When many of us consider retirement planning, we think of our 401k or IRA, but planning for retirement is so much more than that. As an insurance advisor, are you helping your clients plan for their other retirement needs?
Employer Insurance Coverage
During our working years, most employers provide insurance benefits such as life, disability, health, dental, vision, accident, or critical illness coverage. Employees usually elect coverage when it is first offered without having to go through underwriting, so health issues do not affect eligibility. However, if an employee leaves the company or retires, these benefits typically expire, offer a short COBRA period for continued coverage, or, in rare cases, allow for policy continuation at individual rates, often with much higher premiums.
Many people don’t realize they can’t take their employee benefits with them and that most insurance policies will require underwriting, where health issues can pose a problem. The average person assumes they can simply purchase coverage like life insurance, long-term care insurance, or critical illness coverage upon retirement. However, by that time, it’s likely they’ve developed one or more health conditions that could either place them in a higher-priced rate category or deny them coverage altogether.
When to Discuss Retirement Planning Insurance Products
When should you talk with your clients about their retirement insurance portfolio? While it is never too early to start discussing retirement plans and strategies, age 35 is a good place to start discussing options regarding life insurance, long-term care insurance, and even critical illness coverage.
Life Insurance
Lock in a lower rate with a whole life policy, or opt for an indexed universal policy and fully fund it to have the flexibility of using part of the funds as a loan or supplemental retirement income.
Long-Term Care Insurance
LTCI is becoming more and more common to consider at a younger age. Some carriers offer LTCI policies at age 35 (or even younger), while others will not issue them until age 40 or 45. A long-term care need can happen at any age, so it’s vital to make a plan early and set clients on a path of coverage at a lower cost.
Critical Illness Insurance
This coverage helps pay for costs related to a heart attack, stroke, or cancer, including medical bills, travel expenses, hotel stays, alternative treatments, and other related costs, either on an indemnity or reimbursement basis. These policies typically require underwriting but are more affordable when started at a younger age.
Once your client approaches retirement, depending on their insurance portfolio, it is important to discuss some additional options and concerns. At age 62-72, health, dental, vision, and hearing insurance as well as funeral planning products become a high priority.
Medicare & Health Insurance
Since Medicare isn’t available until age 65, clients who plan to retire prior to age 65 must consider other health insurance options. Once Medicare is available, they must go through the process of finding the most suitable coverage. If you don’t write Medicare products, it’s important to understand the enrollment process. Your clients only have a small eligibility window to apply for Medicare benefits and enroll in a suitable plan, depending on the plan type, without underwriting.
Funeral Planning Products
Most people don’t want to burden their loved ones with expenses upon their passing. By purchasing a final expense policy or a funeral expense trust, your clients can set aside funds that will be available almost immediately upon their death that their loved ones can use to cover these expenses. While it’s more affordable to get a policy where you can pass underwriting, there are guaranteed issue options available in most states for older clients.
Dental, Vision, and Hearing Insurance
Certain Medicare supplemental plans include dental, vision, and benefits, but most of them offer very limited coverage. Make sure you discuss these costs and any related concerns to ensure your client is covered appropriately for their needs. There is no underwriting required for this coverage.
Long-Term Care or Short-Term Care Insurance
If your client did not purchase LTCI or short-term care coverage during their younger years, they may still qualify for a policy. Short-term care insurance is a viable option for some clients and typically has less intensive underwriting than LTCI. If you have a client who no longer qualifies, they may still be able to preserve some of their savings if they ever require long-term care.
While most financial advisors would say that you’re never too young to start planning for retirement, many are not discussing ways to protect assets through insurance coverage. Help your clients plan for their retirement years by not only saving financially but also taking advantage of insurance products that preserve assets and provide much-needed financial coverage when they need it most.
