Got It Covered?

Insurance needs change as you get older – some tips from the experts.Sex. Drugs. Rock & roll. Insurance. Did I lose you on that last one? Yeah, I know – reading about insurance is usually a Snoozefest. But while the topic of insurance may not be sexy, it is regrettably necessary and important to review from time to time.John Natale of Concord Group Insurance says that every three to five years is a good timeline – maximum – to sit down and review your actual coverage and make absolutely certain that your coverage matches what you actually have. Think about it: seniors generally tend to fall somewhere into one of two categories – either they’re reaping the benefits of a lifetime of hard work or they’re seriously scaling back to adjust to a limited budget.”I can always tell when someone has recently retired,” jokes Don Knapton of Knapton Reade & Woods Insurance in Hillsboro. “They take time to really read their policy instead of stuffing it in a drawer – and they call me up with questions.” Seniors, he adds, usually need to adjust up or down. “Seniors in giveaway mode may need to scale back on their policy,” he says. “Or if they haven’t taken inventory in a while, they probably need to up their riders.”Protecting Your PropertyProperty insurance protects not only the physical structure of your house but also your personal belongings. It also provides liability protection and additional living expenses should something go wrong. Auto insurance covers your car in case it’s damaged or stolen, liability to others and medical expenses. Although some seniors find that their rates go up as their ages go up (drivers aged 75 or older are considered a high-risk group, much like teen drivers), keep in mind that a lot of companies provide discounts for multiple policies together, such as bundling your auto and home insurance, says Natale. This “multi-policy credit” could save seniors as much as 20 percent in some cases.Insurance companies also determine pricing based on claiming activity, says Thom Cranley, president of Mt. Washington Assurance Co., based in Concord. “The downside of a low deductible is that companies may charge you for that claim and charge a renewal premium, so you’re paying for it anyhow,” he says. “My recommendation is to go with as high a deductible as you’re comfortable covering because you’ll get a better price and you are less likely to get a higher renewal premium.”Cranley adds that the basic property insurance market is pretty stable at the core in terms of coverages that companies offer, but over the years as homes (and the contents within) have gotten more sophisticated – as well as how people use their homes – policies tended to evolve as well. For instance, insurance policies covering water backup in basements used to have a pretty standard $2,000 limit. Nowadays, however, you could very well find fully finished and carpeted basements with home theatre systems or expensive stereo equipment in them, so homeowners have “upped their coverage” to reflect those changes. Other property insurance trends include roadside assistance for seniors who travel a lot, and identity theft/fraud protection. “Criminals tend to target seniors and steal their identities, and Concord Group partners with a specialist advocate to restore their identities,” says Natale.Umbrella policies are also important to seniors, adds Natale. Generally, umbrella policies start with $1 million of extra financial protection above and beyond their homeowners’ policies. “Seniors have accumulated wealth and it’s important that they protect it,” he says.Here’s to Your HealthFor seniors 65 and older, Medicare is the federal health insurance program that pays much – but not all – of their health care. For example, Medicare does not cover most care given at home, in assisted living facilities or in nursing homes.To try to fill the gaps not offered by Medicare, some private insurance companies offer long-term care insurance, says Knapton (although his is not one of them). “As medicine gets better, we’re all living longer,” he says. “Parents are moving in with their kids or going into a nursing home.” Long-term care insurance – which usually covers care in a nursing home, assisted living facility or at home – is so new that it’s evolving constantly, he adds. And only about 10 percent of seniors actually have it.Some policies pay different rates for at-home care as for nursing home care. Others pay the same amount, or have a “pool of benefits” that can be used as needed. “It’s a hot-button insurance for people because insurance companies are having a tough time figuring out how much to charge for it,” he adds. Some companies have decided to drop it altogether and others have chosen to raise rates, he adds. “To those on a limited budget, this could be a fatal blow.”An alternative in the works could be the Community Living Assistance Services and Support Act, or CLASS Act, created under the new healthcare law. If the act survives the current legislative process, enrollment would begin in 2012. Those enrolled would have to pay in for at least five years before they can reap the benefits.Life InsurancePremiums for term insurance are pretty cheap for people in good health up to about age 50. After that, it begins to get increasingly expensive. But regardless of how cost-effective life insurance is, says Knapton, it has to be bought because of a reason. “You shouldn’t buy a life insurance policy from, say, ACME Insurance Company just because some older actor on TV says you should and it seems like just a little bit of money every month. Just to have it and pay into it is not what life insurance is for.”Seniors should have life insurance, he says, because they have a mortgage and if they die their heirs need to pay for that mortgage or their kids still need to get through college. Maybe the person who died started a family later in life and their younger children need a nanny because their spouse will need to work full-time. Or a wealthy person’s heirs might need it for estate taxes.Sometimes, Knapton says, the need for life insurance goes away. “Potentially when you get older you may have acquired enough wealth, you don’t have a mortgage anymore and your kids are already out of college.” Once the need is satisfied, you don’t have to have life insurance anymore, he says. “Retirement is a great time to review it with a professional agent and ask them, ‘Do I need to keep paying in?'”According to the Insurance Information Institute, “you buy life insurance in the event you die too soon and an annuity in case you live too long.” In other words, life insurance provides money for your loved ones after you die, while annuities cover you from running out of money later on in life if you haven’t saved enough. Annuities, often called whole life, then are really a type of investment. In general, whole life policies are meant to be kept for 20 years or more. So if you do buy one be prepared to pay in for the long haul (and make sure the company you’re getting it from will most likely be around that long as well).Cloaked in controversy, these policies sometimes come with high fees and commissions. Many believe there are better ways you can save. Depending on your age, however, you may have no other choice: many companies won’t even sell term life to people in their mid-60s. It’s best to check with a trusted financial advisor if you think annuities might work for you.Taking the DipThe bottom line when it comes to any type of insurance for seniors – and the final piece of advice he would also give his own mom – is this, says Cranley: They shouldn’t be afraid to ask lots of questions when partnering with their insurance company or when reviewing their policies. “You may not have familiarity with the terms, but it’s not that complicated once you get to know them. Ask things like ‘How should I decide what the appropriate level of coverage is?’ or ‘What are the ramifications if I do this?'” NH