insurance, Life Settlements and how to play the game.

What is a Life Settlement and why would I entertain the process?

Given recent and ongoing market corrections, various Ponzi schemes like Madoff, and a general unwinding of “the Wealth Effect” many people are looking to generate cash from current assets.

Also given the real estate and credit markets are virtually frozen especially at the top end Aspenites may conclude that they few options for generating cash outside of traditional means.

However one asset that many may over look is a whole Life Insurance policy.

Historically, an individual had only three or four options if they either no longer wished to pay premiums or wanted cash out of a policy that they held.

1. Surrender the policy for paid up – Call the insurance company and ask them what amount of death benefit you could get from the premiums that you have already put in.
2. Surrender the policy for cash value – Contact the insurance company and ask them to give you all of the cash value in the policy and discontinue the death benefit. This can be fairly disastrous with some policies especially the Guaranteed Universal Life type of contracts that we use for Estate Planning purposes that favor death benefit over cash value. Many times these policies will have a very small cash value as a percentage of death benefit.

3. Allow the policy to lapse – This would be just discontinuing premiums without contacting the insurance company. This is the reason that insurance companies have some of the largest buildings in the world. See item 1 or 4; surrender your policy for paid up, or have it reviewed as opposed to this option.

4. Lastly you can talk to a good Life Insurance broker and use the cash value in your policy to get substantially more Death Benefit from your current Whole Life Insurance policy. The fundamental reason this is possible is that people are living longer. Much like a refinance on your home if you have a policy that was issued before 2001 when the government mortality tables were revised you can have your contracts reviewed and get much more coverage for the same or less premium than the previous contract. By way of example, consider client who had 1MM in coverage with several policies that were taken out in the early nineties. For the same premium plus the cash value in his current contract, (subject to health underwriting) I could get him 2 MM in coverage. If he decided to discontinue the premiums I could still get him about the same amount of coverage that he would have currently.

However, now a new option has presented itself. A secondary market has developed for Whole Life Insurance. Hedge funds, institutional investors, and a variety of people who wish to make a good rate of return may purchase your policy for substantially more than your current cash value. So now your whole life insurance policy may have a current fair market value that can be determined by using a broker to submit your policy to multiple investors.

Do keep in mind that there is one type of Life Settlement that has somewhat of a shady element to it. Some of my acquaintances about town have been solicited by out of town concerns for Life Settlements wherein the owner or insured applies for a large insurance policy and finances the premiums with non recourse premium financing at application for the insurance. This is done with the intent of selling the policy up front. Keep in mind that the application for insurance has multiple questions regarding the sale of the insurance and that you as an insured could potentially be in some hot water if it is subsequently found out that your application had material misstatements on it. If you are involved in this I would ask to see a copy of the application that was submitted to the insurance company. It would be my recommendation to play it straight and apply for your policy initially for legitimate Estate or Wealth transfer purposes.

Drew Kitchell is an Aspen local Financial Advisor, he can be reached at dkitchell@FPaspen.com or his blog about things financial and things Aspen is www.ResortTownBlog.com

Twitter is deeply symbolic of what is drastically wrong in our culture.

Abominable barfing of 140 bits, gaarrrhh. I am much more attuned to Old fashioned blogging as opposed to barfing 140 bits of info at a time... Don’t get me wrong I follow a few, upsidetrader, cpzimmerman and a couple of others.

But I really just don’t get it…

I get facebook and their little update section, but that to me is intrinsically social as opposed to twitter which still seems to me to be vaguely for profit. Plus I have the added benefit that they are somewhat thought through and well stated on facebook.

I don’t have to see everyone’s intimate thought de jour o de momento de cryptico updated in real time every moment. I guess I just value my time too much.

I am sure traders are using it as a great kind of binary hyperactive digital wakie talkies, but I am not possessed of the type of bandwidth required to be a successful a super active type of day trader and I just can’t seem to follow. Call me Old Skool, thanks but no thanks.

Maybe it is because my mom is an English teacher, but mark me words sompin just aint right in twitter town. Git down.

Why Life Settlements??

Given current state of the markets well docu-drama -ed in the current hyper negative global press, many people are looking to generate cash...

Madoff in Aspen, huge losses in the market, commodities plunging, real estate market virtually frozen especially at the top end.

So some are looking to save money or sell assets that are either costing them money on a cash flow basis. One of these assets is a whole Life Insurance policy.

Historically, Life insurance policy owners, after paying premiums on their life insurance policies for many years, have traditionally had only three options if they decided to discontinue their policies:


1) allow the policy to lapse;

2) offer the policy back to the company that originally issued it; or

3) exercise the policy’s non-forfeiture options.

Now we have another option – a life settlement – that is available through a secondary market for life insurance.


Here are a few reasons why this may make sound financial sense for your clients:

· Policy premium cost has become prohibitive

· Policy performance is not meeting projections and may require increased premiums

· Primary beneficiary named in policy predeceases the insured

· Policy owner is now divorced and the beneficiary was his/her spouse

· Corporate buy-sell agreement established, now one of the partners has died or retired

· Retirement of a key executive from the firm that insured his or her life

· Level term policies in which the conversion period is expiring

· Term life insurance costs have increased beyond affordability

· Insured’s estate has been reduced in size and thus one’s tax burden has been reduced

Or you may simply wish to generate cash instead of paying premiums.


Call me if you wish to ascertain a market value for your whole Life Insurance policy in a Life Settlement. We will shop your policy as many investors are available for your type of policy and get you the highest dollar on your policy possible.

If you need these or any financial products and or advice I am your man… Life Insurance, Estate Planning, Asset Protection, Life Settlements, you name it. Let me know http://www.fpaspen.com/ or resorttown at gmail.com

If it is Aspen Real Estate, foreclosures or short sale you seek, look up my wife at http://www.searchaspenrealestate.com/ or aspenbroker at gmail.com

Pilota...

No Fear and Loathing in Aspen….

As a financial advisor who has been in the unique position of seeing the subprime bubble firsthand from the driver’s seat with a mortgage brokerage I have some insights that may be worth your reading pleasure. As property prices rose astronomically in Aspen and to some degree elsewhere from 2002 to 2006 spectators marveled at the appreciation that was to be had for insiders and others in the know or who had the resources to accomplish flips, developments and other various property based plans and schemes. With the recent unwinding of the credit markets and frozen nature of the top end real estate market those left holding the bag when the music stopped have two questions? 1. When are the credit markets going to unfreeze (i.e. when can I get a loan) and 2. When is the market going to come back or (when can I sell my property.)

The answer to number two is obviously linked to number one. The answer to number one is complex and has varying shades of grey. If you can prove enough income to qualify then maybe you can get a loan, if that loan is not too big. If you call asking for a stated income (i.e. no tax returns) loan, with cash out for 5MM dollars you are out of luck. Especially if your project is a spec build. At a recent meeting I was at the question was put forth “when will it come back?” A bank exec of some local note replied, “Well last time it took 20 years”.

To find answers regarding the future we need to look at the past, what caused the run up and why are at where we are today. It started one day in 1987, when the most powerful man in the world came to power. Alan Greenspan. In a nutshell, to create economic prosperity he used several tools, deregulation, obfuscation and artificially low rates to create the largest bubble in the history of the world. I call this the “free money party” I am over simplifying here but continue to follow along. In concert with Fannie, Freddie and HUD the free money party began to escalate. Let’s print more! Great how do we do that? Well, we get people to sign notes, just like the note in your wallet; it has no meaning other than now that you signed it, that money is created. Prosperity abounds!! Well, we are running low, let’s make some more money, well let’s lower interest rates so that we can invent some more money. Everyone is happy now.

Now we need more money to give to the people to invent more money and have more prosperity. How about a secondary market to recycle this money so we don’t just have to print it all. Spectacular!! Move it - shake it - slice it - dice it. Don’t know what you have in your portfolio Mr. Investor or the pension fund of the State of South Carolina, don’t worry about it is backed by REAL estate, no worries. Well what if the people signing these notes can’t exactly qualify for the freeee moneeeey that we want to give them…Hmmm let’s see, lets state their income!! Brilliant!

Many people blame “stated income” – I received an email from a realtor chastising me stating that “this was what got us into this mess in the first place”. I did not reply, however I thought it amusing that this individual had made his living for the last 30 years in a place where the appreciation was fundamentally solely driven by loose lending policy, stated income loan qualifications , and the Greenspan “free money party” mentality.

However stated income has its place. I have clients with a net worth of 350MM Dollars that have a net negative tax return. Many of our self employed builder developer’s realtor financial guys have to use stated income as they write off a substantial portion of their income. By way of example I have a builder, he sells 2 - 4 homes a year in the midvalley so he is looking at 1.5 to 2M in revenue, but with his costs he really has a difficult time qualifying for a loan, even one under 417K. What does this tell you? That if you are a developer and need institutional financing and you are not a top tier concern, better look to self finance or find a new line of work. More later.

If you need any financial products and or advice I am your man… Life Insurance, Estate Planning, Asset Protection, Life Settlements, Fixed Annnuities, Variable Annuities, you name it. Let me know http://www.fpaspen.com/ or resorttown at gmail.com


If it is Aspen Real Estate or foreclosures you seek, look up both properties and my wife at http://www.searchaspenrealestate.com/ aspenbroker at gmail.com