Life and Health

You likely already have Life insurance to protect your family against the financial adversity they could face after your unexpected death. And you’ve probably insured your home, cars, and other personal possessions against the financial loss that can result from fire, theft, or damage. But what have you done to protect yourself and your family against an injury or sickness that affects your ability to work? Do you have Disability insurance?

The reality of how long you and your spouse could stay afloat if one of you were to lose your income due to a disability is sobering. On one income you might no longer have the ability to pay your mortgage, car payments, and other bills. If you are without Disability insurance, tapping into home equity, retirement savings, or credit cards can offer a temporary solution with damaging long-term consequences. Disability insurance offers an affordable method to maintaining your lifestyle without creating additional debt for your family.

There are many different ways to obtain Disability insurance. You might have group coverage at work, through unions or membership groups, and depending on the nature and cause of your disability, you might also qualify for Workers Compensation, Social Security, and veterans’ benefits. Without the benefit of Group insurance, individual coverage is a must.

There are many different types of Disability insurance contracts and several definitions of disability. Consider whether you contract includes:

• A favorable definition of total disability that is consistent with the risk of your occupation and, at a minimum, ensures the payment of benefits in the event you suffer a “loss of income.”
• A non-cancelable, guaranteed renewable clause that states the insurance company cannot cancel the policy or increase the premium until a certain age (as specified in the policy).
• Benefits that are payable until age 65 or later.
• A waiting period consistent with your overall financial plan. The longer you wait to receive benefits after your disability, the lower your premium. You can purchase coverage that provides benefits on the 31st day of disability or up to two years later. Whichever option you choose, make sure you can handle the financial exposure.

With 77 million U.S. baby boomers reaching retirement over the next decade, experts say that the number of people in need of long-term care will double over the next 30 years. Some estimate that 14 million Americans will require some form of assistance with day-to-day activities by 2035. Consequently, senior care could soon replace child care as the country’s number one dependent care issue.

The cost of long-term care can range anywhere from $25,000 to $95,000 a year depending on the region. Without Long-Term Care insurance to cover this hefty price, many families end up paying out of pocket and suffering great financial strain. However, money isn’t the only thing at stake for families without Long-Term Care insurance.

Families who are suddenly faced with the unexpected cost of long-term care must make a tough decision: They can either pay the exorbitant price for a nursing home or professional caregiver or take the ailing loved one into their own home. A great deal of families without Long-Term Care insurance end up caring for their relative at home. Such families often have dependent children in the home in addition to an ailing parent. They quickly learn that caring for an ill loved one has a major emotional and physical impact on everyone in the family. When you take a sick loved one into your home, every day tasks such as eating, bathing, dressing or going to the bathroom become daunting struggles. Plus, caring for an ailing senior is a full-time job—24 hours a day, seven days a week. The responsibilities involved with this undertaking begin to take a toll on the entire family.

Oftentimes, those caring for a sick relative no longer have time to take care of themselves. They abandon healthy eating habits and exercise routines because they simply don’t have time anymore. They also suffer from high levels of stress. Caregivers often become sleep deprived because they must get up numerous times throughout the night to help their loved one. This can all add up to health problems for the caregiver. As a matter of fact, some studies show that long-term caregivers often have a shorter lifespan and more health problems than other people their age. Many long-term caregivers end up quitting or losing their jobs. After all, you can only take so many sick days to care for your loved one. Without a job to help pay the bills, many of these families find themselves struggling financially, often sinking deep into debt.

If you believe that Long-Term Care insurance is unaffordable, just think about the price you and your family could have to pay without it. By planning ahead, you will save yourself and your loved ones from immeasurable amounts of physical, emotional and financial stress. Planning for long-term care is not an easy task for anyone. Most of us don’t want to think about a time when we or one of our loved ones might need help with simple daily tasks. However, in order to protect your family’s financial and emotional well-being, it’s important to plan ahead for an unexpected long-term care situation.

Having Long-Term Care insurance will greatly lessen the suffering that comes with a long-term illness—for both the caregiver and the patient. That’s because with insurance, your family can afford to place your loved one under professional care. This will allow you to focus on dealing with the emotional issues of having an ailing loved one instead of completely draining yourself by trying to meet their physical needs 24/7.

The first step in protecting yourself from such a painful situation is finding a reliable financial advisor who can help you design a long-term care plan. One of our financial professionals can walk you through your family’s needs and find an insurance policy that fits your unique situation and budget.

As an increasing number of big box stores and pharmacy chains open up in-store retail clinics, consumers have more options than ever for receiving medical treatment outside of normal doctor office hours. These retail clinics, such as the RediClinic in many Wal-Marts or the Minute Clinic at CVS, offer incredible convenience to people who become sick at night or on the weekend.

In the past, if a child developed an ear infection or started running a high fever on a Friday night, parents had very limited choices. For the most part, they could either take their child to the local emergency room where they might wait for hours to be seen or they had to watch their child suffer through the weekend until the pediatrician’s office reopened on Monday. Even if they did decide to wait until Monday, they often couldn’t get an appointment right away or they’d be forced to sit in the waiting room for an hour before their child could be seen.

Now, as retail clinics become more common, sick consumers can simply stop by their local superstore or pharmacy to receive medical treatment. These clinics are open during the day, in the evening and on weekends, and most of them take insurance. At most of these retail clinics, you can be seen by a nurse practitioner within 15 or 20 minutes. If you receive a prescription, you can fill it right there at the store’s pharmacy.

For years, thousands of free-standing primary care clinics have operated out of malls and other highly populated areas throughout the country. These more elaborate clinics are often staffed by physicians and offer a broad range of services. Unfortunately, patients often pay a hefty price tag for the convenience of these primary care clinics. However, the newer retail clinics, typically staffed by nurse practitioners, offer fewer services at a much lower price. A retail clinic visit typically costs between $40 and $60—much less than an emergency room visit and even cheaper than some doctor’s office visits.

As these retail clinics continue to meet incredible success, the industry is expanding at a rapid pace. There are currently almost 1,000 retail clinics throughout the nation, according to a Verispan survey released in January 2008. These clinics operate in 36 states throughout the U.S. According to the Verispan survey, CVS Pharmacy’s Minute Clinics are the fastest growing pharmacy retail clinics with more than 390 locations. The second largest retail clinic chain is Take Care Clinics, located in 136 Walgreens stores throughout the nation. Wal-Mart currently has 57 in-store clinics throughout 12 states. However, the popular big box store has plans to expand to a whopping 2,000 clinics by 2014. Wal-Mart’s clinics are run by outside medical firms, such as for-profit companies like RediClinic, regional health plans and local hospitals.

Cut-throat competition

Retail clinic prices vary depending on the services provided to the patient. A typical flu shot costs $15 to $30, treatment for poison ivy and pink eye is priced at around $50, and cholesterol, diabetes and pregnancy tests are generally less than $50. However, as the industry continues to mushroom, these prices are dropping. Surprisingly, retail clinics aren’t just competing with other retail clinics—they’re also creating some tough competition for regular doctor’s offices and hospitals. Some internists and family doctors are starting to worry about losing business to these store clinics, and they’re also concerned about the level of care patients are receiving at these centers. To keep up with these popular retail clinics, many doctors are expanding their office hours and some are even offering Saturday appointments—a change that greatly benefits their patients.

Although the retail clinic industry is still relatively new, there’s no doubt that this innovative business model is having a significant impact on the health care industry. First and foremost, these in-store clinics offer affordable convenience to patients who need medical care after regular hours. However, these clinics are also having a desirable side effect on the medical industry—they are forcing family physicians to take a closer look at their business, improve their services and increase their accessibility.

What do you do if you suddenly lose your Health insurance coverage? Should you take a huge financial risk and go without insurance for a few months or should you find a way to temporarily fill the gap? Whether you’re a recent college graduate or a worker between jobs, a Short-Term Health insurance policy might be the perfect solution.

Short-Term Medical insurance (STM) is most commonly used by new college graduates who find that they’re no longer covered under their parents’ insurance plan. Many college grads sign up for STM insurance to fill the insurance gap until they find a job with an insurance plan. This ensures that they’re covered if they suddenly become ill or have an accident.

Even grads planning to start a new job immediately after graduation stand to benefit from STM insurance. Most employers have a waiting period of up to six months before new employees are covered under their health plan. STM insurance can keep them covered until their new insurance kicks in.

An affordable alternative

STM is much more affordable than Individual Health insurance plans or coverage under COBRA (Consolidated Omnibus Budget Reconciliation Act). Similar to most major health plans, STM insurance includes a deductible and co-insurance charges. However, because these policies are limited in length from six to 12 months of coverage, they can offer significantly lower rates. STM insurance usually costs about 30 to 35% less than individual health coverage.
Another benefit to STM insurance? If you have this type of coverage, you generally aren’t required to use specified in-network providers.

Not just for college grads

Although widely used by new college graduates, many other consumers could benefit from this affordable, short-term coverage as well. For example, if you suddenly lose your job and your Health insurance along with it, STM insurance could keep you covered until you find a new employer. STM insurance might also be a practical solution for the following people:

• Independent contractors
• Seasonal or temporary workers
• Part-time employees
• Recently discharged military members
• Recently divorced people who are no longer covered through their spouse
• Workers between jobs

Let’s say you’ve been working for the same company for 12 years and your Health insurance plan covers you, your spouse and your two young children. Suddenly, your company goes through some changes and your position is eliminated. You know it can take up to 10 months to find a new job with the same level of benefits—but how will you cover your family’s health care costs in the meantime.

Obviously, going without Health insurance is not an option, especially considering that you have children under your care. Your first viable option is to enroll in COBRA coverage to continue your current benefits. If you are eligible for COBRA and lose your job either voluntarily or involuntarily, you can receive up to 18 months of extended coverage for yourself and your dependents.

The downside is that you’ll have to shell out some big bucks if you choose this route. Under COBRA coverage, you will be required to pay 100% of your Health insurance premiums in addition to an administrative fee of up to 2%. This can get extremely expensive for someone who is currently unemployed.

Your second option would be to purchase an Individual Health insurance plan to cover your family until you find a new job. This might be less expensive than COBRA, but still not what most would consider affordable.

However, if you choose to purchase a 12-month STM insurance plan instead, you would pay considerably less for a similar type of policy. If you are confident that you can find a new job within a year or less, STM insurance is probably the ideal option.

Additionally, STM insurance is considered “creditable coverage” under the Health Insurance Portability and Accountability Act (HIPAA). Under federal law, if you have a gap in insurance coverage longer than 63 days, you will lose your Health insurance rights as designated under HIPAA. That means if it takes you longer than expected to find a new job and in the meantime you are diagnosed with a serious illness or become pregnant, you might have a difficult time finding an insurer to cover you. However, if you have continuous health coverage under a “creditable” plan such as STM, you cannot be denied Health insurance even if you develop a condition.

A basic plan

The reason that STM insurance is so affordable is because it is an extremely basic major medical plan. Although STM covers basic medical services, these policies do not cover comprehensive expenses such as maternity benefits or treatments for pre-existing medical issues. Therefore, if you are pregnant or have frequent health issues or a pre-existing condition, STM insurance is probably not your best option. COBRA or individual major medical coverage would be a more appropriate plan for you. But if you are generally healthy and need to fill a gap in coverage for a year or less, STM insurance is a smart and affordable solution.

If you find yourself in between jobs, you have already discovered that finding affordable Health insurance is no easy task. While COBRA provides you the right to continue your previous employer’s coverage, the monthly premiums can be downright unaffordable.

Many people find Short-Term Health insurance, also called Temporary insurance, to be an affordable alternative to COBRA. This coverage helps bridge the gap between having an employer-sponsored plan and waiting for your next job.

Leaving a job often means leaving Group Medical coverage behind, a risky move if you don’t have other insurance options. Short-Term insurance policies help remove the gamble, but they typically only protect against unforeseen sickness or injury. Pre-existing conditions are usually excluded.

Premiums for Short-Term coverage are usually much cheaper than the premiums paid for COBRA. However, the costs can still seem high for a person who just lost their job. It could be tempting to forgo insurance altogether, but financial security is the main reason people buy Short-Term Health insurance in the first place.

Without coverage, an unexpected trip to the hospital could send a person deep into debt. In fact, several published studies cite medical bills as a leading cause of bankruptcy. Short-Term Health insurance is designed to cover these catastrophic events.

Beyond financial protection, Temporary insurance can also help prevent future insurance claims from being rejected under HIPAA, or Health Insurance Portability and Accountability Act, laws. If an individual maintains creditable insurance coverage without more than a 63-day break in coverage, they are considered to have maintained continuous coverage, and exclusions for pre-existing conditions would not apply. This applies even if the Short-Term policy excluded coverage for those same pre-existing conditions. Approved Short-Term insurance policies are considered creditable coverage.

The terms of short-term medical plans usually run from 30 days to a maximum of one year, depending on state requirements. Some policies are designed to provide coverage for a specific number of days with premiums paid upfront, while other policies offer flexible monthly payment plans.

Since Temporary insurance is only designed to last a few months, policyholders still need to plan for a long-term solution. If you find a new job and enroll in your new employer’s Group insurance plan, make sure to find out when the new coverage starts. Although it’s not a long-term solution, people in transition should consider Temporary insurance as an interim solution to ease financial and healthcare concerns.

Anyone who has ever shopped for Life insurance has faced the difficult task of choosing between a Term and Permanent policy. The choice isn’t as clear-cut as it might seem: Although Term insurance might be less costly in the short run, Permanent insurance features an attractive cash benefit. Not surprisingly, having to choose between these two types of coverages intimidates many prospective policyholders. In fact, some consumers are so baffled by this decision that they don’t purchase any coverage.

Fortunately, there is a new type of coverage for those consumers who just can’t decide what policy to buy. Return of Premium Term insurance (ROP) is a hybrid product that provides Term coverage with a twist: Policyholders get all of their paid premiums back if they are still alive at the end of the term.

To understand how ROP combines the best traits of Term and Permanent insurance, let’s compare them side-by-side. If you purchase Term insurance, you pay a set premium for a fixed term, usually between 10 and 30 years. Term rates are low, especially if you are young and healthy. However, your money only buys you a death benefit: If you are still alive at the end of the term, you receive nothing.

Permanent insurance, on the other hand, provides the same death benefit protection, but also allows you to build cash value within your policy. This balance is handy if you need money for emergencies, college tuition, etc. The downside is that you can expect to pay for this benefit through significantly higher premiums.

ROP gives the consumer the best of both worlds by providing the protection of insurance together with the savings component. With such a policy, if you die, your beneficiary receives a lump sum death benefit. But if you live through the term, the insurance company returns all of your premiums. While ROP is an appealing choice for all kinds of individuals, it is especially useful for purchasers who need to fill a temporary need, such as:

• Insurance coverage for a key employee
• Individuals who are planning to refinance their homes
• Divorcees who are required to purchase insurance as part of their divorce decree

Although ROP has many advantages, consumers should keep in mind that the cost of this coverage is somewhat higher than a typical Term policy. And if you need to extend your policy past the initial term period, expect to pay significantly higher rates. The best strategy is to examine all options, carefully weigh the costs and benefits of each, and pick the one that can do the most for you.

Calculating the right amount of Life insurance takes a lot of research, and can be quite a balancing act. You want to make sure that you have enough Life insurance to adequately protect your family. On the other hand, if you buy too much Life insurance, you’ll feel financially strained — which means you’ll be more likely to cancel your policy in a crunch. If you’re trying to figure out how much Life insurance you need, here are a few things to keep in mind:

FIND THE RIGHT POLICY

There are two basic types of insurance policies: Term insurance and Cash-Value insurance. Term Life insurance covers you for a specified amount of time, anywhere from one to 30 years. These policies are less expensive because they are designed solely for protection. Many people choose Term insurance because they figure their need for Life insurance will decrease as they get older. Term insurance is also good option for those who want to protect their children until a certain age.

Cash-Value Life insurance covers you for your entire life and includes Whole Life, Universal Life and Variable Life policies. These policies act as both an insurance plan and a savings tool, which makes them more expensive. Because the insurance company actually invests some of your premium, this type of policy increases in value over time. You can borrow money from the policy, although outstanding loans will be subtracted from the ultimate death benefit. In most cases, both the premiums and death benefit remain the same throughout the life of Cash-Value policies.

FIGURING THE RIGHT AMOUNT

There are a few different ways to calculate the amount of Life insurance you need to adequately protect your family. Some experts say that you should simply multiply your annual income by three times while others say you need at least eight times your annual salary.

However, many professionals say this “income multiplication” method is not accurate enough. Because each family faces a unique set of circumstances and needs, you might want to consider some factors other than annual income. Figuring out the right amount Life insurance requires a comprehensive evaluation of your financial goals, debts, investments, lifestyle and habits.

EXPENSES TO CONSIDER

As you try to determine how much Life insurance you need, you should think about the expenses your family would face if something happened to you. Start by making a list of short-term expenses, such as medical and hospital expenses, funeral arrangements, attorney fees and outstanding debts, taxes and loans. Then add that amount to all the long-term expenses your family would face, such as your home mortgage, college tuition for your children and living expenses.

You should also factor in other sources of income, such as your spouse’s salary, Social Security survivor’s benefits and investments. And don’t forget to consider the cost of inflation. Once you take all of these expenses and sources of income into account, you’ll probably arrive at a much more realistic amount than simply “four times your income.”

WHAT CAN YOU AFFORD?

Although you might know how much Life insurance you’d like to offer your family, you have to be realistic about how much you can actually afford. The primary objective of Life insurance is to protect your family. Therefore, you should choose a policy that you can comfortably fit into your budget so you won’t be tempted to cancel it.

Research shows that half of all people who buy a Whole Life policy end up cancelling it within the first 10 years — most likely because these policies are expensive, and it can be difficult to keep up with the premium payments. Because Term insurance is relatively inexpensive and easy to understand, it may be the perfect solution for families on a budget.

Figuring out how much and what type of Life insurance you need is a complex process that involves a lot of research and thought. Meet with one of our financial advisors or insurance experts, who can help you determine how much insurance you need and what you can realistically afford.

Being self-employed definitely has its perks: Freedom, flexibility, autonomy. Unfortunately, the long list of self-employment benefits doesn’t usually include an actual benefit plan. That means you’re on your own when it comes to insuring yourself.

If you’re self-employed and don’t own Life insurance, you’re putting your family at great financial risk. Not only would a Life insurance policy provide for your family if something were to happen to you, but it would also cover the costs of your business debts.

Everyone needs Life insurance

Any financial expert will tell you that whether you’re self-employed or company-employed, you need Life insurance — especially if you have a family who depends on your income. As long as you’re alive and kicking, you can continue to earn money and maintain your family’s lifestyle. However, if you were to die without Life insurance, your family could find themselves in a financial crisis.

Without your income, your family certainly wouldn’t be able to maintain their former lifestyle, and they might have a hard time making ends meet. They would probably struggle to pay monthly expenses, including the mortgage, credit cards and utilities. On top of that, they could face some hefty bills associated with your death, including burial and funeral costs and medical expenses.

An effective Life insurance plan will ensure that all of your family’s financial needs will be covered in the event of your death — from the monthly mortgage to final expenses to your child’s college education.

A necessity for the self-employed

Although everyone should have Life insurance, it’s an absolute necessity for the self-employed. Why? In the eyes of the law, there is no difference between your personal and business assets. That means that you are personally responsible for any and all business debts.

When the owner of a sole proprietorship dies, the business legally comes to an end. Therefore, if you were to die, any of the debts or losses associated with your business will become the responsibility of your estate. This could include business loans, your office mortgage or lease payments, local, state and federal taxes, lawyer and accountant fees and any payments due to your employees, suppliers or vendors.

To pay off these debts and cover your business’ financial obligations, your family might have to sell off personal assets. This would leave them with even less money to cover their ongoing financial needs.

However, with an effective Life insurance plan, your family would have enough to pay off these business debts and provide for their ongoing financial needs after your death. This is why it’s crucial for any self-employed person to have a Life insurance plan.

Meet with one of our financial professionals to discuss your Life insurance options. We can assess your situation and find a plan that fits your unique needs as a sole proprietor.

Although retirement is a time we can count on happening someday, and disability is something we hope never happens, these two areas of financial preparation are closely related.

Both concern the maintaining of a standard of living, due to loss of income. Rent or mortgage payments, bills, taxes, insurance, and other living expenses, such as food and clothing, will need to be paid for. By planning carefully and being prepared well in advance to cover these costs whether retired or disabled, you will be able to replace your lost income, protect your family, and preserve your estate effectively.

Many people become disabled suddenly and realize that their monthly needs will not be met by their current assets. This is why Disability Income insurance is so important. This type of insurance protects your income by guaranteeing monthly payments after a defined waiting period, whereas social security can take months after you have applied to start receiving benefits assuming you qualify in the first place. Without Disability coverage, you would be forced to tap your retirement savings, which could jeopardize your future financial security. Those who are better prepared for events, such as retirement or disability, will be in far better control of their finances in each situation.

Many parents want to leave their children an inheritance to help provide for them and their families, but such a bequest can be a double-edged sword. Together with all that accumulated wealth comes the problem of having to pay substantial estate taxes. If heirs are forced to pay taxes from the estate proceeds, it will lower significantly the amount they ultimately receive. You can help your heirs to avoid this situation by purchasing a Second-to-Die Life insurance policy on you and your spouse. Such a policy, also referred to as Survivorship Life, can provide tax-free dollars (if owned outside of the estate) to pay estate taxes.

Federal tax law permits you to leave an unlimited amount of assets to your surviving spouse without taxation. Those assets then become part of your spouse’s estate and are taxed when he or she dies. If you purchase a Second-to-Die Life insurance policy insuring both you and your spouse, and you die first, the death benefit is paid to your beneficiaries upon your spouse’s death, thus providing the necessary funds to pay whatever estate taxes are owed. Consider these additional advantages to buying a Second-to-Die policy:

• Survivorship Life costs less than a single insured Life insurance policy. The premium you pay for a Second-to-Die policy is calculated using the joint life expectancy of you and your spouse. Since the insurance company owes nothing until both of you die, the premium will be less.
• Qualifying for this type of insurance is much easier than for single insured Life insurance. Since the death benefit isn’t paid until both insureds die, the insurance company isn’t as concerned if one of you is in poor health. Some insurers will even issue a policy when one of the insureds is deemed uninsurable by typical Life insurance standards.
• Survivorship Life can add value to your estate. Second-to-Die Life insurance does more than protect your estate from taxes. The death benefit can ensure your beneficiaries receive a minimum amount of money, even if you spend through all your other assets during your lifetime.
• The proceeds from a Second-to-Die policy can cover additional tax obligations, such as income taxes owed on any traditional individual retirement accounts (IRAs) and tax-deferred plans that the deceased owned.

Consult with one of our financial professionals to determine if Second-to-Die Life insurance should be a part of your estate planning.