Several Types of Insurance Changes to Consider as You Approach Retirement
As you approach retirement, your financial needs and those who depend on you will likely change. This may require an update of your insurance needs as well. What you need before 40 is probably not what you need after 60. But this doesn’t mean canceling policies and purchasing new ones.
Should You Hold onto Life Insurance?
Life insurance is there to replace lost income during your working years. An insurance payout can help ease the financial burden on those that depend on you. Once all of your children have moved out, it may only be you and your spouse. You may not need as much life insurance. However, some keep the same level of life insurance as a means for giving to charity, paying off debt, leaving as an inheritance or providing for a spouse.
Self-Financing Health Insurance
If you are no longer receiving health insurance through your employer, going without any health insurance shouldn’t be an option. Yes, health insurance is certainly expensive. But when something goes wrong, and you need medical care, paying 100% out-of-pocket can potentially bankrupt you.
To offset some of the high costs of health insurance, consider a high deductible health plan coupled with an HSA. The HSA will provide tax benefits and pay for qualified medical expenses.
Those on Medicare (65 and older) may think that’s all the coverage they need. However, Medicare doesn’t pay for 100% of medical needs. A costly medical bill, which isn’t difficult to acquire, can put you into financial hardship. Medicare recipients should consider purchasing a supplemental plan. They are low cost and can take up the slack left behind by Medicare.
You’ve Paid Off Your Home. Do You Still Need Homeowners Insurance?
Once your home is paid off, you may decide that you can put all that money going toward homeowners insurance to better use. Unless you are willing to replace your home out-of-pocket, in the event something disastrous happens, it’s better to keep your homeowners insurance. The value of your home has also probably risen since you purchased it, which only increases its replacement cost.
Some homeowners’ insurance policies will not cover jewelry or art. Consider supplemental insurance to cover them.
Long-Term Care Insurance
According to the American Council On Aging, the average daily cost for a shared nursing home room is $255. A shared room is the only one Medicare will pay for. After 100 days, Medicare will no longer pay for the room. This makes having long-term care insurance a must-have.
What You Can Probably Live Without
To maintain disability Insurance, you generally need to work 30 hours a week. Check if there are retirement benefits that have similar coverage. Of course, if the disability insurance is cheap and provides some additional coverage, it may be worth keeping.
As always, please feel free to contact the office with any questions. We can discuss to ensure your insurance policies are covering your needs.
The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.
Insurance Decisions to Make as You Approach Retirement
| August 12, 2021