So you have reached retirement age and now you’re wondering how to handle insurance policies you currently have and new plans that are available to you.
For most of your life, your job has provided the avenues of insurance for you. Your health insurance taken care of, normally a life insurance policy and disability policy included in the benefits package. If you’re approaching retirement, you’ll need to step back and reassess what your future needs are.
Once you reach 65 you’ll have applied for Medicare Part A and B. These parts cover hospital and doctor coverage, but to truly take advantage of your options you’ll need to purchase a Supplemental policy or Medicare Advantage plan.
On average you’ll need to focus on three Medicare supplement plans, Plan N, Plan G, or Plan F.
- Plan N is the least expensive of the three, and covers all hospital deductibles, but does leave you with some copayments at the doctor’s office, along with a medical deductible.
- Plan G gives you coverage for everything except the medical deductible which is $183 for 2018.
- Plan F is the most expensive plan, but it also covers all deductibles and copayments. If you choose this plan you won’t have to pay, as long as its covered by Medicare, any money out of pocket.
Medicare Advantage (Part C)
Medicare Advantage is a replacement of Part A and B, though you’ll still need to be enrolled in those parts to get a MA plan.
These plans are designed to mirror the individual health insurance plans you have been used to your entire life. They include deductibles, coinsurance, copayments, networks, dental/vision coverage, prescription coverage, and out-of-pocket maximums.
Depending on where you live, you may have the option to pay $0 for a plan, but benefits can be minimum and so can the networks. Most of these plans will cost around $40 a month, but be sure to talk to an agent who can walk you through how these plans work.
Prescription Coverage (Part D)
If you choose to go with a Medicare Supplement plan then you will need to purchase a Part D plan too.
The government basically makes these plans mandatory because if you do not purchase one at 65, then you’ll have to pay a penalty for the rest of your life once you finally enroll. And if you continue to wait that penalty will increase.
To get a Part D plan you can use the tool on the medicare.gov website, or you can talk with an insurance agent. They’ll show you how your medications work with each plan and help you choose the best one that fits your coverage needs. You’ll pay a monthly premium for these plans, and also co-payments when you pick up your meds.
Chances are your employer had a $50K term policy in your name while you were employed but now that you are about to enter retirement you most likely cannot keep that policy en force.
By now you might not need a life insurance policy to cover a mortgage or any major debts so a large term policy is not the direction you should go. You also might outlive any term policy you buy.
If you decide you just need coverage for funeral expenses and to cover any small debt then your best option could be a final expense plan. These plans normally ask a few health questions, and don’t have a medical exam. You can get up to $50,000 in coverage depending on your health and age.
If you want a plan that builds some cash value and ability to buy more coverage than a Guaranteed Universal Life is perfect for you. This type of policy does include a medical exam, but the benefits of knowing your plan will last you till you’re 100 yr old and a cash benefit after five years makes it a great choice for those who can afford it.
Are There Insurance Plans You Can Give Up?
After discussing the insurance plans you need to update or buy, we need to talk about some of the plans you might not want to keep around.
These are things that just don’t provide any value to you and will drag money out of your checking account for no reason.
While it was once useful to you and protected your income if you were to get injured. You are now out of work or fixing to enter retirement and do not need the income protect that Disability insurance offers.
Long Term Care
If you purchased a low-cost plan when you were younger and feel like you can still make that monthly payment then keeping it would be smart. However, as those premiums rise, this is one insurance policy you might want to consider letting it lapse.
You can instead put those premiums in a saving account, or find a hybrid life insurance plan that offers a long-term rider or lets you take money out to cover cost in a nursing home or long-term care facility.
Make sure you seek out a reputable insurance agency so they can offer you more personalized guidance. And always remember to do your research before going to that meeting and after before you sign an application.