John Ogonowski flew airplanes all his life and understood the risk of his profession. His planning helped ensure his family’s financial future when the unthinkable happened on Sept. 11, 2001.

John Ogonowski grew up on a farm and never wanted to give up that life, even as he pursued a distinguished military and civilian flying career. While a young pilot for American Airlines, John began buying land in his hometown of Dracut, Mass., and eventually developed a second career as a hay farmer. John’s wife, Peg, was a flight attendant at American, and they knew her salary would not be enough to support their three young daughters and keep their farm going if something were to happen to John. So John bought life insurance to supplement the coverage provided by the airline.

On Sept. 11, 2001, the unthinkable happened. Terrorists hijacked American Flight 11, commanded by Capt. Ogonowski, and flew it into the World Trade Center. In an instant, Peg found herself at the center of the worst terror attack in the nation’s history, her grief compounded by concerns about how she would manage without John.

A few days later, the Ogonowskis’ insurance agent¹, Richard Bourgault CLTC LUTCF, came by to offer condolences. The oldest daughter, Laura, then 16, approached him apprenhensively and asked whether they would have to move out of their home. No, he said firmly. “That made all of the difference in the world,” he recalls.

With the insurance proceeds, Peg was able to pay off the mortgage on her home, retire all of the debt on the farm and set aside college money for her girls. Today the 150-acre family farm is still in the business, operated by John’s brother, Jim. Peg, recently retired after a 30-year career with American. “I can’t begin to tell you how huge it was to have had the insurance and to know that we were completely covered,” she says.

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In more than 30 years of farming, Harvey Wood never had an accident. But he didn’t take anything to chance and made sure his family was protected.

It would be difficult to find someone more cautious than Harvey Wood, a third generation Arizona cotton and citrus farmer. In more than 30 years of farming, he never had an accident.

Harvey was cautious about his financial affairs too. Shortly after marrying his high school sweetheart, Sandy, he bought life insurance to make sure she’d always be protected. Over time, Harvey realized that his coverage hadn’t kept up with growing needs. He and Sandy now had young children and the farm was expanding. That’s when Harvey met with insurance agents¹, Bryan Buzzard and Bob Sapanaro. After their comprehensive financial needs analysis, he took their advice and significantly increased his coverage.

Still, there were years when crops were ruined and Harvey didn’t know how he could afford the premiums. Knowing how much Harvey needed the coverage, his agents¹ discussed with him how to use the cash values in his whole life policy to keep the insurance in force.

Several years later, Harvey, 50, was refilling a fertilizer tank in front of a tractor when it slipped into gear and killed him. Sandy and the kids were devastated, but there was hardly time to grieve. They quickly realized that the world wouldn’t stop simply because tragedy had struck.

The crops and bills kept growing. “We owed hundreds of thousands of dollars,” says Sandy. “I kept thinking, this farm has been in our family for generations, I can’t lose it now.” But that’s why Harvey had purchased and kept the additional life insurance. With it Sandy paid off the farm debt, college loans, the mortgage and credit card bills. Today, the family is thriving. Sandy handles the business side of the farm, while her son, H.C., manages the farming operations.

“Our life is forever different without Harvey,” says Sandy, “but because he cared so much and bought the life insurance, our way of life hasn’t changed.”

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As a business owner you have a lot of responsibilities at work and at home. Sometimes those priorities conflict and require tough decisions on how to use the money you earn from your business. Most business owners feel that the best use of their money is to put it back into their business, since that gives them the best return. While for many business owners that is true, that can leave other important priorities like college funding unmet.

Even if you haven’t saved anything for college, and have a child just about to start classes, it may not be too late. Of course, there isn’t time for regular college saving, but maybe there’s a way that those who haven’t prepared can fund college in reverse.

What does it mean to fund college in reverse? It means using a vehicle such as a cash value life insurance policy to build cash to help pay off the college loans. Life insurance is typically used as a death benefit when the insured has died. A lump-sum is paid to the beneficiaries of the policy.

Here’s how it works: Let’s say your daughter has been accepted to a school with tuition of $30,000 per year and you haven’t saved anything for her college. If the school called you and said, “Hey, we decided we were charging too much and so we decided to lower our tuition to $500 a month or $6000 per year. Can you afford that?” You jump up and say, “Yes!” Here’s the rub: the school is not going to call you and lower their tuition bill. But, if you take that $500 a month and buy a cash value life insurance policy on your daughter as she takes out student loans, that policy could build cash sufficient to help pay off her student loans 15 or so years down the road.

So even if you didn’t save in advance and your children are starting college, you may be able to take out the student loans and work towards paying them off.

Insurance products and services are offered by Mutual of Omaha Insurance Company or one of its affiliates. Home Office: 3300 Mutual of Omaha Plaza, Omaha, NE 68175. Mutual of Omaha Insurance Company is licensed nationwide. United of Omaha Life Insurance Company is licensed nationwide, except New York. United World Life Insurance Company is licensed nationwide except Connecticut, New York and the Virgin Islands. Companion Life Insurance Company, Hauppauge, NY 11788-2934, is licensed in New York. Omaha Insurance Company is licensed in all states except: AL, CA, CO, ID, IL, LA, NV, NH, NY, NC, PR, RI, VT, VI, and WI. Products not available in all states. Each underwriting company is solely responsible for its own contractual and financial obligations.

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When a valued employee announces a baby is on the way, you may fear losing their focus—but they may fear losing their job or the opportunity to advance, according to a recent study. (1). Try these strategies to create a family-friendly workplace that eases the transition for you, the employee, and the rest of your team.

Provide parental leave. “This is a great way to keep top employees,” says Cassidy Solis, workplace flexibility program specialist at the Society for Human Resource Management (SHRM). If your business can’t fund parental leave, even an unpaid leave can be useful. Short-term disability insurance can often help employees fund part of a postpartum absence, as can allowing employees to bank paid time off to use during this period. Additionally, three-quarters of new fathers would like flexibility in when they use their paternity leave. (2)

Understand that a new parent has undergone a profound change. “Research shows there is a mental adjustment new parents have to make as they adjust to a new identity,” says Danna Greenberg, professor of organizational behavior at Babson College in Wellesley, Massachusetts, and author of the forthcoming book Momish: Crafting Your Work-Life Story. “For women, so much of society makes them feel that being a good mother and a good professional are mutually exclusive.” Fathers, too, feel the tug of competing priorities. Check in regularly to discuss the employee’s and your expectations regarding parental leave and return to work.

Provide a transition period for reentry. Some companies allow parents to ease back into the traditional work schedule. Take advantage of technology (company intranet, Skype meetings) to allow the employee to have a virtual presence before he or she returns to the workplace.

Allow babies at work. The Parenting in the Workplace Institute says that more than 200 companies, some with as few as three employees, have successfully implemented “babies at work” programs for infants under six months old. (3) Such programs reduce stress and childcare costs for new parents, and as a result, they are highly motivated to find ways to successfully complete their tasks while keeping babies happy. The Arizona Department of Health Services credits its infant-at-work program with boosting morale, supporting breastfeeding, and encouraging employees to return to work sooner.

Make flexible work hours possible. “Smaller businesses actually lead the charge in terms of creativity and flexibility in this area,” Solis says. Small businesses are more likely than large ones to allow employees to do paid work from home occasionally, to vary their starting and quitting times, and to return to work gradually after childbirth or adoption. (4) In addition to improving retention of new-parent employees, workplace flexibility strengthens a business by fostering problem-solving, innovation, and leadership, according to the nationwide When Work Works initiative. Download a free “Workflex and Small Business Guide” at www.whenworkworks.org.

SOURCES:

1.)  Bright Horizons Modern Family Index 2016

2.)  “The New Dad: Take Your Leave,” Boston College Center for Work & Family, 2014

3.)  Parenting in the Workplace Institute, www.babiesatwork.org

4.)   Families and Work Institute, National Study of Employers, 2014

6. U.S. savings bonds. Series EE and Series I bonds are a safe, tax-favored way to save, and offer a special tax benefit for college savers. You can buy them at most banks and savings institutions, or directly from the federal government. If used to pay qualified education expenses (as well as a few other minor requirements), the bond’s earnings are exempt from federal income tax.

To get the education break, you must be 24 or older when you purchase the bond and only bonds purchased after 1989 qualify. You must also meet the income limits. In 2016, the exclusion started to phase out at MAGI of $116,300 for married couples filing jointly and at $77,550 for single filers.

7. Life insurance. While the primary purpose of life insurance is to provide a death benefit to beneficiaries, it can also be used to help fund a college education or other expenses while the insured is living. How does this work? Policies that accrue cash value will generally allow you to access a portion of that money tax-free through either policy loans or withdrawals. Of course, certain conditions and limits exist, and you should always check the terms of your policy to make sure you understand what those are.*

In addition, one type of cash-value policy, known as Indexed Universal Life (IUL), provides an opportunity to accumulate cash value at a rate of return that is linked to a market index. Your cash value has the opportunity to grow when the index performs well, yet you also have safeguards to protect against negative market fluctuations. With this design, you may benefit from market growth without having to worry about market losses.

*Policy loans are subject to interest and policy loans and withdrawals will reduce the cash value and death benefit.

Sources:

1.How America Saves for College 2016, Sallie Mae.

2 .Trends in College Pricing 2016, The College Board.

3 .Trends in Student Aid 2016, The College Board. Data reflects the 61% of bachelor’s degree recipients from public and private nonprofit institutions who borrowed.

Mutual of Omaha Investor Services, Inc. and its representatives do not provide tax advice. Consult with your tax advisor regarding your specific situation.

Registered representatives offer securities and investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Member FINRA/SIPC.

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You’ve been saving and investing steadily for your child’s education over the years, and now your child is entering the final stretch before beginning his or her college journey. Now you’ll want to consider your options as you prepare to pay those upcoming tuition bills. What’s the best way to draw on your accounts? Are there rules about how you spend the money? What if your child decides not to go to college? Here are 13 ways to help pay for your child’s education.

Tax-Advantaged Savings 

1.  529 college savings plans. When you’re ready to tap your account, make sure your expenses are “qualified withdrawals.” These include tuition and fees, books, computers, technology, internet access and some room and board if your child lives off-campus (and attends college at least half- time). Transportation and student loan repayments don’t qualify. Keep records as proof that your 529 withdrawals were for qualified higher education expenses as you go along. What if your child decides not to go to college? You can switch the account to another family member, such as a sibling or a nephew, and preserve the tax benefit for anyone who meets any age requirements as determined by the plan. What if you have excess funds? You can hold the funds in the account in case the beneficiary wants to attend graduate school later or make yourself the beneficiary and continue your own education. If your beneficiaries opt out of college altogether, you can cash in the account and use the money for whatever you want. You’ll just owe tax and a 10 percent penalty on the earnings. (The principal is not taxed, nor does the penalty apply to it.)

2. Prepaid tuition plans. Generally, these plans share many of the same rules as the 529. Qualified withdrawals under prepaid programs cover tuition however, most, do not cover other expenses, such as room and board. But you’ll need to follow the agreement from whatever state or independent college plan you chose, as the distribution of your account assets will be subject to their rules and limits. For instance, state-sponsored prepaid plans may only cover specified costs at certain state institutions. And for the 300-member, independent Private College 529 Plan? This program covers only tuition at the participating institutions.

3. Coverdell Education Savings Accounts. Coverdell contributions are not tax deductible, but amounts deposited in the accounts grow tax-free until withdrawn. Coverdells can be used only to pay for qualified education expenses, such as tuition and fees; the cost of books, supplies and other equipment; and in some situations, the cost of room and board. If money is withdrawn for nonqualified purposes, the earnings portion will be taxed at the beneficiary’s tax rate and subject to a 10 percent federal penalty. Funds can be rolled over without penalty into another Coverdell account for a qualifying family member. All the assets, however, must be withdrawn within 30 days after the earlier of the following: beneficiary reaches age 30, or the beneficiary’s death (unless the beneficiary is a person with special needs).

4.  Roth IRAs. A Roth individual retirement account allows you to take out your contributions at any time, tax- and penalty-free, so you can tap that money for college expenses. You also can withdraw any earnings penalty-free if you use the funds to pay qualified education expenses, although you will still owe tax on the withdrawals if you are under 59 ½ at the time. (Of course, if you leave those earnings in the account until you retire, you won’t pay a penalty or any taxes).

5.  U.S. Savings Bonds. Series EE and I savings bonds let you exclude from your gross income some or all the earnings on any amount you redeem that covers tuition and fees at a qualified post- secondary institution. To get the education break, you must be 24 or older when you purchase the bond and only bonds purchased after 1989 qualify.

6.  Custodial accounts. Also known as UGMAs or UTMAs, after the Uniform Gifts to Minors Act and the Uniform Transfers to Minors Act. Things to keep in mind: All gifts to custodial accounts are irrevocable. Once your child reaches the “age of majority” (as defined by your state law, typically 18 or 21), the account terminates and the child can use the assets for college or anything else.

7.  Life insurance. Within certain policies, such as whole life or indexed universal life (IUL), any accrued cash value can generally be accessed through policy loans or withdrawals to help supplement college funding (assuming the policy remains in force). With IULs, in particular, you can access the cash value at any age, at any time and for any reason.

*Policy loans and withdrawals will reduce cash value and death benefit. Policy loans are subjectto interest charges.

Tax Credits

8.  American Opportunity Credit. This credit applies to qualified education expenses incurred by eligible students attending at least half-time during their first four years of undergraduate education. A parent, spouse or student who is not claimed as a dependent can take a federal income-tax credit equal to 100%of the first $2,000 spent on qualified education expenses and 25% of the next $2,000, for a total of $2,500. You must meet income limits to claim this credit.

9.  Lifetime Learning. With this credit, you can 20% of your out-of-pocket costs for tuition, fees, and books, up to a maximum of $2,000 a year per family. Unlike the American Opportunity Credit, however, the credit is not limited to undergraduate educational expenses, nor does the credit apply only to students attending at least half time. Income limits, however, do apply.

10. Education deduction. After having been reinstated and extended multiple times in recent years, this tax break is scheduled to expire again in 2017. Generally, you may only claim this deduction for qualified educational expenses on your return in lieu of taking either one of the two higher education tax credits: the American Opportunity Tax Credit and the Lifetime Learning credit. With the tuition-and-fees deduction, single filers can claim the maximum $4,000 deduction up to MAGI of $65,000; the deduction drops to $2,000 if MAGI ranges between $65,000 and $80,000. Joint filers can claim the maximum $4,000 deduction up to MAGI of $130,000, and a maximum of $2,000 if MAGI ranges between $130,000 and $160,000. Higher-income earners get no deduction.

 Financial Aid Sources

11.  Scholarships. This type of free money, awarded to students based on academic or other achievements, is universally coveted. (Sallie Mae estimates there are 5 million sources of college scholarships). Scholarships generally don’t have to be repaid, so they’re often called “gift aid.” Programs that award them may specify how scholarship funds must be used, set time restrictions for disbursing the funds or set a ceiling on qualifying family income.

12.  Grants. Grants are often based on financial need. Like scholarships, they don’t need to be repaid (unless, for example, you withdraw from school and owe a refund). The U.S. Department of Education offers a variety of federal grants to students attending four-year colleges or universities, community colleges, and career schools. Go to www.ed.gov and click on grants for more information.

13.  Student loans. Student loans can come from the federal government or from private sources such as a bank or financial institution. Federal student loans usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources. To apply for a federal loan, you must complete a Free Application for Federal Student Aid (FAFSA) — which is basically the starting point for government-sponsored loans and grants, as well as for state aid from colleges. Based on the results of your FAFSA, your college or career school determines a financial aid offer. Income, not assets, is by far the biggest factor in financial aid. And the formula excludes assets held in retirement accounts, the cash value of life insurance policies, and the value of your home and other personal property.

14.  Work-study jobs. The Federal Work-Study program provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the student’s course of study. Schools that participate award funds on a first-come, first-serve basis. Three things influence the total work-study award: when you apply, your level of financial need and your school’s funding level.

*Policy loans and withdrawals will reduce cash value and death benefit.Policy loans are subject to interest charges.

Mutual of Omaha Investor Services, Inc and its representatives do not provide tax or legal advice. Consult with and rely on your tax advisor or attorney for your specific situation.

Registered Representatives offer securities and investment advisory representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Member FINRA/SIPC.

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As your life changes, so do your life insurance needs. To help protect your family, you’ll need a plan that offers flexibility.
The first factor you’ll want to consider is whether to choose a term or permanent life policy. Term life insurance offers an economical way to make sure your family has financial cover if you should pass away unexpectedly — but by definition, it comes with a time limit. Many people who choose term life are comfortable knowing they’re covered for 20, 30 or 40 years, and don’t really want more than that basic, bare bones safety net.
Permanent policies (which include Indexed Universal Life Insurance) work differently. This type of life insurance tends to cost a little more, but you may also get more from it. As long as you keep up with the premiums and keep your policy in force, you’ll never lose the protection of your life insurance backup plan.
What’s more, these policies typically accumulate “cash value,” which you can access through policy loans or withdrawals — generally without paying any taxes or penalties.* That’s a source of income that can come in handy during one of life’s unexpected emergencies. And with a specialized policy such as Indexed Universal Life, you can accumulate cash value at a rate of return that’s linked to a market index.
Most important, permanent policies can keep you covered for your whole life, at every step along the way, but especially during seven significant life events.

Life Event No. 1: Buying a Home
Chances are, when you bought your home you took out a mortgage. If you own that property jointly with someone else, or had someone co-sign for the loan, they would be responsible for 100 percent of the debt and the payments in the event of your death. That unexpected expense, coming at such a troubling time, could leave them in dire financial straits. In the worst cases, overwhelmed by carrying this extra load, the people you care most about could end up in default, and even lose their home.
Life insurance provides a straightforward solution to this potential disaster. In fact, paying off a mortgage is one of the top three reasons people buy life insurance.1 To help keep the people you love in the home they love, you can purchase enough life insurance to completely cover that debt.
Life Event No. 2: Getting Married
Married couples without children often skip life insurance — but that can be a costly mistake. In most households, both spouses work, often contributing equally to household expenses. Budgets for these just-starting-out families often include a lot of debt: student loans, car loans, credit card debt, and mortgages. Add to that regular household expenses, like food and utilities, and you can see how very necessary both salaries may be.

Losing half the available income in the event of an untimely death could leave the surviving spouse struggling to make ends meet. In fact, 7 in 10 households say they’d have trouble covering everyday living expenses within just months of losing their primary wage earner.1 Life insurance can provide the safety net to help cover all the debts and monthly expenses when one spouse suddenly must cover them all, alone.
Life Event No. 3: Having Children
For most people, this joyous life event is the one that sparks interest in life insurance, and for good reason. Your children depend on you completely to provide for them. And as you start having children, current and future expenses may skyrocket.
Whether your family has two incomes or one, your family should have a sufficient financial safety net to protect them in the case of a premature death. The surviving spouse in a dual-income household could be hard-pressed to meet all the monthly household expenses and pay for additional child care. Single-income households are wholly dependent on that one salary, and losing it could be catastrophic without a solid life insurance policy in place.
Equally devastating is the loss of the stay-at-home parent. Those loving household contributions would need to be replaced through full-time child care providers and housekeeping help.
Live Event No. 4: Caring for Aging Parents
People are living longer than ever before, giving you more precious time to spend with your loved ones. Unfortunately, many people fall prey to chronic and debilitating diseases that require intensive around-the-clock care.
If you’re providing some or all the care for an aging parent or grandparent, having a backup plan in place can help protect their care continuity if you die unexpectedly.
Life Event No. 5: Starting a Business
When you own a business, you have a lot at stake. In addition to providing for your family, you have to keep your company solvent and your employees paid. Valued partners and star employees add an extra dimension of both possibility and risk; losing these key members of your business to death or disability can have an enormous impact on your business. To help survive such events, your business needs a stable source of funding, and a permanent life insurance policy could help your company weather that storm.

Sensible policy loans could also be part of a strategy to buy out a retiring partner without depleting business or personal cash reserves.
Life Event No. 6: Sending your Kids to College
College costs have skyrocketed, and they’re only soaring higher. Combinations of 529 plans, scholarships, and grants can help ease that overwhelming financial burden, but most families — most students — rely on significant student loans to cover the difference. In fact, most students come out of college already saddled by more than $30,000 in debt.³ To avoid that burden, some families draw from their retirement savings, which can trigger taxes and penalties on top of the lost growth potential for the nest egg.
If you have a permanent life insurance policy in place, however, prudent policy loans could help cover college costs without incurring taxes, tax penalties, or crushing student loan debt.*
Life Event No. 7: Retirement
Stress-free retirement is the ideal goal, but for millions of Americans, the No. 1 worry is outliving retirement savings.4 If fears about dwindling or disappearing Social Security benefits coupled with anxiety about potential stock market downturns keep you up at night, you’re not alone. Plus, with life expectancy on the rise, your retirement savings may be stretched even tighter.
This is where a permanent life insurance policy can help provide a welcome safety net. Instead of draining retirement accounts in down markets, you can help supplement your required distributions with judicious policy loans, giving your savings their best chance to bounce back. If you do run out of retirement savings, the cash value in your policy may be available to offset some of that lost income.
And if you pass away before your spouse, that life insurance is in place to provide much-needed financial resources after you’re gone.
*Taking loans/withdrawals from your life insurance policy will decrease the benefit.

All guarantees are based upon the financial strength and claims-paying ability of the issuing company.

Sources:

1. “Facts About Life,” LIMRA.com, September 2016.
2. JustDisney.com, Walt Disney Timeline, April 2016.
3. “Average Student Debt at Graduation,” Institute for College Access and Success, October 2016.
4. “Americans Biggest Retirement Fear,” Journal of Accountancy, October 2016.

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Sources:

1 “For the First Time in Modern Era, Living with Parents Edges Out Other Living Arrangements for 18- to 34-Year- Olds,” Pew Research Center, May 2016.

2 IRS.gov, October 2016.

3 “Health Care Costs for Couples in Retirement Rise to an Estimated $260,000,” Fidelity Investments, August 2016.

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Not sure where to find extra cash? One source could be starting a second job to supplement your regular paycheck, where all the money from your second job goes toward extra mortgage payments. If you’ve got a permanent life insurance policy with a healthy cash value balance, you could tap into that (through sensible withdrawals or policy loans) to quickly minimize your mortgage.** Or, you could finally go through your attic and sell some of those stashed-away goodies on eBay to bring in some extra cash, transforming your collectibles into mortgage principal pay downs.

Remember: Every extra amount you send to your lender reduces your principal balance, which in turn decreases the total interest you pay on the loan. And that helps you pay it off faster than expected.

*Examples are for a $300,000, 30-year mortgage with a 4% interest rate

**Withdrawing funds from your permanent life insurance policy will reduce the policy benefit.

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A patriarch’s planning simplifies matters for his four heirs—and theirs.

Because Al and his former partners had had a buy-sell agreement—a legal document that governs what happens if a partner dies or otherwise has to leave the business—he wanted the same clarity for his children. “When you have four children, all adults, and all with different situations in life, as well as a mom and dad who have their own opinions, people don’t always agree on the right steps to take,” Smith says.

As the company evolves, V&A Process will continue to need to make adjustments for the kind of interwoven personal and business matters that so many companies experience. For example, Sue’s son recently joined the business. “That was something my father was ecstatic about, that there was a third generation involved,” Sue says. “The buy-sell agreement will be updated, and that’s something my siblings and I are going to work on.”

RSL Media for Mutual of Omaha

Sue is a current client of Mutual of Omaha Insurance company and it’s affiliates. Her experience may not be representative of the experience of other customers and is no guarantee of future performance or success.

Mutual of Omaha and its representatives do not provide tax or legal advice. Consult the appropriate professional regarding your particular situation.

Insurance products and services are offered by Mutual of Omaha Insurance Company or one of its affiliates. Home office: 3300

Mutual of Omaha Plaza, Omaha, NE 68175. Mutual of Omaha Insurance Company is licensed nationwide.

United of Omaha Life Insurance Company, 3300 Mutual of Omaha Plaza, Omaha, NE 68175, is licensed nationwide except New York. Companion Life Insurance Company, Hauppauge, NY 11788, is licensed in New York. Each underwriting company is solely responsible for its contractual obligations.

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