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My Senior Health Plan
Final Expense Insurance: Is It Right for You?

Final expense insurance is an option you may consider as you organize your retirement details. In the event of your death, having a plan in place can help family members take care of your funeral and related expenses—without financial stress. 

But where do you start? There are many options to cover end-of-life costs. Additionally, talking to loved ones about death can be difficult. Here are some tips to get you started:

1. What is final expense insurance?

Final expense insurance is a policy that you purchase to cover any expenses related to your death. That includes medical fees and funeral costs (from urns and grave markers to flowers and funeral plots).

If you buy a final expense policy, you will pay a premium as you would a life insurance policy. The plan will be valid until you die. Upon your death, your beneficiaries will receive the policy funds.

Unlike life insurance plans that require an in-depth health history evaluation and medical exam, a final expense policy typically requires answering a few straight-forward questions. 

There are a couple of policy options. A guaranteed issue policy requires a test for terminal illness, and a simplified issue policy involves filling out a questionnaire—but it will not require a medical exam. You can talk to your retirement specialist about which policy will best fit your needs.

2. How to start the death-expenses conversation 

Talking about death with loved ones can be tough. However, the greatest gift you can give them—as they face an incredibly difficult time—is a clear plan. That includes nominating a beneficiary to handle your death expenses.

If you have a final expenses policy, your beneficiary will access the funds to cover any costs. It’s essential to choose someone you trust. While the policy is for death expenses, ultimately, the beneficiary can use the funds how they see fit.

3. How does a final expense policy compare to other options?

When it comes to funding your final expenses, there are various options. Here are some questions people ask regularly:

“Isn’t it easier to just buy burial insurance?”

Many people choose to buy burial insurance. In some ways, it’s a practical choice, as you’re buying directly from the supplier—that is, the funeral home that will take care of your burial.

However, a couple of drawbacks to consider include:

  • Being obligated to use a particular funeral home: This can cause problems should you move away from the area (e.g., to another state). A final expense policy is not tied to a set funeral home. You get to choose!
  • Covering only funeral costs: Other expenses may pop up that burial insurance alone will not cover. A final expense policy will help cover extraneous costs.
“What if I create a savings account for final expenses?”

Some people opt to save for their final expenses. This is fine if you can set aside a good chunk of money to cover your funeral costs and never touch it. 

This is risky, as you may need to dip into your savings to cover unforeseen expenses: a sudden medical issue (think about the cost of a hospital stay and footing the bill that medical insurance won’t cover) or an unexpected expense (such as an emergency home repair).

A final expense policy will guarantee that costs related to your death are taken care of. That might include any debts, medical bills, and probate fees.

“I can make final expense provisions in my will, right?”

Providing funds for your burial in your will, while it seems like a practical approach, has some limitations. For example, the reading of your will typically takes place after the funeral. 

Additionally, because your estate has to go through probate court, it takes time (often months) to release the funds to your beneficiary.

A final expense policy will provide your beneficiary with immediate cash to pay for all your final costs. 

“Will Medicare and Social Security cover my final expenses?”

Medicare will not cover your funeral expenses. Social Security will provide a survivor’s benefit for funeral expenses. However, the amount is small (just $255) compared to burial costs that average $8000-$10,000. 

The addition of a final expense policy will provide coverage—not only for burial costs but other death-related expenses. This is something to discuss with your retirement specialist. Together, you can tailor a final expense policy to fit you and your family’s needs.

“I have a life insurance policy. Is that a good way to cover death expenses?”

A final expense policy is a type of insurance policy. If you have a traditional life insurance plan, you may consider adding a dedicated death-expenses policy.

This will allow your beneficiaries to manage your final costs easily during a difficult time. Also, it will provide immediate, separate funds without pulling from your primary life insurance policy.

Help your loved ones when they need it most

Having a plan for your end-of-life expenses is the greatest gift you can give your loved ones. Before you decide how you will fund your final costs, create the opportunity to talk to them about your intentions. It may be uncomfortable, but they’ll appreciate your efforts later on.

Aaron is MySeniorHealthPlan.com’s retirement specialist.

He can answer your final expense insurance questions and help you choose the right plan for your family’s needs.      

  Click here for your free consultation.

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4 Quick Tips for Choosing the Right Travel Insurance

Whether you’re planning an educational trip or a romantic cruise, choosing the right travel insurance can feel daunting, from getting car insurance in another country to understanding your travel medical policy’s fine print. 

The key is to talk to your carriers and really understand the details of your coverage. Not only will you have peace of mind that you’re covered, but if you need to use it, you’ll be prepared when you need it most.

Here are some tips for planning, buying, and understanding your travel insurance.

1. European car rental insurance and must-haves  

When it comes to renting a car, make sure the country where you will rent the vehicle honors your license and insurance (for example, Ireland and Italy have restrictions).

Crossing borders in Europe can have an impact on your insurance. Let the rental company know which countries you will visit. This is important, as there may be areas they will not cover. 

Going from Britain to the Continent. Fancy the 35-minute trip to France via the Chunnel? Ask the rental company about taking your British rental to other countries (including Ireland), as fees can be hefty. It may be more cost effective to rent a vehicle at your destination.

Get an international driving license. While you’ll most likely be okay with your passport and U.S. driver’s license, some countries require an International Driving Permit (IDP) (e.g., Austria, Poland, Italy, and Spain). 

Should you need to show a police officer your license, they’ll recognize the IDP instantly, and you’ll avoid a possible extra fine. For around twenty dollars, you can get an IDP easily through AAA. 

2. Critical cruise coverage

A medical condition that requires treatment, beyond what cruise medics can provide, will be expensive. Make sure you have medical travel coverage—before you get on board.

Cruise ships come with an infirmary (not a hospital), a doctor (or more, depending on the size of the vessel) and nurses. While they are all certified medical-care providers, they do not have the facilities to treat serious illnesses. 

Should you need to be transferred to a land-based hospital or evacuated from the ship, you will be responsible for all the expenses.

Additionally, understand your personal medical insurance coverage. As you plan your cruise, talk to your carrier about your medical insurance coverage and how it relates to travel. 

For example, Medicare typically won’t cover medical treatments outside the U.S. According to the Medicare website, “[t]here are some exceptions, including some cases where Medicare Part B (Medical Insurance) may pay for services that you get on board a ship within the territorial waters adjoining the land areas of the U.S.”

3. Travel insurance and pre-existing medical conditions

Travel insurance for a pre-existing medical condition will give you peace of mind that you’re covered wherever you travel. 

If you have a pre-existing health condition, take the time to research travel insurance that will cover you should the existing condition be related to an illness requiring treatment while outside the U.S.

Clear communication about your medical conditions is essential. If you don’t declare a medical condition, and you need to make a travel-related claim, the insurance company may reject the claim, and you will have to pay the medical costs.

For example, if you have a fall getting off the tour bus and doctors determine that it was related to your pre-existing condition (such as a heart condition or diabetes), your coverage will kick in if the pre-existing illness is listed.

4. Trip cancellation coverage fine print

While the most common reason for trip cancellation is for medical emergencies, your cancellation coverage covers many additional events. That includes terrorist attacks, hurricanes, and revoked vacation time-off. 

Some of the less-well-known events include being required to serve jury duty and not being able to enter your home due to a natural disaster, burglary, or vandalism.

Cancel For Any Reason versus Trip Cancellation

Cancel For Any Reason coverage is a policy upgrade that people often confuse with Trip Cancellation. Most likely, your policy will include Trip Cancellation. For extra protection, you can buy Cancel For Any Reason coverage.

The Cancel For Any Reason upgrade will partially cover cancellations for events not included under Travel Cancellation. Keep in mind that there are time-sensitive stipulations for purchasing the upgrade. Look into this option early in the planning stage of your trip.

Know what’s covered versus “I hope it’s covered” 

You buy travel insurance for peace of mind. But for true peace of mind, you need to know all the details of the policy. When it comes to choosing the right travel insurance, invest time researching the policy’s details. That includes reading and asking questions about:

  • Definitions
  • Provisions
  • Eligibility and period of coverage
  • Claims procedures and payments
  • Limitations and exclusions

In fact, make all your insurance carriers (auto, medical, and travel) part of your trip planning. Talk to them well in advance. Ask questions. Know what’s covered. Enjoy your trip!

Whether you’re driving through Europe or taking a cruise with your grandkids, choosing travel insurance for your particular needs is the smart way to plan your vacation.

Learn more!

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Senior Educational Travel: 3 Planning Tips for an Amazing Trip

Senior educational travel is on the rise. Travel companies offer world-class learning adventures with expert instructors and guides.  However, before you sign up to walk in the exact footsteps of Lewis and Clark, it’s essential to understand what will make the trip memorable for you.

What setting will allow you to learn and have fun? Would travel by tour bus be a good fit or camping in the wilderness with a small group?

Here are three tips to help you plan your most memorable learning vacation:

1. What do you want to get out of your educational travel?

Defining your expectations ahead of time will set you up for a rewarding trip. Do you want to focus on one thing (an architectural period, artist or field of study) and fully immerse yourself or do you prefer to get a general understanding of a whole area?

For example, maybe you want to explore the Roman ruins of Carthage—to wander around the massive arches and pillars and walk where traders once gathered at the baths and amphitheater.

But if the guide rushes you through the archeological wonder, as it’s just one part of the day’s tour (and the park is closing), your learning experience may feel incomplete.

Think about what you want to learn and how to make it happen. Research your destination: the educational opportunities, reviews, news, history, academic papers, and social media pages. Then decide how you will see the site to get the most out of the experience.

2. How do you like to learn?

Everyone has a unique learning style. Will a group setting work best for you, allowing you to discuss what you’re learning?  Alternatively, do you prefer to be independent—to explore and absorb the experience without distraction?

Guided travel tours

Maybe you’d enjoy a larger tour group, allowing you to take in the lecture-style information as you move from place to place.

On the other hand, traveling with a small group will allow you to interact with your guide one-on-one and discuss the experience in depth. Additionally, within a small group, you will be learning with like-minded travelers. What a great way to learn and develop new friendships!

Independent travel

If you prefer to learn independently—to explore like John Muir, and let your surroundings teach you—a self-guided trip may be a good fit.

That could include planning the experiences yourself or going with a group but breaking away to explore on your own. Of course, the internet will be an essential tool for planning your self-directed learning adventure.

3. What activity level do you prefer?

Whether you’re traveling Europe on a tour bus or doing a seven-day hike through Yellowstone with a naturalist, understand the type and level of activity ahead of time.

For example, the All Hands on Deck USS Missouri maintenance trip gets a high-intensity rating, as it includes climbing the ship’s ladders, refinishing the teak deck and sleeping in the ship’s berthing.

Ultimately, taking your physical comfort into account, from getting in and out of buses to climbing stairs into a museum (where ramps may not be available), will allow you to enjoy the learning experience.

Will learning vacations become your new way to travel?

As you plan for your educational vacation, think about how you’d like to feel after the trip. Will you be inspired to do another, having found your new way to travel? When telling friends about your travels, will you realize just how extraordinary your adventure was and how much you learned?

Who knows, before you even tear off your luggage tags, you may turn around and start planning your next learning adventure!

Be a smart traveler! Make trip protection a priority.

A common regret is not getting money back should you have to cancel or cut-short your vacation.

Get a FREE quote today from our Seven Corners travel insurance partner.

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Long-Term Care Insurance: 3 Common Misconceptions

Like any insurance plan, long-term care insurance provides financial relief when you need it most.

However, long-term care insurance is expensive. Given the expense, people put off buying a long-term care (LTC) policy or even making a plan for their future care needs.

But if they do need it (and the odds are higher as people age), and care facility costs and home-care provider fees start to build up, the premium can provide financial support and peace of mind.

Here are three common misconceptions why people think they don’t need an LTC plan and why rethinking that approach is important:

1. “I’m healthy. I don’t need long-term care insurance.”

At age 66, Bill is in great shape. His vitals are good, and his weight is in a healthy range. He runs an annual half-marathon and lifts weights at the gym.  

Additionally, neither his parents or grandparents required nursing care at home or in a facility. They all lived into their 80s and 90s, happy and healthy. With his stellar family history, Bill feels confident he won’t need long-term care. He plans to enjoy life!

While Bill is healthy and takes care of himself, it doesn’t make him exempt from needing care as he gets older. A fall or unexpected health problem could require paying for long-term care.

That might include hiring a home health aide to help with personal needs (e.g., bathing and dressing). At an approximate rate of $20 per hour, the costs add up over the weeks, months and years.

Like many, Bill is taking the I won’t need it approach. However, at the very least, he needs a plan. That includes talking to loved ones about long-term care:

  • Who will provide the care (his spouse, adult children, a home health aide)?
  • How will the costs be covered, including family members who may have to work less to help him?
2. “I’m financially savvy and have a large retirement nest egg.”

Jackie and her husband have a substantial retirement portfolio. Having had a career in finance, she understands the cost benefits of LTC insurance. However, she’s reluctant to buy an LTC policy, as it will put a dent in their disposable retirement income.

Additionally, with the escalating cost of medical care, she’s not confident that the LTC policy will cover their care costs in 20-25 years. Going without LTC is a risk she’s willing to take.

One misconception about LTC insurance is that people will only need it in their later years. They tend to think of it as end-of-life care. However, LTC is the care you could need tomorrow while in your first years of retirement.

For example, if Jackie’s husband should need long-term care due to an accident or an unfortunate diagnosis, even with substantial retirement savings, her financial independence could be jeopardized.

She may want to weigh up the cost of care—that could run into high six figures and beyond—versus paying anywhere from $90 to $200 per spouse, per month.

3. “I won’t qualify because I have existing conditions.”

Cody’s mom Jean has a chronic—but stable—health condition. Cody figures that the existing illness will disqualify her from long-term care insurance.

Unlike some insurance policies, LTC policies do cover people with chronic health problems. That may include diabetes, heart disease, and clinical depression. In fact, the underwriters’ lists of approved chronic conditions are substantial!

As long as the qualifying illness is stable, the insurance underwriters should approve the application.

In Cody’s mom’s situation, rather than dismiss LTC insurance due to her existing condition, Cody can work with an insurance specialist to explore their options. The specialist will walk him through carriers’ underwriting differences to find the plan that best fits his mom’s health and financial needs.

Who will benefit most from an LTC policy?

Should you need long-term care, a policy will provide financial support, allowing you to access the help you need. Also, it will relieve family members (spouse, children, grandchildren) of the economic and personal burden associated with your long-term care needs.

Ultimately, even some coverage is better than none. Also, buying long-term care insurance is as much for you as for your loved ones.

Now is an excellent time to start a conversation about your long-term care needs.

Aaron is MySeniorHealthPlan.com’s retirement specialist. He can help you explore your options and find a policy that fits your financial needs.

Call Aaron today: 1-877-255-6273

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Your Term Life Insurance Is Expiring. Now What?

Your term life insurance is about to expire, you’re retiring, and the kids are gone. This is a good time to determine your insurance needs and weigh your options.

Here’s how to choose the best course of action for your ending-soon term life policy.

Start with these 3 questions:

1. Do loved ones need your financial support?

People often buy a term life policy when they get married, buy a house or have their first child. This type of cost-effective policy provides financial security for your family in the event of your passing.

Now that your children are grown and independent, you may not need as much insurance. However, if your spouse or children still rely on your part-time income or you’re supporting a family member with special needs, the loss of income in the event of your death could be significant.

Your family may also experience a decrease in your pension income and social security benefits, making your life insurance decision more significant.

2. Do you have debt?

As you near retirement, you may still be carrying debt. Maybe you bought a house later in life and have a substantial chunk to pay. Or maybe you went back to school for an advanced degree and are paying off your student loans—as well as your children’s.

If you have significant debt and you pass away, your savings and benefits may not be enough to cover the payments. In this case, continuing your life insurance policy for your family’s financial security will be an important consideration.

3. Do your retirement funds provide access to cash?

If you and your spouse have a well-funded retirement plan,  you will most likely use these funds to cover final expenses. The accessible cash will cover any medical and burial costs.

However, if your money is tied up in assets, such as investments or real estate, covering final expenses may prove challenging. In this situation, your life insurance plan will provide your family with the funds they need to comfortably cover any end-of-life expenses.

Next, explore your term life policy options:

This is where things get a little complicated, as there are many policy options with nuanced details. Your retirement specialist can guide you through the process and help you choose the plan that best fits your needs. In the meantime, you may want to consider the following:

Buy a new term life policy

If the higher cost of a permanent life insurance policy doesn’t appeal to you (a reason you may have chosen your original term policy), buying a new term policy might be a good choice.

You will have to pass a medical exam. And, because you are older, your premium may be higher. However, if you’re in good health, the overall costs may be lower (versus paying for permanent insurance), as the amount of time you need the policy may be shorter.

Convert your coverage

There’s a good chance that your term life insurance policy includes a conversion (or exchange) option. If so, you can convert your expiring term life policy to permanent life insurance coverage.

Conversion requirements will vary, depending on the insurance company. The requirements may allow you to convert your policy at any time before expiration, during a specified period (e.g., within the first ten years) or at a particular age—typically between 65 and 70.

If converting your term policy is the option you prefer, you’ll want to start the process well before the policy expires.

Renew your term life policy

People often choose this option if their term policy is expiring and their health has deteriorated.

If your policy allows renewals, and you decide on this option, you won’t need to do a medical exam. But, because you are older and have health problems, your premium rates will be higher.  

Get started today!

You originally took out your term life insurance plan to provide for your loved ones if necessary. The policy provided peace of mind as you raised your family. Now, it’s expiring.

This is the perfect time to check in with your retirement specialist. Together, you can look at your finances and explore all your coverage options. The sooner you do, the sooner you can get back to the important things—like enjoying your retirement!

MySeniorHealthPlan.com’s retirement specialist Aaron can answer your term life policy questions and

help you choose the right insurance for your retirement needs.                           

Click here for your free consultation

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Spring Travel for Seniors: Stay Local. Have a Blast.

Spring travel for seniors provides the opportunity to get out after the colder months and enjoy a quick, local vacation—maybe to a neighboring town or city.

See how to give your spring getaway a new, fun twist.

Plan your spring travel around hobbies and interests

Do you have interests that you’d like to explore in a new setting? Planning a local trip around a hobby can spark inspiration beyond looking online or checking out library resources.

Gardening

Need some inspiration other than the neighborhood gardens and nursery?

Dust off your gardening journal and choose your travel destination based on botanical or specialty gardens (like Japanese, cactus or rose gardens).

In addition, visiting historic homes and museums in neighboring cities can be a great source for planting ideas. From the landscape architecture to plant selections, inspiration is sure to hit as you wander through the scenic landscapes.  

History

If history is your thing, from war museums to ghost towns, you can plan a trip around a town’s historic offerings. That might include staying at a historic hotel, touring a trading post or visiting a one-of-a-kind folk-art collection.

Study up ahead of time, check on tour dates and times, and get ready for a trip into the past.

Wine (and more)

Many wineries start celebrating the warmer days by opening their tasting rooms and setting up their alfresco seating. Try a small winery for a personalized experience. You can join their email list ahead of time to hear about their upcoming events.

In preparation for the busier season, they may offer food pairings from local restaurants and farms, as well as live music and local art. Do they offer tours? This is a great way to see the vineyard, chat with the owners and hear their stories.

Get away to get active

Hike, bike, walk, run. You can build a trip around physical activity. Whatever your ability, there are plenty of fun ways to do an active, local trip. And at the end of the day, simply return to your hotel, Airbnb or RV to enjoy some well-earned downtime.

Sign up for a community walk—in another town

Doing a community walk in a new city provides the opportunity to see the sights (like eyeing that restaurant for the evening meal) while exercising and having fun.

Many fund-raising organizations (such as March of Dimes and local animal shelters) host community spring walks (and 5K runs). What a great way to get out, give back, and experience a new place on foot.

Additionally, with the help of apps and websites (see digital resources below), you can plan your spring walking getaway around the local trails or community groups.

Spring snow travel

Whether you want to hit the slopes to catch the last of the snow or hike the surrounding trails, spring is a great to time head to a nearby snow mountain. As the snow melts and wildflowers start to emerge, ski areas offer many activities.

For example, California’s Big Bear Mountain comes alive with adventure, touring and leisure activities. From horseback riding to strolling around the spring farmers markets, there’s something for every taste and fitness ability.

Connect with local seniors

Wherever you travel, meeting new people can make a trip more memorable. In addition to getting to know other seniors, you can get their insider’s perspective on where to eat and go that the tourist guides might not know.

Like the small restaurant with secret family recipes and a home-style welcome, the cozy bookstore with armchairs and organic coffee, or the hiking trail with breathtaking wildflowers and photo opportunities.

Senior centers

Look online for the senior center website in the town you’d like to visit. Are they having an upcoming event you could attend—like a dinner dance at the center, a guided tour of a historic district or a day trip to a wildlife reserve?

Give them a call for more details and let them know you’re interested. This will create a friendly connection for when you arrive.

Libraries

Check the local library website for upcoming events. Book readings, yoga classes or coffee mornings generally include social time. What a great opportunity to chat with local residents and learn what their town has to offer!

Tap into your digital resources

Between your smartphone and computer, you can plan your spring trip with ease. Here are some websites and apps you may find useful.

  • Yelp.com: Use the app on your phone or access the website on your computer to see details and reviews on everything from restaurants to golf courses.
  • Alltrails.com: Download the app or visit their website to locate trails at your destination. Enter the city and get details on trails, including facilities, ability levels, reviews, and directions.
  • Meetup.com: Check out the Meetup website and app as a tool for planning your trip. Want to play golf at your destination? Why play alone when you can cruise the course with like-minded, local enthusiasts?  The Meetup slogan says it all: Join a local group to meet people, try something new, or do more of what you love.
  • State park websites: Whether you plan to travel by RV or stay in a cabin, your state’s park website is a useful resource for finding the perfect locations, activities and facilities.
Get ready for your fun spring adventure

Maybe you’re planning a bigger vacation for the summer and want to get out now for a quick trip. Or maybe you’re excited to explore somewhere close to home.  

Planning your local spring trip around activities you enjoy, with the added bonus of meeting new people, is a great way to shake off the sleepiness of winter and celebrate the start of a vibrant new season. Have fun!

Need travel insurance for your getaway? Learn how travel insurance helped one senior couple on their RV trip (watch the video).   

We’d love to hear about your local spring adventure! Visit our Facebook page and show us where you went!

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Want to Convert Your Life Insurance to an Annuity? What You Need to Know.

If you want to convert your life insurance policy to an annuity—or are thinking about it—there are some key things to take into consideration.

Imagine this scenario:

Tom will retire in a few years. Decades ago, he opened a life insurance policy to provide security for his young family. His children are grown now and financially secure. He continues to pay the insurance premium but feels the policy is more than he needs.

He’s considering transferring the policy to an annuity to provide a stream of income for his retirement. But he knows annuities can be complicated—mostly because there are different types of annuities with varying conditions.

He talks to his retirement specialist who walks him through the key points of converting his life insurance policy to an annuity.

Turning insurance policy dollars into retirement income

If you’ve paid into a life insurance policy and built up its cash value, your carrier may allow you to convert it to an annuity. The transfer will provide guaranteed income for the rest of your life.

How it works:

Your advisor will lay out your annuity options—from variable to fixed annuities.

Together, you’ll explore your conversion options and find the annuity contract that best fits your needs. Generally, getting an annuity started requires turning over a lump sum of money. Transferring the policy will enable you to fund the new annuity.

Once the transfer is complete, you’ll start receiving payments (at a time specific to the contract) for the rest of your life (like you do social security benefits).

It’s also worth noting that with some contracts, you may be able to pass the benefits to your spouse. If this is important to you, talk to your carrier about including that in the contract. Also, make sure you fully understand the details, as the benefits will mostly likely be reduced.

Understanding the taxes

Of course, the cashed-out earnings from your policy will qualify as income. Normally, that would require paying taxes.

Thank goodness for the 1035 Exchange!

The 1035 Exchange is part of the tax code that allows policyholders to transfer funds from an insurance policy to an annuity—without having to pay income tax.

Doing an exchange (versus surrendering a policy) is especially helpful for people who’ve paid into a policy for a long time but who find it no longer fits their needs.

That might include taking advantage of lower fees or more flexible investment options or simply needing a greater cash flow for their retirement years.

Either way, the IRS allows an exchange from one policy to another—tax free.

Shop around and ask questions

If you’re interested in converting your life insurance policy to an annuity, dig into the details:

  • Find out about carriers’ payout options and contract conditions.
  • Weigh all the advantages and disadvantages.
  • Make sure your new contract is issued before the existing policy is terminated.
  • Ask about surrender charges—the fee a carrier might charge for cancelling the policy.

Ultimately, when it comes to your retirement plan, you are the decision maker. In other words, shop around, compare plans, and ask questions before you sign anything.

Are you paying for permanent life insurance that you’d rather turn into guaranteed income for retirement?

MySeniorHealthPlan.com’s Retirement Specialist Aaron can answer all your questions. Click here to schedule a free consultation.

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What’s the Full Retirement Age? Get the Facts. Know the Rules.

For decades, full retirement age was 65 years old. But receiving social security benefits has changed, including a higher retirement age and early-retirement options.

Last month, we looked at working after retirement—what it means to collect benefits early, as well as the advantage of waiting a little longer. This month we jump into the nuts and bolts of full retirement age: What it is and how it works.

Early vs full retirement

The earliest you can receive social security benefits is age 62. It’s important to understand that by drawing on your social security early, your benefits are reduced. For example, if you claim social security at 62, you will receive 70% of your benefits…

  • At 63, you’ll get 75%.
  • At 64, you’ll get 80%.
  • At 65, you’ll get 86.7%.
  • At 66, you’ll get 93.9%.
  • At 67, you’ll get 100%.

Additionally, should you apply for early retirement between birthdays, the amount you receive will be calculated according to the additional month. That means, at 62 and one month, your benefit will be 70.4%. At 62 and 2 months, you’ll receive 70.8%, and so on.

Ultimately, if you can delay claiming Social Security until full retirement age, you’ll receive 100% of your benefits.

Watch those earnings (during early retirement)

Also keep in mind that if you work while receiving early retirement benefits, the Social Security Administration (SSA) has an extra-earnings limit. Currently, that amount is $17,640. If you exceed that amount, you will receive less money in your retirement check.

However, once you reach full retirement age, you can earn any amount of money and still receive 100% of your social security benefits.

What will your full retirement age be?

In 1983 the Federal Government changed the legal full retirement age to 67 for those born in 1960 and later. For everyone born after 1937 and before 1960, the legal retirement age increases as follows:

Source: https://www.ssa.gov/planners/retire/retirechart.html

Don’t forget your Medicare age

Whether you draw benefits early or wait until you’re 70, you will still need to sign up for Medicare benefits at age 65. If you are approaching 65, this is a good time to talk to your Medicare specialist.

Mark your calendar

Maybe you intend to draw social security early at age 62 or maybe you’ll wait until you reach full retirement age. Regardless, planning is key to a smooth and happy retirement. That includes knowing the retirement benefits dates and rules and how they apply to you.

The Social Security Administration (SSA) website is a great source of information. It offers many resources for understanding your retirement benefits, including this full retirement article

and age calculator.

At MSHP, we’re here to help you sort out all your retirement and benefits questions.

Need a clear answer regarding your retirement age or Medicare benefits? Give us a call: (877) 255-6273

My Senior Health Plan - Senior Health Insurance & Over 65 Health Insurance Plans | My Senior Health Plan

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My Senior Health Plan
How Does a Fixed Annuity Work and What Are the Benefits?

Like general annuities, a fixed annuity provides guaranteed income for people heading into retirement. The annuity is also a contract—with variables. And that can make choosing the right one challenging.

Take Jackson, for example. He’s in his early fifties. His mother passed away several months ago, leaving him an inheritance.

He wants to invest the money as soon as possible. Jackson hears about fixed annuities for building retirement income.

He sifts through online articles but finds it difficult to sort out the details.

Jackson talks to his retirement specialist who explains how a fixed annuity works and the benefits of investing in one.

What is a fixed annuity?

A fixed annuity is similar to a certificate of deposit (CD). Unlike a bank-issued CD, an insurance company controls the fixed annuity. That includes guaranteeing the interest and payments to the investor.  

But Jackson discovers that fixed annuities can be tricky to understand.

For example, the term “fixed” implies that the annuity is unchanging—set in stone. That’s not quite the case. The interest rate may change, depending on how the insurance company draws up the contract.

It could be that the annuity’s interest rate stays at a fixed rate for a period of time. But the contract may state that the interest will change at certain times according to the current rates.

Also, fixed annuities come in two types: deferred and immediate.

Deferred fixed annuity

As the name suggests, a deferred fixed annuity guarantees an amount of tax-deferred interest. That means, the interest won’t be taxed until you withdraw money from the annuity.

Additionally, with a deferred annuity, you can roll over IRA money, as well as other types of funds. If you put your IRA money into a deferred annuity, the IRA tax rules will still apply.

For Jackson, he can put his inheritance in a deferred annuity, but if he needs to access the money prior to age 59 ½, he will pay income taxes, and he may incur penalties.

Immediate fixed annuity

An immediate fixed annuity is a good fit if you have a lump sum of money to invest and want to receive income right away.

With an immediate annuity, also called a single premium immediate annuity (SPIA), you know what the payments will be—for life. That said, there are some immediate annuities that adjust for inflation (an option to discuss with your retirement specialist).

An immediate annuity may be a good fit for Jackson, as he can choose payment terms, ranging from a payment over a decade to receiving guaranteed income for life.

Ultimately, a fixed annuity may be a good fit if:
  1. You are risk averse

If you’re looking for an investment that guarantees income payments for life and is not subject to market changes, a fixed annuity is a good option.

However, talk to your retirement specialist about how the interest rates are written into the contract: some contracts will include rate changes (this is where a fixed annuity can get tricky).

  1. You have time

If you still have plenty of time before retirement, investing your lump sum of money now in a fixed annuity might be a good fit. The deferred taxes will allow your investment to earn compound interest over the years. And taxes will only kick in once you’re ready to withdraw funds.

  1. You’d like to receive payments now

If you have a sum of money you’d like to invest and start receiving a stream of income now, an immediate fixed annuity may be a good option. You can decide which terms will work best for you—such as receiving payments for the next ten years or over your lifetime.

Sorting out the details

At first glance, fixed annuities seem straightforward: you hand over a sum of money and the insurance company guarantees income for life. But there are different types of fixed annuities with contract details that affect when you receive the payments, for how long and at what interest rate.

Talking to someone who can explain everything about fixed annuities—from fees to surrender charges—will help you tailor a fixed annuity to best fit your needs.

 Are you thinking about investing in an fixed annuity? Aaron, MSHP’s retirement plan specialist, can answer your annuity questions.

Click here for a free consultation.

My Senior Health Plan - Senior Health Insurance & Over 65 Health Insurance Plans | My Senior Health Plan

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My Senior Health Plan
What You Need to Know about Working after Retirement

These days, many seniors are working after retirement. They continue to work and collect social security benefits, often as a means of earning extra income or staying active and engaged in a working community.

While continuing to work has benefits, there are earning limitations that may affect your social security benefits.

Before getting that new job, it’s important to understand the nuances of working while collecting early retirement benefits.

Here are some important things to consider as you plan for working after retirement.

Analyze your early retirement needs

Once you’re in your sixties, you may decide to retire early and start receiving your social security benefits. The earliest you can do this is age 62. But keep in mind that drawing on your benefits before you reach full retirement age of 66 may reduce the benefits you receive in the future.

As part of your retirement planning, take a close look at your current finances and decide if receiving benefit payments early is the wisest choice.

Consider this: if you can work until age 70, you will get a guaranteed additional 8 percent on your monthly payouts. To put that in perspective, as Suze Orman points out, “You’re lucky to find a bank account that pays 2 percent annually.”

Ultimately, the longer you can delay tapping into your monthly benefits, the better your payoff will be later on when you need it most.

Working without retirement benefits

Can you access other income options before tapping into your social security benefits? Maybe part time work with flexible hours will enable you to postpone early retirement benefits for now.  

The key is to keep your future social security checks as strong as possible.

If you do need to draw on your social security benefits early, understand that there’s an annual limit to your earnings.

What is the extra income limit?

If you do draw on social security benefits earlier than full retirement age, be aware that the Social Security Administration (SSA) sets a limit for how much an early retiree can earn without affecting their benefits. As of 2019, that amount is $17,640.

For example, if you work part time or full time and earn more than the allowed amount, the SSA will withhold $1 out of every $2 over the $17,640 limit. Keep in mind, there are conditions that determine how totals are calculated (such as the time of year you start receiving benefits and the monthly amount you earn for the remainder of the year).

As an early retiree, before you commit to a new position, talk to your financial adviser. In the meantime, for an instant view of how extra income may affect your social security payments, you can do an income check with the SSA earnings calculator.

Working after retirement and enjoying the benefits

To get the most out of retirement, thoughtful financial planning plays an important role. While taking early retirement benefits may seem like a good (or necessary) option, future benefits may decrease.

Additionally, extra income you earn that exceeds the allowed early retirement threshold will result in reduced payment amounts (however, upon reaching full retirement age, the SSA will recalculate benefits and credit any withheld early-retirement funds).

You can access more details on early retirement benefits in the SSA “How Work Affects Your Benefits” brochure.

Need help planning for your retirement? Our retirement team can answer all your early- and full -retirement questions.

Call: 877.255.6273

My Senior Health Plan - Senior Health Insurance & Over 65 Health Insurance Plans | My Senior Health Plan

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