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  • Archive for October, 2008

    It’s Official: November Proclaimed National Family Caregivers Month

    Friday, October 31st, 2008

    The White House just released a proclamation from President Bush that officially recognizes November as National Family Caregivers Month! You can read the proclamation below or check it out here:

    For Immediate Release
    Office of the Press Secretary
    October 29, 2008

    National Family Caregivers Month, 2008
    A Proclamation by the President of the United States of America

    During National Family Caregivers Month we recognize and celebrate the many individuals throughout our country who work each day to ensure a better quality of life for their family members. Through their selfless action, these caregivers provide their loved ones support and comfort as they age, combat illness, or suffer from disability.

    Our Nation is compassionate, and we believe in the sanctity of life at all stages. Through tireless efforts and inspiring deeds, many Americans care for loved ones in need. By acting as in-home care providers, people across our Nation are helping to ensure that their family members are provided with love, comfort, and security. My Administration has worked to offer caregivers support and training. In 2006, I signed the Lifespan Respite Care Act of 2006, which established a program to help family caregivers get access to affordable and high-quality respite care. In addition, the National Family Caregiver Support Program encourages cooperation among government agencies and other organizations that support and work with family caregivers.

    National Family Caregivers Month is an opportunity to recognize those who serve a cause greater than self and contribute to the well-being of their loved ones. Family caregivers are soldiers in America’s armies of compassion and set an inspiring example for their fellow citizens.

    NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, by virtue of the authority vested in me by the Constitution and laws of the United States, do hereby proclaim November 2008 as National Family Caregivers Month. I encourage all Americans to honor the selfless service of caregivers who support their loved ones in need.

    IN WITNESS WHEREOF, I have hereunto set my hand this twenty-ninth day of October, in the year of our Lord two thousand eight, and of the Independence of the United States of America the two hundred and thirty-third.


    Trick or Treat: Financial Scams

    Wednesday, October 29th, 2008

    Happy (almost) Halloween! Scam artists know how to manipulate language or offer “perks” to lure even the wisest saver into their financial scams. So how do you know if what their offering is a trick or a treat? Compare what they’re saying to the list of phrases in our “Too Good to be True” Checklist!

    “Too Good to be True” Checklist:

    Phrases and Promises that Probably Mean “It’s Too Good to Be True”

    Here’s a check list of phrases that scam artists use and offers they make. Next time you hear one of these you can just say, “Sorry, I know it’s too good to be true.”

    • “We’ll give you a free lunch and teach you how to invest your money.”

    Don’t let a free lunch and some well-dressed, well-spoken sales persons pressure you. Don’t purchase financial products that you don’t understand or need.

    • “I’m a ‘Senior Certified Financial Planner’ and I have some wonderful investment products for a person just your age.”

    Watch out for people using educational titles to convince you imply that they have been “certified” as experts in financial matters affecting seniors. There is no such designation.

    • “You’ve just won $10,000. If you give me your bank account number, we can put in right in the bank for you.” Never give out any account numbers to anyone over the phone or to anyone you don’t know.
    • “We can erase your bad credit score.” You can take steps to pay down your debt and get your finances back under control, but it will not be easy and it won’t be accomplished in a day. So, don’t pay someone who says that it can. They are probably trying to sell you a high interest loan.
    • “The IRS has made an error in your taxes and will refund the money if you fill in your Social Security number on the attached form.” This request may come in an official-looking envelope, but think about it, obviously the IRS already knows your Social Security number. Don’t fall for this one.

    Be Suspicious of Urgent Demands:

    • “You must decide right now.”
    • “Just sign here.”
    • “All you have to do is give me your credit card number to confirm.”
    • “Give me your Social Security number and we will correct the error.”
    • “You will regret it if you don’t accept this offer right now.”
    • “Give me the cash up front.”

    Annuities and Risk: An Annuities Q & A

    Wednesday, October 29th, 2008

    In the current economic climate, we’re all concerned about our retirement security and our investments, such as annuities. Brokers and agents say they’re receiving a flood of calls about the security of annuities, and that many customers are considering cashing out their variable annuities. This drastic action can be unnecessarily costly: you may have to pay surrender charges as high as 10%, and if you’re younger than 59 and a half, you will be responsible for various tax liabilities and penalties. This morning’s Wall Street Journal offered the following
    Q &A on annuities in the article “Are Annuities at Risk Now? Some Answers:”

    Are Annuities at Risk Now? Some Answers
    Tuesday October 28, 11:08 pm ET
    By M.P. McQueen

    Q: How do annuities work?

    A: Annuities are tax-deferred insurance contracts bought once, or with a series of payments, that offer the owners either a lump sum or a series of payouts after an accumulation period. Unlike other retirement vehicles such as an individual retirement account or a 401(k), annuities have no legal limits on tax-deferred contributions.

    Q: What’s the difference between fixed and variable annuities?

    A: Fixed annuities earn a guaranteed interest rate during a certain period. They are backed by assets in an insurance company’s general account, usually bonds. Fixed annuities depend entirely on the financial soundness of insurers, which are regulated primarily by state insurance departments.

    Variable annuities can also come with guaranteed benefits, such as a death benefit and a minimum return, riders for which the buyers generally pay extra. In other ways, though, they’re quite different: A portion of deposits go to the insurance company to cover administrative costs and guaranteed benefits; the rest is invested in a portfolio of mutual fund-like investments. These accounts are separate from the rest of the insurance contract and belong to the annuity owner, so they’re not as vulnerable to the insurer’s fate.

    Variable annuities, however, are more exposed to market risks. If annuity owners’ investments perform well, there’s the potential upside of a bigger payout. But if they do poorly, as many have recently, income falls, too. Investors can shift their fund holdings, however, to lower-volatility choices such as bond funds.

    Q: How have annuities been affected by recent market conditions?

    A: Many variable annuities have gone through the same gut-churning volatility as mutual funds in general. Partly as a result, while sales fixed annuities rose 39% in the first six months of 2008 from a year earlier, sales of variable annuities overall declined 6% in the same period, according to LIMRA International.

    Q: Should I be worried if the share price of my insurer declines?

    A: Not necessarily. In some cases, analysts say, publicly traded insurance companies’ stock prices have plunged partly because of their efforts to raise capital. And while raising capital can dilute existing shares, it also improves an insurer’s ability to pay claims. Hence, a decline in the stock value of a company doesn’t always spell immediate trouble for annuities or life-insurance policies.

    Q: Should I worry if the financial-strength rating of my insurer declines?

    A: Possibly. Financial-strength ratings, supplied by rating agencies, are an evaluation of the ability of a company to make good on its guarantees. A slip from an excellent financial-strength rating from one of the five agencies — Fitch Inc., A.M. Best Co., Moody’s Investors Service, Standard & Poor’s or — to a slightly lower rating that is still in the secure range isn’t cause for alarm, experts say. But multiple downgrades are a good reason to keep an eye on the company.

    Through Sept. 30, 6.5% of the life/annuity and health-insurance companies followed by rating agency A.M. Best had been downgraded, though most remained in the “secure” range, meaning they are still regarded as financially sound.

    Of course, buyers of new annuities should only buy from top-rated companies, consumer advocates say. You can find information on financial strength of companies licensed in your state by linking to your state’s insurance department, at, the Web site of the National Association of Insurance Commissioners.

    Q: What happens when a company founders?

    A: State regulators usually monitor struggling companies and work with them to try to get additional capital — or to sell the company to a stronger insurer that can make good on all of its claims. State receivers, who include the state insurance commissioner of the company’s home state, often help find other insurers to take over the annuities from the troubled company. Annuity owners then make payments to the new company and collect payouts from it. Otherwise the terms of the annuity usually remain the same.

    Q: What happens if no insurer wants to take over the annuity contracts of a failed insurer?

    A: If an insurer is declared insolvent by a court and is liquidated, state laws require companies to pay annuity (and insurance policy) owners first and in full before paying claims of other creditors. State guaranty associations — funded by other insurers — then make good on the annuities and policies. Death benefits, for instance, are often protected up to $300,000. Cash values are often protected to a maximum of $100,000. (See, the National Organization of Life and Health Insurance Guaranty Associations, for state-by-state terms.)

    With variable annuities, as with fixed contracts, the associations protect the death benefits, guaranteed minimums, and other contract guarantees. But investment account losses because of market declines generally aren’t covered.

    Q: What are my options if my insurer is at risk of insolvency?

    A: Regulators and consumer groups warn that annuity owners, especially those who bought contracts recently, often stand to lose more when rashly surrendering an annuity than they would risk from the insurance company’s failure. That’s because the guaranty funds protect their money up to legal limits, while surrender charges and other penalties can take a chunk of an annuity’s balance.

    For more information on annuities, visit the WISER website and check out our section on annuities, featuring a variety of articles and reports on annuities.


    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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