Tuesday’s need-to-know money news

help-parents-manage-moneyToday’s top story: Long-term care and wealth planning for aging parents. Also in the news: How Donald Trump’s new economic plan could affect you, student discounts on everything needed for college, and the cost of volunteering for a political campaign.

Long-Term Care and Wealth Planning for Aging Parents
Protecting their assets.

How Donald Trump’s New Economic Plan Could Help You (or Not)
What’s in it for you.

Use These Student Discounts to Save on Everything You Need for College
From books to clothes to computers.

The Costs of Volunteering for a Political Campaign
All that free labor can be pricey.

Thursday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Money moves that could kill your retirement. Also in the news: How to stress test your budget, how to build long-term wealth while renting, and how to prepare your parents for financing their long-term care.

9 Money Moves That Could Kill Your Retirement
Avoid these at all costs.

Stress-Test Your Budget with a “Financial Fire Drill”
Putting your emergency plan to the test.

How Renters Can Build Long-Term Wealth, Too
Investment alternatives can help.

Steps to Prepare Your Parents for Financing Long-Term Care
How to have a difficult conversation.

“England is sinking. Scotland is rising.”

DSC04008The narrator of the museum documentary we were watching in Edinburgh was referring to the geology of the United Kingdom, not its economy or politics.

Yet the phrase resonated somehow. Since devolution, when the Scottish Parliament was established after nearly 300 years of British rule, the Scots have definitely taken their own way.

One thing travel can do is help you better understand the world, and I understood Scotland a bit better after learning some of its history this summer. Its union with England was mostly supported by wealthy landowners, merchants and investors who wanted access to England’s colonies. The common people were not so enthralled. After that came the Highland Clearances, when tenant farmers were booted off their traditional holdings so that wealthy landowners could raise sheep instead. The evictions came with little notice and left a lot of suffering in their wake.

So maybe it’s not surprising that many Scots are suspicious of any system–political, social or economic–that favors the rich at the expense of regular people.

While England slashed public benefits after the financial crisis, Scotland restored tuition-free college education for its residents and added free long-term care for its elderly. (Actually, in-home care is free. Care in nursing homes is means-tested.)

As a result, Scotland is moving closer to the European model, where long-term care is at least in part funded by the government in many countries and where college education at public universities is free or very low cost.

These outlays might surprise people who believe the stereotype that Scots are tight with their money, but a Scotsman explained to me that what his people really like is good value for their money.

Renewable energy is a big thing in Scotland, too. The Scots surpassed their goal of 31% by 2011 and its 2020 target has been boosted from 50% to 100%. Again, that’s more like Northern Europe than the rest of the U.K.

Now Scotland is on the brink of deciding whether it wants to be independent. The U.K.’s prime minister, David Cameron, has promised Scotland more control if it stays with the union. So either way, it looks like Scotland may continue to rise.

 

Tuesday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: Capital One could be paying you a visit. Also in the news: Why your tax return could get audited, the pros and cons of self-insurance, and how to rent a home with bad credit.

Capital One Says It Can Show Up at Cardholders’ Homes, Workplaces
“What’s in your wallet? No, really. Show us what’s in your wallet.”

6 Reasons Your Tax Return Might Get Audited
Don’t panic.

Should You Self Insure Against Long-Term Care Risk Or Buy Insurance?
Hedging your bets.

5 Tips for Renting a Home With Bad Credit
Bad credit doesn’t have to leave you out in the cold.

Track How Happy You Are with Your Purchases in Your Ledger
Analyzing your purchase satisfaction can save you money.

Unexpected ways to save on insurance

Zemanta Related Posts ThumbnailMost ideas for saving money on insurance are pretty shopworn. You know the advice: Raise your deductible. Get discounts. Shop around.

So I was pretty psyched to hear a Certified Financial Planner talk about less common ways that advisors can save their clients money. CFP Mark Maurer is president and CEO of Low Load Insurance Services, which caters to fee-only planners. Maurer recently conducted a webinar that covered ways to save money on the big-ticket policies: life, disability and long-term care insurance.

What I learned:

Beware of riders. Two commonly-pushed riders are “waiver of premium” and “return of premium.” Maurer calls these the “undercoating” of the insurance business; in other words, they’re pricey add-ons that may not have the value you’re told.

Premium waivers allow you to stop paying your premiums if you’re disabled, but you typically have to be totally disabled to qualify (unable to work in any occupation, vs. your own occupation, for example). Some policies have the same definition of disability as Social Security, which is notoriously tough to qualify for.

If you’re really concerned about not being able to pay your premiums, then the solution may be disability insurance, Maurer said. Each dollar you’d spend on a DI policy would likely buy you far more insurance than what you’d get from a waiver of premium rider.

Return of premium also sounds good—the idea being that if you don’t use your long-term care policy, your heirs will get back the money you’ve paid in. These riders come with restrictions, too. Typically you have to own your policy at least 10 years and not have made a claim within those 10 years. Any claims thereafter would be deducted from your heir’s payout.

Again, Maurer suggests asking, “What are you really after?” In this case, it’s money for heirs. Buying a permanent life insurance policy likely will offer a better and more certain payout compared to an ROP rider, he said.

Apply the 80/20 rule to long term care insurance. If you’ve ever had a loved one in a nursing home, you know how shockingly expensive custodial care can be. Those who buy long term care insurance often opt for the daily payout amount that will cover either a private or a semi-private room in their area.

Maurer points out, though, that nursing home costs include expenses the patients would be incurring whether or not they were there—expenses like meals and laundry, for example, that typically account for 20% of the total.

So, one way to reduce premiums is to insure for 80% of the costs. Instead of the $255 a day that the average Florida nursing home costs, he suggests, shoot for something like $200 a day…which typically lowers your premium by, guess what, 20%.

Lifetime benefits on disability insurance aren’t a slam dunk. If you have to be disabled, wouldn’t you rather get checks for life rather than having them stop at age 65, when most DI policies cut off?

Well, of course! But like the riders mentioned above, adding lifetime benefits may not give you all the coverage you think you’re getting.

A typical policy will continue 100% of your benefit only if you’re disabled by age 45 and continue to be disabled until age 65, Maurer said. Those disabled after 45 get a smaller benefit, based on a sliding scale that gives you less the older you are when you become disabled. Someone who’s disabled at 58, for example, might get only 35% of his monthly benefit after age 65.

Is that worth premiums that might be 33% higher? Only you can answer that question, but Maurer, who has two disability policies, has decided against adding lifetime benefits to either.

“I didn’t think it was worth the additional premium,” he said.