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Monthly Archives: June 2017

Long Term Care Insurance

Since their levels of care were so different (my mother needed most things done for her), there weren’t any facilities that would allow them to be together. They’d be across the street from each other in different wings of the home. After fifty-five years of marriage, my parents were adamant about wanting to be together in their own home, in their own bed, where they could continue to cuddle and kiss–as they so frequently did. And, since my father was so “difficult” with a terrible temper and quite a long record of manipulative disruptive behaviors, the homes didn’t want to deal with him anyway.

It was challenging, but I committed to keeping my parents in their own home and attending Adult Day Health Care five days a week. Then, with the help of two marvelous caregivers, after four more years of loving each other–they passed, just a few months apart. Even though caring for every aspect of my parents’ last years was the hardest thing I have ever done–I am proud to say I gave them the best end-of-life I possibly could.

Had I only known to insist that we buy Long-Term Care Insurance for them prior to their illnesses–their years of in-home care could have been paid for, and I could have saved myself so much heartache, not to mention a small fortune. I encourage you to learn from my mistake and look into LTC insurance long before you need it–for your loved ones as well as yourself. Like fire insurance, hopefully, you’ll never have to use it.

THREE WAYS TO PAY FOR LONG-TERM CARE

1. Pay for in-home caregivers and assisted living/nursing homes out of pocket. This is expensive and can often deplete a family’s life savings.

2. Meet a very specific poverty level and qualify for government assistance through the Medicaid program. Unfortunately, options are limited, only paying for nursing homes that accept Medicaid.

3. Buy a Comprehensive Long-Term Care Insurance policy. This protects your family’s assets from the rising costs of caring for someone who needs full time care. An employer might pay the tax-deductible premiums. Consider buying it at a younger age, when more affordable and accessible. It must be bought before a major illness strikes. Medicare and regular health insurance does not pay for long-term care. The average cost for a person who needs long-term care is $40-$70,000 annually, depending on where you live, plus the cost to the family caregiver who may have to leave their job.

Reduce Insurance Costs

Adjust Your Deductibles. Perhaps you don’t need a $200 home deduction. If you can live with a deductible of $500 or more you can save significantly from year to year.

Special Discounts. Depending on your age, there may be special discounts you can take that will also reduce your premiums.

Examine Your Policy. Oh, we do think they are correct – right? Well, if your address is incorrect you could be paying more than you should. Check to make sure that your correct zip code is listed…it could cost you money if your insurer has you living in another neighborhood.

Abstain From Bad Habits. If you do not smoke or drink, make sure that your insurance company knows this. Your rate will drop accordingly if this is news to them.

Eat Your Losses. If you have a small claim, consider not submitting this information to the insurance company. Any claims you make can push up your rates down the road thereby costing your more in the long run.

Pay Now, Save Later. Instead of breaking up your premium into monthly payments, consider paying the entire premium at one time. Usually, insurers tack on a surcharge for the privilege of monthly payments.

Cut Business Insurance

Make a list of the actions you’ve taken to reduce your risk. I’ll be able to use that list to negotiate your rates.

Minimize your claims. The businesses that will get the highest rate increases, or not be able to get insurance at all, will be those with frequent small losses or who ignored loss control recommendations.

Make sure any new equipment or buildings are installed or constructed in a manner desirable to the insurance company. Consult with your insurance specialist BEFORE proceeding with construction or installation and avoid nasty surprises on the back-end.

Increase your deductibles and retain more risk – most companies look favorably upon clients with higher deductibles. It shows you are willing to cover the small day-to-day stuff, and use your insurance for large losses – as it is intended. This will help lower your rates, too.

If possible, use higher coinsurance formulas to help lower rates.

Be sure your insurance is providing proper coverage amounts. You may be dangerously underinsured in some instances, or paying for coverage you don’t need in others. Be sure to make contact with your insurance specialist.

Insurance Credit Scoring

Isn’t it interesting that the score most important in our financial lives, our consumer credit score does not even contain full disclosure? As stated above the Federal Trade Commission has ruled that it is OK for Fair Isaac & Co not to disclose the algorithms used in this process, but what about consumer rights.

While it is important to understand what a FICO score is, it is not the main issue of this paper, insurance rates are. So where is the connection? All the public knows is that Fair Isaac tells us there is a high correlation between people with bad credit and high risk drivers. This notion is insane and from what I can see from this black box approach, there is no real causation between the two.

This type of reasoning is similar to convicting a person of something before they have even committed a crime. For instance, let’s say I do a study and that study shows there is a high correlation between criminals and people with bad credit. Is this to say that just because you have bad credit you are more likely to commit a crime and therefore you should be profiled or perhaps locked up because you are a risk to society?

This system is discriminating against minorities, disabled and in my case college students among others. Fair Isaac & Co claims that they cannot show the sophisticated algorithms they use to calculate these correlations and scores because they fear that they would be giving up valuable proprietary information that was very costly to develop and maintain. What about the cost to consumer’s who may be paying higher rates or in worse cases even denied insurance based on these practices.

The Equal Credit Opportunity Act forbids creditors from considering race, sex, marital status, national origin, and religion, but if we don’t even know how these companies are calculating these scores, how in the world could we possibly know whether or not they are discriminating. This smoke and mirror approach is what many government agencies do to subtly discriminate and extort money from the American.

What about extortion? As I reflect on this topic extortion comes to mind. Webster defines extortion as to “obtain by force or compulsion.” By using such unfounded tactics consumers are forced into paying the higher rates. First of all, 90% of all insurance companies use this procedure; secondly in the interest of society legislation requires all Americans with cars to have car insurance. Living in a country where it is virtually impossible to live without a car doesn’t this present some force to pay the rates? Also, lets say you cannot afford to buy a car with cash, in which case you could obtain liability insurance alone and save quite a lot of money; but instead you take out a loan, the bank will require you to obtain full coverage auto insurance to cover them until you pay off the loan. While this case may not represent an extreme case of extortion it does give reason to ponder the connection.

Insurance companies tout themselves as representing peace of mind, protection and security, but at what cost. Over the past 10 years, I have spent roughly 20,000 dollars in car insurance, what have I claimed? Easily less than half and I totaled a car. Is insurance just a form of legalized gambling protected by government? The McCarran-Ferguson Act of 1944 exempts the insurance industry from antitrust laws, so here we are again without a choice; collusion is the rule not competition. Where are the ethics of lawmakers? Many states are screaming about this controversial issue and some states such as California have had some success, but with protection from top government what can consumers do?