March 27, 2018

3-28-18 As Seen In the Rochester Business Journal - Retirees may need to take a second look at insurance policies.

Retirees may need to take a second look at insurance policies

Revisions could be appropriate in life, liability coverage

By: Rochester Business Journal Staff Amaris Elliott-Engel March 28, 2018

Retirement brings up many financial changes, including the need to review the insurance products you are purchasing, local experts say.

She notes that the New York Connects Program can be reached at (###a href="tel:(585)%20325-2800">585) 325-2800 with questions about long-term care questions.

Long-term-care insurance

Richard Marchese, a partner with Woods Oviatt Gilman’s elder law and health care practice group, says that he still recommends to clients that they purchase long-term care insurance even though premiums have spiked.

The premiums for long-term care insurance—which covers the need for help with the activities of daily living—has increased in the past decade because insurers had not priced the product to reflect the actual costs in the marketplace, including that people living longer, Marchese says.

Premiums went up 60 to 80 percent on pre-existing policies, Marchese says.

Anecdotally, Marchese is seeing that people are not purchasing long-term care insurance, but “that’s too bad because when you have long-term care insurance it’s going to be there for you and it’s really going to be a big benefit,” Marchese says.

Many people say like long-term care insurance is a waste of money if they don’t end up needing that type of care because “everyone always thinks they’re going to live forever,” Marchese says. “Everyone always thinks they’ll never go into a nursing home. At least with long-term care, you can tell your kids that you’ll be taken care of.”

He notes that there is a state tax credit compensating for 25 percent of the costs of long-term care insurance.

Joseph N. Bianchi, financial advisor for Alliance Advisory Group, notes that many insurers are coming out with combination policies that pair life insurance coverage with long-term-care riders. “It’s a lot more cost-effective to get the rider,” he says.

Marchese also says he advises clients to purchase an inflation rider when purchasing long-term care policies because nursing homes are raising their rates every year.

The most expensive policies are those affiliated with the Long-Term Care Partnership Program, which allows people, after they have exhausted the policy benefits, to protect a portion of their assets that they would otherwise need to spend down in order to qualify for Medicaid coverage, Marchese says.

Liability coverage

Jake Conkling, owner/agent of Spencerport Insurance Agency, says many people entering retirement have assets to protect. They should make sure that their homeowners, renters and/or auto insurance coverage will adequately protect their assets, Conkling says.

Liability coverage is a “firewall between a lawsuit and your assets,” Conkling says.

Aldrich notes that many older adults will give up homeowner’s insurance after their mortgages are paid off. However, she notes that homeowner’s insurance will still protect them from “acts of God.” Last year, her office received numerous calls from seniors who did not have insurance and needed help after severe storms in the region.

Conkling recommends that consumers consider an umbrella insurance policy for their auto insurance or their homeowners insurance.

Umbrella policies are very inexpensive for the amount of coverage they provide, Conking says.

Additionally, umbrella policies provide more extensive coverage for legal defense, Conkling says.

“There’s really never a good time to forfeit coverage,” Conkling says.


Life insurance coverage


Bianchi says that life insurance needs will depend upon the finances of the people who are seeking to purchase this type of policy.

The permutations of life insurance can include the desire to “leave something behind for your children and grandchildren” or for charitable bequests, Bianchi says.

Some people like retired schoolteachers and police officers will take a survivorship interest in their pensions, which essentially provides a life insurance benefit while decreasing the pension income, Bianchi says.

Bianchi also notes that whole life insurance policies can benefit customers in spending down their retirement savings in 401(k)s or 403(b)s but still live a significant legacy for their families.

Additionally, consumers may want to consider annuities for their provision of steady income streams in retirement, Bianchi says.

Aldrich notes that life insurance may not be needed for some older adults who are supported from their pensions and Social Security. However, other consumers may need life insurance to replace their income should they die before their spouse does or if they have an adult child with special needs.

Aldrich also notes that there are many programs available to help retirees with the cost of health insurance beyond Medicare, such as programs to supplement out-of-pocket Medicare Part D drug plan costs.