Group benefits are important but not cure-all

When people select insurance coverage often they are fortunate enough to select from options available to them at their or their spouse’s workplace.  Group benefits are great opportunities to provide protection to you and your loved ones via health insurance, life insurance, disability insurance, and even long term care (LTC) insurance.  If some or all of these types of insurance are available to you in a group benefit setting you need to take the time and consider all of the options available to you for a couple of reasons. Group benefits often have limited or even no underwriting when it comes protection like life insurance and LTC.  Why is this important you may ask?  In the individual sales market, life insurance and LTC insurance is fully underwritten, meaning the insurance company can look at your health and charge you more for desired coverage or even deny coverage entirely.  It is this less restrictive access to benefits that makes group life and especially LTC coverage a necessary consideration in your overall risk management portfolio.  Also because group benefits spread the risk out among many employees, they are more than likely more affordable than comparable individual benefits.  However nothing is perfect. More often than not when the person carrying the insurance protection leaves or is terminated from employment the group benefits are no longer available.  Sometimes ownership of life insurance or LTC polices can be transferred and the insured would take on the full burden of premiums if they didn’t pay it all already.  What’s the problem with that you may ask?  Let’s say having life insurance on yourself is important to you.  You have access to affordable group life insurance and take it out on yourself.  Unfortunately your company has to downsize its workforce and you are let go.  During the time you were employed you were diagnosed with diabetes.  The life insurance on yourself at your old employer is not… | Read More »

Risk in the stock market has increased

For those who follow the stock market on a daily basis, there is no denying the risk profile of the market has increased.  We believe the chance of a five to 10 percent correction in the S&P 500 has increased.  However, if it does occur it will just serve as just a temporary and overdue correction in an extended bull stock market. Why has the risk of a correction increased?  It all starts with valuation.  Over the past 10 years, the S&P 500 Index has traded at an average price to next 12 month’s earnings per share ratio (“P/E”) of approximately 14x.  Currently, the S&P 500 Index trades over 15x on this P/E valuation multiple.  Thus, stocks appear a little expensive.  Typically, the current small size of the S&P 500 P/E premium to historical averages would not worry us as long as the fundamental tone of the market remained strong.  However, there have been a few chinks in the armor that warrant attention and perhaps will constrain further P/E valuation multiple expansion in the S&P 500 and potentially increase stock market volatility. What are the potential concerns?  First, the Russia and Ukraine escalating tension is causing stress in the marketplace.  The United States and Europe have placed economic sanctions on Russia.  These sanctions increase the risk of negative economic consequences in Europe.  Given recent weaker economic data signals out of Europe, the threat of an increased negative economic impact from the sanctions is cause for some concern.  Secondly, the United States has recently shown some initial signs of inflation picking up.  This is a potential concern because it could move up the Federal Reserve’s time frame for increasing interest rates.  Any sign the Federal Reserve might increase interest rates earlier than the market assumes is a negative for the overall stock market. How has Winch Financial changed its portfolio positioning given the new risks highlighted?  Recently, we raised some cash… | Read More »

It isn’t easy to retire, just ask Brett Favre and the Packers

Of all the lessons in gracious conduct including painful mistakes and sweet amends that the Packers and Brett Favre taught us during these past few years, one of the most obvious is this: it’s really difficult to retire. Once viewed as the golden years, a time for sunset walks, daily golf games and afternoon tea, retirement for today’s American worker can be fraught with peril. As appealing as it may seem when the alarm clock goes off in the pre-dawn hours and you haven’t slept well due to work stress, retirement can cause even more anxiety, especially if it hasn’t been well-planned. The first question you need to ask yourself before you consider retiring is, what do you intend to do with your time? Many people wrap their whole identity in their job title, and waste time floundering for the first few years of their retirement because they have nothing to do. Take some time to envision your own perfect retirement. Go beyond the leisurely morning coffee and stress-free Sunday nights. Ask yourself how you will fill each day. Will you pursue a hobby? Volunteer? Travel? Consult? These questions lead us to the second question you should ask yourself: Will my money last through my whole retirement. Actuarial tables only tell part of the story.  You can’t know how long you’ll live or what your quality of life will be, but you can make an educated guess and protect yourself. See an advisor with a fiduciary responsibility and set up a plan. Will you need a long term care policy? Most likely you will, but the effectiveness of these plans vary wildly and you don’t want a salesperson who is looking for a commission to guide your research. Would an annuity make sense? You may want to purchase a fixed annuity as a portion of your retirement plan, but, again, these products are complicated, nuanced and they can be expensive…. | Read More »