Tuesday, May 29, 2012

How Much Life Insurance do I need?

This is a great question, and I have heard several different versions of the amount one should own. The truth is that life insurance ownership is down, and less people buy it or continue to pay for it during tough economic times. I do believe that if you fail to plan you plan to fail, but at this point if you do not spend much time in this area it fine. You should just buy $500,000 to $1,000,000 in term coverage. (If you have children go $1 mil.) This can vary from person to person, please do not read this and think that I am not doing my due diligence, but the truth is some people are just scanning this information and they like to make quick decisions. If that is you, buy $500k to $1mil in coverage. Please keep in mind that life insurance companies have different requirements on how much life insurance that you can have in force based on your income. (Most carriers cap you out at your annual income.) The federal Government recommends 20x your annual income. (So, if you make $50,000 a year, they recommend that you buy $1 million. $50,000 x 20 = $1,000,000.)
If you would like to plan, I recommend using the online life insurance calculator at www.lifehappens.org. They are a non-profit organization dedicated to help insurance consumers make smart insurance decisions. I really enjoy their website and as an insurance professional, I recommend them to many of my clients. I hope this information helps you decide when you ask yourself, How much life insurance do I need?...

Tuesday, May 1, 2012

What the heck is Cash First Long Term Care and why should I care?

Cash first Long Term Care Insurance pays just like traditional long term care coverage, as a reimbursement for facility care, home care, and/or adult care services, but with a big twist...This type of LTC policy will also give the policy holder a choice to take a cash first benefit, usually equal to 30-40% of the daily or monthly benefit at the time the cash benefit is turned on. Additionally, a good cash benefit policy will allow you to switch back and forth from facility care to cash payout from month to month as your needs change.

That was a lot of insurance jargon I just threw at you, let my simplify it. Long term care is usually paid out based on a monthly amount that will pay out for covered home care and/or facility care. (Sometimes this monthly pay out amount can be set to grow at 3 - 5% compound or simple interest, and the cash benefit will also be set to do the same.)  So, at the time that you need your payout to cover LTC, you can choose to take your cash benefit instead of the monthly reimbursement amount. For easy math's sake, lets assume that your LTC policy was paying out $5,000 a month at the time you need the coverage, then 40% of $5,000 a month = $2,000 a month in cash direct deposited to your bank account instead of $5,000 reimbursed after you have paid for the care. This is a great benefit to have, especially if your LTC event starts out slowly, IE. 3 hours a day of home care at $20 an hour. You can take your cash and spend it any way that you like.

Also, your lifetime pool of money can last longer than planned if you are taking less money. If your LTC policy was set to payout $5,000 a month for 3 years then your policy would pay out a lifetime benefit of $180,000 or $5,000/month x 36 months). However, you could take $2,000 a month in cash for 7.5 years!

I like to think of the cash first benefit as a disability insurance / LTC care policy, it has the same premise, a cash payout due to accident or sickness that leaves you with incapacity. These new policies add a lot of value and as a LTC producer, I show these policies at EVERY long term care presentation. As a matter of fact, I have not sold a non cash benefit policy in over a year now. People see a lot of value in them. If you have any questions on cash first benefit Long Term Care coverage, please let me know. You can email me at ryanaarow@gmail.com. There are no strings attached and chances are I am not licensed in your state anyway. If you are in NC, SC, VA or GA, I can help write you policy, I will be glad to quote you and work with you pressure free through the mail on your own time. All advice and quotes are free.