Do you want to make sure your loved ones are taken care of when you are gone? Do you want to make sure they can stay in their house and pay the mortgage? Do you want to make sure they can afford to pay utilities and food? If so, insurance is a good addition to your estate planning portfolio.
Your estate planning portfolio is not complete unless you consider the need for insurance. We are not talking about health insurance or car insurance; we are talking about life insurance, disability insurance and long term care insurance. It is important to prepare your estate in case you become disabled during your working years, in case you need long-term healthcare as you age, or to make sure your family is taken care of when you are gone. Remember, you can’t predict the future, but you can plan for it.
Life Insurance
A life insurance policy is a contract with an insurance company. In exchange for premiums (payments), the insurance company provides a lump-sum payment known as a death benefit, to beneficiaries in the event of the insured’s death.
Term Life Insurance:
- Least expensive payment
- Temporary insurance that provides coverage for a period of time.
- Make sure you have the ability to convert from a term to a whole life policy
- Provides insurance coverage without any investment build up.
- If you miss a payment, the policy will be canceled.
- This is a form of renting insurance. If you do not die during the term you get nothing out of the policy. (For example, when you rent an apartment, once your lease is up, you walk away and have nothing to show for it)
Whole Life Insurance
- Higher premiums
- If you miss a payment they can take a loan from your premiums and that can place you under water
- Made up of risk protection and an investment account.
- Risk portion represents term insurance
- Investment portion acts as a savings account in the policy (cash value)
- (This is like owning a house, but not being able to make any additions to the house)
“It is important to prepare your estate in case you become disabled during your working years, in case you need long-term healthcare as you age, or to make sure your family is taken care of when you are gone.”
Disability Insurance
Disability insurance is a plan that provides for periodic payments of benefits when a disabled insured is unable to work. The rule of thumb with disability insurance is that you want to be able to protect 60-80% of your after tax income. Even if you receive disability insurance from your employer, you may want to purchase individual disability insurance to cover the amount they do not cover.
Short term Disability: Replaces a portion of your income during the initial weeks of a disabling illness or accident
Long Term Disability:Replaces a portion of your income after those initial weeks, for an extended period of time.
Long Term Care Insurance
Long-term care is care that you need if you can no longer perform everyday tasks (activities of daily living) by yourself due to chronic illness, injury or the aging process. Long-term care is not only for the elderly. A large percentage of people receiving long-term care are under the age of 65.
Long-term care isn’t intended to cure you. It is chronic care that you might need for the rest of your life. This care can span years and be expensive depending on the type of care you need and location where the care is received. Long-term care insurance is one way of helping pay for these expenses.
The policies reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with activities of daily living such as bathing, dressing, or eating
You can use your daily benefits at the following places:
- Home
- Adult Service Centers
- Hospice Care
- Respite Care
- Assisted Living facilities
- Alzheimer’s special care facilities
- Nursing homes
South Florida is the land of retirement. You want to be able to enjoy your retirement. If you live in Miami-Dade, Broward, or Palm Beach counties it is time to start preparing your estate planning portfolio. Make sure both you and your family are taken care of in the future. You can’t predict the future, but you can plan for it.
Contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs.