Why buy long-term care insurance

What young people need to know about long-term care insurance, and reasons why young people should purchase long-term care insurance.

Introduction

Long-term care insurance is a type of insurance designed to cover the costs associated with long-term care, such as custodial care, home health services, and nursing home expenses. It’s an important coverage for seniors, but it’s also something that young people need to consider. Here are some reasons why young people should think about purchasing long-term care insurance.

1. Affordable premiums: Long-term care insurance policies are more affordable when they are purchased at a younger age. That’s because younger people are less likely to make claims and therefore pose less risk to the insurer. As a result, premiums can often be significantly lower than those of someone who waits until later in life to purchase a policy.

2. Peace of mind: By purchasing long-term care insurance early on, you can rest assured knowing that if you ever do need long-term care services in the future, you will be covered. This peace of mind can be invaluable for young people who may not have the financial resources to pay for long-term care out of pocket.

3. Tax benefits: Depending on where you live, purchasing long-term care insurance may qualify you for tax deductions or credits which can save you money down the line. This can be especially helpful for young people who may already have limited disposable income and need all the help they can get when it comes to managing their finances responsibly.

Conclusion

Long-term care insurance is often seen as something that only older people need to worry about, but this isn't necessarily true. Purchasing a policy at a younger age has many benefits including lower premiums and potential tax savings down the line. Young people should consider speaking with an experienced investment advisor or financial planner before making any decisions regarding long-term care insurance in order to ensure they make the right choice for their individual situation.

Do I need landlord insurance?

Do I Need Landlord Insurance?

Are you currently renting or have plans to rent out a home you own? If so, you should seriously consider purchasing landlord insurance if you haven't already. After all, without this type of coverage, you could leave yourself open to severe financial losses that you may not be able to shoulder on your own. To better understand if landlord insurance is right for you, here's a brief description of property and liability protection - two common types of coverage offered through landlord insurance.

Landlord Property Protection

Landlord property protection helps landlords pay for fixing or replacing any physical property that becomes damaged or lost due to a covered event. Such protections cover the main dwelling itself and other structures on the rented property should a covered event like a fire, windstorm, lightning strike, or theft occur. In addition, landlord insurance may also cover certain maintenance items like lawnmowers and snowblowers, so always check the policy details. Please note that any property protection claims will have a specified monetary cap and will likely require you to pay a deductible when collecting on the policy. Any deductibles and limits, however, will factor into the overall cost of the policy.

Landlord Liability Protection

Landlord liability protection helps landlords pay for another person's medical and legal expenses if an injury occurs on their rental property. Please note that while landlords aren't usually required to pay a deductible when making a liability claim, the coverage will only extend to the policy's stated monetary limit.

Though many landlords are content with the basic protections offered by standard landlord insurance, additional types of coverage may be worth considering per your unique situation. Such additions may include building code protection, protection for a rental property under construction, vandalism protection, and burglary protection. If you are unsure about your rental property's best insurance configuration, don't hesitate to ask an insurance broker for their expert advice.

Working with an insurance broker

Four Key Benefits of Using an Insurance Broker

If you're currently in need of insurance - no matter what type of insurance that may be (car, home, life, business, renter's/landlord, legal, health, dental, or a specialty type of insurance) - then hiring an insurance broker may be your best bet. Not only can an insurance broker help you find your perfect policy, but their experience and industry connections can also offer additional benefits. Here are four key benefits of using an insurance broker.

1. An insurance broker can advise you on more coverage options than a company salesperson.

As insurance brokers aren't limited to a single company's products, they are more likely to find the plan that best matches your personal needs. Before advising you on your options, they can sort through many policies to find the one best suited to both your needs and budget.

2. An insurance broker will have your interests in mind rather than the interests of a single provider.

As insurance brokers aren't beholden to a particular company, they can keep your interests in mind while finding you the plan that most meets your needs. On the other hand, a company salesperson might be more inclined to sell you a policy that doesn't fully meet your needs to meet their sales quota.

3. An insurance broker can save you money.

As insurance brokers have close relationships with many insurance partners, they can compare more policies to find you a suitable plan with reasonable premiums. Brokers also have access to competitive group rates and are very experienced negotiators. Having more options and better bargaining power often means more significant savings for their clients.

4. An insurance broker can help speed up the claims process.

As insurance brokers advocate on behalf of their clients, they can help expedite your case with the appropriate insurance provider if you need to file a claim. Such assistance can help speed up the claims process, granting you faster access to some much-needed funds.

There are many benefits to using an insurance broker. Not only can an insurance broker advise you on a wide range of insurance options, but they can also help save you money and advocate for you in times of need. In addition, with an insurance broker on your side, you'll secure the policy most suited to your needs and budget - without the headache that often accompanies attempting the task on your own.

Buying insurance for your business

The Importance of Insurance for Main Street Businesses

You've finished the grueling process of building a small business from the ground up and are just about to move into your highly-anticipated new location on the main thoroughfare in your town. Just because you've secured an excellent location in the heart of your community, however, doesn't mean your business will be on easy street from here on out. Many unforeseen things can and do happen to the small businesses along Main Street, so to help ensure you are better prepared for anything life may throw at your business, you should seriously consider purchasing suitable insurance.

That said, why is it so important that your Main Street business is adequately insured? The answer is simple - you've worked hard to get your growing business to the point where it's at, so why risk leaving it unprotected against any number of situations that could leave both your business and yourself in serious financial trouble? By securing the right coverage tailored specifically to your business's unique needs, you can rest assured knowing you are prepared for many possibilities. With the protections granted by the right insurance policy, you can weather many kinds of storms and minimize any disruptions that may occur should a covered event negatively affect your business.

If you found this article helpful, you may also find our article presenting four key benefits to working with an insurance broker to be valuable.

Building your own personal economy

If the coronavirus pandemic can teach us anything from a financial standpoint, it's that we each need to focus on building our own personal economies. We can't trust, or rely on, other people, politicians, or broken-down systems to do that for us.

If you're one of my high school or college -aged readers, you have the greatest asset going for you right now. You have time on your side. Don't squander it. Harness its great power before it catches up to you and is gone forever. And if you're one of my older readers tuning in, it's better late than never, as the old saying goes. You can immediately commit to these principles and strategies today, and dramatically alter your course heading for the better.

Aaron S. Robertson

Backdrop

As time goes on during the lock downs and business closures throughout the country due to the coronavirus COVID-19 pandemic, we're seeing more and more of the devastating financial effects all of this is having on families and businesses. As I write this, well over 30 million Americans are now unemployed during the pandemic. Food insecurity is creeping in, and children are going hungry. Lines to drive-up food pantries are backed up for miles in some areas of the country. Protestors are demanding an end to the shutdowns, with many pleading that they simply need to return to work in order to support themselves and their families. Rents, mortgage payments, and other bills are going unpaid.

A problem exposed that transcends all politics and personal beliefs about the virus

For this discussion, try to set aside any political or ideological persuasion you may have. Whether or not you think the coronavirus is a hoax; whether or not you're in support of these lock downs/closures; whether or not you feel your Constitutional rights are being violated - none of that matters for purposes of this discussion. These issues will be tested and battled out in the court system in due time. In the meantime, there's one indisputable fact that we know for sure right now in this very moment, and that is the purpose of this discussion - we Americans are not saving enough, and, as we're seeing, we can't weather out a storm, be it in the form of a pandemic, a natural disaster, an individual job loss, or a widespread economic meltdown.

A case in point: Here in Wisconsin, the "Safer at Home" order went into effect on March 25. Granted, schools had already dismissed prior to that date. The school district in which I'm employed, for example, held its last in-person school day back on March 13. Now, the "Safer at Home" order was originally scheduled to go through April 24, but it ended up being extended through May 26. So, let's assume, worst-case scenario, barring any court intervention or the governor lifting it earlier, that the order will stay in place through May 26. In total, that makes for nine weeks between March 25 and May 26 - a hair over two months. As this page on the Wells Fargo Web site explains, we should ideally have 3-6 months worth of expenses tucked away in an emergency fund. That's the typical advice doled out by financial advisors and economists across the board. But families and business owners are really hurting right now, and we're not even at the full nine weeks yet. I'm writing this on May 10, and we still have 16 days to go until we reach May 26. And, in fact, families and businesses were already feeling the pain and pleading to get back to work less than one month into the order. Clearly, we're not saving enough. We're living paycheck to paycheck. But we're great at spending and racking up debt, as Warren Buffett recently pointed out in comments he made about Americans' use of credit cards.

We need to focus on building our own personal economies so that we have the resources to effectively navigate through the storms that undoubtedly come our way in life. And they come in all shapes and sizes - anything from an unexpected car repair to an accident or critical illness. Anything from widespread economic decline to - yes - a pandemic. Back to unexpected car repairs for a moment - this press release issued by BankRate.com in 2016 pointed out at the time that 63% of Americans could not afford to cover a $500 car repair or a $1,000 visit to the emergency room. Four years later, in 2020, those numbers haven't improved much. According to this article published by CNBC back in January, 41% of Americans can cover a $1,000 emergency with savings. That leaves some 59% who cannot. And when it comes to the current state of retirement savings, the picture doesn't look pretty, either. According to this recent Washington Post story profiling six retired baby boomers:

Half of American families in the 56-to-61 age bracket had less than $21,000 in retirement savings in 2016, according to a longitudinal study by the Economic Policy Institute that used the most recent available figures. A less formal survey last year found that little had changed. Forty percent of Americans over the age of 60 who are no longer working full-time rely solely on Social Security for their income - the median annual benefit is about $17,000.

Clearly, what we're seeing right now, is that it took this current crisis - the pandemic - to unmask (pun fully intended) the dire problem of Americans' lack of savings. Tens of millions of Americans not being able to fund an unexpected car repair or emergency room visit, with each individual incident scattered over a long period of time, isn't going to make the news or create large-scale economic disaster. The problem is there, but this type of occurrence isn't enough to expose the true nature of it. But bring tens of millions of Americans together, all at once, who have been out of work now for anywhere between one and six weeks or so, and the lid has been fully blown off. We can't hide it anymore. We're now clearly seeing the magnitude of Americans' lack of savings.

Roots of the problem

I'd imagine that our inability - or unwillingness - to save is largely due to our collective consumer culture. With credit so readily available, it's all too easy to want to live for today by splurging and borrowing against the future. Tying into this is the whole "Keeping up with the Joneses" mentality. It's a trap that's easy to get caught in when it seems like everyone else around you is doing it. But a couple other factors, I suspect, are also at play here.

In addition to the consumer culture/keeping up with the Joneses dynamic, I'm betting that another factor contributing to the problem is that we just don't want to imagine anything bad ever happening. We don't want to think about those things - an accident, serious illness, job loss, natural disaster, pandemic, economic collapse, death - the car needing to be repaired. And because we don't want to think about the potential for things to go wrong, we're naturally caught off guard and perhaps even shaken to our core when they do happen.

"Tens of millions of Americans not being able to fund an unexpected car repair or emergency room visit, with each individual incident scattered over a long period of time, isn't going to make the news or create large-scale economic disaster. The problem is there, but this type of occurrence isn't enough to expose the true nature of it. But bring tens of millions of Americans together, all at once, who have been out of work now for anywhere between one and six weeks or so, and the lid has been fully blown off. We can't hide it anymore. We're now clearly seeing the magnitude of Americans' lack of savings."

Finally, a third contributing cause that I see here at work is our dependency on "the system" stepping in and providing relief when things go awfully wrong. We've come to expect unemployment insurance and other programs that collectively comprise what we call the "social safety net" always being there for us and coming to our rescue. The problem here is that the social safety net is marred by bureaucracy, inefficiencies and backlogs, technical woes, budget cuts, and politics. When it comes to the unemployment system alone, today's front page section of the Milwaukee Journal Sentinel is replete with stories of working people still waiting after many weeks to receive their first unemployment payment. Furthermore, these programs were always meant to be a band-aid of sorts; a little bit of temporary help - a supplement in a jam. They were never designed to fully take the place of our own planning and saving. We can't rely on these programs like that.         

What should we do about it? What can we do?

Fortunately, there are a number of tools and strategies we can implement to help us prepare for these situations and significantly mitigate the effects on ourselves and our families. We, alone, must do these things for ourselves and our families. We can't rely on other people, on politicians, or on broken-down systems to do these things for us. It doesn't matter who's in office. It doesn't matter how strong the broader economy is. We have to do this important work ourselves and resist the temptation to take the words and promises of others at face value.

The best part about these tools and strategies? It doesn't matter what your income is. Your income is not tied to your ability to save, mitigate risks, and build wealth. We know plenty of people earning six-figures who are sinking in debt, and we know plenty of people earning far humbler numbers by comparison who have become millionaires by faithfully following the 10 things millionaires do not do. You can start today with many of these items with the proper mindset and a little discipline.

First, let's talk about that mindset - I don't know if I've transformed into a jaded, cynical, bitter old man in my 30s, or if I've simply become more of a reasonable realist. For me, determining where that line is can be difficult sometimes. But here's my philosophy and psychology in a nutshell, for whatever it's worth. It goes back to some points made earlier about people generally not wanting to think about bad things happening, only to be caught off guard when they do happen: If you can imagine it happening, it can happen. If it can happen, it's likely that it will happen. There's virtually nothing that surprises me anymore about the world - about how people react; about how we treat one another; about the motives of others; about bureaucracy; about chaos, destruction, disease, natural disaster, famine, mass death, economic collapse, situations beyond our control; etc. If it can happen, it's likely that it will happen. And that's why it's important to think in terms of possible worst case scenarios and hedge your bets accordingly in order to protect yourself and those you care about. That was the general gist of my post, "Cultivating many options," that I wrote back in mid-November. In that post, I argued the benefits of having a few backup plans always ready to go at a moment's notice.

"We have to do this important work ourselves and resist the temptation to take the words and promises of others at face value."

I love movies about Wall Street and the world of investing, and one of my favorite films of all time in this genre is The Big Short. Here's a clip from that movie:



Here are some particular lines from that above clip that do a great job of summarizing my overall mindset and approach to life:

Charlie: "Our investment strategy was simple. People hate to think about bad things happening, so they always underestimate their likelihood."

Narrator: "Their strategy was simple and brilliant. Jamie and Charlie found markets will sell options very cheaply on things they think will never happen. So when they were wrong, they were wrong small. But when they were right, they were right big."   

The envelope system - Back in early March, I wrote a post about how I just started utilizing the envelope system for budgeting and saving, a strategy that I picked up from a personal finance class I assist in at the high school I work at. Since starting the envelope system, I've managed to save over $2,200 as I write this. Now, granted, I concede that this number may be a little artificially propped up by Wisconsin's "Stay at Home" order - it's hard to spend money when there's nowhere really to go. Nonetheless, $2,200 is $2,200. I wouldn't have it without this system in place. At first, it took a lot of discipline and getting used to. Now, it's second nature, and it's working really well for me. I love it. I could kick myself in the rear for not starting it earlier.

"It doesn't matter what your income is. Your income is not tied to your ability to save, mitigate risks, and build wealth. We know plenty of people earning six-figures who are sinking in debt, and we know plenty of people earning far humbler numbers by comparison who have become millionaires..."

The snowball method and the avalanche method for tackling debt - The snowball method is taught to students in our personal finance class. It's highly effective yet very simple to implement. This finance article on CNBC discussing ways to tackle credit card debt does a great job of explaining the concept:

Popularized by “The Total Money Makeover” author Dave Ramsey, the snowball method prioritizes your smallest debts first, regardless of interest rate. To try it, start by listing out all of your debts, smallest to largest. Pay the minimum balance on each one, except the smallest. For that one, dedicate as much cash as possible each month until it is repaid. Then move on to the second-smallest debt.

The idea is that you’ll gain momentum by watching debts disappear - as you would watching a snowball grow bigger and bigger - and that will motivate you to continue.

That same CNBC article describes the avalanche method this way:

To employ the avalanche method, list your debts from highest to lowest by interest rate. Pay the minimum balance on each, but this time dedicate as much extra as you can each month to the one with the highest interest rate.

Mathematically speaking, tackling the highest interest rates first is the most efficient way to handle debt because it eliminates interest as quickly as possible. The debts that would be racking up the most in interest are dealt with first, so you can minimize interest paid.

Both the snowball method and the avalanche method are effective for tackling debt. However, it should be noted that, according to this research conducted by Harvard Business Review on paying down credit card debt, which the CNBC article cites, the snowball method appears to be the best way to go because it's easier to stay motivated. There's a psychological effect at play here. You're more likely to see the total number of your debts disappearing faster, even though your higher-interest debts may be getting paid off last, and it's seeing the total number of debts shrinking that will keep you energized throughout the process.

Using cash as a negotiation tool - Who doesn't like cash? Once you start accumulating some through saving, budgeting, and knocking some debts out, you can use cash to your advantage in many scenarios where you're able to negotiate, not just buying a car. Mark Cuban and Dave Ramsey explain the benefits of using cash to negotiate.   

Long-term care insurance - In December 2011, just days before my 29th birthday, I purchased a long-term care insurance policy. This Wikipedia article on long-term care insurance explains it well:

Long-term care insurance (LTC or LTCI) is an insurance product, sold in the United States, United Kingdom and Canada that helps pay for the costs associated with long-term care. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid.

Individuals who require long-term care are generally not sick in the traditional sense but are unable to perform two of the six activities of daily living (ADLs) such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking.

Age is not a determining factor in needing long-term care. About 70 percent of individuals over 65 will require at least some type of long-term care services during their lifetime. About 40% of those receiving long-term care today are between 18 and 64. Once a change of health occurs, long-term care insurance may not be available. Early onset (before 65) Alzheimer's and Parkinson's disease occur rarely.

Long-term care is an issue because people are living longer. As people age, many times they need help with everyday activities of daily living or require supervision due to severe cognitive impairment. That impacts women even more since they often live longer than men and, by default, become caregivers to others.

Now, most people in their 20s aren't thinking 40+ years down the road. But if you're one of them, you have a great advantage. Generally speaking, time and health are on your side, and the younger and healthier you are when you purchase one of these policies, the lower your premium amount. The odds that you're going to need this kind of assistance when you're older are high. And a policy like this can help mitigate those odds by protecting your assets down the road from being eaten up by healthcare costs, not to mention relieving loved ones from the burden of having to take care of you. Insurance agent and financial advisor friends of mine tell me that purchasing a long-term care policy when I did was one of the best moves I could ever make. Many people who purchase these types of policies don't start thinking about and buying them until they're in their 50s or older - to a significant cost disadvantage.

Finally, on this subject, if I pass away prior to having to tap into this policy, all the premiums I paid into it will be returned to my estate.

Disability insurance - I purchased an individual disability insurance policy (individual meaning that it's not tied to my employer-sponsored benefits - I own it as long as I continue paying the premiums on it, regardless of employment status or job changes) back in June 2017. If I become disabled and, hence, unable to work, this policy will provide a guaranteed monthly income for a set period of time. Additionally, at the age of 65, with the way my policy is structured, I can have my premiums returned to me. The amount of premium returned to me will depend on the amount of benefits I took from the policy. If I never have to tap into the policy, I'll have 100% of all the monthly premiums I ever paid into the policy given back to me at 65. I look at this as sort of a forced savings strategy. If I pass away prior to 65, I can have the premiums I paid up to that point go to a beneficiary.

This Wikipedia article on disability insurance sums it up well:

Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the beneficiary's earned income against the risk that a disability creates a barrier for a worker to complete the core functions of their work. For example, the worker may suffer from an inability to maintain composure in the case of psychological disorders or an injury, illness or condition that causes physical impairment or incapacity to work. It encompasses paid sick leave, short-term disability benefits (STD), and long-term disability benefits (LTD). Statistics show that in the US a disabling accident occurs, on average, once every second. In fact, nearly 18.5% of Americans are currently living with a disability, and 1 out of every 4 persons in the US workforce will suffer a disabling injury before retirement.

Job loss insurance - Not long ago, I purchased a policy from SafetyNet, based in Madison, Wisconsin. Unfortunately, SafetyNet is no longer taking on any new customers, but you should be able to find somewhat similar coverage through another provider. These types of policies are becoming popular.

Anyway, at the time I had their coverage, SafetyNet provided an insurance policy that protected against job loss on two different fronts - job loss caused by an involuntary, no-fault-of-your-own layoff/shutdown/business closure that would prevent you from working for at least 30 days, and job loss caused by a covered illness or accident that would prevent you from working for at least 30 days. I believe there were three levels of coverage. You could pay $5 per month for a payout of x. That was the lowest premium/payout amount. The payout may have been $1,000. There was an amount in the middle. And I chose the highest amount of coverage. I paid $30 per month - one dollar a day - for a payout of $9,000. Well, that ended up being a good decision on my part. I ended up filing a claim in early 2018 when the business I was working for was experiencing financial difficulties and had to lay me off. It really came in handy, and I was able to collect regular unemployment insurance from the state of Wisconsin, as well.

Now, for these job loss type of policies, one thing to keep in mind is potential tax implications. With me taking a payout on the layoff/shutdown/business closure side of things, the payout counted as income, and I had to pay tax on that $9,000 when I filed my tax return for the year. Well worth it. I would have had to pay taxes on that $9,000 anyway if I had earned it working. By contrast, you do not have to pay tax on a payout from a covered illness/accident claim.

Finally, here are some additional tips, strategies, and resources from personal finance expert Dave Ramsey that I highly recommend:

30 Easy Ways to Save Up to $1,000

How to Save Money: 20 Simple Tips

How to Save Money Fast
 
8 Ways to Turn Saving Money Into a Game

These are just a few things you may want to consider employing as you seek to build up your own personal economy so that you can navigate the challenging times and curve balls that life, without a doubt, throws at us from time to time. I also have life insurance (both employer-sponsored and individual coverage) and some investments in my toolbox, but that may be better suited for a future post here. I'd also like to write a post in the future about employee benefits. Depending on what your employer all has to offer, there could be some really nice gems that can further help you in mitigating risks and planning for the future.

What are your thoughts, observations, and experiences? Do you have any financial tips and strategies not discussed here that have served you well during times of uncertainty and crisis? We'd love to hear from you! Please feel free to share in the comments section below.

Five ways to save on car insurance

Most drivers know all too well that car insurance is a costly expense. Fortunately, there are several ways that car owners can save money on their car insurance premiums. If you'd like to save money on your car insurance, consider implementing these five cost-saving measures.

1. Do your homework.

If you haven't purchased your car, then do a little homework before you do. By looking into the average insurance costs for different types of vehicles, you'll know which cars cost the most to insure. Knowing this information when choosing a car can save you substantial amounts of money on future car insurance payments.

2. Shop around.

Different insurance companies offer different policies at different prices. That's why it can be worth shopping around for a better deal, even if you already have car insurance. After shopping around, sign with whatever company offers the best value for your money.

3. Bundle your insurance.

Another way to save money on your car insurance is to bundle it with another insurance policy. A popular bundle offered by most insurance providers combines both your car insurance and your home, renters, or condo insurance. If your car insurance is currently with a different provider than your home insurance, inquire with both companies about the potential savings of bundling the two. When each company has provided you with a quote, choose whichever option is best for you.

4. Choose group insurance.

Insurance providers often give their best rates to groups. If your employer, business association, or alumni group deals with a group insurance provider, ask them about the benefits and cost of their car insurance policies to see which provider offers the best protection for the lowest fee.

5. Ask for discounts.

Simply asking your insurance provider for a discount can sometimes be enough to lower your car insurance premiums. Many providers offer discounts for low-mileage drivers and drivers with accident-free records. Those who have taken a defensive driving course may also be eligible for additional discounts. By asking your insurance provider about possible discounts, they can work with you to find any discounts you may be eligible for.

Because insuring a car is never cheap, it's always worth looking into ways to save money on your car insurance premiums. So, if you want to lower your car insurance expenses, consider doing your homework, shopping around, bundling your insurance, choosing group insurance, and asking for discounts.