Planning for What You Can't Control
Risk Management and Insurance Strategies
What happens to your family if anything should happen to you? Will you be able to meet retirement expenses for as long as you live, or will you find you’ve outlived your assets someday? What about healthcare and/or long-term care expenses that too often accompany the aging process? Will they deplete the estate you hoped to leave your children someday?
Risk is not limited to fluctuating financial markets. You and your family face risks every day from forces you can’t always foresee. But that doesn’t mean you can’t prepare for them:
The Passing of a Primary Earner
For many families, life insurance represents the foundation of their finances – the safety net that enables them to pay their mortgage, afford future college expenses or simply maintain their lifestyle in the event of a breadwinner’s death. Life insurance, however, comes in many forms:
- Term insurance offers low cost protection for a limited period of time – say, until your mortgage is paid off or your children graduate from college.
- Permanent insurance, like whole life or variable life, provides coverage for as long as you live. Premiums are higher, but a portion of them is allowed to accumulate tax-deferred as cash value, and be distributed tax-free. You may access cash value through loans or withdrawals to supplement retirement income or meet other expenses.
According to the Social Security Administration, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age. And yet, only 47% of US employers offer long-term disability coverage to their employees. Even if you are fortunate enough to be covered, how much will your policy pay in the event you become disabled, either due to injury or illness?
It is important for you to understand the specifics of any group disability plan in which you participate because they can be vastly different. Because most employee plans are not portable, we typically recommend securing a private policy to ensure monthly benefits and lock in premiums.
We can help you review current coverage and select a policy, if necessary, that will protect your family adequately.
Outliving Retirement Income
The good news is that life expectancies have increased dramatically in recent years and for some people, retirement may last as long as their careers. The not-so-good news is that you’re going to have to generate enough income to maintain your lifestyle for perhaps 20-30 years or more.
Annuities are contracts between you and an insurance company. In return for your contributions, you are assured of receiving a stream of income in the future. Depending on how you choose to take your income, you can receive it over a specified number of years, over your lifetime or the lifetimes of you and your spouse.
Requiring Long-Term Care
The cost of long-term care services provided in the home, at a community facility or in a nursing home may not be covered by Medicare or other medical plans. With the median annual cost of a private care nursing home stay currently hovering around $97,000 per year for a private room, long-term care expenses can be a major threat to your retirement savings and/or the legacy you hope to leave to your loved ones someday.
To mitigate the risk, many people develop a specific long-term care plan. Equally as important, addressing long-term care needs with a target plan can help you maintain your independence and provide you with the freedom to choose the type of care you want.
Your homeowners and auto insurance policies offer liability coverage up to specific limits. But what if you’re sued and found liable for more? That’s where umbrella liability insurance can help. By purchasing coverage, you provide yourself with greater protection if litigation goes against you.
Liability protection typically applies once you’ve exhausted the liability coverage on your homeowners or auto policy. In today’s litigious society, it might pay for you to consider adding an extra measure of protection. By doing so, you can conceivably avoid losing your home, retirement savings or other substantial assets.
Fire, Theft, Accident or Other Mishap
Property and casualty insurance is probably the most familiar type of insurance to most people. If you own a car, you’re required to buy auto insurance. If you own a home, you almost certainly have a policy that protects it from fire, theft or other disaster.
Property and casualty insurance, however, should cover not only the loss of an object, but any additional expenses you incur because of the loss. There are also numerous choices to make involving liability coverage, deductibles and other variables.
Lenox Advisors, Inc. (Lenox) is a wholly owned subsidiary of NFP Corp. (NFP), a financial services holding company, New York, NY. Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. 90 Park Ave, 17th Floor, New York, NY 10016, 212.536.6000. Fee based planning services are offered through Lenox Wealth Advisors, LLC (LWA), a registered investment adviser. Services will be referred by qualified representatives of MML Investors Services, LLC (MMLIS). LWA is a subsidiary of NFP and affiliated under common control with Lenox. Lenox, LWA and NFP are not subsidiaries or affiliates of MMLIS, or its affiliated companies. CRN202210-273937