As you approach retirement, it’s crucial to reassess your insurance coverage to ensure you’re not overpaying for policies that may no longer align with your needs. Once your retirement income is in place, certain policies like short-term disability insurance become unnecessary, and the need for extensive life insurance may diminish. On the flip side, exploring options such as long-term care insurance or a customizable annuity tailored to your retirement requirements might be beneficial.
Life Insurance
For federal retirees enrolled in FEGLI, securing financial stability for a surviving spouse is a common concern. To determine the necessary life insurance coverage, evaluate the income your spouse can rely on, considering factors such as the FERS survivor annuity, Social Security, inherited TSP, and income from personal retirement accounts and investments. This assessment may reveal that a more economical life insurance policy adequately meets your needs.
Healthcare Insurance
Effectively coordinating FEHB and Medicare insurance during retirement can reduce out-of-pocket expenses. Several FEHB plans exempt copayments and deductibles for services covered by Medicare Part B. Enrollees in FEHB HMOs can even seek Part B services outside their network, with Medicare reimbursing them as the primary payer. Combining both insurances ensures more comprehensive coverage, considering the potential gaps in coverage by each plan.
Long-Term Care (LTC) Insurance Alternatives
The escalating costs of traditional LTC premiums have led only 7% of Americans over 50 to invest in LTC insurance. Before retiring, it’s prudent to explore alternatives from private insurers.
Short-Term Care Insurance (STC), also referred to as Convalescent Insurance, is a more cost-effective option covering in-home care, assisted living, and nursing homes for 12 months or less. Hybrid Life Insurance, a permanent policy, not only covers long-term care expenses but also provides a death benefit for beneficiaries.
Annuities With Long-Term Care Riders
An annuity, offering a guaranteed stream of retirement income, becomes even more versatile with the addition of a Long-Term Care (LTC) rider. This rider allows tax-free utilization of funds for long-term care in a facility. In case the LTC coverage goes unused, beneficiaries can receive the accumulated value of the annuity as a death benefit.
For a comprehensive insurance review tailored to your retirement needs, consider consulting with an FRC® advisor.
