When Would You Like to Retire

By Len Harris of The Senior Insurance Center
ldh3008@comcast.net

Many people think they have the wherewithal to retire and enjoy their golden years. Travel, volunteer your time, visit family and friends-Surprise! Health care costs, never expected, are the biggest threat to retirement savings.

Yes, the government will provide some coverage and some employers will pay some retirement health costs, but the lion’s share will still come from the retiree. Deductibles and co-payments are not considered when putting money aside. These expenses can be huge, especially to people susceptible to illness just as they near retirement. It’s estimated that the onset of an illness could siphon approximately 20% of a household’s wealth. “You could easily burn close to $1 million of your nest egg with out-of-pocket expenses for a major illness,” according to George Ciccotello, director of Graduate Personal Finance at Georgia State University.

People think Medicare will cover it all. It doesn’t. Without a Medicare supplement, the average couple aged 65 will spend $200,000 to cover medical costs in the average retirement. That’s just for deductibles, the cost of Medicare, co-payments, non covered items and prescription drugs. That’s based on the husband living to 82 and the wife to 85 with no employer provided health insurance.

Unfortunately, one of the most overlooked forms of protection is Long Term Care Insurance (LTCi).

So many people say they’ll wait until they retire to look at or even think of purchasing a policy. A policy at age 50 might cost 40%-50% less than at age 65. In addition 40% of those needing long term care are between the ages of 18-64. Debilitating illnesses and serious injuries can strike anyone. People don’t plan for this, because “It can never happen to us”.

There are those agents who understand this and are making inroads at the worksite. Showing an employer how this coverage can reduce absenteeism allows the agent to either have the employer offer a “core” plan and let the employee enhance the program, or allow the agent to talk directly to the employees. Either way, LTCi helps both the employer and employee.

It is a fact, long term care insurance is the last thing people think of to protect their later years, but once purchased, there is a 97% retention rate. After they’ve seen the light, it’s kept for life.


7/06

The New Generation of Insurance Scams

Yesterday my Dad called me about an offer he received. Dad is 85, soon to be 86 in March. He is in great health for his age. He goes to the GYM 2 times a week. This man who he sees there a lot, is an insurance agent. He told him about a great deal. He’s going to get him (my Dad) a $1 million Life Insurance policy, and then pay him something like $100k or more. What a deal!

In fact last year, we had an 85th birthday party when Dad turned 85, and one of his friends brought up a similar sounding idea to me that I should investigate. If you have read my bio, you should notice that I too am an insurance agent. Well, this sounded awfully too good to be true to me, so I blocked out even thinking about this until hearing about this again yesterday. So tonight I went on the internet to investigate, and the alarm bells have now begun to go off.

I mean, can you imagine someone purchasing life insurance on an elderly person and then paying the premiums, and also paying the insured? We all know that expression about something being too good to be true. So here is how it works. Let me know what you think. Remember, I have nothing against people making money through legitimate means, or even making lots of it. I want to be one of those making lots of money, but my moral code says to do it honestly and morally.

This is called Stranger Owned Life Insurance or SOLI. Someone buys Life Insurance on someone else’s life, and then pays the premium and pays them for signing up. If approved, the insured must keep the policy for at least two years. After that they can sell it or sign it over to the people who got them involved in this in the first place. Now I am simplifying this, and here is where the potential illegalities lie. First of all, when Life Insurance is bought, the beneficiaries are supposed to have an insurable interest. Like your wife or kids, or now in the modern era, your significant other, if you know what I mean. Or even a business partner. So a total stranger has an insurable interest? Then how about the upfront money? The agent may not tell you, but the proceeds more than likely come from his commission. In most states, this is rebating, and illegal in the insurance business. Two no-no’s. The insurable interest problem is something that can be explained away, because often life insurance is owned for many years, and the people you bought it for to protect may be gone from your life, and after two years, judicial review (previous lawsuit history) has said policies are no longer contestable by the insurance co’s in most situations, and this is one of them.

Now tomorrow I’ll be at a Life Association meeting to discuss this with my peers. I write mostly health insurance, but have a history in the life end of the business too. Sooo, what d’ya think? Let me know. Please also take a look at my insurance blog. Insurancemaven.blogspot.com. I have this article posted there, but have some other items there too.

Long Term Care Insurance 2006

Q)Is there a Long Term Care crisis in America?

A)If it’s not here now it will be soon. The Baby Boom generation begins to turn age 65 in 2011. As it is, Long Term Care is very expensive, and the number one payor, the government, wants ‘out’ as much as possible. As of now 40% of Medicaid payments go towards Nursing Home stays. Prominent Republicans, and now Democrats recognize the importance of having the private sector to pay for the cost of Long Term Care via insurance. Organizations such as the National Association of Health Underwriters, www.nahu.org, have been pursuing the overturning of an amendment by Henry Waxman (D, Ca) that began the prohibition of the Long Term Care Partnership Insurance plans. With the partnership program, if an individual purchases Long Term Care Insurance, and exhausts the benefits of the policy, then they do not have to spend down their assets as they do today. Individuals can maintain on a dollar for dollar basis the amount of assets in their name that the policy was worth. For example, if the policy paid $100k in claims as a maximum benefit, the policy owner could then obtain Medicaid and still have up to 100k in assets to qualify. Democrats did not want this type of program fearing that it would benefit the rich, but now with a looming Long Term Care crisis, they are beginning to recognize the value of this program. Many states now have a partnership program in place in anticipation of federal approval. Even Hilary recognizes this program and has placed her name as a sponsor. After this is passed, the next goal will be approval of an above the line deduction for individual Long Term Care Insurance policies.