Thursday, February 16, 2012

This one's for YOU (Part 1)

It occurred to me the other day, that I've offered few real concrete 'things to do' type posts. Sure, I write in generalities about things you should be doing with and for your family (upper generation) but I haven't offered much when it comes to what you need to be doing for YOU. That is about to change. I've talked about creating stream of income a time or two I think, but today, I'm adding a few other thoughts. These are things that I'd either like to be able to do for myself or that I'm currently working on the best I can.

Here's my list in no particular order. These are things you need to be doing for you, right now, today if you can. If it's already the end of the business day, permission granted to do them tomorrow. :-)

There are six points in all. In this first installment I'm giving you just three: buy long term care insurance; consider disability waivers for your life insurance premiums and review your entire insurance portfolio. In the next installment, I'll tell you (again!) about generating lasting (non-work) income; paying off your mortgage and creating a family account for emergent medical needs.

  1. Get a long term care policy.  I can't say that enough! Get one. Get one NOW. Here's why. First of all, like other kinds of insurance, premiums go up as you age, so unless your name is Benjamin Button, you're as young as you're ever going to be. Now is the time. Second, hopefully you're in reasonably good health so you can qualify. Run, don't walk,  and get a policy. The only thing I would add is that you need to understand the policy's provisions. Review the terms and conditions carefully and make an informed choice but understand that if you eventually develop a chronic illness, this one choice will stand in the gap between your family and financial ruin. Take a look at this article on the failure of the Class Act (a provision of the Patient Protection and Affordable Care Act of 2010 aka Obamacare) which sought to make such coverage widely available. Buried in there is this gem, "[fewer] than 3 percent of Americans now buy private long-term care insurance" but it doesn't say what percentage are being wiped out by LTC costs. I don't know that anyone knows. So be among the 3%. Swim upstream, swim against the tide. Whatever, just buy a LTC plan. Avoidance and ignorance are dangerously expensive.

    I would especially consider the policy's lifetime benefit maximum (which will give you a sense of how much other (non-care related) money you will need to have) and whether the policy pays to family members who may have to provide care. Some policies don't pay family caregivers at all, others pay only a small amount. This may be an add-on benefit that you can buy, but as in all things, consider your family circumstances.

  2. Call your insurance agent and figure out whether your insurance policies have disability waiver of premium riders. If not, get them.

    This seems like a simple enough thing, however, as my cousin's post Ouch! Ouch! Ouch! attests, it can become burdensome to try to keep up payments when funds are required elsewhere.

  3. While you're on the phone with your agent, why not also review your life and other insurance (annuity) coverages? If you live in Trinidad or the Caribbean, consider buying some health insurance. It's not considered necessary and often we have it from our jobs, but if you change jobs, lose your job, or just decide to strike out solo, you've suddenly got nothing. Make sure that you have what you need and what your family needs for their long term protection.

    As for other insurance/protection, when last did you consider increasing your contribution to your annuity/401k? If you work in the US and your company matches contributions to a maximum of some percentage of your income (usually about 4%), are you contributing at the maximum? If not, why not? You're leaving money on the table and it might be time to pick it up. For my Trini friends, do you own an annuity? If not, why not? Don't put all your eggs in your company's basket. Don't be entirely dependent on your employer to provide your retirement. Perhaps it's time to kick things up a notch?

    Because this is a lot, I'm stopping here so that you can process and consider (and hopefully act). I'll post the remaining three thoughts in a day or two.

No comments:

Post a Comment