Money Matters – Mother’s Day: Insurance Planning
BOSTON (CBS) – Finding the insurance policies is the just the first step.
Now you need to review them to be sure you have the latest policy and the premiums are paid. It would not be unusual to find that mom & dad have many expired policies in their file.
- Homeowners: If mom and dad own their home do they have a homeowner’s policy? No one requires them to have insurance coverage if they own their home outright. So check to be sure their home is properly insured. When you helped them with the net worth statement do they have anything that may need special coverage such as a stamp collection, jewelry or antiques? Are they insured for the current value of their home? You want to be sure they have enough coverage.
- Auto Insurance: There is a 25% discount for drivers over 65, a discount for those that drive under 5000 miles a year and some companies give a smaller discount if you drive under 12,000 miles a year.
- Health Insurance: Medicare is for individuals over age 65 but it does not cover everything. They will need a Medigap policy and there are 6 Medigap providers in Massachusetts. Do your parents have insurance from a former employer and a Medigap policy? Here it may take some detective work to be sure they are adequately insured.
- Life Insurance: As we age life insurance becomes very expensive and our need for life insurance decreases. Life insurance is used to cover the loss of our income stream to our dependents. As we age our dependents grow up and most are able to care for themselves. Some individuals own life insurance to pay for their funeral or to leave an inheritance to the children. Others have life insurance to pay the estate taxes especially if they are gifting real estate to their heirs. If mom and dad have paid up policies check the cash value. Some have cash values that are worth more than the insurance benefit. You want these policies stored in a safe place.
- Long Term Care Insurance: This is a personal life style call. Do your parents need it? If they can’t afford the premiums because they cost too much then they probably don’t need it for they will be eligible for Medicaid. If they have a home they want to protect or you want to protect, you and your siblings can buy the long-term care insurance for them. Long-term care insurance premiums are considered a medical deduction for tax purposes. The amount depends on the owner’s age and the premium paid. The average cost of long-term care in the Boston area is over $100,000 a year.
One more thing: http://www.longtermcare.gov/LTC/Main_Site/index.aspx