Ten Thing You Should Know About Medicare – Part One

1. There are two ways to get Medicare, turn age 65 or become disabled.
Your biggest decision is choosing between Original Medicare (Part A and Part B) and the Medicare Advantage plan. If you choose Original Medicare, decide whether to buy a stand alone prescription drug plan or Medigap (Medicare supplemental insurance) policy. If you choose Medicare Advantage, pick a specific plan from a specific company.

2. There is drug coverage available.
Medicare now includes prescription drug coverage also known as Part D.
This coverage is optional. You can get prescription drug coverage through a Medicare Advantage plan. Some of them include drug coverage. Or you can enroll in a standalone Part D prescription drug plan to go with your Original Medicare coverage.
This is important to know: If you don’t sign up for Part D prescription drug coverage as soon as you become eligible for Medicare, you may pay a penalty on your premium unless you qualify for an exception.

3. Even for covered expenses, you’ll pay a share of the cost.
Medicare helps you get the health care you need when you’re sick, but you’ll still be expected to pay a share of the cost. You contribute to Medicare by paying taxes while you work. When you start to use your Medicare benefits, you’ll pay a share of the costs of the care you receive.

4. Your share may be larger than you expect.
If you choose Medicare Parts A and B, you’ll find that there are some expenses Medicare doesn’t cover. If you are seriously ill, these gaps create big bills. Some people who choose Medicare Parts A and B also buy a Medicare supplement insurance policy. Another alternative is to choose a Medicare Advantage plan that can also help you avoid these gaps.

5. Where you live makes a difference.
Medicare Parts A and B are the same across the United States. But other parts of Medicare (Parts C and D) are offered by private companies and may be available in specific counties, states, or regions, and not in others. There are Part C or Part D plans that offer nationwide coverage.

Your Health and Wealth in Retirement

Traditionally, there have been 5 things that may impact retirement savings during retirement:
• Inflation
• Market volatility
• Taxes
• Health care costs
• Longevity
A comprehensive study by LPL Financial, United HealthCare, Age Wave and Northstar Research found that health care expenses are the #1 worry for people nearing and in retirement.

Why? People feel unprepared, overwhelmed and frustrated. Health care planning is one of the things you need to think about and understand how it may impact your financial situation, especially your distribution planning. Consider overall health, you should plan for good health and you should plan for not-so-good health, also called planning for the “certainty of uncertainty.”

It also helps to understand the types of available insurance, such as Medicare, Medicaid and Supplemental.

Sources:
AgeWave, LPL Financial and UnitedHealthcare, Health and Wealth Planning in Retirement Survey, July 2010
LPL Financial and Northstar Research Partners, Advisor Health Insurance Study, May 2010

Life Insurance and Your Expectations

Is your cash value life insurance policy living up to expectations? Many whole life and universal life policies that were purchased in the 1980’s and early 1990’s were purchased with an underlying interest assumption that was significantly higher than it is today. At that time, insurance carriers were crediting policies with record high interest payments. Today, many of those same carriers are paying interest at record lows. All else being equal, a policy can’t help but to under perform.
If you are actively following your policy you may realize the effects of under performance by noticing less than expected cash values, projected lapse dates well before life expectancy, or perhaps even strong suggestions from your carrier to increase premiums.
Many life insurance policies that are being written today take into account recent mortality tables, maturity dates that extend beyond age 100, and much more robust guarantees. As a result, these new policies are often times a good alternative to a policy that isn’t living up to your expectations.

Be sure to seek the advice of a professional as to whether or not it would make sense to change.
* Guarantees are based on the claims-paying ability of the issuing insurance company.

Why is Now a Good Time to Review Your Life Insurance Portfolio – Part 2

The Economy

Carriers that issue life insurance policies with guarantees similar to those mentioned above are reconsidering those products due to the heavy reserve requirements that come along with such a product. This is an important consideration for these carriers as they too are not immune to the significant downturn in the economy. Many carriers are considering removing these products from their product offerings or increasing costs.

Many of us have experienced a significant reduction in our net worth, some of which may have been intended for our children, grandchildren, or charity. Life insurance is an exceptional way to nearly and immediately replace that portion of your wealth and to assure that those you care about will still benefit in the ways you intended.

Why is Now a Good Time to Review Your Life Insurance Portfolio – Part 1

Product Pricing and Evolution
When it comes to pricing, life insurance products that are being issued today are in large part taking into account the 2001 CSO mortality table. The most widely used mortality table prior to the 2001 CSO mortality table was the 1980 CSO mortality table. As you can imagine, improvements in technology and medicine were significant over that 21 year period and as a result life insurance carriers assume clients will live longer and that assumption is built into lower annual pricing assumptions.

Additionally, thanks to improved technology and population mortality, life insurance carriers began issuing policies priced to age 120 and with language guaranteeing that as long as a certain premium is paid the carrier will guarantee coverage until the day the insured passes away, even if that turns out to be age 130, and even if there is $0 cash value in the policy. This is a significant departure from many of the life insurance policies in existence today.

Which Life Insurance is Right for You?

Life insurance needs vary depending upon your personal situation. From term insurance to the many permanent products that offer guarantees and cash accumulation, choosing the right product can be confusing. Below is a brief overview of the various types of insurance that are available to help guide you in choosing which Life insurance is appropriate for you. Ultimately, I recommend contacting a Life Insurance professional for more information and to help determine what form is best for you.

Term Insurance – Term life insurance is a form of temporary insurance that provides a lump-sum payout upon death for a state period of time. Since term insurance can be purchased in large amounts and for a relatively small out-of-pocket expense, it is most suitable for income replacement and short-range goals (i.e., to pay off a mortgage loan, to fund a child’s education, etc.)
Death Benefit: Fixed
Premium: Choice of level or increasing
Cash Value: No
Goal: Pure Protection
Whole Life – Whole Life is a form of permanent insurance that covers a client for as long as he or she lives and continues to make the required premium payment. Whole Life can be a good fit for achieving long-range goals, as the premiums remain the same for the life of the policy. In addition, cash values may provide money to help with temporary needs or emergencies that may arise.
Death Benefit: Fixed or Increasing
Premium: Fixed
Cash Value: Yes
Goal: Protection and Cash Value
Universal Life –

September is Life Insurance Awareness Month

No matter what stage of life you’re in—whether you’re currently working or already retired—life insurance may be an important component of your comprehensive financial plan. And, September is Life Insurance Awareness month: I encourage you to take a few moments to review your current life insurance policy to make sure it meets your needs.

Here is a link to some handy life insurance calculators. Visit www.lifehappens.org.

The Loss Damage Waiver

You’re standing at the rental car counter and the car agent asks if you would like to purchase the insurance on the car you are about to rent. The insurance seems so expensive. What do you do?

The insurance the rental car companies are trying to sell you is called “the loss damage waiver”. Purchasing this coverage from the rental agency relieves you of any responsibility for damage to a rented vehicle. Sounds good on the surface, but is it? It’s possible that you have probably already purchased the majority of what the rental agent is offering. When you purchase physical damage coverage (comprehensive and collision) for a car you own, the coverage will extend to any short-term rental vehicle. In some states (Minnesota included) the coverage for the rental vehicle extends from the liability coverage you purchased for your own personal vehicle.

Think twice before you purchase coverage you may very well already have.