As we approach retirement, many people have questions about their future needs. One of the common concerns is centered on insurance in retirement. Other than insurance for one’s car, home, and healthcare, many retirees believe that they have no other need for insurance products. The truth, however, is rather different.
There are a number of insurance products that soon-to-be retirees should consider in the overall retirement planning process. Each of these supplemental insurance products can provide coverage for gaps in other insurance types, and may be right for your specific needs. Let’s learn more about retirement insurance:
Medicare Supplemental Insurance
For retirees 65 years of age or older, Medicare Supplemental Insurance is a great way to ensure adequate health care coverage. Let’s face it – medical insurance in the United States is a mess. Competing plans, ever-increasing premiums, lack of coverage for pre-existing conditions – all of these factors make many healthcare insurance plans a real gamble, especially for retirees. Medicare insurance does not cover all expenses; things like long-term care and most prescription drugs are not covered by the 80% plan. So, supplemental insurance plans can cover the other 20% not covered in Part A and Part B plans. Supplemental insurance may also offer services that are not part of the regular Medicare plan. And, there’s another type of supplemental coverage that is referred to as “Part D”, which covers many prescription drugs for retirees.
are Supplemental Insurance is a great way to ensure adequate health care coverage. Let’s face it – medical insurance in the United States is a mess. Competing plans, ever-increasing premiums, lack of coverage for pre-existing conditions – all of these factors make many healthcare insurance plans a real gamble, especially for retirees. Medicare insurance does not cover all expenses; things like long-term care and most prescription drugs are not covered by the 80% plan. So, supplemental insurance plans can cover the other 20% not covered in Part A and Part B plans. Supplemental insurance may also offer services that are not part of the regular Medicare plan. And, there’s another type of supplemental coverage that is referred to as “Part D”, which covers many prescription drugs for retirees.
We’ve all faced nearly constant attempts of insurance salespeople trying to sell us some kind of life insurance plan. There are many such plans, each with their own strengths and weaknesses. For retirees, the typical response to life insurance sales is “no, thanks”. If you are retired and your children have grown up, life insurance doesn’t make a lot of sense. If you have steady retirement income from investments and/or some kind of employer pension or Social Security benefits on top of that, that insurance makes even less sense.
However, there are a couple situations where life insurance DOES make a lot of sense. As an example, think about the situation you’d face if you have a disabled child and die unexpectedly. How will that disabled child continue to receive the care he or she needs? If you are retired from your regular job but still working elsewhere, life insurance can offer some protection for family members if you were to die suddenly and lose income. Funding a charity or non-profit organization with a “legacy” plan is another situation where life insurance products make sense.
Long-Term Care Insurance
As we age, the possibility that we will need extensive medical care increases dramatically. It’s no surprise that many elderly people find themselves needing long-term health care. Medicare doesn’t cover long-term care, and many other health insurance plans will run out of benefits if care stretches past a few weeks. What can you do?
Long-term care insurance seems to be one of the best ways to provide healthcare coverage. However, many financial professionals warn clients away from such plans. They can be extremely expensive, quickly cutting into retirement savings and the fixed incomes many retirees have to work with. If you can no longer afford the premiums, the policy is canceled and any money you have spent on the plan to that point is lost. There are a couple of upsides to long-term care insurance, but it is best to speak to a financial professional for details before purchasing this kind of supplemental insurance.
Sometimes referred to as funeral insurance, pre-need insurance is a supplemental plan that covers expenses associated with your death. These expenses can include embalming, graveyard plots, burial fees, funeral services, and transportation. While Social Security provides some funding for funeral and burial expenses as part of its benefits, it is never enough.
A pre-need insurance plan is purchased and funded well before the account holder dies. These plans are often sold by funeral homes, and while many can provide sufficient coverage for death expenses, many other plans do not. The fine print is key here, and in worst-case scenarios, funeral homes that sold pre-need policies go out of business or refuse to honor any insurance agreements. Again, a financial planner can help you determine if this kind of supplemental insurance policy is right for your current and future needs.
When most people think of retirement, thoughts of long ocean cruises, exotic destinations, and extended tours come to mind. In fact, travel is commonly at the top of the list of retirement goals by many people. For those people who are planning to hit the road after they retire, travel insurance makes sense.
What is travel insurance? There are a couple of kinds, with one that covers expenses associated with trip cancellations and another that provides more extensive coverage. This coverage can protect travelers if they need a medical evacuation, fall seriously ill on a trip, or lose luggage and belongings. If you plan to travel, speak to an insurance professional about travel insurance plans and what they do or do not cover.
Insurance is not something most people are comfortable thinking about. For retirees, as long as our health care, vehicle, and home insurance plans are up to date, we believe that’s all we ever need, insurance-wise. Supplemental insurance products can help cover gaps in traditional insurance coverage. Speak to retirement planning professionals and insurance companies to explore supplemental plan options for your specific needs.