Retired People: Insurance Concerns

One of the major insurance concerns for retired people is healthcare costs. The increasing cost of healthcare is a significant issue for retirees, especially since Medicare may not cover all their medical expenses. This means that retirees may need to purchase supplemental insurance or pay out-of-pocket for their medical treatment.

Health insurance

If you retire before the age of 65, you will need to find alternative health insurance coverage until your Medicare benefits kick in. Here are some options to consider:

• Consolidated Omnibus Budget Reconciliation Act (COBRA): COBRA allows you to stay on your employer's health insurance plan for up to 18 months after leaving your job. However, you will have to pay the entire monthly premium yourself.
• Employer-sponsored retiree benefits: Some companies offer retiree health plans for their employees, which are often similar to the group health plan for active employees.
• Health insurance marketplace: The Affordable Care Act (ACA) health insurance exchange provides access to affordable health insurance, even with pre-existing medical conditions. You may be eligible for a premium tax credit based on your income.
• Medicaid: If your income decreases after retirement, you may qualify for free or low-cost health insurance through Medicaid, a federal program administered by each state.
• Spousal insurance: If your spouse has an employer-sponsored health plan, they might be able to add you to their plan.
• Private health insurance: You can purchase a commercial policy directly from an insurance company or through a broker, but these plans can be expensive and may not offer premium tax credits or cost-sharing benefits.
• Short-term insurance plans: These plans provide temporary medical coverage, lasting from less than 3 months to 3 years, depending on your state. They are typically less expensive than ACA plans but offer fewer major medical benefits.
• Membership organization benefits: Some membership organizations offer access to affordable health insurance coverage and discounts on healthcare.

Life insurance

There are various types of life insurance policies, each with unique features and benefits. Term life insurance, for instance, is temporary and offers coverage for a set period, typically 10 to 30 years. Whole life insurance, on the other hand, is a type of permanent life insurance with no expiration date as long as premiums are paid. Universal life insurance is another form of permanent coverage that allows for adjustable premium payments. Burial insurance, also known as final expense or funeral insurance, is a small whole life insurance policy designed to cover funeral costs, typically ranging from $5,000 to $35,000.

When deciding whether to keep life insurance during retirement, it's essential to consider your sources of income, beneficiaries' needs, and final expenses. If you have substantial assets, life insurance can be used strategically to manage estate taxes. Additionally, life insurance can facilitate charitable contributions by designating a charity as a beneficiary.

While there is no one-size-fits-all answer, seeking advice from a financial planner or a fee-only insurance consultant can help determine if life insurance is necessary for your specific situation.

Travel insurance

When buying travel insurance, it's important to compare the options available and not to rely on the default option presented by your travel provider. There are many considerations to take into account, like how far from home you plan to be, the potential for injury or sickness (including your pre-existing medical conditions), and what may already be covered by other insurance plans you have.

• Allianz offers excellent coverage for travelers over 65. It can help make payments for medical treatments overseas, even in the local currency and their preferred payment methods, to keep you from paying out of pocket.
• Medjet’s supplemental coverage for medical transportation helps you get to your home or the hospital of your choice. It includes air medical transport.
• Travelers insurance covers a whole year of trips with the option to upgrade several features. The add-ons include “Cancel For Any Reason” insurance and trip interruption coverage.
• On certain types of trips, such as a cruise or a Caribbean resort that is prone to hurricanes, using the travel provider’s recommended insurance can be a good bet.

When choosing travel insurance, seniors should look for plans that cover medical costs, including pre-existing conditions, medical emergencies, emergency assistance, evacuations, transportation costs, and non-medical expenses, such as travel advice, trip cancellations, and stolen luggage.

The average cost of senior travel insurance is $434 per trip, but this can vary depending on the age of the travelers, the length of the trip, and the total of the non-refundable trip costs.

Home insurance

When it comes to home insurance for seniors, it is recommended to work with an experienced agent who can tailor the coverage to their specific needs. Shopping around and comparing rates from multiple companies is also essential, as well as considering companies that cater specifically to seniors, such as The Hartford's AARP home insurance partner program, which offers discounts for members.

It is worth noting that home insurance rates are generally based on location and factors related to the house itself rather than the occupant's age. However, retirees tend to stay at home more, which can result in lower premiums due to reduced risks. Loyalty discounts are also available from companies like Allstate, offering up to 10% off for long-term customers.

Seniors should also consider the value of their possessions and ensure their coverage is adequate. Standard policies may have lower limits for valuables like art and jewelry, so additional riders may be necessary to ensure full coverage. Liability coverage is another critical component, as it protects against injuries or damage claims by others. Most policies set a minimum of $100,000, but increasing this limit to at least $300,000 is recommended to provide more comprehensive protection.

Long-term care insurance

There are two main types of long-term care insurance policies: traditional and hybrid. Traditional policies, also known as stand-alone policies, offer a predetermined benefit amount that is paid out over a specified benefit period, usually two to five years. On the other hand, hybrid policies combine long-term care coverage with another benefit, typically life insurance or an annuity. While hybrid policies offer the advantage of a guaranteed death benefit, they tend to be more expensive than traditional policies.

When considering long-term care insurance, it is important to carefully review the coverage amount, benefit triggers, benefit period, covered care settings, waiting or elimination period, and reimbursement or indemnity model. Additionally, factors such as age, health status, gender, and marital status can impact the cost of long-term care insurance. It is recommended to purchase long-term care insurance in your mid-50s to early 60s while you are still relatively healthy and before age-related health issues arise.

While long-term care insurance can provide peace of mind and protect your assets, it is important to weigh the high premiums and exclusions that may be associated with these policies. It is also worth noting that traditional Medicare does not cover long-term care beyond some skilled care after hospitalization. Therefore, it is crucial to carefully assess your individual needs and financial situation before deciding whether long-term care insurance is the right choice for you.

Frequently asked questions