Importance of life insurance l Insightful Investing

By Jeffrey Moormeier | May 16, 2018

I suppose today is as good as any to talk about insurance.

Last month, I wrote that one my best friends is fighting stage 4 pancreas cancer. I will let you know that it is my 62-year-old brother. He started chemo today and launched the counter offensive.

He was diagnosed on April 1. This form of cancer is the most vicious thing I have ever seen.  It is so bad I had been unable to spend time with him until a few days ago.

The fatigue and pain is so intense that he has about six hours a day to return calls and have anything resembling a life.

I helped him mow his lawn on Camano Island and watch the grey whales fish for shrimp.  During our time, we talked and reminisced. It was a very authentic conversation.

He has had so much influence on me that I followed him into the financial service business. He recruited me to work for Merrill Lynch after my service in the U.S. Army.

During our conversation, we talked about the real things in life.

He now works for New York Life and has the proper insurance for a situation like this. Thank goodness he took his own advice.

I think a normal and natural concern to this type of news is to think about the ones left behind. After watching many of my clients pass on, the families, especially the wives, have a real adjustment.

And the fact he protected his family from undue financial hardship is one less worry for the family.

It is an advertisement for insurance, really. The exact reason insurance companies exist.

Today, while my brother is fighting for his life, my niece gave birth to a new daughter, and my youngest daughter turned 27 years old on May 7.

There are many reasons to have life insurance.  And today is a very good example.

If something happens to me, I don’t want my wife to have any debt and I want my children’s college to be paid for.

Obviously the older you get the less there is a need for insurance as many people build nice war chests for self-insurance.

My niece has a new baby and a fairly new house and mortgage. She has two children and years to go before she can be self-insured.

In a case like this term life insurance is very inexpensive.

Term insurance for the older crowd can also be used for some "living benefits.”

I have written in this column before about how expensive “long term care” is.

Nationwide, one of the most expensive places to get long-term care is right here in the Pacific Northwest.

An in-home care provider is around $25 an hour.

That is $52,500 for a 40-hour workweek and $130,000 for a 100-hour workweek.  Assisted living for a one-room in this area is about $50,000 a year and for a skilled nursing home is $120,000 or more a year.

If you are a male over the age of 65, you have a 58 percent chance of needing some assistance before you die. If you are a woman the number is much higher at 79 percent.

This is mainly because women outlive men and women tend to care for their husbands before any long-term care solutions are sought.

I remember the tears in my mother’s eyes when she decided to put my father in a facility.  It was the day following the night he fell asleep in the hallway. She was not able, with her 4’10 frame, to get him up to put him in bed.

She apologized to us, as if we blamed her.

What a heroic effort.

Everyone thought she should have sought help much earlier. She wasn’t ready until that morning. And when she fell ill and needed care, there was no husband to help.

The insurance industry has been scrambling to keep long-term care policies affordable.  Most of their policy premiums go up unexpectedly.

One of the main reasons is because insurance companies normally have plenty of policy cancelations and they expect it. They plan for it.

And long-term care insurance is fairly new as an industry.

Cancelations, by and large, are not happening with long-term care policies. People who buy them are keeping them. Therefore, the insurance companies are raising the premiums.

A less expensive option may be “term life” insurance. They have the ability to use a portion of the death benefit “face amount” for long-term care.

I am making a very clear distinction between “long-term care” policies and “term life insurance.”

If you need long-term care, look for a term life insurance policy that enables you to use it for long-term care. And if you don’t need it for LTC, then there is always the death benefit.

In essence you are protecting yourself from two very big risks.

My friend John Stupey of “The Stupey Agency” right here in Mukilteo, is an expert and can help you with this type of financial concern, when you have it.

There are many reasons for life insurance.

My brother has a good attitude about the fight he is in. He is not worried about his family if the worst case manifests.

Plan for the worst and hope for the best. Insightful Investing.

 

Jeffrey Moormeier of JG Moormeier Financial is a Mukilteo-based financial advisor affiliated with KMS Financial Services, an SEC registered investment adviser. His column does not represent the opinions of KMS Financial Services, nor is it an official prediction or recommendation of any kind. The opinions expressed in this column are generalizations. For advise catered to your specific financial circumstances, contact Jeff directly at jeff@jgmoormeier.com or 425-931-8898.

 

 

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