If you’ve been watching the news or reading the paper over the past few years, you know that the cost of healthcare is skyrocketing. In particular, retirees are adversely affected by rising prices. For the average 65-year-old couple retiring today, Medicare premiums for the balance of their lifetimes could add up to tens or even hundreds of thousands of dollars – and that’s just premiums, not additional out-of-pocket expenses!
It’s no wonder many retirees are worried about the cost of their healthcare. Prices are going up at the same time that we’re living longer lifespans. What would happen if you develop a serious health condition and need additional medications, nursing care, and supplies?
As financial planners we work to help you prepare for all aspects of retirement, including the cost of healthcare. One strategy that some people are using involves life insurance plans to build cash value.
Yes, the primary purpose of life insurance is to provide resources to your loved ones after you pass away, but policies that build cash value can also help you out of a tight spot, including high medical bills or associated expenses. For example, Medicare might pay your hospital bills after an accident, but what if you need to build a wheelchair ramp for your home, or need to hire in-home help while you’re disabled?
Some life insurance policies allow you to pay more than the basic monthly premium, and build additional value within the policy. In the event that you need to make a withdrawal or take a loan against the policy, the money can be used for any purpose you wish. So, you could use that money to pay for the level of care you prefer, beyond that which is offered by Medicare or supplemental insurance programs.
Of course, if you don’t access the additional cash value in the policy, your heirs will receive it as part of their inheritance. For some people, this strategy allows them to safeguard their own health and security, while building value in a policy that could benefit their heirs someday.
For more information on this strategy, or any other retirement planning scenarios, give us a call. We can help you weigh your options and devise a plan that meets your needs.