Brian Gruss Licensed Insurance Planner

Figuring Out Your Worth

Most of us like to believe that life is priceless—but in some cases, it’s important to figure out just how much your life is worth. Why would you do such a thing? Because calculating your worth will help you determine how much life insurance you need.

Everyone’s a millionaire

Believe it or not, most people earn more than $1 million throughout their entire lifetime. Think of it this way: If you earn $50,000 a year, you’ll make $1 million within the next 20 years. Of course, most of this money goes toward supporting your family and paying day-to-day expenses like groceries, the mortgage, and utility bills.

If something were to happen to you, your income stream would come to a halt. What would your family do without the money they need to pay the bills and buy necessities? This is why it’s crucial not only to purchase life insurance, but to make sure you have enough insurance to cover all of your family’s needs.

How much do you need?

One way to figure out how much you’re worth to your family is to consider how much income you bring home each month. Then, you can buy a life insurance policy that will pay your family a monthly income that is comparable to what you currently earn.

For example, if you buy a $500,000 life insurance policy and the death benefit proceeds earned 4% annually, your family would receive a monthly payment of about $5,137 for the next 10 years. If you want your family to receive more money each month or payments for a longer period of time, you’ll need to buy more life insurance.

Other considerations

Unfortunately, figuring out how much life insurance you need isn’t as simple as calculating your monthly income. In addition to replacing your income, you’ll need to think about other expenses your family may face if you die. For example, they may have to pay medical bills, hospital expenses, and attorney fees and make funeral arrangements. They will also have to pay off any outstanding debts you may have as well as taxes.

On top of that, you should consider your family’s long-term expenses. Not only will your family be left to pay the mortgage and the bills, but how will your family afford your children’s college tuition or wedding costs? Be sure to factor in any other sources of income your family earns—your spouse’s salary, Social Security survivor’s benefits, and investments—and the cost of inflation. Things become more expensive every year. You want to get a true picture of how much money your family will need in the coming years to accurately determine how much life insurance to buy.

A unique number

Obviously, each family’s life insurance needs will vary significantly. It all comes down to your income, your expenses, and your goals for your family. Finding the “magic number” is a challenge because it’s somewhat of a balancing act. You want to own enough life insurance to adequately protect your family if something happens to you, but you don’t want to buy so much insurance that there’s no money left over to enjoy your life in the present.

The goal is to have enough life insurance to safeguard your family without breaking your budget. If you want to pinpoint just how much life insurance you need to protect your family, meet with a financial advisor or insurance agent. Brian Gruss can help determine how much you need to buy and what you can realistically afford in your budget.

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Closely Consider Life Insurance Options for Your Financial Portfolio

Most of us work with a financial professional to manage the risks associated with our financial portfolios. You may be familiar with their suggestions to diversify by investing in mutual funds, stocks and bonds; but did you know that life insurance is an important addition to your overall financial plan?

Many people believe that there are only two choices when it comes to life insurance – term or permanent. However, evaluating life insurance should not be simplified to only two choices. You may be better off asking yourself a series of questions designed to help you find the right policy for your needs:

• How much insurance do you need and how long do you need it?
• How do you anticipate your insurance needs changing in the future?
• How much can you afford to pay in premiums over time?

With a permanent life insurance policy in force at the time of your death, a death benefit is paid to your beneficiaries. Some permanent policies provide level premiums and most policies offer a cash value component. On the other hand, with a term policy, a death benefit is paid to your beneficiaries only if you die within a specified period of time. The premiums are subject to increase each time you renew your policy and there is no cash-value. Term policies are attractive because the premiums are initially lower than a permanent policy, but if the policy is kept for a long period of time, you may end up paying more in premiums than with a permanent policy.

After considering the differences between term and permanent policies, you may decide to purchase a term policy and invest the premium difference. However, many of us do not have the self-discipline to set aside that extra money each month if we are not already bound to do so by a premium. You should honestly evaluate your ability to set aside money, along with the financial goals you are trying to achieve, before ruling out the idea of a permanent life insurance policy.

A good financial representative will make certain you are educated about the option of adding life insurance to your portfolio. Life insurance is a conservative addition to financial plans, and should be closely examined. Your financial representative should ask questions about your needs and goals, analyze the reality of achieving those goals, create a plan, and make sound recommendations about products that best meet your needs. Furthermore, your representative will be available to provide service on your policies and will be a valuable resource for your future financial needs.

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Retiring Boomers Need $250K to Cover Health Costs

Working people are well aware of the importance of their medical benefits. In fact, many employees will tell you that one of the reasons they chose their present job is that it provided good medical coverage for their family.

As important as medical coverage is to workers and their families, it’s just as important to retirees. According to Fidelity Investments latest health care cost estimate, a 65-year-old couple retiring in 2010 without employer-provided retiree health insurance would need about $250,000 to cover future medical expenses. Besides actual medical costs, this figure takes into account such healthcare related expenses as Medicare Part B and D premiums, Medicare cost-sharing provisions, co-payments, coinsurance, deductibles, excluded benefits and prescription drug out-of-pocket costs. It does not include other health expenses, such as over-the-counter medications, most dental services and long-term care needs.

The $250,000 represents a 4.2 percent increase from Fidelity’s estimate last year of the amount a typical U.S. couple would need during retirement to pay for health care. Since the estimate was first calculated in 2002, the number has risen a total of 56 percent.

The study found that health care costs average $535 a month per couple, the second largest expense compared to food costs, which average $659 a month. Furthermore, health care costs account for approximately one-fifth of an average couple’s total monthly expenses of $2,842.

These findings come on the heels of the current employer trend of getting rid of healthcare plans that supplement Medicare because of rising costs and making retirees directly responsible for paying their own health care expenses. Combine this phenomenon with health insurance premiums that are growing at a rate more than three times earnings growth and two-and-a-half times the rate of consumer inflation, and you have the beginning of a trend toward making individuals accountable for all or part of their own health care costs in retirement.

Fidelity offers the following six suggestions to help Americans better manage their retirement health care costs:

In preretirement:
1. Set aside money specifically for medical needs
Rather than saving generically for retirement, it may help to have a separate and distinct savings account specifically for medical expenses in retirement given their essential nature. To achieve the goal, individuals who are eligible could use a healthcare savings vehicle such as a health savings account (HSA) or earmark a portion of their retirement account for this purpose.

2. Investigate the cost of supplemental health insurance in various geographic locations
Supplemental insurance reimburses individuals over 65 years old for some or all of their cost-sharing, not covered by traditional Medicare. In addition to supplemental insurance, other coverage may also be available (e.g., Medicare HMO). Medicare’s official Web site (medicare.gov) as well as many state Web sites list the supplemental health plans available, including those for Medicare Part D. As individuals approach retirement, they should become familiar with their plan options, the costs, and how these vary by location.

3. Consider phased retirement as part of an overall strategic plan
Some employers offer part-time work with health care benefits. This type of employment can allow preretirees to avoid dipping into their savings accounts too soon for health care needs. By gradually entering retirement, these individuals will be protecting their savings for a longer period.

In retirement:
1. Be proactive in preventive care
There are simple ways to help contain health care costs. For example, get routine doctor-recommended screenings for diseases such as colon cancer. If an individual is otherwise healthy, it is still important to maintain recommended preventive care guidelines. Taking prescription medications according to schedule is another way to avoid complications.

2. Select quality providers
The U.S. Department of Health & Human Services Web site provides information on how well hospitals nationwide are caring for patients who have certain medical conditions or who have undergone various surgical procedures. Using a national database of hospitals, the Web site compares the quality of care of a given hospital and a given treatment/surgery. Patients at better-performing hospitals tend to have fewer complications, which reduces the risk of future additional medical expenses.

3. Always review health claims for accuracy
It is not uncommon for mistakes to happen in the claims payment process. The error could be in many forms, including charges for services not rendered or incorrect charges for a given service. When retirees receive medical bills, they should take the time to review them and follow up with their health care provider when they have questions or concerns about billing.

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