Ken Himmler.com

What is life insurance?

A contract

Technically, life insurance is a contract between the policy owner (which can be you, “the insured,” or a separate party) and an insurer. The policy owner agrees to make premium payments, and the insurer agrees to provide a specified sum to a designated third party (the beneficiary) upon your death.

Tip:           Contracts, including life insurance contracts, are governed by state law.

And a will substitute

Because proceeds are paid directly to the beneficiary, life insurance can bypass the probate process, saving both expense and delay.

Purchased for four primary reasons

Life insurance is one of the biggest players in the estate planning game. For some, it is the only way to ensure that family members will be able to support themselves after the death of the primary wage earner. For those with larger estates, life insurance can provide the funds needed to pay estate taxes (and other costs) without liquidating estate assets. For those with a business interest, life insurance can be used as a vehicle for business succession. Finally, for those with a generous spirit, life insurance can permit you to make charitable gifts.

Advance planning needed to avoid taxes

Although life insurance proceeds are generally received by the beneficiaries income-tax free, they may be subject to estate taxes if you do not plan in advance.

For more information on estate planning or life insurance to pay estate taxes you can go to http://kenhimmler.com.

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What is life insurance?

Life insurance is a legal contract between an insurance company and a policyowner and is governed by state law. Under the terms of the policy contract, the policyowner pays premiums in exchange for the promise of payment of a specified amount of money to a named beneficiary when the insured dies. The policy itself contains provisions specifying the rights and obligations of the parties under the contract.

The specific purpose of life insurance is to replace the economic loss resulting from a person’s death using money from a pool of funds to which many people contributed a relatively small amount.

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Here we are in another day of la-la land with the U.S. and their drug policies. As I was doing research on the portfolios today I noticed some rather odd gyrations within the pharmaceuticals. When I looked further I noticed that just overnight six very popular drugs have doubled in price. As an example Ambien went up 160% in price. Do I have an answer for this, no. I will say that it is primarily a problem with the U.S. Last June (2007) I traveled to Germany to get back surgery done because the cost of this in the U.S. would have been five times as high as it was in Germany. The greatest part of it was it was a single price of 34k. This included everything from the surgery, the post-op and the drugs. If you have ever had any medical work done in the U.S. be prepared to pay $40.00 for a roll of surgical tape. That is another story where a local hospital did in fact try to charge my insurance company $40.00 for surgical tape – until I complained that I could get a roll of hockey tape for $2.00.

Here is the problem:

1) When you are retired or you are going to retire plan on needed a nest egg of about $225,000 per person for medical expenses. (Assuming you retire at age 60 – if you retire earlier it will be more)

2) Plan on an average annual increase of 15% on all medical expenses.  (This sounded good until the 100% increase overnight on drugs)

3) Plan on a 7 out of 10 chance that you will in fact need long term care before you die.

I dont know about you but getting older is really expensive. If you have had an experience with medical expenses ruining someone retirement leave a comment.

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Also check out the other post/article I wrote on Medical Expenses in retirement at

http://www.kenhimmler.com/2008/08/06/healthcare-in-retirement

For an individual who wants to do his or her own investment research on individual

stocks, bonds, or other financial assets, a tremendous number of resources are now available in the marketplace. These can range from basic sources, such as

The Wall Street Journal, to more sophisticated investment research available over the Internet and through subscription services. The following is a brief discussion of the more widely used investment research sources.  For more information on investments such as investment strategies or investing for retirement, you can go to http://kenhimmler.com.

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What is cash value?

Term insurance charges an increasing premium (annually or in bands) to reflect the fact that the insured is aging and, each year, more likely to die. Cash value life insurance has a level premium that is larger than necessary in the early years of the policy to offset the increased costs of insuring the individual in the later years. This excess premium is invested and kept in an account known as the cash value account. In the event that you surrender the policy before death, this excess premium and its earnings are returned to you.

Cash value, by any other name . . .

Since cash value life insurance, also known as permanent life insurance, comes in many product varieties, people often get confused. Whole life, variable life, universal life, and variable universal life are among the most common cash value life insurance products found in today’s marketplace. All of these policies operate in much the same fashion. (For the purposes of this discussion, where they differ is in how the cash value is invested.)

For more information on other life insurance such as life insurance to pay estate taxes, you can go to http://kenhimmler.com.

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What health care benefits are available in retirement?

Medicare

In general

Medicare

is a federal health insurance program created in 1965. Medicare primarily assists those who are 65 or older, but if you are disabled or have kidney disease, you may be eligible for Medicare coverage no matter what your age. Medicare currently consists of

Part A

(hospital insurance),

Part B

(medical insurance),

Part C

(which allows private insurance companies to offer Medicare benefits), and

Part D

(which covers the costs of prescription drugs), with each part having its own eligibility requirements. You may qualify for one or more parts, or you may choose to accept or decline coverage if you are eligible. Many health policies limit coverage for Medicare-eligible individuals regardless of whether they have accepted Medicare coverage.

Medicare benefits for disabled individuals

Under certain conditions, the disabled are eligible to enroll in Medicare before age 65. If you have been receiving (or have been entitled to receive) Social Security disability benefits for at least 24 months (not necessarily consecutively), you may be eligible to enroll in Medicare. To enroll, you must be entitled to benefits in one of the following categories:

·         A disabled individual of any age receiving worker’s disability benefits

·         A disabled widow or widower age 50 or older

·         A disabled beneficiary who is older than age 18 and receives benefits based on a disability that occurred before age 22

In addition, Medicare may be available at any age if you are disabled as a result of chronic kidney failure requiring dialysis or a kidney transplant. For more information, see

Medicare Benefits for Disabled Individuals.

Qualified Medicare Beneficiary program

If you have limited means, you may be eligible for the Qualified Medicare Beneficiary (QMB) program. Here, your state’s Medicaid program may pay for your Medicare Part B premium, Part A and Part B deductibles, and coinsurance requirements. Eligibility rules may vary from state to state, but in general, you must meet the following three criteria:

·         You must be entitled to Medicare Part A

·         Your income must be at or below the national poverty level

·         The value of your assets must be below a certain level

There are also other related programs that have somewhat less restrictive eligibility requirements. For more information, see

Qualified Medicare Beneficiary Program.

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What is the financial impact of premature death?

If you are single

If you are single with no dependents who rely on you for financial support, then it is likely that your premature death will not have a financial impact on your survivors. However, if you have dependents who rely on you for financial support, your death may be a financial burden to your survivors. Life insurance can provide the needed cash to reduce that financial burden.

If you are a single parent

Your premature death as a single parent can have a serious financial impact on your survivors. Life insurance is a cost-effective way to make sure that your children are protected financially should anything happen to you.

If there are two wage earners in your home

In most homes that have two wage earners, both individuals are dependent on the other financially. Life insurance can provide income to the surviving spouse and allow your family to maintain its standard of living.

If there is one wage earner in your home

If there is only one wage earner in your home, the premature death of the wage earner could cause hardship on surviving family members. There may be a need, therefore, for the wage earner to have life insurance to ensure the surviving family’s financial stability. Also, the premature death of the at-home spouse could create financial hardship for the surviving family. This loss could increase the costs of housekeeping or child care, if applicable.

If you are an adult child who supports your aged parents

If you are an adult child who supports a family of your own along with aged parents, your premature death could cause great hardship to your survivors. Life insurance will assist your spouse, who will now be responsible for aged parents and his or her dependents.

For more information on this life insurance and others, such as survivor life or elder insurance, you can go to http://kenhimmler.com.

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