The purpose of life insurance is within the name itself: life. Serving to protect both your life and the lives closest to you, life insurance primarily acts as a vehicle to provide financial protection to your loved ones in the event of your untimely death. In purchasing a life insurance policy, you are protecting the financial future of those closest to you while guarding against the unknown. While no item or amount of money can replace your presence, you can at least have peace of mind in knowing that your beneficiaries will be financially taken care of if you are no longer physically there to support them.
As an employed individual, business owner or employer, you understand the importance of protecting and preserving what you have worked hard to create. In the event of a disabling injury or illness, disability insurance can provide you with income protection if you are unable to receive your normal paycheck.
Disability insurance (DI) offers a solid base to any financial strategy by mitigating risk and providing a sense of comfort to the insured and those dependent upon them. Disabling injuries and illnesses are often extremely unpredictable but can happen to anyone—in fact, 1 in 5 Americans today live with a disability.
Health insurance is a good way to help you manage your health care costs. You pay health care companies premiums – a set amount of money each month - and you get benefits to pay for your eligible health care expenses. This can include regular doctor checkups or injuries to treatment for long-term illnesses.
You can purchase individual health insurance through the Health Insurance Marketplace on your own. Even though it’s called individual health insurance, you can also find plans to cover your family. Because health care can be expensive, it’s a smart idea to have health insurance so you’re prepared for when you or your family have medical needs.
Why should I have individual health insurance?
- • Prepare for the unexpected. You never know when you’ll need medical help.
- • Staying healthy. Many preventive care services – like checkups - are covered at 100%.
- • It’s the law. Under the Affordable Care Act, you may pay a penalty if you don’t have qualified health care coverage.
It might be hard to imagine now, but chances are you’ll need some help taking care of yourself later in life. The big question is: How will you pay for it? Buying long-term care insurance is one way to prepare. Long-term care refers to a host of services that aren’t covered by regular health insurance. This includes assistance with routine daily activities, like bathing, dressing or getting in and out of bed.
A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will reimburse you for care given in a variety of places, such as:
- • Your home.
- • A nursing home.
- • An assisted living facility.
- • An adult day care center.
Considering long-term care costs is an important part of any long-range financial plan, especially in your 50s and beyond. Waiting until you need care to buy coverage is not an option. You won’t qualify for long-term care insurance if you already have a debilitating condition. Most people with long-term care insurance buy it in their mid-50s to mid-60s. Whether long-term care insurance is the right choice depends on your situation and preferences.
Before you shop for coverage, it’s important to learn more about the following topics:
Why buy long-term care insurance?
Companies that sell long-term care insurance
How long-term care insurance works?
Cost of long-term care insurance?
Tax advantages of buying long-term care insurance
How to buy long-term care insurance?
Understanding state “partnership” plans
Long Term Care
About half of 65-year-olds today will eventually develop a disability and require some long-term care services, according to a study revised in 2016 by the Urban Institute and the U.S. Department of Health & Human Services. Most will need services for less than two years, but about 14% will require care for more than five years.
Regular health insurance doesn’t cover long-term care. And Medicare won’t come to the rescue, either; it covers only short nursing home stays or limited amounts of home health care when you require skilled nursing or rehab. It does not pay for custodial care, which includes supervision and help with day-to-day tasks.
If you don’t have insurance to cover long-term care, you’ll have to pay for it yourself. You can get help through Medicaid, the federal and state health insurance program for those with low incomes, but only after you’ve exhausted most of your savings. People buy long-term care insurance for two reasons:
- 1. To protect savings. Long-term care costs can deplete a retirement nest egg quickly. The median cost of care in a semi-private nursing home room is $89,297 a year, according to Genworth’s 2018 Cost of Care Survey.
- 2. To give you more choices for care. The more money you can spend, the better the quality of care you can get. If you have to rely on Medicaid, your choices will be limited to the nursing homes that accept payments from the government program. Medicaid does not pay for assisted living in many states. Buying long-term care insurance might not be affordable if you have a low income and little savings. The National Association of Insurance Commissioners says some experts recommend spending no more than 5% of your income on a long-term care policy.