Financial Insights
November 2013
Thrivent.com
CONTINUED ON PAGE 2
What Is the Right Amount of Life Insurance for You?
Many people’s thoughts turn to gift-giving around this time of year. And although it’s not the kind of gift you’d wrap up and put a bow on, it’s appropriate to think about life insurance as a gift. Life insurance helps you honor your fi nancial commitments to those you love. It’s one of the most caring, generous and responsible gifts you can give.
It’s hard to imagine a product more important to safeguard a family’s fi nancial future than life insurance––it’s what forms the foundation of a strong fi nancial strategy. Yet it’s important to realize that your life insurance needs can and do change throughout your life. Coverage put into place
today may very well serve a different purpose down the road. Permanent life insurance can serve you and your family both during your lifetime and in the event of your death, while term insurance provides fi nancial protection only after you’re gone.*
Estimate Your Coverage Amount
Before addressing which type of life insurance may be best for you, it’s important to fi rst determine how much coverage you desire. And remember, it’s not for you; it’s for those you love. There are a variety of ways to approach this calculation.
One way—a needs-based approach— is to estimate the expenses of those
you’ll leave behind. It basically entails two steps:
1. Estimate what your family would need to meet their immediate, ongoing and future fi nancial obligations if you were to die. For example, this might include mortgage, household expenses, child care, retirement savings, loan and credit card payments, fi nal expenses, funding children’s education, an emergency fund and a child’s wedding.
2. Subtract the fi nancial resources the surviving family members could draw on to support themselves, such as the life insurance you currently have in place and your savings and retirement assets.
The result would be an amount of life insurance adequate to fi ll the gap between your family’s needs and their available assets.
Another approach is the human life value approach. Obviously, it’s impossible to place a value on the life of an individual. However, for life insurance purposes, it is possible to estimate the fi nancial contribution you make to loved ones, and that’s what the human life value approach aims to do. It is an estimate of your potential earning power—the future fi nancial contributions you would make to your family. In other words, it calculates what your family would have had if you hadn’t died.
What Is the Right Amount of Life Insurance for You?
CONTINUED FROM PAGE 1Don¹t hesitate to call
with questions.
Typically, the amount of life insurance someone needs is less than his or her human life value due to the availability of other sources of income, such as existing life insurance coverage, Social Security benefi ts, etc.
Which Approach Is Best?
Many people fi nd that the amount of life insurance that meets their and their family’s needs falls somewhere between the amount determined by a needs analysis and by calculating human life value. This is a personal decision based on your unique
situation, including the amount of risk you and your family are comfortable accepting. But because no one can predict the future, it’s better to take a long-term view when estimating the amount of coverage needed to help ensure those you care about are fi nancially secure in the event of your death.
A Meaningful Gift
As you’re thinking about gifts this holiday season, take a few moments to think about a truly signifi cant gift you can give to those who mean the most to you. Ask yourself:
• Does your current life insurance coverage provide your family with the
The benefi t of life insurance often comes long
after you’ve made the purchase decision. So
it’s critical to deal with an organization that can
keep its promises. Thrivent Financial has been
helping members meet their goals for more than
100 years, and is rated A++ (superior, highest of
16 ratings, April 2013) by A.M. Best.
Ratings refl ect Thrivent Financial’s overall fi nancial integrity and claims-paying ability, but do not apply to the performance of investment products.
necessary means to maintain their lifestyle and achieve the dreams and fi nancial goals you have for them, given today’s economic environment? • Will your life insurance leave the
legacy you desire? Done thoughtfully, charitable giving has the potential to change lives, communities … even the world.
Work with a Thrivent Financial for Lutherans representative to assess your life insurance needs and which type of coverage may suit you best. It’s also good to review your contract regularly to be certain that your life insurance coverage changes as your needs do. When you do this, you’ll fi nd that you’ve given yourself a gift, too: a sense of reassurance.
*Assumes all premiums are paid.
Insurance products issued or offered by Thrivent Financial for Lutherans, Appleton, WI. Not all products are available in all states.
What Do You Want Life Insurance to Do for You?
Life insurance can help you honor the commitments you have made to your family, such as:
Married couples Allow spouse to maintain his or her current lifestyle in the event of your death and to realize dreams that you shared.
Homeowners Ensure your family can continue to live in their home after your passing.
Parents Maintain current lifestyle for children in the event of your death, provide funds for education, leave a legacy for future generations.
Entrepreneurs Start or fund the continuation of a business.
Retirees Supplement retirement income with cash value from permanent life insurance.*
Philanthropists Support organizations or causes that are important to you. * Loans and surrenders from permanent life insurance will decrease the death proceeds and
the cash surrender value available to pay insurance costs which may cause the contract to terminate without value. Surrenders may generate an income tax liability and may be subject to a decrease charge. A signifi cant taxable event can occur if a contract terminates with outstanding debt. Loaned values may accumulate at a lower rate than unloaned values.
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Benefi ts of Being a Member
Thrivent Financial for Lutherans isn’t just a fi nancial services organization. We are a strong and secure, faith-based membership organization with a vibrant member community. As part of this community, our benefi t* and associate** members can take advantage of many special offerings:
• Informative publications, including Financial Insights and Thrivent magazine.
• Free and discounted services, including the Discounted Legal Services benefi t, Identity Protection benefi t and prescription drug discounts.
• Free educational resources, including Independent Living, an online resource to help support a loved one’s independence;
A Time to Mourn, A Time to Dance, a book offering comforting
ways to adapt to loss; Step by Step, simple guidelines for tasks that must be taken care of starting the moment a loved one dies: and Your Will Planning Guide, an online resource to help you gather what you need to create or update your will. • Chapters—local groups of Thrivent members––provide
opportunities to participate in events, vote in elections and serve as a leader.
• Credit Union membership––Members of Thrivent Financial are also eligible to apply for membership in Thrivent Federal Credit Union.
• Find an event––Use the link on the Thrivent.com home page to fi nd workshops and events in your area.
In addition, Thrivent benefi t members can take advantage of the following:
• Financial assistance benefi ts, including the Legacy Support for Orphan Children Benefi t, Newborn Death Benefi t and Uninsurable Child Life Insurance Benefi t. • Board elections to determine who represents member
interests on the Thrivent Board of Directors. • Thrivent Builds Worldwide Trips, a program in
partnership with Habitat for Humanity, which offers member discounts on trips to work with others to build decent, affordable housing.
• Heartwood Conference Center & Retreat, which offers special rates to benefi t members, chapters and Lutheran groups.
For More Information
As a resource to people who believe faith and fi nances go hand in hand, we encourage you to tell others about Thrivent Financial. For more information about the many benefi ts available to members, visit Thrivent. com/membershipbenefi ts, contact a Thrivent Financial representative or call 800-THRIVENT (800-847-4836). * A benefi t member is someone 16 years or older who meets membership
eligibility, has been admitted for membership and has a qualifi ed connection to a Thrivent Financial insurance or annuity product or received a settlement agreement from such insurance.
** An associate member is someone 16 years or older who meets
membership eligibility and has been admitted for membership but does not have a qualifi ed connection to a Thrivent Financial insurance or annuity product. This type of member has:
• Paid an annual associate membership fee, or
• Has purchased a product from a Thrivent Financial affi liate or
subsidiary, such as a Thrivent Mutual Fund product or Thrivent Federal Credit Unionproduct.
Membership benefi ts are not guaranteed contractual benefi ts. The interpretation of the provisions of these benefi ts is at the sole discretion of Thrivent Financial for Lutherans. These benefi ts are reviewed and evaluated regularly. Thrivent Financial reserves the right to change, modify, discontinue, or refuse to provide any of the membership benefi ts or any part of them, at any time.
Deposit and lending services are offered by Thrivent Federal Credit Union, a member-owned not-for-profi t fi nancial cooperative that is federally insured by the National Credit Union Administration and doing business in accordance with the Federal Fair Lending Laws. Insurance, securities, investment advisory and trust and investment management accounts and services offered by Thrivent Financial for Lutherans or its affi liates are not deposits or obligations of Thrivent Federal Credit Union, are not guaranteed by Thrivent Federal Credit Union or any bank, are not insured by the NCUA, FDIC or any other federal government agency, and involve investment risk, including possible loss of the principal amount invested.
Market
View
Past performance is not a guarantee of future results.
Mr. Swansen, Mr. Francis and Mr. Simenstad are discussing the asset classes and portfolios they oversee at a macro-economic level. They are not recommending or endorsing the purchase of any individual security. Asset management services provided by Thrivent Asset Management, LLC, a wholly owned subsidiary of Thrivent Financial for Lutherans. Securities and investment advisory services are offered through Thrivent Investment Management Inc., 625 Fourth Ave. S., Minneapolis,
The One-Fund Approach: The Benefi ts of an Asset Allocation Fund
Asset allocation funds are a simple choice for investors who value diversifi cation and professional money management.
Diversifi cation is an important part of prudent investing, so it is generally good that Wall Street offers so many different mutual funds focused on so many different sectors of the fi nancial markets.1
For many investors, though, sorting through the seemingly endless array of fund offerings to build an investment portfolio, and then managing that portfolio over the long haul, has about as much appeal as weekly appointments with an oral surgeon. For those
investors—indeed, for anyone who does not have the time, confi dence or desire to actively manage their own investment portfolio—an asset allocation fund may be a good choice to consider.
Asset allocation funds allow investors to take advantage of access to multiple funds, professional investment managers, and multiple asset classes and investment styles, all with one purchase. Funds can be used individually to help meet a particular need, or they can be combined to produce a personalized investment strategy. They are diversifi ed and typically invest in a wide variety of asset classes— stocks and bonds, of course, but also cash, and, in some cases, alternative assets such as commodities funds and real estate. They are often structured as funds of funds, meaning they invest in a collection of other mutual funds, each of which hews to a different investment strategy. However, some asset allocation funds also take advantage of investment
opportunities through the direct purchase of individual securities.
Once users determine their investment goals and understand their risk tolerance, they simply select the asset allocation fund (or funds) that matches it. By doing so, they forego the rigors of having to create an allocated investment portfolio by choosing from an almost endless array of individual stock and bond funds. They also forego the need to regularly re-allocate the multi-fund portfolio to ensure its allocation remains aligned with their goals and risk profi le. Nor must they worry about analyzing exactly which individual securities all of those funds are holding to make sure there is no signifi cant overlap from one to the next, since that could skew the asset allocation mix they are trying to attain. This doesn’t imply that you can “set it and forget it,” of course; all investors are advised to review their investments on a regular basis.
With an asset allocation fund, a professional fund manager, or
management team, shoulders all of the fund management responsibilities. The manager makes sure the fund is diversifi ed, and periodically rebalances the fund’s holdings to ensure that it remains aligned with its stated asset allocation strategy. In some cases, the manager may make tactical shifts in the fund’s asset allocation policy to take advantage of favorable investment opportunities, within the overall investment guidelines established for the fund.
Keep in mind that all mutual funds, including asset allocation funds, involve risks, and there are no growth or income guarantees. It’s also important to review and understand asset allocation fund fees and expenses, as they can be higher than individual funds focused on a specifi c asset class or investment category. In addition, the performance of an asset allocation fund is dependent on the performance of the underlying funds or securities in which it invests. As a result, it is subject to the same risks faced by those funds or securities. They include, but are not limited to the following risks: interest rate, infl ation, liquidity, geopolitical, management and credit.
Choosing the Right Asset Allocation Fund
Most fund companies offer a suite of asset allocation funds with different risk, or volatility, profi les ranging from conservative to aggressive. Typically, the more conservative funds tilt more heavily toward bonds, the more aggressive funds more heavily toward stocks. But the total Thrivent offers a suite of mutual
funds that focus on growth for accumulation, and income for distribution, with a range of risk, or volatility, profi les. No matter where you’re at in life, our product suite offers solutions to help meet your long-term fi nancial goals, whether its growth, income or a combination of the two.
Past performance is not a guarantee of future results.
Mr. Swansen, Mr. Francis and Mr. Simenstad are discussing the asset classes and portfolios they oversee at a macro-economic level. They are not recommending or endorsing the purchase of any individual security. Asset management services provided by Thrivent Asset Management, LLC, a wholly owned subsidiary of Thrivent Financial for Lutherans. Securities and investment advisory services are offered through Thrivent Investment Management Inc., 625 Fourth Ave. S., Minneapolis, MN 55415, a FINRA and SIPC member and a wholly owned subsidiary of Thrivent Financial for Lutherans.
David Francis Head of the Equities Department at Thrivent Asset Management Mark Simenstad Head of Fixed-Income Funds at Thrivent Asset Management Russell Swansen
Senior Vice President, Chief Investment Offi cer
Check out
Thrivent.com/yourstreet
for more valuable
commentary
Find weekly updates, monthly market recaps, podcasts, videos and other resources at Thrivent.com/yourstreet. “Wall Street to Your Street” provides market perspectives from our experts designed to help you better understand your investments and feel more confi dent about your choices.
holdings can be quite diverse; a single asset allocation fund might invest in as many as a dozen funds targeting large, small and mid-size domestic stocks; growth and value stocks; income-oriented stocks; international stocks and bonds; and short-, intermediate- and long-term fi xed-income securities, including investment-grade corporate bonds, high-yield bonds, government bonds, municipal bonds, preferred stock, asset-backed securities and mortgage-backed securities. Keep in mind that all mutual funds carry their own unique objectives, risks, charges and expenses, which you should consider carefully before investing.
Having access to a suite of asset allocation funds makes it easier for investors to select one that closely aligns with their investment objectives and tolerance for risk. If their circumstances do change, generally they can simply move from one fund in the suite to another.
Asset allocation funds can help individuals accumulate assets for a wide variety of goals: funding a child’s education, buying a second home, or fi nancing retirement, to cite just a few
examples. Choosing the right fund requires that investors consider not just their goals, but a wide range of variables unique to their fi nancial circumstances. These can include any other investments the investor may own but not directly control (such as shares in a corporate profi t-sharing plan); whether they have access to a defi ned benefi t pension plan or other source of guaranteed income; and how long they have until they expect to begin making withdrawals from their investment account. Answering these questions will help them determine how much risk they can afford to take with their fund.
Investors who will have access to some type of guaranteed income after they stop working—from a pension plan or an annuity, for example—may consider a more aggressive asset allocation fund, since that fund won’t be their sole source of income once they stop working. That may make them comfortable with taking more risk. Investors with longer time horizons may consider a more aggressive fund, too, as they may have more time to recover from any market downturns. Conversely, investors without access
to guaranteed income, or with shorter investment horizons, may favor more conservative asset allocation funds. But remember, every investor’s situation is unique and investment choices should be made taking all factors into consideration.
If you think an asset allocation fund might be right for you, contact your Thrivent Financial for Lutherans representative. He or she can help you choose a fund that aligns with your investment goals and tolerance for risk while also taking into account any factors unique to your fi nancial circumstances.
Investing in a mutual fund involves risks, including the possible loss of principal. The prospectus contains more complete information on the investment objectives, risks, charges and expenses of the fund, which investors should read and consider carefully before investing. To obtain a prospectus, contact a Thrivent Financial representative or visit Thrivent.com.
1 Diversifi cation does not assure a profi t or protect against loss
in a declining market.
For additional important disclosure information, please visit Thrivent.com/disclosures.
Life Insurance: A Charitable Giving Tool
Life insurance can benefi t more than your loved ones—it can also help you create a charitable legacy. In fact, many Thrivent Financial members have created a customized, giving program using life insurance and the Lutheran Community Foundation (LCF). And their gifts are changing our community in profound ways.
Sound Stewardship of Gifts
Since its founding in 1995, the LCF has worked with
thousands of individuals and families to give to their favorite charities in ways that match their fi nancial circumstances. Thanks to the generosity of these donors, the LCF recently reached an impressive milestone by distributing more than $100 million to donor-recommended charities serving local, national and global communities. (See box.)
You don’t need substantial sums to make a difference. A gift of life insurance through the LCF enables you to make a signifi cant charitable gift upon your death—larger than what might be possible today. There are three ways to give life insurance:
Give a new contract. When you buy a new life insurance contract and make the LCF owner and benefi ciary, you are entitled to a charitable deduction for ongoing premium payments as you make them.
Give an existing contract. You can change the owner and benefi ciary on a current life insurance contract to the LCF and receive a charitable tax deduction, plus take a charitable deduction for any additional premiums you pay.
Name the LCF as benefi ciary. Change the benefi ciary of an existing life insurance contract to the LCF and designate all or a portion of the proceeds. This option does not allow you to take a charitable deduction for the premiums you pay, but the proceeds directed to charity provide an estate
tax deduction.
Life insurance can also offer fl exibility to your giving strategy, allowing you to design the contract that fi ts your giving situation, and create a donor-advised fund that refl ects your specifi c giving interests. Through the LCF, you can name various benefi ting charities through one life insurance contract and change those charities at any time simply by contacting the LCF.
For More Information
To learn more, contact your Thrivent Financial representative or the LCF at 800-365-4172, or visit TheLCF.org.
The Lutheran Community Foundation is a public charity serving donors and the community through charitable funds. The Lutheran Community Foundation is independent of Thrivent Financial for Lutherans and its fi nancial associates.
Neither the LCF or Thrivent Financial for Lutherans and its respective associates and employees provide legal, accounting, or tax advice or services. Work with the LCF, your Thrivent Financial representative, and as appropriate your attorney and/or tax professional for additional information.
Insurance products issued or offered by Thrivent Financial for Lutherans, Appleton, WI. Not all products are available in all states.
In $100 Million Ways,
the JOY Is Out
Thanks to the generosity of its donors, the LCF has distributed more than $100 million in grants to donor-recommended charities over the past 18 years. The LCF is a national faith-based charity with a mission to serve donors, spread joy and change lives. Through each custom donor-advised fund, people are giving where they fi nd their strongest connections, and their gifts are improving our shared community every day.
Securities and investment advisory services are offered through Thrivent Investment Management Inc., 625 Fourth Ave. S., Minneapolis, MN 55415, 800-847-4836, a FINRA and SIPC member and a wholly owned subsidiary of Thrivent Financial for Lutherans. Thrivent Financial representatives are registered representatives of Thrivent Investment Management Inc. They are also licensed insurance agents of Thrivent Financial.
These unique campaign opportunities can make a big
difference to nonprofi t organizations. We encourage
you to check back often to see if there are any current
campaigns that are meaningful or relevant to you.
Remember, we’re
here to help.
$1.5 Million in Choice Dollars
®
Directed
to Lutheran Schools During Campaign
Thrivent Financial for Lutherans is committed to giving back, and one of the ways we do this is through Thrivent Choice®. Thrivent Choice is a charitable
grant program that gives eligible benefi t members the opportunity to recommend where Thrivent Financial distributes some of its charitable grant funds each year by directing Choice Dollars®. From time to time, special
Thrivent Choice campaigns––each with a different focus––are designed and launched to encourage eligible members to participate on an ongoing basis and to connect with the program in meaningful ways.
One such campaign, Give Back to Schools, successfully wrapped up on Sept. 30. Approximately 12,000 members participated, which resulted in Thrivent
15%
16%
9%
11%
49%
■ Colleges/Universities ■ Preschools ■ Seminaries ■ High Schools ■ Elementary Schools Financial distributing nearly $1.5 million in grants to Lutheran educational institutions across the country. An additional $650,000 in Thrivent Financial grants have been awarded to Lutheran educational institutions that participated, including 10 organizations selected to receive a $2,500 grant. This campaign, which ran from May 1 to Sept. 30, 2013, encouraged eligible members to direct ChoiceDollars to one or more of their favorite Lutheran educational institutions. As expected, Thrivent members responded in a big way. See the results of how the grants were distributed among the different types of Lutheran educational institutions.
Other Thrivent Choice campaigns offered in 2013:
• Double Direction Church campaign: Thrivent Financial doubled all Choice Dollars directions made to enrolled churches. The campaign, which began Oct. 1, was scheduled to run through Nov. 30 or until $15 million was awarded, whichever came fi rst. Our members responded so enthusiastically that we reached our goal of $15 million by Oct. 31, successfully ending the campaign early.
• Online direction campaign: Members who directed Choice Dollars online between July 1 and Oct. 31 were designated an additional $25 Choice Dollars.
See Thrivent.com/thriventchoice/ campaigns for additional
campaign details.
These unique campaign opportunities can make a big difference to nonprofi t organizations. We encourage you to check back often to see if there are any current campaigns that are meaningful or relevant to you.
Directing Choice Dollars® to an enrolled
organization is subject to the Terms and Conditions of the Thrivent Choice® program.
For full Terms and Conditions or to learn more, visit Thrivent.com/thriventchoice.
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4321 N. Ballard Road, Appleton, WI 54919-0001 Thrivent.com • 800-THRIVENT (800-847-4836)
Financial
Insights
INSIDE
November
2013
FEATURED INSIDE:
PRESORTED STANDARD U.S. POSTAGEPAID
THRIVENT FINANCIAL FOR LUTHERANSWhat Is the Right Amount
of Life Insurance for You?
PAGE 1Member Benefi ts
PAGE 3MarketView
PAGE 4Lutheran Community
Foundation
PAGE 6Thrivent Choice®
PAGE 7Terms to Know
Underwriting
Life insurance underwriting refers to the process of evaluating the risk involved in insuring a particular person. Underwriters use a combination of actuarial (life expectancy) data, statistics and personal data on the individual applying for insurance to help determine insurability and premium rates.
Contact Me/Us
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Certifi ed Financial Planner Board of Standards Inc. owns the certifi cation marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S.
