Thursday, July 12, 2018

Exploring the Many Financial Benefits of Life Insurance Policies by Jim McKinley

Here is a great guest article from Jim McKinley.

Image courtesy of Pixabay

It’s commonly assumed that life insurance has only one benefit: payment to the beneficiary. But did you know life insurance policies offer more than payment upon death?  In fact, there are a number of important potential gains from having a life insurance policy.  Here are just a few.

Two types of policies

Forbes points out that if you have people in your life depending on you - your life partner, children, or even employees - you should have life insurance.  But before you can understand the many ways a life insurance policy can benefit you, your family, and others, it’s important to recognize there are two basic types of life insurance policies.  As NerdWallet explains, there are term life insurance policies and permanent life insurance policies.  Term life insurance policies only pay upon death, but permanent life insurance policies offer a variety of options, thanks to a cash-value component.  That component allows the policy owner to build up tax-deferred savings over time.  Under the umbrella of permanent policies falls whole life, variable life, and universal life.  If you’re on the fence about whether to purchase a permanent policy or not, some experts suggest asking yourself if you want coverage for your entire life.  If the answer is “yes,” then a permanent policy is for you. 

Term insurance, as explained by Money Crashers, is essentially a stripped down version of life insurance.  It lacks the investment component, and although premiums are lower during the covered term, those premiums typically rise substantially when the term ends.  Some experts compare term insurance to a fast food hamburger, noting it’s simple and common.  However, those qualities don’t mean it’s the best option for you, and term policies only payout when the policyholder dies.

Remember that life insurance policies serve in part to compensate when someone passes away.  But the right kind of life insurance can also provide financial security to a policyholder during life.  The following benefits of permanent life insurance can be enjoyed while you’re living:

Tax-deferred growth: The fact that a permanent life insurance policy adds value over time is a big plus.  Basically, your policy’s value continues to grow, with gains added to gains, however long you own it.  There is no tax owed unless funds are withdrawn. 

Tax-free dividends:  Another boon from certain permanent life insurance policies is tax-free dividends.  Those dividends don’t have to be reported on the recipient’s income taxes so long as they stay below the net amount of premium paid into the policy.  Dividends can often be used toward purchasing additional insurance or toward paying policy premiums.

Policy loans:  You can use the cash value in a permanent life insurance policy as collateral for a policy loan.  Loans from your life insurance policy are another tax-free benefit, and they are also free of surrender charges.  

Cash withdrawals:  If a permanent policy provides sufficient cash value, you can make withdrawals.  These withdrawals are usually tax-free up to the amount the policyholder has deposited via premium payments. 

Investment portfolio:  Are you looking for a way to bolster your investment portfolio?  One suggestion is to purchase a whole life policy.  It’s a great option for those with other investments meeting their growth components and whose tax-advantaged contributions are maximized. 

Selling a policy:  A permanent life insurance policy can be sold to help supplement retirement income, pay for medical expenses, cover long-term care, or cover other financial crises.  There are certain requirements you must meet in order to sell your policy.  For example, your policy will need to have at least $100,000 of face value. 

Benefits abound

There are a wide variety of important benefits that come from well-chosen life insurance policies.  In addition to a death benefit, you can gain while you’re still alive.  If times get tight, you have a reliable safety net for you and your loved ones.  Selecting a permanent life insurance policy can provide peace of mind and security.

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Jim is a retired banker with almost 30 years of experience. He created MoneywithJim to share his advice and other resources on a variety of financial topics. 


Monday, June 18, 2018

Planning and Paying for Long-Term Care


Here is a guest article from June Duncan:

Planning and Paying for Long-Term Care


People are living longer than ever, with medical advances staving off disease-based fatalities and increased screening technologies helping identify illnesses sooner. Worldwide, there are close to one billion people over the age of 60. This number is poised to continue its growth, but although we are living longer, we are not necessarily living healthier lives.

Diabetes and heart disease are still ravaging older adults. While fewer people may be dying from these diseases, the future may mean a longer life with much more medical intervention. Because of these trends, long-term care is increasingly becoming a potential reality for many people. Long-term care is a broad category of assistance that a person needs for diseases and conditions that aren’t likely to be resolved. This type of care can include assistance with daily tasks, such as bathing, and moving about to feeding and administering medicine.

Planning for Long-Term Care Needs


As the potential need for long-term care increases across the population, it is crucial to take steps to identify if long-term care is in your future and plan accordingly. According to some reports, about 70 percent of the population is going to need long-term care. For some, the risk of needing this care can be reduced through health-focused actions.

Identifying your risk

The first step in reducing the risk of needing care is to assess your lifestyle and your health. Many of the so-called “lifestyle diseases,” such as cardiovascular disease, diabetes, and certain cancers, are the result of poor health habits. Smoking, overeating and sedentary living increase your risk of having poor health in your older years. While some of these conditions can be managed with pharmaceuticals, the resulting medicated lifestyle is one that often needs outside support.

To some extent, you may be able to reduce your risk through pursuing natural longevity through better nutrition, abstaining from harmful activities, and enjoying regular exercise. You can reduce your risk for developing Alzheimer’s, for example, by keeping your mind active well into adulthood. Challenge yourself to learn a new language, play brain games and puzzles, and read as a hobby.

Paying for Long-Term Care


Some people may need care regardless of how much they try to fight its need. As people’s lifespans continue to grow, there may eventually be a universal need for long-term care, as the human body can become frail with advanced age. Because it may be inevitable and its early need is not entirely controllable, it is wise to include long-term care in your financial and retirement planning. There are a few options for planning, including saving and buying long-term care insurance.

The cost of long-term care

Long-term care can be expensive. Depending on the level of care you need, it can mean that you are hiring a full-time, 24/7 caretaker. While a home health aid will cost around $20 an hour in today’s dollars, nursing home expenses can easily reach $8,000 to $10,000. You cannot sit back and count on needing only a minimal amount of care. Increased longevity can make a nursing home stay last several years, which can drain even the most robust bank accounts.

How to pay for long-term care

Long-term care insurance is an option to mitigate the risk of these expenses, as is a variety of combination products that blend insurance with cash-value benefits and annuities. In general, long-term care insurance premiums increase as you age, and some policies cap the payout amount and duration, such as $100 a day for three years.

Another source of paying for future care is Medicaid, which according to many financial planners, is an increasingly-used source. This government funding for senior medical care only kicks in after you’ve spent all of your assets, so it is the program of last resort for seniors who live lives that outpace their savings.

When determining how to maximize savings, selling your home and downsizing may be a way to repurpose your assets for eventual long-term care needs so that you can privately fund as much of your need as possible. When you are paying out of pocket, you will have more options over where you choose to live. It’s often easier to sell your home before your urgent need arises.

You are never too young or too healthy to begin considering how you will live your senior years. Planning today can put you in better financial shape in the event you need long-term care.

June is the primary caregiver to her 85-year-old mom and the co-creator of Rise Up for Caregivers, which offers support for family members and friends who have taken on the responsibility of caring for their loved ones. She is passionate about helping and supporting other caregivers and is currently writing a book titled, The Complete Guide to Caregiving: A Daily Companion for New Senior Caregivers, due out in Winter 2018.


Photo Credit: Pixabay

Thursday, April 26, 2018

Four Simple Steps to Understanding Medicare – Part Four

Step Four: Understand Supplemental Coverage Options


Medicare Advantage or Medicare Supplement, which is right for you?


One of the neat things about Medicare insurance plan options is that there are plans available for any kind of budget or need.

Medicare Supplements also known as Medigap Plans


Medigap plans pay the balance after Medicare pays their portion. They will pay for the things that would normally be your share. As an example, all the Medigap plans will cover the 20% cost share mentioned above. So, Medicare pays 80%, and the Medigap plan then pays the other 20% of the Part B outpatient expenses. Some Medigap plans will even cover your Part A and your Part B deductibles. You may choose your own Part D prescription drug plan to go with this coverage.

Medicare Supplement plans allow you the freedom of choice for your medical care. You may see any healthcare provider or physician that participates in Medicare across the nation. These plans tend to cost more than Medicare Advantage plans since they are generally more comprehensive. Medigap plans also may tend to give you more freedom in choosing your healthcare providers.

Part C of Medicare, also known as Medicare Advantage Plans


Comprehending Medicare Advantage plans can slightly confusing because the Medicare Advantage program is also known as the Part C of Medicare.

Medicare Advantage plans pay in the place of Medicare. They have been created to make a low-cost alternative to Medicare supplements and are completely optional.

Medicare Advantage plans are private insurance plans with their own local network of providers and physicians. Usually, Advantage plans are an HMO or PPO type of plan. When you join an Advantage plan, you’ll see these providers in order to get the lowest copays.

Generally, you pay co-pays for doctor visits, hospital stays, and other Medicare-approved services. Medicare Advantage plans usually have lower or even zero-dollar premiums as compared to Medigap plans. This is because you agree to share in the healthcare costs by paying co-pays for services as you use them. With a Medigap plan, you frequently have no copay, depending on the particular plan you choose.

The majority of Medicare Advantage plans include a Part D drug benefit as part of the plan. Whether this is a benefit or a deficit depends on whether the included benefit covers the specific prescriptions you need. Every type of plan has its advantages and disadvantages. What matters is what things are most important to you.

Choosing 


In my local community meeting presentations and Turning 65 seminars, we inform participators to ask themselves questions to help them decide. Questions like: 

Is a local network plan going to work for me or will I need wider access because of travel?

Will I be able to pay co-pays as I go to get lower premiums up front? 

Do I prefer to pay whether I use it or not or would I rather pay as I go? 

Am I OK switching Doctors to keep a lower cost plan? 

Which plan gives me the most peace of mind? 

These types of questions that will help lead you to the correct coverage.

Now, what to do about that horrendous stack of mail? 

Here are some suggestions:

Mail from the U.S. government itself are generally items you will want to keep. Watch out for any mail that comes from either the Centers for Medicare & Medicaid Services and the Social Security Administration. These usually contain information related to your Original Medicare benefits which you need to hold on to. Do not toss them out.

The majority of ads from insurance companies can be thrown away. First work through Step Four from before. Then you should have an idea whether you want a Medicare Advantage plan or a Medicare Supplement. If you would like a Medicare Advantage plan, then you can trash any mailer ads that reference Medigap plans. You would keep anything that refers to Part C or an HMO or PPO plans because these terms relate to Medicare Advantage. Similarly, if you have decided a Medicare Supplement will fit you best, then you can scrap all the ads about Medicare Advantage.

Any Prescription Part D mailers you get you can toss in the trash. It is better to base your decision on Part D coverage on total yearly costs rather than some pretty mailer or ad. You can run a comparison on Medicare.gov’s Prescription Drug Finder tool. This is the best tool to assist you in identifying the most comprehensive drug plan for you.

The Easy Way

The easiest solution is to throw the complete heap of mail solicitations in the garbage and get everything you need from one trusted source. Ashford Insurance Services has been helping people new to Medicare for many years. We have already learned what is important and what is not. On top of that, our service is absolutely free.

We can guide you through the next steps to enroll in the right parts of Medicare. We will also help you find the most suitable supplemental coverage and a cost-effective drug plan. We can help you avoid any unnecessary coverage or penalties. 

The conclusion to Understanding Medicare


Unfortunately, there is no really simple explanation of Medicare. We do hope that we have helped you to get the basics down. There is no need for you to do this by yourself. Get someone on your side, working for you, when it comes to understanding Medicare. Again, there is absolutely no cost to you for our assistance.

Sonia Ashford is an independent insurance agent in the Medicare Insurance field and has delivered hundreds of speeches about turning 65, Medicare Advantage and Medicare Supplement insurance plans to consumers in North Texas. A respected agent in the Medicare insurance industry, she is the owner of Ashford Insurance Services, LLC. Visit Sonia's agency website https://ashfordinsuranceservices.com to learn more about how she can help you with your Medicare Insurance decisions.