Rolling calls to following months increases your exposure to the market. You are giving the position more time to drop in price, thus increasing the chance the position will not be called away. We are selling the time premium. With all other things being equal, the premium on options decrease every day. However, the rate at which the premium decays is greater for one month options than two month option.  Because of this, selling a one month option allows us to capitalize on the time value more than other options can.

Stick to the strategy! There is never a time in the book where you get out of the position before Trade Day. You are supposed to be in Bora Bora, not looking at what your stock is doing. If you wanted to sell this stock, you would have to buy back the call option(s). After commissions there would not be as much profit as you think. The point of the rules of the Snider Method is to not think and make decisions about stock prices; no one can predict where prices are going.

NO.  If profits cannot be realized by selling calls one strike above average cost, use the Note Rule. Note rule should only be used on the entire position. We feel owning shares of a position at lower levels is of more benefit to the overall cost basis of a position than it would be to bundle and sell off lowest priced shares, therefore do not use the Note Rule on Bundled shares.

The Bands are set at $5 spreads above $30, and $2.50 spreads below $30. So, if you do end up buying stock above $30 one month and below $30 the next month, for instance, your second buy at is $28.50, then your second purchase is in the Band set at 27.51 to 30.00 and your first purchase is in the band set at 30.01 – 35.00. The Bands above $30 will always be $5 wide regardless of the current price of the stock.



YES. Wording on the checklist is very specific for a reason. Follow the checklist literally in the order presented. Lattco’s purpose is to take away the emotion of picking stocks. We know that there are times when you will sell calls just under the current stock price. Any appreciation in stock will be reflected in the call premium.

YES.  Buying stock, and selling options are independent of each other. You buy stock each month to build your ladder, you sell options when you can. The checklist is specific in its order, it has you buy stock first and then look to sell options.

YES.  Purchasing shares at lower prices allows you to reduce your overall cost basis in the position.  We understand buying stocks at lower and lower levels can be scary, but the method is designed to build a ladder – stocks bought at various levels. This can create favorable Bundling and capital gains opportunities down the road if the price stabilizes or appreciates.

Though a rare occurrence, being called away on a partial lot requires minor adjustments. Continue buying at you normal level. If you were buying 300 shares each month, continue buying 300. If you make it to ten months you may have to buy some extra shares to get you to ten times your level. Band rule can get mixed up, we use a tiebreaker. If there are 200 out of 300 shares left it counts as a purchase in that band, but 100 out of 300 does not count. Assume that your lowest shares were called away as normal.

We recommend 80% of the past 6 months’ yield, up to a maximum of 10% of total account value. New accounts should use historical average for your account type. Ideally it is best to leave some profits in the account for Stake growth and inflation protection. Take only the amount needed. Remember to have an emergency fund outside of Snider Method (we recommend a year’s worth of expenses). Try not to dip into principal. Withdrawals for living expenses should not be based on monthly premiums and profits, because these can vary from month to month. Every 6 months recalculate yield average and adjust withdrawal amount.

There is no way to look back and see how the Snider Method would have performed during a historical period of high inflation like the late 1970’s and early 1980’s. That is because many factors contribute to Snider Method yields. Rising inflation will affect each one of these factors separately, and they may go in different directions. People often ask us to isolate the effect of inflation – in other words, all else being equal, what impact would inflation have? But all else never is equal, and the things that cause the inflation in the first place can also affect stock prices, volatility, etc. These are all things that can have an even greater effect on our yields than inflation. With higher inflation, normally come higher interest rates.

Higher interest rates should increase the price of calls, but decrease the price of puts. Many factors contribute to Snider Method yields. Rising inflation will affect each one of these factors separately, and they may go in different directions. This makes it tough to know exactly how the Method will react. People often ask us to isolate the effect of inflation – in other words, all else being equal, what impact would inflation have? But all else never is equal, and the things that cause the inflation in the first place can also affect stock prices, volatility, etc. These are all things that can have an even greater effect on our yields than inflation.

Historically, stock prices are an acceptable hedge against inflation. Ultimately, it comes down to the company and its ability to pass on price increases to the customer. If they can completely pass on the higher costs, margins will remain intact and the stock price should not suffer. Our goal for the Snider Method is to produce an optimal outcome over the broadest range of possible scenarios. At the same time, we have to understand that we cannot know what the different variables will be in any given future scenario. The idea here is since the future is impossible to predict, you should not invest to protect yourself from one possible outcome. You should invest to do as well as possible in as many outcomes as possible. Given our understanding of randomness and uncertainty in the world, we don’t believe anything is a foregone conclusion. We don’t know if there will be inflation in the near future. There might be. There might not be. For every economist who says high inflation is inevitable, I can show you one who makes an equally credible case for why it is not. Unfortunately, Confirmation Bias dictates that we only tend to hear information that supports a view we already hold and filter out anything that contradicts that view. It works that way for all of us. It is part of our hard-wiring. But it can be very dangerous as it often causes us to fight imaginary dragons that don’t exist.

If a position closes allocated cash is freed up. Pairing that with the money added and you can buy higher priced stocks on the next Trade Day.  If you wait until Trade Day, you know which positions close, and how much cash will be available for newAI
z ‘S�#, �.+ same day your funds clear. This can be found on your “Balances” screen under your  “Account” tab. Remember to always sell options for the next calendar month. For example if today is November 30th, sell December options. If today is December 1st sell January options.

To avoid it, you have to accept a lower level of return. In order for us to achieve an acceptable level of return we will experience volatility along the way. The fact is that it is impossible to avoid the possibility of a repeat. In fact, there have been thirteen post-WWII bear markets, running between 19% and 57% and averaging about 30%. Wealth, in our opinion, is your ability to maintain a certain standard of living indefinitely over time. It isn’t measured by your portfolio’s account balance, but by the inflation-indexed income your portfolio can.

The number at the top of your account statement is irrelevant with a cash flow investment strategy. The number you should be concerned with is the amount of income your portfolio can generate in order to maintain your standard of living indefinitely over time.

Once you retire and begin living off your investments, the natural fluctuations in the economy and financial markets will create variations in your retirement income. Your emergency fund will make those fluctuations manageable.

Cash is your most effective tool for smoothing out the effect of market volatility on your retirement income. This system of managing portfolio variability in retirement is very easy and very effective. When the market’s down and your portfolio isn’t generating the income you need, pull the difference from your emergency fund. Do this as long as you need to in order to supplement the amount you’re not getting from your portfolio with cash.

Markets are mean reverting, meaning the pendulum will swing both ways. When the market booms, put any excess over what you need to live off of back into your emergency fund to replenish it.

If your account is under $500K, make sure you have calculated your Allocated Cash correctly. Keep in mind, your Allocated cash could rise above your Stake if the stocks increase in value after Lattco’s recommendation.  For accounts over $500K, Lattco uses an Adjustment Factor to take advantage of the number of positions your account can hold because of its large size. The odds that all positions will use up all the cash allocated to them is small, so you can fit more positions into your account than you normally would. Lattco uses different Adjustment Factors for margin and non-margin.  Monthly withdrawals can also lower your Stake causing your Allocated Cash to be higher than your Stake.

Trades may be able to be move between accounts.  We recommend correcting the errors as soon as you realize an error was made. According to your Snider Rules if you were to only sell 2 calls, but you sold 3, buy to close one call. If you bought 1000 shares, but were only supposed to buy 100, sell 900 shares. If you recognize the trade error, call the Snider Advisors’ Support Team to discuss the best corrective action. We recommend fixing errors because we are familiar with the long-term outcome of the Snider Method.

This is why we have a savings cash fund, depending on the size of the withdrawal it may be best to take the cash from this account.  It may be best to contact Snider Advisors when you need to take a one-time withdrawal.  Certain factors we look at when determining which positions to liquidate are: Overall impact to the account, Impact to the account’s diversification, The size of the withdrawal relative to positions’ market value, the holding period of a position, total premium collected on a position.

Most of the bad press about these funds is for ETFs linked to a specific commodity. We recommend a broad based commodity ETF that is less impacted by the design flaws. Our GSG recommendation is the best way to gain access to a different asset class for a very low cost. It correlates highly with the asset class we desire, unfortunately, not perfectly. The asset specific ETFs seem to have two downfalls. The first is the current shape of the futures curve.  Longer period contracts are currently more expensive. This creates a cost each time the company’s need to rebalance the portfolio. However, the curve is not always upward sloping. It can have the opposite, downward sloping shape. In this case, these ETFs should outperform. The second potential downfall is traders front running the funds to profit off their future transactions. I haven’t seen any evidence of the actual price impact on the futures contracts. Also, the front runners have to place a bet on the direction of the price. If this bet is incorrect, they can lose a significant amount of money.

Understand that whatever bad news came out about the stock, is already factored into the stock price, even before the news reaches you.  The price of the stock after the news breaks is unpredictable. It will be based on future events which are unknown at the present. With the Snider Method, we take the emotional aspect out of investing, don’t let your emotional reaction to information drive your investment decisions. The Snider Method avoids selling stock at a loss, this incurs negative compounding, which can damage a portfolio.

Deposit < 150K; wait until next trade day. Deposit => 150K; trade immediately.

If the newly added money is a sum of less than $150,000, you will wait until the next Trade Day to trade. If the sum is $150,000 or more, you will trade immediately. 

The reason that you will need to wait until Trade Day for those additions under $150,000 is so you can determine if any of your active positions will close beforehand; if this is the case, the cash that is made available can be pooled to work with your newly added money.

No, you should be in Bora Bora, not keeping an eye on your positions.  Adopting a strategy and sticking with it will yield the best results in the long run. Following rules creates a systematic, non-emotional approach to investing. By selling the calls pre-Trade Day it is possible that you could be giving up potential profits should the stock keep rising. On the other hand, selling now could lock in premium should the stock price fall. This is an emotional roller coaster we like to avoid by sticking to a systematic trade method.

Yes, Bands should stay at $5 increments, given the stock price is between $30.01 and $100.00. The Bands are determined by purchase prices for a given stock.

No, you should be in Bora Bora, not keeping an eye on your positions. Selling the stock requires you to buy back the options you sold; in the end the transaction will not be as profitable as it seemed.  The Snider Method is a systematic method of investing, which takes out all the decision making and emotions; breaking the rules and selling the stock is an emotional decision, these types of decisions can be harmful to your portfolio in the long run.

We have heard this question in many forms since the market crash. They all boil down to: How do I reduce my risk? You need to remember, any risk reduction will also influence our returns. You should adjust your risk exposure by the amount of assets you have invested in the Snider Method. If you feel you need to reduce the risk, you should take some of your assets and put them in a risk-free investment like Treasury securities.

Now feels like a good time to buy protection for your investments, but keep in mind you are protecting yourself from a battle you just fought. Three years ago, our investors were requesting a more aggressive strategy because they felt they were being too conservative. Emotions consistently drive us to create poor investment decisions. This is why we created a systematic approach to investing. Each aspect of the Snider Method contributes to the Risk/Reward balance. Together they all create a balance that we are very pleased.  Adjusting the risk profile of the strategy to be more conservative or more aggressive are all market-timing decisions. These are the decisions investors around the world consistently get wrong.

Our strategy takes the decisions out of the investor’s hands and leaves it up to the market to adjust our exposure. Protecting ourselves from these terrible events hurts our performance in all the other years they do not occur. These types of events are unusual; however, they will happen. It is our goal to set you up to perform well in as many market conditions as possible so that you can prosper over the long-term.

Understand that all events that can be screened, and all news that breaks about a company has already been factored into the price of the stock. In regards to pending events, it is these events which give rise to the uncertainty of the stock price and therefore higher option premiums. A company with a strong balance sheet, that passes bankruptcy screens, and has uncertainty of events around it is exactly what we want. Screening these events would be counterproductive.

Lattco does not take Bands into consideration when it determines which put to sell. Lattco uses a 95% out of the money calculation, and then returns the next lowest strike.  Example: XYZ is trading at $55.85 the strike that is 95% out of the money is $53.06, the next lowest strike is $52. Lattco would say to sell the $52 put. The dollar strike increments are one reason why we went to the 95% OTM calculation. Puts were being assigned without a significant downward move in the market. Always sell the options returned by Lattco.

If you trade from beginning to end, stick with what Lattco tells you.  If you get interrupted, you may want to re-run the list – be sure to update Lattco with your new positions Option prices will reflect movements in stock prices.  This should not be an excuse to find a new “better” stock.

Start the same day your funds clear. This can be found on your “Balances” screen under your  “Account” tab. Remember to always sell options for the next calendar month. For example if today is November 30th, sell December options. If today is December 1st sell January options.

We don’t pick stocks because we think they are going to go up in price, we are looking for good candidates for the Snider Method (these are not speculative stocks).  Each piece of the strategy works to manage the volatility, fundamental screens, dollar cost averaging.  We are also more conservative in non-margin (retirement accounts) with the higher divisor Retirement Planning course does a good job to understand cash flow investing (vs. traditional capital appreciation) like the Snider Method.  The screen process could reduce the risk, but our yield will also decline.

Trade your account as soon as possible.  Always sell next month’s options. To determine which option expiration needs to be sold, refer to the calendar. If today is March 31st sell April options. If today is April 1st sell May options.  Sell the next month option based on today’s date.

If you know in advance that you are going to miss Trade Day, you can request a Vacation Trade from us. Vacation Trades can be requested on the Snider Advisors website; locate the tab labeled “Services” on the front page, and select the link for Vacation Trade to request one.

It is still possible that you will miss a Trade Day due to some unforeseen circumstance; in that instance, the course of action to take is to undertake your trades as soon as possible. Please keep in mind, however, that the options you trade in will have their expiration dates determined by the date that you trade. For example, a trade enacted on November 26th will be for December expiring options, while a trade enacted on December 1st will be for January expiring options.

If there are any other points that need to be clarified, please feel free to contact us with any questions you may have.

Less than half the purchase level does not count as purchase in a band. If this happens with a Band Rule Put the same majority rule applies. If you sold 3 Band Rule Puts and one was assigned do not count that as a purchase in that band.

Historically, major market corrections have happened approximately every 5 years. See attached chart. No one has been able to consistently predict when they will occur. There are plenty of people who have gotten famous for a single market call. Some of them really did call it – Elaine Garzarelli, for example, called the crash of 1987, Ralph Acampora and Abby Joseph Cohen were famous for calling the bull market of the 90’s. But none of them have been able to do it over and over again.

That is luck, not skill.

Since we are unable to predict these events, we need to weather the storm when it arrives. The idea is not to run to harbor every time there is an approaching storm but to build a boat designed to sail in the broadest possible range of weather conditions.

Our boat is the Snider Method.

Since the future is impossible to predict, you should not invest to protect yourself from one possible outcome. It is our philosophy that we never make a change to our investment portfolio based on what we, or someone else, “thinks” is going to happen. If you have constructed your portfolio properly, knowing these events occur on a fairly regular basis, there should be no need to make changes.

Many people have written books predicting unusual events, there is no harm reading them. But remember, Confirmation Bias, which is hard-wired into each of our brains, causes us to seek out opinions which reinforce the view we already hold. For every economist who predicts one thing, I can show you an equal number who make a very credible case for the opposite.

Confirmation Bias tends to filter out the viewpoint that contradicts our own. Confirmation Bias works in a similar way with fear. If you fear something, you will tend to hear noises that go bump in the night. If the world is ending, our portfolio is likely to be the least of our concerns. At that point we are probably standing guard on the roof of our house with a flame thrower, like Mad Max, trying to fend off looters. If you are unsure about whether or not you have a properly diversified portfolio or how the Snider Method fits into a larger financial plan, we would strongly urge you to contact us for a consultation.

This happens very rarely because most times the owner of the option can get more money by selling the option to someone else than he can be exercising the option and selling the shares on the open market.   We usually only see an option exercised just before the expiration date, or if the stock is much higher than the strike price, and even then we don’t usually see it.   If you are called away early do not reestablish a new position that month. Remember, you are in Bora Bora until Sunday before Trade Day and there is no action needed until then. It’s better to wait until next trade day to see if other positions have closed, interest and dividends get paid, etc. Batch up all your cash to buy new positions so you can get in higher dollar stocks, rather than jumping into a new stock whenever cash becomes available.

An ETF is an Exchange Traded Fund.  An ETF trades like a stock, but holds a basket of securities that tracks an index.  Most ETFs track an index, their goal is to replicate the overall performance of the index they track daily.  For example a Dow Jones Industrial Average Index ETF will hold the stocks that make up the DJIA Index.  Instead of purchasing all the 30 stocks, an ETF allows you to own a portion of all 30 stocks by purchasing ETFs allow an investor exposure to an entire sector, or index for a low cost.

Lattco recommends ETFs for smaller accounts to reduce bankruptcy risk and company specific risk.  We can easily be diversified while still holding only one position.

Just because a stock has high premiums in a month, of another one has low premiums, you cannot make the leap and say that a stock will have higher or lower return.  Option prices are driven by many different things. Two of the most important factors are volatility and where the stock price is in relation to the strike price. Volatility fluctuation between high and low is the biggest contributing factor to option premiums. Stock price in relation to strike price is random. Low volatility stocks can fall in the right place on trade day and it will pay off big. But there is no way to control or predict it. Some of the best positions in The Snider Method seemed doomed to fail while they were open. We haven’t found any relation between option premium in the first month and the profit when we close a position. We chose our sort factors to create the optimal blend for the size of your account. The only thing we know for sure is the amount of premium we can create today.

We focus on income. The amount that needs to be allocated to the Snider Method is whatever amount  is required to produce the income you need to maintain your standard of living indefinitely into the future. That may mean that 100% of your portfolio is needed to be invested for income generation, but up to 70% of your assets should go in the Snider Method.

We take a waterfall approach, so each dollar of your investable assets will be directed to the first “pool” to produce cash flow. Once the goal of income is achieved, the next dollar can be directed to hedging against hyper-inflation with broad-based commodities exposure, up to a total of 15%. If you have additional assets remaining, you will want to invest in real estate, as it is a non-correlated asset.

So the ideal breakdown is (in order):  70% Snider Method, 15% Commodities, 15% Real Estate

It is important to note that your Snider Method account should be completely separate from your emergency cash reserves. We advise everyone to only put money in the Snider Method that they are willing to leave invested for at least two years. Twelve (12) months of expenses in a liquid savings account plays a crucial role in the success of your financial planning.

In the Snider Method, we require that our cash holdings come with no risk of loss of principal and our cash must be liquid. Too much risk must be taken with other securities for investors who want to capture this extra yield. While your cash may not earn much in a money market o FDIC program at this time, it is being held at minimal risk. When interest rates rise in the future to more normal levels, we will look at opportunities to invest access cash in safe liquid investments such as T-Bills. See document. “How To Guides”

A position closes in The Snider Method when all shares have been sold. When all shares have been sold the Profit from the Closed Position will be reflected on the Stake Worksheet. When some shares are sold due to Bundling, profit from The Sale of Stock will be reflected on the Monthly Yield Worksheet, however the position is still not closed.

Treat assigned puts like any other purchase.  Your checklist reminds you to update your Individual Stock Purchase Record and Band Rule Worksheet when you’re completing your Sunday Evening Bookkeeping.  Remember assigned puts in the first month prohibit you from buying shares in the second month. Assigned puts due to a Band Rule Put do not prohibit you from buying in the coming month. For instance, in month 8 you use the Band Rule Put and it gets assigned, in month 9 you will purchase stock – unless doing so would cause you to violate the Band Rule.

The person who owns a call, which you sold, has the right to call away your shares. There is no action on your part. In partial assignment situations options are randomly assigned.  Remember the owner of the option has the right, not the obligation, to call away your shares. Because they now own the right to call away your shares, they can exercise that right anytime before expiration date. Most option buyers are speculators with no interest in owning the stock. The option you sold originally has likely been bought and resold numerous times. Whoever owns that contract on expiration day can decide to exercise their right and call away your shares.

We feel it is important to stay diversified among companies owned across all portfolios. All the assets that affect your financial future should be considered when looking for Snider Method positions.  Diversification is a risk management technique, by spreading investments across a number of equities it minimizes the negative effects of downward price movements. Holding the same stock adds additional risk, but we are not being compensated for it when there are other alternative positions to hold. Having the same stock in multiple portfolios can create a headache at tax time.

The exchange which the stock trades on determines if dollar strikes will be offered. Each exchange can elect to list dollar strikes on equity options up to a maximum of 55 individual company.  A stock’s price must be $50 or less to be eligible for the $1 strike listing. Stocks not chosen for $1 strikes are listed with the traditional $5 strike if the stock’s price is above $25, and a $2.50 strike if the stock is below $25. $5 strike = stock’s price > $25; $2.50 strike = stock’s price < $25; $1 strikes increase the number of available options for a stock.

Selling puts in the first month is a way to make a little extra money in normal market conditions.  Calls are sold almost at-the-money so there is a high probability of being called away, if this happens than the put sold will not be exercised and you keep you put premium as extra yield.

Historically, approximately 45% of newly opened positions will close after the first month. Selling a put in the first month allows us to generate extra income on the position, just in case the position does indeed close.

Do not include option premium in Stake calculation until position has closed. Not including premiums in Stake while the position is open is a risk management decision. Premiums are retained for existing open position costs. Waiting until the position closes tends to push you into higher dollar stocks, rather than building Unallocated Cash slowly and buying a new position every time it gets high enough to open a new position with a $25 stock.  Leaving premiums in a position helps to hedge against the risk of a margin call.

Selling puts adds both yield and risk. We do this in the first month because we’re starting with a lot of cash and few shares (overall a low risk situation, low opportunity for yield situation). We don’t do it in subsequent months because we’ve accumulated more shares which means both more risk and the opportunity for more yield. We don’t need to be selling puts in those months. A Snider Method goal is to build a ladder covering a range of stock prices. If we sold puts every month we would end up with a ladder with a high average cost, thus reducing the chances of being called away in the near future while increasing the chances of falling into Winter.

When a put is assigned, it occurs at a price that is above the current market price. When puts are assigned continuously over an extended period of time, it results in an artificial inflation of the Average Cost that is paid for the security. Therefore, selling puts every month would increase the risk of inflating the Average Cost paid for the position, and will also likely increase the amount of time that the position will remain open (the inflated Average Cost will make it harder for the position to close).

We are selling the time premium. With all other things being equal, the premium on options decrease every day. However, the rate at which the premium decays is greatest at 30 days. Because of this, selling a one-month option allows us to capitalize on the time value more than other options can. Rolling calls over to following months increases your exposure to the market. You are giving the position more time to drop in price, thus increasing the chances the position will not be called away. Although you may initially receive more money by rolling calls, this can have long term ramifications if the price drops. Since the Snider Method looks to capitalize on time premium while limiting exposure to the market, we do not roll calls.

Higher potential withdrawal rates. Capital appreciation strategies were designed to work as a “buy and hold” strategy. The issue with this is that when you are entering retirement, you often have to liquidate assets to generate income despite their market value. The challenge is approximately one out every five years in the stock market is a down year. If you have to sell in order to realize profits to pay your bills, you will have to sell at a loss a large percentage of the time. This creates a reverse compounding problem, which creates a high probability you will outlast your money.

Cash flow is money that comes to you while you still own an asset. Examples of cash flow would be rent, royalties, interest, dividends, and option premiums. The key characteristic of cash flow investing is that you do not have to sell the asset in order to make money. This allows you to maintain your standard of living throughout your life by generating income from the asset, rather than trying to sell based on price predictions.

No one can predict prices or market movements with any consistency, so investment strategies that rely on luck or gut feelings, like capital appreciation strategies do, won’t work.

Bundling may feel good in the short term because you are generating more premium, but long-term. Bundling has a negative effect on the balance of risk and income. Bundling increases the Average Cost of your position, thus lengthening the time you will own that position. Bundling reduces the likelihood that you will be close a position in the short term.

It depends. If you have a group policy and your employer pays the premiums (or the premiums are paid with pre-tax dollars), then the monthly benefits will be taxed. This could make a difference in the amount of coverage you actually have and the amount you need to cover your monthly living expenses. If you own an individual disability policy and pay your premiums with after-tax dollars, the benefits you receive will be tax-free.

Yes. Snider Advisors is proud to offer you solutions for your disability insurance needs. We will look at your entire financial picture and design a policy to fit your specific situation. We represent several well-known carriers, and we’re happy to provide a complimentary quote comparison for you. Contact us today to set up a consultation or review of your current coverage.

Absolutely, but it depends on how much coverage you have and what your needs are. If you have a group policy, for instance, that only covers 60 percent of your salary (and you know the benefits are also taxable), you very well may elect to purchase an individual policy to supplement the group plan. The insurance company will look at how much coverage you already have in force to determine how much more you can receive based on your income. The maximum coverage amount is typically up to 85 percent of your salary; moreover, 100 percent coverage is never available in order to encourage you to return to work if possible.

Your savings can definitely supplement your needs if you were to become disabled, but the reality is that your savings are a finite resource; therefore, they are only a short-term solution to a potentially long-term problem. You must have a plan to spend down to a certain limit and transfer the rest of the risk to an insurance company. Savings are also a great way to help reduce the cost of a disability insurance policy because you can choose a longer waiting period for your benefits to kick in and use your emergency fund in the meantime.

Ask yourself this question: If I became seriously sick or hurt and could not work, how would I continue paying my bills? If your answer is that you’re not sure, you need disability insurance. Most people realize the necessity of insuring their homes and lives, but it’s surprising how many do not insure their most valuable asset — the ability to go to work and earn an income.

The statistics for disabilities in America are pretty astounding. For example, the chance of a 35-year-old suffering a disability that lasts three months or longer before age 65 is 50 percent. Those aren’t odds you should bet on with your financial security. Disability insurance protects your paycheck if you lose earned income due to a major accident or illness, and it is a critical component of the rock solid foundation of your financial house.

Without disability insurance, you are risking your financial future and well-being. How will you continue to meet your financial obligations if you have no income? Your savings will only last you for so long, and do you really want to deplete all of your emergency fund? Then what? Are you going to go into major credit card debt? How are you going to save for other important financial goals, such as college for your kids and your retirement?

If you’re thinking this is a lot of questions, you’re right. Without disability insurance, you not only take arisk of losing out on earned income and putting yourself in serious debt, but you also risk your emergency fund not being available for the emergencies that can’t be insured, like losing your job or having to take a long leave of absence to care for a family member.

Snider Advisors is proud to offer you solutions for your disability insurance needs . We will look at your entire financial picture and design a policy to fit your specific situation. We represent several well-known carriers, and we’re happy to provide a complimentary quote comparison for you.

Ask yourself this question: If I became seriously sick or hurt and could not work, how would I continue paying my bills? If your answer is that you’re not sure, you need disability insurance. Most people realize the necessity of insuring their homes and lives, but it’s surprising how many do not insure their most valuable asset — the ability to go to work and earn an income.

The statistics for disabilities in America are pretty astounding. For example, the chance of a 35-year-old suffering a disability that lasts three months or longer before age 65 is 50 percent. Those aren’t odds you should bet on with your financial security. Disability insurance protects your paycheck if you lose earned income due to a major accident or illness, and it is a critical component of the rock solid foundation of your financial house.

Disability coverage is calculated as a percentage of your income. Most standard policies start with 60 percent coverage. Supplemental policies could increase your benefit up to 85 percent. For a quick, back-of-the-napkin way to figure your disability protection needs, do the following:

Group disability benefit amount (net):

Any additional household income:

Total =

Total monthly expenses:

The difference between your total monthly expenses and your current resources is the monthly benefit amount you should seek in a disability policy. For example, if you earn $65,000 a year and have 60 percent coverage through your employer, after taxes your monthly benefit will be about $2275. Let’s say your spouse works part-time and brings in $1,800 a month. The total of these two would be $4,075. If your expenses are $5,000 a month, you will want a disability policy that will cover the $925 gap. Obviously, if you do not have any group benefits or a working spouse, your need for individual disability insurance will be higher.

Disability insurance is priced based on several different factors: your gender, your age, your health status, your occupation, and your annual salary. Typically, females are less of a risk for insurance companies, but not in the case of disability insurance. Their policies will cost about 50 percent more than a man’s. Also, the older you are, the higher your premium will be. If you have hiccups in your medical history, your premium may be rated as well.

The primary determinants of your policy’s premium will be your occupation and salary. The safer and more sedentary your job is, the less you’ll pay. For example, an accountant will not pay as much for disability insurance as an electrician. Your monthly benefit is figured by covering a percentage of your annual income. If you make $80,000 a year and you want 65 percent coverage, then your monthly benefit would be about $4,333. Clearly, the more you make, the more monthly benefit you’ll need, which will result in a higher premium.

The rule of thumb here is that an individual disability policy will cost you about one to three percent of your annual salary. A good policy will be near the top of that range, but it’s a small price to pay for the peace of mind it provides.

Group benefits are a great value and provide a nice safety net, but there are some other very important things to consider. For instance, most employer-sponsored long-term-disability (LTD) benefits cover 60 percent of your salary. If your employer pays the premium (or the premium is a pre-tax deduction from your pay check), those benefits will be taxed. Because of this, many people find that their group LTD benefits may not be enough to cover their expenses. Can you live on 42 percent of your income?

It is also essential that you know what your group benefits will actually provide by reading the contract language carefully. It does no good to think you’re saving money by getting a policy through your employer if you won’t be able to collect the benefits when you need them. Compared to individual policies, group insurance benefits are often less generous.

Be sure to know the policy’s definition of disability. Is it “own occupation,” which will pay you benefits if you are unable to do your specific job duties, or is it “any occupation,” which will only pay benefits if you are unable to work in any job? A surgeon who breaks his hand, for example, and cannot perform surgeries could collect benefits with “own occ,” but with “any occ” he may be forced to go teach or do administrative work and would not receive disability benefits.

Most group policies can be canceled at any time, leaving you without coverage. You’ll also need to find out if your employer-sponsored plan is portable, meaning that if you leave your employer, you will still be able to take your policy with you. Why is this important? Remember that as you get older, the odds increase of getting an illness, accident, or condition that makes you uninsurable. Not all employers offer disability benefits. What you want to avoid is having to change employers, not owning a policy, not having a policy that is portable, and finding you can’t get private insurance any more.

To purchase a disability insurance policy, you simply need to apply. Along with your application, you will need to submit your first premium. If you decide you do not want the policy or are denied coverage, a full refund will be given to you. You will also need to supply income verification. This is usually accomplished with tax returns, although you may need to furnish a few other financial documents if you are a business owner.

Depending on the monthly benefit amount, the insurance company will also often require that you complete a brief medical examination, which typically includes a urine and blood sample. You will be given a survey on your health history, and the insurance underwriters will order your medical records from your doctor(s). They will evaluate any diagnoses, surgeries, recommended procedures, medications, and your overall health condition.

Well, let us first confess that we are biased here. We believe that you should only buy disability insurance from a true expert – and not just an expert on disability insurance, but an expert in financial planning. This is part of the foundation of a solid financial house, so you want to be sure you have the best architects working with you. You do not want to buy a policy from someone who does not really understand your specific needs and how disability insurance fits in the big picture.

The purpose of a disability policy is to manage a risk – not just any risk – a possibly catastrophic financial risk that has the potential to gravely impact your household and future prosperity. This type of coverage is a must if you rely on your paycheck to meet your expenses.

The most important thing is to work with an agent who understands the magnitude of the risk being managed, its potential impact, and how it fits in with your entire financial picture. If the agent does not ask to see your personal income statement and balance sheet and have a lengthy discussion about your resources and financial situation, that, in our opinion, should be an immediate red flag!

Disability policies have many moving parts, so it’s important that you understand all the base components of a sound policy as well as all the additional features, or riders, that are available to you. Riders are add-ons to a base disability policy that can enhance your coverage according to your specific needs. Different carriers offer different riders, and sometimes companies will include certain no-cost riders as part of the base plan. More often, riders will be available for an additional premium, and some are just too valuable to overlook.

Base features: At the very least, you want a policy that is non-cancelable and guaranteed renewable. This means that the insurance company cannot cancel or change your plan as long as you pay your premiums.

You also want a 90-day elimination period or longer; anything shorter will drive up the premium significantly.

Choose a benefit period to age 65, which will pay you benefits if you become disabled until you turn 65. This way, you’re covered for the rest of your working life.

Most importantly, you’ll want to be sure that the policy’s definition of disability is “own occupation,” meaning you’ll receive benefits if you are unable to perform the duties of your own job at the time of disability.

Riders: One of the most important additional features you’ll want to include is a residual disability or partial disability rider. The nature of the way disabilities occur is usually gradual. It is unlikely that someone will become disabled one day and then get better all of a sudden. People become sick over time as well as recover over time. A residual disability rider will pay the insured partial benefits if he or she is only able to do some of the material duties of the job or only work part-time. The benefits paid are usually in proportion to the percentage of income lost.

Another important rider you’ll want to add is inflation protection. A COLA, or cost of living adjustment, will increase your benefits so that you don’t lose purchasing power. This is calculated in different ways, but most companies offer the COLA as a flat percentage between three to six percent or adjust your benefits based on the CPI-U (Consumer Price Index – Urban).

The future purchase option, or future increase option, is a powerful addition to a disability policy. If you ever foresee an increase in your income, then this rider is a must. It guarantees you the ability to buy more coverage in the future regardless of any adverse changes in your health. Without this rider, there is no guarantee that you will be able to buy more insurance, and as you get older and generally less healthy, the future purchase option will be a surefire way to protect you against becoming uninsurable.

If you are no longer working or do not need to insure your paycheck, you may consider dropping your disability insurance policy. This time usually occurs at retirement. When you retire, it typically means that you either do not earn a salary any longer or you have enough resources to cover your monthly expenses. There’s a good chance that at this stage in your life, other types of insurance, such as long-term care insurance, should become your main focus. You can then shift the premiums you paid for disability insurance to help fund these other objectives.

Just like with any other insurance, you are always “one step away from the banana peel.” You never know what will happen on your next doctor’s visit, and you don’t want to wait until then to find out you’re uninsurable. You should purchase disability insurance as soon as possible if you are working and have no other means to support yourself if your income were to cease due to a disabling incident.

Disability insurance is essentially paycheck insurance; therefore, if you are not working or earning income, you cannot get coverage. So, if you are a stay-at-home parent and do not earn a salary, you will not be able to purchase disability insurance (even though a stay-at-home parent could very well become disabled). Additionally, there are especially hazardous occupation classes that will not qualify for a policy because employees in those fields of work are deemed to be exposed to too much risk. Some examples include: mold and asbestos removers, air traffic controllers, waiters, entertainers, and professional athletes.

Without disability insurance, you are risking your financial future and well-being. How will you continue to meet your financial obligations if you have no income? Your savings will only last you for so long, and do you really want to deplete all of your emergency fund? Then what? Are you going to go into major credit card debt? How are you going to save for other important financial goals, such as college for your kids and your retirement?

If you’re thinking this is a lot of questions, you’re right. Without disability insurance, you not only take a risk of losing out on earned income and putting yourself in serious debt, but you also risk your emergency fund not being available for the emergencies that can’t be insured, like losing your job or having to take a long leave of absence to care for a family member.

It depends. If you have a group policy and your employer pays the premiums (or the premiums are paid with pre-tax dollars), then the monthly benefits will be taxed. This could make a difference in the amount of coverage you actually have and the amount you need to cover your monthly living expenses. If you own an individual disability policy and pay your premiums with after-tax dollars, the benefits you receive will be tax-free.

Generally, life insurance policies are tax-sheltered and death benefits paid to beneficiaries are not considered taxable income to them. Life insurance benefits will be taxed as part of the policy owner’s estate, under the federal estate tax, if their net worth including the policy is more than the federal limit. This will also happen if the estate is named the beneficiary. To avoid paying estate taxes, a policy owner should not ever name his or her estate as the policy beneficiary. Instead, it is wise to name other persons or trusts as beneficiaries.

Yes. Snider Advisors is proud to offer you solutions for your disability insurance needs. We will look at your entire financial picture and design a policy to fit your specific situation. We represent several well-known carriers, and we’re happy to provide a complimentary quote comparison for you. Contact us today to set up a consultation or review of your current coverage.

Yes. Snider Advisors is proud to offer you solutions for your life insurance needs. We will look at your entire financial picture and design a policy to fit your specific situation. We represent over 30 well-known carriers, and we’re happy to provide a complimentary quote comparison for you. Contact us today to set up a consultation or review of your current policy.

Yes. Snider Advisors offers long-term care insurance from well-known long-term care insurers including Genworth, John Hancock, Mutual of Omaha and others. We will look at your entire financial situation and custom design a policy to fit your unique situation. Contact us today to set up a free consultation or review of your current policy.

Yes. Snider Advisors is proud to offer you solutions for your Medicare Supplement insurance needs. We will look at your entire financial picture and help you choose the policy that fits your specific needs. We represent several well-known carriers, and we’re happy to provide a complimentary quote comparison for you. Contact us today to set up a consultation or review your coverage needs.

Absolutely, but it depends on how much coverage you have and what your needs are. If you have a group policy, for instance, that only covers 60 percent of your salary (and you know the benefits are also taxable), you very well may elect to purchase an individual policy to supplement the group plan. The insurance company will look at how much coverage you already have in force to determine how much more you can receive based on your income. The maximum coverage amount is typically up to 85 percent of your salary; moreover, 100 percent coverage is never available in order to encourage you to return to work if possible.

Your savings can definitely supplement your needs if you were to become disabled, but the reality is that your savings are a finite resource; therefore, they are only a short-term solution to a potentially long-term problem. You must have a plan to spend down to a certain limit and transfer the rest of the risk to an insurance company. Savings are also a great way to help reduce the cost of a disability insurance policy because you can choose a longer waiting period for your benefits to kick in and use your emergency fund in the meantime.

Ask yourself this question: If I became seriously sick or hurt and could not work, how would I continue paying my bills? If your answer is that you’re not sure, you need disability insurance. Most people realize the necessity of insuring their homes and lives, but it’s surprising how many do not insure their most valuable asset — the ability to go to work and earn an income.

The statistics for disabilities in America are pretty astounding. For example, the chance of a 35-year-old suffering a disability that lasts three months or longer before age 65 is 50 percent. Those aren’t odds you should bet on with your financial security. Disability insurance protects your paycheck if you lose earned income due to a major accident or illness, and it is a critical component of the rock solid foundation of your financial house.

Without disability insurance, you are risking your financial future and well-being. How will you continue to meet your financial obligations if you have no income? Your savings will only last you for so long, and do you really want to deplete all of your emergency fund? Then what? Are you going to go into major credit card debt? How are you going to save for other important financial goals, such as college for your kids and your retirement?

If you’re thinking this is a lot of questions, you’re right. Without disability insurance, you not only take arisk of losing out on earned income and putting yourself in serious debt, but you also risk your emergency fund not being available for the emergencies that can’t be insured, like losing your job or having to take a long leave of absence to care for a family member.

Snider Advisors is proud to offer you solutions for your disability insurance needs . We will look at your entire financial picture and design a policy to fit your specific situation. We represent several well-known carriers, and we’re happy to provide a complimentary quote comparison for you.

Ask yourself this question: If I became seriously sick or hurt and could not work, how would I continue paying my bills? If your answer is that you’re not sure, you need disability insurance. Most people realize the necessity of insuring their homes and lives, but it’s surprising how many do not insure their most valuable asset — the ability to go to work and earn an income.

The statistics for disabilities in America are pretty astounding. For example, the chance of a 35-year-old suffering a disability that lasts three months or longer before age 65 is 50 percent. Those aren’t odds you should bet on with your financial security. Disability insurance protects your paycheck if you lose earned income due to a major accident or illness, and it is a critical component of the rock solid foundation of your financial house.

If you are reading this, the answer is most likely yes. How can I say that when I don’t even know you or anything about you? Easy… If you are over the age of 40 and have less than $3.5 million in assets, chances are extraordinarily high that you need a long-term care policy.

Depending on your health care coverage needs, a Medicare Supplemental insurance policy can coordinate with your Medicare benefits to help you fill in any gaps in your coverage and meet your eligible health care expenses.

Snider Advisors has a team of licensed insurance agents who can offer you practical strategies, customized for your specific situation, for managing the risk of retiree healthcare costs, including but not limited to, Medicare Supplement and Long-Term Care insurance.

If you fit any of the following criteria, a review of your long-term care situation is probably in order:

1. You are 40 years old or older, with less than $3.5 million in assets, and you do not have long-term care insurance. The longer you wait, the more expensive long-term care insurance becomes and the more likely you are to develop a condition that makes you uninsurable.

2. You already have a long-term care policy. Long-term care is very specialized insurance that should be custom-tailored to fit your specific situation. As experts in both long-term care and financial planning, we would be happy to review your policy for you. If you have a good policy, we will tell you so. If not, we will show you how we can do better.

3. You have been turned down for coverage because of a medical issue. We have been able to get coverage for a surprising number of clients who have been turned down by less knowledgeable agents.

If you buy a Medicare Supplement insurance policy, you will pay a monthly premium to the private Medicare Supplement insurance company that sells you the policy. Keep in mind, this may be on top of the deductibles you are paying for Medicare Part A and Part B. You must be enrolled in both Part A and Part B to purchase a Medigap policy.
If you are in Original Medicare (Parts A and B) and you have a Medigap policy, first Medicare pays its share of the Medicare-approved amounts for your covered health care costs. Then your Medigap policy pays its share of the cost. Any remaining costs would be your responsibility.

Disability coverage is calculated as a percentage of your income. Most standard policies start with 60 percent coverage. Supplemental policies could increase your benefit up to 85 percent. For a quick, back-of-the-napkin way to figure your disability protection needs, do the following:

Group disability benefit amount (net):

Any additional household income:

Total =

Total monthly expenses:

The difference between your total monthly expenses and your current resources is the monthly benefit amount you should seek in a disability policy. For example, if you earn $65,000 a year and have 60 percent coverage through your employer, after taxes your monthly benefit will be about $2275. Let’s say your spouse works part-time and brings in $1,800 a month. The total of these two would be $4,075. If your expenses are $5,000 a month, you will want a disability policy that will cover the $925 gap. Obviously, if you do not have any group benefits or a working spouse, your need for individual disability insurance will be higher.

Disability insurance is priced based on several different factors: your gender, your age, your health status, your occupation, and your annual salary. Typically, females are less of a risk for insurance companies, but not in the case of disability insurance. Their policies will cost about 50 percent more than a man’s. Also, the older you are, the higher your premium will be. If you have hiccups in your medical history, your premium may be rated as well.

The primary determinants of your policy’s premium will be your occupation and salary. The safer and more sedentary your job is, the less you’ll pay. For example, an accountant will not pay as much for disability insurance as an electrician. Your monthly benefit is figured by covering a percentage of your annual income. If you make $80,000 a year and you want 65 percent coverage, then your monthly benefit would be about $4,333. Clearly, the more you make, the more monthly benefit you’ll need, which will result in a higher premium.

The rule of thumb here is that an individual disability policy will cost you about one to three percent of your annual salary. A good policy will be near the top of that range, but it’s a small price to pay for the peace of mind it provides.

Life insurance premiums are based on three primary factors: your age, your health status, and whether or not you use tobacco products. If you obtain individual coverage, you will probably be underwritten by the insurance company to determine whether you are a suitable risk or not. Underwriting is the process of examining your medical records, health history, and current health status to approve or deny coverage. The older and less healthy you are, the more premium you’ll pay. Conversely, the younger or healthier you are, the more your premium will be reduced.

As mentioned, life insurance provided through an employer will likely be the cheapest coverage you can obtain because it is usually not underwritten. Your benefits handbook or HR coordinator should be able to point you to a table that will outline the amounts of coverage available and the associated costs based on your age.

Term insurance is always cheaper than permanent insurance because it does not have a separate cash value account. Therefore, with term insurance, you can buy substantially more coverage than you can with a permanent policy. If you are in good health, term insurance is pretty affordable. To give you an idea, a 35-year-old non-smoking female with a preferred rating will pay about $400 annually for $1 million in coverage. That’s about $33 a month for a considerable amount of protection.

This number is simple math. Many people pick an arbitrary number that sounds like it’s good enough, but the truth is, you should calculate and arrive at a deliberate amount that makes the most sense for your family. After doing this, you may find that you’re under-insured, which means you’ll want to look into purchasing more coverage. You may also find that you’re over-insured, which means that you can abandon some of your coverage and use those dollars for other financial goals. Add up the following to calculate your life insurance need:

Final medical expenses: This would cover hospital bills if you were sick or severely hurt before dying. The average need is about $10,000; you determine what you would be most comfortable with.

Probate/taxes: It will depend on which state you live in and the size of your estate (which is essentially the value of all your assets), but for an estate under $100,000, the probate and taxes would be $6,000 in Texas. For an estate under $300,000, the cost is about $14,000 in Texas.

Burial and funeral expenses: The average cost is $6,500, but can easily be up to $10,000+ depending on what your wishes are.

Paying off home and liabilities: Add up all of your debts and the remaining balance on your mortgage.

Future college expenses: Look into the costs for the school or university that your child(ren) will attend and multiply the current cost by four to five years. Now, apply a six percent increase each year until the child reaches age 22 (or completion) for inflation. Figure this amount for each child.

One-time expenses: These would include weddings, home improvements, etc…

Income replacement: Decide how long you will want your income replaced and multiply the current amount by the number of years. Do you want to provide this amount until the kids go off to college? Until your spouse reaches a certain age?

Group benefits are always a great value to employees. There is usually no underwriting, so obtaining coverage is fast and easy. The premiums paid are typically a fraction of private insurance costs, but there are some important things to be aware of when evaluating a group life insurance plan.

Most group life insurance is not portable, meaning that if you no longer work at that company, you lose your coverage. Additionally, because many group plans do not require underwriting, the amounts that you can purchase are limited. As a consumer, you always want to be sure to read your benefits handbook and understand exactly what you are getting with your employer-sponsored policy. The last situation you want to find yourself in is losing your job, losing your life insurance coverage, and not being insurable in the private market.

As with all things, the answer is it depends. Some group long-term care policies offered by employers are very good. Others…not so much. Very often, there is an opportunity to either save you money or get you more benefits for the same money, particularly if you are in excellent health and/or are applying jointly with your spouse. The bottom line is the only way to know for sure, whether your group policy is adequate and a good value for the money, is to have your policy reviewed by a long-term care expert.

Group benefits are a great value and provide a nice safety net, but there are some other very important things to consider. For instance, most employer-sponsored long-term-disability (LTD) benefits cover 60 percent of your salary. If your employer pays the premium (or the premium is a pre-tax deduction from your pay check), those benefits will be taxed. Because of this, many people find that their group LTD benefits may not be enough to cover their expenses. Can you live on 42 percent of your income?

It is also essential that you know what your group benefits will actually provide by reading the contract language carefully. It does no good to think you’re saving money by getting a policy through your employer if you won’t be able to collect the benefits when you need them. Compared to individual policies, group insurance benefits are often less generous.

Be sure to know the policy’s definition of disability. Is it “own occupation,” which will pay you benefits if you are unable to do your specific job duties, or is it “any occupation,” which will only pay benefits if you are unable to work in any job? A surgeon who breaks his hand, for example, and cannot perform surgeries could collect benefits with “own occ,” but with “any occ” he may be forced to go teach or do administrative work and would not receive disability benefits.

Most group policies can be canceled at any time, leaving you without coverage. You’ll also need to find out if your employer-sponsored plan is portable, meaning that if you leave your employer, you will still be able to take your policy with you. Why is this important? Remember that as you get older, the odds increase of getting an illness, accident, or condition that makes you uninsurable. Not all employers offer disability benefits. What you want to avoid is having to change employers, not owning a policy, not having a policy that is portable, and finding you can’t get private insurance any more.

Chances are, if you have a spouse, dependent parents, and/or children, they would need financial resources if you were to die prematurely. If you need to provide financially for others in the event of your death, you need life insurance.

Life insurance is a love purchase. It protects your loved ones from financial hardship due to the loss of income and other struggles in the aftermath of a death. How will they continue to pay the bills? Will your family have to downsize homes or relocate to a different school district? Will a non-working spouse immediately need to find work?

Life insurance can be the difference between total despair and complete financial security, but it isn’t just about the financial impact of death; it’s also about the emotional burden that mourning family members will carry. No amount of money will bring a loved one back or take away from the immense loss that a family feels, but life insurance does buy time. It can help alleviate many of the anxieties and uncertainties that come with an unexpected death and give a family much-needed time to heal.

Snider Advisors is proud to offer you solutions for your life insurance needs. We will look at your entire financial picture and design a policy to fit your specific situation. We represent over 30 well-known carriers, and we’re happy to provide a complimentary quote comparison for you.

If you’re turning 65 soon, you may not have all the information you need about your Medicare options and benefits. Medicare has four parts and can be difficult to sort through. Many find that they are unsure of their eligibility, enrollment periods, base coverage, and alternative plans. Additionally, Medicare Part A and/or Part B may not be sufficient to meet the health care needs of much of the growing senior population.

Snider Advisors can help you get the additional health care coverage you need with Medicare Supplement (Medigap) insurance. We’ll start by outlining all the steps of Medicare enrollment and educating you on your standard benefits. Then we’ll help you analyze your health care coverage needs to determine whether additional provisions may be necessary. We will work with you to compare the plans that are available so you can confidently select the one that best fits your individual situation. We’ll ensure that you get enrolled within the appropriate window and do our very best to make the process as smooth and simple as possible.

Want to know more about Medigap insurance? Shelley Seagler is Snider Advisors’ in-house Medicare Supplement insurance specialist, and she can be reached at directly (214)446-8538 orsseagler@snideradvisors.com.

1. Your age

2. Your health status

3. The length of elimination period(s)

The elimination period is like a deductible but it is based on time rather than dollars. For example, a policy with a 90- day home health elimination period means you will pay for the first 90 days of care in your home. Benefits will kick in on the 91st day.

No claims offset for inflation protection – the benefit amount increases by the inflation adjustment percentage times the benefit pool of money without offsetting for claims. This can give you several months of additional benefits compared to policy without this feature.

Zero home healthcare elimination period offset – a special feature in which the elimination period for skilled nursing care is reduced by one day for each day you receive home and community care coverage bene?ts. When combined with a zero day home healthcare elimination period, this can reduce the elimination period to zero in a large number of instances.

Lifetime benefits – doesn’t just protect against the average expense scenario but from the truly catastrophic.

Riders are optional add-ons to a base insurance policy that enhance the coverage that you have. The right riders can add value, flexibility, and safety for the policy owner and his or her family. Sometimes they are included without any additional premium, but more often, they will come with a price. Some may be beneficial to you, while others may not, so you will have to evaluate your options and decide if you need any of the following:

Renewability: guarantees that when the policy term has ended, the insured may renew the policy for another period of coverage without providing proof of insurability. The new premium is based on the current age of the owner and his or her health rating at the time the original policy was purchased. This rider is typically inexpensive and can be very valuable. For example, if a policy owner gets diagnosed with a serious illness during her original term, and is still living at the end of the term, purchasing another policy would be extremely difficult. With a rider that allows for renewal, the insured could continue her coverage at a reasonable rate because the illness would not be a factor in the change of premium.

Convertibility: allows the policy owner to convert his or her term coverage into a permanent policy during or at the end of the term. Most people do not need permanent insurance, but this rider can be valuable for an individual who needs a permanent policy and cannot currently afford the premiums. Just like the renewable rider, the ability to convert does not require proof of insurability.

Return of Premium: repays all premiums paid if the insured is still alive at the end of the term. This can be a valuable rider considering the amount of money that can be paid over the 10, 20, or 30 years of a term policy. It sounds like a great deal to have all your money returned to you; however, this rider can cause the annual premium to increase as much as 4-5 times the cost of the base premium. Therefore, it is important to evaluate affordability.

Double (or triple) Indemnity: will pay double or triple the face amount of the policy if the insured dies as a result of an accident. The catch here is that the definition of “accident” must be carefully scrutinized. In addition, the statistics for payouts on this type of claim are infinitesimal.

A Medicare Supplement insurance plan is a health insurance policy sold by private insurance companies. These policies are also commonly known as Medigap policies. They provide additional coverage and benefits on top of your Medicare Part A and Part B benefits.

To purchase a disability insurance policy, you simply need to apply. Along with your application, you will need to submit your first premium. If you decide you do not want the policy or are denied coverage, a full refund will be given to you. You will also need to supply income verification. This is usually accomplished with tax returns, although you may need to furnish a few other financial documents if you are a business owner.

Depending on the monthly benefit amount, the insurance company will also often require that you complete a brief medical examination, which typically includes a urine and blood sample. You will be given a survey on your health history, and the insurance underwriters will order your medical records from your doctor(s). They will evaluate any diagnoses, surgeries, recommended procedures, medications, and your overall health condition.

To purchase a life insurance policy, you will need to apply. Along with your application, you will need to submit your first premium. If you decide you do not want the policy within the free look period or you are denied coverage, a full refund will be given to you. Depending on the face amount, the insurance company will also often require that you undergo a brief medical examination, which typically includes a urine and blood sample. Sometimes, if you are older or purchasing a large amount of insurance, an EKG is also requested. You will be given a survey on your health history, and the insurance underwriters will order your medical records from your doctor(s). They will evaluate any diagnoses, surgeries, recommended procedures, medications, and your overall health condition.

There are really only two types of life insurance: permanent and term. Permanent insurance is a long-term vehicle that combines insurance with an investment account. A portion of your premium goes towards your insurance coverage, while the rest is directed to a separate account to build cash value.

There are 3 types of permanent life insurance: whole life, universal life, and variable life. The difference between each of these policies is essentially how their separate accounts are invested. Whole life is invested very conservatively, usually in bond funds and cash equivalents. Universal life tracks an index, such as the S&P 500, and usually comes with a cap and floor for market performance. Variable life is invested directly in the stock market. With variable life, you can choose the securities and change your investments in the policy.

Term insurance is pure protection. There is no investment vehicle attached to the policy. Your premiums only pay for the insurance costs on the insured, which makes term insurance much more cost effective for most people than permanent insurance.

We believe that life insurance is risk management. Risk management means that you must transfer risk to an insurance company because you cannot afford to handle the ramifications of various situations, such as an untimely death, with your own pocketbook. For most people, this can be accomplished with term life insurance for an exceptional value.

We do not believe that permanent insurance makes sense for most people’s needs; however, we will not assert that no one should ever buy permanent insurance. It does serve its purpose in a small number of cases. Special needs trusts, buy-sell agreements, and estate tax planning are the primary uses of permanent insurance. More often than not, mixing insurance with investments is a losing deal. The expenses, fees, and commissions you will pay are hidden in the plan, the policies rarely perform as illustrated, and you get less coverage for more money.

If you are unsure of which type of life insurance is right for you and your family, seek the expertise and help of a knowledgeable life insurance professional. He or she should be able to assess your entire financial situation and determine what makes the most sense for you. 9 times out of 10, term insurance will do the trick. If an agent does propose permanent insurance, make sure you are thoroughly educated on why it is being recommended and get a second opinion if necessary.

Well, let us first confess that we are biased here. We believe that you should only buy disability insurance from a true expert – and not just an expert on disability insurance, but an expert in financial planning. This is part of the foundation of a solid financial house, so you want to be sure you have the best architects working with you. You do not want to buy a policy from someone who does not really understand your specific needs and how disability insurance fits in the big picture.

The purpose of a disability policy is to manage a risk – not just any risk – a possibly catastrophic financial risk that has the potential to gravely impact your household and future prosperity. This type of coverage is a must if you rely on your paycheck to meet your expenses.

The most important thing is to work with an agent who understands the magnitude of the risk being managed, its potential impact, and how it fits in with your entire financial picture. If the agent does not ask to see your personal income statement and balance sheet and have a lengthy discussion about your resources and financial situation, that, in our opinion, should be an immediate red flag!

Disability policies have many moving parts, so it’s important that you understand all the base components of a sound policy as well as all the additional features, or riders, that are available to you. Riders are add-ons to a base disability policy that can enhance your coverage according to your specific needs. Different carriers offer different riders, and sometimes companies will include certain no-cost riders as part of the base plan. More often, riders will be available for an additional premium, and some are just too valuable to overlook.

Base features: At the very least, you want a policy that is non-cancelable and guaranteed renewable. This means that the insurance company cannot cancel or change your plan as long as you pay your premiums.

You also want a 90-day elimination period or longer; anything shorter will drive up the premium significantly.

Choose a benefit period to age 65, which will pay you benefits if you become disabled until you turn 65. This way, you’re covered for the rest of your working life.

Most importantly, you’ll want to be sure that the policy’s definition of disability is “own occupation,” meaning you’ll receive benefits if you are unable to perform the duties of your own job at the time of disability.

Riders: One of the most important additional features you’ll want to include is a residual disability or partial disability rider. The nature of the way disabilities occur is usually gradual. It is unlikely that someone will become disabled one day and then get better all of a sudden. People become sick over time as well as recover over time. A residual disability rider will pay the insured partial benefits if he or she is only able to do some of the material duties of the job or only work part-time. The benefits paid are usually in proportion to the percentage of income lost.

Another important rider you’ll want to add is inflation protection. A COLA, or cost of living adjustment, will increase your benefits so that you don’t lose purchasing power. This is calculated in different ways, but most companies offer the COLA as a flat percentage between three to six percent or adjust your benefits based on the CPI-U (Consumer Price Index – Urban).

The future purchase option, or future increase option, is a powerful addition to a disability policy. If you ever foresee an increase in your income, then this rider is a must. It guarantees you the ability to buy more coverage in the future regardless of any adverse changes in your health. Without this rider, there is no guarantee that you will be able to buy more insurance, and as you get older and generally less healthy, the future purchase option will be a surefire way to protect you against becoming uninsurable.

Well, let us first confess that we are biased here. We believe that you should only buy life insurance from a true expert – and not just an expert on life insurance, but an expert in financial planning. This is part of the foundation of a solid financial house, so you want to be sure you have the best architects working with you. You do not want to buy a policy from someone who does not really understand your specific needs and how life insurance fits in the big picture.

The purpose of a life insurance policy is to manage a risk – not just any risk – a potentially catastrophic financial risk that has the potential to gravely impact the people you love the most. This policy is not just about you. In fact, it may be about you least of all!

The most important thing is to work with an agent who understands the magnitude of the risk being managed and its potential impact, someone who genuinely cares about helping you protect your loved ones. If the agent does not ask to see your personal income statement and balance sheet and have a lengthy discussion about your resources and financial situation, that, in our opinion, should be an immediate red flag!

Term life insurance policies are pretty straightforward. First, you want to be sure you are dealing with a financially-sound, highly-rated insurance company. You can check their ratings with A.M. Best, Moody’s, or Standard and Poor’s. Next, make sure your policy’s death benefit matches the specific amount of coverage you need. Choose how long you will need this protection and get a policy with a corresponding term period.

Make sure the policy is guaranteed renewable. This means that each year if you pay your premium, your coverage is in force for that year and you do not have to undergo a health exam. You also want to make sure that the premium is fixed, or guaranteed to remain the same, for the life of the policy.

Well, let us first confess that we are biased here. We believe that you should only buy long-term care insurance from a true expert – and not just an expert on long-term care insurance but an expert in retirement planning. These are very complex policies with lots of moving parts. You do not want to buy this policy from someone who does not really understand the true implications of the policy they are selling.

The purpose of a long-term care policy is to manage a risk – not just any risk – a potentially catastrophic financial risk that has the potential to not only impact you at the time you can least afford the risk, but also your spouse, children and anyone else who loves you. This policy is not just about you. In fact, it may be about you least of all!

The most important thing is to work with an agent who understands the magnitude of the risk being managed, its potential impact and how it fits in with your entire financial situation. If the agent does not ask to see your personal income statement and balance sheet and have a lengthy discussion about your resources and financial situation, that, in our opinion, should be an immediate red flag!

In our opinion, a well-designed long-term care policy should always include the following benefits. These benefits may have additional costs, but we think they are worth it.

Inflation protection – beware if it says Guaranteed Purchase Option…that is not inflation protection although it is at times represented as such. You want automatic inflation protection each and every year – usually at 5% per year.

Compound, not simple, inflation calculation – simple compounding will result in a much lower benefit amount as the years pass.

Weekly or monthly benefit, not daily – imagine you have a $150 daily benefit and two or three care-givers provide services on the same day. Any services incurred that day, in excess of $150, will come out of your pocket. This is far less likely to happen with a weekly or monthly benefit period.

Alternate care benefit – this means the policy will pay for all reasonable care settings, services, treatments and equipment … even those that haven’t been created yet. Assisted living, for example, has just sprung up in the last few years. Older policies without this benefit would not cover assisted living.

Equipment and home modification – these expenses seem trivial to those who are not knowledgeable but they can add up to a very substantial amount very quickly.

Alternate care benefit – this means the policy will pay for all reasonable care settings, services, treatments and equipment … even those that haven’t been created yet. Assisted living, for example, has just sprung up in the last few years. Older policies without this benefit would not cover assisted living.

If you are no longer working or do not need to insure your paycheck, you may consider dropping your disability insurance policy. This time usually occurs at retirement. When you retire, it typically means that you either do not earn a salary any longer or you have enough resources to cover your monthly expenses. There’s a good chance that at this stage in your life, other types of insurance, such as long-term care insurance, should become your main focus. You can then shift the premiums you paid for disability insurance to help fund these other objectives.

If you no longer need to provide financially for someone else in the event of your death, you may consider dropping your life insurance policy. This time may come after a divorce, death of a spouse, or retirement. By the time you are ready to quit working, chances are, you have saved enough in your portfolio to self-insure your heirs’ financial well-being. This means that if you were to die, your assets would fully take care of your loved ones’ needs. There’s another good chance that at that stage in your life, other types of insurance, such as long-term care insurance, should become your main focus. You can then shift the premiums you paid for life insurance to help fund these other objectives.

Just like with any other insurance, you are always “one step away from the banana peel.” You never know what will happen on your next doctor’s visit, and you don’t want to wait until then to find out you’re uninsurable. You should purchase disability insurance as soon as possible if you are working and have no other means to support yourself if your income were to cease due to a disabling incident.

Just like with any other insurance, you are always “one step away from the banana peel.” You never know what will happen on your next doctor’s visit, and you don’t want to wait until then to find out you’re uninsurable. This isn’t a purchase that you can time, because no one knows when they’re going to die. It’s not pleasant to think about, but life insurance should be purchased as soon as you need to provide for another’s financial well-being if you were gone. Usually life events, such as marriage and the birth of children, trigger life insurance needs. Be sure to update and increase your coverage as your family grows.

Many financial advisors have traditionally suggested 55 as the ideal age to purchase long-term care insurance. Kim said as much in her book, How to Be the Family CFO. More recently, however, we have had a change of heart. We now believe that your early 40’s is the best time to purchase long-term care insurance.

Any number of medical conditions can make you uninsurable for long-term care: obesity, diabetes, heart disease, uncontrolled high blood pressure, hip or knee replacement, Parkinson’s Disease and many others. Buying long-term care insurance early protects you from a change in medical status that could make long-term care insurance unattainable or very expensive. By buying young, you are, in effect, locking in your current medical condition. In addition, the younger you are, the less expensive your long-term care coverage will be.

During the open enrollment period, which is the 6-month period that begins the first day of the month in which a beneficiary is both age 65 or older and enrolled in Medicare Part B, your right to purchase a Medicare Supplement policy is guaranteed. This means that no matter what your current or past health history looks like, you can buy a plan.

After the guaranteed issue window expires, you must meet medical underwriting, if required by the insurance company, in order to qualify for a Medigap policy.

It depends on your personal preferences, needs, and requirements. Consideration should be given to benefits, cost, your economic situation, and current health. There are currently ten different plans, and each plan ranges in benefits and coverage options.

Medicare Supplement plans must comply with federal and state laws for your protection. Additionally, all Medicare Supplement plans are standardized and must provide the exact same benefits, no matter which company sells the plan. For example, Plan F sold by Company 1 must be exactly the same as Plan F sold by Company 2. Premiums, however, can vary, so it is important to compare the costs and shop for competitive rates.

Disability insurance is essentially paycheck insurance; therefore, if you are not working or earning income, you cannot get coverage. So, if you are a stay-at-home parent and do not earn a salary, you will not be able to purchase disability insurance (even though a stay-at-home parent could very well become disabled). Additionally, there are especially hazardous occupation classes that will not qualify for a policy because employees in those fields of work are deemed to be exposed to too much risk. Some examples include: mold and asbestos removers, air traffic controllers, waiters, entertainers, and professional athletes.

Most people find that purchasing life insurance is a relatively easy, smooth process. There are some who experience difficulty because of their health status. Smokers and those who receive sub-standard or table ratings due to medical conditions may find that the premium is nearly prohibitive. Usually, a person who engages in hazardous avocations, such as rock climbing, hang gliding, or race car driving, can be insured for a higher premium. Additionally, those who serve in dangerous occupations, such as aviation and the Armed Forces, may not be able to obtain private coverage.

If you need to provide financially for others in the event of your death, you need life insurance. Chances are, if you have a spouse, dependent parents, and/or children, they would need financial resources if you were to die prematurely. If you do not need to ensure a death benefit to your loved ones, you probably do not need life insurance; however, there are other specific instances where one might need life insurance. Those with significant liabilities, buy-sell agreements for business partners, and estate tax planning come to mind.

First let’s start with the cost of long-term care. A new study conducted by the Center for Retirement Research at Boston College found that a couple who are both aged 65 — and who are free of chronic disease — can expect to spend $197,000 on health care costs, including insurance premiums, out-of-pocket expenses and home-health costs, over the rest of their lives. That figure does not include the cost of nursing-home care, which is called the x factor in healthcare funding.

According to the study, there is a 5% chance that cost will exceed $570,000. The study noted that fewer than 15% of households nearing retirement have that amount of money in total assets.

Now, consider that healthcare costs are rising much faster than inflation. An ongoing study by PriceWaterhouseCoopers, projects that healthcare costs will rise by 9% in 2010, slightly lower than previous years but still several times the core rate of inflation.⁶ A study by Prudential found the cost of long-term care specifically had risen between 5% and 13% annually depending on the type of service.

What studies, like the one by the Centers for Retirement Research (CRR), do not take into account is the standard of care and quality of life most of us would expect does not come from bare-bones or even average expenditures. Now, imagine you needed that standard of care 20 years from now. Using even a very conservative 5% inflation number, that would equate to $400,000 a year! Using the 9% inflation projection from PriceWaterhouseCoopers, the number becomes $840,000 per year. How long will your savings last at $840,000 a year?

One last thing to consider when you are considering self-insuring. Many of our clients can afford to self-insure even the highest levels of care, for a reasonable period of time…but that is based on what you have today.

What long-term care insurance does, among other things, is to hedge the risk of a change in circumstances. Twenty or thirty years is a very long time and things can change. Just ask all those people who invested their millions with Bernie Madoff and now have nothing. Having enough money to “qualify” to invest with Bernie Madoff, they almost certainly felt, at the time, they could self-insure. But their circumstances changed in the blink of an eye. What happens now if they are faced with a $200,000, $300,000 or even $500,000 long-term care bill during their lifetime?

The bottom line is this: For a few thousand dollars a year, provided you are healthy enough to obtain coverage, you can lay off the majority of a potentially catastrophic risk, one which many will experience and most cannot afford. Why would you even consider self-insuring when the cost-benefit trade-off is so favorable?

Without disability insurance, you are risking your financial future and well-being. How will you continue to meet your financial obligations if you have no income? Your savings will only last you for so long, and do you really want to deplete all of your emergency fund? Then what? Are you going to go into major credit card debt? How are you going to save for other important financial goals, such as college for your kids and your retirement?

If you’re thinking this is a lot of questions, you’re right. Without disability insurance, you not only take a risk of losing out on earned income and putting yourself in serious debt, but you also risk your emergency fund not being available for the emergencies that can’t be insured, like losing your job or having to take a long leave of absence to care for a family member.

Long-term care insurance helps to protect you, your assets and your loved ones from the financial and emotional burden of caring for you when you can no longer care for yourself.

Without proper medical insurance coverage, you are risking your financial future and well-being. A Medicare Supplement insurance plan may help you save on out-of-pocket health care costs. Medicare was never designed to cover 100 percent of your medical bills, and the deductibles increase each year. A Medigap policy can largely cover these costs.

Life insurance is a love purchase. It protects your loved ones from financial hardship due to the loss of income and other struggles in the aftermath of a death. How will they continue to pay the bills? Will your family have to downsize homes or relocate to a different school district? Will a non-working spouse immediately need to find work?

Life insurance isn’t just about the financial impact of death; it’s also about the emotional burden that mourning family members will carry. Will your spouse have time to grieve, or will he/she have to worry about going back to work right away? Would your children have to be put in day care without time to process their feelings? No amount of money will bring a loved one back or take away from the immense loss that a family feels, but life insurance does buy time. It can help alleviate many of the anxieties and uncertainties that come with an unexpected death and give a family much-needed time to heal.

In a word, yes. But consider these facts.

We rarely buy insurance with the intent to use it. Take your automobile or homeowner’s insurance. What is the likelihood you will ever file a total loss against either of those policies? Pretty unlikely, right? You don’t expect your car to be totaled or your house to burn down. But you wouldn’t own a house or a car without insuring it against a catastrophic loss.

Long-term care insurance, on the other hand, has a very high probability of a claim. When you turn 65, there is a 70% chance you will need at least some some long-term care at some point in your life. 40% of those who turn 65 will, at some point, spend time in a skilled nursing facility.1 Yet, in spite of a much higher probability of needing the coverage, only 7 million people were covered by long-term care insurance in 2007.

The other consideration is cost. The younger you are and the healthier you are the less expensive a policy will be. So by purchasing early, you may be paying for longer but you will be paying less and you have eliminated the risk that you cannot get coverage in the future.

And here is one more surprising statistic to consider: nearly 40% of those who need long-term care are under the age of 40.
For us, the question comes down to what you can afford. If you are young and healthy and can afford to purchase a $1000 – $1500 a year policy (maybe less if you are super healthy) without materially affecting your standard of living, you probably should.

This is one of the biggest misconceptions when it comes to funding our healthcare costs. Medicare only pays in very limited situations:

• You must have been hospitalized for at least 3 days.

• You must enter the nursing home within 30 days of the hospitalization. Only the first 20 days are 100% covered; then there is a daily deductible.

• There’s a 100-day maximum related to any one hospitalization and diagnosis. You must be making regular progress as documented by medical professionals. If progress toward independence is no longer occurring, insurance coverage ends.

The last point is the key. If you are not making progress towards independence, coverage ends. In other words, Medicare is designed to pay for temporary care, not long-term care.

Generally, life insurance policies are tax-sheltered and death benefits paid to beneficiaries are not considered taxable income to them. Life insurance benefits will be taxed as part of the policy owner’s estate, under the federal estate tax, if their net worth including the policy is more than the federal limit. This will also happen if the estate is named the beneficiary. To avoid paying estate taxes, a policy owner should not ever name his or her estate as the policy beneficiary. Instead, it is wise to name other persons or trusts as beneficiaries.

Yes. Snider Advisors is proud to offer you solutions for your life insurance needs. We will look at your entire financial picture and design a policy to fit your specific situation. We represent over 30 well-known carriers, and we’re happy to provide a complimentary quote comparison for you. Contact us today to set up a consultation or review of your current policy.

Life insurance premiums are based on three primary factors: your age, your health status, and whether or not you use tobacco products. If you obtain individual coverage, you will probably be underwritten by the insurance company to determine whether you are a suitable risk or not. Underwriting is the process of examining your medical records, health history, and current health status to approve or deny coverage. The older and less healthy you are, the more premium you’ll pay. Conversely, the younger or healthier you are, the more your premium will be reduced.

As mentioned, life insurance provided through an employer will likely be the cheapest coverage you can obtain because it is usually not underwritten. Your benefits handbook or HR coordinator should be able to point you to a table that will outline the amounts of coverage available and the associated costs based on your age.

Term insurance is always cheaper than permanent insurance because it does not have a separate cash value account. Therefore, with term insurance, you can buy substantially more coverage than you can with a permanent policy. If you are in good health, term insurance is pretty affordable. To give you an idea, a 35-year-old non-smoking female with a preferred rating will pay about $400 annually for $1 million in coverage. That’s about $33 a month for a considerable amount of protection.

This number is simple math. Many people pick an arbitrary number that sounds like it’s good enough, but the truth is, you should calculate and arrive at a deliberate amount that makes the most sense for your family. After doing this, you may find that you’re under-insured, which means you’ll want to look into purchasing more coverage. You may also find that you’re over-insured, which means that you can abandon some of your coverage and use those dollars for other financial goals. Add up the following to calculate your life insurance need:

Final medical expenses: This would cover hospital bills if you were sick or severely hurt before dying. The average need is about $10,000; you determine what you would be most comfortable with.

Probate/taxes: It will depend on which state you live in and the size of your estate (which is essentially the value of all your assets), but for an estate under $100,000, the probate and taxes would be $6,000 in Texas. For an estate under $300,000, the cost is about $14,000 in Texas.

Burial and funeral expenses: The average cost is $6,500, but can easily be up to $10,000+ depending on what your wishes are.

Paying off home and liabilities: Add up all of your debts and the remaining balance on your mortgage.

Future college expenses: Look into the costs for the school or university that your child(ren) will attend and multiply the current cost by four to five years. Now, apply a six percent increase each year until the child reaches age 22 (or completion) for inflation. Figure this amount for each child.

One-time expenses: These would include weddings, home improvements, etc…

Income replacement: Decide how long you will want your income replaced and multiply the current amount by the number of years. Do you want to provide this amount until the kids go off to college? Until your spouse reaches a certain age?

Group benefits are always a great value to employees. There is usually no underwriting, so obtaining coverage is fast and easy. The premiums paid are typically a fraction of private insurance costs, but there are some important things to be aware of when evaluating a group life insurance plan.

Most group life insurance is not portable, meaning that if you no longer work at that company, you lose your coverage. Additionally, because many group plans do not require underwriting, the amounts that you can purchase are limited. As a consumer, you always want to be sure to read your benefits handbook and understand exactly what you are getting with your employer-sponsored policy. The last situation you want to find yourself in is losing your job, losing your life insurance coverage, and not being insurable in the private market.

Chances are, if you have a spouse, dependent parents, and/or children, they would need financial resources if you were to die prematurely. If you need to provide financially for others in the event of your death, you need life insurance.

Life insurance is a love purchase. It protects your loved ones from financial hardship due to the loss of income and other struggles in the aftermath of a death. How will they continue to pay the bills? Will your family have to downsize homes or relocate to a different school district? Will a non-working spouse immediately need to find work?

Life insurance can be the difference between total despair and complete financial security, but it isn’t just about the financial impact of death; it’s also about the emotional burden that mourning family members will carry. No amount of money will bring a loved one back or take away from the immense loss that a family feels, but life insurance does buy time. It can help alleviate many of the anxieties and uncertainties that come with an unexpected death and give a family much-needed time to heal.

Snider Advisors is proud to offer you solutions for your life insurance needs. We will look at your entire financial picture and design a policy to fit your specific situation. We represent over 30 well-known carriers, and we’re happy to provide a complimentary quote comparison for you.

Riders are optional add-ons to a base insurance policy that enhance the coverage that you have. The right riders can add value, flexibility, and safety for the policy owner and his or her family. Sometimes they are included without any additional premium, but more often, they will come with a price. Some may be beneficial to you, while others may not, so you will have to evaluate your options and decide if you need any of the following:

Renewability: guarantees that when the policy term has ended, the insured may renew the policy for another period of coverage without providing proof of insurability. The new premium is based on the current age of the owner and his or her health rating at the time the original policy was purchased. This rider is typically inexpensive and can be very valuable. For example, if a policy owner gets diagnosed with a serious illness during her original term, and is still living at the end of the term, purchasing another policy would be extremely difficult. With a rider that allows for renewal, the insured could continue her coverage at a reasonable rate because the illness would not be a factor in the change of premium.

Convertibility: allows the policy owner to convert his or her term coverage into a permanent policy during or at the end of the term. Most people do not need permanent insurance, but this rider can be valuable for an individual who needs a permanent policy and cannot currently afford the premiums. Just like the renewable rider, the ability to convert does not require proof of insurability.

Return of Premium: repays all premiums paid if the insured is still alive at the end of the term. This can be a valuable rider considering the amount of money that can be paid over the 10, 20, or 30 years of a term policy. It sounds like a great deal to have all your money returned to you; however, this rider can cause the annual premium to increase as much as 4-5 times the cost of the base premium. Therefore, it is important to evaluate affordability.

Double (or triple) Indemnity: will pay double or triple the face amount of the policy if the insured dies as a result of an accident. The catch here is that the definition of “accident” must be carefully scrutinized. In addition, the statistics for payouts on this type of claim are infinitesimal.

To purchase a life insurance policy, you will need to apply. Along with your application, you will need to submit your first premium. If you decide you do not want the policy within the free look period or you are denied coverage, a full refund will be given to you. Depending on the face amount, the insurance company will also often require that you undergo a brief medical examination, which typically includes a urine and blood sample. Sometimes, if you are older or purchasing a large amount of insurance, an EKG is also requested. You will be given a survey on your health history, and the insurance underwriters will order your medical records from your doctor(s). They will evaluate any diagnoses, surgeries, recommended procedures, medications, and your overall health condition.

There are really only two types of life insurance: permanent and term. Permanent insurance is a long-term vehicle that combines insurance with an investment account. A portion of your premium goes towards your insurance coverage, while the rest is directed to a separate account to build cash value.

There are 3 types of permanent life insurance: whole life, universal life, and variable life. The difference between each of these policies is essentially how their separate accounts are invested. Whole life is invested very conservatively, usually in bond funds and cash equivalents. Universal life tracks an index, such as the S&P 500, and usually comes with a cap and floor for market performance. Variable life is invested directly in the stock market. With variable life, you can choose the securities and change your investments in the policy.

Term insurance is pure protection. There is no investment vehicle attached to the policy. Your premiums only pay for the insurance costs on the insured, which makes term insurance much more cost effective for most people than permanent insurance.

We believe that life insurance is risk management. Risk management means that you must transfer risk to an insurance company because you cannot afford to handle the ramifications of various situations, such as an untimely death, with your own pocketbook. For most people, this can be accomplished with term life insurance for an exceptional value.

We do not believe that permanent insurance makes sense for most people’s needs; however, we will not assert that no one should ever buy permanent insurance. It does serve its purpose in a small number of cases. Special needs trusts, buy-sell agreements, and estate tax planning are the primary uses of permanent insurance. More often than not, mixing insurance with investments is a losing deal. The expenses, fees, and commissions you will pay are hidden in the plan, the policies rarely perform as illustrated, and you get less coverage for more money.

If you are unsure of which type of life insurance is right for you and your family, seek the expertise and help of a knowledgeable life insurance professional. He or she should be able to assess your entire financial situation and determine what makes the most sense for you. 9 times out of 10, term insurance will do the trick. If an agent does propose permanent insurance, make sure you are thoroughly educated on why it is being recommended and get a second opinion if necessary.

Well, let us first confess that we are biased here. We believe that you should only buy life insurance from a true expert – and not just an expert on life insurance, but an expert in financial planning. This is part of the foundation of a solid financial house, so you want to be sure you have the best architects working with you. You do not want to buy a policy from someone who does not really understand your specific needs and how life insurance fits in the big picture.

The purpose of a life insurance policy is to manage a risk – not just any risk – a potentially catastrophic financial risk that has the potential to gravely impact the people you love the most. This policy is not just about you. In fact, it may be about you least of all!

The most important thing is to work with an agent who understands the magnitude of the risk being managed and its potential impact, someone who genuinely cares about helping you protect your loved ones. If the agent does not ask to see your personal income statement and balance sheet and have a lengthy discussion about your resources and financial situation, that, in our opinion, should be an immediate red flag!

Term life insurance policies are pretty straightforward. First, you want to be sure you are dealing with a financially-sound, highly-rated insurance company. You can check their ratings with A.M. Best, Moody’s, or Standard and Poor’s. Next, make sure your policy’s death benefit matches the specific amount of coverage you need. Choose how long you will need this protection and get a policy with a corresponding term period.

Make sure the policy is guaranteed renewable. This means that each year if you pay your premium, your coverage is in force for that year and you do not have to undergo a health exam. You also want to make sure that the premium is fixed, or guaranteed to remain the same, for the life of the policy.

If you no longer need to provide financially for someone else in the event of your death, you may consider dropping your life insurance policy. This time may come after a divorce, death of a spouse, or retirement. By the time you are ready to quit working, chances are, you have saved enough in your portfolio to self-insure your heirs’ financial well-being. This means that if you were to die, your assets would fully take care of your loved ones’ needs. There’s another good chance that at that stage in your life, other types of insurance, such as long-term care insurance, should become your main focus. You can then shift the premiums you paid for life insurance to help fund these other objectives.

Just like with any other insurance, you are always “one step away from the banana peel.” You never know what will happen on your next doctor’s visit, and you don’t want to wait until then to find out you’re uninsurable. This isn’t a purchase that you can time, because no one knows when they’re going to die. It’s not pleasant to think about, but life insurance should be purchased as soon as you need to provide for another’s financial well-being if you were gone. Usually life events, such as marriage and the birth of children, trigger life insurance needs. Be sure to update and increase your coverage as your family grows.

Most people find that purchasing life insurance is a relatively easy, smooth process. There are some who experience difficulty because of their health status. Smokers and those who receive sub-standard or table ratings due to medical conditions may find that the premium is nearly prohibitive. Usually, a person who engages in hazardous avocations, such as rock climbing, hang gliding, or race car driving, can be insured for a higher premium. Additionally, those who serve in dangerous occupations, such as aviation and the Armed Forces, may not be able to obtain private coverage.

If you need to provide financially for others in the event of your death, you need life insurance. Chances are, if you have a spouse, dependent parents, and/or children, they would need financial resources if you were to die prematurely. If you do not need to ensure a death benefit to your loved ones, you probably do not need life insurance; however, there are other specific instances where one might need life insurance. Those with significant liabilities, buy-sell agreements for business partners, and estate tax planning come to mind.

Life insurance is a love purchase. It protects your loved ones from financial hardship due to the loss of income and other struggles in the aftermath of a death. How will they continue to pay the bills? Will your family have to downsize homes or relocate to a different school district? Will a non-working spouse immediately need to find work?

Life insurance isn’t just about the financial impact of death; it’s also about the emotional burden that mourning family members will carry. Will your spouse have time to grieve, or will he/she have to worry about going back to work right away? Would your children have to be put in day care without time to process their feelings? No amount of money will bring a loved one back or take away from the immense loss that a family feels, but life insurance does buy time. It can help alleviate many of the anxieties and uncertainties that come with an unexpected death and give a family much-needed time to heal.

Yes. Snider Advisors offers long-term care insurance from well-known long-term care insurers including Genworth, John Hancock, Mutual of Omaha and others. We will look at your entire financial situation and custom design a policy to fit your unique situation. Contact us today to set up a free consultation or review of your current policy.

If you are reading this, the answer is most likely yes. How can I say that when I don’t even know you or anything about you? Easy… If you are over the age of 40 and have less than $3.5 million in assets, chances are extraordinarily high that you need a long-term care policy.

Snider Advisors has a team of licensed insurance agents who can offer you practical strategies, customized for your specific situation, for managing the risk of retiree healthcare costs, including but not limited to, Medicare Supplement and Long-Term Care insurance.

If you fit any of the following criteria, a review of your long-term care situation is probably in order:

1. You are 40 years old or older, with less than $3.5 million in assets, and you do not have long-term care insurance. The longer you wait, the more expensive long-term care insurance becomes and the more likely you are to develop a condition that makes you uninsurable.

2. You already have a long-term care policy. Long-term care is very specialized insurance that should be custom-tailored to fit your specific situation. As experts in both long-term care and financial planning, we would be happy to review your policy for you. If you have a good policy, we will tell you so. If not, we will show you how we can do better.

3. You have been turned down for coverage because of a medical issue. We have been able to get coverage for a surprising number of clients who have been turned down by less knowledgeable agents.

As with all things, the answer is it depends. Some group long-term care policies offered by employers are very good. Others…not so much. Very often, there is an opportunity to either save you money or get you more benefits for the same money, particularly if you are in excellent health and/or are applying jointly with your spouse. The bottom line is the only way to know for sure, whether your group policy is adequate and a good value for the money, is to have your policy reviewed by a long-term care expert.

1. Your age

2. Your health status

3. The length of elimination period(s)

The elimination period is like a deductible but it is based on time rather than dollars. For example, a policy with a 90- day home health elimination period means you will pay for the first 90 days of care in your home. Benefits will kick in on the 91st day.

No claims offset for inflation protection – the benefit amount increases by the inflation adjustment percentage times the benefit pool of money without offsetting for claims. This can give you several months of additional benefits compared to policy without this feature.

Zero home healthcare elimination period offset – a special feature in which the elimination period for skilled nursing care is reduced by one day for each day you receive home and community care coverage bene?ts. When combined with a zero day home healthcare elimination period, this can reduce the elimination period to zero in a large number of instances.

Lifetime benefits – doesn’t just protect against the average expense scenario but from the truly catastrophic.

Well, let us first confess that we are biased here. We believe that you should only buy long-term care insurance from a true expert – and not just an expert on long-term care insurance but an expert in retirement planning. These are very complex policies with lots of moving parts. You do not want to buy this policy from someone who does not really understand the true implications of the policy they are selling.

The purpose of a long-term care policy is to manage a risk – not just any risk – a potentially catastrophic financial risk that has the potential to not only impact you at the time you can least afford the risk, but also your spouse, children and anyone else who loves you. This policy is not just about you. In fact, it may be about you least of all!

The most important thing is to work with an agent who understands the magnitude of the risk being managed, its potential impact and how it fits in with your entire financial situation. If the agent does not ask to see your personal income statement and balance sheet and have a lengthy discussion about your resources and financial situation, that, in our opinion, should be an immediate red flag!

In our opinion, a well-designed long-term care policy should always include the following benefits. These benefits may have additional costs, but we think they are worth it.

Inflation protection – beware if it says Guaranteed Purchase Option…that is not inflation protection although it is at times represented as such. You want automatic inflation protection each and every year – usually at 5% per year.

Compound, not simple, inflation calculation – simple compounding will result in a much lower benefit amount as the years pass.

Weekly or monthly benefit, not daily – imagine you have a $150 daily benefit and two or three care-givers provide services on the same day. Any services incurred that day, in excess of $150, will come out of your pocket. This is far less likely to happen with a weekly or monthly benefit period.

Alternate care benefit – this means the policy will pay for all reasonable care settings, services, treatments and equipment … even those that haven’t been created yet. Assisted living, for example, has just sprung up in the last few years. Older policies without this benefit would not cover assisted living.

Equipment and home modification – these expenses seem trivial to those who are not knowledgeable but they can add up to a very substantial amount very quickly.

Alternate care benefit – this means the policy will pay for all reasonable care settings, services, treatments and equipment … even those that haven’t been created yet. Assisted living, for example, has just sprung up in the last few years. Older policies without this benefit would not cover assisted living.

Many financial advisors have traditionally suggested 55 as the ideal age to purchase long-term care insurance. Kim said as much in her book, How to Be the Family CFO. More recently, however, we have had a change of heart. We now believe that your early 40’s is the best time to purchase long-term care insurance.

Any number of medical conditions can make you uninsurable for long-term care: obesity, diabetes, heart disease, uncontrolled high blood pressure, hip or knee replacement, Parkinson’s Disease and many others. Buying long-term care insurance early protects you from a change in medical status that could make long-term care insurance unattainable or very expensive. By buying young, you are, in effect, locking in your current medical condition. In addition, the younger you are, the less expensive your long-term care coverage will be.

First let’s start with the cost of long-term care. A new study conducted by the Center for Retirement Research at Boston College found that a couple who are both aged 65 — and who are free of chronic disease — can expect to spend $197,000 on health care costs, including insurance premiums, out-of-pocket expenses and home-health costs, over the rest of their lives. That figure does not include the cost of nursing-home care, which is called the x factor in healthcare funding.

According to the study, there is a 5% chance that cost will exceed $570,000. The study noted that fewer than 15% of households nearing retirement have that amount of money in total assets.

Now, consider that healthcare costs are rising much faster than inflation. An ongoing study by PriceWaterhouseCoopers, projects that healthcare costs will rise by 9% in 2010, slightly lower than previous years but still several times the core rate of inflation.⁶ A study by Prudential found the cost of long-term care specifically had risen between 5% and 13% annually depending on the type of service.

What studies, like the one by the Centers for Retirement Research (CRR), do not take into account is the standard of care and quality of life most of us would expect does not come from bare-bones or even average expenditures. Now, imagine you needed that standard of care 20 years from now. Using even a very conservative 5% inflation number, that would equate to $400,000 a year! Using the 9% inflation projection from PriceWaterhouseCoopers, the number becomes $840,000 per year. How long will your savings last at $840,000 a year?

One last thing to consider when you are considering self-insuring. Many of our clients can afford to self-insure even the highest levels of care, for a reasonable period of time…but that is based on what you have today.

What long-term care insurance does, among other things, is to hedge the risk of a change in circumstances. Twenty or thirty years is a very long time and things can change. Just ask all those people who invested their millions with Bernie Madoff and now have nothing. Having enough money to “qualify” to invest with Bernie Madoff, they almost certainly felt, at the time, they could self-insure. But their circumstances changed in the blink of an eye. What happens now if they are faced with a $200,000, $300,000 or even $500,000 long-term care bill during their lifetime?

The bottom line is this: For a few thousand dollars a year, provided you are healthy enough to obtain coverage, you can lay off the majority of a potentially catastrophic risk, one which many will experience and most cannot afford. Why would you even consider self-insuring when the cost-benefit trade-off is so favorable?

Long-term care insurance helps to protect you, your assets and your loved ones from the financial and emotional burden of caring for you when you can no longer care for yourself.

In a word, yes. But consider these facts.

We rarely buy insurance with the intent to use it. Take your automobile or homeowner’s insurance. What is the likelihood you will ever file a total loss against either of those policies? Pretty unlikely, right? You don’t expect your car to be totaled or your house to burn down. But you wouldn’t own a house or a car without insuring it against a catastrophic loss.

Long-term care insurance, on the other hand, has a very high probability of a claim. When you turn 65, there is a 70% chance you will need at least some some long-term care at some point in your life. 40% of those who turn 65 will, at some point, spend time in a skilled nursing facility.1 Yet, in spite of a much higher probability of needing the coverage, only 7 million people were covered by long-term care insurance in 2007.

The other consideration is cost. The younger you are and the healthier you are the less expensive a policy will be. So by purchasing early, you may be paying for longer but you will be paying less and you have eliminated the risk that you cannot get coverage in the future.

And here is one more surprising statistic to consider: nearly 40% of those who need long-term care are under the age of 40.
For us, the question comes down to what you can afford. If you are young and healthy and can afford to purchase a $1000 – $1500 a year policy (maybe less if you are super healthy) without materially affecting your standard of living, you probably should.

This is one of the biggest misconceptions when it comes to funding our healthcare costs. Medicare only pays in very limited situations:

• You must have been hospitalized for at least 3 days.

• You must enter the nursing home within 30 days of the hospitalization. Only the first 20 days are 100% covered; then there is a daily deductible.

• There’s a 100-day maximum related to any one hospitalization and diagnosis. You must be making regular progress as documented by medical professionals. If progress toward independence is no longer occurring, insurance coverage ends.

The last point is the key. If you are not making progress towards independence, coverage ends. In other words, Medicare is designed to pay for temporary care, not long-term care.

Yes. Snider Advisors is proud to offer you solutions for your Medicare Supplement insurance needs. We will look at your entire financial picture and help you choose the policy that fits your specific needs. We represent several well-known carriers, and we’re happy to provide a complimentary quote comparison for you. Contact us today to set up a consultation or review your coverage needs.

Depending on your health care coverage needs, a Medicare Supplemental insurance policy can coordinate with your Medicare benefits to help you fill in any gaps in your coverage and meet your eligible health care expenses.

If you buy a Medicare Supplement insurance policy, you will pay a monthly premium to the private Medicare Supplement insurance company that sells you the policy. Keep in mind, this may be on top of the deductibles you are paying for Medicare Part A and Part B. You must be enrolled in both Part A and Part B to purchase a Medigap policy.
If you are in Original Medicare (Parts A and B) and you have a Medigap policy, first Medicare pays its share of the Medicare-approved amounts for your covered health care costs. Then your Medigap policy pays its share of the cost. Any remaining costs would be your responsibility.

If you’re turning 65 soon, you may not have all the information you need about your Medicare options and benefits. Medicare has four parts and can be difficult to sort through. Many find that they are unsure of their eligibility, enrollment periods, base coverage, and alternative plans. Additionally, Medicare Part A and/or Part B may not be sufficient to meet the health care needs of much of the growing senior population.

Snider Advisors can help you get the additional health care coverage you need with Medicare Supplement (Medigap) insurance. We’ll start by outlining all the steps of Medicare enrollment and educating you on your standard benefits. Then we’ll help you analyze your health care coverage needs to determine whether additional provisions may be necessary. We will work with you to compare the plans that are available so you can confidently select the one that best fits your individual situation. We’ll ensure that you get enrolled within the appropriate window and do our very best to make the process as smooth and simple as possible.

Want to know more about Medigap insurance? Shelley Seagler is Snider Advisors’ in-house Medicare Supplement insurance specialist, and she can be reached at directly (214)446-8538 orsseagler@snideradvisors.com.

A Medicare Supplement insurance plan is a health insurance policy sold by private insurance companies. These policies are also commonly known as Medigap policies. They provide additional coverage and benefits on top of your Medicare Part A and Part B benefits.

During the open enrollment period, which is the 6-month period that begins the first day of the month in which a beneficiary is both age 65 or older and enrolled in Medicare Part B, your right to purchase a Medicare Supplement policy is guaranteed. This means that no matter what your current or past health history looks like, you can buy a plan.

After the guaranteed issue window expires, you must meet medical underwriting, if required by the insurance company, in order to qualify for a Medigap policy.

It depends on your personal preferences, needs, and requirements. Consideration should be given to benefits, cost, your economic situation, and current health. There are currently ten different plans, and each plan ranges in benefits and coverage options.

Medicare Supplement plans must comply with federal and state laws for your protection. Additionally, all Medicare Supplement plans are standardized and must provide the exact same benefits, no matter which company sells the plan. For example, Plan F sold by Company 1 must be exactly the same as Plan F sold by Company 2. Premiums, however, can vary, so it is important to compare the costs and shop for competitive rates.

Without proper medical insurance coverage, you are risking your financial future and well-being. A Medicare Supplement insurance plan may help you save on out-of-pocket health care costs. Medicare was never designed to cover 100 percent of your medical bills, and the deductibles increase each year. A Medigap policy can largely cover these costs.

Stick to the strategy! There is never a time in the book where you get out of the position before Trade Day. You are supposed to be in Bora Bora, not looking at what your stock is doing. If you wanted to sell this stock, you would have to buy back the call option(s). After commissions there would not be as much profit as you think. The point of the rules of the Snider Method is to not think and make decisions about stock prices; no one can predict where prices are going.

YES.  Buying stock, and selling options are independent of each other. You buy stock each month to build your ladder, you sell options when you can. The checklist is specific in its order, it has you buy stock first and then look to sell options.

YES.  Purchasing shares at lower prices allows you to reduce your overall cost basis in the position.  We understand buying stocks at lower and lower levels can be scary, but the method is designed to build a ladder – stocks bought at various levels. This can create favorable Bundling and capital gains opportunities down the road if the price stabilizes or appreciates.

We recommend 80% of the past 6 months’ yield, up to a maximum of 10% of total account value. New accounts should use historical average for your account type. Ideally it is best to leave some profits in the account for Stake growth and inflation protection. Take only the amount needed. Remember to have an emergency fund outside of Snider Method (we recommend a year’s worth of expenses). Try not to dip into principal. Withdrawals for living expenses should not be based on monthly premiums and profits, because these can vary from month to month. Every 6 months recalculate yield average and adjust withdrawal amount.

There is no way to look back and see how the Snider Method would have performed during a historical period of high inflation like the late 1970’s and early 1980’s. That is because many factors contribute to Snider Method yields. Rising inflation will affect each one of these factors separately, and they may go in different directions. People often ask us to isolate the effect of inflation – in other words, all else being equal, what impact would inflation have? But all else never is equal, and the things that cause the inflation in the first place can also affect stock prices, volatility, etc. These are all things that can have an even greater effect on our yields than inflation. With higher inflation, normally come higher interest rates.

Higher interest rates should increase the price of calls, but decrease the price of puts. Many factors contribute to Snider Method yields. Rising inflation will affect each one of these factors separately, and they may go in different directions. This makes it tough to know exactly how the Method will react. People often ask us to isolate the effect of inflation – in other words, all else being equal, what impact would inflation have? But all else never is equal, and the things that cause the inflation in the first place can also affect stock prices, volatility, etc. These are all things that can have an even greater effect on our yields than inflation.

Historically, stock prices are an acceptable hedge against inflation. Ultimately, it comes down to the company and its ability to pass on price increases to the customer. If they can completely pass on the higher costs, margins will remain intact and the stock price should not suffer. Our goal for the Snider Method is to produce an optimal outcome over the broadest range of possible scenarios. At the same time, we have to understand that we cannot know what the different variables will be in any given future scenario. The idea here is since the future is impossible to predict, you should not invest to protect yourself from one possible outcome. You should invest to do as well as possible in as many outcomes as possible. Given our understanding of randomness and uncertainty in the world, we don’t believe anything is a foregone conclusion. We don’t know if there will be inflation in the near future. There might be. There might not be. For every economist who says high inflation is inevitable, I can show you one who makes an equally credible case for why it is not. Unfortunately, Confirmation Bias dictates that we only tend to hear information that supports a view we already hold and filter out anything that contradicts that view. It works that way for all of us. It is part of our hard-wiring. But it can be very dangerous as it often causes us to fight imaginary dragons that don’t exist.

To avoid it, you have to accept a lower level of return. In order for us to achieve an acceptable level of return we will experience volatility along the way. The fact is that it is impossible to avoid the possibility of a repeat. In fact, there have been thirteen post-WWII bear markets, running between 19% and 57% and averaging about 30%. Wealth, in our opinion, is your ability to maintain a certain standard of living indefinitely over time. It isn’t measured by your portfolio’s account balance, but by the inflation-indexed income your portfolio can.

The number at the top of your account statement is irrelevant with a cash flow investment strategy. The number you should be concerned with is the amount of income your portfolio can generate in order to maintain your standard of living indefinitely over time.

Once you retire and begin living off your investments, the natural fluctuations in the economy and financial markets will create variations in your retirement income. Your emergency fund will make those fluctuations manageable.

Cash is your most effective tool for smoothing out the effect of market volatility on your retirement income. This system of managing portfolio variability in retirement is very easy and very effective. When the market’s down and your portfolio isn’t generating the income you need, pull the difference from your emergency fund. Do this as long as you need to in order to supplement the amount you’re not getting from your portfolio with cash.

Markets are mean reverting, meaning the pendulum will swing both ways. When the market booms, put any excess over what you need to live off of back into your emergency fund to replenish it.

This is why we have a savings cash fund, depending on the size of the withdrawal it may be best to take the cash from this account.  It may be best to contact Snider Advisors when you need to take a one-time withdrawal.  Certain factors we look at when determining which positions to liquidate are: Overall impact to the account, Impact to the account’s diversification, The size of the withdrawal relative to positions’ market value, the holding period of a position, total premium collected on a position.

Most of the bad press about these funds is for ETFs linked to a specific commodity. We recommend a broad based commodity ETF that is less impacted by the design flaws. Our GSG recommendation is the best way to gain access to a different asset class for a very low cost. It correlates highly with the asset class we desire, unfortunately, not perfectly. The asset specific ETFs seem to have two downfalls. The first is the current shape of the futures curve.  Longer period contracts are currently more expensive. This creates a cost each time the company’s need to rebalance the portfolio. However, the curve is not always upward sloping. It can have the opposite, downward sloping shape. In this case, these ETFs should outperform. The second potential downfall is traders front running the funds to profit off their future transactions. I haven’t seen any evidence of the actual price impact on the futures contracts. Also, the front runners have to place a bet on the direction of the price. If this bet is incorrect, they can lose a significant amount of money.

Understand that all events that can be screened, and all news that breaks about a company has already been factored into the price of the stock. In regards to pending events, it is these events which give rise to the uncertainty of the stock price and therefore higher option premiums. A company with a strong balance sheet, that passes bankruptcy screens, and has uncertainty of events around it is exactly what we want. Screening these events would be counterproductive.

We don’t pick stocks because we think they are going to go up in price, we are looking for good candidates for the Snider Method (these are not speculative stocks).  Each piece of the strategy works to manage the volatility, fundamental screens, dollar cost averaging.  We are also more conservative in non-margin (retirement accounts) with the higher divisor Retirement Planning course does a good job to understand cash flow investing (vs. traditional capital appreciation) like the Snider Method.  The screen process could reduce the risk, but our yield will also decline.

Trade your account as soon as possible.  Always sell next month’s options. To determine which option expiration needs to be sold, refer to the calendar. If today is March 31st sell April options. If today is April 1st sell May options.  Sell the next month option based on today’s date.

If you know in advance that you are going to miss Trade Day, you can request a Vacation Trade from us. Vacation Trades can be requested on the Snider Advisors website; locate the tab labeled “Services” on the front page, and select the link for Vacation Trade to request one.

It is still possible that you will miss a Trade Day due to some unforeseen circumstance; in that instance, the course of action to take is to undertake your trades as soon as possible. Please keep in mind, however, that the options you trade in will have their expiration dates determined by the date that you trade. For example, a trade enacted on November 26th will be for December expiring options, while a trade enacted on December 1st will be for January expiring options.

If there are any other points that need to be clarified, please feel free to contact us with any questions you may have.

Historically, major market corrections have happened approximately every 5 years. See attached chart. No one has been able to consistently predict when they will occur. There are plenty of people who have gotten famous for a single market call. Some of them really did call it – Elaine Garzarelli, for example, called the crash of 1987, Ralph Acampora and Abby Joseph Cohen were famous for calling the bull market of the 90’s. But none of them have been able to do it over and over again.

That is luck, not skill.

Since we are unable to predict these events, we need to weather the storm when it arrives. The idea is not to run to harbor every time there is an approaching storm but to build a boat designed to sail in the broadest possible range of weather conditions.

Our boat is the Snider Method.

Since the future is impossible to predict, you should not invest to protect yourself from one possible outcome. It is our philosophy that we never make a change to our investment portfolio based on what we, or someone else, “thinks” is going to happen. If you have constructed your portfolio properly, knowing these events occur on a fairly regular basis, there should be no need to make changes.

Many people have written books predicting unusual events, there is no harm reading them. But remember, Confirmation Bias, which is hard-wired into each of our brains, causes us to seek out opinions which reinforce the view we already hold. For every economist who predicts one thing, I can show you an equal number who make a very credible case for the opposite.

Confirmation Bias tends to filter out the viewpoint that contradicts our own. Confirmation Bias works in a similar way with fear. If you fear something, you will tend to hear noises that go bump in the night. If the world is ending, our portfolio is likely to be the least of our concerns. At that point we are probably standing guard on the roof of our house with a flame thrower, like Mad Max, trying to fend off looters. If you are unsure about whether or not you have a properly diversified portfolio or how the Snider Method fits into a larger financial plan, we would strongly urge you to contact us for a consultation.

An ETF is an Exchange Traded Fund.  An ETF trades like a stock, but holds a basket of securities that tracks an index.  Most ETFs track an index, their goal is to replicate the overall performance of the index they track daily.  For example a Dow Jones Industrial Average Index ETF will hold the stocks that make up the DJIA Index.  Instead of purchasing all the 30 stocks, an ETF allows you to own a portion of all 30 stocks by purchasing ETFs allow an investor exposure to an entire sector, or index for a low cost.

Lattco recommends ETFs for smaller accounts to reduce bankruptcy risk and company specific risk.  We can easily be diversified while still holding only one position.

We focus on income. The amount that needs to be allocated to the Snider Method is whatever amount  is required to produce the income you need to maintain your standard of living indefinitely into the future. That may mean that 100% of your portfolio is needed to be invested for income generation, but up to 70% of your assets should go in the Snider Method.

We take a waterfall approach, so each dollar of your investable assets will be directed to the first “pool” to produce cash flow. Once the goal of income is achieved, the next dollar can be directed to hedging against hyper-inflation with broad-based commodities exposure, up to a total of 15%. If you have additional assets remaining, you will want to invest in real estate, as it is a non-correlated asset.

So the ideal breakdown is (in order):  70% Snider Method, 15% Commodities, 15% Real Estate

It is important to note that your Snider Method account should be completely separate from your emergency cash reserves. We advise everyone to only put money in the Snider Method that they are willing to leave invested for at least two years. Twelve (12) months of expenses in a liquid savings account plays a crucial role in the success of your financial planning.

We focus on Income. The amount that needs to be allocated to the Snider Method is whatever amount  is required to produce the income you need to maintain your standard of living indefinitely into the future. That may mean that 100% of your portfolio is needed to be invested for income generation, but up to 70% of your assets should go in the Snider Method.

We take a waterfall approach, so each dollar of your investable assets will be directed to the first “pool” to produce cash flow. Once the goal of income is achieved, the next dollar can be directed to hedging against hyper-inflation with broad-based commodities exposure, up to a total of 15%. If you have additional assets remaining, you will want to invest in real estate, as it is a non-correlated asset.

So the ideal breakdown is (in order):  70% Snider Method, 15% Commodities, 15% Real Estate

It is important to note that your Snider Method account should be completely separate from your emergency cash reserves. We advise everyone to only put money in the Snider Method that they are willing to leave invested for at least two years. Twelve (12) months of expenses in a liquid savings account plays a crucial role in the success of your financial planning.

In the Snider Method, we require that our cash holdings come with no risk of loss of principal and our cash must be liquid. Too much risk must be taken with other securities for investors who want to capture this extra yield. While your cash may not earn much in a money market o FDIC program at this time, it is being held at minimal risk. When interest rates rise in the future to more normal levels, we will look at opportunities to invest access cash in safe liquid investments such as T-Bills. See document. “How To Guides”

In the Snider Method, we require that our cash holdings come with no risk of loss of principal and our cash must be liquid. Too much risk must be taken with other securities for investors who want to capture this extra yield. While your cash may not earn much in a money market o FDIC program at this time, it is being held at minimal risk. When interest rates rise in the future to more normal levels, we will look at opportunities to invest access cash in safe liquid investments such as T-Bills. See document. “How To Guides”.

Higher potential withdrawal rates. Capital appreciation strategies were designed to work as a “buy and hold” strategy. The issue with this is that when you are entering retirement, you often have to liquidate assets to generate income despite their market value. The challenge is approximately one out every five years in the stock market is a down year. If you have to sell in order to realize profits to pay your bills, you will have to sell at a loss a large percentage of the time. This creates a reverse compounding problem, which creates a high probability you will outlast your money.

Cash flow is money that comes to you while you still own an asset. Examples of cash flow would be rent, royalties, interest, dividends, and option premiums. The key characteristic of cash flow investing is that you do not have to sell the asset in order to make money. This allows you to maintain your standard of living throughout your life by generating income from the asset, rather than trying to sell based on price predictions.

No one can predict prices or market movements with any consistency, so investment strategies that rely on luck or gut feelings, like capital appreciation strategies do, won’t work.

Higher potential withdrawal rates. Capital appreciation strategies were designed to work as a “buy and hold” strategy. The issue with this is that when you are entering retirement, you often have to liquidate assets to generate income despite their market value. The challenge is approximately one out every five years in the stock market is a down year. If you have to sell in order to realize profits to pay your bills, you will have to sell at a loss a large percentage of the time. This creates a reverse compounding problem, which creates a high probability you will outlast your money.

Cash flow is money that comes to you while you still own an asset. Examples of cash flow would be rent, royalties, interest, dividends, and option premiums. The key characteristic of cash flow investing is that you do not have to sell the asset in order to make money. This allows you to maintain your standard of living throughout your life by generating income from the asset, rather than trying to sell based on price predictions.

No one can predict prices or market movements with any consistency, so investment strategies that rely on luck or gut feelings, like capital appreciation strategies do, won’t work.