Special Needs Trusts

It seems like the topic of special needs planning drops into my lap every 3-4 months.  In the course of a conversation with a new client I'll learn that there is a special needs child in the picture.  Like a snowflake, all situations are different, but in many cases they can be handled nearly the same.

Let's look at an example.  A middle-aged couple has 3 kids, one of which is autistic.  While it's assumed that one of the other two kids will take responsibility for their sibling down the road, nothing is written in stone.  Mom and Dad can care for the child up to a point but someone is going to have to care for them as they get older.  And what happens when Mom and Dad pass away?

Most importantly, special needs kids grow to become special needs adults.

A Special Needs Trust is typically the answer.  First and foremost, I highly recommend you find an attorney who has a couple of these irrevocable trusts already approved by a judge.  As an attorney friend of mine said when discussing this topic with me, "Do not let an lawyer 'practice' on your client!"

A Special Needs Trust works like this:  The trust is established but without any money inside. The money comes from a second-to-die life insurance* policy on the parents.  The logic behind this is that if one parent dies, the surviving parent can still care for the child.  At the death of the second parent, the life insurance policy is paid to the trust which then can help support the special needs child/adult.
The key to all of this is planning.  As I stated earlier, all cases are different, however taking the time to prepare can really lessen the stress and financial burden down the road.

*We suggest a second-to-die guaranteed universal life policy.  For more information, contact us through our website at Surf Financial Brokers.    

Sick or Hurt? Can't Work? Need a HUG?

May is Disability Insurance Awareness Month (DIAM) and I'm sure you're still worn out from last year's awesome good time.

But seriously, DI is one of the most undersold insurance products out there and for several reasons.

First, unless your employer offers it to you, most people don't go out of their way to find out how to get a policy.  We at Surf Financial go out of our way to help the large number of self-employed secure a DI policy.  Everyone from farmers to chiropractors, accountants to engineers and, yes, even stay-at-home spouses can and should have a disability policy in place.

Another reason why people do not have DI coverage is that many agents don't understand the product well enough to sell it.  It's difficult to explain something that you don't understand.  Luckily, most of our agents know the benefit of disability insurance and would love to help you.

Lastly, many people don't understand the process of getting a disability policy.  Unlike life insurance, where your health is the major thing taken into consideration, DI underwriters need to look at your occupation (some are more dangerous than others) and your income needs.  This is where things get tricky.

In a previous post, I mentioned the M.U.G. (mortgage, utilities, groceries) plan.  Since many people rent, I've changed the mortgage to housing, thus the HUG plan.  What are your monthly bills?  How much would you need if you were sick or hurt and unable to work?  A DI plan can be designed to cover those bills at a minimum.  

On a scale of 1-10 with 10 being very important and 1 not important at all, how important is it to you that you can take care of your housing, utilities, groceries and more if you were unable to work due to a sickness or injury?  How important would it be to make sure that your family was able to continue living a "normal" life should something happen to you as a breadwinner.

Why Do You Still Have That CD At The Bank?

It's a simple question but one that does require some thought.

If you have a bank certificate of deposit (CD), odds are good you aren't making a lot of money on it about now.  If you are lucky, you may have found one in the last few years that offers 2%, with 1.5% being a more common rate.  Sure, it's safe and you won't lose money.  Or will you?

The problem is inflation.  With inflation running at around 3%, your money is eroding.  It's losing value as you read this.  The fed has promised to raise rates which should eventually trickle down to your CD, but it won't happen any time soon.  So what are your options?

1. An annuity.  Annuities have gotten a bad rap over the years and I lay most of this squarely at the feet of agents selling them.  Of course, not all insurance agents and advisors are bad.  As a matter of fact, most are doing their best to find the most appropriate product for their clients.  Annuities can be an awesome deal for some people, but not for all.  Unfortunately, some will maintain that annuities are for everyone and fail to discuss the downside.  When I'm with a client I make sure to discuss the low liquidity and built in surrender charges, but for the person who is sitting on a lot of money in a CD losing to inflation, the solution may be an annuity.  And most importantly, I never suggest anyone put more than half of their money into an annuity.
2. A single premium life insurance policy.  If you have money sitting in a CD and you don't need it for retirement, why not?  For most people, the death benefit will double their one-time premium and it can pay for final expenses, estate taxes, or fund a grandchild's education.
3. Long-term care insurance.  Here again, if you are at an age where you may be considering retirement, you may as well consider the health expenses that go along with it.  A recent survey revealed that over 40% of respondents said they underestimated the healthcare costs in the retirement years.  As mentioned in an earlier post, insurance companies now offer life insurance (see #2 above) with LTC built in.  

Give us a call or look us up on the web.  We would be happy to help you find an alternative to fit your needs.

How Obamacare Inadvertently Created Medical Discrimination

If you've bought an #Obamacare policy on the exchange, you may want to consider this scenario. 

 

At the time of your insurance purchase you ask the agent, or whomever is helping you, if your specialist is in this company's network.  You check the insurance company's website and are told that yes, your doctor is part of the network.

Now you make an appointment with the doctor's office and they verify your insurance over the phone but your can't see a doctor for month or so.  Finally, the day arrives, you go to your physician and are told, sorry, but this doctor isn't taking your insurance because it was purchased on the healthcare exchange.

"What?  I was told you took my insurance!" you exclaim.  

This is happening everyday in doctor's offices around this country.  Doctors are turning away patients because the policies that are sold on the exchange have lower reimbursement rates.  So even though everyone is required to have insurance and the government is subsidizing part of the premium, your policy isn't the same as the others.

What can be done to fix this?  Easy. The Affordable Care Act should be amended to require payments to doctors to be the same on or off the exchange.  Or, require insurance carriers to note on their websites which doctors won't be accepting those policies so the patient doesn't waste their time or money.  And while they are fixing it, take the coding out of the policy number that indicates if coverage is sold on the exchange or not.  

In essence, medical practices are using the "we won't get reimbursed as much" reason for keeping away patients that need services.  Unfortunately, congress won't take any action on fixing the problem because too many are focused on repealing the law altogether.  That's a story for a later blog.

Long Term Care Insurance? Use Life Insurance!

As I have mentioned in an earlier blog post, the long term care (LTC) insurance world has gone through many changes.  After the market dropped in 2008, many carriers stripped down their new policies, removing benefits and benefit periods from new policies.  Other carriers raised the rates on their existing policy holders.  Some did both!

I've always said that people that are seriously concerned enough to purchase LTC are "forward thinkers".  However, if you purchased an LTC policy at a younger age, say under 50, you could have been penalized for your forward thinking by having a rate increase.

Fortunately for younger people who have seen a parent or grandparent go through and chronic illness and understand the expenses involve, there may be a solution and it is life insurance.

Many companies now offer life insurance policies with LTC benefits included in some shape or fashion.  If you died before you needed the LTC benefits, the policy will pay a death benefit to your beneficiaries.  On the other hand, if need if for a nursing home, assisted living or home health care, you can use your policy for that instead.  And since most of these policies build cash value, you can also use it for a retirement supplement.

And the best part is you don't have to worry about a rate increase down the road.

Let us at Surf Financial Brokers help you with your long term care and other insurance needs.

Are You Insuring Your Love?

February is when the insurance companies promote life insurance through a campaign called "Insure Your Love".  And as we all know, when someone purchases a life insurance policy on themselves, they do it knowing that they will not directly benefit (or be the beneficiary) of the policy.  Instead, their loved ones are being protected financially.

So we at Surf Financial Brokers ask you to change your way of thinking.  Instead of being concerned about monthly cost (because life insurance is probably less expensive than you think), consider how your spouse can live in a house that is paid off, have no debt, and can still take care of little emergencies like a new refrigerator or tires for the car.  And if you have kids, making sure that they can graduate from college without a mountain of debt. 

We've made it easier for you by updating our life insurance quoting engine which is on our home page.  You can literally look for a quote in around 30 seconds.  Find a policy you like and request an application.  We will call within one business day to get your information forwarded to the insurance company YOU choose.  

When it comes to insuring your love you shouldn't have to worry about costs and with Surf Financial you won't have to.

#nopressureinsurance 

Wishing All a Merry Christmas!

Christmas is the time of year we think of loved ones.  For most of us, having our family with us as we celebrate the holidays is all we ultimately ask for.  Unfortunately many people will be spending the holidays this year without that special loved one or family member.  If you know of such a person, reach out and take a little extra time to talk and spend time with them.

We at Surf Financial Brokers want to wish you and yours a very Merry Christmas and a safe, prosperous and Happy New Year!