Q: It seems like everybody is talking about the Equifax hack. How do I know if my information was involved and what should I do about it?
A: On September 7, Equifax revealed that it had been hacked. Hackers stole personal information on 143 million people which accounts for roughly 60 percent of the adult population of the United States. If you are an adult with a financial life, you should probably assume your information was stolen. You can protect yourself by doing three simple things.
First, enroll in a credit monitoring service. Equifax has its own identity protection program called Trusted ID (which is somewhat ironic, given how they responded to the hack.) For a limited time, they will provide this service free of charge. However, to get the free subscription, you must waive your right to participate in any class-action lawsuit related to the breach.
If you don’t want to go with Equifax, other credit monitoring services are available. You can find independent reviews of competing offerings at www.nextadvisor.com. In the search box, type “Credit Report Monitoring.” Monthly fees for these services range from $15 to $25—a pittance compared to the damage an identity thief can do.
Second, consider putting a “freeze” on your credit. When you freeze your credit, any credit application will be blocked. You will be given a PIN to unfreeze your account when you want to authorize it. The cost of freezing credit is about $10 per year per credit bureau. If you decide to go this route, you must initiate a freeze at all three bureaus or you won’t have any protection. Make sure you keep track of your PIN numbers.
You should also take time to review your credit reports. All three credit bureaus are required by federal law to provide you with a free annual credit report. Review your reports for mysterious accounts, late payments on debts you do not recognize, and other suspicious activity.
If you discover a problem, report it immediately to the credit card or bank involved. In addition, go to the Federal Trade Commission’s website, www.IdentityTheft.gov. While they can’t solve all your problems, they can help you recover from identity theft.
Q: Last week you wrote about managing longevity risk using Qualified Longevity Annuity Contracts (QLACs). The idea of using a QLAC sounds interesting, but what happens to my investment if I die before the payout begins?
A: When you buy a QLAC, you select from two payout options—single life or joint life. A single life annuity will pay based only on your life. A joint life annuity pays you and your spouse and ends when the last surviving spouse dies. Because joint life expectancy is significantly longer than a single life expectancy, the payout for a joint life annuity will be lower than a single life annuity.
Under the standard terms of most QLAC contracts, your early death will cause you to forfeit any undistributed premium. However, if you are worried about this, you can elect a cash refund option. With the cash refund option, your named beneficiary will receive any undistributed premium should you die before the end of a specified term. As you might expect, choosing the refund option will reduce your annuity payout.
Steven C. MerrellMBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey. He welcomes questions that you may have concerning investments, taxes, retirement, or estate planning. Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to firstname.lastname@example.org.