Dominic Sitowski, CEP, LUTCF

Term coverage is cheap these days. Make sure you don’t pay too much.

Presented by Dominic Sitowski, CEP, LUTCF

How much are you paying for term coverage? Term life insurance today is cheaper than it has been in about 20 years, as competition has driven premiums lower and lower.1 With hundreds of insurance firms offering term policies, it might be time to rewrite yours.

How cheap is term coverage right now? If you’re 40, it is possible to pay less than $1,000 a year – perhaps much less – for a term policy with typical death benefits of $250,000, $500,000 or $1 million. In fact, if you are a 50-year-old male living in California, $1 million of term coverage for 10 years can be had for as little as $780 annually, according to Insure.com’s November survey. 2

How can you get the lowest rates? It helps if you a) weigh 200 lbs. or less, b) have no family history of heart disease or personal history of tobacco use, c) have blood pressure in the vicinity of 140/80 and cholesterol below 240, d) drive safely with the record to prove it, and e) avoid dangerous travel and dangerous activities. 3

Why have premiums become so inexpensive? You can chalk it up to a few powerful factors: death rates have declined markedly in recent decades, and men are starting to close the life expectancy gap on women. Plus, insurers are going all-out to get your business – advertising online, on the radio, on TV and seemingly everywhere else. 4

Besides low premiums, what else should you look for? You want a guaranteed renewable policy, which will let you renew your term coverage at the end of the given term without having to undergo a medical exam. You also want fixed premiums for the life of the term, as opposed to a “teaser” premium that rises after a few years. You can buy a term policy lasting 10, 20, or 30 years; the shorter the term, the cheaper the premiums.

Cheap premiums shouldn’t be the only factor in selecting term coverage. There’s also the health of the company to consider. Insurance companies do go out of business – it is rare, but it happens. Did you know insurance companies are rated? You can check companies out at insure.com (the online ratings are totally free) and at ambest.com. 3

How can you save money? Make sure you talk with a qualified insurance advisor who can give you an overview as well as an update on the best rates out there. You may be pleasantly surprised what kind of term coverage you can get today – for less.

Dominic Sitowski a Representative with Crown Capital Securities] and may be reached at www.domsitowski.com, 503-496-3641 or dsitowski@crownmail.net.

These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information. Securities offered through Crown Capital Securities, L.P., Member FINRA/SIPC.

What can you do to help yourself get pre-approved?

provided by Dominic Sitowski, CEP, LUTCF
Remember when getting a mortgage was easy? Now, you need pre-approval. So how can you increase your chances of passing that all-important test?
You want a lender in your corner. Sellers and agents don’t want to waste their time working with a buyer who isn’t pre-approved. Why should they contend with uncertainty?
A buyer with a pre-approved loan gets respect when a seller gets multiple offers. A pre-approval shows the seller the size and terms of the loan the bank is ready to greenlight. Commonly, a pre-approval is good for 90-120 days.1
Pre-approval is a whole different level than pre-qualification. You can supply very basic financial information to a bank or lender and walk out with an estimate of how much mortgage you might be able to carry. However, that is no promise. Pre-approval is an actual commitment from the lender to you.
So what can you do to earn that commitment?
Test the waters well before you test the housing market. Visit more than one lender, and see what you can borrow, just how much home you can afford, and what kind of mortgage options you have. Keep in mind that a pre-approval is a pledge that a mortgage lender makes to you, not a contract. Should some other bank or mortgage company make you a more attractive pledge, you are free to switch horses.2
Make your case. Don’t skimp on the documentation you bring to the appointment. Usually, a mortgage lender will want to see the hard data of your financial life over the last couple of years: the bank statements, the federal tax returns, the W2s, the pay stubs. If you earn investment income, bring paperwork showing that you do. If you deposited any big sums into your bank account recently, you’ll probably be asked what that deposit represents.
The amount you are pre-approved for typically reflects three factors: how much you have saved up for a down payment, your FICO score and your current address. It should only take a few business days for a lender to get back to you and let you know how much mortgage it will pre-approve for you.1
Aim to get pre-approved within 30 days. This way, you don’t risk harming your FICO score so much. The majority of credit-scoring paradigms out there don’t penalize your credit rating for home loan, student loan and car loan inquiries made 1-30 days prior to the score calculation.2
Don’t expect all the details right away. When you apply for a loan, your lender is using that day’s mortgage rates to calculate costs and payments, and rates move. So the pre-approval may be light on particulars about the interest rate or the loan type.
Avoid fly-by-night lenders. The seller and the seller’s agent want to see that a reliable, “name” lender is issuing its stamp of approval here, not an obscure Johnny-come-lately. Credibility counts.
Can’t get a standard loan? Don’t forget about the Federal Housing Administration, through which you might be able to arrange a mortgage with as little as 3.5% down. Most lenders can process an FHA loan like a standard loan, and commonly the rates are about an eighth of a point higher than a standard mortgage. Also, remember that first-time buyers have until the end of 2009 to qualify for an $8,000 federal tax credit which can be put toward the down payment and closing costs.1
Dominic Sitowski is a Representative with Crown Capital Securities, LLP and may be reached at, www.domsitowski.com, 503-496-3641 or dsitowski@crownmail.net.

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Securities offered through Crown Capital Securities, L.P., a Registered Investment Advisor. Member FINRA/SIPC.

Citations.
1 forbes.com/2009/07/01/pre-approval-mortgage-personal-finance-ask-money-builder.html [7/1/09]
2 smartmoney.com/personal-finance/real-estate/7-tips-for-getting-a-preapproved-mortgage/ [8/6/09]

The U.S. is the only developed nation without a comprehensive national health care system. President Barack Obama aims to change all that with a massive reform bill to bring health insurance to 46 million Americans without it over the next 10 years.
Huge reform, huge questions. How much will this cost? Who will pay for it? Could the reform put private health insurers out of business? Will it work? These are just some of the questions swirling around the proposed legislation.
Huge compromises. The most controversial aspects of the bill may soon be watered down. Part of that has to do with cost; part of it has to do with appeasing the private sector. The Senate and House must reconcile different versions of the bill. In the House version, 95% of Americans would be eligible for health coverage; in the Senate version, 97% of Americans would qualify.1,2
Possibly kaput: the government-sponsored option for health insurance. Could private health insurance companies hope to compete with the federal government? Private insurers railed against their proposed new competitor – and last week, Sen. Kent Conrad (D-ND), a Senate Finance Committee member, told Bloomberg News that talk was shifting away from that concept in the Senate and toward nonprofit cooperatives. The House version of the bill still includes the government-run plan.1
Also possibly kaput: mandatory health insurance for employees. In the original conception, businesses would pay federal fines in the future if they refused to provide health coverage to workers. According to Sen. Conrad, the Senate version of the bill would ask businesses to shoulder a portion of the cost of Medicaid coverage received by their workers, or 100% of the Medicaid tab for certain workers poor enough to qualify for a tax credit that could help them buy health insurance.1
If the bill passes, the amount of employer-provided health benefits exempt from income taxation might be limited. Sen. Max Baucus (D-MT), current chair of the Senate Finance Committee, has suggested a $15,000-$17,000 ceiling on that tax exclusion.1
Definitely disliked: the proposals to fiddle with private Medicare plans. The Obama administration has set goals of ending overpayments to Medicare Advantage, which it claims would save the government $177 billion by 2019. In that same time frame, it also wants to use Medicare reimbursements to reduce preventable hospital readmissions – for a conceived $25 billion in additional savings.3 The Obama reforms would also give Medicaid members a bigger prescription drug discount, while reducing that discount for high-income Medicare members.4
In testimony before the House energy and commerce panel, Blue Cross and Blue Shield Association senior VP Alissa Fox contended that any cuts in Medicare funding “would cause millions of Medicare Advantage enrollees to lose their coverage and lead to significant reductions in benefits or increases in premiums for millions more.” In addition, Blue Cross, Blue Shield and America’s Health Plan recently presented a letter to Sen. Ted Kennedy (D-MA), referencing a Milliman study that found the average family of four pays $1,700 a year more than they should in health insurance premiums due to Medicare and Medicaid underpaying hospitals and physicians.1,5
Obama claimed before the American Medical Association that his reforms “will actually extend the life of the Medicare Trust Fund by 7 years and reduce premiums for Medicare beneficiaries by roughly $43 billion over 10 years.”3
The proposed total costs: apparently almost $1 trillion. Sen. Baucus and Sen. Chuck Grassley (R-IA) worked in late June with the Senate Finance Committee to whittle down the House’s $1.6 trillion version of the bill to less than $1 trillion.2
Who pays for it? Tax increases and savings would fund the reforms. More specifically, the President has talked about cutting back the value of the itemized deductions available to the wealthiest American taxpayers. House Ways and Means subcommittee chair Rep. Richard Neal (D-MA) said other ideas a payroll tax and a value-added tax. The Senate seems to prefer the idea of taxing employee health benefits.6
More change likely to come. “We are still early in this process,” Obama noted Thursday. “We have not drawn lines in the sand.” Expect those sands to shift further as legislators and lobbyists exert pressures on another of the President’s ambitious reforms in July.
Dominic Sitowski is a Representative with Crown Capital, LP and may be reached at www.domsitowski.com, 503-496-3641 or dsitowski@crownmail.net.

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Securites offered through Crown Capital Securities, L.P., a Registered Investment Advisor. Member FINRA/SIPC.

Citations.
1 bloomberg.com/apps/news?pid=20601103&sid=aki1sLcOe4GM [6/26/09]
2 cnn.com/2009/POLITICS/06/25/health.care.proposal/ [6/25/09]
3 usatoday.com/news/washington/2009-06-15-obama-speech-text_N.htm [6/25/09]
4 forbes.com/2009/03/03/obama-health-plan-lifestyle-health_obama_health_budget.html [3/3/09]
5 usatoday.com/news/washington/2009-06-23-health-congress_N.htm [6/23/09]
5 washingtonpost.com/wp-dyn/content/article/2009/06/18/AR2009061804053.html [6/18/09]

Quote of the week. “The softest things in the world overcome the hardest things in the world.” – Lao-Tzu

Is real estate recovering? Existing home sales are up for the third straight month. The National Association of Realtors had residential resales up by 3.6% in June – 0.2% under last year’s pace, but still an encouraging sign. Prices are a motivation – nationally, the median existing home sale price was $181,800 last month.1

Gas guzzler round-up gets underway. The federal government’s CARS program (informally known as “cash for clunkers”) officially began over the weekend, with $3,500/$4,500 credits available to new car buyers who drive in 1984-or-newer autos that average 18 MPG or less. The program will run until November 1 or until the $1 billion in federal rebates run out. You can visit cars.gov to determine whether you have a qualifying vehicle.2

Oil & gold have a good week. Crude oil futures gained 5.37% last week to finish at $68.05 per barrel on the NYMEX Friday. In the latest AAA gas prices survey, a gallon of regular unleaded averaged $2.470 nationally as opposed to $4.026 a year before. (However, gasoline futures gained 8.25% last week.) Gold settled at $953.10 per ounce Friday, wrapping up a 1.66% weekly gain.3

Indication of hope. Could the recession have ended already? The Conference Board’s index of leading economic indicators increased 0.7% for June (the third consecutive monthly gain, marking the best performance since January 2002, which was two months after the conclusion of the last recession). The coincident-to-lagging indicators in the index also increased for the third month in a row.4

9,000 … 2,000? … 1,000? The Dow topped 9,000 last week, and the NASDAQ and S&P 500 may surpass the 2,000 and 1,000 benchmarks if the rally continues. The NASDAQ lost ground Friday to end a 12-session win streak and close the week at 1,965.96. The S&P 500 stood at 979.26 at Friday’s close; the Dow ended Friday’s market day at 9,093.24.5

% Change Y-T-D 1-Yr Avg 5-Yr Avg 10-Yr Avg
DJIA +3.61 -19.88 -1.74 -1.67
NASDAQ +24.66 -13.78 +1.26 -2.70
S&P 500 +8.42 -21.82 -1.97 -2.78
10YrTIPS Yd -20.96 +7.10 -1.90 -0.01

(Source: CNNMoney.com, ustreas.gov, treasurydirect.gov, bls.gov, 7/24/09)6,7,8,9
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.

Riddle of the week. What can fill a room, yet takes up no physical space?
Contact my office or see next week’s Update for the answer.

Last week’s riddle answer: 12 times; 12 X $2 = $24. The coin came up tails the remaining 8 times; 8 x $3 = $24. So they were all even after 20 coin flips.

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«Dominic Sitowski, CEP, LUTCF»

These views are those of Peter Montoya Inc., and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards.

Citations.
1 news.bostonherald.com/business/real_estate/view/20090723existing-home_sales_show_promise/srvc=home&position=recent [7/23/09]
2 latimes.com/business/la-fi-clunkers25-2009jul25,0,4520824.story [7/2409]
3 cnbc.com/id/32130526/page/2/ [7/24/09]
4 bloomberg.com/apps/news?pid=20601087&sid=aHisOoFaeD.U [7/22/09]
5 cnbc.com/id/32129064 [7/24/09]
6 money.cnn.com/data/markets/dow/ [7/24/09]
6 money.cnn.com/data/markets/nasdaq/ [7/24/09]
6 money.cnn.com/data/markets/sandp/? [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F24%2F08&mode=add&symb=DJIA [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F23%2F04&mode=add&symb=DJIA [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F23%2F99&mode=add&symb=DJIA [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F24%2F08&mode=add&symb=COMP [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F23%2F04&mode=add&symb=COMP [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F23%2F99&mode=add&symb=COMP [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F24%2F08&mode=add&symb=SPX [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F23%2F04&mode=add&symb=SPX [7/24/09]
6 money.cnn.com/quote/historical/historical.html?pg=hi&close_date=7%2F23%2F99&mode=add&symb=SPX [7/24/09]
7 ustreas.gov/offices/domestic-finance/debt-management/interest-rate/real_yield_historical.shtml [7/24/09]
8 treasurydirect.gov/RI/OFAuctions [7/24/09]
9 bls.gov/news.release/history/cpi_08171999.txt [8/17/99]