Insurance Resources by Guest Blogger, Tony Steuer

Tony Steuer, our guest blogger shares some great insurance articles and updates for your planning needs. Tony is an Insurance Literacy Advocate, Founder of The Insurance Literacy Institute, Creator of The Insurance Bill of Rights and Author of The Questions and Answers on Insurance Book Series. His website is www.insuranceliteracy.org.

Resources for Long-Term Care Insurance

Thanks to Lisa Fu for the opportunity to be a resource for her article “3 Things to Know About Long Term Care Insurance” on Magnifymoney.com. Lisa takes a look at the basics of long term care insurance and the age at which a person should consider purchasing a long term care insurance policy. Long Term Care insurance is an important part of a financial plan as it is estimated that 70% of Americans will have a health issue that requires some type of Long Term Care services – home care, facility care, adult day care and so on. These are services that are not covered by Medicare. The average daily cost can be hundreds of dollars depending on your location and the type of service. To find out the cost in your area, visit the Genworth cost of care survey.

The complete article “3 Things to Know About Long-Term Care Insurance” can be read by clicking on the article name. A few highlights below:

Once in retirement, the average American is expected to spend as much as $250,000 on medical expenses.

Like any insurance, the trade-off with long-term care insurance is the leverage provided. If you can’t afford the premium and it doesn’t provide good leverage, investing in long-term care insurance might be unwise.

Steuer advises those who expect a need to purchase a long-term care policy after the age of 40. But purchasing long-term care insurance in your 40s also could save you hundreds of dollars in premium costs, compared to doing so in your 50s.
Depending on the health issue, you may not be able to meet the requirements to file a claim. To use the benefit, you have to be unable to perform two of six activities, such as bathing or feeding yourself. Your health may not be poor enough to use it as a result. “It is likely that a claim won’t be made until someone reaches their 70s.

You may not be able to afford it right now. If you have student loans and other expenses that have placed you in debt, paying for a long-term care insurance premium simply may not be possible. Steuer advises those who expect a need to purchase a long-term care policy after the age of 40 and if you have assets between $1 million and $5 million. “Someone who either has less than $1 million or more than $5 million should not consider it,”he says.

Long-term care insurance as an industry is going through some transitions. Prior to purchasing a policy, you should read my take on this: Can Long-Term Care Insurance Survive? The answer is a definitive yes and this article will provide you the knowledge to make a wise choice on this important coverage especially if “You Are in Denial About Long-Term Care Insurance“. And insurance regulators have formed a Long-Term Care Insurer Solvency Team. Insurance companies must remain solvent and profitable to be able to pay claims, unfortunately this was not the case for Penn Treaty policyholders (who can go here to get answers to their liquidation questions). It’s important to note that life insurance, health insurance, disability insurance and long term care insurance policy holders do have protection through the National Organization of Life and Health Guaranty Associations.

Key Person Insurance Coverage

Key Person Life and Key Person Disability Insurance is used to provide cash inflow when a key person is disabled or passes away. Thanks to Kristin Colella of RSL Media for the opportunity to be a resource for her article on Mutualofomaha.com on “Does Your Business Need Key Person Coverage”. Kristin takes a look at the impact to a business of a key person becoming disabled or dying and how insurance can be used to protect against that loss financially. When a key person is suddenly removed from company operations for an unspecified period of time or permanently, it will have an impact on the company financially.

The complete article “Does Your Business Need Key Person Coverage” can be read by clicking on the article name. Article excerpts including my comments follow below:

Keep in mind that not just any employee can be considered a key person. “The insurance company is going to want to know how that person is essential to the business, and will ask for financials and a job description to prove it,” says chartered life underwriter Tony Steuer, founder of the website The Insurance Literacy Institute. You will also need the key employee’s consent to take out the coverage.

In some cases, a business owner or partner can be insured as a key person. “Oftentimes, owners are the key people because a lot of the business is dependent on them or their connections,” Steuer says.

 

Sharing Economy Concerns:

Thanks to Ingrid Case for the opportunity to be a resource for her article on Time.com on “3 Tips for Seniors Looking to Make Extra Income”. Ingrid takes a look at how Seniors can earn money in retirement through the sharing economy (think: driving for Uber or Lyft, hosting guests through Airbnb or offering services through TaskRabbit”. As Ingrid points out, these are great ways to make extra money while setting your own hours, there are other considerations some of which I covered in “Thoughts on the sharing economy“. Article excepts including my comments follow below:

You may need to augment your insurance coverage if you are, say, using your car in a ridesharing service. “If you’re a senior, you do not have time to replace the nest egg that an uninsured accident could destroy,” says Tony Steuer, an insurance industry consultant in Alameda, Calif.
There are other insurance considerations for example, if you are driving for Uber or Lyft, your personal auto insurance will not provide any coverage during the time you are in your car waiting for a passenger. Coverage through Uber or Lyft starts when you have a passenger. If you are renting out your home, your homeowner’s coverage may not provide coverage. It’s important to read and understand the terms of your policy and to seek out supplemental coverage as needed.

Othello Powell, GEICO director of commercial lines points out that “Rideshare drivers take ‘huge risk’ with personal auto coverage“, most personal auto policies were never designed to protect you or your vehicle for commercial purposes. A typical personal auto policy contains coverage gaps and limitations for ridesharing and package delivery. If an accident does happen with drivers’ personal auto policies, they have to provide their insurance carriers with specific details, including the phase of the ride they were in. For example: Was the app on or off? Was the vehicle carrying any passengers or packages? Depending on the answers, drivers may not have the coverage they thought they had.

If you are working in the sharing economy, be sure you’ve read your homeowner’s insurance, auto insurance or related policy to determine what’s covered and what’s not covered. If your “work” is not covered, then you should strongly consider obtaining insurance to fill that gap.

Consumer Insurance Rights:

There continues to be more resources and protections for insurance consumers, depending on the state you live in and the type of insurance coverage. The Michigan Department of Insurance recently posted: Know Your Rights When Working With Insurance Companies. You can help increase awareness of the need for insurance and advocate for these rights by participating in The Insurance Bill of Rights Movement and signing The Insurance Bill of Rights petition (please share the petition). This is your opportunity to make a positive change as a consumer and as a member of the insurance industry.

The Department of Labor fiduciary rule has been delayed for an additional 60 days (link includes a countdown clock). The National of Association of Insurance Commissioners is moving forward to address this uncertainty by reviewing their annuity suitability guidelines. Annuities have been a prime area of sales abuses ranging from having high fees to contracts with surrender charges that exceed the contract holders’ life expectancy to those that can not be surrendered. If the annuity companies and those who sell annuity products were to concentrate on the positives of annuities – providing a guaranteed stream of income while minimizing fees, it would benefit consumers and more Americans would use this as part of their retirement distribution plan.

Health Care/Health Insurance Update:

Some of you may be fatigued by the ongoing health care/health insurance discussion, however, this appears to be the issue that just won’t die, despite Paul Ryan declaring that “Obamacare is the law of the land“.

Trump continues to poke at it, which creates uncertainty for insurance companies (Obamacare’s insurer’s struggle for stability amid Trump’s threats), in turn creating uncertainty for insurance consumers.

Insurance regulators also are concerned. Trump has stated that he is not sure if his administration would fund what are known as cost-sharing reduction payments, which reduce deductibles and co-payments for lower-income people.

Trump’s administration did announce some minor fixes last Thursday (a good start, just nowhere close to enough according to health insurers). However, despite uncertainty, insurers gear up for Obamacare 2018.

South Carolina is suing the federal government over the collapse of their health insurance exchange.

The IRS stated that the Earned Income Tax Credit has helped in that subsidies paid to an insurance company rather than directly to the taxpayer cut down on tax fraud.

For a thorough look at the issues, take the time to read “A Health Care Roadmap” and it includes an overview of the issues and includes areas that can be improved and ways to increase cost efficiency, make the plan financially do-able – please take the time to read it and share it. Yes, this is fixable, Alaska just did it.

Visit Tony’s website for more relevant articles on insurance: www.insuranceliteracy.org.