Docstoc

type

Document Sample
type Powered By Docstoc
					      Introduction to
    Insurance Planning
    Virtual Class 3 of 3

Education Planning, Financial Planning
  for Changing Circumstances, and
         Economic Concepts




         Introduction to Financial Planning – Session 3 of 3
             College Planning
• Determine the type of school that a young adult will
  most likely attend: community college, state
  university, private institution, Ivy League school, etc.

• Project the cost of that school in the future. Use school
  inflation factor, not a GDP factor.

• Determine the future value needed.

• Calculate the amount needed (lump sum or annuity
  payment) to fund goal.



                Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #1
  Assume a child is born today and you want to plan for his/her college
  education. College will start at age 18 and run for 4 years. Tuition is currently
  $30,000 per year and the yearly increase in college cost is 7%.

  Assuming an after-tax rate of return of 11%, what is needed at the end of
  each year if the last payment occurs at the beginning of the first year of
  college?




                      Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #1
  Assume a child is born today and you want to plan for his/her college
  education. College will start at age 18 and run for 4 years. Tuition is currently
  $30,000 per year and the yearly increase in college cost is 7%.

  Assuming an after-tax rate of return of 11%, what is needed at the end of
  each year if the last payment occurs at the beginning of the first year of
  college?

             Step 1
             Determine the PV of the 4 years of tuition,
             starting at age 17.

             •   n          =     4
             •   i          =     3.7383 or 1.11/1.07 – 1 x 100
             •   PMT        =     $30,000
             •   PV         =



                      Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #1
  Assume a child is born today and you want to plan for his/her college
  education. College will start at age 18 and run for 4 years. Tuition is currently
  $30,000 per year and the yearly increase in college cost is 7%.

  Assuming an after-tax rate of return of 11%, what is needed at the end of
  each year if the last payment occurs at the beginning of the first year of
  college?

         Step 1
         Determine the PV of the 4 years of tuition, starting
            at age 17.

         •   n        =     4
         •   i        =     3.7383 or 1.11/1.07 – 1 x 100
         •   PMT      =     $30,000
         •   PV       =     ($109,571.80)



                      Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #1
  Assume a child is born today and you want to plan for his/her college
  education. College will start at age 18 and run for 4 years. Tuition is currently
  $30,000 per year and the yearly increase in college cost is 7%.

  Assuming an after-tax rate of return of 11%, what is needed at the end of
  each year if the last payment occurs at the beginning of the first year of
  college?

        Step 2
        Determine the PV of the lump sum calculated in Step 1
        based on the estimated FV of education of $109,572.

        •   n         =    17
        •   i         =    3.7383
        •   FV        =    ($109,572) computed in Step 1
        •   PV        =




                      Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #1
  Assume a child is born today and you want to plan for his/her college
  education. College will start at age 18 and run for 4 years. Tuition is currently
  $30,000 per year and the yearly increase in college cost is 7%.

  Assuming an after-tax rate of return of 11%, what is needed at the end of
  each year if the last payment occurs at the beginning of the first year of
  college?

        Step 2
        Determine the PV of the lump sum calculated in Step 1
        based on the estimated FV of education of $109,572.

        •   n         =    17
        •   i         =    3.7383
        •   FV        =    ($109,572) computed in Step 1
        •   PV        =    $58,712.85




                      Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #1
  Assume a child is born today and you want to plan for his/her college
  education. College will start at age 18 and run for 4 years. Tuition is currently
  $30,000 per year and the yearly increase in college cost is 7%.

  Assuming an after-tax rate of return of 11%, what is needed at the end of
  each year if the last payment occurs at the beginning of the first year of
  college?

         Step 3
         Determine the annual payments needed to fund
         college tuition costs.

         •   n        =    17
         •   i        =    11
         •   PV       =    $58,713
         •   PMT      =



                      Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #1
  Assume a child is born today and you want to plan for his/her college
  education. College will start at age 18 and run for 4 years. Tuition is currently
  $30,000 per year and the yearly increase in college cost is 7%.

  Assuming an after-tax rate of return of 11%, what is needed at the end of
  each year if the last payment occurs at the beginning of the first year of
  college?

         Step 3
         Determine the annual payments needed to fund
         college tuition costs.

         •   n        =    17
         •   i        =    11
         •   PV       =    $58,713
         •   PMT      =    $7,777.80



                      Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #2
  Assume college costs of $36,000 per year in today’s dollars and that the
  yearly increase in college cost is 6%. The student will start college in 5 years
  and the rate of return is 5%. What is needed today to fund these four years of
  college?




                     Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #2
  Assume college costs of $36,000 per year in today’s dollars and that the
  yearly increase in college cost is 6%. The student will start college in 5 years
  and the rate of return is 5%. What is needed today to fund these four years of
  college?

        Step 1
        Determine the PV of the 4 years of tuition starting in
           5 years.

        •   n      =     4
        •   i      =     (.9434) or 1.05/1.06 – 1 x 100
        •   PMT    =     $36,000
        •   PV     =




                       Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #2
  Assume college costs of $36,000 per year in today’s dollars and that the
  yearly increase in college cost is 6%. The student will start college in 5 years
  and the rate of return is 5%. What is needed today to fund these four years of
  college?

        Step 1
        Determine the PV of the 4 years of tuition starting in
           5 years.

        •   n      =     4
        •   i      =     (.9434) or 1.05/1.06 – 1 x 100
        •   PMT    =     $36,000
        •   PV     =     ($147,461.38)




                       Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #2
  Assume college costs of $36,000 per year in today’s dollars and that the
  yearly increase in college cost is 6%. The student will start college in 5 years
  and the rate of return is 5%. What is needed today to fund these four years of
  college?

         Step 2
         Determine the PV of the lump sum calculated in Step 1
         based on the estimated FV of education of $147,461.

         •   n       =    5
         •   i       =    (.9434)
         •   FV      =    ($147,461) computed in step 1
         •   PV      =




                     Introduction to Financial Planning – Session 3 of 3
Educational Planning Illustration
               #2
  Assume college costs of $36,000 per year in today’s dollars and that the
  yearly increase in college cost is 6%. The student will start college in 5 years
  and the rate of return is 5%. What is needed today to fund these four years of
  college?

         Step 2
         Determine the PV of the lump sum calculated in Step 1
         based on the estimated FV of education of $147,461.

         •   n       =    5
         •   i       =    (.9434)
         •   FV      =    ($147,461) computed in step 1
         •   PV      =    $154,618



              Q&A


                     Introduction to Financial Planning – Session 3 of 3
             Education Planning
•   Financial aid eligibility is determined by filling out a
    Free Application for Federal Student Aid (FAFSA)
    application.

•   The formula is called the expected family contribution
    (EFC) for a child's education.

•   Some of the factors used in this calculation include:
       1.   Taxable income
       2.   Assets
       3.   Retirement funds
       4.   Benefits (such as unemployment and Social Security).




                  Introduction to Financial Planning – Session 3 of 3
       Education Planning
The EFC calculation is used to determine eligibility for
  financial aid programs, except for unsubsidized
  student loans and PLUS loans, which are provided
  regardless of financial need.

Here is the EFC calculation:
  Tuition Cost of Attendance                                       $ XXX
  Less: Expected Family Contribution                               $ (XXX)
  Financial Need                                                   $ XXX




             Introduction to Financial Planning – Session 3 of 3
          Educational Planning
The government excludes these assets from
  consideration when determining the EFC:

•   Home equity in a primary residence
•   Retirement plans (i.e. IRA, 401(k), etc.)
•   Cash value life insurance
•   Annuities
•   Value of a small business owned and controlled by the family




                  Introduction to Financial Planning – Session 3 of 3
          Educational Planning
The following are used to help a student with
  college costs:

•   Pell Grant
•   Supplemental Educational Opportunity Grants
•   Perkins Loans
•   Federal Direct/Stafford Loans
•   PLUS Direct/PLUS Loans
•   Work-Study Programs




                Introduction to Financial Planning – Session 3 of 3
                      Pell Grant
The federal Pell Grant is not a loan and does not require
  repayment.

• Awarded to undergraduate students who have not
  earned bachelor's or professional degrees.




                Introduction to Financial Planning – Session 3 of 3
                      Pell Grant
The federal Pell Grant is not a loan and does not require
  repayment.

• Awarded to undergraduate students who have not
  earned bachelor's or professional degrees.
• Maximum awards for Pell Grants are $5,350 per
  student for the 2009-2010 school year.




                Introduction to Financial Planning – Session 3 of 3
                      Pell Grant
The federal Pell Grant is not a loan and does not require
  repayment.

• Awarded to undergraduate students who have not
  earned bachelor's or professional degrees.
• Maximum awards for Pell Grants are $5,350 per
  student for the 2009-2010 school year.
• A student can receive only one Pell grant per year.




                Introduction to Financial Planning – Session 3 of 3
                      Pell Grant
The federal Pell Grant is not a loan and does not require
  repayment.

• Awarded to undergraduate students who have not
  earned bachelor's or professional degrees.
• Maximum awards for Pell Grants are $5,350 per
  student for the 2009-2010 school year.
• A student can receive only one Pell grant per year.
• If a student is enrolled part-time, the full-time amount
  of $5,350 is prorated.




                Introduction to Financial Planning – Session 3 of 3
              Stafford Loans
Provided by the United States Department of Education.
   The loans are either:

1. Subsidized loans
2. Unsubsidized loans

All Stafford Loans have below-market interest rates and
    the rate cannot exceed 8.25 percent.




                Introduction to Financial Planning – Session 3 of 3
               Stafford Loans

Subsidized Stafford loan does not accrue interest until
   after the deferment period which is typically six
   months after:

   •   Graduation
   •   Leaving school
   •   Dropping below half-time status




                Introduction to Financial Planning – Session 3 of 3
              Stafford Loans

Unsubsidized Stafford loan

   A loan in which the borrower is charged interest on
   the principal from the moment of disbursement until
   the loan is paid off. There is an option of paying the
   interest as it accrues.




                Introduction to Financial Planning – Session 3 of 3
               Stafford Loans
The following allows the student to obtain a "deferment"
  (a temporary postponement of payments):

• At least half-time enrollment at a post-secondary
  school.




                Introduction to Financial Planning – Session 3 of 3
               Stafford Loans
The following allows the student to obtain a "deferment"
  (a temporary postponement of payments):

• At least half-time enrollment at a post-secondary
  school.
• Enrollment in an approved fellowship program.




                Introduction to Financial Planning – Session 3 of 3
                Stafford Loans
The following allows the student to obtain a "deferment"
  (a temporary postponement of payments):

• At least half-time enrollment at a post-secondary school.

• Enrollment in an approved fellowship program.

• Enrollment in an approved rehabilitation training program for
  the disabled




                 Introduction to Financial Planning – Session 3 of 3
               Stafford Loans
The following allows the student to obtain a "deferment"
  (a temporary postponement of payments):

• At least half-time enrollment at a post-secondary
  school.
• Enrollment in an approved fellowship program.
• Enrollment in an approved rehabilitation training
  program for the disabled.
• Economic hardship (for up to 3 years).




                Introduction to Financial Planning – Session 3 of 3
               Stafford Loans
The following allows the student to obtain a "deferment"
  (a temporary postponement of payments):

• At least half-time enrollment at a post-secondary
  school.
• Enrollment in an approved fellowship program.
• Enrollment in an approved rehabilitation training
  program for the disabled.
• Economic hardship (for up to 3 years).
• Former student's inability to attain full-time
  employment (for up to 3 years).



                Introduction to Financial Planning – Session 3 of 3
                  PLUS Loans
Parent Loans for Undergraduate Students (PLUS
  Loans)

  Allow parents with good credit history to borrow funds
  for a child’s educational expenses when the dependent
  child attends college at least half-time.




               Introduction to Financial Planning – Session 3 of 3
                   PLUS Loans
•   The interest rate is variable but will never exceed
    9 percent.




                Introduction to Financial Planning – Session 3 of 3
                   PLUS Loans
•   The interest rate is variable but will never exceed
    9 percent.

•   Interest accrues on the loan from the moment of
    disbursement until the loan is paid off.




                Introduction to Financial Planning – Session 3 of 3
                   PLUS Loans
•   The interest rate is variable but will never exceed
    9 percent.

•   Interest accrues on the loan from the moment of
    disbursement until the loan is paid off.

•   Typically a 4% fee to originate the loan.




                Introduction to Financial Planning – Session 3 of 3
                   PLUS Loans
•   The interest rate is variable but will never exceed
    9 percent.

•   Interest accrues on the loan from the moment of
    disbursement until the loan is paid off.

•   Typically a 4% fee to originate the loan.

•   Loans must be repaid within 10 years.




                Introduction to Financial Planning – Session 3 of 3
Campus-Based Student Financial
            Aid
There are three campus-based programs that are
    administered directly by the financial aid office at
    participating schools. They are:

1.   Federal Supplemental Education Opportunity Grant
     Program (FSEOG)

2.   Federal Work-Study Program

3.   Federal Perkins Loan




                 Introduction to Financial Planning – Session 3 of 3
Federal Supplemental Education
  Opportunity Grant Program
           (FSEOG)
• FSEOG is a grant, an outright gift, which need not be
  repaid.

• The FSEOG is awarded to undergraduate students with
  low EFCs and gives priority to students who receive
  federal Pell Grants.

• Benefit amounts range from $100 to $4,000 per
  academic year.




                Introduction to Financial Planning – Session 3 of 3
 Federal Work-Study Program

This program enables undergraduate and graduate
  students to earn money for education expenses
  through jobs that pay at least current minimum wages.




               Introduction to Financial Planning – Session 3 of 3
         Federal Perkins Loan
• A loan provided to undergraduate and graduate
  students that have exceptional financial need (i.e.,
  very low EFCs).




                Introduction to Financial Planning – Session 3 of 3
         Federal Perkins Loan
• A loan provided to undergraduate and graduate
  students that have exceptional financial need (i.e.,
  very low EFCs).

• Although the loan is made with governmental funds,
  the school is the lender.




                Introduction to Financial Planning – Session 3 of 3
         Federal Perkins Loan
• A loan provided to undergraduate and graduate
  students that have exceptional financial need (i.e.,
  very low EFCs).

• Although the loan is made with governmental funds,
  the school is the lender.

• The loan must be repaid at a 5 percent rate.




                Introduction to Financial Planning – Session 3 of 3
         Federal Perkins Loan
• A loan provided to undergraduate and graduate
  students that have exceptional financial need (i.e.,
  very low EFCs).

• Although the loan is made with governmental funds,
  the school is the lender.

• The loan must be repaid at a 5 percent rate.

• After students graduate, leave school, or drop below
  half-time status, there is a nine-month grace period for
  repayment.


                Introduction to Financial Planning – Session 3 of 3
         Federal Perkins Loan
This loan must be paid within 10 years from the start of
  repayment. The following conditions will cancel the
  loan:

• Death
• Total and permanent disability
• Becoming a full-time special education teacher, nurse,
  or medical technician
• Serving in the Armed Forces




                Introduction to Financial Planning – Session 3 of 3
     Get Ready For Questions
Our first 5 questions in this session are back-to-back.
  They will cover:

       •   Educational Planning
       •   Pell Grants
       •   Stafford and PLUS Loans
       •   FSEOG
       •   Federal Work Study Programs
       •   Federal Perkins Loans




                  Introduction to Financial Planning – Session 3 of 3
              Poll Question #1
Which of the following is/are true regarding
 federal Pell Grants?

1. The Pell Grant does not require repayment.
2. The maximum awards for a Pell Grant for 2009-2010 is
   $5,350.
3. A Pell Grant is only available for full-time students.




                 Introduction to Financial Planning – Session 3 of 3
              Poll Question #1
Which of the following is/are true regarding
 federal Pell Grants?

1. The Pell Grant does not require repayment.
2. The maximum awards for a Pell Grant for 2009-2010 is
   $5,350.
3. A Pell Grant is only available for full-time students.


Answer:                    Choices 1 and 2 are correct.
                           (Choice 3 is wrong as a Pell Grant can be prorated.)




                 Introduction to Financial Planning – Session 3 of 3
               Poll Question #2
Which of the following is/are true regarding a
  subsidized Stafford Loan?

1.   No interest is charged on the loan until repayment of the
     loan begins.
2.   The loan begins 9 months after either graduation, leaving
     school, or dropping below half-time status.
3.   All Stafford Loans have below-market interest rates cannot
     exceed 8.25 percent.




                  Introduction to Financial Planning – Session 3 of 3
               Poll Question #2
Which of the following is/are true regarding a
  subsidized Stafford Loan?

1.   No interest is charged on the loan until repayment of the
     loan begins.
2.   The loan begins 9 months after either graduation, leaving
     school, or dropping below half-time status.
3.   All Stafford Loans have below-market interest rates that
     cannot exceed 8.25 percent.


Answer:                     Choices 1 and 3 are correct.
                            (Choice 2 is true for 6 months.)




                  Introduction to Financial Planning – Session 3 of 3
               Poll Question #3
Which of the following is/are true regarding an
  unsubsidized Stafford Loan?

1.   No interest is charged on the loan until repayment of the
     loan begins.
2.   All Stafford Loans have below-market interest rates that
     cannot exceed 8.25 percent.




                   Introduction to Financial Planning – Session 3 of 3
               Poll Question #3
Which of the following is/are true regarding an
  unsubsidized Stafford Loan?

1.   No interest is charged on the loan until repayment of the
     loan begins.
2.   All Stafford Loans have below-market interest rates that
     cannot exceed 8.25 percent.



Answer:                      Choice 2 is correct.
                             (For choice 1, interest accrues at the start of
                             the loan.)




                   Introduction to Financial Planning – Session 3 of 3
               Poll Question #4
Which of the following is/are true regarding PLUS
  Loans?

1.   Interest rate cannot exceed 8.25%.
2.   The rate is variable.
3.   There is typically a 4% fee to originate the loan.
4.   The Federal Perkins Loan must be repaid within 10 years.




                  Introduction to Financial Planning – Session 3 of 3
               Poll Question #4
Which of the following is/are true regarding PLUS
  Loans?

1.   Interest rate cannot exceed 8.25%.
2.   The rate is variable.
3.   There is typically a 4% fee to originate the loan.
4.   The Federal Perkins Loan must be repaid within 10 years.


Answer:                     Choices 2, 3 and 4 are correct.
                            (For choice 1, there is a 9% rate for the
                            PLUS loan.)




                  Introduction to Financial Planning – Session 3 of 3
                 Poll Question #5
Which of the following is/are true?

1.   The Federal Supplemental Education Opportunity Grant can be
     obtained along with a Pell Grant.

2.   The Federal Perkins Loan has a 6-month grace period for
     repayment.

3.   The Federal Perkins Loan is cancelled if you become a full-time
     special education teacher, nurse, or medical technician.

4.   Loan must be repaid within 10 years.




                    Introduction to Financial Planning – Session 3 of 3
                 Poll Question #5
Which of the following is/are true?

1.   The Federal Supplemental Education Opportunity Grant can be
     obtained along with a Pell Grant.

2.   The Federal Perkins Loan has a 6-month grace period for
     repayment.

3.   The Federal Perkins Loan is cancelled if you become a full-time
     special education teacher, nurse, or medical technician.

4.   Loan must be repaid within 10 years.


Answer:                       Choices 1, 3 and 4 are correct.
                              (Choice 2 should be 9 months.)

              Q&A


                    Introduction to Financial Planning – Session 3 of 3
 Qualified State Tuition Plans
           (QSTPs)
Referred to as 529 Plans. The benefits include:




              Introduction to Financial Planning – Session 3 of 3
 Qualified State Tuition Plans
           (QSTPs)
Referred to as 529 Plans. The benefits include:

• Tax-deferred growth. No AGI phase-out.




               Introduction to Financial Planning – Session 3 of 3
  Qualified State Tuition Plans
            (QSTPs)
Referred to as 529 Plans. The benefits include:

• Tax-deferred growth. No AGI phase-out.
• The beneficiary/student is not taxed on the gross
  income earned within the plan.




                Introduction to Financial Planning – Session 3 of 3
 Qualified State Tuition Plans
           (QSTPs)
Referred to as 529 Plans. The benefits include:

• Tax-deferred growth. No AGI phase-out.
• The beneficiary/student is not taxed on the gross
  income earned within the plan.
• The contributor can remove assets from their taxable
  estate. $13,000 x 5 years = $65,000 for 2010.




               Introduction to Financial Planning – Session 3 of 3
 Qualified State Tuition Plans
           (QSTPs)
Referred to as 529 Plans. The benefits include:

• Tax-deferred growth. No AGI phase-out.
• The beneficiary/student is not taxed on the gross
  income earned within the plan.
• The contributor can remove assets from their taxable
  estate. $13,000 x 5 years = $65,000 for 2010.
• Many states provide state tax deductions and/or tax
  exemptions for contributions.




               Introduction to Financial Planning – Session 3 of 3
 Qualified State Tuition Plans
           (QSTPs)
Referred to as 529 Plans. The benefits include:

• Tax-deferred growth. No AGI phase-out.
• The beneficiary/student is not taxed on the gross
  income earned within the plan.
• The contributor can remove assets from their taxable
  estate. $13,000 x 5 years = $65,000 for 2010.
• Many states provide state tax deductions and/or tax
  exemptions for contributions.
• The contributor/owner has full control of the assets
  and can change the beneficiary.



               Introduction to Financial Planning – Session 3 of 3
        Prepaid Tuition Plans
  Are plans where prepayment of tuition is allowed at
  current prices for enrollment in the future.

Disadvantages:

• The parents assume the risk that the child will not
  meet the school's academic and admission
  requirements, or

• The student may receive a scholarship from that
  college or from another college.




                Introduction to Financial Planning – Session 3 of 3
               Poll Question #6
Which of the following is/are true regarding 529
  plans?

1.   Tax-deferred growth with AGI phase-out limitations.
2.   The contributor/owner has full control of the assets and can
     change the beneficiary.
3.   There is a possible state tax deduction for contributions
     made.
4.   No penalty if there is a distribution made due to a
     scholarship or the death or disability of the beneficiary.




                   Introduction to Financial Planning – Session 3 of 3
               Poll Question #6
Which of the following is/are true regarding 529
  plans?

1.   Tax-deferred growth with AGI phase-out limitations.
2.   The contributor/owner has full control of the assets and can
     change the beneficiary.
3.   There is a possible state tax deduction for contributions
     made.
4.   No penalty if there is a distribution made due to a
     scholarship or the death or disability of the beneficiary.

Answer:                      Choices 2, 3 and 4 are correct.
                             (Choice 1 has no AGI limits.)

             Q&A


                   Introduction to Financial Planning – Session 3 of 3
Coverdell Education Savings
         Accounts
A Coverdell ESA is an investment account established
with cash that is not deductible for the year
contributed.




             Introduction to Financial Planning – Session 3 of 3
  Coverdell Education Savings
           Accounts
  A Coverdell ESA is an investment account established
  with cash that is not deductible for the year
  contributed.

• The contributions are made for the benefit of children
  that are under 18 years of age.




                Introduction to Financial Planning – Session 3 of 3
  Coverdell Education Savings
           Accounts
  A Coverdell ESA is an investment account established
  with cash that is not deductible for the year
  contributed.

• The contributions are made for the benefit of children
  that are under 18 years of age.

• The contributions grow tax-free and are not subject to
  tax if used for qualified educational expenses.




                Introduction to Financial Planning – Session 3 of 3
  Coverdell Education Savings
           Accounts
  A Coverdell ESA is an investment account established
  with cash that is not deductible for the year
  contributed.

• The contributions are made for the benefit of children
  that are under 18 years of age.

• The contributions grow tax-free and are not subject to
  tax if used for qualified educational expenses.

• If the funds are used for anything other than higher
  educational expenses, the earnings are subject to
  ordinary tax rates and a 10% penalty.



                Introduction to Financial Planning – Session 3 of 3
  Coverdell Education Savings
           Accounts
• Assets are counted as child's.

• Annual contribution for 2010 is $2,000 per beneficiary.

• Must be used by the beneficiary by age 30 or can be
  rolled over to another beneficiary.

• If there is any remaining amount, it will be subject to
  ordinary tax and the 10% penalty.




                Introduction to Financial Planning – Session 3 of 3
Coverdell Education Savings
         Accounts
Contributions can only can be made for 2010 when the
following AGI limits are met:

    MFJ      $190,000 - $220,000;
    Single   $95,000 - $110,000

Drawback of Coverdell ESAs is that a tax-free
distribution will preclude either the Hope Scholarship
Credit or Lifetime Learning Credit in the same year.




             Introduction to Financial Planning – Session 3 of 3
  Coverdell Education Savings
           Accounts
Qualified elementary and secondary school expenses are:

• Tuition, fees, room and board, academic tutoring,
• Books, supplies, and other equipment such as
  computers,
• Uniforms, transportation, and supplementary items or
  services.

Used for the enrollment or attendance of the beneficiary
  at a public, private, or religious school providing
  elementary or secondary education kindergarten
  through grade 12.




                Introduction to Financial Planning – Session 3 of 3
               Poll Question #7
Which of the following is/are true regarding a
  Coverdell ESA?

1.   The contribution must be made for the benefit of a child
     before the child turns 19 years of age.
2.   Annual contribution is $5,000 per beneficiary.
3.   A tax-free distribution can be used to pay for a computer,
     transportation and uniforms.




                   Introduction to Financial Planning – Session 3 of 3
               Poll Question #7
Which of the following is/are true regarding an
  Educational IRA?

1.   The contribution must be made for the benefit of a child
     before the child turns 19 years of age.
2.   Annual contribution is $5,000 per beneficiary.
3.   A tax-free distribution can be used to pay for a computer,
     transportation and uniforms.



Answer:                      Choice 3 is correct.
                             (Choice 1 is under 18, choice 2 is $2,000.)




                   Introduction to Financial Planning – Session 3 of 3
         Coverdell Illustration
John is single with AGI of $100,000 and has three children,
   ages 18, 15, and 12, from a prior marriage. He wants to
   know what is the maximum contribution to a Coverdell ESA
   that he can make in 2010.




                 Introduction to Financial Planning – Session 3 of 3
          Coverdell Illustration
 John is single with AGI of $100,000 and has three children,
    ages 18, 15, and 12, from a prior marriage. He wants to
    know what is the maximum contribution to a Coverdell ESA
    that he can make in 2010.

Step 1        Determine who is eligible.




                  Introduction to Financial Planning – Session 3 of 3
          Coverdell Illustration
 John is single with AGI of $100,000 and has three children,
    ages 18, 15, and 12, from a prior marriage. He wants to
    know what is the maximum contribution to a Coverdell ESA
    that he can make in 2010.

Step 1        Determine who is eligible.

Step 2        Determine maximum contribution of $2,000 multiplied
              by number of eligible children.




                  Introduction to Financial Planning – Session 3 of 3
          Coverdell Illustration
 John is single with AGI of $100,000 and has three children,
    ages 18, 15, and 12, from a prior marriage. He wants to
    know what is the maximum contribution to a Coverdell ESA
    that he can make in 2010.

Step 1        Determine who is eligible.

Step 2        Determine maximum contribution of $2,000 multiplied
              by number of eligible children.

Step 3        Determine the amount allowed after AGI phase-out
              limitation.




                  Introduction to Financial Planning – Session 3 of 3
          Coverdell Illustration
 John is single with AGI of $100,000 and has three children,
    ages 18, 15, and 12, from a prior marriage. He wants to
    know what is the maximum contribution to a Coverdell ESA
    that he can make in 2010.

Step 1        Determine who is eligible.
              (The 15-year-old and the 12-year-old)
Step 2        Determine maximum contribution of $2,000 multiplied
              by number of eligible children.

Step 3        Determine the amount allowed after AGI phase-out
              limitation.




                  Introduction to Financial Planning – Session 3 of 3
          Coverdell Illustration
 John is single with AGI of $100,000 and has three children,
    ages 18, 15, and 12, from a prior marriage. He wants to
    know what is the maximum contribution to a Coverdell ESA
    that he can make in 2010.

Step 1        Determine who is eligible.
              (The 15-year-old and the 12-year-old)
Step 2        Determine maximum contribution of $2,000 multiplied
              by number of eligible children.
              (2 children x $2,000 = $4,000)
Step 3        Determine the amount allowed after AGI phase-out
              limitation.




                  Introduction to Financial Planning – Session 3 of 3
          Coverdell Illustration
 John is single with AGI of $100,000 and has three children,
    ages 18, 15, and 12, from a prior marriage. He wants to
    know what is the maximum contribution to a Coverdell ESA
    that he can make in 2010.

Step 1        Determine who is eligible.
              (The 15-year-old and the 12-year-old)
Step 2        Determine maximum contribution of $2,000 multiplied
              by number of eligible children.
              (2 children x $2,000 = $4,000)
Step 3        Determine the amount allowed after AGI phase-out
              limitation.
              (Note: the phase-out for a single taxpayer is $95,000 - $110,000).
              Allowable is $2,667, calculated as:
                        [$110,000 upper AGI limitation - $100,000 actual AGI] /
                        [$110,000 upper AGI limitation - $95,000 lower AGI
                        limitation] x $4,000 maximum contribution = $2,667.


                  Introduction to Financial Planning – Session 3 of 3
     The Hope Scholarship Credit
(American Educational Opportunity Credit)
Comprised of:

• 100 percent of the first $2,000 of qualified expenses
  paid in the tax year, plus 25 percent of the next
  $2,000 for a maximum of $2,500 per student.

• College enrollment must not be less than half-time
  during the year.




                Introduction to Financial Planning – Session 3 of 3
     The Hope Scholarship Credit
(American Educational Opportunity Credit)
The AGI limits for 2010 are:

    Single    $80,000 - $90,000
    MFJ       $160,000 - $180,000;


• A 40% (maximum of $1,000) refundable credit for
  students who do not have a tax liability.

• The credit is increased to $3,600 for Gulf Opportunity
  Zone students.




                Introduction to Financial Planning – Session 3 of 3
     The Hope Scholarship Credit
(American Educational Opportunity Credit)
The credit is eligible for first four years of post-secondary
  education for the:

           • Taxpayer

           • Spouse

           • Dependent




                 Introduction to Financial Planning – Session 3 of 3
  The Lifetime Learning Credit
• Annual base amount is $10,000.

• The credit is based on a 20 percent factor of the
  qualified expenses.

• The maximum credit is $2,000= ($10,000 x 20%) and
  applies to the family, not on a per-child basis.

• It can be claimed for an unlimited number of years.




                Introduction to Financial Planning – Session 3 of 3
  The Lifetime Learning Credit
If two or more children in the same household incur
    qualified expenses in the same year, the parents may
    claim:




                Introduction to Financial Planning – Session 3 of 3
  The Lifetime Learning Credit
If two or more children in the same household incur
    qualified expenses in the same year, the parents may
    claim:

• a Lifetime Learning Credit




                Introduction to Financial Planning – Session 3 of 3
  The Lifetime Learning Credit
If two or more children in the same household incur
    qualified expenses in the same year, the parents may
    claim:

• a Lifetime Learning Credit

• a Hope Scholarship Credit for both children, or




                Introduction to Financial Planning – Session 3 of 3
  The Lifetime Learning Credit
If two or more children in the same household incur
    qualified expenses in the same year, the parents may
    claim:

• a Lifetime Learning Credit

• a Hope Scholarship Credit for both children, or

• a Lifetime Learning Credit for one child and a Hope
  Scholarship Credit for the other.




                Introduction to Financial Planning – Session 3 of 3
  The Lifetime Learning Credit
If two or more children in the same household incur
    qualified expenses in the same year, the parents may
    claim:

• a Lifetime Learning Credit

• a Hope Scholarship Credit for both children, or

• a Lifetime Learning Credit for one child and a Hope
  Scholarship Credit for the other.

However, only one credit is allowed per child per year.




                Introduction to Financial Planning – Session 3 of 3
  The Lifetime Learning Credit
After you figure out the credit, the amount may be
   reduced based on the following AGI limitation for
   2010:

   Single     $50,000 - $60,000;
   MFJ        $100,000 - $120,000.

• The credit is 40% or a maximum of $4,000 for Gulf
  Opportunity Zone students.




                Introduction to Financial Planning – Session 3 of 3
Hope & Lifetime Learning Credit
          Illustration
John and Mary are married and have AGI of $62,500 for 2010.
     They have one child, Hans, who is in the third year of college.
     The following are the costs for education:

           •    John (part-time night school) $7,000
           •    Mary (part-time night school) $5,000
           •    Hans (full-time college)     $32,000

1.   Who is eligible for the Hope Credit?




                   Introduction to Financial Planning – Session 3 of 3
Hope & Lifetime Learning Credit
          Illustration
John and Mary are married and have AGI of $62,500 for 2010.
     They have one child, Hans, who is in the third year of college.
     The following are the costs for education:

              •      John (part-time night school) $7,000
              •      Mary (part-time night school) $5,000
              •      Hans (full-time college)     $32,000

1.   Who is eligible for the Hope Credit?
     Hans is eligible.




                         Introduction to Financial Planning – Session 3 of 3
Hope & Lifetime Learning Credit
          Illustration
John and Mary are married and have AGI of $62,500 for 2010.
     They have one child, Hans, who is in the third year of college.
     The following are the costs for education:

              •      John (part-time night school) $7,000
              •      Mary (part-time night school) $5,000
              •      Hans (full-time college)     $32,000

1.   Who is eligible for the Hope Credit?
     Hans is eligible.
2.   What is the allowable Hope Credit?




                         Introduction to Financial Planning – Session 3 of 3
Hope & Lifetime Learning Credit
          Illustration
John and Mary are married and have AGI of $62,500 for 2010.
     They have one child, Hans, who is in the third year of college.
     The following are the costs for education:

              •      John (part-time night school) $7,000
              •      Mary (part-time night school) $5,000
              •      Hans (full-time college)     $32,000

1.   Who is eligible for the Hope Credit?
     Hans is eligible.
2.   What is the allowable Hope Credit?
     $2,500 (($2,000 x 100%) + ($2,000 x 25%))




                         Introduction to Financial Planning – Session 3 of 3
Hope & Lifetime Learning Credit
          Illustration
John and Mary are married and have AGI of $62,500 for 2010.
     They have one child, Hans, who is in the third year of college.
     The following are the costs for education:

              •      John (part-time night school) $7,000
              •      Mary (part-time night school) $5,000
              •      Hans (full-time college)     $32,000

1.   Who is eligible for the Hope Credit?
     Hans is eligible.
2.   What is the allowable Hope Credit?
     $2,500 (($2,000 x 100%) + ($2,000 x 25%))
3.   Who is eligible for the Lifetime Learning Credit?




                         Introduction to Financial Planning – Session 3 of 3
Hope & Lifetime Learning Credit
          Illustration
John and Mary are married and have AGI of $62,500 for 2010.
     They have one child, Hans, who is in the third year of college.
     The following are the costs for education:

              •      John (part-time night school) $7,000
              •      Mary (part-time night school) $5,000
              •      Hans (full-time college)     $32,000

1.   Who is eligible for the Hope Credit?
     Hans is eligible.
2.   What is the allowable Hope Credit?
     $2,500 (($2,000 x 100%) + ($2,000 x 25%))
3.   Who is eligible for the Lifetime Learning Credit?
     (John and Mary. Ignore Hans as it is beneficial to take the Hope Credit).




                         Introduction to Financial Planning – Session 3 of 3
Hope & Lifetime Learning Credit
          Illustration
John and Mary are married and have AGI of $62,500 for 2010.
     They have one child, Hans, who is in the third year of college.
     The following are the costs for education:

              •      John (part-time night school) $7,000
              •      Mary (part-time night school) $5,000
              •      Hans (full-time college)     $32,000

1.   Who is eligible for the Hope Credit?
     Hans is eligible.
2.   What is the allowable Hope Credit?
     $2,500 (($2,000 x 100%) + ($2,000 x 25%))
3.   Who is eligible for the Lifetime Learning Credit?
     (John and Mary. Ignore Hans as it is beneficial to take the Hope Credit).
4.   What is the allowable Lifetime Learning Credit?




                         Introduction to Financial Planning – Session 3 of 3
Hope & Lifetime Learning Credit
          Illustration
John and Mary are married and have AGI of $62,500 for 2010.
     They have one child, Hans, who is in the third year of college.
     The following are the costs for education:

              •      John (part-time night school) $7,000
              •      Mary (part-time night school) $5,000
              •      Hans (full-time college)     $32,000

1.   Who is eligible for the Hope Credit?
     Hans is eligible.
2.   What is the allowable Hope Credit?
     $2,500 (($2,000 x 100%) + ($2,000 x 25%))
3.   Who is eligible for the Lifetime Learning Credit?
     (John and Mary. Ignore Hans as it is beneficial to take the Hope Credit).
4.   What is the allowable Lifetime Learning Credit?
     $2,000 ($10,000 x 20%) It does not matter how John and Mary allocate their amounts.
     No AGI limitations due to AGI < $120,000

                  Q&A


                         Introduction to Financial Planning – Session 3 of 3
              Series EE Bonds
For accrued interest to be tax-free, it must meet the
  following exceptions:

• EE Bonds must be purchased in the name of one or
  both parents of the student/child.

• The parent must be 24 years old before the first day of
  the month of the issue date of the bond.




                Introduction to Financial Planning – Session 3 of 3
             Series EE Bonds
After you figure out the eligible accrued interest, the
   amount may be reduced based on the following AGI
   limitation for 2010:

   Single     $70,100 - $85,100
   MFJ        $105,100 - $135,100.




                Introduction to Financial Planning – Session 3 of 3
   Uniform Gift to Minors ACT
            (UGMA)

• Allows parents the option to put assets in a custodial
  account for the child.

• State will determine age of majority.

• Possible “kiddie tax” issues.

• UGMA assets are the child's when determining financial
  aid.




                Introduction to Financial Planning – Session 3 of 3
       Student Loan Interest
•   Maximum of $2,500 of interest may be deducted as
    an adjustment to the taxpayer's AGI.

•   The loaned funds must have been spent on:

      1.   tuition and enrollment fees
      2.   books, supplies, equipment
      3.   room and board, or
      4.   transportation expenses.




                 Introduction to Financial Planning – Session 3 of 3
         Student Loan Interest
The phase-out for the eligible interest is as follows for
  2010:

   Single      $60,000 - $75,000.
   MFJ         $120,000 - $150,000.




                 Introduction to Financial Planning – Session 3 of 3
        Student Loan Interest
An employer can pay $5,250 per year for an employee's:

• tuition (both graduate and undergraduate)

• enrollment fees

• books, supplies, and equipment.

There are no phase-out limitations for 2010 and job-
  related classes are not subject to these rules.




                Introduction to Financial Planning – Session 3 of 3
       Monetary Settlements
• Legal settlements

• Structured settlements

• Lottery winnings and monetary windfalls

• Lump-sum retirement distributions

• Insurance proceeds




               Introduction to Financial Planning – Session 3 of 3
           Legal Settlements
• How are they taxed when received? Generally,
  amounts received as damages for injury are excluded.
  Punitive damages are taxable.

• How do you pay damages as a defendant? Minimize
  the exposure by doing a risk analysis. (This will be
  explained in the next course.)




                Introduction to Financial Planning – Session 3 of 3
      Structured Settlements
• Injured victim receives a stream of income.

• The annuity stream received is tax-free.

• Types of structured settlements:

       o   Temporary or permanent disability
       o   Guardianship for minors or incompetents
       o   Worker's compensation
       o   Wrongful death




                   Introduction to Financial Planning – Session 3 of 3
  Lottery and Other Windfalls
• If there is a lump-sum or annuity option, help the
  client determine the best choice.




                Introduction to Financial Planning – Session 3 of 3
  Lottery and Other Windfalls
• If there is a lump-sum or annuity option, help the
  client determine the best choice.

• The amount is subject to income taxes.




                Introduction to Financial Planning – Session 3 of 3
  Lottery and Other Windfalls
• If there is a lump-sum or annuity option, help the
  client determine the best choice.

• The amount is subject to income taxes.

• Because most lottery winners go bankrupt shortly
  thereafter, help to manage the winnings.




                Introduction to Financial Planning – Session 3 of 3
        Special Circumstances
•   Divorce
•   Disability
•   Dependents with special needs
•   Terminal illness
•   Non-traditional family
•   Job change
•   Job loss




                Introduction to Financial Planning – Session 3 of 3
               Divorce Issues
• Division of assets and their tax basis
• Spousal support – alimony taxable to payee tax-
  deductible to payor. Special recapture in year three if
  there is front-loading.
• Child support is tax-free.
• Qualified Domestic Relations Order (QDRO) for assets
  in a qualified account.
• Social Security: When married more than ten years,
  divorced individuals will use a former spouse for
  maximum payout calculations.




                Introduction to Financial Planning – Session 3 of 3
 Other Special Circumstances
           Issues

• Dependents with special needs

• Terminal illness - consider a viatical settlement

• Non-traditional family division of assets upon death




           Q&A


                 Introduction to Financial Planning – Session 3 of 3
Supply & Demand
We will now switch to an interactive web page
for more information on Supply and Demand.




    Introduction to Financial Planning – Session 3 of 3
              Price Elasticity
The quantity demanded of a good in response to changes
  in that good's price.

• A good is elastic when its quantity demanded
  responds greatly to price changes.

• A good is inelastic when its quantity demanded
  responds little to price changes. Beer and gasoline,
  considered necessities by some, will remain in demand
  no matter what the price.




               Introduction to Financial Planning – Session 3 of 3
  Substitutes & Complements
• Substitutes - increase in the price of one will cause
  an increase in demand for the other. For example, if
  the price of oil, gas, or propane suddenly rose sharply,
  the demand for firewood would most likely increase.

• Complements - products that are usually consumed
  jointly. They are related such that a decrease in the
  price of one will cause an increase in the demand for
  the other. For example, when jelly goes on sale,
  peanut butter will most likely increase.




                Introduction to Financial Planning – Session 3 of 3
  Diminishing Marginal Utility
As the rate of consumption increases, the marginal utility
  derived from consuming additional units of a good will
  decline. Marginal utility is the additional utility received
  from the consumption of an additional unit for a good.

Example: All-you-can-eat shrimp at Beefsteak Charlie’s.




                 Introduction to Financial Planning – Session 3 of 3
                 Poll Question #8
Which law indicates that demand for an economic
   product will vary inversely with its price?



1.   The   law   of   competition
2.   The   law   of   supply and demand
3.   The   law   of   demand
4.   The   law   of   supply




                       Introduction to Financial Planning – Session 3 of 3
                 Poll Question #8
Which law indicates that demand for an economic
   product will vary inversely with its price?



1.   The   law   of   competition
2.   The   law   of   supply and demand
3.   The   law   of   demand
4.   The   law   of   supply

Answer:                         The law of demand is the
                                correct answer.



                       Introduction to Financial Planning – Session 3 of 3
                 Fiscal Policy
• Comprised of taxation, expenditures, and debt
  management by the federal government.




               Introduction to Financial Planning – Session 3 of 3
                  Fiscal Policy
• Comprised of taxation, expenditures, and debt
  management by the federal government.

• Changes in taxation affect corporate earnings,
  disposable earnings, and the overall economy. As tax
  rates increase, corporation after-tax income declines,
  which reduces their ability to pay dividends.




                Introduction to Financial Planning – Session 3 of 3
                  Fiscal Policy
• Comprised of taxation, expenditures, and debt
  management by the federal government.

• Changes in taxation affect corporate earnings,
  disposable earnings, and the overall economy. As tax
  rates increase, corporation after-tax income declines,
  which reduces their ability to pay dividends.

• Tax rate increases also reduce individual’s disposable
  income and limit the amount of money entering the
  economy.




                Introduction to Financial Planning – Session 3 of 3
           Deficit Spending
• When government expenditures exceed revenues/tax
  collections.




              Introduction to Financial Planning – Session 3 of 3
             Deficit Spending
• When government expenditures exceed revenues/tax
  collections.

• By selling debt securities to the public to finance
  deficits, Treasury Securities compete with other issuers
  of debt securities.




                Introduction to Financial Planning – Session 3 of 3
             Deficit Spending
• When government expenditures exceed revenues/tax
  collections.

• By selling debt securities to the public to finance
  deficits, Treasury Securities compete with other issuers
  of debt securities.

• This demand drives the value of debt down due to the
  increased supply of debt, causing the yields on debt
  instruments to rise to meet competition.




                Introduction to Financial Planning – Session 3 of 3
             Poll Question #9
Which of the following describes supply if the
 quantity supplied does not change significantly
 with a change in price?

  a)   Unit elastic
  b)   Elastic
  c)   Inelastic
  d)   Variable




                 Introduction to Financial Planning – Session 3 of 3
             Poll Question #9
Which of the following describes supply if the
 quantity supplied does not change significantly
 with a change in price?

  a)   Unit elastic
  b)   Elastic
  c)   Inelastic
  d)   Variable

Answer:                    A quantity supplied that does not
                           change insignificantly with a
                           change in price is called inelastic.



                 Introduction to Financial Planning – Session 3 of 3
          Poll Question #10
Which of the following government actions would
   best describe fiscal policy?

   1) Increase in government spending
   2) Decrease in the money supply
   3) Decrease in income taxes




              Introduction to Financial Planning – Session 3 of 3
          Poll Question #10
Which of the following government actions would
   best describe fiscal policy?

   1) Increase in government spending
   2) Decrease in the money supply
   3) Decrease in income taxes



Answer:                 Choices 1 and 3 are correct.




              Introduction to Financial Planning – Session 3 of 3
             Monetary Policy
The Federal Reserve (Fed) is charged with three primary
  responsibilities:

• Maintain sustainable long-term economic growth.

• Maintain price levels that are supported by that
  economic growth.

• Maintain full employment.




                Introduction to Financial Planning – Session 3 of 3
              Monetary Policy
The reserve requirement for a member bank of the
  Federal Reserve is the percent of deposit liabilities that
  must be held in reserve.

• As this requirement is increased, less money is
  available to be loaned to customers resulting in a
  restriction of the money supply.

• Conversely, as reserve requirements are decreased,
  more money is made available for loans.




                 Introduction to Financial Planning – Session 3 of 3
             Monetary Policy
The Federal Funds Rate is the overnight lending rate
  between member banks.




               Introduction to Financial Planning – Session 3 of 3
             Monetary Policy
Open market operations is the process by which the
  Federal Reserve purchases and sells government
  securities in the open market.

• The Fed buys government securities to cause more
  money to circulate, thereby increasing lending and
  lowering interest rates.

• The Fed sells government securities to restrict the
  money supply. As investors purchase government
  securities, more money leaves circulation, which
  decreases lending and increases interest rates.




               Introduction to Financial Planning – Session 3 of 3
            Monetary Policy
The Federal Reserve discount rate is the rate at which
  member banks can borrow funds from the Federal
  Reserve to meet reserve requirements.




               Introduction to Financial Planning – Session 3 of 3
             Monetary Policy
The Federal Reserve discount rate is the rate at which
  member banks can borrow funds from the Federal
  Reserve to meet reserve requirements.

• When the Fed raises the discount rate, it increases
  short-term borrowing costs and discourages member
  banks from borrowing funds. This results in the money
  supply contracting.




               Introduction to Financial Planning – Session 3 of 3
             Monetary Policy
The Federal Reserve discount rate is the rate at which
  member banks can borrow funds from the Federal
  Reserve to meet reserve requirements.

• When the Fed raises the discount rate, it increases
  short-term borrowing costs and discourages member
  banks from borrowing funds. This results in the money
  supply contracting.

• The Fed will lower the discount rate when it wants
  to increase the money supply.




               Introduction to Financial Planning – Session 3 of 3
             Monetary Policy
The Federal Reserve discount rate is the rate at which
  member banks can borrow funds from the Federal
  Reserve to meet reserve requirements.

• When the Fed raises the discount rate, it increases
  short-term borrowing costs and discourages member
  banks from borrowing funds. This results in the money
  supply contracting.

• The Fed will lower the discount rate when it wants
  to increase the money supply.

• Banks are able to borrow funds at lower rates and lend
  more money, which increases the money supply.



               Introduction to Financial Planning – Session 3 of 3
            Poll Question #11
What action taken by the Fed will lead to increased
  money supply?

a)   Lowering the prime rate
b)   Lowering the discount rate
c)   Selling Treasury securities
d)   Increasing reserve requirements




                Introduction to Financial Planning – Session 3 of 3
            Poll Question #11
What action taken by the Fed will lead to increased
  money supply?

a)   Lowering the prime rate
b)   Lowering the discount rate
c)   Selling Treasury securities
d)   Increasing reserve requirements

Answer:                   Lowering the discount rate (not the prime
                          rate) is the correct answer. Note, when the
                          Fed buys securities and/or increases the
                          reserve requirements, the money supply is
                          decreased.


                Introduction to Financial Planning – Session 3 of 3
               Business Cycle
Business cycles are swings in total national output,
  income, and employment marked by widespread
  expansion or contraction in many sectors of the
  economy.

• Business consists of two general phases: expansion
  and contraction

• Has two points: peak and trough

• Each phase of the business cycle passes into the next
  phase and is characterized by different economic
  conditions



                Introduction to Financial Planning – Session 3 of 3
      Business Cycle




Q&A


      Introduction to Financial Planning – Session 3 of 3
        Upcoming Risk Management
                Sessions
For the next three sessions students will learn how to identify risk management techniques
and calculate the insurance payout in the event of a claim. The facts and circumstances of
each situation determine whether a current insurance policy has any deficiencies and whether
alternative solutions will need implementing.

The first virtual session will focus on definitions used in insurance contracts, how to evaluate
risk exposure, and how to implement an insurance policy based on a given situation and the
limitations of both the policy and the insurance company.

Modules to complete before the next virtual classroom session:
    • Course Preview
    • Principles of Insurance
    • Legal Aspects of Insurance
    • Evaluation & Analysis of Risk Exposure
    • Insurance Needs
    • Insurance Policy Selection
    • Insurance Company Selection




                          Introduction to Financial Planning – Session 3 of 3
                    Thank You!
See you at the next session!

Risk Management
Session 1 of 3




                Introduction to Financial Planning – Session 3 of 3

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:7
posted:3/25/2011
language:English
pages:142