Auto Insurance

Today’s article on the types of auto insurance may serve as a great tool to learn about the types of car insurance available. There are four main types of auto insurance: liability, uninsured or underinsured motorist, collision and comprehensive and personal injury. It is required by most states to carry certain types of auto insurance.

Liability Insurance

Liability insurance is usually considered a necessity and many states have a minimum legal requirement for liability coverage. This type of insurance helps protect against injury claims and property-damage suits (up to policy limits) brought by other drivers, pedestrians or property owners if you are at fault in an accident. Your liability policy helps pay for injuries suffered by others and the cost of damage to other people’s property, as well as legal costs if necessary, up to a dollar limit.

You can choose a policy with an overall limit for all liabilities or you can select one with separate limits for (1) individuals injured in an accident, (2) all injuries in the same accident, and (3) property damage.

Uninsured or Underinsured Motorist Coverage

A policy with an uninsured motorist provision will pay damages if an uninsured motorist or a hit-and-run driver injures you and/or your passenger(s). you cannot buy more coverage against an uninsured driver than you carry yourself in liability. For example, if you carry $25,000 coverage per person and $50,000 per accident, you can buy only up to those amounts of coverage against an uninsured driver. You can also add protection against inadequate insurance coverage by another driver who injures you or damages your property in an automobile accident. This provision means that your policy will pay for injuries or damage that the other driver's policy does not.

Collision and Comprehensive Coverage

Collision insurance reimburses you for repair costs to your vehicle that were caused by a collision. While this coverage is great, please note that it can also be the most expensive. Comprehensive coverage helps pay for damage due to fire, storm, vandalism, or theft. If a lender holds a lien on your car, the lender will likely require you to pay for both collision and comprehensive insurance. To lower the cost, of this insurance, you may choose a higher deductible. Although this increases your out of pocket expenses in the event of an accident, it may result in lower premiums.

Personal Injury Protection

Residents of states with “no fault” insurance, must buy personal injury protection. Personal injury insurance will pay your medical expenses in the event of a car accident, regardless of who was at fault. When you purchase this protection, you agree not to sue for any suffering or injury you may sustain.

If you would like a quote for auto insurance, click here.

For more information on auto insurance, click here, or call our office today 201-342-3300. One of our associates will be happy to speak to you.

Life Insurance for Business Owners

Did you know that life insurance is not just for individuals? Life insurance can be bought by a business owner to insure the business in the event of the death of a key employee. On today’s blog we would like to discuss life insurance policies for business owners and what one can do with the benefit money.

Purchase a buy-sell agreement

Generally, with a buy sell agreement it is determined before hand what will happen if the owner or a key person dies, or leaves due to a personal decision or disability. The death benefit from a company-owned life insurance policy can be used to purchase the decedent’s interest in the company from their heirs.

Replacing lost income

In the event the business continues, there may be a time where the business closes doors for a bit while survivors make a new plan to move forward. If this were to happen, the death benefit could be used to replace lost revenue or pay for costs associated with keeping the doors open it may also help the surviving owners avoid borrowing money or selling assets.

Replacing lost income

Most likely, any business owner has family members that are dependent on income from the business. If they were suddenly gone, the proceeds from the death benefit could replace the family’s lost income for a little while until they figure things out.

For a more in-depth article about life insurance for business owners, click here, or for personalized attention, please feel free to call out office at 201-342-3300. One of our associates will be happy to speak to you.

529 Plans

If you’re like most parents, chances are you would like to find the most suitable way to save for your children’s college education. On today’s blog, we at Federal National Funding would like to introduce you to the 529 plan.

A 529 plan (also known as a qualified tuition plan) is a popular way to save for higher education. Perhaps you have heard of the original form of the 529, a state operated prepaid tuition plan that allows you to purchase units of future tuition at to today’s rates with the plan assuming the responsibility of investing the funds to keep pace with inflation. Many state governments guarantee that the cost of an equal number of units in the sponsoring states will be covered regardless of investment performance or the rate of tuition increase. Remember, each state has different rules and restrictions. Prepaid tuition programs will typically pay for future college tuition at any sponsoring state’s eligible colleges or university—some will even pay an equal amount for out of state or private institutions.

The other type is the savings plan. It’s close to an investment account but the funds accumulate tax deferred. Withdrawals from state sponsored plans are free of federal income tax as long as they re used for qualified college expenses. Many states also exempt withdrawals from state income taxes for qualified for higher education expenses. Unlike prepaid tuition plans, contributions can be used for all qualified college expenses (tuition, fee, books, equipment, supplies, room and board) and the funds can be used at all post-secondary schools in the United States. Remember that there is a risk associated with this plan—investments may not preform as well as anticipated and may even lose money.

In many cases, 529 plans place investment dollars in a mix of funds based on the age of the beneficiary with account allocations becoming more restrictive as the time for college draws closer. Recently, states have hired professional money managers to actively manage and market their plans, so a growing number of investors can customize their asset allocations. Some states enable account owners to qualify for a deduction on their state tax returns or receive a small match on the money invested. Earnings from 529 plans are not taxed when used to pay for eligible college expenses. And there are even consumer-friendly reward programs that allow people who purchase certain products and services to receive rebate dollars that go into state-sponsored college savings accounts.

An advantage to the 529 is that contributions are considered gifts to the beneficiary, meaning that anyone can make contributions of up to $14,000 a year without facing gift tax consequences. Additionally, contributions can be made in monthly installments or be paid in a lump sum.

For more information about 529 plans click here or call us today at 201-342-3300. One of our associates will be happy to help you.

Long Term Costs

If you have been meaning to learn about long-term care costs, today’s blog is just for you.

The majority of Americans don’t have a plan when it comes to paying for long-term care. In fact, many Americans simply live their lives hoping they won’t need it. But in the event that you or your loved ones do need long-term care, there are options for covering the costs.

Self-Insurance

When a person self-insures, they pay for the costs themselves and have sufficient income to cover the costs. Keep in mind that although a person may be able to pay for long term care out of pocket now, they may not be able to in the future due to rising costs.

Medicaid

Medicaid is a joint federal and state program that covers medical bills for the needy. If you qualify, it may help you pay for long-term care costs. But, to qualify for Medicaid, you need to have few assets or have to spend down your assets. The state laws determine income and resource limits.

To get Medicaid assistance, you may have to transfer your assets to meet those limits. But this can be complicated because there are laws made to discourage asset transfers for the purpose to qualifying for Medicaid. We highly suggest meeting with an advisor such as us at Federal National Funding to discuss new Medicaid rules. If you would like to learn more about Medicaid, click here.

Long-Term Care Insurance

This type of policy can help transfer some of the economic liability of long-term care to an insurance company in exchange for regular premiums. Long-term care insurance can help pay for skilled care, intermediate care, and custodial care. Most policies pay for nursing home care, and comprehensive policies may also cover home care services and assisted living. Insurance can help protect your family financially from the potentially devastating cost of a long-term disabling medical condition, chronic illness, or cognitive impairment.

A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the policy.

Long-Term Riders on Life Insurance

A number of insurance companies have added long-term care riders to their life insurance contracts. For an additional fee, these riders will provide a benefit — usually a percentage of the face value — to help cover the cost of long-term care. This may be an option for you.

To learn more about long-term care costs, Medicaid, or long-term care riders on life insurance, click here or call us at 201-342-3300. One of our associates will be happy to speak to you.

Homeowner's Insurance

Your home is one of your greatest assets, thus, you should make sure it is protected. This is where homeowner’s insurance comes into the picture. Homeowner’s insurance can protect against liabilities—when someone is injured on your property—damage to the structure of your home, and/or personal belongings and theft.

Though policies vary, a typical homeowner’s policy covers damage from certain “perils”. However, you may need to purchase a separate endorsement or policy to cover disasters such as floods, earthquakes, and tornadoes if you live in a high-risk area.

When reimbursing you for a loss, an insurance company will use one of two methods to determine the value of the property: replacement cost and actual cash value. With replacement cost, the insurance company pays you the cost of replacing the damaged property; there is no deduction for depreciation, but there is a maximum dollar amount. With actual cash value, the insurance company pays you an amount equal to the replacement value of damaged property minus a depreciation allowance. Keep in mind that before you are reimbursed, you'll need to satisfy a deductible.

Additionally, the typical homeowner’s policy includes liability protection that provides coverage damages caused by your negligence. Medical expenses to third parties your legal costs to any lawsuit brought against you are also included. Most policies provide a standard amount of liability coverage (usually $100,000) per accident.

If you re looking for a quote on homeowner’s insurance, click here.

For more information about homeowner’s insurance click here, or call us today at 201-342-3300. One of our associates will be happy to speak to you.

Diversification

As a financial firm, we consider it our duty to educate the public on various topics. Today we would like to discuss the benefits of diversification in one’s investment portfolio.

But what is diversification?

Diversification is an investment strategy used to manage risk by having investment money spread across various investment vehicles. Such investment vehicles may include stocks, bonds, real estate, and cash alternatives. Please note, diversification does not guarantee a profit or protect against loss.

The main philosophy of diversification is as follows: don’t put all your eggs in one basket. You can spread the risk among investments, as well as over different industries—this can help offset a loss in any one investment.

Likewise, the power of diversification may help smooth your returns over time. For example, as one investment goes up, it covers for one that may be going down. This may allow you to ride out market fluctuations which is helpful for more steady performance under various economic conditions. Diversification can be very helpful as it can bring you more comfort as you invest.

For a modest initial investment, you can purchase shares in a diversified portfolio of securities. You have “built-in” diversification. Depending on the objectives of the fund, it may contain a variety of stocks, bonds, and cash vehicles, or a combination of them.

If you want to start with a more modest investment, a good start would be to purchase shares in a diversified portfolio of securities. With securities, you have “built-in” diversification. And depending on the objectives of the fund it may contain stocks, bonds, and cash vehicles, or a combination of them.

Whether you are investing in mutual funds or are putting together your own combination of stocks, bonds or other investments vehicles it is a good idea to keep in mind with the importance of diversifying. The value of stocks, bonds, and mutual funds, change along with market conditions. Shares when sold, may be worth more or less than their original cost.

If you are interested in starting your investment portfolio, you can start by reading this article on annuities here, or read up on mutual funds here. Or if you would like personalized attention, feel free to call our office at 201-342-3300. One of our associates will be happy to speak to you.