Planning for the Future - Insurance


In planning for the future, insurance should be considered. There are many types. You will have to decide the cost/benefit issues, in other words, is the risk that you will need the insurance worth the cost of purchasing the insurance. Keep in mind that the older the person that needs the insurance, the higher the premiums are likely to be. Your attorney, accountant, and insurance agent can all help you decide.


Money Puzzle




Health Insurance

Health insurance can vary dramatically from company to company. Check your policy to see what is covered should you become disabled or need specialized care. Find out if there is a cap on payments or if services are restricted. Factor these findings into your overall plan. See Insurance Resources for more information.




Insurance Resources

The National Association of Insurance Commissioners offer several useful booklets for a small fee. Call at 1-202-824-1600.

Life Insurance Buyer's Guide
A Shopper’s Guide to Long-Term Care Insurance
Choosing a Medigap Policy


NCThe North Carolina Department of Insurance offers a wealth of information for residents. You may call them at 1-800-546-5664.


Most states offer citizens health insurance assistance. These programs may use trained volunteers to offer information and counseling on topics such as Medicare, supplemental policies, and long-term care insurance.

NC In North Carolina, as part of the NC Patient's Bill of Rights and housed within the Consumer Protection Division of the Attorney General's Office, citizens have the Managed Care Patient Assistance Program to assist with health insurance issues. This program can offer advice about appeals, coverage, and explain individual policy benefits related to managed care. Contact them at 1-866-867-6272.




Insurance Sellouts

It may be possible to sell your life insurance policy for cash. Pre-planning wouldn't include this option but knowing about it may give you some comfort should you need cash later for an unexpected situation.

There are several options to choose from. Before you make this decision, however, be sure to discuss the implications with your attorney and insurance agent. If you change your mind about wanting coverage, it may be more difficult to obtain an affordable new policy or to even find anyone to let you buy a new policy. So, make your decision carefully and get all the facts before you decide.

Senior Settlement or Life Settlement
This is the sale of an existing life insurance policy by its owner to a third party. The owner receives a cash settlement in exchange for transferring ownership and all other rights of the policy to that third party.

Viatical Settlement
This is the sale of an existing life insurance policy by a terminally ill individual for cash.




Life Insurance

Many life insurance policies offer special benefits and payments should you become disabled. Consider whether or not this might be a good choice for you before you purchase a plan. See Insurance Resources.




Calculating Costs

Long-Term Care Insurance

Generally, Medicare (the federal health insurance program for seniors), does not cover long-term care. Long-term care generally means care that is offered in assisted living facilities or nursing homes. Long-term care insurance covers medical and non-medical care should you need to move to a long-term care facility. Long-term care insurance is purchased through regular insurance companies.

In looking at different policies, get an actual copy and read the fine print.

  • Find out what triggers the insurance, in other words, what has to happen in order for you to use it. Who decides if the triggers have happened?
  • Find out whether the policy is tax-qualified or non-qualified. The type may have an effect on your taxes. Qualified plans adhere to the guidelines set by the Health Insurance Portability and Accountability Act of 1996. This law includes basic consumer protections - and uses the inability to handle two activities of daily living for three months as a trigger for benefits.
  • How flexible is the plan? Will your own doctor be allowed to authorize payment or will the insurance company doctor have to approve? Will you be able to receive care at home?
  • Does the plan pay "prevailing" or "usual and customary" costs or "actual" costs? Actual costs are the better choice.
  • Will the plan change as what is offered changes? Look for wording such as "In certain circumstances we will consider alternate plans of care."

Need help? Most states offer a Seniors Health Insurance Information Program (the name may vary slightly from state to state. Trained volunteers can answer your questions on traditional insurance, long-term care insurance, and insurance policies that cover what Medicare doesn't cover.


There are also several websites that rate the financial strength of long-term care insurers. This is important because you want them to be in business and able to pay your claims should you ever need to file any.

  • A.M Best - you type in the company's name on the homepage and it instantly gives you a rating.
  • Standard & Poor's - requires you to register but still offers free information.
  • Moody's Investors Service - click on "insurance" along the left side of the screen to get information on companies.
  • Weiss Ratings Inc. - offers a free list of its strongest and weakest rated underwriters of long-term care insurance.

Any insurance broker should be able to give you information on long-term care insurance as well. Remember, though, that they make their money by selling insurance policies.

Be sure to investigate whether or not it make sense, financially, to purchase such a policy. The wealthy can pay the bill independent of insurance. Medicaid will cover the very poor. As a general reference, if you currently have investable assets (exclusive of your home) greater that $1.5-$2 million, it may make more sense to "self insure" rather that to buy a policy.

Your state may offer tax credits for long-term care insurance. Be sure to check with your accountant or with your state department of insurance or with the Internal Revenue Service (IRS) (1-800-829-1040) to see if you can benefit from such a credit. Outside North Carolina, contact your State Health Insurance Counseling and Assistance Program.




Man Checking Papers


If you work outside the home, you may have retirement benefits offered by your employer. As you plan for the future, consider contributing the maximum amount. Your employer may offer a match. Talk to your plan administrator to find out what your options are and then consult with your accountant to determine the best tax choice for your situation.

If you are self employed, you are eligible to contribute to a number of different individual retirement accounts (IRAs). Again, consider making the maximum contribution. Your accountant should be able to help you determine which plan you qualify for and which is best for your situation.




Specialty Insurance

Specialty policies are those that cover specific potential problems. They can, for instance, cover cancer or other specific disabilities or limitations or burial costs. Be sure to carefully read what will be covered and what will not and when coverage will start and how eligibility will be determined. Remember that it may be impossible to get this type of coverage once you need it. Be sure to check into the financial strength of the company before you purchase.



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