Tag: Long-Term Care
Understanding Long-Term Care Insurance Options
Whether or not they prepared financially for it during their working years, the need for long-term care is a reality that most seniors must eventually face. Every situation is different, but most people as they age will either need long-term care themselves or find that their spouse needs it. Without proper planning, that can be a sobering truth indeed.
Long-Term Care Insurance Options for You
A 2017 study by Genworth Financial shows that long-term care, independent of medical bills, costs seniors anywhere from $18,000 a year (adult day care) to $97,000 a year (private room in a nursing home). And it’s a scenario the majority of seniors will face; about 70 percent of 65-year-olds will incur some type of long-term care costs in their lifetime, at an average cost of $138,000 per person.
For those who start thinking about long-term care resources in their ‘50s, purchasing a long-term care insurance policy could be a prudent option. But the premiums generally cost between $2,500 and $5,000 a year, and a senior will need to keep paying for the insurance after retirement. As with all insurance, it’s a gamble to theorize whether the expenditures in your younger years will be worthwhile, since no one knows how healthy their retirement years will be.
Other Options for Long-Term Care
Another option, and a relatively new product, is a life insurance policy with a long-term care rider. These policies are structured to allow for life insurance payouts when the policyholder is younger and has beneficiaries to protect, which will turn into long-term care coverage in that person’s later years. The rider accumulates the most value when entered into in a person’s ‘40s or ‘50s.
When a senior faces a dire need for long-term care, other options do exist to help fund that expense even if that individual didn’t plan for it in his earlier years. Some seniors liquidate assets like houses and cars, which they no longer need if they are moving into a care facility, to pay the bills. Others, if their assets have become depleted, can use Medicaid to help pay for continued care. But those who don’t wish to drain their resources or find themselves restricted to Medicaid-accepting facilities might find themselves in a bind with a pressing need for an alternative income source.
Life Settlements for Long Term Care Needs
Enter life settlements, in which seniors sell unwanted life insurance policies and receive a cash windfall that can be used for long-term care needs. Not every individual qualifies for a settlement, but declining health can often increase the odds that a settlement will be favorable. To learn whether you or your loved one could pursue a life settlement, try Magna’s simple life settlement calculator, or schedule a call with one of our specialists today.
The Top 8 Cities for Retirement in the U.S. in 2019
Once you reach retirement age, it’s important that you are able to manage your finances properly. Stretching the dollars you’ve saved may mean you’ll want an inexpensive place to live out your retirement. If you’re looking for U.S. cities with a low cost-of-living, check out our list below.
Where to retire in the United States in 2019?
8. Cleveland, OH
Cleveland’s annual living expenditures total around $36,000. This figure factors in important items such as your housing, healthcare and transportation costs. Frugal spenders who have managed to save a modest amount each year throughout their working lives will have no trouble managing their expenses in this city.
7. Augusta, GA
You can expect to spend $35,781 on an annual basis should you retire in Augusta. In addition to low costs for your basic needs such as food, housing, medical and transportation expenses, there are other reasons to choose this city in Georgia. Relatively warm summer temperatures are a major draw and many current residents report a high happiness index.
6. Brownsville, TX
There are several cities in the state of Texas that make excellent choices for retirement living. Brownsville is one such city, boasting a low cost of living of only $35,461 each year. Because it’s Texas, you’ll also enjoy warm or moderate temperatures all year round. If you want to experience other cultures, you’ll find a large Spanish-speaking community in Brownsville that is eager to welcome newcomers.
5. Toledo, OH
We’re back to Ohio, where you’ll only have to spend about $35,095 annually to enjoy a relaxing retirement lifestyle in Toledo. Groceries for an entire year will only cost you $3,375 and even the highest estimated expense – transportation – comes in at an annual total of $6,814. Current residents report high happiness across various age groups and enjoy access to many of the city’s amenities.
4. Memphis, TN
Memphis offers you warm temperatures and friendly greetings for just $33,859 in annual costs. The city combines a laid-back atmosphere that is perfect for easy-going retirees along with the amenities and upscale venues one might expect from a major metropolitan area. If you’re looking for a slower pace as you enter retirement, but don’t want to sacrifice the modern conveniences of a major urban area, you should definitely consider Memphis as your retirement destination.
3. Jackson, MS
A move to Jackson might be perfect for you if you enjoy distinctive culture coupled with a low cost of living. Annually, you’ll only need to spend $33,676 to enjoy a pleasant lifestyle in Jackson. This, combined with the area’s Southern charm and culture make it an appealing option. Jackson is also currently undergoing revitalization, so you’ll be able to see the old merge with the new during this transformation.
2. Detroit, MI
Detroit is another place where you’ll see history and culture come together with modern innovation. Retiring to this city will only cost you $33,356 each year, which includes everything from housing to transportation. The metro area borders Canada, so you can experience the unique influence of the early French settlers. While parts of the city are sparse, the city is still a modern metropolis with plenty to offer to keep you entertained during retirement.
1. Birmingham, AL
Birmingham tops our list because we’ve found that it’s one of the least expensive cities to live in across all categories. Housing costs are a little higher on average than some other cities we’ve cited here, but Birmingham makes up for that with much lower costs in most other areas. Average healthcare costs for this city are comparatively low, as are the transportation costs. Birmingham capitalizes on this by offering modern, urban areas and attractions at more affordable prices than some bigger cities. Even as you stretch your dollars, you’ll find plenty of opportunities for entertainment or new experiences here.
This list showcases our top eight picks for affordable retirement choices in the U.S. While we’ve given you the best overall annual average costs, keep in mind that these can vary somewhat depending on things like your specific transportation needs (public or private) and your grocery budget. Your personal finance plan may be able to reduce these costs even more.
Financial Cleaning Tips for 2019
Millions of Americans, even those who are in their retirement years, have only a poor grasp of their finances. They do not know about the many financial instruments available to them on the open market. Many do not even have a dollar saved for retirement. It takes years to build up good financial habits. However, one easy step that every American can take is financial spring cleaning. Financial spring cleaning helps people understand and then make the most of their finances during a designated period every year.
Financial Cleaning: What you need to know in 2019 and beyond!
Know what you have
The first step of financial spring cleaning is to bring all of an individual’s assets and debts together. This task may be no small burden. In order to do this, an individual should pull together the account balances and financial statements that make up their financial lives. These statements may include every credit card and bill to pay as well. In addition to simple balances, display all of the fees and interest rates that they pay on these accounts.
This effort leads to the next step in the financial spring cleaning process. They may want to cancel credit cards with high monthly fees. Checking or savings accounts that charge high fees should also be reviewed and possibly cancelled so that those funds can be transfered into low-fee accounts. The process for these account changes can be tedious and cumbersome. As a result, it’s important to come up with a step-by-step plan to handle each problematic account.
For those accounts and debts that cannot easily be handled with a trip to the bank, financial spring cleaning can involve a plan to pay off any debts that an individual may have. It is helpful to restart the process of debt payment and arrangement every year since new debts may have been accumulated throughout the year. The best way to pay off debts is to arrange them by their interest rate. Families may want to shift payments to where they are putting as much money as possible towards the debt with the highest interest rate and then only paying the minimum payment on all of the other debts. Then, once the debt with the highest interest rate has been paid off, the individual or family moves on to the next debt and the debt after that until all debts are paid off.
The next step is to look at goals. Financial investment and savings should always be oriented towards goals. Simply throwing money into an account will break down the moment a severe expense pops up. One suggestion is to make savings goals and then devise plans to achieve these goals. While goals need to be specific numbers, they should not be immutable or unchanging. People need to be able to shift their goals based on major expenses, changes in salaries, or other contributing factors. Financial spring cleaning is a perfect time during the year to adjust different goals. It often occurs several months after a January raise or bonus and right around the time of a tax refund.
Finally, individuals need to reevaluate their holdings and where exactly their money is. When they bring all of their funds together, they will learn how much money they have in stocks, bonds, and other types of accounts. They will also be able to easily view the performance of those assets over time. Each website for accounts has graphs and charts that allow an individual to view their own progress. Financial spring cleaning is a great time to analyze the percentages of their funds that they have in each asset class. In some instances, an individual may have their money in an asset class that will most likely lose money in the short-term or the long-term.
They may determine that they have too much risk or not enough to meet their goals. This is especially the case for people who are about to retire and have too much risk. They need to start tapping into the money in the near future and cannot withstand an unexpected drop in the stock or bond market of several percentage points. In those cases, they can use this time of reflection to shift their holdings around to different asset classes. This effort can be helpful in reaching the goals established earlier in the spring cleaning process.
Financial spring cleaning is a time for pause and reflection of an individual’s assets. It may not ensure that a person can immediately work their way out of debt or secure enough money for a comfortable retirement. However, it is critical for making money over the long-term and for reducing any confusion or inefficiency in an individual’s portfolio. Whether individuals have a large amount of money or almost nothing at all, everyone should at least consider a yearly financial spring cleaning.
What Are The Different Types Of Life Insurance?
Life insurance is something that many people don’t prioritize until it’s almost too late. We get busy with the demands of adult life–career, jobs, family–and then something happens to make us question our longevity. It may be time to sign up for life insurance.
While most of us might think term life insurance is the best option, life insurance is something that should be thoroughly investigated to make sure you are getting the most bang for your buck. There are many options available, and spending some time to understand the differences between insurance types will help you choose wisely in this decision that will not only affect you, but your whole family. Here are some types of insurance, with the features of each:
The Two Main Types of Life Insurance: Term Vs. Permanent
We may be familiar with these types of life insurance, but there are several sub-sects within each category that offer different benefits to the policy owner. Before we cover the intricacies of these policies, let’s get an overview of term vs. permanent and what they mean for you:
Term Life Insurance
Term life insurance is considered the most basic type of life insurance policy, because it awards benefits only upon the death of the policyholder. There is no build up of cash value, and after the initial term that is agreed upon when the policy is created, the policy ends. Contract length can run anywhere from 15 to 30 years, with some of the better companies offering a 1-year renewable contract option beyond the initial term. The terms of the contract and the premiums stay the same for the life of the contract. This makes it difficult for the policyholder to request additional coverage when the initial term ends, as they would have to re-qualify for coverage at an older age, with possibly a more questionable health status. In some cases it is possible to convert a term life policy over to a more permanent form of coverage.
Permanent Life Insurance
Permanent life insurance is a policy that remains in effect as long as the policyholder is still alive, and it retains cash value and in some cases, even appreciates in value. While premiums may be a bit higher, there is additional security in realizing that this type of coverage will not, like term life insurance, eventually cease to exist.
The Different Types Of Permanent Coverage
Whole life coverage is the simplest form of permanent coverage, for it allows those who are budget conscious to stick to a premium that remains the same for the life of the policy. There are advantages to beginning a whole life contract at a young age, since lower premiums remain in effect as the policyholder continues to advance in age and possibly developing some adverse health conditions.
Universal life coverage has some of the same benefits of whole life; death benefits are guaranteed pending the death of the policyholder, and the policy steadily grows in value, providing additional security upon maturation. One additional benefit of universal and whole life policies is that they can be borrowed against to pay down debt, to refinance, or to make large purchases, although this is not a practice that most financial advisors would condone.
Variable coverage grows in ways similar to whole life and universal coverage, but the policyholder has the option of taking a portion of his account and investing it in equities that have the potential to grow much larger than a life insurance policy normally would. This could potentially make cash payout at the end of the policy much greater. If you an individual that would be okay with a certain amount of risk to acquire growth, this might be the policy for you.
Survivorship coverage exists for families where it is necessary to insure more than one person. This type of coverage is generally less expensive than holding two life insurance policies. Some policies pay out upon the death of the first family member, while others grow in cash value until the death of the last surviving policyholder. These types of policies are ideal for people looking to maximize their cash growth while minimizing their out-of-pocket costs.
Final expense coverage is typically purchased by seniors ages 50 and above who do not want the burden of their funeral and burial expenses taken on by their survivors. With the average cost of a funeral estimated at about $10,000 today, final expense coverage is a welcome benefit to families already experiencing grief and loss.
No medical exam coverage is a benefit to people with pre-existing conditions that may not be covered by an insurance provider. While this is beneficial to those people, the coverage comes with higher premiums and lower overall benefits than policies offered to people willing to undergo medical exams.
Thanks to the wide variety of options, almost everyone can get the life insurance coverage they need at a price they can afford. Ultimately you will need to determine the best choice for your needs, but knowing a bit more about what is out there will allow you to make an informed decision. There is tremendous peace of mind that comes with knowing you’ve made the right decision for you and your loved ones.
Am I eligible for a viatical settlement?
You may be eligible for a viatical settlement if you have an in-force life insurance policy that you’re willing to sell in exchange for a one-time payment. There are companies that specialize in buying life insurance policies from individuals who longer need or want their policies. In such an arrangement, the viatical company becomes the owner and beneficiary of the policy, and the buyer becomes responsible for premium payments. After the sale of the policy, the original owner no longer has any obligations or claims relating to the policy. Once the insured person dies, the viatical company collects the death benefit.
Does a viatical settlement make sense?
A viatical settlement does not make sense for everyone, but for individuals in certain situations, it could provide a much-needed infusion of cash to help with medical or other expenses. If you have a life insurance policy that you’re sure your beneficiaries will not need to rely on, and you are in need of a lump sum of money, a viatical settlement might be suitable. It’s important to understand that the amount you receive in exchange for your life insurance policy can be significantly less than the policy’s death benefit. You’ll also want to discuss any potential tax implications with your tax advisor.
How is my payout determined?
Under a viatical settlement, your payout is determined by the amount of the policy’s death benefit and your expected lifespan. Generally, the longer you are expected to live, the lower your payout will be. This is because the viatical company will have a longer period during which they will make premium payments on the policy – reducing their profitability. You may be required to have a medical examination in order for the viatical company to estimate your expected lifespan.
Choosing an Accelerated Death Benefit or a Viatical Settlement
Some life insurance policies have an accelerated death benefit, which allows the insured person to receive part of the policy’s death benefit while they are still living. Eligibility is usually reserved for situations where the insured person is suffering from a terminal illness. If you’re in this situation, an accelerated death benefit may be optimal, because you are able to retain ownership of the policy while receiving financial assistance. If your policy does not have an accelerated death benefit, or if it does include one and you’re not eligible to activate it, a viatical settlement may be a better option.
Want to learn more about Viatical Settlements? Contact Magna Life Settlements today!
How To Pay For A Senior Living Community With Your Life Insurance Policy
It’s a common refrain: seniors who have always thought they would want to stay in their home as long as possible have a change of heart when they realize how convenient and enjoyable a senior living community might be. Oftentimes, however, there is a high, one-time entrance fee that can range from tens of thousands of dollars to hundreds of thousands of dollars. These entrance fees are used for future long-term care costs. Additionally, monthly prices for such facilities can range from $1,500 to $6,000.
Seniors may be drawn to retirement communities for different reasons—the availability social connections and arts and enrichment activities, the convenience of meals and other services, or the understanding that the regular upkeep of a house has become too burdensome. But since studies show that only about 3 percent of Americans buy long-term care insurance, the desire to move into an all-inclusive community can also bring plenty of financial uncertainty. Even those who have engaged in careful retirement planning are often unprepared for the mounting expenses, and long-term care becomes more expensive every year.
Enter the life settlement, an option for seniors who are holding onto life insurance policies they no longer want or need. By selling an unwanted policy for a payout larger than the surrender value, people over 65 can use the funds to help pay for the entrance fee and/or monthly costs of a retirement community. Life settlements can be the answer for those who find that their monthly income is insufficient to pay for the living situation that best suits their needs in their golden years. A life settlement serves seniors financially two ways: 1. by providing a sum of money to help meet expenses and 2. by removing the burden of paying regular insurance premiums.
It’s easier than ever for seniors to research life settlements and, if they qualify for a favorable sale, to walk through that process with a life settlement company like Magna. The first step is to use Magna’s simple life settlement calculator tool to determine initial eligibility, and from there an individual can schedule a phone call with one of Magna’s settlement specialists to learn more about the settlement offer and the steps to convert life insurance into a windfall.
If your senior living situation is less than optimal and the lack of resources has become a barrier to moving into that retirement community you have been researching, find out today if a life settlement might be the answer. Every day more seniors are learning that their old life insurance policy has hidden value that can improve their lives now.
Help Your Clients Navigate Healthcare Finances
For seniors, health concerns often spring up unexpectedly, and the rising and prohibitive costs of quality health care lead to a burdensome financial situation for many people in their retirement years. An AARP study estimated that 65-year-old couples who retired in 2017 would face $275,000 of health care costs during retirement. When health expenses are a concern, seniors often turn to their financial advisors to help them navigate their limitations and choices.
Advisors must be adept at offering money solutions that are custom-built for a client’s particular needs, and the situation of a senior with health-care concerns is certainly different than a young married couple looking to start a college fund for their future children. So what are some principles that can guide advocates who are seeking the best financial path for their senior clients?
Make sure funds are accessible. A young investor with a long view toward higher education or retirement might be happy to invest in the stock market or another vehicle with a promising rate of return over a number of years, but seniors need resources that they can access easily when needs arise. A life settlement is one option that can provide quick funds for healthcare bills.
Understand the full picture. Does the retiree you are advising have long-term care insurance? Do he and his spouse hope to live in a retirement community or stay in their home as long as possible? Are they committed to maintaining investments to help their children and grandchildren? Financial goals and needs change over time, so an astute advisor will evaluate periodically to make sure a client’s portfolio fits his current situation.
Stay informed about new and innovative options. Even retirees who invest wisely during their working years can be hit with unexpected expenses, so advisors have a responsibility to stay informed on options that can increase their income in their later years. In addition to low-interest, easily accessed funds and the maximization of benefits from programs like Medicare and Social Security, advisors could offer a windfall to clients by providing information about life settlements. When a life insurance policy is no longer meeting a senior’s needs and the premiums are burdensome, a life settlement could be the optimal solution.
Advisors looking to give the full life settlement picture to their clients can review Magna’s settlement criteria here, or call a Magna specialist at 1-888-996-2475 to learn more.
Staying Healthy and Happy as You Age
There are many negative perceptions when it comes to getting older in America. The good news: the pessimistic perception of aging is changing. Most seniors feel younger than their actual age and a study that polled more than 10,000 seniors found that people grew happier as they aged.
The aging process doesn’t have to be as bleak as some make it seem. With the right mindset, you can shift your perspective on growing older. With the right plan of action, you can ease the difficulties of the physical part of the process as well.
Consumers Pay for Insurance Company Mistakes
A Wall Street Journal recent article entitled “Millions Bought Insurance to Cover Retirement Health Costs. Now They Face an Awful Choice”, discussed the recent trend of increases in rates for Long-Term Care insurance. The article discusses how many people were told that they would have level premiums to cover medical needs in the future. These consumers paid their premiums and kept their end of the bargain, only to be told that the insurance companies did not correctly estimate the costs and the risks.
This story is analogous to the recent trend in life insurance, where consumers were illustrated a premium stream at purchase. Later, when the insurance companies determined that they were not making the profit they had expected, they have sought to raise premiums after the fact to pass along this miscalculation to the insured.
This article quotes the president of Genworth Financial, Inc., a large seller of long term care insurance, as saying that the companies should never have priced the products as they did, and that the regulators should never have allowed it.
In both the life insurance and the long term care cases, consumers who believed what they were told, and paid their premiums, are now having the rug pulled out from under them. There were companies a decade ago who priced their policies correctly. These carriers suffered as consumers flocked to the more cheaply priced policies. Now the companies who priced the policies correctly do not need to change pricing, while those who undercut and mispriced policies are doing so.
This should not stand. If insurance companies, with scores of actuaries, price products incorrectly, they should stand by that pricing. When they are more profitable than expected, they don’t lower prices and give money back to the insured. Why should it work the other way?
Faced with this dilemma, American seniors must get creative about how to pay for long-term care or risk a major hit to their retirement funds.
The National Association of Insurance Commissioners (NAIC), the U.S. regulatory support organization created by the chief insurance regulators from all 50 states, formed a Long-Term Care Innovations Subgroup to study this issue. The group recently issued a report that identified some viable options for privately funding long-term care costs. Four specific options they laid out included the following:
• Single Premium Permanent Life Insurance Policies
• Annuity Long-Term Care Hybrid Policies
• Impaired-Risk Payout Annuities
• Life Settlements.
Of these long-term care financing options, a life settlement is the only one that does not involve seniors buying anything or spending any money out of their own pockets.
A life settlement is a proven strategy for generating cash from an unwanted or unaffordable life insurance policy. In a life settlement transaction, a senior sells his or her life insurance policy to a third-party investor for an immediate cash payment. The investor then takes over the premiums on the policy and collects the death benefit when the insured passes away.