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Insurance Matters

Insurance transfers the financial risk of life's events to an insurance company. A sound insurance strategy can help protect your family from the financial consequences of those events. A strategy can include personal insurance, liability insurance, and life insurance.

Life Insurance:

kids running

Protecting Those Who Matter Most

Life insurance has the potential to offer protection at a crucial time for those who matter the most to us. Life insurance needs are different at different times in life. During working years, life insurance may be able to help your loved ones avoid drastic changes in lifestyle in the event of your passing. During retirement, life insurance can be positioned to offer additional tax and estate benefits. Regardless of your life stage, consider reviewing your life insurance needs annually to account for changes in your family situation.

To understand life insurance, you need to understand the answers to three questions:

First, how does it work? How does life insurance function, step by step?

Second, how much do you need? How much insurance coverage will it take to meet your obligations?

And third, what are your life insurance options?

First, how does life insurance work?

All life insurance products fall under one of two broad types: term life insurance and permanent life insurance.

Term insurance is the simplest form of life insurance. It allows policyholders to purchase coverage for a specific period of time at a specific price. Term insurance is normally less expensive than permanent insurance.

Permanent insurance does not expire. It remains in place as long as premiums are paid.

How much life insurance do you need?

(There are general estimates available based on multiples of income. However, if you are looking for a more accurate estimate, consider completing a "DNA test." A DNA test is a "Detailed Needs Analysis" that takes into account a wide range of financial commitments to help better estimate insurance needs.)

The first step is to add up needs and obligations.

Start with your family’s short-term needs. How much will it cost to cover your final expenses, such as a funeral, final medical bills, and any outstanding debts, such as credit cards or personal loans?

Next, look at your family’s long-term needs: how much will it cost to maintain your family’s standard of living? How much is spent on necessities like housing, food, and clothing? Also, consider factoring in expenses such as travel and entertainment. Answering the question, “What would it cost a year to maintain this lifestyle?” is a good place to start.

Finally, look at your family’s future obligations. Will aging parents need some kind of support? Will children or grandchildren need help with college costs? And so on.

Next, take a hard look at your family’s liquid assets.

Liquid assets are assets that can be redeemed quickly and for a predictable price. Generally, houses and cars are not considered liquid assets since they may require time to sell and because selling them may adjust your family’s standard of living.

Needs and obligations—minus liquid assets—can help you arrive at a better idea about the amount of life insurance coverage you may need.

Keep in mind that this is just a quick exercise. While it’s a good start at understanding your insurance needs, a more detailed review may be necessary to better assess your situation.

What are your life insurance options?

All life insurance products fall under one of two broad types: term life insurance and permanent life insurance.

Term insurance is the simplest form of life insurance. It allows policyholders to purchase coverage for a specific period of time at a specific price. Term insurance is normally less expensive than permanent insurance.

Permanent insurance does not expire. It remains in place as long as premiums are paid.

Long-Term Care Protection Strategies:

Long-term care can be an expensive drain on family resources. And people might be surprised by the number of Americans who may need long-term care if current trends remain in place.

It makes sound financial sense to develop a strategy to protect yourself—and your family—should the need for long-term care arise.

Since so many people over age 65 are expected to eventually need some level of long-term care it makes sense to have a better understanding about long-term care and how it works—and to consider what you can do to prepare financially.

To do that, we need to examine three key questions:

First, what is long-term care?

Second, how much does it cost?

And third, what are your long-term-care funding options?

What is long-term care?

Long-term care includes skilled nursing care — such as the rehabilitative care needed after an extended hospital stay. But that’s just one of the many types of care available.

Long-term care also includes assisted living facilities. These are environments for individuals who can no longer function independently but don’t need daily care. These facilities offer occasional help with what are referred to as “activities of daily living.” These include help bathing, dressing, eating, transferring—getting in and out of bed or wheelchair—and walking.

It can also include home health care, that is, occasional help with the activities of daily living we just listed, as well as help with meals, budgeting, house cleaning, medication management, and even transportation. In this case, however, the help is offered by hired assistants who come to your home on a regular basis.

It can also include home health care, that is, occasional help with the activities of daily living we just listed, as well as help with meals, budgeting, house cleaning, medication management, and even transportation. In this case, however, the help is offered by hired assistants who come to your home on a regular basis.

Long-term care even includes respite care—that is an occasional break for family members who provide long-term care services.

Next question: how much does care cost?

The costs vary state by state and region by region.

The national average for assisted living centers—single occupancy—is $43,200 a year. The average cost of a skilled care facility — again, single occupancy in a nursing home — is much higher at $91,250 a year.

The price can range widely from there. Some areas—Utah and Missouri, for example—are somewhat lower than the national average for long-term-care costs. Others—like New York or California—are quite a bit higher.

Source: Genworth 2015 Cost of Care Survey

What are your options for long-term care?

There are many, however your primary choice is between two options: self insure or purchase long-term-care insurance.

Disclosure. This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in education you about insurance generally and not to provide personal advice. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company.

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