Welcome to the Aun Agency Frequently Asked Questions list (FAQ). In this series of pages, you will find answers to some of the most often asked questions regarding the Michael Aun Agency..

I have plenty of time to purchase insurance. Why rush?

It wasn't raining when Noah built the ark either. According to the 1980 Study by the Department of Health, Education and Welfare, for every 100 people starting their careers, the following situation exists at age 65:

29 are dead

13 have annual incomes of $3,500 (below poverty level).

55 have annual incomes between $3,500 and $20,000. The median income for this group is $4,700.

3 have annual incomes over $20,000 and are financially successful.

It's a paradox than in the world's richest nation, millions of people live in poverty. They didn't plan to fail, they simply failed to plan.

What can a financial needs analysis do for my family?

1. Overcome roadblocks while you're alive.

2. Plan for cash needs at death.

3. Create sufficient income from your estate for your family when your income-earning ability stops.

My spouse doesn't work outside the home. Why should I have insurance on a spouse?

A stay-at-home spouse puts in nearly 100 hours per week, according to the American Council of Life Insurance. The breakdown includes nursemaid (45.1 hours), dietician (1.2 hours), food buyer (3.3 hours), cook (13.1 hours), dishwasher (6.2 hours), housekeeper (17.5 hours), laundress (5.9 hours), seamstress (1.3 hours), maintenance (1.7 hours), gardener (2.3 hours) and chauffer (2.0 hours)= TOTAL 99.6 HOURS PER WEEK.Not all, but some of these duties are applicable to every stay-at-home spouse. Hiring someone else to perform these functions require more than a little money. At $10 per hour, it would cost you $1,000 per week.

How much income do I need to replace if I die?

Based on a Government study by the Bureau of Labor Statistics, the following are typical income objectives in order to permit a family to "remain in their own world" after the death of a breadwinner. Assumptin is that the morgage on residence is paid, or that a rent fund has been established, and that educational expenses are provided for separately.

$35,000 - 70%

$43,000 - 63%

$48,000 - 57%

The Bureau of Labor Statistics study also found that two income households outspend their one-earner counterparts. Therefore, if both spouses are presently working, 70% of their total gross income should be provided regardless of income level.

How much of our income do we use?

Two adults consume 70% of the family income.

Two adults and one child consume 74% of the family income.

Two adults and two children consume 78% of the family's income.

Two adults and three children consume 80% of the family's income.

Two adults and four children consume 82% of the family's income.

What factors affect the purchase of insurance?

1- Health.

2- Occupation and hobbies.

3- Cost- Premiums increase on average about 4% per year.

Why do so many insurance professionals fail?

Why buy now?

Whatever life insurance you buy now, rather than later, will be bought at a "discount"... because the higher premium you pay later is not just for one year... but for every year thereafter. Get it today while it's on sale.

Why do I need mortgage insurance? Can't I just rent?

According to the Bureau of Labor Statistics- Consumer Price Index, rents have literally doubled over the past 15 years. What will they be in the future?

A RENT FUND can accomplish two things:

1- Help offset future rent increases, and

2- Be used to help buy new housing.

Why is an education fund so important? Don't the Knights of Columbus offer student loans and scholarships?

Over a lifetime, college graduates earn 50% more than high school graduates. Success in tomorrow's world will depend even more on a good education. College costs are spiraling. Most people do no planning for these costs. They hope to pay for them out of current income. The result is there is a shortfall. The Knights of Columbus offers student loans and scholarships, but rarely are all the costs covered. Your children or grandchildren will need a minimum of $10,000 per year for a state supported institution and as much as $25,000 or more for a private school

Why should we begin planning now for our children's education?

THERE ARE THREE REASONS:

1- If we wait until it's time for college to begin, we lose the advantage of spreading costs over many years.

2- If we have to borrow money at college time, the loan plus the interest will have to be repaid. By beginning to accumulate funds now, on the other hand, interest earnings reduce the amount that has to be set aside.

3- We may die or become disabled before our children are ready for college.

Is a life insurance policy a good gift for your children?

1- Teaches foresight and thrift

2- Unlikely to be squandered and wasted.

3- It is a gift for which you will always be remembered.

4- If you die or become disabled, the policy pays for itself.

5- Increasing policy values are tax sheltered under current tax law.

6- Lower premium than would be available at a later age.

7- Provides collateral for future plans- college, marriage or business.

8- Provides protection for future grandchildren.

NO OTHER GIFT COMBINES ALL THESE ADVANTAGES.

Why don't I just buy term insurance?

Many term dollars go for naught. Arthur L. Williams, Associate Professor of Insurance at Penn State University, has published an artical for the Journal of Risk and Insurance regarding the fate of Term Insurance Policies.

Here are his conclusions:

1. 45% of all term policies are terminated or converted in the first year.

2. 72% of all term policies are terminated or converted within the first three years.

3 Only 1% of term insurance resulted in death claims.

IN OTHER WORDS, THE ODDS ARE 100 TO 1 AGAINST TERM INSURANCE EVER BECOMING A CLAIM!

"My spouse can remarry! Why do I need insurance?"

Would you remarry your spouse knowing that he or she might have the extra luggage of a family to support? According to actuarial figures from the American Table, the experience of the industry on remarriage of widows after 30 on a ten year basis is as follows:

AGE-NUMBER WHO REMARRY

Age 30 - 403 of every 1000

Age 40 - 193 of every 1000

Age 50 - 86 of every 1000

Age 60 - 46 of every 1000

At best, only 40.3% remarry. The older one gets, the less likely that they will remarry. Less than 20% of forty year olds remarry. Only 8.6% of fifty year olds tie the knot again. And only 4.6% of all sixty year olds say "I do!" again. If your insurance program is based on hoping your spouse can find a new partner, the odds are against you!

Does the Knights of Columbus offer Roth IRA's and regular IRA's?

The Knights of Columbus offers both Roth and regular IRA's, utilizing a flexible premium annuity as the funding vehicle. We also do rollovers from pension or other retirement plans such as TSA's, SEP's and 401-K distributions.

Do the Knights of Columbus offer non-qualified annuities? What is the advantage of a non-qualified annuity over a certificate of deposit?

Yes, the Knights of Columbus offers an excellent annuity program backed by the power of the top ratings in the insurance industry.

Current tax laws allow the interest on earnings on annuities to accumulate without current taxation.

Probate can be avoided when a named beneficiary is used.

Tax-deferred annuities with the Knights of Columbus are safe. The principal and 3.5% of the interest are guaranteed.

Because we are rated AAA Extremely Strong by Standard and Poors and A++ by the A.M. Best Company, the Knights of Columbus is a safe harbor for your annuity funds. Only 11 companies in the world have both these rankings and your K of C is one.

Annuities offer a ten percent withdrawal privilege with no surrender charge upon the anniversary date of your annuity, as long as you have at least $5,000 on deposit.

Unlike many Certificate of Deposits (CD's), you can add money to your Knights of Columbus annuity anytime you want.

Annuities are taxed only as your money is withdrawn. CD's are taxed on as "as-earned" basis.

Your money grows faster in an annuity because you enjoy compounding of interest:

1- Interest on principal.

2- Interest on interest.

3- Interest on tax savings you enjoy.

You can not outlive an annuity. Payments are guaranteed for a lifetime.

Unlike the stock market, your Knights of Columbus annuity won't take a roller coaster ride. Can you afford the risk of a lifetime of earnings being lost?

Can you afford to roll the dice and lose? Would you have to depend on your children to live? Would you have to seek employment in retirement? Can you afford these risks?

Do your current investments offer a choice of settlement features like lump sum settlement, installment payments, lifetime income, interest income? Your Knights of Columbus annuity does!

Does the Knights of Columbus offer a Medical Withdrawal Option?

Yes! If you have a life threatening situation, you will be able to withdraw all your money from out annuity without penalty.

YES!

If I have an annuity with another company, can I 1035 transfer it on a tax free basis to a Knights of Columbus annuity?

ABSOLUTELY.

Do K of C annuities comply with IRS distribution requirements for IRA's?

Knights of Columbus annuities are structured so that they comply with Internal Revenue Service distribution requirements.

What happens to my annuity when the husband or wife dies?

The Knights of Columbus has a wonderful "forgo" privilege which allows the surviving spouse to assume the account number and terms and conditions of the annuity without taxation or death charges or penalties. What a terrific option! The surviving spouse must be named the beneficiary, not a trust.

Can you summarize briefly why Knights of Columbus annuities are good for our members?

There are a number of reasons- safety, liquidity, high yields without risks, tax advantages, flexibility, no probate requirements, depression proof, lifetime income and other settlement options. Also our annuities are incontestable.

If you happen to have a question that is not covered in the FAQ, please feel free to contact us at your convenience, toll free 1-(800)-356-0567 or 1-(888)-356-0567 or e-mail us at Michael@aunagency.com. We will answer any questions you may have in a timely and responsible manner.