We don't fix toasters anymore. Or TV sets. We just buy new ones. America has become a throwaway society - and sadly many people make the mistake of discarding older, but still very useful financial products simply because they think newer is better. That can be a costly mistake.
Here are five financial products you may have that should be examined very carefully before dumping them just to get a newer model.
1. Life Insurance policies. Why keep an older policy? There are several reasons. You may not qualify for the same premium rates today as when you were younger and healthier. Or the older policy could have a higher guaranteed floor interest rate paid on the cash value. Plus, buying a new policy starts a new two-year contestability period - where the insurance company could decline a payout to your beneficiary if it is determined you made misstatement on your application.
To get a completely independent review of your current policy in comparison with a proposed new policy, go to www.EvaluateLifeInsurance.org.
2. Long Term Care Insurance policies. How sad to have paid premiums for years, only to let the policy lapse just when you are closer to needing it. Yet, that's exactly what a new study from the Boston College Center for Retirement Research exposes. They report that more than a third of those with LTC insurance policies at age 65 will let their policies lapse at some point. The two prime reasons: affordability and "cognitive decline." But the study also shows that those who let their policies lapse are <> So don't let your LTC policy lapse. If premiums rise, switch to a shorter period of coverage or less inflation protection - but hang on to at least some of those benefits.
3. Credit Cards. While it's good to weed out cards you aren't using anymore, keep the oldest of your credit cards and use it from time to time, instead of closing the account. It demonstrates your credit history better than new cards, thus raising your credit score. While newer cards may give you cash back, or miles, or points, or low-rate balance transfers, your old card says you're a good credit risk - useful if you're buying a home, a car, or even life insurance.
4. Series EE Savings Bonds. While I don't advise buying Series EE or I bonds today because the government has changed the way it calculates interest on them, many older bonds still have high "floor" rates. Those floor rates - as high as 4 percent for bonds issued in 1985 -- make older savings bonds a real winner. I wince when I see young people cashing in bonds given them as babies to spend the cash today.
5. Long held stocks or mutual funds. Perhaps you inherited shares from your parents, or even grandparents, in old blue chip companies that are still alive and prospering. Newer, tech-oriented stocks may be enticing. But don't sell the old ones without consideration. Many pay nice dividends. And if you sell, you could owe capital gains taxes - depleting your investable funds. (If you acquired shares through inheritance, you have a new "cost basis" - the value on the date of death.) Plus, selling those shares and buying new ones will cost you in commissions or fees - good for the broker, not so good for you.
Look before you leap to sell financial assets and products. Just like with friendships, the benefits of hanging in there may grow in the long run if you care enough to look. And that's The Savage Truth.
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Here are five financial products you may have that should be examined very carefully before dumping them just to get a newer model.
1. Life Insurance policies. Why keep an older policy? There are several reasons. You may not qualify for the same premium rates today as when you were younger and healthier. Or the older policy could have a higher guaranteed floor interest rate paid on the cash value. Plus, buying a new policy starts a new two-year contestability period - where the insurance company could decline a payout to your beneficiary if it is determined you made misstatement on your application.
To get a completely independent review of your current policy in comparison with a proposed new policy, go to www.EvaluateLifeInsurance.org.
2. Long Term Care Insurance policies. How sad to have paid premiums for years, only to let the policy lapse just when you are closer to needing it. Yet, that's exactly what a new study from the Boston College Center for Retirement Research exposes. They report that more than a third of those with LTC insurance policies at age 65 will let their policies lapse at some point. The two prime reasons: affordability and "cognitive decline." But the study also shows that those who let their policies lapse are <
3. Credit Cards. While it's good to weed out cards you aren't using anymore, keep the oldest of your credit cards and use it from time to time, instead of closing the account. It demonstrates your credit history better than new cards, thus raising your credit score. While newer cards may give you cash back, or miles, or points, or low-rate balance transfers, your old card says you're a good credit risk - useful if you're buying a home, a car, or even life insurance.
4. Series EE Savings Bonds. While I don't advise buying Series EE or I bonds today because the government has changed the way it calculates interest on them, many older bonds still have high "floor" rates. Those floor rates - as high as 4 percent for bonds issued in 1985 -- make older savings bonds a real winner. I wince when I see young people cashing in bonds given them as babies to spend the cash today.
5. Long held stocks or mutual funds. Perhaps you inherited shares from your parents, or even grandparents, in old blue chip companies that are still alive and prospering. Newer, tech-oriented stocks may be enticing. But don't sell the old ones without consideration. Many pay nice dividends. And if you sell, you could owe capital gains taxes - depleting your investable funds. (If you acquired shares through inheritance, you have a new "cost basis" - the value on the date of death.) Plus, selling those shares and buying new ones will cost you in commissions or fees - good for the broker, not so good for you.
Look before you leap to sell financial assets and products. Just like with friendships, the benefits of hanging in there may grow in the long run if you care enough to look. And that's The Savage Truth.
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