Concerns
 
No one buys insurance because they want insurance.  People buy it because they are concerned about exposure to some
sort of risk.  Although everyone has a somewhat unique set of circumstances, there are a number of risks which are
common and it is these which the insurance industry builds products to address.  Home owners all have a risk of wind
damage and fire.  Drivers all have a risk of collision and theft.  That sort of thing.
 
For persons approaching retirement, the primary concern is that something occurs which causes the retirement date to
come sooner.  This can result in fewer savings contributions going into the portfolio, fewer years for the savings to earn
returns and compound, and the need to start taking income withdrawals early.  Collectively these can have a devastating
effect on a situation that would have otherwise been on track to provide a secure retirement.
 
After retirement has occurred, the focus switches to making sure that the income lasts as many years as it needs to (the
revenue side of the equation), and dealing with budget increases due to inflation and medical or care costs (the expense
side of the equation).
 
These aren’t necessarily the only categories of problems, and each household will encounter these issues a bit differently
than the next.  But the point is, all households may be negatively affected by these factors, and as such, they are topics of
​universal concern.
​Common Types of Coverage
(Note that all of these are described in some detail further down the page)
 
Medicare Supplement
Medicare Advantage
Critical Illness
Annuity – For Interest Earnings
Annuity – For Life-time Income
Long-term Care
Short-term Care
Disability Income
Term Life Insurance
​Decision Time
Once you’ve made some high-level assessment of the kinds of coverage that you think make the most sense for you
and your family, it’s time to look at specifics.  Practically speaking, this is the point at which you are likely to need
​some help. 
 
First of all, knowing which insurance companies carry the various kinds of coverage is not the sort of thing that most
people would have any reason to know, in the first place.
 
Beyond that, coverage amounts, policy details and premium costs need to be “calibrated” to your particular set of
circumstances.  That’s best done via a conversation with someone familiar with the options; and preferably familiar
with the overall retirement planning and management process, too (i.e. not just someone trained to sell insurance).  
 
If that’s a conversation you would like to have, please click here to be taken to our contact page.  We’d be happy to
discuss the particulars and assist you in deciding what’s best for you.
Common Types of Coverage – Details
 
Medicare Supplement – Medicare is the primary health insurance for seniors, and it covers a lot.  But it doesn’t cover
everything.  There are 10 standard policy types (mandated by the government) which give people a range of choices
about the other kinds of coverage they can purchase separately.  These policies run the range from covering a few
key basics to lots of bells and whistles.  Base cost is generally a function of the number of additional coverage
elements, and the key is to only pay for the ones you are likely to get benefit from.  For each type, the cost
increases by age
 
Medicare Advantage – A replacement for Medicare underwritten by private insurance companies.  In principle they
are designed to be an all-in-one alternative to the Medicare plus Medicare Supplement route, while simultaneously
allowing insurers to offer additional features which might not be available from other carriers. 
 
Critical Illness – Typically these policies pay a fixed sum in the event of major medical problems (cancer, stroke,
heart attack, etc).  Generally the money paid out on these policies (usually $50K to $150K) can be used for any
additional medical or household expenses which occur around the time of medical event.
 
Annuity (For Interest Earnings) – People seeking interest earnings often turn to insurance companies, by way of
annuity contracts.  These contracts often pay higher rates than bank CDs, and in some cases have tax advantages
which are not available with other financial instruments.  Those who purchase annuities for interest reasons
typically choose options to have their principal and accrued interest paid back to them over periods ranging
from three to ten years.
 
Annuity (For Life-time Income) – Typically the same kinds of policies/contracts as those mentioned above.  The
important difference is that the purchaser’s goal in undertaking the transaction is to set up a stream of income
payments for the rest of his/her life.  These are structured to mimic old-style retirement plans, but instead of
earning credits over a lifetime of work, they are established through one or a few significant payments to the
insurance company, in exchange for the future stream of income.  Because the insurer is obligated to pay for as
long as the person is alive, this format shifts the financial risk of living for a long time to the insurance company.
 
Long-term Care – In general, Medicare covers costs for medical situations which have the potential to improve
with treatment, like recovery from a heart attack, a knee replacement, bad case of the flu, etc.  But most chronic
conditions are treated differently, and the benefits may be capped, assuming the condition is even covered at all. 
Of greatest financial significance for most people: needing to move to a nursing home due to generally declining
health is not a cost covered by Medicare.  Long-term care insurance is available to provide funding for a wide range
of care-related costs that are only partially covered by Medicare, or not covered at all.
  
Short-term Care – Covers the same types of costs as those described for long-term care.  But the payout period
is usually capped to a year or less.  The limit on the payouts causes the premium cost to be lower.  This type of
coverage tends to have its greatest value in cases where Medicare reaches a limit on a covered treatment but
there are still going to be a few more weeks or months of nursing care, therapy, etc.  Those with this type of
coverage avoid some or all of the out-of-pocket costs associated with those last rounds of charges.
  
Disability Income – A type of insurance for those who are still working which provides income replacement in the
event that the person is unable to work.  In a pre-retirement situation, this type of coverage may make it possible
to keep paying the recurring household budget items for a few years , until the planned retirement age can be
achieved.  It serves as a way to prevent, or at least reduce, the need for early withdrawals from the retirement savings.
 
Term Life Insurance – This is the most basic kind of life insurance available.  For older persons, it is sometimes a
good temporary measure to make sure that a funding need can be met if the insured person dies before retirement. 
Examples of specific funding targets include education of children or grandchildren, pay-off of a mortgage, living
expenses for what would have been the last few working years prior to retirement, and money to fund additional
contributions to the retirement savings which would have come via payroll deduction had the person lived.  The
point is to add a pool of money so that the retirement savings don’t have to do double-duty and have to pay for
something they were never intended to cover.  Once the funding need is met, or full retirement is reached, the
​term coverage can be canceled so that the premium costs are not ongoing.
 
 
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