10 Ways For Retirees to Save on Car Insurance

10 Ways For Retirees to Save on Car Insurance

10 Ways For Retirees to Save on Car Insurance

Most people see a significant change to their driving habits once they retire.  Instead of driving to work everyday, they usually end up driving irregularly.  Usually the driving involves a trip away or a trip to visit friends.

For most retirees, that means they drive less often than they used to.  Why should they pay the same level of insurance as someone who is constantly on the road?

Here are some tips to help retirees save on their car insurance.

Look for Limited-Driving Discounts

Many companies offer discounts that specifically target older drivers.  The fact that your driving is less frequent than a younger person should immediately obtain a significant discount.  Make sure that your insurance provider is giving you this discount and if not, call them about it.  Inform them of your retiree status and tell them about your driving habits.  If they don’t provide a discount, change providers.

Collision Coverage

If you have an older car you might consider completely removing your collision coverage.  When you are driving less, you might be perfectly happy with your old car that is not worth much money.  If it is only worth a few thousand dollars, there isn’t much point insuring it.

Increase Your Collision Deductible

By increasing your deductible you can save hundreds of dollars.  You won’t be driving much and most older drivers take a great deal of care on the road.  It is unlikely you will be involved in a crash so increase the deductible.

Install a Telematics Device

A telematics device keeps track of how often you drive your car, how far you drive and how fast you go.  It allows insurance companies to offer better value on your insurance policy based on your driving habits.  This can be a big saving for people who don’t drive very often.

Keep the Kids off Your Policy!

Young people who don’t have a proven driving record can be extremely expensive to insure.  Keep your grandchildren off you policy!

Use Your Good Track Record to Negotiate

If you have decades of unblemished driving, make sure you impress your insurance company with it, then ask for another discount.  If they will not reward you for that sterling driving record, find a company that will.

Loyalty Discounts

You probably have years of car insurance through the same company.  Ask for a loyalty discount, even it’s not mentioned in their brochures.  Insurance companies like to hang onto customers who have good driving records and who have been with the company for many years.

Take a Driving Safety Course

This tip applies to anyone who wants to obtain cheaper insurance premiums.  Many insurers will offer you a discount if you have successfully completed a driver’s safety course.

Buy a Car That is Cheap to Insure

It might be nice having a fast sports car to show off to your friends.  But when you retire you won’t be speeding around like a hoon anymore.  Sports cars with large engines can be more expensive to insure.  Consider buying another car that focuses on safety features instead of speed.

Keep Your Car in Great Condition

Even you have an older car, make sure it is well maintained.  Some insurance policies have clauses that limit coverage if your car causes an accident, due to mechanical failure.  Read the fine print and make sure your car is in great shape.

 

 

Planning for retirement, buying Insurance or self-insure?

Long Term Care Insurance

Long Term Care Insurance

For younger people who are interested in planning for their old age, one of the big questions is how to deal with potential long term care requirements? It is entirely possible that you may require hospitalization or a home nurse when you are older and both of those prospects can be extremely expensive.

You can rely on long term care insurance, but there is always the risk that your claim may be denied. The other option is to self-insure, which involves building up a pool of funds over your lifetime to help cover those unexpected costs.

Some financial analysts suggest that instead of putting money into long-term-care premiums and you could invest the money in a low cost 60/40 balanced index fund, which creates that pool of funds for later in life.

Since insurance is all about calculating risk, what does this self-insured scenario look like? The chance that an individual who lives to 65 will need no long term care before dying is about one in three. One in five seniors will need long term care for five years or more, so that is the two ends of the spectrum.

Then you have to look at home health care costs versus nursing home care. A nursing home will cost between $70’000-90’000 per year while in home care is closer to $30’000. If you have a good relationship with your family, you would be more likely to have a good home environment to spend your old age in so that should also be considered.

A young person in their 30s can buy a long term policy for about $60 a month, which provides $200 per day in care costs. Now what would we end up with if we invested the $60 instead? A life long mutual fund that is split at 60/40 stocks to bonds would return anywhere between 6-8%. Yo will have about $220’000 in that account by the age 85. That amount of money could pay for perhaps 2-3 years of nursing home care or 7-8 years of in home care.

Additionally that $60 a month insurance premium would continue to rise in cost, so you would have to consider that the lump sum from investing the same amount in an investment account may be closer to $300’000. Some insurance companies also go broke! What happens when the Insurance company you have been investing in goes belly up before you receive your long term care, all of those premiums will be meaningless.

Additionally, your relatives get to keep any of the unused money from a long term health fund that you have set up. That might give them more incentive to keep you in their home instead of in an expensive nursing home. On first glance it seems that someone in their 30s would be best off building their own long term care fund.

However there are a few issues. You would have to continue adding to that account your entire life, without fail. What happens if you lose your job for a couple of years? You might be forced to dip into the fund and when it’s not building, risk is increasing. What if you decide to dip into it to pay for your children’s college? It takes discipline to save for decades.

Long term care costs could increase rapidly as well, so that fund may not cover much into the future. An insurance policy will adjust it’s payout total upwards as costs rise, but of course so will premiums. Insurance covers the cost of inflation, the self-insured person bares the cost of inflation against their savings.

There is also the small possibility that you will need longer term care, so what happens if you burn through your fund and have to rely upon your children? It could be very expensive for them and damage their future finances.

The last risk is that you may need long term care at a much younger age than expected. What if you have a serious illness that forces you to retire at age 50? You self-insured fund won’t be big enough yet to cover you for an extended period.

When all factors are considered, both self insurance and long term care insurance have negative and positive aspects. If you want to reduce risk, take a closer look at your finances, health, lifestyle and family. If you are well off financially, can commit to saving, and can see yourself living in a big house with loving children who can help care for you in your old age, there is less risk with self-insurance.

However if you think you won’t have the family network to help support you, or you are concerned about your health in old age, then insurance may be a better option. Either way it’s a difficult decision, but with some thought you can reduce risk and find the right solution for yourself.

Age Limits For Life Insurance

Life Insurance Age Limits

Life Insurance Age Limits

Life Insurance is one of the most important purchasing decisions you can make because it affects not only you but your entire family and any other dependents.  A life insurance policy is designed to compensate your loved ones when you pass away.

However there are restrictions on what age you can buy life insurance and this article will give you a general overview on the types of life insurance and the age restrictions for those kinds of policies.

There are two types of life insurance available to purchase in the United States.  The first type is called “Term Life Insurance”.  It is a form of impermanent insurance, which means the insurance policy contract needs to be renewed at specific time periods (usually yearly).  The other form of life insurance is “Permanent Life Insurance” and that covers your entire life on the condition that you continue to pay for the insurance.

Generally life insurance policies have a cut off age of 85.  Once past the age of 85 people are considered ineligible for life insurance.  However, if you bought a permanent life insurance policy previously, you can continue payments past the age of 85, right up until your death.

Statistically speaking, most people don’t live long past the age of 85, many dying well before that age.  The cost of premiums for Term Life Insurance will also rise with age – so if you are 80 years old, your insurance will be more expensive than if you were 20 years old.  It is simply not economical for insurance companies to provide insurance to anyone past the age of 85 because the premiums paid will not cover the insurance payout.

One of the reasons many older people are turning towards funeral benefits policies is that they are no longer eligible for life insurance, but wish to cover some of the costs associated with their passing, such as the funeral.  When the average life expectancy in a country increases, insurance companies might raise the insurable age, but unfortunately in the United States the trend has been in the other direction with people dying earlier.

Permanent Life Insurance is usually the best option if you have a healthy lifestyle, good genes and expect to lie past 85.  You can just continue your policy and know that your loved ones will receive a payment even if you die at the ripe age of 100!