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Blog Archive April 2019


10 Types of Insurance That Can Be Avoided

Most people can safely avoid certain types of insurance without risking regret or consequence. The claims related to these policies are typically covered by more common types of policies or very unlikely. There is, of course, always the possibility that one large claim could justify buying any of the insurance policies below. However, it would be highly recommended to instead invest what you would pay in premiums in an emergency investment fund to use as you wish.
1. Rental Car Insurance
Those that have full insurance coverage on their vehicles do not need rental car coverage because it transfers over to their rented vehicle. Your credit card may also offer coverage if used to pay for the rental car.
2. Children’s Life Insurance
Life insurance policies for children provide the beneficiary with a benefit if the child passes away. When the child reaches adulthood, the policy can be converted to an adult policy without the need for a medical interview or examination. The need for this coverage is minimal unless the child has a substantial financial worth that sustains a family or group of individuals. A young adult usually qualifies for a life insurance policy easily and the odds that a child will die at a young age are minor.
3. Accidental Death and Dismemberment Insurance
This type of insurance pays a beneficiary if the cause of your death is an accident. This would really only apply to those that work in a potentially hazardous environment, but even then, you should be able to get adequate coverage through your life insurance policy, without paying extra for this secondary premium.
4. Credit Card Insurance
Credit card insurance covers your credit card payment if you are unable to. However, considering that most credit cards have low minimum monthly payment amounts, most should be able to stay current. Also, the money you are spending for credit card insurance can be applied towards your credit card balance.
5. Mortgage Life Insurance
Mortgage life insurance pays off the balance of your mortgage if you pass away. However, it’s unnecessary to pay for a separate policy specifically for that. A life insurance policy should provide a death benefit large enough to pay off your mortgage balance along with other expenses.
6. Identity Theft Protection
Identity theft Insurance reimburses victims for money lost due to identity theft. Policy coverage can include legal bills, notary bills, credit monitoring services, lost wages and copies of your credit report. Consider that this insurance is usually included for free with credit cards, or as a rider in your home insurance. Most credit report monitoring services also include it. If you do decide to apply for a policy, your monthly cost will range from about $10 to $100 and deductibles range from $100 to $500.
7. Extended Warranties
Electronic devices and appliances are typically sold with a warranty and the option to purchase an extended warranty. In most cases you won’t need the extended warranty. Most products do not break during the time period that the extended warranty covers and the repair costs are usually less than the warranty. Buy a trusted brand and you probably won’t need a warranty.
8. Collision Coverage on an Old Car
The collision portion of an auto policy covers repairs or replacement of your vehicle when it is your fault. Older cars lose value quickly, therefore the premiums for collision coverage may not be worth the expense depending on the value of your car.
9. Flight Insurance
This type of travel insurance pays a benefit to a designated beneficiary if you die during a flight. However, flight accidents are rare. In 2017, there were 3.19 accidents per million commercial flight departures. Life insurance will also cover most death situations.
10. Disease Insurance
Insurance policies can be implemented to cover specific diseases such as cancer, a heart attack, an organ transplant and coronary bypass surgery. They are designed to pay for necessary medical services and treatments that aren’t covered by a traditional policy.
While the premiums for these types of policies are not very high, beware of the many stipulations and limited number of diseases. You could find yourself paying for a policy and still not covered for the services you need if you don’t meet all the requirements. You will most likely have more coverage by having a good medical policy and long-term disability insurance.
Fri, May 10, 2019, 4:30 PM
Pan American Bank & Trust
190 North Smith Street
Palatine, IL 60067
Join us for a fun evening of networking and update your professional portrait. Headshots will be taken by Maureen T Miller Photography. Food and beverages will be provided. Space is limited!

Guide for Graduates to Reduce Student Loan Payments

$1.5 Trillion dollars in student debt is owed by about 44 million people in the United States. This is the second highest consumer debt category in the U.S. after mortgages, followed by credit cards and auto.  The average student will graduate college with about $25,000 in student debt. Considering the average salary for a college graduate is approximately $50,000, the cost of being independent, with the added long-term burden of a student loan payment, can hinder several types of economic decisions. For instance, many may choose to rent an apartment rather than buy a house or delay pursuing further education to avoid added debt.

There are several strategies recommended to optimize student loan payments, which can result in a faster payoff and reduced total debt paid. Here are a few methods:
1. Whenever possible, add more than the minimum payment
Most graduates are excited at the prospect of leaving their dormitory, earning a salary and upgrading their lifestyle. However, the longer you can continue to live the sparse routine of a college student and use your salary to pay off your college loans, the more grateful you will be in the long run. Sharing an apartment with roommates and having inexpensive meals most nights of the week will allow you to can use your income to pay down a significant portion of your debt within the first couple years after graduating. Use any additional funds you save to add to your student loan payments. Do not escalate your lifestyle immediately upon obtaining a job, without regard to your looming debt.
2. If possible, find a side or weekend job to afford additional payments towards your student loan.
Making more than one payment per month saves you interest and speeds up your payoff date by months or years. You might opt to have an automatic payment made with every paycheck. Payments can also be made randomly throughout the month. However you choose to make repeated payments, the key is to have more than one payment per month applied to your student debt.
3. Consolidate or refinance your student loan
Refinancing may not be ideal for everyone, but many have been able to shorten their payment periods and save money by refinancing. There are issues to be aware of, however. For instance, if you are refinancing federal loans with a private lender, you may no longer benefit from federally funded advantages such as income based repayment, deferment and forbearance. Also, confirm you’ll be receiving a superior interest rate.
4. Make a lump sum payment whenever possible
While it may be hard to give away a large sum of money to your dreaded student loan, doing so will not only reduce the length of your student payments but the amount of interest you are accruing, therefore reducing the amount of money you will owe overall. This will also shorten the amount of time you will need to sacrifice to pay off your debt. Therefore, if you receive a bonus, raise or cash gift, consider applying it toward your student debt. This will be a short-term sacrifice for a long-term gain.
5. Accepting a job that offers loan forgiveness
While it may not be typical, negotiating student loan repayment with a job acceptance is becoming more popular with current graduates searching for jobs. Also, some government positions offer up to $10,000 per year of student debt forgiveness through the federal government’s Student Loan Repayment Program.If you are in the nursing field, research the Nursing Education Loan Repayment Program for repayment options and teachers can access assistance through Teach for America. Graduates who are employed in the public sector can also look for debt relief help through the Public Service Loan Forgiveness Program.

Points to Consider When Choosing a Financial Advisor
We are continuously bombarded with ads and tips from brokerage firms, financial advisors and franchised firms wanting to manage our hard earned money.  All of them promise significant returns and personalized customer service. With so many offering the same service, what is the best way to go about choosing someone to manage our life savings? This choice is not only worrisome but personal. Every person’s needs and goals for both their current and future situation varies, so the right advisor for your neighbor may not be ideal for you. Before selecting an advisor, take the time to meet with a few different ones to ask questions and express your needs before making a decision.  Consider the following when making your choice.
Trust your instincts. We don’t choose our doctors because of television ads and their rankings aren’t determined by the number of procedures they’ve done, but rather by the success of their patient outcomes. However, financial firms use exactly this type of info when trying to appeal to potential consumers in their advertising. At the base of their business concept, they are not focused on the outcomes, so much as the quantity of people they can manage. It is all about the number of sales.
Most of these large banks and brokerages are often publicly traded organizations whose advisors have sales goals, sales incentives and sales managers. This means their paychecks are based on volume. If this approach doesn’t interest you, ask for local references or research local, independent advisors in your community. Check their backgrounds, confirm how the advisor is compensated and ask for references. Knowing this information should lead to a greater feeling of trust, which is essential to the success of the relationship.
In any situation where money is involved, critical listening skills are imperative. You must feel as though your advisor is not only experienced enough to guide you in the right direction, but also empathic to your needs and goals. He/She must be receptive to your concerns, fears or lack of. Some investors might be too high risk while others might not be maximizing their potential. A good advisor will know what types of questions to ask to give you the tools to make decisions based on realistic expectations.
For example, if you tell an advisor that you’re a high-risk investor, the advisor could ask you to imagine losing a quarter of your investment tomorrow, playing out how that would affect your financial situation. Your reaction would help the advisor gain a greater comprehension of your risk tolerance. Asking these types of deeper questions also creates a better understanding between you and your advisor, which may help avoid emotional reactions or disappointments in the future.
Many advisors have designations and letters after their name. Some are more prestigious and more difficult to earn than others. For example, the Chartered Financial Analyst (CFA®) designation and the Certified Financial Planner® (CFP) certifications, take several years to complete and include a proctored, multi-hour exam.
Other programs are self-study through online programs with finals that can be completed at home. Therefore, although an advisor may have a lot of letters after their name, it may not mean much. It’s best to research each designation, which organization sponsors it and how it was earned.
Education and Experience 
FINRA requires all financial advisors to pass a Series 7 licensing exam, which is necessary in order to sell securities. Shockingly, there is not an academic requirement prior to the exam. For this reason, it is especially important to ask about education and relevant work history when interviewing for an advisor. Their previous professional experience will contribute greatly to how they manage your portfolio. 
For example, an advisor who was a banker may have experience with real estate or the challenges business owners face; someone who served as a trust officer may be well versed in inter-generational wealth transfer; and an advisor who previously trained as a family therapist may understand family dynamics and the role of money in relationships.
The method by which advisors are compensated has become a point of contention. Due to this, a ‘fiduciary standard’ offers some level of protection for clients who prefer a level fee-compensation option rather than the commission-based type. Legally, a fiduciary must follow a higher standard of care than a traditional broker. Level fees help the consumer know that the advisor is not biased toward a given product or service based on the amount of commission they will receive. For a variety of reasons the industry is moving more toward this fee-based standard.
Choosing the correct financial advisor for yourself is incredibly important to ensure the success of your financial future.
Having a high level of trust, a strong sense of communication, confidence that he is knowledgeable and capable and a clear understanding of how he/she or is compensated are all essential pieces of information for a client.  By knowing all of this information, you will be able to develop a true relationship with your chosen advisor, and therefore able to obtain a better result from the relationship.

Prized Skill of an Admirable Leader

Hopefully you’ve had the good fortune of interacting with a leader you highly respect and admire. If so, you have probably studied them, pinpointing the qualities that you find so inspiring.  Leaders and those in superior positions that command respect in such a positive way usually have a common skill. They are able to connect with others, making them feel understood and on common ground. The ability to develop such a connection, no matter how superior the position, level or experience of the leader is fundamental in gaining the respect of your colleagues.
This is not an easy skill, nor is it unintentional.
In a workplace environment, having such a relationship is beneficial in so many respects. By developing a mutual connection between parties, communication is facilitated, therefore strengthening relationships and building trust. This entire scenario allows the leader to guide the team easily in the direction of his choice, creating little resistance inspiring motivation.
The ability to connect is an asset to a leader at any level. Here’s a few key points to focus on to achieve that goal.
1. Focus on listening
While your advice as a leader may be appreciated, if you want to connect with someone, give them the opportunity to be heard. You can’t connect with another person if you’re having a one sided conversation. This will also help you to understand things from the other person’s perspective. Keep in mind that people will naturally side with leaders who make them feel heard and understood.
2. Be authentic
As a leader, it’s difficult to admit failure but admitting you are human is what will allow people to relate to you most. Most accomplished leaders like to present a successful persona: they are always dressed meticulously, punctual, prepared and ready for anything that may be presented to them. In reality, everyone has personal struggles, bad hair days and nervous moments. By allowing others to see that you are vulnerable and experience the same emotions and hardships as those you manage, will allow employees to connect to you as a leader rather than be intimidated by the image of someone they cannot measure up to.
3. Value people over products 
Ultimately, having employees that are content and satisfied will lead to success much more so over focusing on the bottom line. Companies that primarily focus on product and sales numbers typically do not have happy employees or much success. If the employees selling your products are not happy they will not sell it well. A positive culture and true connections established in a company will determine the ultimate success of a company.
4. Empathy
One of the most fundamental ways to connect with another person is to have empathy. Empathy is the capacity to understand or feel what another person is experiencing. This requires a leader to not only be aware of the situations of his employees, but to also identify issues and be sensitive to their emotions and needs. Having empathy makes a person a better communicator because it helps in the process of relaying information in a way that best relates to the other person.
Demonstrating empathy is difficult for a leader in a superior position. It requires vulnerability and sensitivity, which many fear can be mistaken for weakness. This is a fine line, which few great leaders can balance. Only a truly confident leader can retain their sense of authority through admiration and respect yet maintain their connections through empathy and authenticity. Those that can achieve this happy medium are the inspirational leaders that effortlessly command respect, admiration and motivation.
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