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A magazine from WEA Trust Member Benefits

403(b)

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403(b)

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IRA © 2009

your insurance

Stormy weather ahead. Be prepared.

your account

Mutual fund changes coming.

your kiosk

weabenefits.com

2010

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Take a lesson from Jack & Jill

SPRING

Get financially fit this summer. LTC insurance: Who should buy it?

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your $ {

SPRING 2010

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- Required minimum distributions resume in 2010.

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- New mutual funds coming.

4 YOUR INSURANCE

4 9 YOUR QUESTIONS

6 YOUR FINANCES

10 YOUR KIOSK

- Tips to minimize your risk of property damage from severe weather.

- Our new twist on financial education will help you understand common financial pitfalls and how to avoid them.

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403(b)

- Watch for your IRA 5498 form.

- Act 28 reminder.

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3 YOUR ACCOUNT

- IRA and 403(b) fee information.

IRA

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CONTENTS

403(b)

403(b)

IRA

- We answer a member’s question about the Guaranteed Investment.

- Who should buy long-term care insurance? - Shape up your finances this summer.

president’s letter

9 © 2010 WEA Member Benefit Trust. All Rights Reserved.

Dave Kijek, President/CEO, WEA Trust Member Benefits

Learn from Jack’s mistakes the fun way

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I love games. That’s why I’m so excited about our new financial literacy board game “Don’t be Jack.” In addition to being fun, it’s another opportunity for those we serve to receive the information necessary to make sound financial decisions. The “Don’t be Jack” name and concept is a spin-off from our popular Jack and Jill brochure, which details the power of compounding interest, first distributed in 2001. Players encounter real life scenarios where the

choices they make will either move them toward financial security (and winning the game) or set them back. Watch for opportunities in your area to play and learn. I’m also excited that we will be offering new long-term care insurance options to members and their families this spring. Long-term care insurance not only protects your assets, but greatly improves your care options in the event you need long-term care services. There is so much misinformation about this coverage. We hope that you will take time to learn more about how this valuable protection can benefit you. (See page 10.) Finally, I want to thank member

Bill Gesell for writing us with his questions about the Guaranteed Investment. (See page 9.) Anytime you are considering entrusting your hard-earned money and future security to anyone, you need to know exactly what you’re buying into. Ask questions and make sure you’re satisfied with the answers. Remember, this is your organization and we hope you will look to us to help you improve your personal finances and secure your financial future.

weabenefits.com


{ your account IRA and 403(b) News Required minimum distributions resume in 2010

The federal required minimum distribution (RMD) suspension in 2009 has expired, and RMD requirements will resume in 2010. If you’re retired and age 70½ or older, you should have received a letter and form about your 2010 RMD. Please complete the form instructing us how you will take your RMD. These instructions will remain in place until you change them in writing. If you do not respond, we will distribute the full RMD amount in December 2010 minus 10% federal tax withholding.

IRA 5498 forms on their way

Form 5498 is a tax form that IRA holders receive at the end of May if you made a contribution for the year (2009) or you had a balance as of December 31, 2009. A contribution is defined as Traditional IRA and Roth IRA contributions made between January 1, 2009, and April 15, 2010, for 2009 tax year and rollovers, conversions (Traditional to Roth), and recharacterizations.

Privacy notice enclosed with your statement

Protection of your nonpublic personal financial information is very important to us. Enclosed with your statement this month is a copy of the WEA TSA Trust privacy policy. Please read it carefully.

New mutual funds coming

As part of an annual review, the investment committee recommended— and the Board of Trustees approved—changes to the mutual fund offerings in the 403(b) and IRA programs. Details will be mailed to participants in May.

Expanded financial planning services

In addition to our popular Retirement Income Analysis program, we will soon begin offering new financial planning services including a nofee consultation for newer members, a fee-based Portfolio Analysis for members who want a comprehensive evaluation of their current investment portfolio, and a fee-based Retirement Income Projection which is a slimmed-down version of the Retirement Income Analysis (appropriate for members who are 11–20 years from retirement). Watch for more information at weabenefits.com and in the next issue of your$.

Fee information

IRA—The annual administrative fee for IRA accounts is 0.45% ($4.50 per $1,000) with an annual fee cap of $500. 403(b)—Effective June 1, 2010, the WEA TSA Trust’s annual administrative fee will increase from 0.32% to 0.35% (an increase of 30¢ per $1,000), and the annual fee cap will increase from $225 to $300.

Let us help you

get your Act 28 together

Wisconsin Act 28—the budget bill which passed last year—made auto insurance mandatory as of June 1, 2010, increases minimum limits for medical pay coverage, and includes changes that impact how your policy calculates uninsured motorist (UM) and underinsured motorist (UIM) coverage limits. The net result for Wisconsin residents is that your insurance coverage may not be what you think it is. In some cases, you may actually have more coverage than you need.

Auto Insurance is mandatory as of June 1, 2010. Minimum limits increased for Medical Pay coverage. Stacking of coverages applies to UM/UIM. UIM coverage is mandatory and no longer optional. We can help you evaluate your insurance needs in this new environment and explain the options available so you can find the right balance between coverage and premium costs. Underwritten by WEA Property & Casualty Insurance Company.

Call us at 1-800-279-4010 or go to weabenefits.com to register for a personal phone consultation with one of our insurance specialists. Learn about the law changes and coverage definitions at weabenefits.com/act28.

Your questions answered Member Bill Gesell had questions about our Guaranteed Investment, including how it is monitored and the stability rating of the holding company. His questions are answered on page 9. If you have questions, e-mail them to memberbenefits@weatrust.com. weabenefits.com

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{ your insurance WIND

HAIL

WATER

LIGHTNING

Spring and summer in Wisconsin can brew up severe weather resulting in property losses. Here are some tips to help minimize your risk.

Spring and summer in Wisconsin, though welcomed after the long winter months, can brew up severe weather with the potential to damage property and result in financial loss for residents. Hail storms, high winds, flooding, and lightning—these are the most prevalent weather-related causes of property damage in Wisconsin. With deductibles averaging around $1,000, getting hammered by severe weather may cost you some money. Reduce the chances of taking a financial hit by doing what you can to prevent a loss due to severe weather.

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WANT MORE? Flood Insurance fema.gov and floodsmart.gov

Home inventory list weabenefits.com/inventory

Data Backup Services mozy.com carbonite.com datadepositbox.com

Water damage

In general, homeowners insurance has very limited water damage coverage, according to Bob Manor, Claims Manager at WEA Trust Member Benefits. Water coming from seepage through the basement walls is commonly excluded. Flooding is not a covered loss; however, water damage caused by bursting water pipes, for example, would be considered a covered loss. Another common cause of water damage is drain and sewer backup— which is covered only if you have added an endorsement to your policy expanding your coverage. “If you have a finished basement, it is unlikely you will be able to prevent damage to carpet and drywall in the event of flooding,” says Manor. “However, there are some things you can do to reduce your loss.” ✓ Store unused personal property in plastic containers or bins. ✓ Make sure your sump pump is working properly prior to the storm season. ✓ Stack valuable furniture on tables or plastic crates during heavy downpours if your house is prone to flooding.

✓ Pull up soaked carpeting immediately to prevent the build-up of mold and mildew following a flood. ✓ Check to see if you qualify for National Flood Insurance. (See sidebar.) ✓ Consider adding sewer and drain backup coverage to your homeowners policy. “If you have homeowners insurance through WEA Trust Member Benefits, call us to see if our sewer and drain backup endorsement fits your needs,” suggests Manor. “This endorsement covers flooding that occurs as a result of your basement drain backing up, and we offer several coverage levels (up to $20,000) to fit your budget.”

Wind

Extreme winds brought on by thunderstorms and tornadoes can cause serious damage to your home and property, tearing off roofs, throwing debris through windows, or uprooting trees. Most homeowners insurance policies cover damage caused by wind, but you can reduce your risk by: ✓ Pruning trees to remove dead branches and thinning out thick canopies. weabenefits.com


3 Inspecting your roof for loose shingles prior to storm season. 3 Storing or securing patio furniture and grills and anything that could become a flying missile. “The cost of replacing patio furniture is seldom above the deductible, but it is one of the most frequently damaged items in summer storms,” says Manor.

Hail

Hail causes $1 billion in damage to crops and property each year. It can cause costly damage to vehicles, roofs, and siding. “There’s not much you can do to protect your home from hail,” says Manor, “however, good parking practices can save you hundreds of deductible dollars. And remember, there is a deductible for each car.”

video, financial information, and music collections, you stand to lose much more than the computer itself. “Our computers have become, among other things, the family photo album. You just can’t put a dollar amount on things like photos or video,” says Manor. He offers the following tips: 3 Disconnect your computer and cable or satellite modem from the power source when you are not home and especially while on vacation or on long weekends. 3 Consider using an online data back-up service. Mozy (mozy.com), Carbonite (carbonite.com), and Data Deposit Box (datadepositbox. com) are just a few of the many costeffective online data storage companies.

“The cost of replacing patio furniture is seldom above the deductible, but it is one of the most frequently damaged items in summer months.” - Bob Manor, Claims Manager at WEA Trust Member Benefits 3 Garage your car in the summer. “When the weather is warm, people tend to be more lax about garaging their cars, but this simple step can save you money and time,” says Manor. 3 When away from your house during a hail storm, try to park under or near trees, or on the leeward (eastward) side of buildings. This may minimize the effects of hail, as it usually comes from the west.

Lightning

In addition to direct strikes, which can cause fire, lightning generates electrical surges that can damage electronic equipment like your computer. Typical surge protectors will not protect equipment from a lightning strike—the electrical energy from lightning is far too powerful. Surge protectors are effective for more common power surges caused by the operation of high-power electrical devices (such as air conditioners and refrigerators), faulty wiring, or downed power lines. “When possible, unplug any appliances and electronic equipment when there is a threat of storm,” Manor advises. With our reliance on computers to store personal data, including photos, weabenefits.com

3 Keep other nonessential electronics unplugged when not in use. 3 Avoid using your computer and other electronics when a lightning storm is in your area.

Flood insurance In June 2008 torrential rains caused more than $765 million in damage to property and crops in Wisconsin. More than 25,000 homes and businesses that registered for disaster assistance with the National Flood Insurance Program (NFIP) did not have flood insurance. Whenever there is flooding in the state, WEA Trust Member Benefits receives a large volume of calls from members wondering how they can get insurance coverage to protect themselves from losses due to flooding. If you live in a community that participates in NFIP, you may qualify for National Flood Insurance. It’s a good idea to buy flood insurance even if you live in a low- or moderate-risk area. Almost 25% of all flood insurance claims come from areas with low-to-moderate flood risk. The NFIP has an arrangement with private insurance companies to sell and service flood insurance policies. Visit floodsmart.gov for a list of insurance companies.

Know your policy

It’s important to understand what your policy says. The policy is a contract between you and your insurance company. Make sure you know what’s covered, what’s not, and what the deductibles are. If you have questions about your policy, the time to ask is before you need to make a claim.

Know your stuff

Do you have an inventory of your personal property? No one likes to think about experiencing a household disaster, but taking stock of the items you own is wise protection. Compiling an inventory now can save precious time and frustration later. You can access a form online at weabenefits.com/inventory to help you with this task. Photos and videotapes of your belongings can also be beneficial. Underwritten by WEA Property & Casualty Insurance Company.

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{ your finances

TAKE A LESSON FROM JACK & JILL Meet Jack and Jill. They started out on equal footing—same school, same job, same salary—but very quickly their financial situations parted ways. Jack made choices that negatively impacted his financial position and future, while Jill avoided common financial mistakes and got on the fast track to a secure future.

KN O W LE D G E Pre-tax 403(b) contributions are: A. Taken out of your salary before taxes. B. Taxed before being deducted from your pay. C. Exempt from taxes.

S A V IN G

You open a 529 account for your child. What is the money in this savings account intended for?

A. Day care expenses.

B. Whatever the child chooses once they turn 18. C. Future college expenses.

S

harpen your pencils and put your thinking caps on. It’s time to find out whether you’re a Jack or a Jill. Answer either “Yes” or “No” to each of the following questions: 1. Do you spend less than you earn on a monthly basis? 2. Do you have a written budget? 3. Do you have three to six months of expenses saved for emergencies? 4. Are you currently saving for retirement? 5. Do you know if your car and house/condo/apartment are properly insured? 6. Do you understand all of the benefits available to you through your district and Wisconsin Retirement System (the state pension plan)?

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7. Do you know what fees you pay on your credit cards and retirement accounts? weabenefits.com


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Jack answered “No” to each of these questions. He consistently spends more than he earns, he is unaware of how the benefits available to him through his district and union membership can help improve his financial situation, and he has not started saving. Jill, on the other hand, has set a budget to track and regulate her spending, has gone to a number of seminars regarding benefits and finances, and started saving for her future right away. How did you fare on the quiz? Are you more like Jack or Jill? Most likely you’re a little of both. We should all strive to be more like Jill. Studies indicate that most Americans are not implementing best practices when it comes to personal finances, and our knowledge of financial matters is not what it should be. We know that it takes time to become financially secure, and the amount of information out there is immense. It can be difficult to know who to trust.

P L A N N IN G

SPENDI

In order to plan for unexpected expenses you begin to save toward an emergency fund. TRUE or FALSE: A money market account would be a good account to save an emergency fund in.

TRUE or FA LSE account ca : A flexible spending n be used to p out-of-poc ket medica ay for l exp dependent care expen enses and ses.

weabenefits.com

NG

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That’s where Member Benefits comes in. We are here to help Wisconsin public school employees become financially secure. Like you, we believe knowledge is key. That’s why we offer financial seminars specifically designed for public school employees. We provide the

P L A N N IN G

You’re trying to decide on the amount of your auto insurance deductible. Your options are: $250, $500, or $1,000. Which one would r your team choose and why? If you for team can make a convincing case . your choice, move ahead two spaces If not, stay where you are.

information you need in order to make sound financial decisions.

members understand common financial pitfalls and how to avoid them. Each turn provides a scenario that will illustrate the advantages or consequences of certain financial actions. Here are a few examples of situations you might experience in the game:

Don’t Be Jack game

We put a new twist on financial education with “Don’t Be Jack”— an interactive board game that helps

S AV I N G

You’re saving for a home that you hope to buy within the next five years. Should you save that money in a variable or a fixed account? If your team answ ers correctly, mov e ahead two spaces . If not, stay where you are.

SPENDING Before making big purchases, you ask yourself these five questions: Can I afford it? Do I need it today? Have I paid off my credit card balances? Do I have the cash? Have I compared prices? Move ahead two spaces.

You were talking with a coworker and learned the diffe rence between a Traditional IRA and a Roth IRA. Move ahead one spac e. BONUS: If your team can correctly identify the difference between a Traditional IRA and a Roth IRA, roll again.

™ ™

Financial literacy in the classroom Half of U.S. adults received a failing grade for their knowledge of basic economic concepts, according to a 2008 survey conducted by the National Council on Economic Education. The National Institute of Financial and Economic Literacy program, open to educators and financial professionals, teaches new and innovative approaches to teaching personal finance. Plus, participants walk away with dozens of teaching materials and free resources. This program is hosted by Edgewood College in Madison. Classes offered this summer include: Paychecks, Financial Contracts, and Entrepreneurship June 21-25, 2010 Investor Education, Economics, and Insurance July 12-16, 2010 Credit and Money August 2-6, 2010

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KNOWLEDGE

For more information or to register, go to wdfi.org.

WANT MORE? ™

Don’t Be Jack game

To learn more about the game, go to weabenefits.com/dontbejack. If you’re interested in having Member Benefits present Don’t Be Jack near you, contact us at 1-800-279-4010 or e-mail us at memberbenefits@weatrust.com. Groups of around 20 are ideal.

Finances 101: Seven Mistakes New Members Make With Their Money

This free financial seminar offered by Member Benefits shares the same concepts and topics covered in the Don’t Be Jack game. For a full presentation description and schedule, go to weabenefits.com and click on the calendar icon in the left menu bar. Don’t Be Jack, Be Jill is a trademark of WEA Member Benefit Trust. weabenefits.com


{ your questions

ABOUT THE GUARANTEED INVESTMENT Financial strength

Member Bill Gesell of Eau Claire asked the following questions about the Guaranteed Investment.

Q: A:

What is the name of the insurance company that provides the Guaranteed Investment “guarantee”? Prudential Retirement Insurance and Annuity Company (PRIAC), a wholly-owned subsidiary of The Prudential Insurance Company of America, a Prudential Financial company.

Q:

What is the status (stability/rating, etc.) of PRIAC, and what is their investment portfolio comprised of?

A:

An assessment of PRIAC’s financial strength is published in a document that also includes details about their asset portfolio. The charts and graph illustrated above are from the most recent document dated 09/2009. The complete document, which includes detailed explanations about the ratings and portfolio, may be viewed at weabenefits.com/PRIAC.

Q:

PRIAC has received the following ratings from major independent rating agencies:

How does WEA Trust Member Benefits monitor and evaluate PRIAC? What factors and criteria are considered? Who is involved in the process?

weabenefits.com

Rating agency

PRIAC financial strength rating

Financial strength rating category

Moody’s Investors Service

A2 (Good)

6th highest of 21

Standard & Poor’s

AA- (Very Strong)

4th highest of 21

A.M. Best

A+ (Superior)

2nd highest of 15

Fitch

A+ (Strong)

5th highest of 21

Portfolio size & diversity

PRIAC maintains a large, well-diversified asset portfolio:

Bonds 72.6%

Real estate 0.0% Stocks 0.03%

PRIAC General Account

A:

Assets $21.4 billion

Surplus $1.2 billion

WEA Trust Member Benefits utilizes several factors in evaluating and monitoring PRIAC. On a quarterly basis we monitor the financial strength of PRIAC by utilizing outside independent rating agencies. These agencies rate insurance companies based on their ability to meet their outstanding obligations. Annually we review the performance and activity in the portfolio. In conjunction with this review we conduct a market survey of similar investments to gauge the quality of the investment choices made by PRIAC.

Mortgages 21.1%

Other 2.1% Cash 4.2%

Claims-paying ratings represent the opinions of rating agencies regarding the financial ability of an insurance company to meet its obligations under its insurance policies. As of 09/30/2009. Portfolio holdings and composition are subject to change. Insurance products are issued by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, CT, a Prudential Financial company. PRIAC is solely responsible for its financial condition and contractual obligations.

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WANT MORE? Find out about the Guaranteed Investment weabenefits.com

More information about PRIAC weabenefits.com/priac

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{ your kiosk Long-term care insurance. Who should buy it? Without the protection of a long-term care (LTC) insurance policy, members of all ages are vulnerable to the high cost of extended care that’s often needed after a serious accident or illness. Why? Because even the very best health insurance policy has limited, short-term coverage (for “skilled” care only), and NO coverage for longterm care (“non-skilled”). The same is true for Medicare. Neither were designed to cover LTC services. If you were to suffer a stroke or were involved in an accident today and required a long recuperation, how would you pay for the high cost of care? Out of your income? Your savings? Your assets? Because we don’t want you to be blind-sided by reality, WEA Trust Member Benefits is preparing to offer new long-term care insurance options to WEAC members and their families this spring.

• Forty percent of people receiving long-term care are under age 65. • The average annual cost of long-term care in Wisconsin is: -- $72,272 for a private nursing home. -- $45,371 for home care by a licensed health aide at $19.18 per hour for 44 hours/week. -- $38,043 for a private one-bedroom assisted living facility. *Source: Annual Cost of Care Survey, Genworth Financial, April 29, 2008.

Call 1-800-279-4010, Ext. 6636 for more information.

you gradoen? How woucld stituti your finan ial in

First rate The WEA Trust earns the No. 1 health plan rating in Wisconsin (CAHPS® Survey Results, 2009).

Get

A+ rates from WEA CU:

Receive a .25% DISCOUNT on your Auto Loan

It’s the second straight year the Trust has earned the state’s top score. With a WEA Trust health plan, members’ health and financial security comes first.

with a Premiere Checking Account & Automatic Payments!*

CAHPS® is a registered trademark of the Agency for Healthcare Research and Quality.

800-457-1142 . weacu.com *Membership eligibility required. APR = Annual Percentage Rate. Approval subject to normal credit standards. Restrictions apply. Offer valid for a limited time. Repayment example: 4.25% APR at 36 months is $29.63 per $1,000 borrowed.

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Defining Excellence. Delivering Value. THE TRUST DIFFERENCE.

800.279.4000

weabenefits.com


T his Summer!

$HAPE UP Take time this summer to get financially fit. Here are two presentations that will help improve your financial condition and sense of well-being.

Get physical with your 403(b) retirement savings If you currently have money with another 403(b) provider, plan to attend $mart Move: A Workshop. Learn how taking advantage of a low-cost 403(b) savings program may help you reach your retirement goals sooner. By attending $mart Move, you will: • Learn the impact that fees have on your 403(b) account balance. • Find out what you need to know to make sound decisions about moving your money. • Learn the value of the WEA TSA Trust 403(b) plan to your financial security. • Get step-by-step instructions on completing all required forms.

Pump up your knowledge about your state pension plan Wisconsin Retirement System (WRS), the state pension plan, will be a source of retirement income for most Wisconsin public school employees like you. How much do you know about this important benefit? Whether you just started your career or are nearing the end of it, plan to attend Understanding Wisconsin Retirement System. WEA Trust Member Benefits is offering this free presentation to help you learn to: • Read and interpret your pension statement. • Calculate your WRS pension benefit. • Choose an appropriate annuity option. • Purchase forfeited service. • Determine whether you will have a retirement income gap.

$mart Move Understandin Wisconsin g Retirement System { FEEDBACK Do you have a story to tell? Do you want to tell us what you think about the magazine or suggest an article idea? Send an e-mail to

memberbenefits@weatrust.com.

Please type “your$” in the subject line.

$mart Move and WRS seminar schedules: July 13

Sheboygan, Green Bay, Rice Lake, Burlington

July 20

Brookfield, Appleton, Rhinelander, La Crosse

July 28

Green Bay, Janesville, Hayward

August 3 Fond du Lac, Menomonie, Racine, Neenah August 10 Madison, Mosinee

Go to weabenefits.com/shapeup to register or call 1111 1-800-279-4030, Ext.

weabenefits.com

{ SEMINARS Find more financial seminars online at weabenefits.com. Click on “Seminars” under the Learning Center tab or go to our “Calendar of Events” page.

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PRESORTED STANDARD US POSTAGE PAID MADISON WI PERMIT NO 2750 PO Box 7893, Madison, WI 53707-7893

Join more than 45,000 Wisconsin public school employees who trust us with their financial future.

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“We would recommend that all members check out the programs that WEA Trust Member Benefits has to offer. We really enjoy the personal service we get, and every advisor is knowledgeable and answers our questions completely.” James and Jessica Jaeger / Omro School District

For more information, complete the reply card inside this magazine or call: 1-800-279-4010 • Personal Insurance 1-800-279-4030 • Retirement & Investments


Your$ Magazine -- Spring 2010