|
|
|
|
| Your Life Link
4th Quarter 2008 |
 |
Greg Hoernschemeyer, CLU
Vice President
|
| Quick Links |
|
For more information about these topics, please contact
Greg Hoernschemeyer
at 513.745.0707.
|
|
|
Greetings!
Over the past several weeks there has been significant and rapid disruption in the financial markets. Following problems in real estate, mortgage and other financial sectors, the Fed's announced rescue of a major insurance carrier is drawing additional attention.
While the dust has not settled, the problem appears located in the non-insurance entities, which are not subject to the traditional conservative requirements - reserving, oversight, guarantee fund protection that have long made the insurance industry and life insurance a source of strength and stability to policyholders and the economy.
The life insurance industry has a long standing history and story to tell about keeping our promises to policyholders and serving as protection and savings safety net for families and businesses. In these challenging times, it is important we tell this story as often as we can and HORAN is committed to providing you with the resources and materials to help you understand the facts.
Please refer to the linked article for additional information: Worst Crisis Since '30s, With No End Yet in Sight, located at The Wall Street Journal.
|
|
Ten Things You Need to Know About Long-Term-Care Insurance
Now living longer than ever before, two out of five Americans eventually will need long-term care at some point in their lives.
Neither health nor disability insurance covers long-term care, leaving long-term-care insurance as the only option besides paying out of pocket.
Three of the ten things you need to know about long-term-care insurance are: |
|
|
|
|
- Medicaid Only Pays For The Indigent--And Don't Count On Medicare. Medicaid only pays for the indigent, and will not help middle-class health care consumers, who will quickly go through retirement savings if they should end up needing nursing care in their 60s or 70s. Do not look to Medicare to pay for it, either. Only if a Medicare enrollee spends at least three days in a hospital and then goes to a nursing home for the same condition that put him or her in the hospital will it cover the care.
- Long-Term-Care Insurance Protects Retirement Assets. Self-insuring requires assets that generate at least $100,000 to $150,000 a year in funds available specifically for long-term-care costs.
- Buy It Sooner, Rather Than Later. The younger you are when you apply for a policy, the more likely it is you will be approved--57% of those who apply for long-term-care insurance at age 80 or older are declined by insurers, while only 11% of those who apply between the ages of 50 and 59 are turned down.
See full story, located at Forbes.com to read about the other seven. |
The Ins and Outs of Life Settlements
The market for life settlements -- the sale of your life insurance policy to a third party -- is expanding rapidly, as many senior citizens find themselves with policies they either do not need or cannot afford.
Now there is a third option: selling the policy to an entity other than the insurance company that issued the policy in a transaction called a life settlement. The life settlement company continues paying the premiums and receives the death benefit when you die.
Life settlements are not for everyone. Only when your original reason for holding the life insurance policy no longer exists should you consider selling it. Some people can no longer afford the payments as their life insurance premiums become larger. There are also times when estate plans change. For example, some people buy life insurance to cover estate taxes; however, the estate tax exclusion is rising.
A couple can leave $4 million tax free to their heirs this year ($2 million from each spouse) and $7 million next year ($3.5 million each); therefore, families with estates that size or smaller no longer need the insurance.
People with unexpected health expenses also may want life settlements to help pay for their care.
See full story, located at Yahoo Finance, to read additional tips for consumers.
|
|
Securing Your Nest Egg
With traditional pensions disappearing from the workplace, you must depend on your 401(k)s and related defined-contribution plans to support you in retirement. However, if a disability limits your ability to fund such a plan, a nest egg would suffer in the long run. That is where retirement-contribution protection comes in. It is designed to continue funding your retirement if you should become disabled for a year or two, or permanently.
Falling Short. Before diving into retirement-contribution protection, you should first get standard disability coverage. If you are unable to work for any amount of time, standard disability insurance will help you continue to care for dependents, make mortgage or rent payments, and meet other needs. Standard coverage typically is available through an employer's benefit plan, and can be supplemented with individual policies.
Insurers have caps on how much income they will pay out each month under regular disability coverage. Someone earning $30,000 a year may be able to replace well over 75% of income; however, coverage for high earners could replace as little as 40% of your salary. People opting to get retirement-contribution protection to prevent a gap in retirement funding usually have to seek out individual policies.
How it Works. Coverage can be sold either in a stand-alone policy or as a rider to a regular disability policy. In judging eligibility, most companies require that you are already contributing to a defined-contribution plan, such as a 401(k), individual retirement account, employee-stock ownership plan or simplified employee pension. Insurers generally match your coverage to your previous year's contribution. You also get coverage for any employer match you were receiving on your 401(k) contributions.
With group policies - those you would get through an employer - contributions continue to be made, in most cases, directly into an employee's 401(k) plan or annuity. With individual policies, your insurer sets up an irrevocable trust in your name if you become disabled. Contributions to the trust usually begin six months to a year after a person becomes disabled, depending on the policy. Investment choices within the trust depend on the insurer. With the trust, any distributions or investment interest, income or capital gains are subject to taxes and must be paid annually - even though the interest, income and gains are reinvested in the trust. The taxes are paid by the trust out of assets it has accumulated.
Cost Factors. The cost of a policy depends on a host of factors including your age, the amount of coverage, and how long you are willing to wait after becoming disabled before contributions kick in. Before buying retirement-contribution protection, be sure to understand fully the fine print in your policies. Also, do not expect immediate benefits from the assets accumulated in your trust if you get disabled while you are still young. Generally, you will not be able to access the assets until at least age 65.
|
|
Questions or Comments?
Do you have a question you would like addressed in our next issue?
|
|
Horan Securities, Inc., doing business since 1996.
Disclaimer
This eNewsletter is a digest of information published by a variety of web-based sources and is published as a service to our users. Horan Associates, Inc | Horan Securities, Inc. is not the author of the material unless specifically noted. We review each article to ensure that it is related to the interests of our subscribers. Horan Associates, Inc | Horan Securities, Inc. does not endorse the individual authors of these articles, although Horan Associates, Inc | Horan Securities, Inc. has reviewed these articles, for accuracy and completeness and your independent review for personal relevance should be undertaken. Reliance on this material should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. All articles are copyrighted to their publishers. This publication is intended for general information only and not as legal advice. You should discuss specific details with your advisor.
Notice of Confidentiality
This email and any of its attachments may contain Horan Associates, Inc. | Horan Securities, Inc. proprietary information, which is privileged, confidential, or subject to copyright belonging to the Horan companies. This email is intended solely for the use of the individual or entity to which it is addressed. If you are not the intended recipient of this email, you are hereby notified that any dissemination, distribution, copying, or action taken in relation to the contents of and attachments to this email is strictly prohibited and may be unlawful. If you have received this email in error, please notify the sender immediately and permanently delete the original and any copy of this email and any printout. Thank you.
|
|
|
|
|
|
