Category: Insurance

Life Insurance in Retirement – Do You Really Need it?

Life Insurance in Retirement – Do You Really Need it?

Do You Really Need Life Insurance in Retirement?

In retirement, you need a plan that will keep you healthy and happy for many years, but what happens when those years run out? Well, you need a plan for that too. Life insurance in retirement is one solution.

We all will end up in different financial places in retirement, and our cash flow and savings will dictate how our “final expenses” play out after we pass. Not everyone needs life insurance in retirement, but even if you don’t “need” it, you still may want it.

life insurance in retirement article with medicarelifehealth.com

How Much Life Insurance Do I Need in Retirement? Plus, What Kind?

Let’s break down some of the reasons for having life insurance in retirement in both the need and want categories. Then, let’s look at the life insurance recommendations for each of these unique needs on what type of insurance fits best and how much life insurance you will need.

Reason One: No Savings

You may need life insurance if your saving plan didn’t quite pan out like you thought it would. According to a study done by Northwestern Mutual, 1 in 3 Americans have less than $5,000 saved for retirement. The average funeral costs between $7,000 and $9,000, and many people have large medical bills from their last days, so you can see how that math does not add up.

You might have Social Security coming in monthly or even a pension. However, you typically need that money for retirement living expenses. Unless you think you can save a little of that money each month in retirement, life insurance is a good idea. (Be honest with yourself. If you could not save it before retirement, you probably will not save it now.)

Life Insurance Recommendations for No Savings

Your options will depend on your cash flow situation.

Final Expense

Term life and traditional whole life insurance is usually too expensive when you are older, and your social security death payment is only $255.

We recommend Final Expense Insurance. Also called, Funeral Insurance or Burial Insurance, Final Expense will give you a smaller face value ($10,000 to $20,000 is very common) but it is priced accordingly. This amount will help your loved ones cover your end of life costs.

If you are close to or already in your retirement years, I recommend getting this insurance sooner rather than later, as the premiums will go up every year you get older.

final expense insurance burial insurance - a guide by medicarelifehealth.com

Life Insurance for your final expenses has a bonus when it comes to cash flow – it is paid to the beneficiary directly and is not subject to federal income tax which can save hundreds/thousands. Moreover, because it does not have to go through probate delays, your family gets the money faster.

Finally, here is one last benefit: You can assign funds from the life insurance to be paid directly to your funeral home. This little convenience can be a big deal to your loved ones.

Personal Finance and Insurance for Retirement

Reason 2. Market Volatility Concerns

Another type of retiree may want life insurance because they are concerned about their savings being affected by market losses. Maybe you are like “most Americans” who have an average of $84,821 saved for retirement. However, $85k well below what experts consider enough for living expenses. Think of what one bad market year could do to your nest egg.

Even if you had a couple million in retirement, there are reasons for life insurance in relation to market losses. It just depends on how much you are intending to leave behind and for what reasons.

Example

For example, one spouse dies right after a large market crash (hopefully unrelated). The crash leaves the other spouse with half their portfolio assets and the same amount of living costs. The surviving spouse can use the life insurance money to fill in the holes from the lost income and catch up in the market.

You could use this money to pay off a mortgage. Similarly, you could use it to handle any issues with the estate. In addition, it is always good to know that your loved ones will have cash to bury you, no matter what the market conditions.

Life Insurance Recommendations

  • IULFor those that have cash to pay premiums and market assets to protect, I recommend you talk to a licensed agent about an IUL – Indexed Universal Life Insurance. These policies offer flexibility for your particular phase in life. However, they are complex, so please talk to a professional about your options.

3. Long-Term Care Considerations

What Is Long Term Care Insurance

As an alternative to Long Term Care Insurance, some retirees consider Life Insurance Policies that have LTC riders or a Chronic Illness Rider. For example, an insurance carrier might offer a product (like an IUL policy) with an option to purchase up-front a rider that will cover long term care events. You can pay qualified long-term care expenses with the death benefit, naturally, before death. Then, when you pass, the insurance company pays what is left to your beneficiaries.

Can Life Insurance be Used for Retirement?

On the other hand, there is life insurance for retirement savings. This is a totally different ballgame than buying life insurance for death benefit needs. Many people will buy a whole life or traditional life insurance policy that has a cash value with the purpose of using this cash value as a source of income in retirement. Let’s look at how to do this.

How to Use Life Insurance for Retirement

To start, using life insurance retirement means planning ahead – usually before you retire. Whole life insurance policies, such as traditional and Indexed Universal Life policies have a cash value component built into them.

In addition, you can structure them to build more or extra cash in them by lowering their death benefit and contributing more premium. (There are rules to how to structure these policies to be tax preferred and legal, so working with an independent insurance agent or financial advisor is the best way to build a policy for you.)

The purpose of structuring a whole life policy in this way (with more cash value building up) is to be able to access this cash in retirement. Policy owners can take out “loans” against their policy’s cash to use for retirement funds.

Often times, this money is removed (all or partially) from the volatility of the stock market. As a result, this cash provides a “bucket” of money that could be accessed during down times in the market. Alternatively, you could use it for one time purchases in retirement, (for example: cars, vacations, down payments, etc.)

So, What’s the Best Insurance Policy for Retirement?

Of course, this answer depends on your personal needs and wants. However, I would recommend some form of life insurance to all retirees.

  • If you can afford to be responsible for your funeral and burial expenses, do it. Your family will appreciate it.
  • If you can afford to make sure your spouse can continue to enjoy retirement when you are gone, hop to it.
  • If you are looking for an alternative to Long Term Care Insurance, call an agent and learn your options. Medical expenses are not getting cheaper. In addition, Medicare does not cover these.

My Personal Experience

I’ll leave you with my own family’s relevant story. Last year, when my father-in-law unexpectedly passed away, his Final Expense policy saved everyone time and from stress. This left my mother-in-law well taken care of financially, but a lot of her assets were not in cash at the moment.

It was a great relief for all of us not to have to jump through a bunch of hoops to get the bills all taken care of. The policy paid money directly to the funeral home and then sent my mother-in-law the rest in a check. All of that without a tax event. It made me grateful to have a family that planned for each other and made the last year a little less stressful for all.

Life Insurance Basics – What’s Most Important

Life Insurance Basics – What’s Most Important

Life Insurance Basics & Where to Go to Dive Deeper

Knowing your life insurance basics is an important part of your financial planning. Here is what is most important to know, so you can make the best decisions for your future.

life insurance basics including whole life, term insurance pros and cons

What is Life Insurance?

Life insurance is a way to protect yourself and your family from financial loss in the event of a death.

It is a contract with a life insurance company (also called a “carrier”). You pay monthly premiums in exchange for financial protection in the event of a death.

Basic Use of Life Insurance

Here is an example of a basic use of life insurance for a family.

  • To start, let’s say you are concerned about your financial status if your spouse where to pass.
  • You take out a life insurance policy for $500,000 on your spouse.
  • Then, you will pay monthly premiums for a set amount of time, or until you decide you do not need the death benefit anymore.
  • If your spouse dies while the policy is “in force” (active), then you will receive $500,000.
  • Depending on if it is a term or whole life policy, there are different benefits and different ways for the policy to continue or to end. Let’s discuss these different types of life insurance next.

Why Do I Need Life Insurance?

This is Life Insurance Basics 101 – Life has responsibilities and obligations, and the more you have, the more protection you may need.

  • For example, people consider securing protection from life insurance for: mortgages, rents, living expenses, college savings, retirement savings, paying off debts, paying taxes (i.e. estate taxes), giving to charities / churches, and/or paying for funerals and burials.

In addition, life insurance can be used for retirement planning and for Long-Term Care costs. For these purposes, you will need a certain type of insurance: whole life insurance. So, let’s start there.

What is Whole Life Insurance?

Often called “traditional insurance” or “permanent life insurance”, whole life insurance is a contract that is active until death. It has a cash value as well as a death benefit.

The insurance company expects the policy holder to pay premiums for the whole life policy until death occurs (or the policy is deactivated).

Whole life premiums are level, meaning that they do not go up year to year. In addition to the death benefit, which is also called the “face value,” the policy accrues cash inside of it. You can access this cash for loans against the policy.

What is an IUL Indexed Universal life PIN - Medicare Life Health
  • There is also Modified Whole Life Insurance.

What is Term Life Insurance?

Term is life insurance designed to expire at some point if death does not occur first. For example, you can design a policy to stay in-force or active for 10, 15, 20 or 30 years.

In regards to term life insurance basics, you pay monthly premiums to keep the policy active. In addition, these premiums may go up or down year to year depending on how you and the insurance company structure your policy. There is no cash value in a term policy.

Term vs Whole Life Insurance – Pros and Cons

What are the benefits to having one type of policy over the other? Well, there are pros and cons to both term and whole life insurance. Let’s look at each.

Term Life Insurance Benefits – “The Pros”

  • Affordability: Term life insurance is affordable. Since there is no permanent value to a term life policy, the premiums are less expensive than a whole life policy of the same face value. In other words, you can get a larger death benefit payout amount for less money paid in each month.
  • Flexibility: You can structure your term policy according to your needs. You can play with the face amounts, the premiums paid, and the length of time needed to structure a policy that meets your needs.

Term Insurance Limits – “The Cons”

  • Temporary Coverage: First, the major “con” of a term life policy is that it will end at some specified point, leaving you uninsured and with no lasting value from having the policy.
    This is okay, because the policy will have done it’s job to protect you when you were most vulnerable financially, but it is good to note that it will end. (The policy offers temporary protection, but insurance carriers have not structured it to offer long-term planning or retirement cash flow options.)
  • Increasing Premiums: The second consideration is term policy premiums can often go up year to year. Unless you choose a “level-term premium” option, your policy may start off completely affordable, but become more expensive as you age. (This makes sense because your mortality rates increase as you age. It’s just part of the game.)

Whole Life Insurance Benefits – “The Pros”

  • Permanent Coverage: The main benefit of owning a whole life insurance policy is that it is permanent insurance. It is not designed to terminate at a point in time.
  • Cash Value: Second, a pro of whole life insurance is that it becomes more valuable with time. As you hold the policy and pay your premiums, you will accrue a cash value inside the policy. Depending on how you structure your policy with your carrier, the face value may continue to go up as your cash value increases. In addition, you will have access to this cash for taking out “loans” against the policy. Many people use these loans for one time purchases, or as a source of funding in retirement.
  • Long-Term Care Money: Finally, whole life policies have the benefit of adding additional riders to meet other needs. For example, many whole life policies now have the ability to add a critical illness or long-term care rider. In these policies, you can use your life insurance to pay for qualified assisted living, nursing home and end-of-life care with access to not just the cash value, but also the face value or the policy with accelerated benefits.

Whole Life Limits – “The Cons”

  • Expensive Premiums: Whole life is more expensive than term insurance because it is considered permanent and it also accrues a cash value.
  • Long-Term Payments: You need to make sure you can afford to keep paying the premiums on a whole life policy. The policy will end if you stop paying the premiums. If there is a chance that you may not be able to sustain the higher premiums on a traditional policy, then you should consider term instead. Term premiums are cheaper. Moreover, some companies offer the ability to convert their term policies to permanent policies at specific times in the future with no extra underwriting.

When Should I Get Life Insurance?

There are many different times in life that life insurance benefits can be useful. However, the time to buy life insurance is when you are healthy enough to get it. Buying life insurance often requires going through underwriting, and you will need to be able to pass underwriting requirements to get a policy.

Times People Buy Life Insurance

  • Births
    People buy whole life policies on their kids. These provide small amounts of insurance to cover costs in the event of a death. Or, they are permanent policies kids can keep and often have the ability to add to when they are older.
  • Starting a Family
    Protecting your loved ones when you are in your earning years is an important function of life insurance. Make sure to buy it when you are healthy enough to get it. Often, people will buy life insurance even before they are married or have kids – just to make sure they will have it in case they end up with an illness that makes them uninsurable later.
  • Planning for Retirement
    You can purchase whole life policies, such as Indexed Universal Life Policies, to help you plan for retirement. People often buy these later, when they have the funds to pay for the premiums. However, you still need to pass underwriting and pay for the cost of insurance at whatever age you are buying them. Younger applicants still have cheaper costs of insurance.
  • Planning for Long-Term Care
    You can apply at any time for a whole life insurance policy that has riders for long-term care or critical illness. Again, you just need to be able to pass underwriting.
  • Planning for Final Expenses
    Finally, you can buy final expense insurance – also known as burial or funeral insurance – at any time. These are also whole life policies. However, the are often for smaller amounts and can have less stringent underwriting requirements and even guaranteed issue.
burial insurance for seniors buying guide

What Does Life Insurance Cost?

Life insurance premiums can be just a few bucks a month to thousands a month. It depends on your health, your age, the amount of death benefit you want, and what else you need from your policy.

Life Insurance Basics FAQ’s

Who are the parties to an insurance policy or contract?

So, who are the people involved in a life insurance contract? Let’s take a look at who is the beneficiary, the insured, and the policy owner.

  • First, what is a Beneficiary?
    The person or people who collects the benefit in the event of the insured’s death.
  • Then, who is the Insured?
    The insured is the person who’s life is insured. If they die, then the policy activates the death benefit.
  • Finally, who is the Policy Owner?
    The policy owner is the person who owns the policy and usually pays for it. They may or may not be either the insured or the beneficiary.

What are the parts to an insurance contract?

Insurance companies issue insurance policies to people looking to protect against losses. The life insurance basic policy parts include face values, death benefits, premiums, and sometimes cash values. Let’s look at what each of these elements do.

  • What is an Insurance Policy?
    An insurance policy is a contract or agreement between an insurance company and its clients to provide indemnification (compensation for loss) if and when a specified event occurs.
  • What is a Carrier?
    Carrier is another name for an insurance company.
  • What is Premium?
    Premium is a contracted amount of money paid to an insurance company to keep an insurance policy active. Usually, premiums are paid monthly. They can be level, or change year to year, depending on the insurance policy contract.
  • What is a Death Benefit?
    The death benefit is the amount of money the beneficiary/beneficiaries receive in the event of the death of the insured.
  • What is a Face Value?
    The face value is the amount of money the insurance contract is worth in the event of a death or if the policy matures before a death occurs.
  • What is Cash Value?
    If you have a whole life policy, you will also have a cash value in addition to the face value of the policy. The cash value is an amount of money builds up inside of the policy as you hold the policy and pay your premiums. Further, as outlined by each policy, you will most likely have access to this cash to take out loans against the policy if needed.

Conclusions

When it comes to life insurance basics, if you understand what term and whole life insurance policies are and what they do, you have a great head start.

People of all ages can use life insurance to round out their financial planning. From providing for family needs, to retirement and long-term care planning, to offering cash for final expense needs, life insurance works hard from many angles.

If you are ready to find a policy that fits your needs, we suggest talking to an independent insurance agent that can show you multiple options.

Average Funeral Costs For End of Life Planning

Average Funeral Costs For End of Life Planning

Average Funeral Costs For End of Life Planning

Average Funeral Costs for planning and budgeting

What are the average funeral costs in the United States? The cost of a funeral depends greatly on the options you or your loved one choose.

This article includes a helpful end of life planning list with average funeral costs detailed for your budgeting – including caskets, facilities and burial plots.

The only true fact of life is that death is certain. With death comes a lot of questions, and a lot of planning. It is never too soon to financially prepare for the costs of funerals. You might be wondering what options exists and what the costs are of those options.

Average Funeral Costs Summary Chart

ServiceAverage Costs
Funeral + Burial$7,640
Cremation$5,150
Casket Rental$995
Cremation Casket$1,200
Cremation Container$150
Urn$200
Burial Plot$100’s – $10,000’s
Embalming$750
Casket$1,000 – $2,500
Viewing Facility Rental$425
Body Preparation$255
Hearse Rental$340
HeadstonesStart at $1,000
Source: NFDA 2019

How Much Does a Funeral Cost? Here is a Detailed Breakdown

Body Options

Burial vs. Cremation & Also Body Donation

There are three options when it comes to post life care. The two most popular in the United States are burial and cremation. The other option is body donation.  Body donation is gaining popularity because of its low cost and the idea that the person is giving back to the world one final time through donating to science and medicine.

You may have an idea in your head about what your final wishes will entail, but you should still try to understand each option and their financial obligations, so you are financially prepared. It is never to early to prepare for the inevitable.

Average Cost of Cremation

Cremation isn’t free, but it is cheaper than burial. The average cost of cremation with a viewing in the United States, is $5,150, according to the National Funeral Directors Association (NFDA).  The bulk of the fee for cremation is the service fees charged by the funeral home. These fees cover the labor the funeral director and basic services.

Average Viewing Costs with Cremated Bodies

Viewing costs include the rental of the funeral home or other venue and memorial service. A viewing is a great way for family and friends to say their final goodbye to their loved one.

You can choose for the viewing to occur either before or after the cremation. Choosing to do a viewing before the cremation can result in some extra costs such as embalming and rental casket costs.

Embalming is not necessary for cremation, but many choose to include embalming if they have an open casket viewing before the cremation. The cost for embalming averaged $750 in 2019 according to NFDA.

Because a casket is not necessary for cremation, many choose to rent a nice casket for the viewing. The average rental casket cost was around $995. Flowers, and displays including photos may also increase the costs of the viewing.

Cremation Casket Rental Costs

The purchase of a casket is not necessary. However, you will be required to purchase a cremation container. A cremation casket can be purchased for around $1,200. This a traditional looking wooden casket that is burned with the remains. The alternative option would be a cremation container, which is a wooden box that isn’t lined, and typically very cheaply made. The cost of a cremation container is around $150.

When considering whether to go with a casket or a cremation container, it’s really personal preference and beliefs. Some believe there is more comfort and dignity in using a lined casket, whereas others believe the box is not the final resting place, so spending extra money on it is unnecessary.

Average Cost of an Urn

Next to consider, cremation results in the family being given back the remains. Many people decide to keep the remains in a special place, called an urn. The funeral home only has to supply a basic box for the remains.

As a result, most people choose to purchase an urn, which can cost several hundred dollars. Personalized urns that use high quality materials may even cost thousands of dollars.

Funeral & Scattering Travel Costs

In addition, if you plan on scattering ashes in a special place, you will want to consider the cost of travel.

Travel may not just be for one person either, sometimes this act is basically a small ceremony of its own and may require travel for several people. If you’re planning your own final wishes and are not wanting your loved ones to pay any costs for your funeral, you may want to consider how much it would cost for them to travel.

For example, if you want your ashes scattered in the ocean, but all of your loved ones live in the middle the United States, you will want to include the cost for them to take off work and travel so they can be there for your final wish.

Other Cremation Costs

Furthermore, funeral homes may charge other fees – including a transportation fee.

  • The transportation fee is charged for picking up the remains from the hospital or morgue and transporting it back to the funeral home.
  • The funeral home may charge you a cremation fee if it uses a third party for the cremation.
  • There may also be body preparation fees for clothing changes, make up, hair, or anything else that needs to be done to do the body in order to proceed with the visitation and cremation.

What Else Can Be Done with Cremation Remains?

Finally, cremation remains can be used in a lot of different ways. Some people may keep them in a urn, others may choose to scatter them in a special location. There are other options beyond that though.

  • You can create jewelry out of cremation remains. For example, several businesses can use remains to create lab grown diamonds.
  • You can also purchase a biodegradable urn to grow a tree out of the ashes.
  • In addition, you can have them put into fireworks or ammo.
  • Finally, there are a lot of companies that use ashes to make products, such as vinyl records, glass artwork, and stuffed animals.

Average Cost of a Burial

Burials come with the most expenses. However, planning for a burial ahead of time can save everyone a lot of stress associated with the cost of a burial.

According the NFDA the average cost of a funeral with a viewing and burial was $7,640, and this didn’t include the cost of the cemetery plot or the vault.

What is a Vault and What is it used for?

  • A vault is something that is put in the ground to keep the ground from collapsing. They are not always necessary, it just depends on the cemetery, which is why it’s important to plan now.

Average Cost of Burial Space

Not all burial spaces are equal. The cost for a plot can range from a couple of hundred in a rural area, to over $10,000 in an area with less green space to bury people.

What is a Mausoleum and What is the Average Cost?

Moreover, choosing a mausoleum as an option, will result in a much higher cost. A mausoleum is an enclosed where caskets are kept in crypts. They are an above ground burial option and typically have benches or a space for people to visit.

Average Cost of a Burial Plot

In-ground plots can be cheaper, but they can also be costly. It just depends on the location. Purchasing burial space as soon as possible can ensure you have a spot and protect you from the cost of inflation.

When choosing a burial space, the size of the space matters. Some people only purchase single plots, while others purchase double plots so they can rest next to their spouse. They may also purchase a family plot. The more space you take up, the more money it will cost.

Finally, in many states though, you can create your own family cemetery on family land, following state and local laws of course. Being buried in a family cemetery can significantly reduce the cost of a burial funeral.

Average Cost of a Casket

A metal casket cost on average $2,500. This cost can increase substantially depending on the quality and design of the casket. If you opt for a basic casket, the cost could be around $1,000.

The funeral home typically sells caskets, but you can always purchase a casket from another source to save yourself money. The Funeral home has to use the casket you provide.

You also don’t need a casket at all. It is “green” burials are becoming more popular. It is a burial that focuses on natural decomposition and limiting pollution into the Earth. The option to not use a casket exist. However, if you purchased a plot on private property, that cemetery may have its own rules. It is important to fully understand the rules for the location of the plot.

Average Viewing Costs

The Viewing portion of the funeral can incur several costs. The cost for the use of the facilities for viewing averaged $425.

The cost for body preparation averaged $255. Body preparation for a visitation includes sewing and gluing specific parts of the body to create a natural sleeping look. It also includes make-up and hair styling. The other cost will be embalming.

The Average Cost of Embalming

Embalming is not mandatory, even for burials. However, many people decide on embalming because it slows the rate of decay, allowing families to have an open casket viewing and funeral with the body looking as close to living as possible. The cost for embalming can average $750.

If you’re interested in a green burial, you may choose to forego embalming or find a funeral home and embalms using Earth friendly essential oils. The Green Burial Council can answer a lot of questions regarding green burials.

Cemetery Headstone Costs

Headstones, monuments, grave markers, whatever you call them, they are part of the price tag for burial funerals. They are commonly done in granite, but the material used does affect cost.

A small flat grave marker starts at $1,000 on monument.com, while upright headstones start at $1,200. What you decide to add to the headstone can also increase the cost. The cemetery may have rules about headstones.

In addition, you will want to make sure the headstone you purchase follows the cemetery’s rules because if it doesn’t, you might be liable for the costs associated with getting a stone that is in regulation.

Hearse Costs

The use of the funeral home’s hearse is not free. You will be charged for the hearse to transport the casket from the funeral home to the location of the funeral and then to the cemetery. The average cost for the use of a hearse in 2019 was $340.

If you use the service car or van for the funeral service, it could also cost you money. The average cost for the use of the funeral home’s service vehicle was $150 in 2019.

Open and Closing of Plot Fees

The other fee you will incur with a burial is the opening and closing of the plot. Digging up the plot and then refilling it usually requires the use of specific machinery, such as an excavator.

This cost could be included in your plot purchase, but it could also be separate fee due upon opening/closing of the plot.

Likewise, opting for a crypt in a mausoleum doesn’t get rid of this cost either. Opening the crypt can cost money as well. When searching for a cemetery be sure to ask them of the costs that will come up when it is time to use the plot.

Non-Traditional Burials

Traditionally, in the United States, burials occur with the body in a casket, in a cemetery. This is not the only form of burial though.

  • Green Burials in which the body is placed naturally in the earth to allow for natural decomposition is becoming more popular.
  • There is also the option for an ocean burial. Burials at sea are legal, and must follow certain guidelines, such as the burial must take place more than 3 nautical miles from a shore. More information on the legality of ocean burials can be found on the Environmental Protection Agency website.

Body Donation

A Non-Traditional, But Helpful, Low Cost Option.

Body donation is typically low cost or completely free of costs. There maybe stipulations on whether a body is accepted. You can reach to several programs in your area to find one that best fits your needs and beliefs. Typically these programs are ran by universities, but there may also be private organizations in your area.

Body Farms

Body Farms are often ran by Anthropology departments at universities. You can research your local or closest university to see if they have a Body Farm.

In these cases, the cost of body donation is completely free. They may charge a travel fee if they have to pick up the remains from a specific distance. You may still need to contact a funeral home to pick up the remains until the organization that runs the Body Farm can make arrangements to transfer the remains to their land.

What exactly happens on a Body Farm?

Well, they put the body in different environments to study the decay process and develop new ways to make identifications on bodies. It can seem like a less than peaceful ending, but the scientific advancements made because of Body Farms is incredible! It is a great way to keep helping science move forward after death.

Whole Body Donation

Medical schools use donated bodies to help students study medicine and perfect techniques they need to become incredible doctors.

Body donation to these programs is free of cost. If you live near a medical school, you can contact the university to find out if they have a body donation program, and whether there are any costs associated with the program.

Typically, it is a cost-free option, but occasionally you may need to cover the cost of transportation. However, the program usually covers cremation of the remains after the body has been used to it’s fullest extent.

There are other programs as well, such as Medcure, which services 45 states and is a cost free option. Medcure covers transportation costs, the cost of the death certificate, and the cost of cremation. The program you choose may also offer confirmation on how the body was used. This can give families a sense of pride knowing their loved one was part of research that is helping people.

How to Pay for Funeral Costs

Here are the most used ways of paying for funeral costs:

  1. Final Expense Insurance – Also known as funeral insurance or burial insurance. This is a whole life insurance plan that gives you a lump-sum of cash when you pass to help you pay for your end of life expenses.
  2. Prepaid Plans – Plans made with service providers before you pass that cover the costs at a specific facility or with a specific company.
  3. Savings / Retirement Funds – Paying with cash.

NOTE: Long Term Care Insurance – Unless you have a special rider on your long-term care insurance, it will not pay for your final expenses.

Average Funeral Costs Summary

As you can see, the average funeral costs in the United States vary significantly depending on the options you choose. Having a plan and a budget set in place early will help you to save money in the long run.

Final Expense Insurance will help you with making sure these costs are covered for your loved ones after you are gone.

Funeral Insurance – Best Rates, Reviews and Recommendations

Funeral Insurance – Best Rates, Reviews and Recommendations

Funeral Insurance – Best Rates, Reviews and Recommendations

funeral insurance rates reviews article from medicare life health

Which funeral insurance companies and policies are the best? You have a lot of choices when it comes to funeral insurance (also known as burial insurance or final expense insurance.) We are here to help make sense of your options and choose the best funeral insurance policy for you.

Funeral Insurance Basics

  • Funeral insurance is a small, whole life insurance policy that can cover end of life expenses. It is also referred to as final expense or burial insurance.
  • When you die, the value of the policy is paid to your family members in cash, tax-free.
  • They can use this money for anything; however, most policies are purchased for the purpose of paying for funerals, burials and any other final expenses.

The Benefits of Funeral Life Insurance

The benefits of burial or funeral insurance include:

  • A quick payout of cash in the event of your death.
  • Flexibility to use the payout benefit however your beneficiaries like.
  • A small emergency fund. (The policy will eventually build up a cash value that you can access.)
  • Easy applications and broader approval than other forms of life insurance. (No medical exams, guaranteed coverage options available).
  • Premiums stay level. (Your cost-per-month will not increase).
  • The face value (payout) will not decrease over time.
funeral insurance reviews

Competitive Carriers / Insurance Companies

The best funeral insurance policy for you will depend on your needs and purchasing circumstances. Often, rates are based on simple health underwriting, gender and age. Some companies are more competitive for some people depending on their ratings.

Some of our recommended insurance companies include:

  • Mutual of Omaha
  • Foresters
  • Transamerica
  • Royal Neighbors

Funeral Insurance Cost

The cost of your funeral / final expense policy will depend on how much cash benefit you will need when you die and your underwriting situation when you purchase it. Your age is a primary factor on how much your policy will cost.

Frequently Asked Questions – FAQ’s

Is the Policy Payout Taxed?

Funeral / Burial Insurance is tax-free. Just like any other life insurance policy (that follows the rules set by the U.S. government), you do not have to pay taxes on the money paid out by your policy.

What is the Difference Between Insurance vs Prepaid Plans?

Final expense / burial insurance is different than buying a prepaid funeral plan, burial plot or cremation service. You can directly prepay for end of life services at various service providers, funeral homes and burial locations.

Your insurance cash payout is not prepaying for any vendors or locations. It is just a lump sum paid to your family (or beneficiaries) for them to use as they wish.

You can use a prepay plan in addition to funding a life insurance plan, or as a stand-alone option. Many people like the freedom of their family being able to use the life insurance money as they wish. Most often, the circumstances and associated costs of your death are unpredictable. You can alleviate stress for your family by giving them flexibility in using your policy funds.

Can I Buy Funeral Insurance Online?

Yes, the simplified nature of these life insurance applications do afford the opportunity to purchase a policy online in some instances. However, since there are many options available from multiple companies, we suggest you talk to an independent insurance agent.

Independent insurance agents will often represent multiple companies and can listen to your needs and direct you to a company that will have the best plan for your unique needs.

Find an agent near you here.

What Does Funeral Insurance Cover?

These policies are typically purchased to cover the following:

However, as mentioned before, this money does not have to be used for any particular thing. Your beneficiaries are provided a lump sum of cash when you pass, and they have the right to use the money for whatever they may need.

Burial Insurance for Seniors Ultimate Buying Guide

Burial Insurance for Seniors Ultimate Buying Guide

Burial Insurance for Seniors Buying Guide

This is your ultimate guide to burial insurance (also called final expense insurance or funeral insurance).

burial insurance for seniors buying guide

Burial insurance plays a unique role in your financial planning. Many people buy these policies to help their loved ones cover end of life expenses for themselves.

Two Reasons for Having End of Life Insurance

  • Sometimes, people buy end of life insurance because they do not have cash on hand to cover funeral expenses, and they do not want their passing to put a burden on their family.
  • Other times, they might have cash on hand, but still want to provide their family with accessible funds, that is not in stock form, to pay for their funeral/burial. They do this in order to preserve their cash/investments to pass on to their family.

An Example of How to Use a Burial / Final Expense Policy

A couple years ago, my family lost my father in law. He was survived by his wife of 49 years. However, he had decided a few years back to purchase a final expense policy to cover his funeral and burial expenses in the event of him passing. Although he had plenty of investments that could have covered his expenses, he knew it would be easier for everyone just to have access to quick cash if needed.

My father in law was right. With his policy, we were able to “assign” funds from the policy directly to the funeral home and to the place we purchased the casket. That was much easier than freeing up invested retirement funds. Moreover, his widow didn’t have to worry about end of life expenses eating into her cash savings.

Do I Need Burial Insurance / Funeral Insurance?

From my story above, we can see that:

  • In this instance, the final expense insurance policy wasn’t completely necessary. However, it was convenient, made everyone feel secure, and was generous.
  • However, in other instances, burial insurance could be completely necessary for funeral/burial expenses. For example, if the person it is bought for lives on a fixed income, check-to-check, with no significant savings, then this policy could be a life saver for the survivors.

Can I just save for end of life expenses?

Yes, saving up for funeral expenses is one option, but sometimes this saving just doesn’t happen. In addition, death is often accidental or unexpected, and you might not have enough time to save up what you need.

Funerals and burials can lead to debt if your loved ones are not prepared to cover these costs. As a result, you will need a solid plan to cover these costs, and funeral / burial insurance is often your most secure option.

Let’s look a little deeper into what is final expense insurance and where / how to find a policy.

The Definition of Burial Insurance / Final Expense

Final expense insurance, which is also called burial insurance or funeral insurance, is a type of whole life insurance that helps you pay for end of life expenses.

  • USED FOR: For example, a final expense life insurance policy could help you pay for a funeral, burial, casket or end of life hospital fees.
  • AMOUNTS: These policies are often for smaller amounts (smaller face values) as they have larger premium payments and often shorter timeframes to own them. Typically, policies are for $5,000 to $25,000.

Final Expense / Burial Insurance Cost

So, what does final expense insurance cost? First, these polices are whole life policies, which means that it is a “permanent policy” you will fund and keep until you pass.

Second, burial insurance policies usually have “face values” (payouts) between $5,000 and $25,000. Since they are whole life, they will gain a cash value as you pay your premiums, and they will pay your beneficiaries their face value in cash when you die.

Your rates (premiums) will depend on:

  • What company you choose.
  • Your age and other underwriting criteria.
  • How big of a face value (payout) you choose.

Applying for and Getting Final Expense Insurance Quotes

Insurance companies made burial insurance accessible to many types of people. Moreover, people that would be turned down by other forms of life insurance (or turned off by expensive premiums), can often find funeral policies that fit their needs.

Some funeral / burial insurance policies offer:

  • Guaranteed coverage for certain age groups
  • Ability to skip medical exams
  • Affordable premiums that don’t increase
  • Cash value in the policy to access in an emergency
  • No wait periods to start a policy

So, how can you get burial insurance quotes?

I suggest talking to an independent insurance agent to compare quotes for any type of life insurance policy. They will be able to discuss your unique needs and match you with the best product for you.

More about Independent Agents

Best Final Expense / Burial Insurance Companies

What is the best burial insurance company (aka final expense insurance carrier)? Depending on where you live, you will have multiple different options for insurance companies to choose from.

Some of the biggest players in funeral insurance are:

  • Mutual of Omaha
  • AIG
  • Foresters
  • AARP
  • AAA
  • Royal Neighbors of America
  • Transamerica

We will have reviews of each company coming soon.

Conclusions

Is final expense life insurance worth it?

Yes, funeral insurance / burial insurance is worth buying for those you love in the event of your death. It provides:

  • Quickly accessible funds to pay for end of life expenses
  • A potential way to build a small emergency fund in cash value
  • Peace of mind, that your loved ones will not be stressed about your end of life expenses in the event of your death.

Finally, if you need to talk to someone about a policy, please contact us here and we will find an agent to help you.

HMO vs PPO Which is Better?

HMO vs PPO Which is Better?

HMO vs PPO Which is Better?

HMO vs PPO Which is better in regards to health insurance, Medicare Advantage Plans and dental insurance

Insurance has changed a lot over the last 20 years, and there is no better example than the way we define and use provider networks. When you are looking at insurance plans, it’s important to compare HMO vs PPO. Which is better for you?

We are here to clear up the confusion, and quickly answer the most frequently asked questions in regards to what is HMO and PPO insurance, how the plans work, and where you will find HMO and PPO insurance plans.

If you are a Medicare user, you will run into HMO vs PPO in regards to choosing a Medicare Advantage Plan. You can learn more about Medicare Advantage Plans here.

What is an HMO?

To start, what is HMO health insurance? A HMO is a network of health care providers, set-up by a health insurance company, to offer services and benefits to its customers. (More at Healthcare.gov.)

What does HMO stand for? Health Maintenance Organization

How does an HMO work?

  • To start, when you are a beneficiary/member of an HMO, you have access to a specific set of healthcare providers in a specified geographical area. (For example, a city, counties or defined state(s).) These providers include doctors, healthcare professionals, specialists and hospitals.
  • You must use the HMO’s contracted providers to have your care paid for by your insurance plan. Moreover, if you go outside the plan for care, you will often have to pay the full cost of your care.
  • You can only go outside of your plan’s provider list in the case of an emergency.
  • With most HMO’s you need to have a Primary Care Physician (called a PCP). Your PCP takes care of your general health care and then refers you to specialists as needed.
  • So then, as a member of an HMO, if you need to see a specialist, your PCP with often have to refer you, to use one. However, in some states, and with some plans, the insurance companies have take away this requirement. As a result, it is important to check your specific plan’s requirements for seeing a specialist.
  • Finally, HMO’s are often concerned about prevention and keeping their member’s as healthy as possible to keep everyone’s costs down. For this reason, health maintenance organizations will often provide prevention based benefits and services to encourage safe and healthy behaviors among their members.

What is a PPO?

So, in regards to insurance, what is a PPO? A PPO is a type of insurance plan that uses a defined network of medical providers to meet your health care needs.

You pay a contracted rate (less than full price) to see network providers. However, unlike an HMO, with a PPO you can use doctors, clinics and hospitals outside the network at a higher cost. (More at healthcare.gov.)

What does PPO stand for? Preferred Provider Organization.

How Does a PPO Work?

  • First, with a PPO, you still have a network of providers to use that offer contracted prices to members of the PPO.
  • In contrast, you have more flexibility to go outside the network if needed to use uncontracted providers. You will most likely have to pay a higher percentage of the costs to use these providers, but the insurance companies will still pay something.
  • You can use any provider when the circumstance is deemed an emergency.
  • With most PPO’s, you do not have to have a referral to see a specialist.

What is the Difference Between HMO and PPO Insurance Plans

Both HMO’s and PPO’s have contracted networks of healthcare providers, clinics and hospitals where they will pay for some or all of your care. However, there are differences to consider:

  • First, HMO’s and PPO’s treat their out of network costs differently.
    • With an HMO, if you go “out-of-network” to see a provider, they may not cover any of your costs. Unless, it is an emergency situation.
    • With a PPO, the plan will most likely cover “out-of-network” provider/hospital visits, but at a lower percentage rate than their “in-network” providers/hospitals.
  • Second, the networks treat visits to healthcare specialists differently.
    • With an HMO, you will often need a referral to see a specialist.
    • With a PPO, you can most often just choose a specialist from the network provider list and make an appointment to see them without a referral.
  • Third, the PCP is usually the person making referrals in an HMO network. As a result,
    • The HMO’s often require having a primary care physician (PCP) on file for its members.
    • While the PPO’s usually do not have a requirement to name a PCP.

So, HMO vs PPO Which is Better?

After reading about the differences between HMO’s and PPO’s, it may seem like the PPO sounds hands down better than the HMO. Regarding, its freedom to see both in-network and out-of-network providers, and its options to see specialists without a referral, it does seem more flexible.

So then, why do people like HMO’s as well as PPO’s, and which one is right for you?

  • To start, HMO’s have changed a lot over the last years. Their networks have become more robust and their requirements less strict. In certain geographical areas, the HMO might include all the major hospital systems and the majority of providers. As a result, it may not matter to a person if they have a PPO or HMO, in regards to providers available.
  • Second, in some states, it is not necessary to get a provider referral to see a specialist in an HMO’s network. State laws often dictate how HMO’s work in this capacity, so it is important to learn how your area’s plans work.
  • Third, their may be a cost difference paid by members between an insurance company’s HMO and PPO plans. These costs include monthly premiums, max out of pocket costs, deductibles, and co-pays/co-insurances. When picking a plan, it often comes down to what is the more affordable option.
  • Finally, since HMO’s are often more focused on the wellness of their members, they might have other prevention benefits and services available to their members. PPO’s can sometimes have these services too, you will just need to do your homework to see what is included when shopping for a plan.

Going Deeper: HMO vs PPO Which is Better FAQ’s.

For those of you that have further questions, here are the most asked questions in regards to HMO and PPO insurance.

What does HMO POS mean? / What is HMO POS Medicare Advantage?

An HMO POS is a type of HMO network that allows more flexibility in seeing providers outside of the specified HMO provider list. POS stands for Point of Service.

According to Healthcare.gov, with an HMO POS, you will still need to choose a PCP (primary care physician) and they will still make specialist referrals for you. However, with a POS, if they want to refer you to a specialist outside of the HMO network, they can do so with the POS designation. Keep in mind, specialists and providers outside of the HMO network may still have higher out-of-pocket costs than in-network providers.

In a HMO POS Medicare Advantage Plan, you also have this ability to use providers who are “out-of-network,” but they may incur an increased cost.

What is Medicare PPO? / What is Medicare HMO?

PPO’s and HMO’s come into play in Medicare when you are using Medicare Part C – aka Medicare Advantage Plans.

Medicare Advantage (MA & MAPD) Plans are alternative plans offered by private insurance companies to take the place of Original Medicare. They often include drug coverage or Part D coverage (MAPD plans). They are approved by the Federal Government and cover everything that Original Medicare covers. In addition, they often offer benefits and services beyond what Medicare offers such as dental, vision and hearing benefits.

So then, what is a Medicare Advantage PPO plan or HMO plan?

What is Medicare Advantage?

Medicare Advantage plans are often HMO, PPO, or PFFS plans. (Additionally, they have special plans set up for people with special needs.) When you are choosing a Medicare Advantage Plan, you will need to consider everything we discussed about HMO’s and PPO’s as they will apply to these private insurance plans and how they set-up their provider networks.

Ok, then what is a PFFS Plan?

PFFS is a Private Fee-for-Service Plan. These plans also have networks that include a list of providers that have agreed to accept the plan. Moreover, you can see other providers, not on the list, as long as they agree to the plan’s terms and conditions and bill the plan directly. Original Medicare is an example of a PFFS plan.

What is HMO Medicaid?

Medicaid is provided to its recipients at a state level. Each state has to decide how to manage their Medicaid programs. These “managed care” options include choosing an insurance administrator to deliver healthcare services to Medicaid beneficiaries in a way that will “manage cost, utilization, and quality.” Often times the contracted insurance company will use an HMO model to structure their network of providers.

medicare and medicaid difference guide

In addition, if you are a “Dual Eligible” beneficiary – meaning that you qualify for both Medicaid and Medicare – then you have the option of finding a private insurer to manage your health care insurance. Each state has DSNP Medicare Part C (Medicare Advantage) providers that offer plans to dual eligible beneficiaries to help them manage the care between Medicare and Medicaid. These plans can also be HMOs or PPOs.

What is an EPO?

An EPO is an Exclusive Provider Organization. According to Healthcare.gov, “EPOs generally limit coverage to care from providers in
the EPO’s network (except in an emergency).”

What is PPO Dental Insurance? / What is HMO Dental Insurance?

Dental Insurance Carriers (aka Insurance Companies) set-up their provider networks similar to how medical companies set-up their networks. They have both DHMO and DPPO plans.

Just like in medical insurance, both DPPO’s and DHMO’s have provider networks, but HMO’s will typically only pay for services rendered by providers in the network. In addition, PPO’s will pay more of the costs for services provided by network providers, but will pay some percentage of costs out-of-network. For this reason, Dental HMO’s are usually less expensive than PPOs.

What is Better HMO or PPO Dental Insurance?

There are other differences between Dental PPO’s and HMO’s including deductible costs, and co-pays/co-insurances. When you are looking at dental plans in your area, you will need to decide what type of plan most affordably meets your dental care needs.

Sometimes this will be an DHMO and other times, this will be a DPPO, so compare costs, provider networks and types of dental services covered before buying a policy. Here is a good article for more detail on dental insurance network types to help you decide what is best for you.

What is Preferred Provider Organization?

Also known as a PPO, a Preferred Provider Organization is a type of insurance plan that provides a network of healthcare providers, offices and hospitals for its members to use at contracted costs. In addition, it provides the flexibility to use providers outside of its networks if needed, but at a higher cost to the members.

Then, what does preferred provider mean?

Preferred provider means that a particular doctor, specialist, clinic, hospital or other healthcare professional or facility is a part of your insurance provider’s network. They will offer a contracted (most likely discounted) rate for you to use their services while on your PPO insurance plan.

What is the largest PPO network?

The largest PPO Network in the United States is MultiPlan.

What is MultiPlan PPO?

Multiplan is not a “type” of healthcare insurance. They are a third party company that helps insurance companies “manage the cost of care, improve their competitiveness and inspire positive change.” You do not have a Multiplan PPO, you have a PPO that uses Multiplan.

What is a Regional PPO?

We often hear the questions, “what is a Regional PPO?” and “what is a Regional PPO Medicare Advantage Plan?” Regional just refers to the service area for the PPO. Members will have access to providers in the PPO’s specified region.

What is Health Maintenance?

“Health Maintenance” refers to a system of prevention. In insurance terms, it refers to an insurance network plan with a focus on keeping medical costs down by keeping members healthy with lower cost preventative care options.

The thought is “an ounce of prevention” will lead to significant cost savings on unused healthcare dollars down the road.

So then, what are the benefits for providers who use HMO model?

Providers who are a part of the HMO model have benefits of being a part of a network that pays them based on a contracted fee. Each network will arrange the contracts differently. However, the providers will know that they have access to the insurance carrier’s pool of members to service for their healthcare needs.

HMO vs PPO Which is Better Summary

In conclusion, whether a PPO or a HMO is “better” all depends on your needs and the plans available in your area.

If we missed any questions in “HMO vs PPO Which is Better” you may have, please drop us a note in the comments and we will do the best to answer them!

All the best. Carly and the MLH Team

‘Mutual Perks’ Announced by Mutual of Omaha

‘Mutual Perks’ Announced by Mutual of Omaha

‘Mutual Perks’ Announced by Mutual of Omaha

mutual perks by mutual of omaha

What are ‘Mutual Perks'(SM) = Are they Discounts?

Yes, and we like discounts.

Moreover, anyone in retirement or on a “fixed income” certainly appreciates discounts. So when Mutual of Omaha announced an added discount benefit to their insurance customers, we were very interested.

What are Mutual Perks?

Mutual Perks are not directly a part of a Mutual of Omaha Policy; rather, they are additional discounts with third-party companies that are available to life insurance policy holders as well as select medical insurance policy holders.

What Kinds of Discounts are Offered?

As far as we can tell, the discounts focus on companies that can either keep you or your bank account healthy. Here is a list of the types of companies that will feature “Mutual Perks” discounts.

  • Eyeglasses
  • Hearing aids
  • Home mortgages. T
  • Massage,
  • Chiropractic
  • Acupuncture
  • Low-cost gym memberships (at over 10,000 locations)
  • Also, retail, travel and dining coupons

The official press release from Mutual of Omaha didn’t specify any particular companies, but we will update this post in the future if we hear any more details.

Why is Mutual of Omaha Offering These Discounts?

The insurance industry is an old, mostly stable industry, but it is still very competitive. It’s great to see insurance company’s still adding benefits to serve their members better. In addition, healthier members are also always better for any insurance company’s bottom line. In this case, Mutual Perks seems like a win-win.

Here is what the corporate office has to say:

“Our customers, and their financial well-being, are important to us,” said Jennifer Wulf, Mutual of Omaha’s vice president of customer insights. “That’s why we’re excited to offer these exclusive money-saving opportunities. It might be a little surprising that an insurance plan opens the doors to these offers, but we are always looking for ways to delight our customers while partnering with them in their financial security and healthy living goals.”

Mutual Press Release on Feb. 25, 2020

How Can I Get Mutual Perks?

If you want Mutual Perks, you will need to be a Mutual of Omaha policy holder. If you already are, the company will most likely be getting in touch with you to let you know if the benefits apply to you.

Otherwise, if you are considering purchasing a life insurance policy, Mutual of Omaha is probably hoping Mutual Perks might make you look again at their options. I must admit, I am interested in hearing more myself!

Medicare and Medicaid Difference Guide

Medicare and Medicaid Difference Guide

Medicare and Medicaid Difference Guide

medicare and medicaid difference guide

The Medicare and Medicaid Difference Guide helps you understanding both services, so you can make the best decisions for yourself and your loved ones.

The United States has two separate national health care systems: Medicare and Medicaid. The government created the two programs for two different kinds of people. However, they often overlap. Let’s look at both programs, including their similarities and difference. We will also look at who needs or qualifies for each program.

Let’s Start with Medicare vs Medicaid.

What is Medicare?

Medicare is the U.S. national health care program that provides seniors age 65 and older, and some disabled people, with health insurance.

The U.S. government started the program in 1966. The Centers for Medicare and Medicaid Services runs these programs. Medicare also covers people with end stage renal disease and amyotrophic lateral sclerosis.

Medicare does not cover all of the costs associated with health care. As a result, people with Medicare will also use a Medicare Supplement Insurance Plan (Medigap Plan) or a Medicare Advantage Insurance Plan to round out their care coverage.

Please read our Ultimate Guide article on “What is Medicare.

What is Medicaid?

Medicaid is the United States National Health Care System that provides health coverage to over 64.7 Million People.

The program was created for people with low-incomes that cannot afford, or do not have access to, private healthcare insurance.

How are the programs similar?

Medicare vs Medicaid Pin

The programs are both National Health Care Systems. In fact, they are the only two nationalized heath care systems the United States has. Many other countries around the world have much more extensive national coverage for their citizens. The U.S. has a limited program for specific age, income, and health groups, and the rest of the country relies on private health insurance.

In addition, both programs cover specific hospital services, doctor services, and other health care related services.

Medicare has four parts. First, Medicare Part A, also known as “Hospital Insurance,” helps with coverage regarding: inpatient care, home health care, nursing facilities, and hospice.

Second, there is Medicare Part B, also known as “Medical Insurance.” Part B helps with coverage related to doctor and other provider services, including: doctors visits, health care providers, outpatient, prevention services, and medical equipment. Medicare Beneficiaries pay for Part B.

Finally, Medicare has a Prescription Drug Program that is administered by private insurance carriers. Click here to lean more about What Medicare Covers and Medicare Parts A, B, C and D are.

Both Medicaid and Medicare Advantage Plans can be set up as managed care plans with networks of doctors and hospitals members have access to. If you would like to learn more about how these networks work, please read, HMO vs PPO – Which is Better?

How are the programs different?

One of the biggest differences between the two programs is who runs them. Medicare is run on a national level, by the Federal government. On the other hand, Medicaid is run by each state individually.

Of course, the biggest difference is the the different populations the programs serve:

  • Medicare – For Seniors over age 65, and some disabled people
  • Medicaid – For people with low income and few resources

Medicare and Medicaid Differences in Beneficiaries – Who Gets What Program?

The U.S. government created Medicare and Medicaid to take care of different “vulnerable” populations – the poor, the disabled, and the elderly. Let’s look at each program and population.

Who should get Medicare?

Anyone who is a citizen or qualified resident of the U.S. can enroll in Medicare when they turn 65 years old. There is a seven month window of time starting three months before turning 65, the month of your birthday, and then three months after your birthday month.

How do I Sign-up for Medicare?

First, you may be automatically signed-up if you are already receiving Social Security (SS) or Railroad Retirement (RRB).

Second, if you are not already receiving SS or RRB benefits, you must sign up for it when you turn 65 years old.

Conversely, if you are not ready for Medicare when you turn 65, you must notify the government that you want to delay your benefits. If you do delay, it must be because you have credible coverage in place. An example of this would be an employer plan.

Click here to read more about Medicare, including where to go to enroll.

From Our Article What is Medicare? A Guide to All Medicare Basics

Supplemental Medicare Insurance Options

Medicare picks up about 80% of the health care costs for its beneficiaries. For the other 20%, seniors turn to either Medicare Supplements (aka Medigap Plans) or Medicare Advantage Plans. Click here to read our article on Medicare Advantage vs. Medigap, or see the informational articles below.

What is Medicare Advantage?
What are Medicare Supplements_

Who should get Medicaid?

Medicaid is for people with limited income and resources. Medicaid is run on a state level, not on a federal level. As a result, in order to qualify for Medicaid, you will need to determine what your state defines as a qualifying income level.

How Do You Enroll in Medicaid?

Again, since Medicaid is run by State Governments, you will need to contact your state’s agency to start see if you qualify to enroll.

You can find a list of State Agencies here on the Medicaid.gov website.

Who Can Get Both Medicare and Medicaid?

People of any age who have certain qualified disabilities and people over 65, who are also below their states Medicaid income levels, can qualify for both Medicare and Medicaid.

For example, Henry is a 55 year-old disabled man who is also unemployed and living below the poverty level set by his state. Consequently, he would most likely qualify for both Medicaid (because of his income level) and Medicare (because of his qualified disability).

People that qualify for both programs are called “Dual Eligible.”

Who Can Help?

Navigating one (let alone both) of these systems can be confusing. But there is help available.

  • Finally, if you need help finding a Medicare Supplement or Medicare Insurance Plan, or if you are dual eligible for both Medicare and Medicaid, then please contact an Insurance Agent. An Independent Medicare Insurance Agent will help you explore your options, and help you make the right choice for your unique situation.

Further Helpful Reading

How to Choose A Medicare Plan
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What is Long Term Care Insurance?

What is Long Term Care Insurance?

What is Long Term Care Insurance?

What Is Long Term Care Insurance

Long Term Care Insurance Polices provide cash to cover the cost of your care when you cannot take care of yourself.

At some point, you may need help to get through each day. Hopefully, you have family and friends to help you, but even they can only help you to a point.

Many people find maintaining their independence and dignity an important value. Consequently, these people find Long Term Care (LTC) Insurance is an important part of their financial planning.

Defining Your Needs

You need to start thinking now about how you will plan for your own care down the road. “Long-Term Care” as a plan has many parts including:

  • Where you will live
  • What services you will need
  • What people you can depend on
  • How you will pay for everything
  • What legal considerations you need to address

Additionally, part of your plan might also include insurance.

What Can Long Term Care Insurance Help You Pay for?

Long Term Care Insurance can help you pay for:

  • Nursing homes & LTC facilities
  • In home daily living services
  • In home personal services

Who Needs Long Term Care Insurance?

According to New York Life Insurance Company, 70% of people age 65 and older will need help with daily living at some point. Moreover, almost 50% of these people will end up spending more than $107,000 on Long Term Care costs.

Reasons People Get LTC Insurance

Here are a few types of people that need Long-Term Care Insurance:

Do I need Long-Term Care Insurance?
  • Independent people who do not want to rely on their family to take care of them or pay for their care.
  • Prepared people that do not have reliable support they can trust to help with their care.
  • Determined people that want enough money to cover in home services so they don’t have to go to a nursing home.
  • Planning people that do not want to drain their retirement accounts with LTC expenses.
  • Finally, people that do not want to end up on Medicaid at any point in their lives.

Does Medicare Cover Long-Term Care?

Many of my clients have asked me if Medicare covers Long-Term Care costs and services. It is a good question, but perhaps not a good answer. The answer is no. Medicare does not cover LTC costs.

Why Doesn’t Medicare Cover LTC?

What is Medicare - Medicare Life Health Co.

To start, long-term care has mostly to do with the support and services you will need for daily living and personal care activities. These are not medical services. Consequently, they are not covered by Medicare.

  • For example, if you need to see a doctor or medical provider, that is a medical expense.
  • In contrast, if you need help using the toilet, that is a long-term care expense.

What About Medicaid?

Medicaid will eventually help you pay for LTC expenses. However, you must be considered below the poverty level before the Medicaid program kicks in.

As an example, my grandparents both lived to be about 87 years old. (Married 67 years!) They had enough money to cover their assisted living expenses for a while, but the last 6 months or so of their lives were spent on Medicaid. They had to do a “spend down” of all of their assets to cover LTC expenses. Once their funds were exhausted, Medicaid kicked in.

In their case, while they had money to spend, they had choices on where they lived and what services they used. However, as soon as the money was gone, they had to move to a place that had “beds” available for Medicaid recipients. As a result, they were moved around a lot in their last year.

On the much brighter side, they were together until the end and passed months apart. They were also happy and loved. So, even though the journey was difficult, we were all in it together. You can read a little more about my care-giving story here.

If you do not want to “spend down” your assets on LTC costs, you will need to have insurance to cover your care costs.

How Does LTC Insurance Work?

LTC is an insurance policy. Consequently, you take it out now to pay for a future event that may or may-not occur.

  • First, you pick a plan with an insurance carrier and structure it to fit your needs. This includes deciding how large of a benefit you want.
  • In addition, your decision will also depend on how much premium you can afford to pay a month for your policy.
  • Premium cost is based on age, and availability of policies are dependent on health underwriting. As a result, not everyone will be able to afford a plan, and not everyone will be able to get a plan. As with most insurance, the younger and the healthier, the better. So, start soon.
  • Then, you keep paying premiums until you need the policy. (Or you cancel the policy because you ended up not needing it. For example, you die before you needed it.)

When Do Long-Term Care Insurance Benefits Begin?

First, in order to start using your LTC policy’s benefits, a licensed medical practitioner will need to certify you chronically ill.

According to Mutual of Omaha, being chronically ill means, “You need help with at least two of the six activities of daily living for at least 90 consecutive days or you need continual supervision due to a severe cognitive impairment.”

The government defines Activities of Daily Living (ADLs), as “basic actions that independently functioning individuals perform on a daily basis.”

ADLs Include:

Caring for Elderly Parents - a how to guide from medicare life health co.
  • Bathing
  • Dressing
  • Using the toilet
  • Transferring (to or from bed or chair)
  • Caring for incontinence
  • Eating

So, you typically need to not be able to do at least two of these to start your benefits.

Do Benefits Start Right Away?

To start, it takes a bit of time to get the right paperwork completed by your doctor, sent in and then certified by the insurance company. Even then, your policy might not kick-in right away.

To keep the cost of LTC insurance lower, many insurance companies will build-in an elimination period. Often, you can decide how long this waiting period will be before benefits begin. Naturally, the longer the waiting period, the less expensive the policy.

Will My Policy Last Until I Die?

Typically, your policy has a set payout rate. This means that it will pay out up to a specific dollar amount. If you outlive this amount, then you will have to use other resources to pay for your care.

How Much will my LTC Policy Cost?

The cost of your policy will depend on your needs, cost of living in your area, your age, your health, and many other factors. To find out an exact cost, you will need to work with an agent to discuss your unique situation.

How Much Long-Term Care Benefit Do I Need?

This is also a question we can’t answer without knowing your needs and situation. If you are wanting a rough idea of what you may need, try out this Long-Term Care Insurance Calculator from Mutual of Omaha.

What are the Alternatives to Purchasing a Long-Term Care Plan?

Long-Term Care Policies are expensive. Additionally, if you wait too long they might not be available to you. One alternative is to spend down your assets until you qualify for Medicaid. If you do not have a lot of assets left by the time you need Long-Term Care, then this may be an option for you.

However, if you have saved money and do not want to drain it all away in medical costs, then you may have another option: Life Insurance.

Do I need life insurance in retirement?

“As an alternative to Long Term Care Insurance, some retirees consider Life Insurance Policies that have LTC riders or a Chronic Illness Rider. For example, an insurance carrier might offer a product (like an IUL policy) with an option to purchase up-front a rider that will cover long term care events. You can pay qualified long-term care expenses with the death benefit, naturally, before death. Then, when you pass, the insurance company pays what is left to your beneficiaries.”

From Our Article: Do I Need Life Insurance In Retirement.

Conclusions

In summary, long-term care insurance can protect you and your family against the rising costs of assisted living and nursing home care. However, it is expensive. You need to plan ahead to either secure LTC insurance early on, or find another option like life insurance with LTC riders.

medicare and medicaid difference guide
What is Final Expense Insurance?

What is Final Expense Insurance?

What is Final Expense Insurance?

Final expense insurance (also known as burial insurance or funeral insurance) is an insurance policy that provides cash to cover end of life expenses such as funeral and burial costs.

They are typically smaller face values (the amount of payout money). In addition, insurance companies often structure them as whole life policies.

what is Final Expense Insurance

Introduction

My father-in-law passed away two years ago. His passing was my first experience in how important Final Expense Insurance is. It made everyone’s lives easier that he had a policy in place to cover end of life expenses.

Up until a few years ago, my father-in-law had a larger term policy on himself and his wife. However, they decided to cancel that policy since they were set financially for retirement. Fortunately, he had a good agent that set him up with a smaller Final Expense policy.

My in-laws did have enough in savings to cover a funeral. However, it was just so much easier not to have to worry about how to get access to that money. Their savings sat invested in mutual funds and stocks, which take a few extra steps to get to. Consequently, no one wanted to go through any more extra steps to get to it.

The insurance money was delivered easy enough. We did have to wait for the hospital to file a coroner’s report before we could get the money. However, in the meantime, we “assigned” the insurance money to the funeral home and burial services before we had it. The whole experience was positive and the final expense money was helpful.

What is Final Expense Life Insurance?

  • Final expense policies are life insurance policies. Just like other types of life insurance, a final expense policy issued by an insurance company pays money to a designated beneficiary when the insured person dies.
  • Final Expense policies are whole life policies. Since whole life premiums are usually more expensive than term premiums, the face value is usually a smaller amount.
  • The purpose of these policies is to pay for end-of-life expenses. For example, you could use them for funeral costs, burial fees, and even medical bills.
  • Of course, you can use the money for anything. It is just a cash payout.

The Benefits of a Whole Life Policy

As noted, a final expense policy is usually a whole life policy. This means a few things:

  1. Your policy will have a cash value in addition to a face value. A cash value in an insurance policy is an amount of money you have access to for loans while the policy is active (in force). (The face value is the amount of money your beneficiary receives when you die.)
  2. The cash value grows on a tax-deferred basis.
  3. Your final expense policy will have level premiums. (The premiums will be guaranteed not to go up as you age.)

How Much Final Expense Insurance Do I Need?

When you are deciding how much cash you need consider funeral costs, burial costs, end-of-life medical bills, and any other loose ends. According to Mutual of Omaha, an average funeral costs about $7,000 to $10,000. Most people don’t have access to that sum in cash. Even those that do, might have other things they want to do with that cash.

Every insurance company prices premiums differently. Additionally, they all offer different face value amounts (i.e. the amount of money your beneficiary receives when you die). However, the usual amounts are anywhere from $2,000 to $40,000.

Funeral Costs to Consider

Costs of Funerals will depend on your post life choices. For example, you could choose to be buried or cremated. Alternatively, you could choose something non-traditional such as body donation, which could cut down on end of life costs. Burial costs include caskets, as well as, the plot where you want to be buried.

Your funeral choices will also affect the cost of your burial costs. Funeral homes have vary price points, churches may also have donations or fees involved in their services. Many families also choose to have food provided. Food costs also vary significantly – from free potluck style options, to full catered events.

Here is a summary chart of the average costs for funerals in the United States. For more in depth coverage, please read our article “Average Funeral Costs for End of Life Planning.”

Average Funeral Costs Summary Chart

ServiceAverage Costs
Funeral + Burial$7,640
Cremation$5,150
Casket Rental$995
Cremation Casket$1,200
Cremation Container$150
Urn$200
Burial Plot$100’s – $10,000’s
Embalming$750
Casket$1,000 – $2,500
Viewing Facility Rental$425
Body Preparation$255
Hearse Rental$340
HeadstonesStart at $1,000
Source: NFDA 2019

Average Funeral Costs for End of Life Planning.”

Alternatives to Final Expense Insurance

You could get confused as you look into the different options available for retirement and end of life planning. For example, there is Long-Term Care Insurance, Prepaid Funeral or Burial Plans, and other forms of life insurance. What can you use for what? Let’s look at a few options and what they are useful for, including…

  1. Prepaid Plans
  2. Long Term Care Insurance
  3. Savings / Retirement Funds

1. Prepaid Funeral Plans

First, let’s look at prepaid plans. Prepaid plans are different from final expense insurance. These are contracts with specific funeral or burial providers that allow you to prepay for their products and services before you need them. In contrast, with a final expense policy…

Your insurance cash payout is not prepaying for any vendors or locations. It is just a lump sum paid to your family (or beneficiaries) for them to use as they wish.

You can use a prepay plan in addition to funding a life insurance plan, or as a stand-alone option. Many people like the freedom of their family being able to use the life insurance money as they wish. Most often, the circumstances and associated costs of your death are unpredictable. You can alleviate stress for your family by giving them flexibility in using your policy funds.

https://medicarelifehealth.com/funeral-insurance

2. Long Term Care Policies

Long Term Care Policies (LTC) are not life insurance policies, so they are not useful in paying for end of life costs. LTC is an insurance policy that helps you pay for assisted living and nursing care when you need it in a long-term capacity. However, these costs do not include what is needed after you pass.

On the other hand, people often ask…

Can I Use My Final Expense Policy for Long-Term Care (LTC) Costs?

Do I need Long-Term Care Insurance?

Potentially, yes. Some Final Expense policies have accelerated death benefits for terminal illness or nursing home confinement. This means you can use the face value of the policy as cash to pay for these expenses. However, if your policy is only for $10,000, this will not get you far!

If you are looking to use insurance to cover long-term care (LTC) costs, a final expense policy is not the tool to use. Final Expense policies usually do not have a big enough face value, or accrue cash fast enough, to fund LTC. Look at funding an Indexed Universal Life (IUL) with a LTC/Critical Care Rider to help with this.

Additionally, you can get a Long Term Care Insurance Policy.

3. Savings and Retirement Funds for End of Life Expenses

Yes, you can use your savings and retirement investment funds for paying for end of life costs. Just note, that these need to be accessible to you when you need them to cover the bills. If the money is tied up in the stock market, you will need to account for the extra time and fees it will cost to free up that money.

Also, make sure that you are not relying on a pension or annuity that will expire once you pass. Some annuities have pay outs written into them when a annuitant dies, but some are done paying out completely with an end of life event.

Finally, know that often we have the best intentions for saving for retirement, but it doesn’t always work out the way we hope. If you think there might be a chance that you won’t be able to save enough, a funeral policy might be the tool you need to protect your family/friends.

Is Final Expense Life Insurance for Me?

What is Final Expense Insurance Pin

To start, insurance companies created final expense policies for older adults (typically 45 years old +). If you are younger and reading this article, there are better options for you at this time in your life. Head over to our IUL page to learn about Indexed Universal Life, or think about term insurance.

As you get older, term insurance and other higher face value whole life policies get more expensive. In addition, insurance takes on a different importance as your debts dwindle and your savings rise. You can read more about insurance needs as you age in our article “Life Insurance in Retirement?”

Final Expense Life Insurance is a great solution for older adults that need to take care of their loved ones by leaving cash to cover their end of life expenses.

Reasons for Having Burial Insurance

What is your reason for having final expense insurance? Finding your why is an important part of the buying process for funeral insurance.

Sometimes, people buy end of life insurance because they do not have cash on hand to cover funeral expenses, and they do not want their passing to put a burden on their family.

Other times, they might have cash on hand, but still want to provide their family with accessible funds, that is not in stock form, to pay for their funeral/burial. They do this in order to preserve their cash/investments to pass on to their family.

https://medicarelifehealth.com/burial-insurance

What Insurance Companies Offer Funeral / Burial Insurance?

There are many insurance carriers that offer final expense insurance as a part of their whole life offerings. Here are a few of the larger companies that offer solid, competitive products:

  • Mutual of Omaha
  • AIG
  • Transamerica
  • Foresters
  • AARP
  • Royal Neighbors of America
  • AAA

What to Look for in a Policy

The best funeral / burial insurance policies offer at least a few of the following benefits:

burial insurance for seniors buying guide
  • Level premiums (meaning the cost does not increase)
  • Affordable premium options
  • Guaranteed coverage (for people between certain ages)
  • Ability to skip medical exams (simplified or guaranteed issue in some cases)
  • No wait periods
  • Cash value build-up in the policy (for emergency access)

How Do I Get a Policy?

If you are ready to get a final expense policy, it is time to talk to an agent. She or he can help you in creating a solution that meets all your needs. Different companies have different options and riders, so it is a good idea to work with an expert to set your’s up right. It does not cost you anything extra.

Conclusions

Final expense insurance is an important part of your retirement planning.

It is a good option for owning life insurance in retirement that can secure yourself and your loved ones for the seen and unseen future events.

As we have seen, sometimes, even if you have saved enough for your final expenses, and paid off your debts before you retire, you still may benefit from final expense insurance. Especially, if your money is tied up in stocks or retirement funds, and you need access to cash quickly.