Do I Need Life Insurance If I Have a Pension

August 24, 2020 11:38 newlambertagency

People often go for life insurance when they’re in their early 30s. It seems to be the ideal time as they have their whole life ahead of them and naturally, anyone would want to feel secure. But what about the people on the other spectrum? People who have retired, their children are grown and are settled. They have put together a reasonably solid income plan with Social Security, pensions, and annuities supplemented by investments and retirement accounts. They often wonder, do I need life insurance if I have a pension?

Well, first of all, life insurance is intended to help the beneficiaries cope with the expenses incurred from the loss of a loved one. And life as we know it is unpredictable. It’s important to be ready for anything that life throws at us and life insurance could be the answer to that.

Life insurance safeguards you from any hardships of financial loss and the primary concern is the loss of income. So if your family remains secure after your passing and they don’t experience any financial loss with the support then logically there’s no need for life insurance.

But what if that’s not the case?

Do you need life insurance?

You need to ask yourself, Will someone experience a financial loss when you die? If the answer is no, then you don’t need life insurance. For instance, let’s say you have a steady source of retirement income from investments and pensions and you’ve chosen an option that pays 100% to your surviving spouse. Then your death wouldn’t have any effect on their income.

Do you want life insurance?

Even if there will be no substantial financial loss experienced upon your death, you may like the idea of paying a premium now so that family, or a favourite charity, will benefit from your death. Life insurance provides you with an option to leave a substantial amount to a charitable cause, children, grandchildren, nieces, or nephews. So life insurance after retiring could be a great way to spread happiness.

Situations Where Life Insurance Is Needed

Everyone has a unique situation regarding their finances but below are some considerations for continuing life insurance policies:

  • Retirees who will lose a substantial portion of the family income when one spouse dies
  • Families or couples in their peak earning years that are saving for retirement
  • Parents whose children are not adults
  • Business owners or business partners, and employees employed by small businesses
  • Families with a large estate that is subjected to estate tax

 

Simply put, for people that have substantial financial support regardless of any loss of income, life insurance after retiring might not seem like a necessity. But for people who like to go the extra mile for protecting their families, life insurance is the right step.

Annuities: Insurance for Retirement

August 19, 2020 12:36 newlambertagency

Do you have a retirement plan? If not, then maybe you should start planning. And if you’ve wondered about annuities, then you should continue reading and put an end to your queries.

You’ve probably heard about annuities before—but have you ever considered adding them to your retirement strategy? They remain often ignored and frequently neglected among investors, but Annuities may be the best retirement product that hardly anyone buys.

What are Annuities?

Simply put, an annuity is a contract between you and an insurance company. In return for the money you pay to buy the annuity (which is called a premium), the insurance company will give you a series of payments that are guaranteed to last for a time you select in advance. Thus it could be said that they’re retirement insurance.

An annuity could pay you for your entire life – even if you live to more than 100 years – for your spouse’s entire life, or for a set time that you select, depending upon the type of annuity. And what’s even more appealing is that you can withdraw funds from some types of annuities.

To know more about them, let’s look at the annuity types.

Types of Annuities

Immediate Annuities allow you to turn a lump sum of money into a stream of guaranteed payments that can last for your lifetime, or a set time, depending on your preferences.

Fixed Annuities guarantee your premium payment and guarantee a fixed annual rate of return for set periods until you’re ready to start getting payments.

Variable Annuities are long-term financial products designed for retirement planning that allows you to invest in the market. They provide you with growth potential when the market is up, but can also mean you can lose money when the market drops.

Deferred income annuities allow you to take money that you have today and turn it into a guaranteed stream of lifetime payments in the future.

Now, let’s compare annuities with life insurance or should we say, annuities vs. life insurance.

Annuities vs. Life Insurance

Annuities are generally offered by Life insurance companies and investment companies, Life insurance deals with mortality risk i.e. the risk of dying prematurely while Annuities, on the other hand, deal with longevity risk, or the risk of outliving one’s assets. If the annuity holders survive to outlive their initial investment, it makes Annuities a risk to the annuity issuer. That is why there’s concern over Annuity issuers hedging longevity risk by selling annuities to customers with a higher risk of premature death.

Even though annuities are known to be complex, they can be an extremely beneficial part of your retirement plan.

What Types Of Insurance Do Small Businesses Need?

August 13, 2020 11:40 newlambertagency

If you own a small business, there’s no denying that the most important thing you need to protect your assets and finances is an insurance policy. But even small businesses differ in various aspects – some usually function with 10 or fewer employees, while some focus on smaller operations with just 3-5 staff.

Naturally, various types of insurance cater to different businesses’ needs. However, one thing’s for certain, and that is, finding the right insurance. And let’s face it – all businesses confront an element of risk daily, regardless of their size or the industry they are in so the need for insurance is indisputable

  1. Life insurance: As popularly known, this policy protects an individual (employee) against death. This type of insurance helps with peace of mind and builds overall morale and trust between the company and employees.
  2. Health insurance: Health insurance is no less than wealth insurance for employees on a payroll – it functions as a financial safeguard in case of any unforeseen health problems caused by accidents or disease for themselves or even for their family members. It ensures the financial security of employees and as a result, they perform better.
  3. Dental/Vision: Dental insurance pays a portion of costs associated with preventive, minor, and some major dental care. While Vision insurance and vision benefits plans typically cover the cost of an annual eye exam and prescription eyeglasses and/or contact lenses.  Although not many businesses offer them, these kinds of benefits help attract new workers and retain current employees.
  4. Key Person Insurance: Also called as Keyman insurance, it is simply life insurance that covers the key person in a business. In a small business, this is usually the owner, the founders, or perhaps a key employee or two. There are the people who are crucial to a business–the ones whose absence would sink the company. You need to consider key person insurance on those people.

What do small businesses must consider when choosing each type of insurance?

Major medical plans are expensive and not always better. With network restrictions, high premiums, deductibles, co-pays, and max out of pocket requirements, they can seem a bit worthless.

Major medical plans also require minimum participation rates and if a member in the group has excessive claims, it may result in an increased rate for everyone in that group. Individual plans with group billing options are often a better option for small employers. However, if someone in a small group requires maternity or has a major pre-existing medical condition, true major medical may be required to get everyone covered.

The payment method should also be given key consideration. For instance, when it comes to dental insurance, some plans pay a fixed fee for dental procedures. Payments may be made directly to dentists by the insurance provider. Other fixed fee plans reimburse the employee while indemnity plans make the insured employee responsible for paying the dentist. The insurance provider then reimburses a portion of the cost.

Also, you can avoid any inconvenience in case of a claim by knowing what is included and what is not. You can always consult your insurance agent in case some things are not crystal clear to you. Take time to read the terms of the policy and make sure to update them regularly to cover significant changes in your business.

Is there anything else a small business owner should know about choosing insurance?

If you’ve decided on choosing an insurance policy, you must know a few important things beforehand.

For instance:

  1. Is your guaranteed renewable?
  2. What happens if your business partner dies unexpectedly?
  3. Can you use your doctor or hospital?

Medicare Advantage Plans in 2020 Can Offer More Benefits

August 12, 2020 12:11 newlambertagency

People love extra benefits, there’s no way around it. If you go grocery shopping your eyes are eager to fall upon the perfect offers that give you benefits worth more than the cost. And when it comes to a healthcare plan, the case is no different.

We are inherently attracted to any plan that offers extra benefits at a lower cast. And that’s exactly you could get with the Medicare advantage plans in 2020. Simply put a Medicare advantage plan offers more options at lower costs and the benefits can be tailored to the patient’s needs.

We all know how the year 2020 has turned out. This year has made us focus on a plan that is unique and superlative. Medicare Advantage plans can give chronically ill patients a broader range of supplemental benefits. The said benefits are more than just health benefits. According to Centers for Medicare and Medicaid Services, they have a “reasonable expectation” of improving or maintaining the health of the beneficiary,

Let’s look at the Medicare Advantage plan in detail

What is Medicare Advantage?

Medicare Advantage plans are provided by private insurance companies instead of the federal government. Hence it’s an alternate way to get your medical and hospital benefits from a private health insurance company contracted with Medicare. One of the most attractive Medicare Advantage Plans benefits is that they’re allowed to offer you additional benefits from Medicare. They can also set their price structure.

How do they work?

As mentioned already, they’re considered to an alternative to Medicare and cover all the expenses incurred under Medicare. There are some Medicare Advantage plans offered that cover additional costs not paid for by Medicare including vision, dental, and hearing expenses. Medicare pays the premiums for participants in Medicare Advantage plans. Medicare Advantage plans don’t work with Medigap or Medicare Supplemental Insurance.

The average premium for Medicare Advantage plans in 2020 was expected to be around $23.00. Private companies receive a fixed amount each month for Medicare Advantage plan care. In turn, these companies can charge out-of-pocket costs to policy-holders and can establish their own rules for service such as the need for referrals or provider networks for both non-urgent care and emergency services.

What qualifies as extra benefits from Medicare in 2020?

According to CMS, Medicare Advantage extra benefits qualify if they diagnose or compensate for physical impairments. The extra benefits also qualify if they diminish the impact of injuries and health conditions and lessen avoidable emergency room visits.

The Medicare Advantage premiums are at their lowest in 6 years and as per CMS, the premiums in 2020 are expected to decline 23 percent from 2018. That’s encouraging news, especially at a time like this.

Is Whole Life Insurance Worth It?

August 10, 2020 13:40 newlambertagency

In your otherwise busy lifestyle, there comes a time when you wonder about taking an insurance policy- it could be to safeguard your family or just to have a secure retirement plan. But when you sit down to Google about a policy that’ll offer the protection you desire, you’re immediately bombarded with terms you may not understand.

There is more than one type of insurance policy so naturally, it results in confusion. But if you find yourself wondering about Whole Life insurance, then we may be able to guide you and put an end to your confusion.

What is a Whole Life insurance policy?

Whole life insurance is a type of permanent life insurance, which means the insured person is covered for the duration of their life as long as premiums are paid on time. Permanent life insurance is different than term life insurance, which covers the insured person for a set amount of time (usually between 10 and 30 years).

Whole life insurance is the most common type of permanent life insurance policy that people purchase. They also cost more because they include an extra savings component, which is referred to as the “cash value”, which brings us to the next question, is whole life insurance worth it? Read on.

How do they work?

There are 3 major components of a Whole Life insurance policy:

Death Benefit: As the name suggests, the death benefit is a tax-free amount of cash which is paid out by the insurance company after you die. For instance, let’s say you bought a whole life insurance policy with $100,000 in coverage, then that $100,000 becomes the death benefit.

Beneficiary: A person that receives the death benefit is the beneficiary. Anyone can be your beneficiary- be it a spouse, children, a business partner, a friend, trust or organization etc.

Premiums: The amount of money you pay for your whole life insurance policy – payment could be made monthly or annually.

As the name implies, a Whole Life insurance policy lasts for your life as long as the premiums are being paid on time. That means if you buy it when you’re 30 and continue paying your premiums until you die, your family will receive the death benefit.

How does cash value work?

Cash value is your ideal volatility buffer for uncertain economic times and financial emergencies. That means a whole life policy can serve as a source of emergency funds for you if something goes wrong, or you may be able to take out a loan against the policy.

Over time, the cash value of your policy increases, and you may have the option to withdraw funds or borrow against it. The rules on how and when you can do this differ from company to company and the policies they offer.

The cash value of a policy earns interest and grows over time. Life insurance companies often guarantee a certain amount of growth every year and that is why people flocked to buy whole life insurance following the 2008 recession.

Hope the above information answers your burning question – is whole life insurance worth it?

You can always consult an agent for guidance and choose a policy that suits you the best.