FAQs About Insurance

Medicare FAQ’s

• Q1

  I heard that there is a penalty if I don’t sign up for Medicare.

  That’s true. But there is a major exception. If you are turning 65 and you (or your spouse) are still working for a company and you are on their employer health insurance, and the company has at least 20 employees, then you can delay getting onto Medicare until either you or your spouse stop working or you drop off the plan for any reason. At that point, you can enroll into Medicare without any penalty.

• Q2

  What if the company has less than 20 employees?

  Then the rules are different. You will need to go ahead and enroll into Medicare when you are first eligible.

• Q3

  I’s turning 65 soon and I just received my Medicare card in the mail. Is that all I need?

  No. Medicare has four main parts (Parts A, B, C, and D), but you’ll notice that your card only has Part A and Part B listed on it. Medicare doesn’t cover everything, and if you do nothing else, you will not have any prescription drug coverage (and if you get it later you will pay a penalty for late enrollment), and you will have a potentially unlimited liability for as much as 20% of your medical bills.

• Q4

  What’s the difference between Medicare Advantage and Medicare Supplement?

  Both are offered by insurance companies, but that’s where the similarities end. Medicare Advantage (Part C) is a way to get your Medicare benefits through a private health plan, which may have a separate premium, co-pays, deductibles, and restrictions on which doctors you can use. These plans are subsidized by Medicare and all medical claims must go to the plan. A Medicare supplement is an optional add-on to close the “gaps” in Original Medicare, such as the 20% mentioned above, and will automatically pay their portion once Medicare has processed theirs. There are no network restrictions with a Medicare Supplement (except for a Medicare Select supplement plan).

• Q5

  Why do you say that working with you costs me nothing?

  This is true. We never charge you to work with us, because if we can assist you in enrolling into a Medicare Supplement, Medicare Advantage Plan, or Medicare Prescription Drug Plan, we are compensated from that insurance Company. And, that company cannot charge you more because you used an independent agent, nor can they charge you less if you call them and enroll directly. The prices of their policies must be approved in advance by the State Department of Insurance, regardless of how they choose to sell that particular policy.

Long-Term Care FAQ’s

• Q1

  I’m not planning on needing Long-Term Care, but if I do, I’ll just move in with my kids

  There is a 100% chance that all of us will reach a point in our lives where we are no longer able to care for ourselves. For some of us, that moment will come the same day we pass away, but for more than half of us, that time will come and we will still be around, meaning someone else will have to help us prepare meals, bathe, go to the restroom, get dressed, get out of bed, etc. This puts a huge burden on your loved ones, not only financially, but emotionally too. It can significantly affect their ability to work, their relationships with their spouse and kids, and exacts a heavy physical toll.

• Q2

  I will never need to go into a nursing home, so why do I need to buy Long-Term Care Insurance?

  Almost all long-term care begins in either your own home or when you move in with a family member. It can not be overstated how big a difference it makes if there is money to pay a caregiver to come to the home, even if it’s only for a few hours a day, or even a week. This provides a much needed break for the family member and you will likely get better care from a trained caregiver.

• Q3

  Why should I buy Long-Term Care Insurance? I’d rather just self-fund it if I need it, and if I don’t, I’ve wasted my money.

  You never know what kind of care may be needed in the future. Take Alzheimer’s for example – someone can live for a decade or longer with this terrible disease, and as it progresses, taking care of you can become an impossible burden for a family member. Entire retirement plans have been obliterated by the cost of a long-term memory care stay. And, with the solutions we work with to insurance against that, you can be assured that if you pass away and never need long-term care, your beneficiaries will get back the money you paid for this coverage. One more thing – if done correctly, you can take a small portion of your existing savings and leverage that into an unlimited, tax-free long-term care benefit, leaving the bulk of it to continue to grow or to be passed along to your family upon death. The question you should be asking is “Why shouldn’t I do this?”

Annuity FAQ’s

• Q1

  I’ve heard that annuities will tie up your money for such a long time that it’s not worth it.

  Annuities usually do have an early surrender penalty, but it decreases each year until it goes away completely. Most companies will also allow you to withdraw up to 10% of your account value annually with absolutely no penalty. Most companies will allow a greater penalty-free withdrawal if you become confined in a nursing home, or waive it entirely if you become terminally ill. And, if you pass away early, your beneficiaries will get the entire death benefit (usually the full account value) with no penalty. One more thing – most Fixed Index Annuities are purchased with retirement funds such as an IRA, 401k, or 403b. When you were saving money, you were contributing to these accounts a little at a time. Any money you take out will be fully taxable, so it is rarely prudent to withdraw a large portion of it anyway, regardless of whether it’s in an annuity or not. Moving funds from a retirement account to an annuity in and of itself does not trigger any taxes.

• Q2

  Annuities have high fees, right?

  Some do. Variable annuities, which is a securities product that has a risk of loss, can have very high fees, and they are not always obvious. You may have one of these and simply wonder why it never seems to earn as much interest as you thought it would. We do not deal with any variable annuities. Fixed annuities can have fees or no fees. If it has a fee, it will be fully discussed up front and you will have a specific reason why there is a fee – i.e. if your main priority is providing a lifetime income to supplement your Social Security, then there may be a fee to add this feature. But, the fee will only come into play if you change your mind and decide to liquidate the annuity. So if the fee is 1%, the annuity will earn 1% less than it would with no fees. On the other hand, if your main reason for buying the annuity is to protect your retirement account from ever losing money, there are several great options out there with absolutely no fees.

• Q3

  I don’t need an annuity. I am just planning to take 4% out of my retirement account and I’ll never run out of money.

  The 4% rule has been around for decades, and with the market crashes in 2001, 2008, and recently, have been proven to be unreliable, at best. Retirement requires a shift in how you think about your lifelong accumulated savings. Why have you saved all this money in the first place? It’s not to take a huge, taxable lump sum withdrawal, it’s to draw income to supplement your Social Security income and/or pension income. Traditional retirement accounts are at risk of loss, regardless of whether it’s invested in stocks, bonds, mutual funds, ETF’s, real estate, precious metals, cryptocurrency, etc. A Fixed annuity has NO market risk, but is designed to give you some of the upside of these types of investments. What could be safer than that? The answer? Nothing. If your goal is lifetime income, an annuity may guarantee you 4.5, 5, 5.5, or 6% of your principal each year, and will continue to pay out for the rest of your life, even if the underlying asset is 100% depleted. It can also be set up to continue to pay your spouse this income for the rest of their life too, even after you are gone. And if you both pass away early, your beneficiaries will receive a death benefit equal to or greater than the account value. There is NO OTHER investment that can guarantee all this.

• Q4

  There are so many annuities out there, how do I pick the right one?

  Yes there are. Our team has access to virtually every annuity on the market, and we can quickly look at several to find you the right one based on what your purpose for your money is. The fact is, many of the very larges names in the annuity business are being pushed pretty hard by the industry. They’re not only pushed to the general public because of large advertising budgets, they are being pushed to agents and advisors by wholesalers that have a financial incentive to do so. Robb is a Series-65 licensed fiduciary, and this means he must always act in your best interest, which is a higher standard than the suitability standard that insurance-only licensed agents fall under. We take every annuity recommendation very seriously, which is why we will want to thoroughly understand your financial situation, your concerns, wants, needs, and dreams, and take into account any extenuating circumstances that may influence your decision. We will then use our team’s expertise and find you the right product with the right company to give you the best outcome possible. Ready to get started? Let’s have a conversation today!

Life Insurance FAQ’s

• Q1

  What type of Life Insurance is the best?

  The type that is in force when you die. We are not trying to be funny here…think about it…this is why you buy life insurance, to provide tax-free funds to your family upon death.

• Q2

  How much life insurance do I need:

  It really depends on several factors, such as how many dependents you have, will you need to pay for college in the future, do you have a mortgage and/or other debt, do you have investments that aren’t liquid and may take quite awhile to unwind after you die, do you just want to cover final expenses, do you want to build cash value that you can use to supplement your retirement, or do you want a policy that can pay a portion of the benefits even while you are alive should you be diagnosed with a critical illness or become disabled? And perhaps most important, what is your budget? These are all the types of questions we will ask you in order to be able to recommend the right life insurance coverage.

• Q3

  What is the difference between term and whole life insurance?

  Term insurance does give you the ability to have a much greater death benefit that whole life for the same monthly payment, but, the policy will only be in effect for a defined amount of time (usually 10, 15, 20, 25, or 30 years). After this time passes, the annual payment will increase dramatically each year, and almost everyone will not keep the policy then. Only about 2% of all term policies ever pay out a death benefit. A whole life insurance policy will never expire as long as you continue to pay the premiums. And, the premiums are guaranteed never to go up. Even though you won’t get as much death benefit for your monthly payment, you will own a policy that can build real cash value over time and will likely be there for your family when you die. So another way to look at it is with a term policy, you are sort of “renting” the coverage for a specified amount of time, but with a whole life policy, you actually own a policy for the rest of your life.

• Q4

  I have plenty of money in retirement. I don’t need life insurance.

  That may be true, but will your beneficiaries be able to access their inheritance in time to pay for your funeral costs? Will they have to liquidate some assets that they’d otherwise not liquidate due to temporary market conditions because they have to pay for a funeral? Will they need to pay some property taxes, insurance, or utility bills in the short term after you die? All of these issues can be taken care of with a small whole life policy that will provide enough tax-free cash to cover all of these expenses and give them more time to sort out your estate. Remember – you don’t buy life insurance for yourself, you buy it for them.