Category: Healthcare

A Case Study of Critical Illness Insurance Protection - Part B

10/28/2020

In last blogpost, we discussed who needs critical illness insurance protection. Now we will show a case study below.

She was happy to save about $100 a month in her health savings account (HSA), and her company contributed to her HSA each year as well. But a major illness would quickly wipe out her HSA balance and leave a real financial gap.

The numbers show how affordable it can be for Sarah and her family to close the gap if illness strikes. For $41.14 a month — less than the cost of one meal out with her husband and children — she can rest assured knowing she’ll have enough money to cover day-to-day expenses and any other unexpected costs.

Sarah also knows because she added the Return of Premium Rider, she will get some of her premiums back if she never needs her policy.

1 Comment

AIG Foreign National Guidelines

11/12/2018

2 Comments

Q. I am a Chinese living in mainland China, can I buy life insurance in U.S.?

A. Based on our experience, AIG （友邦保险） is the most lenient among life insurance companies towards foreign nationals. If you meet the following requirements from AIG, yes, you can apply for life insurance in the U.S.!

2 Comments

Are Healthcare Cost in Retirement Overestimated?

7/29/2018

1 Comment

Q. Are we overestimaing healthcare related costs in retirement?

A. Possibly. While most people probably have seen the annual Fidelity study that predicts individual retirees may need as much as $133,000 to $147,000 to cover health care costs in retirement, a recent EBRI study finds that after Medicare premiums, actual retirees are self-reporting the median spending on health care services is actually “just” $27,000, which averages out to barely more than $1,000/year or $100/month of out-of-pocket expenses over 25+ years of retirement, while total spending on all out-of-pocket medical expenses after Medicare premiums was under $2,000/year.

In other words, beyond the ongoing cost of Medicare premiums themselves, the range of medical expenses in retirement may actually be much narrower, and much less uncertain, than is commonly suggested.

Of course, there is still the challenge that medical expenses have, for decades, been inflating at a higher pace than the general level of inflation, and the cost of long-term care expenses in particular still remain a substantial wild card. Nonetheless, the EBRI survey shows that even those who die at age 95 or later and experience the most expensive (95th percentile) of costs, cumulative medical expenses are “just” $269,000 (effectively producing a range of medical expenses in retirement from $27,000 to $269,000). Which suggests in the end that the bulk of medical expenses may actually be more “plannable” and stable than commonly conveyed, and the real issue is how to plan for (or insure) long-term care expenses or the risk of a serious terminal illness that could rack up substantial medical bills in retirement.

1 Comment

How to plan for health care in retirement without going broke

7/24/2018

1 Comment

Q. How to plan for health care in retirement without going broke?

A. According to Fidelity’s latest estimate, a 65-year-old retiring couple will need an estimated $275,000 in today’s dollars to cover health care expenses in retirement (calculated as the present value of monthly Medicare premiums, copayments and deductibles, and prescription drug out-of-pocket expenses, but not nursing home or long-term care expenses).

Notably, though, it’s not as though these retiree health expenses are actually due at a lump sum at the start of retirement; instead, the retirement is that they’re simply a series of $5,000 – $10,000/year expenses for retirees throughout the retirement years (albeit slightly lower in the early years, and higher in the later years as intermittent health events lead to a progressive series of higher-cost “one-off” health events). And in fact, the relative stability of health care expenses in retirement (at least until the later years) means it’s often easiest to simply earmark certain income retirements in retirement for those (recurring) health care expenses, such as one spouse’s ongoing Social Security payments.

Pre-retirees might look to fund their future retiree health expenses by contributing to a Health Savings Account, and leveraging the HSA’s triple-tax-free benefits not for current medical expenses but retiree medical expenses. And for more affluent individuals, often the biggest challenge of health care expenses in retirement isn’t the actual cost, but simply the “sticker shock” of transitioning from a world where the employer often pays some, part, or even all of the health insurance expenses, while the retiree must handle the entire cost of Medicare premiums and co-pays, and Medigap supplement insurance, all by themselves. Of course, it’s also important to remember that one of the most straightforward ways to manage retiree health expenses is simply to try to live a healthier lifestyle in the first place, too!

Check out the Marketwatch article for more details.

1 Comment

How to Plan for Retirement Health Care Costs

10/28/2017

Author

Archives

Categories