The kids are back to school, the holiday season is right around the corner, fall activities are in full swing!
September brings up an important topic that is very overlooked- Insurance Awareness Month. We set this month each year to educate individuals about the need for insurance in everyday lives. Today I will cover a few insurance basic topics.
Insurance in its simplest form is a contract between an individual and an insurance company, where the insurance company promises to pay a beneficiary a specified sum of money upon the occurrence of a specific event. (ie: death, long term care, disability)
Life insurance policies help bridge a gap of lost income in the event of death. A common example is a husband and wife who have two kids and the mother is the primary earner of the family. A life insurance policy would help fund the husband and kids’ lives due to the significant loss of income from the wife's passing.
Think of your personal situation, if one earner of your family were to pass away due to unforeseen circumstances, would drastic financial changes need to be made to ensure you were able to keep living your life? If you answer is yes, we would encourage you to consider your need for life insurance. There are several different types of insurance available and our team at Creekmur Wealth will help you go over all these options to determine the best solutions for you situation.
Another common insurance is Long Term Care insurance. This type of insurance helps bridge the gap for the cost of nursing home care, hospice care, assisted living, and many other types of care. Long term care facilities are very expensive and typically cost around $5,000-$7,000 per month and the average stay at a facility lasts between 24-36 months. This could cost an individual anywhere from $120,000-$250,000 and even more if care lasted longer. Approximately 70% of people who turn 65 years old will need some degree of long-term care in their future.1
The Alzheimer’s associations estimate the total cost of care for the final five years of life is $367,000 for people with dementia and $234,000 for those without. Long term care would help pay for some or all these costs since Medicare or Medicaid will not cover these types of health issues. The typical cost for long term care insurance depends on gender, health, age, and other demographics. Women tend to pay more than men due to life expectancy. Annual Premium estimates show that at age 55, a male will pay on average $2,100-$2,500 and a woman will pay $3,700-$4,000 per year. Discounts for couples are given in some states as well.2
This type of care helps take the burden off family members and friends during the later stages of life. You will not have to worry about someone coming over multiple times a day to check on or help you out. Long term care is very expensive, and costs have drastically increased over history. This is a way to hedge rising insurance costs and supplement Medicare. There is not a one size fits all solution for long term care and individuals need to examine their family history to help make the an educated decision.
Many people struggle to discuss end of life issues which makes Life insurance and Long Term Care insurance both difficult topics to discuss with loved ones.
A trusted third party can help ask questions that are hard to ask and look at your overall financial picture. Planning ahead - before the needs arise - will help relive stress on yourself, loved ones, and family members affected by a health condition or need for long term care. At Creekmur Wealth our team of experts will examine your insurance needs and prepare options for you to consider.
If you are unsure that you have considered this important piece of your financial plan, let us help you start the conversation.
Best Regards,
Andrew Pisel
Wealth Advisor
Sources:
1. https://www.genworth.com/aging-and-you/finances/cost-of-care.html
2. https://www.alz.org/help-support/caregiving/financial-legal-planning/planning-for-care-costs
