Broker Check

February 2020 Bonus Newsletter Articles

What Is Cyber Insurance, and Do You Need It?

Does your company store or communicate potentially sensitive information about customers, employees, or competitors? Cyber attacks and loss of data can be devastating to a business, so you may want to be proactive about addressing this risk.

Start by determining areas of vulnerability. Then create cybersecurity policies and procedures for employees to follow.

You might also consider purchasing cyber insurance, which provides protection against potential financial losses resulting from data breaches caused by cyber attacks, viruses, and other threats. It also helps cover third-party lawsuits filed against your company resulting from data breaches or your failure to adequately protect sensitive or confidential information.

Who Needs Cyber Insurance?

Your company or organization may be a candidate for cyber insurance if it does any of the following:

  • Sends or receives documents electronically
  • Communicates with customers or other outside parties via email, text messages, or social media
  • Stores third-party information on a computer network that may be considered sensitive or private, such as an individual’s identity, tax information, income, address, Social Security and/or credit-card numbers
  • Stores confidential company information (e.g., tax documents, sales or marketing figures or projections, trade secrets) on a computer network
  • Advertises company services or products via a website or social media

What Does It Cover?

While individual policies may differ, cyber insurance can help cover:

Loss of data. Cyber insurance may help cover the cost of restoring or reconstructing data that was lost, stolen, or damaged.

Losses from data breach or security failure. Cyber insurance may cover some of the costs of investigating how and where the breach occurred; expenses associated with regulatory fines; legal costs of defending against lawsuits and settlement of claims brought by victims whose information was inappropriately accessed, shared, or lost; expenses related to notifying victims of the data breach, such as customers and employees.

Costs associated with extortion or ransom demands. That’s right, a cyber criminal may demand a ransom or try to extort money from your company in exchange for your data. Cyber insurance covers some costs of paying the ransom for the data or for the restitution to victims whose information was captured.

Losses from business interruption. If your company must close while the data breach is investigated and resolved, cyber insurance can help offset the ordinary costs and expenses of your business during its down time.

The cost of cyber insurance depends on the types of coverage selected, and policies have exclusions, terms, and conditions for keeping them in force.

This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2020 Broadridge Investor Communication Solutions, Inc.


Do Target-Date Funds Hit the Bull's Eye for You?

More than half of 401(k) participants have assets invested in target-date funds.1 These “all-in-one” funds are often the default option in workplace plans, and their apparent simplicity appeals to many investors.

But target-date funds are not as simple as they appear to be. Like all investment strategies, they have strengths and weaknesses.

Focused on Time

Target-date funds offer a professionally managed mix of assets — typically a combination of other funds containing stocks, bonds, and cash alternatives — selected for a specific time horizon. The target date, usually included in the fund’s name, is the approximate date when an investor would begin to withdraw money for retirement (or another purpose, such as paying for college). An investor expecting to retire in 2045, for example, might choose a 2045 fund. As the target date approaches, the fund typically shifts toward a more conservative asset allocation to help conserve the value it may have accumulated and potentially provide income.

One Size May Not Fit All

Target-date funds utilize basic asset allocation principles that are often used to construct more complex portfolios, but the allocation is based solely on the target date and does not take into account the investor’s risk tolerance, personal goals, asset levels, sources of income, or any other factors that make an investor unique. An investor with $200,000 in a target-date fund has the same asset allocation as an investor with $20,000 in the fund. An investor who also has a pension and might be comfortable taking more risk with 401(k) investments is placed in the same risk category as an investor who will depend primarily on savings in the 401(k) account.

Glide to or Beyond Retirement

The transition from more aggressive to more conservative investment allocations is driven by a formula called the glide path, which determines how the asset mix will change over time. The glide path may end at the target date or continue to shift assets beyond the target date, taking the fund into your retirement years.

Funds with the same target date may vary not only in their glide path but also in the underlying asset allocation, investment holdings, turnover rate, fees, and fund performance. Be sure you understand the asset mix of your fund and how it changes over time.

Asset allocation is a widely accepted method to help manage investment risk. It does not guarantee a profit or protect against investment loss, and there is no guarantee that you will be prepared for retirement on the target date or that the fund will meet its stated goals. Keep in mind that investing in other securities outside of a target-date fund may change your overall asset allocation.

The principal value of a target-date fund is not guaranteed before, on, or after the target date. The return and principal value of mutual funds fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.

Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

1) Investment Company Institute, 2019

This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2020 Broadridge Investor Communication Solutions, Inc.

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