Saturday, October 31, 2009

Do You Have an Illness, or Does it Have You?

Do You Have an Illness, or Does it Have You?

After yesterday’s blog about health care reform needing to address bankruptcy caused by medical expenses, I wanted to make clearthat you have hope and you can be in control of your future. There is nothing inevitable about having a major illness send you to financial ruin.

Careful planning can cover these exposed gaps – and this is an example of where the “Living Benefits” solution I discussed in an earlier blog could prevent this ruin.

Then yesterday my dad sent me an article about Bill Trewin, a Canadian man with Parkinson’s disease. He had been running marathons before he was diagnosed with PD, and found that he was in danger of stumbling if he kept up his normal running.

Did he give up and go crawl in a hole? No, as Bill says in the article, “I have Parkinsons…it does not have me.”

He moved on to a different sport, Nordic walking, which allows him to get the same great exercise, but also gave him the stability of using poles while he walks. If you check out the Nordic walking site, you’ll learn how great this is for your bones, back, and posture, and can provide a workout of any intensity level.

It is important to find solutions with the help of a team or community. Working with others, often experts in the fields, we can have problems and not let them have us.

Friday, October 30, 2009

Most Bankruptcies caused by Medical Bills

Outrageous Stories

This is an amazing number, and hopefully will be one thing addressed by any health care reform: in America 62% of people who are declaring bankruptcy are having to do it because of their medical bills.

Are all of these people without health insurance?


Fully 75% of them do have health insurance, but needed costly measures that weren’t covered in their policy.

This New York Times article tells of a computer security specialist who had to go to the hospital and found that most of his treatment was excluded by his insurance. He and his wife had to declare bankruptcy.

Or look at the case of a middle-class couple who had to declare bankruptcy after she had breast cancer and he had bypass surgery, on this CBS The Early Show with Harry Smith. Their health insurance only covered about 10% of the bills.

The first thing we need to do is read the fine print of our health insurance policies!

If they are not enough to cover a catastrophic accident or critical illness, we need some additional insurance to cover those catastrophes.

Thursday, October 29, 2009

A Comprehensive Insurance Solution

“Living Benefits”

What is wrong with life insurance?

Traditional life insurance has the drawback of covering only 1 emergency – your passing away. And with term insurance, the vast majority of policies will never be paid because they are outlived. But the leading causes of death in America are also the primary causes of disability, the need for long term care, and ultimately most cases of financial struggle.

Every 29 seconds someone suffers from a coronary event, and 45% of heart attack victims are under the age of 45.

Every 45 seconds someone suffers from a stroke.

The chance of developing cancer during your lifetime is 1 in 3 for women, and 1 in 2 for men.

Of all Americans who reach age 65, about 60% will eventually need some form of long term care.
There are so many challenges a family faces long before the worst possibility of losing a loved one. What is wrong with life insurance is that it doesn’t address all these risks.

What is wrong with disability insurance and long term care insurance?

Disability insurance is very important for the breadwinner of the family to have, for how many months can your family live without that income? And yet, disability insurance will never pay the full amount of the income, and often comes with waiting periods.

Long term care insurance is another valuable protection, because the costs of long term care are so high that it protects your assets from being depleted in the event you need this care. However, many people hesitate to get it because they don’t know for sure that they’ll use it. Or what if you have a heart attack or stroke, but recover enough that you do not trigger the long term care because you can still perform the activities of daily living?

A Comprehensive Solution

The solution to these shortcomings of traditional, separate insurance policies is to get one policy that will provide “Living Benefits” as well as death benefits.

It is now possible to get such a policy through a 150-year-old, A-rated mutual company. The one policy will pay in three ways:
· Acceleratd living benefits
· Retirement income benefit
· Death benefit.

We can design a policy to cover disability, chronic and terminal illness, and long term care. In addition, you will be able to access the value for retirement or other needs.

We all have multiple risks to insure against, and it is hard to know which one we will need first. A “Living Benefits” life insurance policy provides one combined, affordable solution to all of these needs.

Friday, October 23, 2009

Quality Time or Mess & Stress?

How do you make Quality Time out of your Final Moments?

I was sitting in my client’s living room and we were laying out the map to start planning his estate. Legal documents need to be signed, insurance needs to be set up, and most of all, basic values need to be clarified.

In this case, I didn’t need to remind him how so many people procrastinate making these decisions and clarifying their values. He told me a story himself that made the point.

He had recently been at the funeral of his friend’s mother. She had been on her deathbed when the family realized that she hadn’t left a living will. The doctor was asking the family for a decision, and soon, about how long to maintain her life artificially. They had to make that difficult decision right there. Next, they realized that she had never said what she wanted done with her remains. They started asking her, and her mute reaction at the mention of cremation led to their decision to have her buried. That was just the beginning. Dealing with the estate after she died became messy too.

To illustrate the point of how common this is, I met two people at a workshop the very next day and when I mentioned this story they both quickly recited similar tales from their own family. Their frustration at the chaos and hurt feelings and wasted time was still palpable. One family was still arguing over who was responsible for what. Another saw the breadwinner pass away and leave the spouse, who needs assistance, without long term care insurance.

Why not make even your last moments quality time? Instead of the pressure to make difficult decisions, leave your heirs with clearly written wishes and directions. In fact, be creative, and write in your will and fund with your life insurance a big family reunion in your honor to celebrate your life! Or set up a trust for your heirs and fund their education. Or leave a gift to a charity that is close to your heart. And spend your last moments with your family without the stress of having to get all these decisions made.

Take some time, before it is too late, to clarify your values, what you stand for, and then pass on to your heirs some of who you are as well as what you accumulated.

Tuesday, October 13, 2009

Guard Thy Treasure

Rule #1: Do Not Lose Money

In his book The Richest Man in Babylon George Clason describes how someone could become wealthy by saving and investing 10% of his earnings every year. However, what was done with that money was very important. The vehicle for the money had to be safe. In the book he tells the story of one man who gave his money to someone pretending to be an expert investor and he never saw the money again. He was the Bernie Madoff of Babylon! So if you work hard to be able to put that 10% aside, the first rule has to be: do not lose the money. Or as he put it in step 4, “Guard thy treasures from loss.”

Their Investments Were a Waste of Time

Have you lost money in the market? You are certainly not alone. And yet, it may not be as bad as you think, for your investments are not what will create your wealth. Instead, look at the last lesson in Clason’s book: “Increase thy ability to earn.” In a study done at Harvard Business School that followed a group of people who wanted to become millionaires, they found that their investing was largely a waste of time. Those who did become wealthy did so not in the market but by continually increasing their earning potential. They made themselves more valuable and earned more, or they grew their business; ultimately their cash flow, not their investing, made them wealthy.

Rule #2: Refer to Rule #1

This bit of wit and wisdom is attributed to Warren Buffett, who detests risk, and has carefully built up a track record of strong returns. Yet even he, a full-time investor in the market, has lost money. So what can we do? Look for a place to put your money that cannot lose money, and yet has potential for making gains when the market goes up.

The Power of Zero

One solution that has these qualities is the equity-indexed annuity (EIA), which offers returns tied to a market index, such as the S&P 500. It also features a minimum return rate guarantee like traditional fixed annuities. In the past this minimum, or floor, was often 0%, and so the insurance companies used the phrase “the power of zero.” That is, when the market goes up, you participate in the gain. When the market goes down, your annuity holds it’s value. Now, however, many annuities have a floor not at 0% but somewhere between 1 and 3%. Indexed Annuities are popular with investors who want to benefit from the upside potential of the market without forfeiting the security of a guaranteed return.

So to follow the path of the richest man in Babylon – to guard and increase your treasure – consider indexed annuities as one vehicle to get you where you want to go.

Thursday, October 1, 2009

A Tale of Two Startups

The Bust
Recently I got a call from a woman who needed to talk about health insurance for her family.

“My husband’s company is folding, so we are not going to have health insurance through the company anymore. It was a high-tech, mobile communications company, and he helped to start it. They have a great product, and they were doing well, but the economy just hit them hard.”

It turned out that she was not as worried as I thought she might be. He had been doing these types of ventures for 15 years, and she was used to the changes. Also, he knows a lot of people in the industry so she sounded confident that he would land on his feet somewhere.

However, we did have to do a bit of research to find a solution to their family’s health insurance. She needs certain prescription drugs, but to get a family plan that has a rich prescription drug coverage would cost double what she was budgeting to pay. We found out that she could order her medication from Canada at a fraction of the cost of covering it here, and her doctor confirmed that this would work fine. The important thing was that her family did not have a gap in coverage, so there won’t be any questions of pre-existing conditions.

The Boom
Soon after that, another call came in, from a friend involved in a new startup.

“Bengt, I volunteered to be the one in the group to take care of the health insurance. Can you look into it for me?” he asked.

“Sure,” I answered, “I’ll do the work for you. And it doesn’t cost you anything extra!”

These are six guys on the other end of the cycle, with a big idea, full of hope, some angel financing already in, and working out of the founder’s home. While some companies are cutting back on health insurance, they are setting it up before they had even turned a profit.

Their big idea is to help people maximize the profitability of their websites (check them out at ). Since they already had become members of the Washington Technology Industry Association, I was able to get them a great deal for their health insurance through the employee benefit trust run by the WTIA. So now all these young guys have great health benefits and some life insurance as well.

With all the other challenges and changes they are facing to build their new startup, at least they have the peace of mind that having health and life insurance provides. I look forward to them doing great things in the near future!