Insurance and Retirement

Do my insurance needs change after I retire? 

Does a 65 year old couple nearing retirement still need the same type and amount of insurance protection as they did 20 years before when the kids were still at home and they were juggling a mortgage, paying bills and worrying about college tuition? Another way of asking that question is “how have your insurable interests changed?” For a young family, the primary motivation for carrying insurance was to either replace income if you became disabled or leave your spouse enough money to pay-off the bills, send the kids to college and have something left over to help meet monthly expenses if you died. But now the kids are grown, the mortgage (if you have one) is down to a handful of years, and you’ve accumulated a lot more in assets than you had back then.

So let me ask again “how have your insurable interests changed?” 

Life Insurance

The need for life insurance doesn't necessarily go away when you retire, but the type and amount of coverage you may need could be very different. How?

• Beyond final expenses, do you have outstanding debt you want to be paid off?
• Will your spouse need supplemental income to offset the possible loss of your social security and/or pension benefits? If so, how much?
• If you’re remarried and now enjoy a “blended” family, do you need to equalize the division of your estate between your children, step-children and/or current spouse?
• Will your passing create a taxable event for your heirs?
• Would you like to endow a favorite charity or your alma mater?

All of these scenarios can be readily addressed with life insurance, keeping investment and retirement accounts or real estate holdings intact. And from an estate planning standpoint, death benefit proceeds are paid to your beneficiaries FREE of income tax. But the amount of insurance you need in retirement may be more or less than what you required just a few years prior, depending on how your insurable interests may have changed.

We'll help you assess your insurable interests and review your current coverage. Should you have gaps or unreasonalbe policy limitations, we'll help you obtain the additional protection you need.  

Long-Term Care

Long-term care is a basket of different services to help people with chronic conditions overcome the limitations that keep them from being independent. It differs from traditional medical care as it helps one live as they do now, not necessarily to correct or improve medical problems. Long-term care services may include help with performing the Activities of Daily Living, home health care, respite care, hospice care, adult day care, care in a skilled nursing home or in an assisted living facility. It may also include care management services which will evaluate your needs, and coordinate and monitor delivery of long-term care services.

The US Department of Health and Human Services' “Understanding Long-Term Care” indicates that a couple aged 65 or older has a 70% chance of one of them needing some form of long-term care. Of that total, over 40% will need skilled nursing home care. And perhaps most surprising, of the total number of people receiving long-term care services, nearly 40% are under the age of 50!

What do long-term care services cost In Arizona?

• In-home health care can range from $18-22 per hour.
• Assisted living care can range from $38,000 to $45,000 per year.
• Skilled nursing home care can range from $55,000-70,000 per year (semi-private room).

And the costs continue to escalate. What many people don’t realize is that Medicare may pay a small portion of skilled nursing care costs for a very limited time, but Medicare supplemental insurance and most health insurance will not pay for long-term care.

Effectively, this leaves you with three options to pay for long-term care: using your personal financial capital, purchasing long-term care insurance, or Medicaid for those who qualify. However, the Medicaid alternative imposes strict limits on income and assets (to include home equity), and includes a 60-month 'look-back' period for any assets that you may have transferred ownership of or gifted to another individual or entity.

Long-term care insurance serves two primary purposes: to help preserve your financial resources, and to provide necessary relief and support to your primary care giver, typically a spouse or family member.

However, you have options beyond traditional long-term care insurance. Over the past few years, insurance carriers have started introducing a new generation of combination insurance products (life insurance or annuities with long-term care riders), offering you much greater flexibility to tailor your insurance coverage to better meet your lifestyle needs and budgetary limitations.

Alpha Financial Advocacy is contracted with several of the highest-rated insurance companies offering both traditional long-term care insurance as well as the newer long-term care combination policies. We will help you evaluate your options and tailor a solution that meets your needs.

The National Association of Insurance Commissioners publishes "A Shopper's Guide to Long-Term Care Insurance" which does an excellent job of explaining the what's, how's and why's of long-term care. Its FREE for the asking.

To order your complimentary copy, click here and register.

If you would like to schedule a complimentary appointment to discuss your concerns about long-term care or ask us a question on any of the above concepts, please select the appropriate link below:

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