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If You’re Going to Borrow, Do It the Smart Way

July 11, 2023

Any time you borrow money, you’re going to pay interest and be subject to certain fees (like late payment penalties). No one wants to give away more of their hard-earned money than necessary, but sometimes a loan is needed. If you’re going to borrow money, follow these steps to do it the smart way. 


Check rates with a local credit union. Because credit unions are not-for-profit institutions, they often offer lower interest rates on loans and/or charge lower fees for services. Of course, if you’re not a member of a local credit union, you will first need to apply for membership. In many cases the benefits of a credit union membership are worthwhile enough that you should keep an account there just in case you ever need a loan. Do remember that in most cases, a higher credit score will be required by a credit union in order to obtain a loan. 


Apply for loans online. Applying for loans online is quick and easy, and allows you to efficiently compare rates, fees, and terms of repayment among multiple lenders. If you have less than stellar credit, you might also find more options this way. However, you might notice that you have less room to negotiate online. 


Use a 0 percent interest credit card. Many credit cards offer introductory periods, with 0 percent interest from 6 to 21 months. These offers can represent a terrific opportunity to finance a purchase without interest, if you know that you can pay off the balance within the specified time period. Of course, you might face very high interest rates if you miss a payment or fail to pay off the card within the introductory period, so make sure to plan carefully when using credit cards as a loan. 


Personal line of credit. A personal line of credit from a bank or credit union works similarly to a credit card, allowing you to continue using credit for a specified period of time. But because this option usually carries a lower interest rate than credit cards, it can be a better option. This type of loan works best for irregular, short-term spending. 


Always do your research. With any lending option, do your research before signing on the bottom line. Check interest rates, fees, and the flexibility of repayment options. And finally, check with the Consumer Financial Protection Bureau to see if an institution has registered complaints. These reviews will help you identify the possibility of unethical lending practices, like hidden fees and penalties. 


And of course, make an appointment with us before making major decisions that impact your long term financial situation. We can help you determine how a decision fits into your overall plan and identify additional options that could benefit you. 

Using Life Insurance to Protect Your Business: Key Strategies for Business Owners

February 11, 2025
As a business owner, safeguarding your enterprise against unforeseen events is crucial for long-term success. Life insurance offers several strategies to protect your business, ensure continuity, and provide financial stability during challenging times. Two primary methods are buy-sell agreements and key person insurance. Buy-Sell Agreements A buy-sell agreement is a legally binding contract that outlines the procedure for transferring ownership if an owner departs due to death, disability, or retirement. Funding this agreement with life insurance ensures a smooth transition and financial security for the remaining owners and the departing owner's beneficiaries. Types of Buy-Sell Agreements Cross-Purchase Agreement: Each owner purchases a life insurance policy on the other owners. Upon an owner's death, the surviving owners use the policy proceeds to buy the deceased owner's share. This method is often suitable for businesses with a few owners. Entity Purchase Agreement: The business itself owns life insurance policies on each owner. If an owner passes away, the business uses the proceeds to buy back the deceased owner's share, redistributing it among the remaining owners. This approach is typically preferred for businesses with multiple owners. Key Person Insurance Key person insurance is a policy that a business takes out on essential employees whose loss could significantly impact operations. The business owns the policy, pays the premiums, and is the beneficiary. If a key person dies or becomes disabled, the policy proceeds can be used to: Cover the costs of finding and training a replacement. Offset lost revenue resulting from the key person's absence. Reassure clients, creditors, and investors of the business's stability. This strategy is vital for businesses where certain individuals are integral to success, such as top executives, lead developers, or primary sales personnel. Additional Strategies Beyond buy-sell agreements and key person insurance, consider these life insurance strategies: Collateral Assignment: Use a life insurance policy as collateral for business loans. In the event of the owner's death, the lender is paid from the policy proceeds, preventing financial strain on the business. Executive Bonus Plans: Provide key employees with life insurance policies as part of their compensation package. This not only offers them personal financial protection but also serves as an incentive for retention. Deferred Compensation Plans: Promise to pay key employees a certain amount at retirement, funded through life insurance policies. This ensures the business can meet its obligations without affecting cash flow. Implementing life insurance strategies is essential for business owners aiming to protect their enterprises from unforeseen events. Work with us to explore your life insurance options and we can help your business remain resilient and continue to thrive.

What Happens If You Outlive Your Term Life Insurance?

February 1, 2025
Term life insurance provides coverage for a specified period, such as 10, 20, or 30 years. If you outlive your term policy, the coverage ends, and no death benefit is paid to your beneficiaries. As you approach the end of your term, it's essential to evaluate your current financial situation and consider options to maintain life insurance coverage if needed. Options to Consider Annual Renewable Term: Some term policies offer an option to renew annually after the initial term expires. While this allows you to extend coverage without a medical exam, premiums typically increase each year based on your age, making it a potentially costly option over time. PROGRESSIVE.COM Policy Conversion: Term-to-Permanent Conversion: Many term policies include a conversion feature, allowing you to convert your term policy into a permanent life insurance policy, such as whole or universal life, without undergoing a medical examination. This option can provide lifelong coverage and build cash value, but premiums will be higher than those of the original term policy. NEWYORKLIFE.COM Purchasing a New Policy New Term Policy: Applying for a new term life insurance policy can be an option, especially if you're still in good health. However, premiums will be higher due to increased age, and you may need to undergo a medical exam. Permanent Life Insurance: Alternatively, you might consider purchasing a permanent life insurance policy, which provides lifelong coverage and accumulates cash value. This option is generally more expensive but offers additional benefits. Exploring Alternative Coverage: Final Expense Insurance: Designed to cover end-of-life expenses, such as funeral costs and medical bills, final expense insurance offers a smaller death benefit with more affordable premiums and may not require a medical exam. Guaranteed Universal Life Insurance: This type of policy provides coverage for a specified age (e.g., up to age 90 or 100) with lower premiums compared to whole life insurance, focusing primarily on the death benefit without significant cash value accumulation. Take Action Now As your term life insurance policy nears its expiration, assess your current financial needs and health status to determine the most suitable course of action. Consulting with an insurance professional can help you navigate your options and select the best solution to ensure continued financial protection for your loved ones.
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