Insurance and Retirement: Making the Right Decisions
As people go through different stages in their lives, their insurance needs change. The concerns they had when starting out are generally much different than the ones they have as their careers wind down.
As they get ready to retire, many people worry whether they are making the right decisions about insurance coverage. They know that there are certain issues that must be addressed so they can ensure they are properly covered.
If you are considering retirement, here are some key issues that you should consider.
Most people are used to getting health insurance through their employers. However, as they prepare to retire, they prepare for things to change. It’s a good idea to check in with your employer’s human resources department about options that may be available to you after retirement. Some employers offer coverage for retirees. This can be especially useful when people choose to retire before reaching age 65.
If retiree coverage is an option for you, make sure to ask questions. Employers aren’t required to provide this coverage, so the benefits they offer are often limited. Make sure to ask about the cost of insurance, as well as how much the plan will pay in different situations.
If retiree coverage isn’t offered and you are not yet 65, you will need to buy a policy on the private market. Traditionally, many early retirees had problems getting private health insurance, but the Patient Protection and Affordable Care Act (Obamacare) changed things. Now, private insurers cannot turn you down for coverage, and they are prohibited from charging you more than three times what a 20 year old pays. Still, coverage can be expensive. Working with one of our insurance agents can help you find the most cost-effective and complete coverage available to you.
If you are 65 or older, your local insurance agent can also help you understand what health care insurance policies are needed to supplement Medicare. Generally, Medicare and private insurance can work together to give you complete coverage. Medicare might be the primary payer, taking care of your bills first. If there are bills remaining, the secondary payer would typically cover the balance.
Leaving your employer behind might also mean saying goodbye to the life insurance policy offered as part of your benefits package. These types of plans are usually term life insurance policies. There is no cash value—only the coverage offered to your beneficiaries in the event of your death.
Losing coverage through your employer means that you should start thinking about purchasing your own coverage privately. As a retiree, there are two options available to you. You could purchase a term life insurance policy on your own. You could also pursue something called permanent life insurance.
Permanent life insurance policies provide lifelong protection (not just protection for a set term), and they also accumulate cash value upon maturation. Your coverage will remain in place as long as you pay your premiums. You can also access the money you pay in by withdrawing from the plan or borrowing against it.
There are several types of permanent life insurance available, including whole life, universal life coverage and endowments. The best way to learn the details of each of these policies is to talk with an expert about your individual needs and goals.
When choosing a specific plan, contact us, to talk to a local insurance agent who can answer your questions and provide guidance about insurance planning for your retirement.
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