Chronic Illness Benefit – Does Your Life Insurance Offer This Benefit?

Does your life insurance policy offer this benefit at no additional cost:

How the Rider Works

A portion of your policy death benefit may be paid to help you and your family cope with the strain of a chronic illness if a U.S. licensed healthcare practitioner who is not the insured, policyholder, beneficiary or relative thereof, has certified in the last 12 months that the insured:

  • is unable to perform two of the six recognized activities of daily living (bathing, continence, dressing, eating, toileting, and transferring)without substantial assistance for a period of at least 90 consecutive days, or;
  • has a severe cognitive impairment that requires substantial supervision by another person to protect the insured from threats to health and safety for a period of at least 90 consecutive days

To receive benefits under the rider, the healthcare practitioner must also certify that continuous care in an eligible facility or at home is expected to be required for the remainder of the insured’s life.

Want to do a Life Insurance Review give our office a call at 215-886-2122.

 

Retirement on a Cruise Ship – Is it for you?

About 2 years ago my wife and I were on a cruise through the western Mediterranean aboard a Princess liner. At dinner we noticed an elderly lady sitting alone along the rail of the grand stairway in the main dining room.

I also noticed that all the staff, ships officers, waiters, busboys, etc., all seemed very familiar with this lady. I asked our waiter who the lady was, expecting to be told she owned the line, but he said he only knew that she had been on board for the last four cruises, back to back.

As we left the dining room one evening I caught her eye and stopped to say hello. We chatted and I said, “I understand you’ve been on this ship for the last four cruises.” She replied, “Yes, that’s true.” I stated, “I don’t understand” and she replied, without a pause, “It’s cheaper than a nursing home.”

So, there will be no nursing home in my future. When I get old and feeble, I am going to get on a Princess Cruise Ship. The average cost for a nursing home is $200 per day. I have checked on reservations at Princess and I can get a long term discount and senior discount price of $135 per day. That leaves $65 a day for:

1. Gratuities which will only be $10 per day.

2. I will have as many as 10 meals a day (of fantastic food, not institutional food) if I can waddle to the restaurant, or I can have room service (which means I can have breakfast in bed every day of the week).

3. Princess has as many as three swimming pools, a workout room, free washers and dryers, and shows every night.

4. They have free toothpaste and razors, and free soap and shampoo.

5. They will even treat you like a customer, not a patient. An extra $5 worth of tips will have the entire staff scrambling to help you.

6. I will get to meet new people every 7 or 14 days!

7. TV broken? Light bulb need changing? Need to have the mattress replaced? No problem! They will fix everything and apologize for your inconvenience.

8. Clean sheets and towels every day, and you don’t even have to ask for them.

9. If you fall in the nursing home and break a hip you are on Medicare; if you fall and break a hip on the Princess ship they will upgrade you to a suite for the rest of your life.

10. There is always a doctor on board.

Now hold on for the best! Do you want to see South America, the Panama Canal, Tahiti, Australia, New Zealand, Asia, or name where you want to go? Princess will have a ship ready to go. So don’t look for me in a nursing home, just call shore to ship.

PS: And don’t forget, when you die, they just dump you over the side at no charge.

Longevity Risk: Have you planned for living too long?

You have heard of Market Risk, Inflation Risk, Interest Rate Risk and a few others but have you made plans for just living way too long?

The question of how much money is needed in retirement leads to another question which is perhaps the most difficult and the most central issue you as the advisor face when helping your clients prepare for retirement: How long should you expect clients to live? What is their longevity risk? Getting this variable exactly right is virtually impossible. Getting it wrong can have a profound impact on a client’s quality of life, lifestyle, and legacy.

Will you live to age 85? 90? 95? 105?

Longevity Risk Defined

So what is longevity risk? Longevity risk is the risk that people on average will live longer than expected. Due to improvements in medical technology, nutrition, disease control, public health, and environment, human life spans have improved very rapidly and very significantly. The National Center of Heath Statistics reports that between 1975 and 2016, life expectancy at birth increased from 72.6 to 78.8 years for the total U.S. population. For males, life expectancy increased from 68.8 years in 1975 to 76.3 years in 2016, and for females, life expectancy increased from 76.6 years in 1975 to 81.2 years in 2016. You can view the report at: https://www.cdc.gov/nchs/data/hus/hus16.pdf#015.

The problem is that many individuals underestimate their “average” life expectancy. In fact, according to a study conducted by the Society of Actuaries (SOA), titled Risks and Process of Retirement Survey, they reported that almost half of retirees and pre-retirees in the U.S. under estimate average life expectancy. The study asked respondents about their views respecting longevity risk. Here are some of the results:

  • Approximately four in 10 respondents (43% of retirees and 38% of pre-retirees) underestimate average life expectancy by five years or more, the report Another two in 10 underestimate it by two to four years;
  • Four in 10 retirees (42%) and pre-retirees (41%) correctly respond that about half of 65-year-old men and women can expect to live until median life expectancy (age 83 for men and age 86 for women). Two in 10 (21% of retirees and 20% of pre-retirees), believe that fewer than half will live at least until that age, while approximately one-third (31%), and 36%, respectively believe about 75% or more will live until then;
  • Typical retirees and pre-retirees see themselves living until age 84 (median for retirees) or 85 (median for pre-retirees). The report notes, however, that one- quarter of retirees (24%) and almost three in 10 pre-retirees (28%, up from 15% in 2005) think they will live until age 90 or later; and
  • At the other extreme, one in 10 retirees (9%) and pre-retirees (10%, down from 16% in 2005) do not think they will reach age 75.

Of course, averages alone don’t tell the entire story since once we reach our retirement years, the chances of surviving for another 20 to 30 years are substantial. In fact, as we survive each stage of life and the associated risks, the odds of us surviving to higher ages increase.

Figure 3.1 shows the life expectancies of 65-year-old Americans. According to the Social Security Administration mortality tables, a 65 year-old man has a 22% probability he will live to age 90, while a 65 year-old female will have a 34% probability she will live to age 90.

Figure 3.1

Probability of Today’s 65-Year-Old Living to Various Ages

65 Year-Old Male 65-Year-Old Female 65 Year-Old Survivor
Age Probability Age Probability Age Probability
80 61% 80 71% 80 88%
85 41% 85 54% 85 73%
90 22% 90 34% 90 49%
95 8% 95 6% 95 23%

Source: Social Security 2010 Mortality Tables with 1% mortality improvement. https://www.ssa.gov/planners/lifeexpectancy.html

Why not give our office a call and let us explain how to get ready for Longevity Risk.  Call 215-886-2122 and we can show you how to plan for life.

Employee Retention Planning

Imagine you have an employee, Susan, who has the expertise, knowledge and relationships to drive your company forward every day. As you make strategic decisions on the direction for your organization, she’s in the trenches transforming your vision into reality. The truth is, Susan knows the ins and outs of your business operations better than you do. And that’s good. After all, you wouldn’t be where you are if you didn’t delegate successfully.

One day, however, Susan sits down across the desk from you and gives you two weeks’ notice. She’s found a job that pays better and offers her more opportunities. What effect would this have on your business? Would it slow operations and reduce employee morale?

Now consider this scenario. As owner of the company, you are also the best salesperson, developing strong relationships with prospects and customers. However, when it’s time to retire, you take the most valuable asset with you: yourself. Because you haven’t trained your employees to sell, your business folds so you cannot sell it.

Every day, business owners lose employees because they failed to put an incentive plan in place to retain them. It can be devastating. Also, business owners may take for granted the value they bring to their companies. Because of this, they do not create a succession plan that ensures their employees can take over when they retire.

When you build a business, you cannot do all the work yourself. If you can leverage yourself, you will have more freedom and increase the value of your business. When you leave, you don’t want the business’ worth to decline. So you need to put programs in place to find, retain and incent talented people to grow your business and increase its value.

We can help you to:

  • Create incentive plans that recruit, retain and reward employees who are essential to your business.
  • Leverage yourself by providing incentives, such as sales bonuses, to employees who you develop so they can do your job.
  • Add protection for the worst case scenario in which a key employee dies or becomes disabled.

If you overlook such plans, your business may be in jeopardy.

Don’t risk losing key employees just because you failed to plan ahead. Make a plan to leverage yourself and build business value.

employee retention planning

 

Disability Risk Fact Sheet

  • One-third of all people between the ages of 30 and 64 will become disabled  sometime in their lives. (Source: Health Insurance Association of America)
  • At age 32, the chance of being disabled for 90 days is 6.5 times greater than the  chance of death. (Source: National Association of Insurance Commissioners)
  • Each year, one person in eight will suffer disability.  (Source: National Association of Insurance Commissioners)
  • Seventeen percent of American families (one in six) have at least one adult who is  disabled from employment. (Source: 2000 U.S. Census)
  • The likelihood of being disabled for more than three months is greater than dying in  any given year. (Source: Society of Actuaries)
  • Seventy-five percent of disabilities are caused by an illness rather than an accident.  (Source: Commissioner’s Disability Table)
  • In the first year following a paraplegia, living expenses average $259,531 per person.  (Source: National SCI Statistical Center, 2005)
  • Only 17 percent of small businesses offer disability coverage.  (Source: Life Insurance Market Research Association)
  • Forty-eight percent of VA mortgage foreclosures are attributed to disability.  (Source: FHA, Disability Income Concepts, 1998)
  • Eighty-two percent of American workers have inadequate or no disability protection.  (Source: Consumer Federation of America and American Council of Life Insurers, 2003)
  • Social Security Disability Insurance  (SSDI) is available if you have worked 10 years before becoming disabled; after five months of disability; if the expected duration of disability is more than one year. It pays an average of $894.10 per month. (Annual Report on the Social Security of DI Program, 2004)
  • Seventeen percent of American families (one in six) have at least one adult who is disabled from employment. (Source: 2000 U.S. Census)

Without a succession plan, a thriving business could fail in an instant.

Succession planning is critical to supporting the effective transition of a business from one owner to the next; whether that transition occurs due to a planned exit by the owner — like the owner’s retirement — or an unexpected or tragic event — like death or disability. Without a plan in place, a thriving business could fail in an instant, jeopardizing the financial futures of all those who rely on the business and its continued success.

Yet up to 60% of business owners do not have any formal succession plan for their business.

Give my office a call to discuss how to solve your business succession problems at 215-886-2122.

Mcdonalds

 

 

 

 

 

 

 

 

 

 
 

 

Long Term Care Insurance

Waiting to get older to buy your long term care insurance? 78% of people between the ages of 50-59 are approved for coverage when they apply, but that number drops to 56% at age 70. If your health changes while you’re “waiting to get older,” you might be out of luck. What’s your plan for long term care?  I could share all kinds of figures about cost and percentages that one will need care, I am sure you have heard it before, I would rather share the following.

Here is a story we have often shared about the subject:

“Barrel of Bricks”

Long-term care is one of those unexpected expenses everyone should plan for but few people actually do.

Consider this humorous accident report from someone who should have considered long-term care sooner.

I am writing in response to your request for additional information on my accident report.  In block number three of the accident reporting form I wrote, “Trying to do the job alone,” as the cause of my accident.  You said in your letter that I should explain more fully and I trust the following details will be sufficient.

I am a bricklayer by trade.  On the day of the accident I was working alone on the roof of a new six-story building.  When I completed my work I discovered that I had about 500 pounds of brick left over.  Rather than carry the bricks down by hand, I decided to lower them in a barrel by using a pulley, which fortunately was attached to the side of the building at the sixth floor.

Securing the rope at ground level, I went up to the roof, swung the barrel out, and loaded the bricks into it.  Then I went back to the ground level and untied the rope, holding tightly to it to ensure a slow decent of the 500 pounds of brick.  You will note in block eleven of the accident report that I weigh 135 pounds.

Due to my surprise at being jerked off the ground so suddenly, I lost my presence of mind and forgot to let go of the rope.  Needless to say, I proceeded at a rather rapid rate up the side of the building.

In the vicinity of the third floor I met the barrel coming down.  This explains the fractured skull and broken collarbone.

Slowing down slightly, I continued my rapid ascent, not stopping until the fingers of my right hand were two knuckles deep into the pulley.  Fortunately, by this time I had regained my presence of mind and was able to hold tightly to the rope in spite of my pain.

At approximately the same time, however, the barrel of bricks hit the ground and the bottom fell out of the barrel.  Devoid of the weight of the bricks, the barrel now weighed approximately 50 pounds.  I refer you again to my weight in block eleven.  As you might imagine, I began a rapid decent down the side of the building.  In the vicinity of the third floor I met the barrel coming up.  This accounts for the two fractured ankles and the lacerations of my legs and lower body.

The encounter with the barrel slowed me enough to lessen my injuries when I fell onto a pile of bricks and, fortunately, only three vertebrae were cracked.

I am sorry to report, however, that as I lay there on the bricks in pain, unable to stand, and watching the empty barrel six stories above me I again lost my presence of mind.  I let go of the rope.

Moral of this tale:  It doesn’t pay to try to do the job alone.

Maybe you should take a serious look at long-term care now to prepare for the time when you or your loved ones might need it.  I can help you evaluate your options and needs to avoid your “barrel of bricks.”

Give my office a call at 215-886-2122 and let’s have a conversation.