Term insurance is something we recommend most clients have in place as we are not typically proponents of permanent life insurance in most cases. That said, a few weeks ago we had a conference call with a life insurance salesman (for a company that shall remain nameless) that caused us to pause and consider what he was selling. Let me lay out the facts for you:

• The clients (husband and wife) both own a term insurance policy with premiums increasing annually, as each gets older.
• As you would suspect, neither of these term policies is accumulating any cash value as they are term policies and not permanent (whole life, variable life, etc.) policies.
• The salesman touted that the clients were "guaranteed" to receive at least a 5.2% annual "dividend" on their policies and, quite often received 6% to 7% annual "dividends" on their policies.

At first, we asked questions like:

• How can the insurance company afford to pay 6% to 7% annual dividends on their products, given the low interest rate environment we are in?
• Where could they invest the money to earn a 9% to 10% annual return, since they would have to earn that much, after their fees to afford to pay their clients 6% to 7%, to earn a profit?

After having some discussions with SWA team members and giving it some serious thought, I remembered back to my days working at a CPA practice and recalled purchasing a term policy from the American Institute of Certified Public Accountants (AICPA). At the end of each year, I would receive a refund check from the AICPA, which they called a "dividend."

Simply put, that dividend check was a refund of the premiums I paid in, because fewer than expected individuals in my age group (covered by the same policy) had died that year. Then it dawned on me that the particular insurance company that we're now dealing with was doing the same thing. By that, I mean they are refunding premiums they overcharged their clients and are calling those refunds a "dividend."

Now I don't know about you, but getting a refund of something I am overpaying (every year) in the first place is not a return on my investment. It merely tells me that I am likely getting charged too much for a product I can likely purchase for less somewhere else.

My counsel to each of you reading this blog is to understand exactly what type of life insurance coverage you are paying for and how much it is really costing you. Most importantly, don't let the insurance company convince you that life insurance is a "great investment." We feel, in almost all cases, life insurance should be used to protect your family and not as a tool to create wealth for retirement, college planning, etc.

If you have any questions about this topic, please reach out to SWA as we have the life insurance resources that can review your existing policies, help you understand your coverage, and determine whether other options may prove more beneficial.

After reading an article titled: "MN Insurance Premiums Jump, State Calls Increases 'Unsustainable,'" by Katharine Grayson of the Minneapolis / St. Paul Business Journal, we felt compelled to share some of that information. We are well aware that this topic is of great interest and concern to our clients. Here are some of the facts Katharine references in her article that are alarming:

• Minnesota insurers will increase rates for individual health plans by an average of more than 50% in 2017.
• The insurer with the smallest approved rate increases in the individual market was HealthPartners, although it still received a 50% rate hike on average.
• The largest rate increase is for UCare, which received a premium increase of nearly 67%.
• Rate hikes in the small-group market (businesses with 50 or less workers) were considerably less, ranging from a decline of 1% to an increase of 14.8%.

Based on the above information, we feel it is increasingly important to understand what health care costs could look like for you, and the impact those costs could have on your retirement cash flow needs, especially if you anticipate retiring before age 65.

If you have any questions regarding your specific situation, please contact SWA as we have resources that can work with you, on an individual basis, to help find the best solution for you.

Knowing when to sign up for Medicare can be tricky. When you turn 65, you will be enrolled in Medicare Part A & B automatically (although you have a choice to accept Part B), if you are already receiving Social Security or Railroad Retirement Board benefits. If you are age 65 or older and are not receiving Social Security or Railroad Retirement Board benefits (because you are still working), Medicare enrollment works differently. In this case, you will not automatically be enrolled for Medicare Part B and you will need to sign up during your Initial Enrollment Period. If you have health insurance coverage because you are actively employed and choose to delay your enrollment in Medicare Part B, you will be granted a "Special Enrollment Period" that begins when you quit working or your health insurance ends.

For enrollment in Medicare Part A, if you are still working at age 65, your situation may be different. If you've worked at least 10 years (40 quarters) and qualify for premium-free Medicare Part A, you will be automatically enrolled in Part A when you turn age 65, even if you are still working. However, if you haven't worked enough quarters to receive Medicare Part A without paying a premium, you will need to enroll in Part A yourself.

If you need to sign up for Part A and / or Part B, you can sign up during the following time frames:

• Medicare Initial Enrollment Period: When you first become eligible for Medicare, you have a 7 month period to sign up. This 7 month period begins 3 months before the month of your 65th birthday, including the month you turn 65, and ends three months after the month you turn 65.
• General Enrollment Period: If you happen to miss the Initial Enrollment Period, you can sign up between January 1st and March 31st each year. Your coverage will begin July 1st. Unfortunately, you may have to pay a higher premium if you enroll late.
• Special Enrollment Period: If you or your spouse (or a family member, if you are disabled) is currently working and you are covered by a health insurance plan through an employer or union (that meets certain Medicare standards), you have a "Special Enrollment Period" when your coverage ends. This period ends 8 months after employment health insurance coverage ends.

If you have any questions about your Medicare benefits or how the impact of what we have outlined above may affect you, please contact us today. We have resources available that can help answer your questions.

If your child is heading to college next fall, now is the time to drill in to the details of how you (parents and/or child) are going to pay for it. There is a wide range of options to pay for college tuition, such as cash savings, 529 plan, grants, scholarships, work study and loans. Other than the 529 plan, each of these options require the student and parent complete the Free Application for Federal Student Aid (FAFSA).

The FAFSA used to be a big headache as parents scrambled to gather the information required to complete the application as close to early January as possible. The reason being financial aid is typically doled out on a first come first serve basis. The problem was always getting income amounts (FAFSA requires income from the parent and child's 1040). Since most people don't file tax returns in January, let alone have all of the information available to file, it was very difficult get the required information.

Good news! Beginning with the 2017-2018 school year, you will be able to file the FAFSA beginning October 1, 2016. Under the old rules, this would seem impossible, but last year new rules were put in place to use parent and child's income from the prior year tax return (2015 tax return is used for 2017-2018 school year FAFSA). And, to make matters even better, the electronic version of the FAFSA goes directly to the IRS and pulls (using the IRS Data Retrieval Tool, if you opt for it) the required income amounts into the FAFSA for you.

There is still some work for you to do to complete the FAFSA. You still need to gather asset information, which can be a pain looking for all of your account balances. However, if you are an SWA client, you can use Wealth Access, our new client net worth statement application. Most of your asset information will be available at the click of a button.

Please feel free to contact your SWA advisor or Kay Strand if you need further information regarding FAFSA or Wealth Access.