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Indexed Universal Life Insurance Faces Fresh Scrutiny

Regulators homing in on whether insurers are presenting a picture of performance that’s too rosy. Financial advisers working with indexed universal life insurance are finding themselves in the middle of a heated battle between state regulators and the life insurance industry.

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safety_trap.top_.jpgIndexed Annuities are a Safety Trap

The card that landed in mailboxes throughout central Illinois in early 2008 promoted “the most informative retirement workshop you’ve ever attended.”

Pinnacle Investment Advisers, which had four offices in the area, was offering discussions of Medicaid planning, IRAs, and tax-efficient income over lunch or dinner. Bios of Pinnacle owners Susan and Tom Cooper mention their grandchildren, his Vietnam service, and her Bible study group.

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missed fortune..JPGBeware of the “Missed Fortune” Sales Concept

I went downstairs this morning, poured a nice cup of coffee, opened my Sunday edition San Diego Union newspaper and there it was. A full quarter page advertisement promoting Doug Andrew’s seminar titled Now’s the Time to Convert Your IRAs and 401(k)s to Better Plans (While Tax Rates are Lower and Your Account Values are Lower). The advertisement included a biography of Mr. Andrew and he was nice enough to include a photo too.

As a member of The Center for Life Insurance Disputes I see a lot of life insurance scams and abuses. I believe that if I can help one person not get swindled out of their money then I’ve accomplished something worthwhile. If you are being solicited by one of Missed Fortune’s promoters, think long and hard about the adage “if it sounds too good to be true it probably isn’t true”. That is the perfect way to sum-up Doug Andrew’s Missed Fortune 101. It’s nonsense that will work for only a very small number of people.

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Annuities may cause problems with Medicaid

Medicaid, the state and federally funded public assistance program, might be off the radar screen for financial advisors selling annuities to senior clients for retirement planning.

It shouldn’t be, attorneys say.  Problems could arise if a client needs nursing home care and runs out of money.  The wrong kind of annuity could prevent him or her from qualifying for the program that funds more than half of the nation’s long-term care.

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Best selling book’s financial promises don’t add up

Pamela Yellen’s New York Times best-seller, “Bank on Yourself,” made a splash by promising to help people build their wealth even as their investments were losing value. In the aftermath of the housing crash, the book seemed to throw a lifeline to consumers whose financial security was suddenly under threat and who were desperate for help on how to preserve their standard of living.

Sound too good to be true? Many people have expressed skepticism, including personal finance personalities such as Suze Orman and Dave Ramsey. Yellen dismissal of such doubts is summed up in an entertaining cartoon, claiming she is is offering “financial secrets [financial services companies] don’t want you to know.” I approached this investigation in that spirit, prepared to assess — and to buy — the products she recommends under the Bank on Yourself method.

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The CD Story

You have probably seen many an ad in your local newspaper advertising a 90 day Certificate of Deposit [CD] at an annual return that is greater than what you can obtain from any bank.  If so, you are probably wondering “how and why” they are making this offer.  Here is how it typically works:

In order to take advantage of the promotion rate, prospective customers are required to make an appointment with the company and personally meet with a sales agent.  There is usually a maximum amount and maturity that you are able to invest into the CD; for example, the CD value must be for less than $10,000 and for periods of no longer than 3 or 6 months.  You are, of course, allowed to purchase a CD for an amount greater than the maximum; however, the promotional incentive is usually only available on the first $10,000.  Any amount over that will be at a lower interest rate.

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