How To Evaluate Your Disability and Life Insurance Needs

The beginning of the New Year presents multiple opportunities to evaluate your current estate plan and your financial strategies. Significant changes have occurred for many people throughout the last two years at a global level in addition to those that might have affected your personal life, such as a marriage or a divorce. This makes it important to ensure that you always have appropriate insurance coverage.

Failing to have appropriate insurance coverage can prove problematic if and when you have an event that would have otherwise been covered by this situation. It becomes very important to have the support of an experienced lawyer to guide you through this process and help you round out a comprehensive plan.

Life insurance and disability insurance are often overlooked but are important components of your financial security strategy. Disability Insurance steps in to help provide you a portion of your income if you become disabled or incapacitated and are unable to work. Life insurance is much more situational, but you should consider any potential assets and debts that you have, as well as how you would intend to support a loved one or other beneficiaries in the event that your income were no longer available.

If you are the primary wage earner, you might include 5 to 10 times your annual income when evaluating coverage for a life insurance policy. For more information about using these strategies to help protect your loved ones and to limit your risks, schedule a consultation with an estate planning lawyer in Virginia Beach.


Getting A Handle on Planning After the Birth of a New Baby

Congratulations on your newest addition. There are many different things to think about in the wake of becoming a new parent but one of the most important is putting an emergency fund. The U.S. Department of Agriculture shares that the cost of raising a child up to age 18 is more than $230,000 for a married couple of little income with two children. Your own financial house needs to be in order before you can provide for your children. A starter emergency fund of $500 or so can help you in the event that a sudden and small expense crops up.       
You’ll eventually want a bigger fund but it could take several years to get there. You will also likely need life insurance as well. Young parents will typically need up to 10 times their income in terms of coverage. You can boost your emergency and retirement savings until those accounts are on track. If you still have money left over after that, consider contributing to a 529 college savings account.
Furthermore, you will want to update all of your estate planning documents after welcoming a new loved one into your family. You’ll need to ensure that your will includes stipulations about who should step in in the event that you pass away to care for your minor child. A will is the only way to name such a person and it needs to be formally documented in case something ever happens to you and/or your spouse. Consulting with an experienced estate planning attorney is recommended.

Medical ID Theft On The Rise

Senior citizens, already uniquely vulnerable to identity theft, are most often the targets of a specific variation of this kind of fraud.

A medical record folder being pulled from the ...
A medical record folder being pulled from the records (Photo credit: Wikipedia)
“Medical identity theft happens when someone steals your personal information and uses it to commit health care fraud,” according to a page on the website of the Federal Trade Commission. “Medical ID thieves may use your identity to get treatment, even surgery, or to bilk insurers by making fake claims. Repairing damage to your good name and credit record can be difficult enough, but medical ID theft can have other serious consequences. If a scammer gets treatment in your name, that person’s health problems could become a part of your medical record. It could affect your ability to get medical care and insurance benefits, and could even affect decisions made by doctors treating you later on. The scammer’s unpaid medical debts also could end up on your credit report.”
“In the last five years, the number of data breaches in the medical sector has quadrupled,” noted writer Laura Shin in a recent article in Fortune magazine. “Last year, for the first time, the medical sector experienced more breaches than any other. It’s again on track to lead in 2014, according to the ID Theft Center. While the health care industry has long suffered fraud by providers or employees fraudulently billing insurers, Medicare, or Medicaid, the medical industry is only just now trying to catch up to the quickly growing threat from hackers.”
The FTC recommends that everyone, but especially older Americans, read every explanation of benefits statement from their insurers. Further, the Federal Trade Commission suggests that people should annually ask insurers for a list of the benefits that have been paid in their name.
“If you think you may be a victim of medical identity theft, ask your health care provider or hospital for your medical records,” the FTC says. “You have a right to get copies of your current medical files from each health care provider, though you may have to pay for them. You also have a right to have inaccurate or incomplete information removed.”
“Many hospitals have ombudsmen or patient advocates who also can help.”

Long-Term Care Rate Hikes Troubling

As members of the Baby Boom generation move into retirement and beyond, long-term care insurance policies to help cover the costs of assisted living or nursing homes are becoming more and more of a necessity, rather than a luxury.

Nursing home clown visit
(Photo credit: Kara Newhouse)
Unfortunately, the cost of these policies is rapidly become prohibitive for a large segment of our aging population, according to a recent story in the Richmond Times-Dispatch.
In the story, staff writer John Reid Blackwell notes that such policies date back nearly four decades and that millions of Americans have been paying the premiums for them.
“Yet costs for long-term care insurance have been rising dramatically in recent years, the result of numerous factors including miscalculations by the insurance companies that have sold policies,” according to the story. “Faced with higher-than-expected payouts on long-term care policies and lower-than-expected investment returns on premiums paid, some insurers have exited the market entirely.
“Other major providers such as Henrico County-based Genworth Financial Inc. and Boston-based John Hancock Financial, a division of Canadian insurance company Manulife Financial, have sought approval from state insurance regulators across the country to raise premium rates. The rising rates mean that people who may have been paying for a policy for many years are seeing double-digit percentage increases on premiums that can already run several thousand dollars a year.”
“This phenomenon in recent years of very significant premium rate increases for long-term care insurance is something that is pretty widespread in this country,” Jacqueline K. Cunningham, Virginia’s commissioner of insurance, is quoted as saying. “It is something that we have been keeping our eye on, and it is definitely a source of concern. We have gotten complaints from a lot of people who are concerned about the rate increases they have gotten.”
In Virginia alone, Blackwell noted, regulators have approved 82 rate increases sought by 33 legal entities for long-term care policies between Jan. 1, 2009, through Aug. 14, 2013, according to a study conducted for the State Corporation Commission’s Bureau of Insurance last year by members of the American Academy of Actuaries.
“The average annual premium increase was 36 percent, with a range of increases from 8 percent to 100 percent. As of Dec. 31, 2012, there were 259,159 individuals in Virginia covered by long-term care insurance policies, according to the report.
“A number of these policyholders have received financially challenging rate increases on their policies,” the report said.
“As a result, ‘some policyholders are not able to afford their current LTCI premiums and are having to reduce their policy benefits, if able to do so, or allow their coverage to lapse,’ the report said.”

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Long-Term Care Cancellations Require Better Notification

It should never happen again.
And whether it’s by passage of a new law or a rule change at the Virginia Bureau of Insurance, maybe it never will.
A recent story in the Richmond Times-Dispatch brought to light the plight of people left without long-term care for the elderly. The story focused on the Pirron family. For more than a decade, David and Anne  Pirron paid almost $400 in premiums a month long-term-care policy offered by John Hancock Life Insurance Co.
“Their son, Michael Pirron, had helped them research a policy, and later he was added as a third-party designee so that he also would get notices about changes to the plan,” according to the story by Tammie Smith.
“About a year-and-a-half ago, my mother had a major health issue,” Michael Pirron, the CEO at Image Makers, a Richmond-based technology consulting company, told the newspaper. “Realizing my father was not managing my mother’s health well, I called the long-term-care (policy).”
“To his surprise and dismay, Pirron said he was told the plan had been canceled seven months before because of nonpayment,” Smith wrote. “Apparently his father, who had begun to show some of the cognitive impairments of Alzheimer’s, had inadvertently canceled the automatic payments while intending to cancel another automatic bank draft. Pirron said the company that wrote the policy sent letters to his father, who just stuffed them into a drawer. As the third-party designee, Pirron was supposed to get notices as well. The insurance company said a separate letter was sent to him, but Pirron is adamant that he never got anything. If he had, Pirron said, he would have corrected the matter.
“The company refused to reinstate the policy. Pirron appealed but was denied.”
Although nothing can now be done for his parents, Michael Pirron has been working to get a bill passed in the state’s General Assembly that would force long-term policy insurers to notify third-party designees by certified mail when a policy is canceled.
“The bill this year, House Bill 719 sponsored by Del. Jennifer L. McClellan, D-Richmond, was considered by a House subcommittee in January but did not make it out after state insurance officials said they would work on an administrative fix,” according to the Times Dispatch. “The state Bureau of Insurance … filed a notice of a proposed rule change that addresses Pirron’s concern about third-party designees getting notices. The proposed change also requires companies to keep receipts showing cancellation notices were sent.
“McClellan said that because the rulemaking process was in the works, her bill did not go forward.”