Archives for Finances

The Common Issues With Annuities

annuitiesRecently, a handful of companies across the US are switching up the benefits packages offered to their employees. Typically, in a high-authority company, employers will have the opportunity to put money away in their 401(k) while their company matches a certain percentage. Or, some companies will even offer shares of life insurance. However, we are seeing that more and more companies are doing away with life insurance policies and offering something different: annuities. With cuts being made to retirement spending, more and more employees are faced with a real loss on their hands in terms of their retirement fund. While annuities do have their benefits, they also have many problems. The number one problem is their total cost.

Understanding Annuity Problems

The problems with annuities run far and wide; however, there are 3 main issues that make it hard for individuals to benefit from–making it more of a risk than a reward. With that, let’s take a closer look at the top 3 problems with annuities:

The Anti Selection

A major problem with annuities is anti-selection. In terms of anti-selection, actuaries must price different annuity rates based on extraordinarily high life expectancy rates. This mainly due to the fact that many elderly people–ranging from good to poor health–aren’t too concerned with outliving their savings. This means that they are less likely to invest in annuities. So, when comparing life insurance policies and annuities together, there’s quite a major difference in the way these policies are priced. For instance, for certain life insurance policies, many insurers will require their clients to partake in a thorough medical exam. They require this because they know that anyone who’s diagnosed with a life-threatening medical condition will have a better chance of investing in a life insurance policy. Which goes to show how insurers take advantage of their clients. But annuities aren’t any better since their rates are based on disproportionate assumptions which greatly discourages many senior citizens from investing.

Costs to Providing Guarantees For Fixed Payouts

Another significant problem with annuities is the costs that come with fixed payout guarantees. You’ll find that many insurers will try to sell an annuity on the basis that they can guarantee fixed payouts to their clients month after month during their retirement years. However, to do so, the insurer must ensure their money with careful conservation in mind. To truly attain a fixed payout month after month, there are significant costs attached. By investing a client’s money conservatively, there’s minimal room to really grow their investment which greatly hurts them in the long run.

Extra Fees For Marketing and Administrative Efforts

What many people don’t realize is that the industry of individual annuities comes with significant marketing and administrative costs. However, these costs are not something that your typical employer is faced with. And on many occasions, (many due to this and the anti-selection factor) they find that providing their employees with annuity packages rather than life insurance or the other benefit package varieties. Due to this, many employers find it far more affordable to offer their employees with group annuity purchasing instead. But, unfortunately, this is something that poorly affects the long-term finances of the said employees since they are the ones stuck paying the marketing and administrative fees. \

Sell Your Annuity For Cash

At Rising Capital Associates, you can sell your annuity for cash that you can use immediately. Contact us today for more informati0n on how we can help you.

Read more

Banks Aiding In Preventing Elderly Financial Abuse

elderly-financial-abuseBack in February, US Senator Kirsten Gillibrand announced her Senior Financial Empowerment Act proposal. If it passes, this bill would not only regulate financial abuse reporting, but it would also make funding available for both education and fraud protection amongst senior citizens. The creation of this bill was inspired by the massive shift our economy is experiencing due to the retirement of many in the baby-boomer generation. Additionally, the baby-boomer generation seems to be a major target to the financial exploitations caused by criminals and scammers. For this reason, it’s essential to have a form of protection in place–like the bill created by US Senator Kirsten Gillibrand–for senior citizens to rely on.

Baby Boomers Are Reaching Retirement Age

For decades, experts believed that a major population shift would occur as the baby-boomer generation began to retire. This predicted shift would result in record numbers of the elderly in America. Currently, we are seeing this prediction come true as record levels of the elderly population have been reached. According to the US Census Bureau, approximately one in five Americans will be 65 or older by the time we reach 2030. Additionally, the American Bankers Association (ABA) reported that about a third of the population is made up of senior citizens over the age of 50. As much of our population consists of the baby-boomer generation, they also contribute significantly to our country’s financial wealth. The American Bankers Association also stated that this generation held more than 70% of deposits in a variety of banking institutions (source).

Although their contributions to this society have been significant, many senior citizens are living on a fixed-income or regimented retirement savings. Unfortunately, for these reasons and more, this generation of senior citizens is a major target to financial fraud.  

Seniors Targeted For Fraud

According to the American Bankers Association, senior citizens in our society lose approximately $3 billion a year to a variety of financial scams. This is an epidemic in its own that needs a quick solution. Luckily more and more banks are keeping their eyes open for any suspicious activity that looks like it could be derived from fraud. Luckily, our society is taking action and devising plans that could help to reduce the amount of fraudulent activity that occurs to senior citizens. Just last week, the American Bankers Association announced a new initiative to help bankers detect and take a larger role in protecting their customers. To do so, the ABA sent out a list of ‘red flags’ that bankers should be aware of. These ‘red flags’ include:

  • Opening lines of credits without purpose.
  • Making quick transfers of large sums in and out of different accounts.
  • Writing out checks as ‘cash’ or for very vague purposes.
  • The inability to pay their routine bills.
  • Uncertainty when withdrawing money.

In addition to this list, the ABA also created a publication called, “Protecting Seniors: A Banking Resource Guide for Partnering with Law Enforcement and Adult Protective Services.” This guide was also put together with the help of the National Sheriffs’ Association, National Adult Protective Services Association, and the Consumer Financial Protection Bureau. This publication is an excellent read for both senior citizens and those who work within banking institutions.

Keeping our senior citizens safe from fraud is a major issue in the US, and one that we are finally starting to make progress in preventing.

 

Read more

Here’s Why Selling Your Annuity Can Make Sense

annuitiesThroughout the years, millions and millions of annuities have been sold to families around the world, and with that, billions of dollars are awarded to the insurance companies that sell them. It’s obvious that annuities are profitable for various insurance companies, but will they really provide you with the long-term financial assistance you need? Annuities are not conducive to every lifestyle, so, if you have an annuity you believe might not cover your financial needs, you may want to consider selling it to a structured settlement/annuity purchasing company who will provide you with a sizable lump sum payment in return.

When Selling Your Annuity Makes Sense

Money Management

If you like to carefully manage your assets–or having full access to them–having an annuity plan can make that pretty difficult. Usually, insurance companies take over that role when you purchase an annuity plan from them, providing you with a monthly income. However, this monthly income may not be substantial enough to supplement you through your retirement and it’s one that you cannot increase. So, if you prefer to manage your money yourself, it would be very ideal to sell your annuity payments for cash. Once you’ve sold your annuity, you will be given immediate access to your well-deserved cash, allowing you to manage or invest it in any way you would like.

A Change in Retirement Plans

Even though we spend our entire working lives planning for retirement, you simply never know what’s going to happen during that time. Though we hope for the best, unexpected events can occur–medical emergencies that end in costly medical bills; a poor investment; assisted living costs; home refinancing; anything could happen. If a change in your retirement plan occurs and you are waiting on your annuity payments to help finance it, it may be time to sell your annuity.

The Loss of A Spouse

Although it’s something no one likes to think about, the passing of a spouse in an unexpected event that can come with great financial stress. If you believe that you or your spouse will have trouble managing assets or not be left with substantial funds to supplement them through their retirement, then you may want to consider other options. A beneficial option would be to sell the annuity plan you previously purchased. In selling your annuity plan, you will receive a large, lump sum in return, allowing you to invest it where you need it. It will also provide you with the means to support you or your spouse in the event of a passing. It’s a terrible thing to think about, but it’s necessary in order to ensure that your loved ones are being taken care of.

 

If you own an annuity and any of these reasons apply to you, then it might be time to sell your annuity and supply yourself with a healthy and financially fruitful retirement.  At Rising Capital, we make it simple to sell your annuity or sell your structured settlements for cash. Contact us today for more information at 866-444-5061.

 

 

 

Read more

Indexed Annuities Are Causing Some Issues

indexed-annuityAn indexed annuity is a variation of a fixed and variable annuity. This type of annuity is taxed-deferred and considered to be an ideal savings option for someone who is looking for something more long term. Indexed annuities allow for many opportunities for growth with protecting policy owners in the event of a down market.

Typically, an indexed annuity will monitor the market index–hence its name–such as the S&P 500. Recently, researchers and analysts have noticed that over the years, indexed annuities have evolved greatly. However, this expansion has insurance markets quite concerned. In order to compete with the versatility of indexed annuities, some insurance companies are developing their own products and investment plans for a leg up in the market.

Lack of Transparency And Understandibility

After carefully studying these different products and investment policies, researchers have noticed that they are not nearly as transparent and understandable as standard annuity plans from reputable investment companies. Researchers also have discovered that almost all of this ‘unique’ plans don’t offer the best financial benefits as traditional market indexes do (source).

Wink Inc discovered that in a  2013 study that there were only 6 companies who offered ‘hybrid indices’(something that adds more complexity with less growth advantage) for indexed annuities.  Today, that number has increased to 50. Additionally, they were able to determine that aside from S&P 500, these indices are the second most popular with more than 30% of sales recorded in the third quarter. Some of these indices include Pimco Global Optima Index, S&P Multi-Asset Risk Control 5% Excess Return Index, and the BNP Paribas Momentum Multi Asset 5 Index. Due to the surge in indexed annuities, the demand for hybrid indices is becoming more and more popular amongst insurance companies. Additionally, these hybrid indices offer policyholders an interest rate that will not cap, unlike its competitor.

Hybrid Indices

These hybrid indices may seem enticing for someone who is looking for an investment plan yet has little knowledge of the ins and outs of it, however, it’s leaving many insurance agents uneasy. Sheryl Moore, the president and CEO of consulting firm Moore Market Intelligence, claims that any insurance agent who gives clients information on these hybrid indices are actually giving them unregistered, incorrect investment advice, which is very frowned upon in this business practice. Not only is it frowned upon, but it also can result in criminal charges, punishment fees, loss of insurance license, and even jail time depending on the state you reside and work in. Many other insurance agents, CEOs, executive directors, etc.–not just Moore–are as equally uneasy and skeptical about this new brand of insurance. So much so, that you won’t find it at any reputable insurance agency.

Sell Your Annuity to Rising Capital Associates

If you no longer wish to continue receiving your annuity payments and would prefer a lump sum of a cash, contact us. At Rising Capital Associates, you can sell your annuity payments for cash now. You can also sell your structured settlement payments for cash now as well. 

 

Read more

The Equifax Breach Leaves Seniors More Vulnerable

scam-alertThis past September, Equifax released alarming news that they had experienced one of the largest cybersecurity breaches in history. From mid-May through July of 2017, over 145.5 million US residents were put at risk of identity theft. The criminals responsible for this breach were able to access personal information such as names, Social Security numbers, birth dates, addresses, and driver’s license numbers. Although this breach was monumental, leaving millions of Americans feeling exploited, vulnerable, and in constant fear of identity, Equifax created resources that allowed those affected to take proper measurements to further secure their personal information.

As of recently, there have not been any reported unauthorized activity on any consumer or commercial credit reporting databases. However, in light of this breach, senior citizens need to be on constant alert for scams or fraudulent activity that can occur on their banking accounts. Not only are they vulnerable to financial scams in general, but the Equifax breach could leave them at an even greater risk. Although many senior citizens are highly capable of avoiding financial scams, it’s always highly important for family member or caregiver to look out and protect them as well.

Seniors and Caretakers Working Together to Avoid Scammers

In a survey conducted by the Cooperative Credit Union Association (CCUA)–a trade group based in New England–research showed that more than two-thirds (out of 1,700 people) of caretakers reported that scammers had attempted to target their elderly relatives (Source). Furthermore, the most popular attempt at fraud was through phone calls; however, 22% of those same scam attempts were made through either email or another form of online contact.

In addition to their study, the CCUA found that those same caretakers worry that their loved ones will not have the ability to spot a fraud as efficiently as they can. With the Equifax breach being the newest form of financial fraud, caregivers are worried more now than ever.

As stated previously, 145.5 million consumer credit files were compromised in the Equifax breach. With the two most important pieces of information being hacked and accessed–birth dates and driver’s license numbers–caregivers are growing increasingly concerned. With access to their driver’s license numbers, birth date, and Social Security number, scammers will have full capability to cross-reference their information and begin to target their victims by their age group. Unfortunately, it’s far too often that fraud is detected once it’s too late, therefore, it’s highly important for family members, friends, and caretakers to educate themselves on ways to help their loved ones avoid the risk of falling victim to a financial fraud.

Protecting Seniors From Scams

Here are some tips to protect your elderly relatives from scams and fraudsters:

  1. Talk to them regularly about all of their financial decisions. 
  2. Inform them of ways to handle potential scammers when you aren’t there to do it for them. It’s important for them to have an idea of what to look out for in order to successfully avoid any forms of financial scam; even if it means writing up a script on what they can say to scammers that call them.
  3. Advise them that if they think they are receiving a call that doesn’t seem right, then they need to hang up immediately.

Being educated and helping your loved one become more educated is one of the best courses of action in order to thoroughly protect and prevent any type of financial fraud from occurring to your elderly loved one.

With a breach as significant as the one that Equifax faced, it’s highly important for seniors to be on high alert for any forms of scams that are a result of this massive infringement on the personal information of US citizens.

Read more