Altfest Answers is a video series that uses hypothetical scenarios to take a look at the impact comprehensive wealth management can make on the real lives of clients and their families.

In this episode, “The Young Doctor with a High Insurance Premium,” President Andrew Altfest, CFP®, MBA, is joined by Senior Financial Advisor, Daniel Kimeldorf, CFA, CFP®, for a discussion on the holistic financial planning Altfest can provide for young professionals who are struggling with student debt and expense management.

If you are interested in a complimentary consultation with Altfest, schedule a meeting with us at this link.

 

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Andrew Altfest, MBA, CFP®: I’m Andrew Altfest, President of Altfest Personal Wealth Management. I’m joined today by Daniel Kimeldorf, who is a Senior Financial Advisor at Altfest. We’re going to discuss Dr. Chase, who is a cardiologist in his early thirties making about $300,000 a year. Dr. Chase has put himself through medical school, he’s paying down his student loans, helping his parents pay down their mortgage, and also helping his younger sister with her student debt. So, Daniel, what was the financial challenge that we helped Dr. Chase with?

Daniel Kimeldorf, CFA, CFP®: Dr. Chase originally came to Altfest seeking comprehensive financial planning. When we took a holistic look at his financial picture we saw a big opportunity for him to save money on his insurance portfolio, while keeping an appropriate level of coverage. Of course, as a fee-only fiduciary, Altfest does not sell insurance or any financial product. We make all decisions in the best interest of our clients.

AA: So how did we help Dr. Chase?

DK: We conducted a needs-analysis of his current insurance portfolio and saw that he was over-insured. He had been sold a permanent whole-life policy with a very large death benefit and very high premiums that he would have to pay for the rest of his life. It was important to Dr. Chase to ensure his parents and sister would be taken care of should he pass away prematurely. Hence the large death benefit. But he doesn’t need a permanent life insurance product to do this considering his parents will likely pass before he does and his sister will be financially independent in the near future. With those goals in mind, we discussed replacing the permanent life product with a term of temporary policy that offers coverage for a lower cost and is more appropriate for his situation. We determined that even if he decided to stay with a different less expensive permanent life product, it could save him around 600 thousand to 700 thousand dollars over his lifetime. In the end, we decided to replace the permanent life product with a term policy. We used the money he saved to invest and grow in a separate account naming those family members as his beneficiaries.

AA: Let’s get to the bottom line here. How did this help his overall financial planning?

DK: By making those adjustments to his insurance portfolio, we saved upwards of $500,000 over the next 20 years or so. His annual premium payments went from $16,800 for the permanent insurance policy to $1,300 for the new term policy. By shifting to products that were less expensive and more appropriate for his insurance goals, we made sure his financial needs were covered, even in the event of premature death. The money that was saved can now go into investments that are appropriate for his needs, and the return on investment on top of the money we saved with the premiums could amount to a million dollars or more over his lifetime.

AA: Dr. Chase is a physician in his early 30’s, but we help physicians of all ages with their insurance planning. Whether it be life insurance, disability insurance, long term care insurance, medical insurance, home owner and auto insurance, we find that our clients are paying too much and are not properly covered. We’re here to help. We don’t sell insurance so our clients trust that our advice is strictly in their best interest. Whatever your hot button financial planning issue is, feel free to get in touch with us to discuss your particular financial planning needs. Thank you.

 

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Illustration is strictly hypothetical and is not representative of actual client experience. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful. Altfest does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions.

 

Investment advisory services provided by Altfest Personal Wealth Management (“APWM”). All written content on this site is for information purposes only. Opinions expressed herein are solely those of APWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.