Seniors face a bewildering array of health plan choices. Should you stick with Original Medicare, which provides only hospital and medical coverage? Original Medicare, plus a Medicare Supplement from a private insurer? Or should you opt to buy a Medicare Advantage plan through a private insurer to take care of all your health insurance needs?
You’ll get a brief overview if you want to read more.
Medicare Supplement, or “Medigap” Plans
If you have Original Medicare (Parts A and B), a Medicare Supplement plan can fill the “gaps” left in your coverage, including deductibles, co-payments and uncovered services.
Medicare Part B has a monthly premium. For an additional low monthly premium, a Medigap plan can help you avoid unpleasant financial surprises. Policies cover individuals only (no family coverage), so you and your spouse will need separate policies.
Medicare Advantage plans (also called “Part C”) take the place of Original Medicare. Written by private insurance companies, they include all the benefits of Medicare Parts A and B, and often include other coverage, such as Medicare prescription drug coverage (Part D), sometimes for an extra cost.
If you have a Medicare Advantage plan, you do not need (and cannot use) a Medicare Supplement policy.
Life insurance is the foundation of any family’s financial plan.
Life insurance can help ensure your family can maintain its lifestyle if a breadwinner dies prematurely. Many insurance experts advise purchasing life insurance equal to five to eight times the individual’s income.
Life events that affect your need for coverage include:
- Birth of a child
- Buying a home
- Children attending private school or college
- Retirement savings
- Estate planning and protection
- Desire to make a charitable bequest
Whole life, or permanent, life insurance also offers tax-advantaged savings for retirement and estate protection. Term life insurance provides pure death benefit coverage for a specific time (one to 30 years) and has no cash savings.
Permanent life insurance, or cash value, programs provide death benefits plus some additional benefits, including the tax-deferred accumulation of cash.
Whatever your life insurance needs, we can help you find both term and whole life coverage at competitive rates.
You can read more here about term life and permanent life insurance.
Term Life Insurance
Term life insurance comes in several varieties:
- Renewable. Policy owners can renew coverage at the end of their policy term without having to submit new medical information, though the premium rate will generally rise with each renewal.
- Convertible. A convertible policy allows the insured to convert term coverage into a permanent policy without providing evidence of insurability (usually a medical exam), in exchange for a higher premium, which remains fixed after conversion.
- Level. Level-premium policies have a fixed premium for a certain number of years (usually 10 or 20), while the death benefit remains unchanged. Although the rate locks in for the policy period, it can jump considerably upon renewal.
Permanent Life Insurance
Permanent life insurance provides lifelong protection and includes a savings element that grows on a tax-deferred basis and may become substantial over time. Premiums are generally higher than for term insurance, but they remain fixed.
All permanent insurance has a face value and a cash value. The face amount is the money that will be paid at death, while cash value is the amount of money currently available to the policyholder. Permanent life offers other benefits–purchasers can withdraw some of the money, obtain a loan using the cash value as collateral or use the cash value to pay premiums, provided there is enough money accumulated.
The different types of permanent life policies include:
- Whole or ordinary life. The face amount of the policy is fixed, while premiums remain level and must be paid on a regular basis. It offers a death benefit and a savings account, which grows based on insurance company-paid dividends.
- Universal or adjustable life. More flexible, employees can pay premiums at any time, in virtually any amount, and may change the amount of the death benefit, although an increase usually requires a medical examination. After accumulating sufficient funds in the cash value account, employees may alter premium payments, a useful feature if an employee’s economic situation has suddenly changed.
- Variable life. This policy combines death protection with a savings plan. Cash value will vary with the performance of the underlying investments, although some policies do guarantee a minimum death benefit.
- Variable-universal life. The employee has the investment risks and rewards of variable life insurance, coupled with the ability to adjust the premiums and death benefit available under universal life.
Dental Insurance Plans
Dental insurance encourages preventive dental care, which saves an estimated $4 for every $1 spent by eliminating the need for expensive, invasive and painful procedures.
The Affordable Care Act requires all new (non-grandfathered) health insurance plans in the individual and small employer markets to include dental coverage for children age 18 and younger as an “essential health benefit.” This means if you’re getting coverage for someone 18 or younger on an individual or small group plan, dental coverage must be available as part of the plan or in a stand-alone plan.
Although the health care reform law requires most people to have health coverage or pay a penalty, this doesn’t apply to dental coverage. Although insurers must make dental coverage available to individuals age 18 or younger, you don’t need to have dental coverage, even for children, to avoid the penalty.
Even if you don’t need dental insurance to avoid penalties under the Affordable Care Act, dental insurance helps many people afford expensive dental care.
Most dental insurance plans cover:
- Twice-yearly cleanings and exams
- Annual x-rays
- Restorations (fillings and crowns)
- Periodontics (treatment of gum disease)
- Endodontics (root canals)
- Bridges and dentures
Some also cover orthodontics. Many dental insurance plans let you see any dentist, while some use a network of dentists.
You can read more about the various types of plans here.
Most insurers offer managed care plans designed to encourage wise use of dental benefits, with lower out-of-pocket costs for preventive services such as exams, x-rays and cleanings. Many plans also offer benefits for orthodontics, but pay a lower percentage for orthodontics than for restorative services such as fillings, root canals, etc.
Dental Insurance Plans
The different types include:
Under this “traditional” insurance plan, the plan pays dentists according to a formula—usually a percentage of the dentist’s fee, up to a “usual and customary” maximum. The dentist can bill insureds for the difference, or copayment. Most plans also have patients pay a deductible per visit or per series of treatments as well.
Preferred provider organizations (PPOs):
A dental PPO consists of a network of providers who agree to accept a certain discounted payment for their services. PPO plans give insureds financial incentives to use these “preferred providers” by paying higher percentages of claims they submit than for those submitted by non-preferred providers. Insureds pay the uncovered portion out of pocket.
Dental health maintenance organizations (HMOs):
In an HMO, dentists agree to provide specified dental services to members in return for a periodic per-capita payment—usually monthly. Payments do not depend on the number or type of services rendered, and the HMO accepts the financial risk for providing covered dental services to members.
Most plans require participants to use an HMO dentist, but some plans provide reduced benefits for members who use out-of network dentists. A participant may have to pay a deductible, co-payment, or any amount exceeding plan coverage levels.
The Affordable Care Act requires all new (non-grandfathered) health insurance plans in the individual and small employer markets to include vision benefits for children age 18 and younger as an “essential health benefit.” This means if you’re getting coverage for someone 18 or younger on an individual or small group plan, vision coverage must be available as part of the plan or in a stand-alone plan. This benefit covers an annual eye exam and one pair of glasses or contact lenses for children. The law does not require plans to offer vision benefits for adults.
And as with dental benefits, you do not need to have vision coverage, even for children, to avoid penalties under the Affordable Care Act.
Still, vision coverage encourages individuals and families to get regular eye examinations. An estimated 11 million Americans have uncorrected vision problems, ranging from refractive errors (near- or far-sightedness) to sight-threatening diseases such as glaucoma or age-related macular degeneration. Regular eye examinations can also identify other health conditions, such as diabetes, that can affect the eyes even before the individual experiences noticeable symptoms.
You can learn more about vision insurance here.
Vision insurance generally covers the following basic services:
- Annual eye examinations, including dilation
- Eyeglass frames
- Eyeglass lenses
- Contact lenses
- LASIK and PRK vision correction at discounted rates.
An estimated 11 million Americans have uncorrected vision problems, ranging from refractive errors (near- or far-sightedness) to sight-threatening diseases such as glaucoma or age-related macular degeneration. Vision insurance encourages people to take care of their vision and health. Regular eye examinations can also identify other health conditions, such as diabetes, that can affect the eyes even before the individual experiences noticeable symptoms.
For those who don’t have employer-provided medical benefits, many individual medical plans offer vision coverage as an add-on. You can also buy a separate individual vision insurance policy.
Long-term Care Insurance
With nursing homes costing an average of $83,000 annually (more in urban areas), long-term care needs can stretch the finances of almost any family. Medicare and Medicare Advantage do not cover custodial care in a nursing home, assisted living or home healthcare setting. Unless you have savings or long-term care insurance, when you can no longer take care of yourself, you would have to spend down your assets until you qualify for Medicaid.
Long-term care insurance (LTC) can help you pay for the cost of nursing home and other long-term care for yourself or for an elderly dependent.
A study by the U.S. Department of Health and Human Services says that people who reach age 65 will likely have a 40 percent chance of entering a nursing home. About 10 percent of the people who enter a nursing home will stay there five years or more.
You can read more here about what LTC covers, what features to look for and tax considerations.
What LTC covers
LTC policies vary widely. However, they all cover non-medical custodial care services excluded by medical insurance (including Medicare and Medicare Advantage). Coverage kicks in when the insured cannot perform two or more “activities of daily living,” such as eating, toileting, transferring, bathing, dressing or continence, or when he/she becomes cognitively impaired due to senile dementia or Alzheimer’s disease.
What to look for
Guaranteed renewability and inflation protection
To qualify for tax advantages, LTC plans must offer these features, although insureds can elect not to buy inflation protection.
Coverage for home healthcare
Many disabled individuals do not require nursing home care, but simply need help with activities of daily living. A policy that provides benefits for home healthcare can help the insured stay in the comfort of his/her own home.
Under an individual policy, insureds can include LTC premiums they pay with other unreimbursed medical expenses, subject to a cap that increases with age. Benefits received from LTC policies generally do not count toward taxable income, as long as the benefits do not exceed an insured’s actual long-term care expenses.
Disability Income Insurance
What’s your most valuable possession? Your home? Its contents? For most working individuals, their ability to earn an income is worth far more than these physical assets. If you have a high school diploma, your lifetime earnings potential exceeds $1 million. As education increases, so do earnings.
For example, the “average” man with a professional degree will earn $4.03 million over his working life, while the “average” female professional will earn nearly $3 million. A disability can jeopardize this valuable asset.
Short-term disability (STD) insurance plans typically have a waiting period of 0 to 14 days before a covered individual will receive benefits, and they provide benefits for a maximum of six months to one year.
Long-term disability (LTD) policies usually begin paying benefits 30 to 180 days after the disability occurs, once the covered individual has exhausted sick leave and short-term disability benefits.
You can read more here about the features, trigger definitions and tax implications of disability policies.
The National Association of Insurance Commissioners (NAIC) says that a male U.S. worker at age 35 faces a one-in-five chance of a disability taking him off his job for 90 days or more. For a 35-year-old woman, that risk increases to one in three.
Most working adults don’t have the savings needed to pay their expenses if they were unable to earn an income for 90 days or more. Disability income insurance replaces a portion of an insured’s pre-disability income when they cannot work or cannot work full-time due to a disability.
The most effective disability benefit plan designs coordinate sick leave, short-term disability (STD) and long-term disability (LTD) benefits, so that once the insured exhausts sick pay and STD benefits, LTD benefits begin immediately. Disability income insurance replaces only a portion of lost income to give disabled individuals some incentive to return to gainful employment after a disability.
Many Americans are in danger of outliving their retirement savings. Annuities have many uses in financial planning, but one of the most important is providing a guaranteed income during retirement.
You can buy annuities through life insurance companies—in fact, annuities are a form of life insurance and, like life insurance, usually require a health questionnaire or medical exam. In exchange for paying a premium, the insurer will provide you with a monthly benefit for the term you select, which can be as long as the rest of your life…no matter how long you live.
Annuities come in many varieties. You can buy single-premium annuity that will, with just one payment, give you a guaranteed monthly payment for a set period or your lifetime. Joint-and-survivor annuities protect couples by paying a monthly benefit to one spouse and, when he or she dies, to the survivor. We can help you find the type of annuity that best meets your financial needs.
You can read more here about the different types of annuities, including fixed period, variable, single life and tax-sheltered annuities.
Annuities are contracts that require one party to make regular payments for more than one full year to another (the annuitant). In exchange, the annuitant pays a premium, as with life insurance. In fact, annuities are a form of life insurance. If you want to buy an annuity, you will likely have to undergo some sort of underwriting process.
Annuities fill many different needs in financial planning, so over the years, insurers have developed many different types, including:
Fixed period annuities
– pay a fixed amount to an annuitant at regular intervals for a definite length of time.
– make payments to an annuitant varying in amount for a definite length of time or for life. The amounts paid may depend on variables such as profits earned by the pension or annuity funds or cost-of-living indexes.
Single life annuities
– pay a fixed amount at regular intervals during an annuitant’s life, ending on his or her death.
Joint and survivor annuities
– pay a fixed amount to the first annuitant at regular intervals for his or her life. After he or she dies, a second annuitant receives a fixed amount at regular intervals. This amount, paid for the life of the second annuitant, may be the same or different from the amount paid to the first annuitant.
Qualified employee annuities
– a retirement annuity purchased by an employer for an employee under a plan that meets certain Internal Revenue Code requirements.
– a special annuity plan or contract purchased for an employee of a public school or tax-exempt organization.
Annuities have many uses in financial planning, particularly in retirement planning. Some require a securities license to sell, in addition to a life insurance sales license.