This week's picks include an argument for how the economy is doing just fine, an opinion about how hybrid should not apply to annuities, a piece on selling life and disability insurance to millennials, an overview of Thursday's long-term care panel, the DOMA ruling's impact on advisors, managing risk for the younger generation of heirs, and more.
Blame Bernanke – Your life insurance policy may need a rescue
"Since the 1980s universal life policies have been sold to older, affluent folks for their tax savings and flexibility. You start off paying annual premiums (or even one big single premium) that more than covers your death benefit. The excess grows tax deferred, building a cash value that supposedly covers some or all of the higher premiums as you age. Problem is, during the 1980s and 1990s policies were sold with illustrations showing the excess earning anywhere from 6% to 12% interest."
Ignore the markets (and the Fed), the economy is doing fine
"You could be forgiven for missing the latest installment of market panic over the past ten days. It came and went like a summer thunderstorm -- passing over the global financial landscape quickly and violently. But unlike meteorological events that inflict actual harm, the sharp gyrations of financial markets have increasingly less relationship to real-world economies and exist in their own never-never land of self-fulfilling prophecies and conventional wisdom."
Too young for other insurance?
(Wall Street Journal)
"Financial-services firms are taking a cue from younger Americans—considered to be largely financially conservative—and ramping up pitches for products typically marketed to older adults. These include life and disability insurance. But are such products the best use of your dollars right now?"
Facing a tight deadline, long-term care panel holds first meeting
"The panel is hobbled with a meager budget and staffing, and it is facing a three-month deadline for its report. Speakers at the meeting reminded the commission that the effort is daunting."
Hybrid annuities: What’s in a name?
"Hybrid is a car. Hybrid is a plant. Hybrid is not an annuity in my opinion, and Webster’s. I know, it’s too late. This hybrid thing is here to stay, and this will go down as one of the classic branding mistakes of all time. It would not surprise me if universities teach classes on this marketing debacle in the very near future."
Gay rights ruling has big impact for advisors
"In a historic victory for the gay rights movement, the court struck down a central feature of the Defense of Marriage Act, ruling that married same-sex couples are entitled to federal recognition. By declining to decide an appeals case regarding California's Proposition 8, which forbids gay marriage in that state, the court also effectively overturned that law. But the resulting mix of rules may complicate planning needs for same-sex married clients, advisors say."
Managing risk for the wealth-inheriting younger generation
'Many financial advisors are skilled experts when it comes to offering advice on the generational transfer of wealth, via such instruments as trusts and the establishment of limited liability companies. But they may not provide the same degree of specialized guidance when it comes to the generational transfer of knowledge—measures to preserve prosperity and increase wealth, as well as the risks potentially thwarting these goals."