Finance Tips from Roche Financial Partners

Nobody likes to think about disasters – let alone plan for them – but, it is very important that we implement a strategy for keeping certain information safe.  I’d like to discuss the important documents that will always be needed by clients regardless of the specific form of destruction or devastation that you encounter.

• Identification:  Most of us have probably never been in a situation where we literally have no identification to prove who we are when prompted to do so. Many people in the tornado-destroyed areas had no driver’s license, Social Security card, birth certificate or marriage license. The lack of said documents could make life very difficult when trying to revive your life after a complete devastation and get back to normal as you know it. Remember: identification is the driving force behind everything we do in our day-to-day affairs.

• Documentation of Ownership: Deeds and/or titles to land, homes, cars, boats, etc., are all documents especially needed when forced to prove that you owned your home or car for insurance claim purposes. In my opinion, it would be very difficult to file insurance claims on property that has been completely blown or washed away with no evidence of the damage available for assessment. Therefore, the need for documented ownership may be at issue at some point in the claims process if the asset is no longer present.

• Personalized Legal Documents: I cannot begin to comprehend the emotional and total lifestyle devastation that a tornado, flood or hurricane would have on a person’s life, much less the additional effects from a family member being killed in the process. Sadly, then, the question becomes “Do the surviving members of the family have a copy of the deceased’s will?” Did the deceased member even have a will? What if a family member is seriously injured and incapacitated? Does the family have a copy of the Power of Attorney, the Living Will and/or Medical Proxy?  Obviously, it’s extremely important to have these documents in the first place, and then for family members and other key advisors to have copies of these personalized legal documents should tragedy strike.

• Proof of Insurance Coverage: Whether it’s homeowner’s, auto, health, life, disability, long-term care or an annuity insurance contract, all insurance coverage policies and/or supporting documents are of immense importance in post-disaster situations. Reviewing homeowner’s insurance coverage is something of yearly importance that I highly recommend you relay to your clients, as new personal property assets or even structural additions often happen. Having full knowledge of their coverage and the supporting documentation will always help expedite the claims process, especially in a time of devastation, while also assuring they get the full benefits of their insurance coverage.

• Tax Returns and Financial Account History:  Most often in disaster-stricken areas, there are tax relief efforts announced and enacted by state and federal governments for the citizens of the affected areas. That relief, in some cases, allows for carry-back deductions with regard to casualty losses, resulting in the need for historical tax return retrieval. Taxpayers are only allowed to amend back three years; however, I highly recommend keeping from five to seven years of documented, filed tax returns, due to statute-of-limitation issues. Whether tax relief deductions are allowed to be carried back or not, there is still the need for past tax return retention should a historical audit be requested by the IRS. This also could bring forth the need for all financial account histories such as bank  accounts, credit card accounts, and even investment account statements, as taxes and finances collectively intermingle.

Business disaster planning in the wake of 9-11 has improved dramatically; however, the need for personalized disaster planning within our own families has been somewhat overlooked in the whole process. It’s unfortunate that it often takes a natural disaster to force us to open our eyes and realize not only do our clients need financial advice but they also need help preparing for when disaster strikes.

This column is provided by Robert Gregov,CFA, CFP®, a local member of FPA and President of Roche Financial Partners. Roche Financial Partners is an independent wealth management firm that specializes in comprehensive financial planning and investment management. Our mission is to make a significant contribution to the quality of life of our clients by empowering them with the peace of mind and personal satisfaction that comes from achieving their financial goals. To learn more about Roche Financial Partners or the article above, please contact us at (609) 575-6762 or info@rochepartners.com. See our website at www.rochepartners.com.

It’s no secret that a lot of fixed income investors are concerned about a sudden, dramatic rise in interest rates. While we don’t think any rise is imminent—and that when rates do rise, they’re likelier to inch gradually higher rather than all at once—the fact is that rates can’t stay this low forever. And when rates do eventually rise, they’re bound to benefit somebody.

Here’s who—and what—could do well in a rising interest-rate environment:

Savers. The primary beneficiaries of higher interest rates are investors who are savers. They’ll be able to generate more income on their investments and compound that income over time.

From a bond investor’s points of view, the key is to have the flexibility to reinvest capital when rates rise. That’s why we favor bond ladders. With a ladder, there is a bond maturing every year and if rates move up, the proceeds from the maturing bond can be reinvested at higher rates.

Ladders provide the flexibility to reinvest while staying invested. They may not perform as well as more targeted strategies, and the bonds in the ladder will still move down in price if rates rise, but our view is that the benefits of ladders outweigh these disadvantages in a low interest rate environment.

Credit-related bonds. Rates usually go up in a stronger economy; the spread between bonds with credit exposure and Treasuries has tended to narrow in such environments. So even though higher interest rates may mean lower bond prices in all sectors, the decline in corporate bonds is likely to be less than the price decline in Treasury bonds. At least, that’s what we’ve seen in every previous tightening cycle.

Floating rate notes (FRNs). Some FRNs may appreciate in value, since most are indexed or referenced to a benchmark rate, such as the London Interbank Offered Rate (LIBOR), that moves with the market. So if the Fed is raising short-term rates, then the floating rate note may keep up with the hike in short-term rates. However, FRNs typically are shorter duration bonds, so if long-term rates move up while short-term rates stay low (that is, if the yield curve steepens) they may not keep up with the overall increase in rates.

This column is provided by Robert Gregov,CFA, CFP®, a local member of FPA and President of Roche Financial Partners. Roche Financial Partners is an independent wealth management firm that specializes in comprehensive financial planning and investment management. Our mission is to make a significant contribution to the quality of life of our clients by empowering them with the peace of mind and personal satisfaction that comes from achieving their financial goals. To learn more about Roche Financial Partners or the article above, please contact us at (609) 575-6762 or info@rochepartners.com. See our website at www.rochepartners.com.

It’s that time of year once again – tax season. This may incite some groans but as the saying goes – there are two things that are certain in life – death and taxes – so might as well get on with the latter and in a way that protects your family’s financial well being.  We have four quick steps to check yourself before the 15th of April.

First, is whether to elicit help or handle your own. Generally speaking, if your financial situation is straightforward, a software like Turbo Tax or a walk-in tax service is sufficient, depending on how hands on you want to be.  If you are uncertain or have a more complex profile, use a tax advisor or Certified Public Accountant.

Next, be sure that you or your advisor is on top of the ever evolving tax laws that you need to follow and credits that you are eligible for. Remember, while we all think about taxes at this time of year, tax consequences should be incorporated into your planning and investments year-round.  Your financial planner should be managing any tax loss harvesting when taking a comprehensive view of your portfolio.

Then, carefully consider your withholding rate. If you can invest at a good return and can manage your liquidity needs at year end, withholding less and paying in April is most beneficial. If you are weary of having to owe come April, you can have more withheld and expect a check. Just remember, it was Uncle Sam and not you who saw the benefit of holding onto that money throughout the year.

Finally, some tax planning is adhering to certain, basic requirements. The IRS suggests you maintain records of all income and expenses (including statements and receipts) for at least 7 years. If you have gone electronic to avoid paper, remember to confirm what is available online. You may need to download statements if they are only available online for a limited time. Remember to keep your prior tax filings in a safe place, secure fireproof safe or safety deposit box.

We hope this brief road-map is helpful to you as April 15th approaches but also year-round.

Valentine’s Day 2013 has come and gone. Most make it a point to spend time with your significant other, heed that annual reminder to pick up a greeting card, maybe flowers, chocolate, or whatever traditions you have as a couple. A good habit to start that will keep your relationship strong is communication about your finances. It is no secret that many couples fight over money – not just spending or saving habits but truly what your collective goals are and how you both will work to get there. Finding that common ground vision and values can ensure you are both on the same team and will minimize any conflict. Here are six common pitfalls and tips on how to avoid them.

He/she spends and I am a saver – This is a common one and oftentimes a misconception. If one of you makes the frequent purchases for the household, and the other makes the high-priced infrequent purchases, in reality you both might be spending evenly. There are cases where money seems to flow out of one side of the relationship however. Break this routine of focusing on spending by making a specific plan with savings and spending targets to meet them. This will neutralize your natural tendencies and redirect your focus and behaviors on your collective plan and investments (saving or spending) to achieve it. Agreeing these targets together, being informed about how this helps you reach your joint goals, and monitoring your progress is a great way to do this.

He/she is risk averse and I am anxious that we aren’t invested in the market enough – Risk tolerance can be a funny thing. It is common that when times get tough and markets take a dip, someone who considered themselves to be risky investors because they love the idea of the potential upside is ready to sell their investments because they are uncomfortable with the downside. This of course leads to the worst strategy you can have of buying high and selling low – so it is important that you critically evaluate your risk tolerance – together – and even better with the help of a professional. There are scenarios and layers of questions that can help you truly determine how much risk you are willing to and should take.

Combine all or separate accounts – This is a personal choice for all couples. Some get more comfort having specific joint and individual accounts, others like to combine everything. Contributions to joint accounts should be discussed and agreed. It is important to note that without everything being combined, there are some specific steps to take to avoid red tape in accessing your spouse’s account in the event of an emergency. Additionally, while accountholders may differ, if married, your accounts are still linked and following a death, lawsuit, etc your marriage partnership will forever link your accounts.

One person takes the lead and the other is unaware – Many couples take a parent/ child approach to dealing with their finances, with the saver typically taking the parent role. It is important that the basics are known by all – your assets, liabilities, cash flows, budget, goals and progress. Just like that reminder to make a reservation for Valentine’s Day, schedule regular check-ins to review your family’s financial state together. With the ease of banking these days, electronic statements, auto-payments – it is easy to lose track of where your hard-earned money is going. Be sure to review all statements for errors and to stay proactive.

Different histories and how to blend – Varying levels of debt (student loans, credit cards) coming into a relationship is often a cause for question. Who pays off what? This is a topic that you should address head on and determine what you feel comfortable doing together. Don’t punish an individual for past mistakes, though you might agree they will be responsible for correcting them. The most important thing is being aware of all accounts and debts, so that the financial decisions you make going forward are directed by your current status and informed by your previous actions.

To budget or not to budget – One might enjoy building a detailed budget while the other considers it a dirty word. The budget can be as detailed as you agree together but the bare minimum is that you must make your money work for you. Agree goals together and translate them to day to day reminders. This might mean an automated email from your credit card company if your spending is reaching a target you set for the month, auto-saving taking the discretion out of putting the money aside, and quarterly credit report checks so that your hard work on maintaining your finances is not destroyed by errors in processing or identity theft.

Keep the communication open and take the time to discuss this important, though perhaps less romantic topic, with your loved one. It will make you stronger as a couple and as partners working together towards your dreams and goals.

This column is provided by Robert Gregov,CFA, CFP®, a local member of FPA and President of Roche Financial Partners. Roche Financial Partners is an independent wealth management firm that specializes in comprehensive financial planning and investment management. Our mission is to make a significant contribution to the quality of life of our clients by empowering them with the peace of mind and personal satisfaction that comes from achieving their financial goals. To learn more about Roche Financial Partners or the article above, please contact us at (609) 575-6762 or info@rochepartners.com. See our website at www.rochepartners.com.

As we wrap up the first month of 2013, many of us are making resolutions. A recurring one is often to spend more time on what matters. Depending on the individual this may mean spending quality time with family, building friendships, pursuing hobbies, progressing your career, dedication to charities, or simply to be more present. One aspect of your well-being that might not make your short list of resolutions, but should, is ensuring you have the means to do what you love and have the financial peace of mind to allow you to focus. If you have neglected this area of your well-being in the past, this is the year to make that change. Here is how – the five keys to becoming financially fit.

Fitness is more than a number - “I watch my investments every day.” Financial fitness is more than a number, on the scale, the ATM, or your online portfolio. It is multi-faceted just like your physical health. There are several indicators and aspects that must be managed actively. Your physical health cannot be maintained through diet alone. Similarly, by worrying about your investments in isolation, you won’t achieve the financial well-being that you are seeking. Cash flow, risk tolerance, goals, estate planning, retirement, tax consequences, total cost of investing, and asset allocation are just some of the critical components not to overlook. A truly comprehensive wealth plan will cover all aspects of your financial health, to help you reach you financial goals.

Get organized - “Sure, I contribute to my 401K, but it is hard to get a handle on where I stand overall.” Just like you schedule your annual physical, you should dedicate the same time to a regular financial checkup. With a slew of account statements (checking, savings, retirement accounts, debts), considerations, and personal goals, it can be difficult to know where to start. Taking a full inventory of your personal wealth – assets, liabilities, cash flows, and goals is the only way to begin on the right path. A professional can help you to assess it all and develop some very specific resolutions and actions to take next.

Experts can help - “I thought I could manage it myself but I just don’t have the time.” The best intentions are sometimes not enough. Much like you might engage a personal trainer to get your physical fitness on track, or rely on your primary care physician to gauge your overall health – calling in the experts can help. A financial advisor (not just a broker) can provide you with expertise, help you craft a plan, and most importantly implement for results. One advisor who coordinates between accountants, attorneys, insurance agents, estate lawyers, tax advisors on your behalf, rather than the onus being on you to piece together how your “specialists” are contributing to your overall health. The word of warning here – be sure your incentives are aligned. What you need is an advocate, not a salesperson pushing a product that may or may not be right for you. Look for certifications that hold your advisor to the highest standard of care and fiduciary duty to look out for your best interest.

Clean out your closet - “I admit a lot of my current investments were emotionally charged.” January is a time for cleaning out your closet, what doesn’t fit, what is clouding the rest. This is a good time to make sure that you unload of poor investment decisions of the past in a tax-efficient way. Sometimes, without a clear plan, it can be hard to weed out what “doesn’t fit”. Revisit your goals, how you plan to achieve them, and then compare that to the portfolio that you currently hold.

Seize the day - “I figured it was about time to take control of my financial future.” With personal finances, there is no time like the present so start today. Because of the time value of money (investing a dollar today versus a dollar 10 years from now can have a significant impact to your wealth long-term), it is important to get time on your side. No matter what stage you are in, there is no better time like the present. The consequences of ignoring your financial health grow over time. Shake off bad habits of the past and get on the right track now.

This column is provided by Robert Gregov,CFA, CFP®, a local member of FPA and President of Roche Financial Partners. Roche Financial Partners is an independent wealth management firm that specializes in comprehensive financial planning and investment management. Our mission is to make a significant contribution to the quality of life of our clients by empowering them with the peace of mind and personal satisfaction that comes from achieving their financial goals. To learn more about Roche Financial Partners or the article above, please contact us at (609) 575-6762 or info@rochepartners.com. See our website at www.rochepartners.com.

It’s a much different picture renovating a home in 2012 than in 2002. Fueled by huge gains in the price of real estate, homeowners a decade ago were tapping home equity with little care since prices were expected to keep climbing, more than covering the cost of such improvements.

Today, with the slowdown in real estate and the widening damage in the subprime loan market, home prices aren’t rising much – and falling in some places. And lenders tend to be a lot choosier these days about who to do business with. So before considering a home renovation, it makes sense to make sure your financial house is in order:

Start with your credit report: If you’re considering borrowing, make sure your credit report and payment records are in the best possible shape. As in most economic crises, lenders go from being permissive to squeamish in an instant, so even people with good credit behavior are going to be under the microscope. Start by checking your credit report — you have the right to get all three of your credit reports – from Experian, TransUnion and Equifax – once a year for free. You can do so by ordering them at www.annualcreditreport.com, but do so at staggered times throughout the year so you can catch potential errors in your report as they happen. Also, if you need to clean up any bad behavior – late bills, heavy credit card debt, clean it up before you wander back into the real estate market. Remember that a bad credit score can raise the total cost of your mortgage.

See what kind of payoff your chosen renovation will have: During the housing boom, people thought virtually any renovation would offer big returns. That wasn’t true then, and it’s particularly untrue now. Take the time to figure out what renovations have the best chance for return on investment now – go to Remodeling magazine’s annual Cost vs. Value report online and check 2012 project cost averages for your region of the country. In this market, renovate because it’s going to bring you comfort or pleasure, not because you’re expecting immediate profits.

Know how long you’ll need to stick around: When you sell, remember that most married couples can exclude from their taxable income up to $500,000 of gain and most individuals filing single or married filing separately can exclude up to $250,000. It’s required that you must have owned and used your home as your principal residence for two out of five years before the sale. The exclusion is generally applicable once every two years. However, if you are unable to meet the two-year ownership and use requirements because of a change in employment, health reasons or unforeseen circumstances, then your exclusion may be prorated.

Beware the bump in property taxes: The great thing about a more valuable home is the potential higher value when you sell. The bad thing is a visit from the county assessor – more valuable property tends to lead to higher tax assessments. Make sure you cannot only afford the cost of renovation, but what you’ll need to pay higher taxes if your home is reassessed.

Don’t forget to deduct applicable sales tax: If sales tax was imposed on a major renovation or if your state or locality imposes a general sales tax on the sale of a home or the cost of a substantial addition or major renovation, you might be able to deduct it.  This alternative is particularly valuable in low-tax states, and the sales tax paid on the purchase of some large items including the purchase of a home or major addition can be added to the table amounts.

Make sure your renovation makes your home salable: A discussion with a real estate agent or someone familiar with the value of improvements in your immediate neighborhood can tell you what will add to value or take it away. For instance, a big addition can take away from the value of a home if it’s not aesthetically in tune with the rest of the neighborhood. Obviously, any renovation that keeps your house on the market longer better be worth it now because it might damage your sales prospects later.

This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Robert Gregov,CFA, CFP®, a local member of FPA and President of Roche Financial Partners. Roche Financial Partners is an independent wealth management firm that specializes in comprehensive financial planning and investment management. Our mission is to make a significant contribution to the quality of life of our clients by empowering them with the peace of mind and personal satisfaction that comes from achieving their financial goals. To learn more about Roche Financial Partners or the article above, please contact us at (609) 575-6762 or info@rochepartners.com. See our website at www.rochepartners.com.

Like many difficult situations with people we love, planning to take over an older relative’s finances is best done in happier times, when both sides are healthy and various options can be considered.  Unfortunately, events can sometimes intervene – death, illness or natural disasters can make an elder’s need for assistance a critical matter.

Once stricken, older relatives may be unable to understand questions or express their wishes in proper detail. If there is no plan, family members grasp at responsibilities – or shirk them – without any idea of what the older relative would really want.

What’s critical to understand is that such talks should go far beyond money. They need to be discussions about independence and basic preferences for the way an individual wants to live or die. Demographers believe that with the rising number of single Americans – those divorced or never married – these conversations will become increasingly complicated as they fall to nieces and nephews, younger friends or designated representatives.

Want to avoid a worst-case scenario? Start the conversation now. Here are some ideas:

Decide what’s important to talk about first: Maybe this conversation isn’t just about where the will or health care power of attorney is. Maybe this conversation is about you noticing that a parent or loved one is moving slower, is more forgetful, is clearly looking like their health has taken a turn for the worse – and maybe that’s why you want to know where the will is. Jumping into money issues first is usually a mistake. Deal with immediate health and lifestyle issues first.

Explain why you want to talk about finances: In some families, having a successful financial discussion means several attempts and some frustration. Don’t let yourself become angry or frustrated – just keep starting the conversation until it catches on. It might make sense to say something like, “You’ve always been so independent, Mom. I just want you to give us the right instructions so we do exactly what you want.”

Prepare your questions in advance: When a parent or relative is unconscious or unresponsive, the younger relative is immediately in the drivers’ seat. That’s why it’s critical to make a list of questions for the elderly relative to answer in detail. The basics: Where important papers are, how household expenses are paid, who doctors and specialists are, what medicines are being taken and whether there’s a will, an advanced directive and a funeral plan (and money or insurance proceeds to pay for it). There may be dozens more questions beyond these based on your family’s personal circumstances. But in creating this list, ask yourself: “What do I need to know if this person suddenly becomes sick or dies?”

Offer to get some qualified advice: If you don’t fully understand your relative’s financial affairs, it might make sense for you both to talk to an attorney or a tax or financial adviser. A qualified adviser can offer specific suggestions on critical legal documents that should be in place and ways to make sure accounts to pay medical and household bills are accessible to the older person and the designated friend or relative who will hold power of attorney.

Plan a caregiving strategy together: You should discuss the relative’s preferences and trigger points for various stages of heath care. An individual always wants to stay in his or her home, but you should have an honest discussion about how much you can do at home as a caregiver and whether various services (home health aide, geriatric care manager, assisted living) should be introduced at various stages. Talking through what a parent will be able to live with at various health stages – and putting that information in writing – will save plenty of doubt and bitterness later.

Discuss what should happen with the home:  If an elderly relative becomes sick and irreversibly incapacitated, the equity in his or her home may come under consideration as a resource to pay uncovered medical or household maintenance. Since the home is both a major asset and an emotional focal point, it’s best to get good advice and spell out specifically what the elderly relative wants done with his property and under what conditions.

Make sure everyone knows the plan: Once you settle on a strategy, make sure all family and friends understand the plan and their assignments.

This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Robert Gregov,CFA, CFP®, a local member of FPA and President of Roche Financial Partners. Roche Financial Partners is an independent wealth management firm that specializes in comprehensive financial planning and investment management. Our mission is to make a significant contribution to the quality of life of our clients by empowering them with the peace of mind and personal satisfaction that comes from achieving their financial goals. To learn more about Roche Financial Partners or the article above, please contact us at (609) 575-6762 or info@rochepartners.com. See our website at www.rochepartners.com.

It’s one of the most important questions a couple will face in their relationship but it so rarely gets asked until a relationship is well underway – should we pool or separate our money for investment?

The answer is as unique as the both of you. But there are some critical facts and some questions to consider as you develop a financial strategy for a lifetime.

Pooling can be a great idea after a marriage because the both of you are legally bound together, so why not bind your finances for potential maximum return? Many financial experts believe it’s a good idea for the simplest of reasons: The bigger the pile of money you two can gather, the greater the potential for financial gain with the right advice.

But there’s more to it than simply combining your assets.  Pooling your investment dollars should produce not only shared decision-making, but shared awareness of everything going on with your finances for a lifetime. It’s the kind of cooperation that will not only benefit you all the years of your marriage, but also provide a surviving spouse the knowledge to function if the other dies suddenly or is incapacitated.

But how about a couple that wants to plan separately? The first question is: Why? There may be compelling reasons – for instance, one spouse has assets he or she wishes to protect from another spouse engaged in a high-risk business proposition. Others may have significant inherited family assets that need to be protected for heirs from potential loss in a divorce. And of course, this is the least attractive reason, but it happens: One spouse doesn’t simply trust the other.

These questions and more are a good reason for a couple planning to marry to sit down with a trained financial expert like a Certified Financial Planner™ professional to go over their respective and combined goals for home ownership, retirement, kids’ college savings and various other lifestyle goals. 

Here are some things to consider:

What approach will get you to your goal faster?  Young people starting out literally need to save every nickel to save for a first home. It makes sense to figure out how much you can jointly put aside and where to invest that money based on your risk tolerance.

How can your employer help?  Obviously max out on your 401(k) and other retirement savings options – particularly if there’s significant company matching involved, but check to see if your other benefits will do more for you and your spouse. See if joining on one or the other health plan might be a better value than going it alone on your respective plans. If you have a health savings account that your spouse hasn’t, see how you can make that a part of your overall joint investment strategy. Also, don’t forget employee discounts that might cut your overall household spending. 

Let your competing investment styles…compete:  There are plenty of studies on this, but they seem to hold steady – Men tend to take more investment risks; women seem to be risk-averse. One of the advantages to working with a trained financial expert is not only their ability to make solid investment suggestions for you, but to identify the differences in your investment approaches and find compromises that work best for the both of you.

Talk:  Talk about your financial expectations and what goals you’d like to achieve. Talk about any concerns you have about money.  Most importantly, talk about your money history – your credit rating, debt, and bankruptcy. Oh, and if you survive these initial discussions, make a promise to talk about money once a month.

This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Robert Gregov,CFA, CFP®, a local member of FPA and President of Roche Financial Partners. Roche Financial Partners is an independent wealth management firm that specializes in comprehensive financial planning and investment management. Our mission is to make a significant contribution to the quality of life of our clients by empowering them with the peace of mind and personal satisfaction that comes from achieving their financial goals. To learn more about Roche Financial Partners or the article above, please contact us at (609) 575-6762 or info@rochepartners.com. See our website at www.rochepartners.com.

Disability insurance protects your ability to earn an income. It provides money to pay your rent, mortgage and all your basic living expenses if you are injured or sick for an extended period. It is called disability Insurance or disability income protection but think of it as income replacement when you are sick or hurt and cannot work. At any age, you are about six times more likely to be disabled for some period of time than to die.

Think your employer’s coverage is enough? Think again. You may have whatever sick leave you have coming, and then if an employer offers short-term disability coverage, it generally doesn’t last more than 12 weeks. There are employers that offer long-term disability coverage, but if you’ve never checked the terms of that coverage, you should.

It never hurts to consult a financial advisor with expertise in this subject, such as a Certified Financial Planner™ professional.

Basic components of long-term disability coverage:

Monthly benefits:  Long-term disability insurance is generally structured to pay 70 percent of your income up to age 67 or your normal retirement age. See if the policy you’re buying offers you the chance to buy more insurance as your income increases in future years.

Benefit term:  For each disabling incident, your policy may pay benefits for a certain period – two, five years or until retirement. It’s all in how your policy is constructed. Many policies may pay for life if you purchase this benefit and you are disabled prior to age 60.

Buying younger is generally cheaper: Like health and life insurance, the younger you buy, the less you’ll pay. Occupation enters into the picture because high-risk jobs (where disability is a greater work-related factor) tend to draw more claims. Like health insurance, it will consider your medical history and your lifestyle, including your weight, pre-existing conditions and whether you smoke.

Premium cost:  The premium will depend on a wide array of factors and can vary dramatically from person to person. Such things as your age and your gender (women pay more for disability insurance because they tend to live longer and may work longer) will be considered.

Non-cancellation provisions:  Make sure that once you’re approved, the insurer can’t cut your coverage unless it decides to stop writing coverage for everyone in your job class. It should also state that the insurer can’t raise your rates.

Guaranteed renewable:  Like the category above, it means you can’t be canceled, except if the insurer stops writing insurance for your job category. The insurer can, however, raise the rates for everyone in the category.

Own occupation vs. any occupation:  If you have “own occupation” coverage, it is intended to go into effect if you can’t perform the functions of the job you’re now in. “Any occupation” coverage pays only if you can’t work at any job where you’ve been reasonably trained to do the tasks. For example, if you’re working a desk job, you could easily be transferred to a receptionist’s job or some other function within the company that you can now do or is your former position. That could significantly interfere with your recovery time, so consider the benefits of (specify) “own occupation” coverage.

Elimination period:  Like a deductible in home, health or car insurance, the elimination period is a big cost determinant in disability coverage. Most policies will kick in after 30 days after you’ve been declared disabled. But if you specify an elimination period of 60, 90 or 120 days, your premium will be lower. An important point about the 30-day elimination period: the benefits don’t start accumulating until you’ve been laid up a month after the ruling date and you won’t get your payment until a month after that. Be very clear with your insurer when you’ll get your first check based on what elimination period you choose, and funnel the money you’ll need in the meantime to your emergency fund.

Partial payments/Residual benefits:  Some policies may offer you ‘residual benefits’ or a partial payment if you’re less than 100 percent disabled, but still can’t perform all the duties of your job.

If you’re thinking about self-employment:  You’ll likely need disability coverage. But the time to buy is while you’re still in your current job. Why? Because you won’t be able to prove your income once self-employed, so consider obtaining your desired coverage as you can before you leave.

This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Robert Gregov,CFA, CFP®, a local member of FPA and President of Roche Financial Partners. Roche Financial Partners is an independent wealth management firm that specializes in comprehensive financial planning and investment management. Our mission is to make a significant contribution to the quality of life of our clients by empowering them with the peace of mind and personal satisfaction that comes from achieving their financial goals. To learn more about Roche Financial Partners or the article above, please contact us at (609) 575-6762 or info@rochepartners.com. See our website at www.rochepartners.com.

When your home is damaged it is important to know what to do and what to expect when you file a claim for losses under your homeowners insurance policy.

Having paid premiums for years to be covered in case of a disaster, you will want to do whatever is necessary to make certain that you will be properly compensated for your loss and help to speed your family’s return to a normal life.

The Insurance Information Institute (III) provides a publication titled, “Settling Insurance Claims after a Disaster”.  The publication, which can be found at III’s Web site, describes what you will—or would—need to know and do when damage occurs; including: . 

Filing a claim.  Contact your insurance agent or company to report your damages.  Confirm that your policy’s terms cover it so that you can file a claim, your claim exceeds your deductible, you need estimates for repairs, and so on.

Get ready for adjuster.  Fill out a form that you will receive with descriptions of damaged and destroyed items, dates of purchase, original costs, and replacement costs. When the company sends out an adjuster to assess the damage, be prepared to show him/her all the structural damage in and around the house and to give him/her the description of damages—keeping a copy for yourself—and copies of detailed estimates for repairs from contractors whom you are considering. Also be prepared to show the adjuster damaged items and give him/her sales slips, invoices, or cancelled checks, which you have kept since their purchases, as well as receipts for any necessary temporary repairs, for which you will be reimbursed.

How much you may get.  The amount of money you may get from your insurance company depends primarily on the type of policy that you have.
• Replacement cost policies provide you with whatever is needed to replace damaged items with similar ones of equal quality.
• Actual cash value policies pay what’s left after deducting depreciation from replacement costs, which can leave very little.

If your home is so damaged that it cannot be repaired, a typical replacement cost policy will pay to replace it within specified limits; an inflation-guard clause will help you to keep up with increases in building costs.

Under an extended replacement cost policy, a company will pay 20 percent or more above the specified limits to give you protection against very large cost increases. A guaranteed replacement cost policy pays whatever it costs to rebuild your home—but not to improve on it.

Temporary quarters. If you and your family have to live elsewhere until your home is repaired or replaced, your company probably will pay for your loss of use: reasonable additional living expenses—such as rent, eating out, utility installation costs, added transportation costs—which may be 20 percent or more of the insurance on your house. (Be sure to keep records of your expenses.)

Water damage.  Homeowners’ policies don’t cover flood damage but do cover other kinds of water damage, such as rain coming through a hole made in the roof during a hurricane. If you have a flood policy and can substantiate flood damage, you need to get actual repair costs for payment.

Trees and shrubbery.  Companies typically pay for removing trees that fell on your house but not for those that fell on your lawn or for replacing damaged trees and shrubbery. 

Getting the money.  You usually get two insurance checks when both house and contents are damaged. If you have a mortgage, the check for home repairs will be made out to both you and the lending institution. The lender is likely to put the money into an escrow account, pay for the work as it is completed, and inspect it before making the final payment. 

If your property was destroyed or damaged due to an “unusual” event such as a hurricane, you may be entitled to an income tax deduction. Read IRS Publication 547, “Casualties, Disasters, and Thefts,” on the IRS Web site, www.irs.gov.