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By James Lunders, Insurance Agent

Insurance companies, the good ones that is, have built trusted relationships with their clients. There is a bond that occurs between the people of a community and those who help them in their hour of need.

Over the past few years these trusted insurance companies have moved toward helping their clients in other forms of finance and financial planning. Insurance companies are now big players in the banking and financial management arenas. They have taken a holistic approach to helping clients not only protect their wealth but grow it as well. Today you will find an article published by the Associated Press that addresses this very issue.

Wednesday, December 19th, 2007
(c) 2007. The Associated Press. All Rights Reserved.

DES MOINES, Iowa (AP) – Your insurance company is likely handling more than policies these days. Investments, retirement plans, even car loans and checking accounts have been added to some service portfolios as insurance companies expand into the traditional realm of banks.

Accelerating the trend are baby boomers looking to build their wealth before retirement.

Many traditional insurance companies — with slogans like Allstate’s “You’re In Good Hands” and State Farm’s “Like A Good Neighbor” — have cultivated relationships of trust in insurance. They appear to have succeeded in transferring that trust into banking and management of their customers’ retirement assets.

A Forbes magazine ranking of the nation’s top 25 financial services companies, based on 2006 revenue, included 10 insurance companies, including State Farm, MetLife, Allstate, Prudential Financial and New York Life Insurance.

Bloomington, Ill.-based State Farm Insurance Co., the nation’s largest auto and home insurer, branched out into banking in 1999 and into other financial services areas a few years later. Through its 17,800 insurance agents in the United States, the company offers mutual funds, savings accounts, even car and bank loans.

“When you purchase a new auto, you need to perhaps borrow some money to purchase the vehicle and then you need to buy some insurance. When you’re purchasing a new home, you need a loan, obviously, and you need insurance,” said State Farm spokesman Dick Luedke.

“It’s planning for your financial future and insurance is part of that and banking is part of that and investing is a huge part of that.”

State Farm, a mutual company therefore not publicly traded, still makes most of its profit from insurance. Banking and mutual funds make up just 2.6 percent of the company’s accounts.

Yet State Farm’s bank held $13.7 billion in assets as of June 30, according to the Department of Treasury, ranking in the top 1 percent of all U.S. banks based on total asset size. Its retail mutual funds business closed 2006 with nearly $3.9 billion in assets under management, a gain of about $1 billion last year, its fifth year in business.

Bob Hartwig, an economist and president of the New York-based Insurance Information Institute, a nonprofit trade group, said many insurance companies have branched out to broaden their revenue stream.

“The traditional insurance industry is very cyclical and can have some very bad years, such as years when there are major catastrophes,” Hartwig said. “For decades, federal law prohibited insurers from getting into banking and financial services but that depression-era legislation was swept away in 1999. For the last eight to nine years, insurers have been able to get into this in a big way.”

Des Moines-based Principal Financial Group Inc., founded in 1897 as a mutual life insurance company serving bankers, took advantage of the regulatory changes to transform itself, becoming the nation’s leading 401(k) retirement plan provider.

Only a quarter of Principal’s operating profit still comes from individual life and health insurance. The rest comes from managing securities, real estate and other investments in the United States and abroad. The company provides asset management and retirement services in Argentina, Brazil, China, Chile, India and Mexico.

Principal CEO Barry Griswell said the insurance industry’s transformation is due to the attractiveness of the financial services industry.

“The fact that we have the aging of the population, we have a lot more wealth created in this country. We have more families in the higher income levels creating a lot more savings,” Griswell said in a September interview. “We have everybody positioning for the future of the baby boom generation as they really ramp up their retirement savings.”

The baby boom generation is Principal’s growing focus, he said.

“When they start retiring, those assets they’ve accumulated primarily out of 401k and others will flow largely into individual IRAs,” Griswell said. “So probably the one area we’re putting most emphasis on going forward … will be the retail mutual fund. We currently have $50 billion in assets under management. I would like to see that get to $100 billion fairly soon.”

The trend is not expected to peak for many years, he said. Baby boomers are just nearing retirement, and those born at the peak of the boom in 1957 still have a decade or more of work ahead of them.

January 24th, 2008

By  James Lunders

Insurance Agent
So your 1040 is filed and you are now anxiously waiting for your refund. What do you plan on doing with it? Go on that long-awaited cruise, get a new set of golf clubs or buy that wide-screen TV you’ve had your eye on? There are so many ways you could spend your refund, but there may be better alternatives to consider.
According to the Internal Revenue
Service, over 75 percent of American taxpayers received a federal tax refund, with the average around $2,500. It’s what you do with your refund now that may create a better financial future for you and your family later on.
Instead of spending your refund this year, consider funding an Individual
Retirement Arrangement (IRA), setting up a college savings fund for a child, or paying down credit card debt. These options will help to improve your financial situation.
First on your list of priorities should be paying down any high-interest credit card debts you have incurred. By paying only the minimum each month, you may be paying just the interest (or less) on the debt and little or nothing towards the principal. Paying down the debt can free up additional money for other important financial needs.
If debt is not a problem, your tax refund could provide you an excellent opportunity to fund an existing IRA or establish a new one. For the 2007 tax year, you can contribute up to $4,000 to an IRA. If you are 50 years or older by December 31, 2007, you can add an
additional $1000 to the account. Making a tax-deductible contribution to a Traditional IRA is an option if you are not participating in an employer-sponsored retirement plan or, if you are participating, your Adjusted Gross Income falls within eligibility guidelines.
A Roth IRA may be a more appropriate choice, depending on your eligibility. Contributions to a Roth IRA are not tax deductible. However, qualified distributions are received free from federal income tax.
Your refund could also be used to fund a Coverdell Education Savings Account
(ESA) or 529 Plan for your child. Contributions are not deductible, but withdrawals to pay qualified educational expenses are free from federal income tax.
One thing to remember after you’ve decided the fate of this year’s refund: the check you received is not a windfall but the return of an interest-free loan you provided the government.
Regardless of the pleasure you may get from receiving a large check each tax year, adjusting the amount withheld by Uncle Sam to reduce the amount of future refunds may be an appropriate course. You may not get a refund in April, but there may be more in each paycheck to contribute to a Coverdell ESA, 529 plan, IRA or to pay down debt throughout the year.
Take some time to consider your options before making the down payment on that cabin cruiser. The earlier you start saving for your future, the more you may have during your retirement.
If you have questions about these options and others, you owe it to yourself to contact a financial services professional that you know and trust. Your financial future may depend on it.

By James Lunders, agent

April 15 has long been considered a date to avoid. Visions of tax men coming for your money are common in many advertisements on television and in print.
Wouldn’t it be nice if you could do something to lower your federal income tax burden instead of mailing a big check on April 15? With a traditional Individual Retirement Arrangement (IRA), you may be able to do just that.
A contribution of the 2007 maximum of $4,000 prior to April 15, 2008 could reduce your taxable income, making your federal tax burden less for the year. If you were 50 or older by the end of 2007, you can add a $1000 catch-up contribution to potentially reduce the tax burden even more.

If you already have a traditional IRA, plan to make a contribution prior to the April 15 deadline. If not, talk to a financial professional as soon as possible to start one.
There are restrictions governing who may contribute to a traditional IRA. If you don’t qualify, consider a Roth IRA. You won’t get the federal tax advantages now, but qualified withdrawals can be made free of federal income tax during your retirement years.
Either way, having a plan for retirement is important. You owe it to yourself to make the best plan as soon as possible.

This site is being developed daily and should be up to speed by the end of February, 2008.

Thank you for visiting.

James