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Insurance

Long-Term Care Insurance? REALLY?

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Asking the Hive Mind: Is long-term care insurance (the kind that covers nursing home stays and in-home nursing care) worth the cost?

While I was working for the Great Desert University, I bought long-term care insurance through TIAA-CREF. The price was nominal at the time. Then TIAA-CREF decided insuring the future elderly against old age was not the best business to be in. They unloaded their policyholders on MetLife.

MetLife, which has also said it would like to be out of that business, has steadily increased its rates. This year I’m paying $130 a month. That’s $1,560 a year I could either put into savings or use to buy food. Problem is, this policy has (in theory) a deal where every couple of years you can opt to pay more for inflation adjustment. Shortly after I was laid off, the time came to opt in to that year’s extra gouge. But I was broke. I called and explained this, and the rep said they would give me a couple of months (by which time I would be receiving Social Security) and then offer the chance to opt in. They never did present that opportunity, and when I called them to ask after it, they said too bad, so sad. So that $130 a month is not covering the full current cost of nursing care. At best, it would only defray it.

Look up MetLife’s long-term care insurance on the Web and you find they work hard not to cover what you think they cover: so say Forbes Magazine and a whole raft of unhappy customers. Apparently Metlife is difficult to deal with and does everything it can to weasel out of paying.

The alternative is to move into a life-care community before you need its nursing home. Friends of mine just moved into the Beatitudes, a life-care campus whose amenities remind one of a fancy resort. My father, after my mother died, moved himself into a similar life-care community, which not only kept a roof over his head and two (truly mediocre) daily meals on his table but also covered the cost of any stay in its nursing home. In effect, it provides nursing home insurance: apartment residents have, as part of the package, guaranteed access to and coverage for the on-campus nursing home.

Out of curiosity, I looked into the Beatitudes and found they charge $10,000 a month(!) for nursing home care (unless, of course, you’re a tenant in their life-care community). The Beatitudes does the best it can to hide its costs from the Internet. One site, which more clearly is talking about life-care accommodation (not nursing-home care), estimates the average is $3647 a month; my friend’s husband remarked that they were paying around $5,000/month for a two-bedroom apartment, including utilities, semiweekly cleaning service, and meals. At Royal Oaks in Sun City, the cost is around $3600/month (my total average living expense here in my paid-off shack with yard guy., taxes, insurance, & utilities is around $2000/month). In effect, the elevated monthly cost of these places amounts to nursing home insurance.

However, one wonders whether that is worth the cost. Noting that 1 in 4 Americans will die in a nursing home, a study done between 1992 and 2006 showed the median length of nursing home stay was 5 months and the average length was 14 months. Interestingly, only 27.3% of the 8,433 subjects lived in a nursing home at the time of their death. Okay…  14 months at 10 grand a month would come to $140,000, which would nicely clean out the assets you’d like to leave to your heirs. Even 5 months would be ridiculous, but it would leave a few pennies for the offspring.

Let’s say one lives to be about 90 before needing such care. At $1,560 a year between my present age (74) and that age, I’d have forked out $31,200 to MetLife, which at today’s supposed rates would cover a little over 3 months of nursing home care. According to a recent Rand study, about half of middle-aged Americans will land in nursing homes at some point, but the cost will be only about $7,300 over a lifetime. If you put $130/month into savings, in 5 years you would have set aside more than $7,300.

So I question whether it’s worth continuing to pay $130/month (and more…and more…and more every year), when money is tight and I sure could use $130 to cover daily necessities. The original TIAA-CREF policy had a deal where if you’d been paying for awhile and then you quit paying premiums, some degree of coverage would remain. Apparently MetLife does, too: see page 4 of the linked PDF. If you put that $130 a month into a savings account (or invested it), after 20 years you’d have stashed over four times the amount needed to cover the typical lifetime cost of nursing care (according to Rand). Since I’ve been paying into that LTC policy for many years, a monthly $130 stash in a bank account plus whatever was accrued permanently at MetLife might cover most of my cost, especially if I were lucky enough to die within two or three months.

Still. It’s one bitch of a dice throw. If you have a stroke that disables you but fails to carry you away, if you come down with Parkinson’s or MS or ALS or Alzheimer’s or God only knows whatever open-ended horror, you in fact could need months or years of care.

That would clean out your estate, leave you living (after a fashion: breathing, anyway) on the public dole, and rob your heirs of everything you worked so hard to pass down to them.

So…what’s your opinion? Do you have long-term care insurance? Why or why not?

5 Reasons you may not Have Enough Life Insurance Coverage

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Hopefully, you have life insurance. Having a proper policy in place is an excellent way to protect your loved ones against the unknown. Life has a way of throwing some crazy things at you.

Unless you can predict the future (and if you do, let us know), then you should have a life insurance to protect your family’s finances.

If you already have a plan, you need to take a long look at your insurance coverage. Sadly, you may realize you don’t have nearly enough insurance. Let’s look at some of the reasons why you might not have enough insurance.

Even if you don’t like math or thinking about your passing (and who wants to?), don’t worry, it’s not going to be complex math. Looking at these categories is one of the most important things you can do.

Kids

Having children is one of the most common reasons people get life insurance coverage. When a couple has their first child, they tend to purchase a term life insurance policy, but they don’t let their policy grow as their family does. If you bought your life insurance many years ago, you might have had more children since you purchased it.

The more children you have, the more life insurance coverage you need. If you’ve had more children, look at your life insurance to ensure they will have the coverage they need.

Job Promotion

One goal of your policy is to replace your paycheck if you were to die. If you have people who need your paycheck, like a spouse or a child, then make sure they have the money they need to replace the income.

If it’s been several years, you may have gotten several pay increases or job promotions. The more money you make, the larger your life insurance you should buy to replace your stream of money.

Your plan should be big enough to replace your paycheck for at least 5 years. Preferably, it will be able to give your family seven to ten times your annual income.

New House

Your mortgage is your biggest expense. If you have a mortgage loan, it’s probably the biggest bill you have and will ever have.

You don’t want to think about passing away, but if you did, your spouse is still going to have to pay for your mortgage bill. They would only have one income, but if they have your life insurance money, they can pay off your mortgage bill.

You might have owned a smaller home when you originally purchased your life insurance plan. If you’ve moved into a larger home, you have a larger mortgage. Make sure your plan is still big enough to cover those expenses.

Side Gigs: Ride-sharing? Does your insurer know?

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So if you have nerves of steel or you live someplace where the traffic isn’t as batsh!t as the Phoenix area’s, the idea of renting out your car’s back seat to Uber or Lyft riders sounds kind of appealing. Presumably you could set your own hours, and for relatively little effort pick up a few bucks to help make your life more tolerable.

Okay, hiring out as a rideshare driver is not everyone’s cuppa. But if the idea appeals to you, think it through carefully.

There’s something you need to know: your auto insurance will not cover you, your riders, or your vehicle if you get in an accident while you’re driving for hire. And while those highly lucrative companies that make their profits by treating you as an employee but claiming you’re not an employee may tell you that they’ll cover damages incurred while working in their hire, it ain’t necessarily so.

Friend of mine recently got into an accident while driving for Lyft. He did not understand that he needed to buy commercial insurance to cover himself, his car, and his passengers, which can cost ten times as much as regular personal insurance. Apparently the ride-share companies now claim, in a vague way, that they offer some degree of coverage, but whether they really do and to what degree is unclear. Not only is your regular personal insurer unlikely to cover your liabilities, when they find out you were driving for Uber or Lyft, they’re likely to cancel your policy. At that point, you will be left seriously up the creek…

Friend reported the accident to Lyft, whose representative told him to try to collect from his own insurance. He had been told (he says) that Lyft would cover accidents that happen while the car is contracted to the company. Supposedly, Uber and Lyft will cover medical expenses and other damages up to $1 million, even if an uninsured or underinsured driver is involved, if you’re on the way to pick up a fare or carrying paying passengers. But since ordinary auto insurance does not cover costs incurred while ride-sharing for pay, what Lyft was quietly asking him to do was to defraud his insurance company by neglecting to mention the circumstances. Unfortunately, he’s the type who cannot tell a lie.

Of course, his own insurer told him to take a flying leap.

So he returned to Lyft: they refuse to answer his calls. He is now stuck for the cost of repairing his own vehicle, for medical and other costs incurred by the customer, and for costs suffered by the other car’s driver and passengers.

And, he notes, the Lyft gig never paid enough even to cover the ordinary depreciation on his vehicle.

In some (but not all) states, you can buy rideshare insurance. These policies generally cost less than full-blown commercial coverage, but…one wonders.

Even if you have rideshare coverage, you must let your regular policy issuer know. If you do not, they’re likely to cancel your insurance.

But think about this: if my friend is right and net profit from gig taxi-driving doesn’t even cover the depreciation on your car, it certainly isn’t going to cover the cost of extra auto insurance. Car insurance isn’t cheap to begin with; it’s sure not going to get cheaper when you’re using your vehicle to drive strangers around through city traffic.

The take-home message? If you’ve got any common sense, look for some other ways to make a few extra bucks. Mowing lawns might be good. Cleaning pools is said to be lucrative. Painting houses? Cleaning? Anything but ride-sharing.

 

Travel Insurance: Don’t go without it

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Forget something?

The other day at the Scottsdale Business Association, we were chatting with our friend and co-conspirator Jerry Rose, who founded a high-end travel agency in Scottsdale and, in due time, sold it to Frosch Travel. He lives on as the Scottsdale shop’s manager. The subject of travel insurance came up.

He says he personally would not travel without it – and he travels a lot. It’s so important, in fact, that his company now requires customers either to take out a policy or to sign a waiver stating that you were offered the opportunity and declined.

If you fall ill or are hurt in a foreign country, on a cruise ship, or in transit, travel insurance coverage can be a lifesaver – literally and metaphorically. Not just for you, but for your family and your traveling companions.

Jerry recently had an experience that proved the truth of this, while he was on a European cruise. Says he: “My travel companion had a cardiac infarction while we were on board. He had to be taken off the ship in Germany as we were on the way to Russia. He hospitalized for five days. The insurance paid for all his hospitalization and put up his wife-to-be in a hotel for five or six days. They got her a cell phone, and they accommodated the couple when they had to reroute home from Berlin instead of from Stockholm, where the trip ended.”

Not all policies do all things for all people. As with any insurance, providers may set a various standard exclusions, such as pre-existing mental illness, alcohol-related injuries, harm from participating in high-risk, extreme sports, and injuries or death sustained in adventure travel. Understanding your travel insurance policy is key to satisfaction and appropriate coverage.

Your travel agency or insurance provider should give you a detailed written description of available plans and what they cover. Check out this PDF for a typical range of coverage: TravelInsurance Jerry advises travelers to study the offerings carefully and select the policy that best addresses your concerns.

Some policies are rather limited, and some cover a full range of issues – baggage loss, delays in transit, and more. For example, one of Jerry’s recent clients died while traveling with his wife and two other couples in Cambodia. Fortunately, he and his wife had purchased a top of the line policy. The insurance company handled the paperwork, translation to English, and all the arrangements to transport him back home. All three couples had purchased policies, and all three had arranged for trip interruption insurance. Because they were all traveling together, they were all able to accompany the widow home, with their costs covered.

These kinds of policies, of course, are expensive – Frosch caters to a high-end clientele. I asked Jerry what he regards as the minimum level of coverage. He said the bare minimum would be coverage of costs for the nonfundable parts of your trip.

Baggage coverage would also seem to be pretty much indispensable. Another client took a trip in which she never did get her luggage. “It was shipped all over the world,” Jerry says, “but it never got to her. She arrived in Europe and had no clothes.”

Don’t neglect this crucial aspect of modern-day travel. When a guy who’s been in the travel business for upwards of 30 years says he wouldn’t travel without it, he’s tryin’ to tell you something.

Image: DepositPhotos, © peshkova

 

4 Ways to Potentially Reduce Your Car Insurance Bills

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Car insurance is mandatory in most states, so it’s something you’ll have to purchase as a car owner. There are many factors insurance companies consider when deciding how much to charge you to insure a vehicle. Some of them, such as your age, are outside your control. However, there are ways you can influence the others.

Drive an Older or Less Valuable Car

The value of your car is something that impacts car insurance bills. Generally, if your car is newer or perceived as having significant value, your coverage cost increases. That’s because insurers know it’d cost more to replace an older, less valuable car than a new vehicle, or a model that’s very in demand.

If you’re not too proud to get around in a set of wheels that’s not brand new or the flashiest model possible, driving an older, plainer option could help you save money on insurance costs. If you’re in the market for a new car and want to be as sensible as possible about the eventual insurance costs, research to find out which new cars generally cost the least to insure and set your sights on those.

Follow the Rules of the Road

Driving safely isn’t just a practice that could avoid accidents. It could also help you save money on car insurance. If you have a history of speeding tickets, wrecks, or driving under the influence, insurance companies may conclude it’s very risky to extend coverage to you. If you’ve gone a step further to make sure you understand how to drive safely and completed a defensive driving course, that decision could also lower your premium rates.

Describe Your Occupation Accurately

Car insurance applications often ask about your occupation. That’s because insurance companies know certain work requires a lot of time on the road. If your line of work doesn’t make you have to spend a large percentage of a typical day at work in the car, but the opposite could easily be assumed, make sure to clarify.

For example, if you work for a truck driving company but only do administrative work, mention that the majority of your days are spent behind desks, not the wheel of a heavy-duty truck. The more thoroughly you describe your occupation, the less likely it is insurers will make false assumptions that jack up your insurance prices.

Get Insurance From a Local Provider

Although you may feel tempted to go online and purchase insurance on your own, it’s best to do business with a local insurance specialist instead. That representative should have a strong working knowledge of the types of coverage that exist and be well equipped to recommend coverage that suits your car insurance needs and budget.

Also, you may find an insurance company that offers several types of coverage. If you remain a loyal customer to that provider for many years as you purchase numerous kinds of insurance, you may get a discount for coverage.

Clearly, lowering your car insurance rates isn’t impossible. It’s just necessary to be aware of some of the factors above and act accordingly.

So…How Would YOU Replace Obamacare?

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Since a certain element in the Body Politick is bound and determined to kill universal health care — at least in the form of the Affordable Care Act — it might behoove our leaders to think about what (if anything) they would put in its place. They evidently haven’t a clue hidden inside their bituminous hearts. So…let’s help them out.

If you asked me, here’s what I’d tell them.

• All vaccines will be free, including flu shots.

No one can force you to get yourself or your kids immunized (although schools would retain the right to bar enrollment for kids who haven’t had a basic round of shots). But if you have to be treated for an illness that could be prevented or ameliorated by vaccination, and you cannot prove you have a current vaccination for it, then you should have to pay for the treatment out of pocket. This includes trips to ERs.

• ER treatment that’s not a true emergency — like showing up to get free treatment for a strep throat or a cold or anything else that would have been covered if you had ponied up the cash for minimalist coverage: that will be something you have to pay for out of pocket.

• All preventive health care: free.

• All birth control: free.

• Coverage for an elective abortion:  you pay for it out of pocket. An abortion resulting from a medical emergency or severe pathology will be fully covered.

• Coverage for Rx drugs: chemotherapy, cardiac disease, kidney disease, multiple sclerosis, and diabetes drugs are included in the basic healthcare package. For most other prescription drugs, you can opt into a special plan, similar to Medicare Part D.

You can’t be blocked from opting in if you’re suddenly diagnosed with something that requires long-term use of drugs.

OTC drugs that have been Big-Brothered off the shelves, such as cough medicines that actually work, are to be returned to the market, so that you don’t have to go to a doctor to treat a bad cough from a cold.

• All other coverage would be handled much in the manner of Medicare, partially covered with flat fees, partially funded by taxes. Base hospital coverage would be free , but as with Medicare, more extensive Part B-type coverage would cost a couple hundred bucks a month: $134-$268, depending on your income. Expanded coverage would be available optionally through insurers or the government, but strictly regulated, exactly as Medigap plans are regulated now.

• Care for self-inflicted harm from drug use and alcohol abuse: you pay for it. This includes treatment for ODs and injuries incurred in accidents caused by your own drunk driving.

• Mental health care, even drying out from alcohol and dope (exclusive of physical disease or injury caused by abuse): covered.

• Coverage for the indigent, the unemployable disabled, and the homeless: through expanded Medicare.

How will this be underwritten? With a tax on everyone, including people who are not now working but getting income from dividends or welfare. And a no-exceptions, no-cap tax on the wealthy and the über-wealthy.

If businesses are to continue offering health insurance as a job perk, then the tax exclusion for the benefit can’t be eliminated. Otherwise, Americans will have to resign themselves to paying hundreds more in taxes, as the cost of employer-based plans will be taxable. On the other hand, it may be fairer for everyone, including employees of corporations that can afford to swing health plans, to pay their own share.

Insurance premiums, after all, ARE a kind of tax. They work the same way as a tax works: everyone pays in, for the common good. If everyone in the country is paying in, individual premiums will be lower. And if we’re not ALL paying for stupidity (drug use, alcohol use, refusal to vaccinate), then shared costs will be lower.

How would you advise our doughty leaders about replacing the Affordable Care Act?

Image: DepositPhotos, © sudok1