Benefit Life Stage Examples

Transcription

1 Benefit Life Stage Examples Single Divorced Age 50**: Overview: Mary is beginning life anew after her recent divorce. She is unsure of the future and looks to get reacquainted with her favorite hobby, reading. She has two children, ages 25 and 27, both of whom are out of the house. Housing: Mary owns a three bedroom house with payments of $1,072 per month. Debt: Mary has never been able to pay off her credit card debt of $2,481. Her car has two more years left on the loan balance of $5,456. Savings/Investments: Mary has saved $24,494 in a 403(b) annuity, both in a fixed annuity and variable annuity. She also has accumulated $10,094 in her local credit union. Mary has 45 sick leave days accumulated as a middle school principal. She has a goal of retiring in 10 years and would love the idea of reading every day Health: Mary has a few fairly minor health issues, but overall is in good health. The doctor has recommended she have some minor surgery soon. Her parents have long lives of 82 and 81 years old.

2 Recommendations: Employee benefits: Mary should enroll in her employer-sponsored Medical Benefit plan as she may need it for one major reason: something could happen very easily and be very costly. As she is the sole income and would hate to fall back on her children, this protection is a must. Hints on Choosing the Right Option for You and Your Family Think about how you use health insurance. Ask yourself... How often do I (and/or my dependents) go to the doctor (for illnesses, preventive care, etc.)? How often do I (and/or my dependents) need prescription medications? Which networks do my doctors participate in? Do I (and/or my dependents) want to go to the doctor I choose, when I choose, wherever I may be at the time? (Often, this is a very expensive choice) What preventive services (Such as immunizations, checkups, colonoscopies, etc.) will my family need this year? Can I live by the rules of an HMO, or do I need more flexibility? What deductible can I live with? What co-pays can I budget? Weigh both the premium and out-of-pocket costs against the benefits the plan will provide for your family.

3 Since Mary is the sole income, protection of her ability to continue to earn an income is vital. Mary has both short and long term debt and should have this protected should an unforeseen accident or illness happen. She saw that more mortgage foreclosures occur due to long term illnesses/accidents than any other cause. Commissioner s Standard Insurance Table Mary has debt payments on her credit cards and would need help if something happened to her paycheck. Her need for Disability Income Insurance is great and growing. The reasons are as follows: Long Term Disability- Mary has a home and will have debt to cover should a sickness or illness occur. Since she supports herself, her income and its replacement in the event of disability are essential. Commissioner s Standard Insurance Table Her debt payments (autos, furniture and everyday living expenses) will require meeting regardless of her health, so it would be wise to make sure she is covered. Her savings and investment plans would be interrupted by a disability. Life Insurance- Mary has moderate life insurance needs. She may want to consider a moderate amount of Term Life Insurance at work to pay her debts off should a premature death occur. Term life insurance will give her higher life insurance protection with lower cost during her earlier years of coverage.

4 Mary may consider a Permanent Life Insurance policy to meet her long term goals for protection, as she has a mortgage and does not have any idea how long she may need life insurance coverage. Retirement/Saving- Stay focused on keeping an emergency fund of at least four months living expenses. This could be accumulated in a credit union, savings account, money market mutual fund or short-term bond fund.* Consider paying off her credit card debt from savings and/or disciplined increased payments. Begin a positive and proactive habit of saving 10% to 20% of her paycheck into mutual funds managed by qualified investment managers. She should take an Investment Risk Tolerance Questionnaire to determine her level of investing acumen/comfort.* Other Insurance Benefits coverage- Look into Long Term Care insurance, either on a group basis with her employer (if offered) or an individual plan. She will have the income and assets to pay for this coverage, and this could keep a long term illness from eroding her lifetime savings. Mary s parents have a long life history. This will also allow Mary to be independent of the financial support of others, get care where she prefers and leave her inheritance for her children. Check to see if her company sponsors Dental Insurance, and if they pay a portion of the premiums. She may find it easier to pay a fixed premium in return for unforeseeable bills and expenses. Look to her Flexible Spending Accounts to help with out-of-pocket expenses for items such as dental and vision visits, medical deductibles, co-pays, etc. Look at having a will drafted. Review any other benefit options offered by your employer.

5 **This document is intended to be informational and does not constitute legal or financial advice regarding any specific information. It is not intended to be used to avoid tax-related penalties or to promote and market or recommend any transaction to another party. Due to the comprehensive nature of many benefit programs and individual circumstances, it is recommended to review and consider all benefits offered by your employer before making final selections. Remember, past performance of an investment product does not guarantee future results. Investors should carefully consider the investment objectives, risks, charges and expenses of their investments before implementing their decisions. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money. You should seek the help of a qualified professional before making financial or legal decisions.