Friday, November 22, 2013

Are you carrying enough insurance for your Retirement?


Insurance is a realm of the financial world that all too often seems to be intentionally confusing. Fortunately, auto insurance is fairly straightforward, but there’s not many other types on the market today that really are easily understood. There are deductibles, coverage limits, acts of God, and any of a thousand other terms that you really only hear of in paperwork for buying a policy. How are you supposed to understand it when it’s the people trying to sell you the stuff that are explaining it to you? Can they really be trusted to be fair, or are they working on the premise that the more they sell you, the more money they’ll make? First off, you need to slow down a bit. There’s a lot to understand, and if you try to rush through it, you could get taken advantage of, particularly if you’re near retirement or you’re already retired. When you’re thinking about a certain insurance policy, regardless of what it is, you need to make sure you completely understand the policy you’re about to buy. Not taking your time with it can lead you to buy insurance that not only won’t do you any good, but may also be a complete waste of money!

Insurance is a product and a commodity developed to make companies a lot of money, and to help you out some of the time. In fact, actually using the insurance you’ve been paying for can make you a bad risk in the eyes of some insurers, regardless of how much you might have paid into said insurance company. Let’s say you’ve been with the same auto insurance company for 40 years, and have paid nearly $300,000 in that time for auto insurance. Did you know that they can drop you from their insurance if you’re involved in an accident? Well, perhaps not “drop” you immediately, but rather “choose not to continue in a relationship with you.” It’s a dog-eat-dog world in the realm of insurance, so always look out for your own best interests first, even if you have known your insurance agent for 40 years.

Health insurance is another sticky situation for retirees or for folks nearing retirement. If you’re laid off at age 58, and can’t find another job, but slip through the cracks where public health care assistance is concerned, then you might end up in a bad way should you get sick. It’s not a pleasant thing to think of, but those four years during which you may be unemployed and are not eligible for full-coverage medicaid also tend to coincide with the approximate average age of cancer diagnoses. If you’re not a fan of the Affordable Care Act, this by itself might just be enough to change your mind, since insurers won’t be able to turn you down for individually-purchased insurance just because you might have been diagnosed with a major illness prior to your layoff and consequent loss of company-sponsored health coverage. 

During retirement, Medicare insurance is a great way to pay medical bills, but it doesn’t cover everything. These gaps in medicare coverage for retirees can get expensive, and are particularly tough for seniors who require specialty prescriptions for their wellness plans. It is generally accepted that Medicare will only cover half to three-quarters of your medical expenses during retirement, so an additional plan, combined with some savings set aside before you retire, is a good idea to ensure that the health care you need at retirement won’t put you in the poor house while you are retired! 

There are insurance products that you’ll need during retirement, but they’re not the same that you had when you were working. A great resource to look to is the AARP, whether you’re a member or not. Through them, you can find excellent resources to help you pare down your options as a retiree and avoid getting taken to the cleaners by unscrupulous agents!

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