Tuesday, April 24, 2012
Your security is important to us. We created our online Security Center to provide you with the latest threat information, scam alerts, prevention tools, victim resources and articles for your online safety. Visit us often.
Our Current Rates:
For a listing of our current deposit and loan rates, click here.
Insuring for Life
As a kid, I thought our insurance agent was part of the family. He dutifully visited our home four times a year to collect the quarterly policy premium. There were some relatives we didn't see that often.
The personal visits assured payments weren't missed. No worries about a policy lapse because of an overlooked due date.
Mom would offer him a cup of coffee or glass of iced tea to keep him occupied while she got out her checkbook. They would chat about little things while she wrote the check; what the kids were up to, if dad was working steady, upcoming home repairs.
At least, it seemed like little things at the time. In truth, it gave our agent a glimpse of our family's situation. It gave him an opportunity to evaluate our needs on a regular basis and offer whatever advice he could offer to assure our family was protected.
Our family has lost a valuable member. We wouldn't have time to entertain a visiting insurance agent today, even if they still made the rounds. The responsibility for assuring our family's protection rests on our own shoulders.
So where do you start? How do you calculate how much protection your family needs? For what length of time? Do you need life insurance in retirement? What type of insurance is best for me? And how is one person supposed to know all of this?
Life insurance can be a delicate subject. After all, its entire purpose is planning for your death. Not a particularly jolly subject.
Every situation is unique. A single person with no dependents has no real need for life insurance.
Married with young children? You'll probably need enough to payoff the mortgage and other outstanding debt along with your final burial expenses. Plan for your children's future college expenses and potential medical costs. A special-needs child will require additional consideration.
Calculate how much you earn now and what you pay out in monthly expenses. Allow for two year's of your current income as replacement to allow your spouse time to get back on their feet. Include enough to cover child care, too. Others may want to assure their spouse has enough to be comfortable the rest of their life.
A non-working spouse needs coverage as well. If something happens unexpectedly, you'll need some time before you can start your life on a new order. The policy payout can take some stress out of decision making as you can take as much time as you need in trying to rebuild.
A term insurance policy may be your best option during these years. It offers the lowest premium for the largest benefit. You choose the limit, 10, 15 or 20 years. Premiums increase at stated intervals, if at all.
But at the end of the term limit, the policy ends. There is no cash value to convert. Should you still need coverage, you'll have to buy a new policy. Your premiums will be much higher due to age. And if your health declines, you may not qualify for anything affordable.
Despite what you had hoped when you started out, you may still need life insurance after retirement. Particularly if you still have a mortgage.
Your estate is responsible for paying off all debt, including a mortgage, before any property is handed down to your heirs. If the debt exceeds your assets, they're left footing the bill.
And if you didn't execute a will, the estate goes through probate first. The State takes their cut first, leaving your heirs with even less to distribute to your creditors.
Will your spouse need additional income after your death? The economic collapse has left even those best prepared for retirement worrying about their golden years. Social Security checks don't stretch too far. A life insurance policy can help cover unexpected medical costs, or even keep food on the table.
Several websites offer life insurance calculator tools and tips on choosing the right type policy for your situation. Find one unaffiliated with an insurance broker for the most accurate results.
Save Money on Auto Insurance
Auto insurance can be expensive. The price you pay for it can vary greatly based on the company you choose, the coverage options you choose, the car you own, and more. Here are some suggestions on how to save money on your auto insurance.
The very first thing you can do to lower your insurance costs is to shop around for the best rates. Ask friends, family, co-workers, search online, or look in the phone book.
In addition, each state has its own insurance department that may list basic rates and consumer complaint information on major insurers in their state. The State of New Jersey's insurance department can be reached here or 609-292-5360. For a list of insurance departments for each state, see the Insurance Information Institute's website.
When shopping around for insurance, you'll find that there are companies that sell insurance through agents and others that sell insurance directly via the Internet or phone. Try getting quotes from different types of companies.
Those that sell through agents may sell through their own agents or enlist independent agents. Agencies selling through their own agents will have the same name as the insurance company and only offer their own policies. Independent agents may offer policies from several different insurance companies.
Each insurance company will have their own rate structure, so the same amount and type of coverage at one company may be quite different at another. When considering prices, be sure to compare "apples to apples." Think about the coverage you want and then ask for a quote on that. For example, if you need full coverage on a new vehicle with a $500 deductible, be sure to obtain a quote from each company on just that.
Check with your employer or any other organization of which you may be a member to see if they have a group discount plan. Some insurance companies offer discounts to customers who obtain their insurance through a group plan from their employer, professional group, business group, or other association.
A quick way to lower your insurance costs is to raise your deductible. The deductible is the amount of money you have to pay out of your pocket for a covered loss before your insurance company will pay a claim. The typical deductible is $500. But if you can afford to raise your deductible to $1,000, you may save 30-40 percent on your premium depending on your insurance company.
However, if you have a loan on your vehicle, check with your lender before you raise your deductible. Some lenders have limits on the amount of deductible you can choose.
Consider dropping your collision and/or comprehensive coverage on an older vehicle. If you car is worth less than 10 times the premium, it may not be cost effective to purchase the additional insurance. Visit the NADA website to confirm its value if you're unsure.
These days, many insurance companies use credit information to price their policies. By paying your bills on time and maintaining a good credit profile, you may pay less for your insurance.
Ask your insurance company for any other available discounts. Common discounts include: multiple vehicles, no accidents in the last 3 years, no tickets in the last 3 years, defensive driving course, low annual mileage, anti-lock brakes, daytime running lamps, anti-theft devices, air bags, long-time customer, and student driver with good grades.
Discounts may also be available if you purchase multiple policies from the same company. For instance, many insurers will offer a discount if you buy two or more types of insurance from them, such as purchasing both homeowners and auto insurance. Of course, this only helps if the combined policies are less than what you could purchase separately elsewhere. So once again, shop around!
If you are in the market for a new car, you may want to check and compare insurance costs of the cars you are considering before you buy. Insurance premiums are partially based on the vehicle sticker price, the cost to repair, its overall safety record, and its probability of being stolen. The Insurance Institute for Highway Safety can give you valuable information on the safety rating of your car on their website. The bottom line is that some cars are just more expensive to insure than others.
One quick side note for if you are purchasing a new vehicle or if you are thinking of refinancing your vehicle - GCF Bank has great rates on auto loans. For a limited time, loans on new or used cars (max 5 years old) are available as low as 3.99 percent. Call us or check out our website for details.
Whichever insurance company you decide to choose, be sure it is one that is financially stable. You can check insurance company ratings with A.M. Best or Standard & Poor's. Auto insurance is supposed to protect you financially in the event of loss or damage. Make sure to pick a company that gives you peace of mind. For more information, you can contact the National Insurance Consumer Helpline at 800-942-4242.
We take a break from our regularly scheduled "Seabiscuit" installment today to reprint a frequently requested article from our December 13, 2011 issue of GCFlash.
Two Retirement Rules of Thumb:
I am often asked how much one needs to retire. This is very likely one of the most often asked questions in finance. And because the prudent answer is "it depends," whole industries of consultants and pundits have emerged to try to assist in the answer (for a fee, of course). But isn't there a simple "rule of thumb" to be guided by? Yes there is, so read on.
Some years ago a (fairly well heeled) colleague and I were discussing a particular investment that contained various unknown risks. As usual, he was fretting about the potential "what-ifs." At one point, I joked with him and said, "So what, you can always just take the million bucks you already have and retire." He shot back, "It takes four million to retire." This colleague had already calculated the pile of capital he would need, at conservative investment returns, to generate the monthly income that he was accustomed to.
You should know that his calculation ignored Social Security (SS) - he didn't think it would be around that long - and his modest pension and also accounted for him leaving his entire retirement principle balance to his two sons after his and his wife's death (I always told him he spoiled his children). So based on these criteria, four million was HIS number. And it was prudent, based on those objectives.
Of course, most Americans don't need anything close to four million bucks to retire comfortably, but his point was well taken and has stuck with me. So how about a rule of thumb or two:
Retirement Rule of Thumb #1 -The Leave an Estate Plan (you might also want to think of this as "the spoiled kids rule" or alternatively "the live off the interest rule"): From a moderately diversified investment portfolio, you would be able to withdraw one half of one percent (0.5%) per month and very likely never touch your principle. The math wizards will quickly deduce that this equates to a 6% per year rate of return. For our mythical one million bucks, that would equate to $60,000 per year (or $5,000 per month). Can you live on that? Add in SS and perhaps a pension, and for many Americans the answer would be "Yes." It might require relocating to a lower cost locale since NJ is a notoriously high tax, high cost and retirement unfriendly state.
Retirement Rule of Thumb #2 -The Don't Worry About Leaving an Estate Plan (you might want to think of this as the "to hell with the kids rule" or "no luggage rack on a hearse rule"): From a moderately diversified investment portfolio, you would be able to withdrawal one full percent (1%) per month and likely chew through your principle over time, but not at a rate fast enough to reach zero before you die. You need not be a math wizard to deduce that this equates to a 12% per year rate of return. Once again, for our mythical one million dollar nest egg, you would earn $120,000 per year (or $10,000 per month). Can you live on that? Even without adding back SS and perhaps a pension, most Americans could easily say "I can live on that." It might not even require the relocation to a lower cost, more tax friendly state (but, hey why not!).
There is a mountain of empirical evidence to support both rules; based on life expectancies, historical investment returns, the business cycle, etc. The rule is easy to apply, and in most cases you don't need a calculator. For example, you are 50 years old, and just received your quarterly IRA statement. It projects that in 15 years (you projected retirement date) your balance should be about $700K, with past returns projected out. You have no heirs, so you apply Rule #2 and determine that you can withdraw $7,000 per month. When you add in your expected SS income and a small pension, you decide this is fine and little if any change in lifestyle will be required.
On the other hand, if you insist on leaving an estate to your heirs you must apply Rule #1. Worse yet, you have always been self-employed and paid only minimal amounts into SS and have no pension. Could you live on $3,500 per month? Certainly not in NJ, but it seems it would be lean even in North Carolina, Tennessee or Florida. Your only choice is to throw the heirs overboard and/or substantially increase your savings rate between now and your retirement date. You get the point.
One can conjure up any number of scenarios. However, the basic premise is that, generally speaking, you won't chew through principle at a 6% investment return and only modestly so at a 12% return. You can pick points in between and modify any number of other parameters, but the rules will generally hold true. And better yet, you can ignore inflation and taxes since they shouldn't appreciably change the math. I apply these two rules of thumbs all the time. And you can too. Maybe you could even charge a fee...
GCFlash is a weekly e-mail sent only to its listed customers and associates free of charge. GCFlash informs customers of special product offerings which may be of interest, current interest rates on both deposit and loan products, selected financial news and other financial tidbits. GCFlash is intended to supplement the more comprehensive information listed on the GCF Web site at http://www.gcfbank.com.
For more comprehensive information, visit our Web site at http://www.gcfbank.com or call (856) 589-6600 Ext: 337 (Timothy P. Hand)GCFLASH PRIVACY STATEMENT
GCF maintains your e-mail address in a confidential and secure database along with much of your other account information, such as mailing address and telephone number, etc. Before aggregating our e-mailing list each week, we filter out any duplicates. In most cases, this inhibits the unintended e-mailing of multiple copies of GCFlash to a single e-mail address. However, because these account records are kept by both individual and account, there is a chance members of the same household could each receive a copy of GCFlash or any other transmission at the same e- mail address - resulting in multiple copies. For example, a husband and wife that both have accounts with GCF may both receive a copy because the names are different but listed at the same e-mail address. This is similar to the manner in which each individual may share a common telephone number. To handle this situation, GCF recommends you simply delete any extra copies of GCFlash as this will ensure that ALL individuals receive any future promotional mailings, which might only be targeted or offered to specific accountholders meeting certain criteria. GCF has the capability to suppress customer e-mail addresses so they are omitted from our transmission list. If you would rather have a specific household memberÃ¢â‚¬â„¢s e-mail address suppressed in our electronic database, simply send us a reply, as stated below, and indicate the accountholder for which you would like to have e-mail suppressed. Please keep in mind that this suppression will mean that NO future e-mails are sent, including special promotional offers. If you have any questions about this process or need additional information, please contact us at firstname.lastname@example.org.
If you would like to be removed from this electronic mailing list, please hit reply and place the word REMOVE in the subject line. Please note, removing your name from our electronic mailing list means GCF will send NO FUTURE NEWS or SPECIAL OFFERS.
Banking With Us