Retirement and Insurance: Tips for Getting the Most out of Your Policies

1:05 PM, May 28, 2020
State Farm Pam Hansen Insurance After Retirement Pic 1.jpg

Retirement affords those entering their golden years a well-deserved break from the hard work you have put in day in and day out for decades. Among the vacation plans, home remodels, and endless leisure time with grandchildren, it is important to hit pause on the fun, just for a moment, and confirm that you and your family are properly cared for into the future.
From ample life insurance coverage, to estate taxes and new home insurance options, here is some advice to consider as you prepare for the next stage of life.

Renew or invest in life insurance with adequate coverage
Pensions and 401(k)s may not effectively cover final expenses or provide surviving loves ones with financial sustainability. However, a life insurance policy payout, known as a death benefit, can fill this hole. It is always a good idea to review your life insurance coverage every few years, but especially important as you enter retirement.
Through assessing yours and your spouse’s cost of living by calculating your needs, you are armed with the information to ensure your death benefit is large enough to pay off existing debts and provide financial security for beneficiaries.

Supplement life insurance with a long-term care rider
Life insurance acts as income replacement and helps cover end of life expenses, but it does not aid in the event of incapacitation. Long-term care riders are a recommended answer. State Farm agent Pam Hansen Alfred elaborates, “A long-term care rider will pay if a client needs care for the ability to do two of the six activities of daily living such as eating, bathing, getting dressed, toileting, transferring, and continence. It will also pay if a client is cognitively impaired from mental health disorders like dementia or Alzheimer’s disease.”
Alfred notes some insurance companies offer life insurance policies packaged with long-term riders. “We do this so either contingency has coverage,” says Alfred.

Eliminate estate taxes with an irrevocable life insurance trust
In certain circumstances, life insurance payouts can increase the value of your estate, burdening your surviving spouse and beneficiaries with estate taxes.
Estate taxes come into play when assets such as cash, property, trusts, securities, business interests, and insurances are cumulatively valued over the IRS’s exemption limit. This amount is also known as your gross estate.
However, there is a way to offset this tax bill for your loved ones. Instead of putting your life insurance policy in your name, an irrevocable trust might be a viable option. An irrevocable trust covers your premiums and pays out the life insurance death benefit to your beneficiaries. When it comes to the final calculation of your gross estate, your life insurance will not factor into your assets, potentially keeping your gross estate below the exemption limit. The trust can also help cover estate taxes.

Medicare Supplement policies limit out-of-pocket health costs
Depending on the employer you are leaving, you may take your current health insurance with you, or search for alternative means of coverage. Many retirees of a certain age will rely on Medicare to cover their medical expenses, yet Medicare is not a catchall for every health-related expense.
“When a person turns 65, they are eligible for Medicare,” says Alfred. “Medicare will pay after a hospital deductible or a doctor deductible and then they will pay 80 percent of the approved amount and the customer is responsible for the deductible plus the 20 percent that Medicare approves but doesn’t pay.”
Medicare Supplement Insurance, also known as a Medigap policy, will take on the remaining 20 percent. There are several options available and your insurance agent can help you discern which Medigap policy best suits your needs.

Explore car insurance discounts
Retirees are known to drive the least in comparison to all age groups. Not only does this put less wear and tear on your vehicle, but there are advantages for your car insurance rates.
“Without the need to drive to work daily, retiree’s car insurance needs change. Retirees should look into low mileage discounts,” says Alfred.
Most insurance companies also offer discounts for smart driving practices that in some instances, can save drivers up to 50 percent off their monthly premiums.
All drivers are rated individually, and higher scores give drivers better insurance rates. When it comes to rates, there are many factors aside from age that influence a driver’s ultimate driving score. “A critical component is a person’s credit,” says Alfred. If you have spent a lifetime polishing your credit score, your car insurance should reflect that effort.

Pay attention to your home’s coverage needs
Retirees who already own their homes or are reaching the mortgage-payment finish line have invested in their homes emotionally and financially. Choosing the right homeowners insurance solution is key to establishing peace of mind for your biggest investment.
Homeowners insurance has evolved to include new coverages such as utility line endorsements, which cover collapsed sewers. Alfred notes a specific coverage offered through State Farm, “(State Farm) has another coverage that will provide benefits if built-in appliances such as furnaces, air conditioners, and hot water heaters experience mechanical breakdown.”

Consider an insurance policy that protects your financial and physical assets
The unexpected life event never announces itself and, in some cases, can rattle your financial stability to its core. After retirement, there is not a steady influx of new income to counterbalance these emergencies.
A personal liability umbrella policy increases your liability limit protection in the event of a lawsuit or heavy insurance claim.
“I’ve always said that if a person, particularly retirees, could only have one policy, they should choose a personal liability umbrella policy that protects their personal assets such as their home, portfolio accounts and retirement accounts. For instance, if someone wants to sue you for a negligent act like a car accident, they would just take the policy and not the personal assets you have worked so hard to acquire,” elaborates Alfred.
For further assistance on your insurance needs, reach out to Pam Hansen Alfred and her team at (406) 453-6010, stop by their offices at 2817 10th Ave. So., or visit

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