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Archive for the ‘Finance Plan’ Category

Long term care insurance is a complex product, and the complexity only increases when one attempts to understand how long term care insurance interacts with Medicare and Medicaid. In this article, we outline the basics of long-term care insurance as well as what is typically covered by Medicare and Medicaid.

Whether or not to purchase long term care is one of the questions we frequently encounter. Typically, the client asking the question is not completely clear on the purpose of long term care, nor what it covers versus what Medicare and Medicaid is meant to cover. The relatively high premiums associated with long term care only make the decision more difficult.

Long term care insurance can cover the cost of a variety of services, from skilled care to assistance with basic activities of daily living, (ADLs). The type of help covered depends on the policy, but in general it can range from an in-home caregiver to an assisted living center. Typically, health insurance does not cover these costs, nor does Medicare or Medicaid (more on those programs in a bit). In many instances, those needing such assistance are older and have a solid base of assets, and long term care insurance allows them to avoid depleting their assets. For those with lesser assets, long term care insurance might allow them to receive in-home care or simply receive quality care that they might otherwise not be able to afford.

If you are considering a long term care insurance policy, we’d recommend that you start by looking at the following factors:

Monthly benefit – ensure the benefit is sufficient to cover the typical cost of a nursing home or in-home care in your community. Elimination period – the elimination period is the amount of time that must pass before the policy begins paying out. The longer the elimination period, the lower the cost of the policy. Benefit period – the longer the benefit period, the greater the amount of coverage. ADLs – examine the number of ADLs the policy lists and how many you need help with to qualify for benefits. The more ADLs covered, and the fewer needed to qualify for benefits, the easier it is to receive payment from the policy.

Beyond the above factors, there are a number of other features offered on these policies. Among the most important to examine are the inflation riders as well as the shared care and survivorship protection of premium riders. Further, make sure you understand specifically what the policy will cover in terms of in-home care and assisted living. Lastly, we always examine the financial ratings of the policy issuer to ensure they are on a sound financial footing.

So how does long term care insurance mesh with Medicare and Medicaid? Medicare is typically meant to cover “medically necessary” or skilled care. More specifically, in order to qualify for Medicare payment of any long term care bills, the following conditions must be met:

A hospital stay of three consecutive days (not counting the day of discharge from the hospital) Admission to a nursing facility within 30 days of discharge for the same illness for which you were hospitalized Receive skilled care only; and Certification by a medical professional that you need skilled nursing or rehabilitative services daily.

The other governmental program that provides some assistance is Medicaid. However, Medicaid is a joint program between the Federal and State governments designed to provide assistance to the poor. Thus, before Medicaid would provide any coverage, there are tests to ensure that neither the assets nor the income of the applicant exceed Medicaid limits, which are generally low. Further, not all institutions accept Medicaid coverage, so choices under this program are limited.

It’s clear that Medicare and Medicaid will only fund long term care expenses in very limited circumstances. Long term care insurance does fill the gap in providing coverage in a broader range of circumstances. Policies are not inexpensive, and annual premiums in excess of $2,000 are not at all unusual. Some of our clients choose to purchase policies, while others elect to self-fund potential long term care costs.

Whether or not you need this coverage is a complex question and understanding how it fits within your overall financial plan is key. A few questions to consider include whether or not you could fund these needs with your existing assets, or if you could fund them with existing assets would you want to do so? Some clients who purchase policies do so to protect the assets they plan to pass on to their children, not because they couldn’t fund long-term care costs themselves. Others purchase long term care because without it, they could not afford the level of care they prefer. If you find yourself confused by the ins and outs of the coverage and uncertain of whether or not you need it, we recommend working with an objective third party to see if it makes sense for you.

We often dream about financial freedom, we want to and more often talk about becoming financially free. But how many of us actually do something different to achieve this dream? Without a concrete action plan, and clear define road map, no matter how ambitious is the dream, chances of becoming financially free will almost equal to none. Without a clearly define road map to follow, one will soon forget the dream of freedom and go back to live their normal daily life. Action plan can be constant reminder serves to remind a person of his objectives, goal and estimated deadline. Besides, in journey to become financially free, you will want to review your progress against the action plan to see how much progress you have made and how far away you are from your goal.

In order to become financial free we need to know what is the definition of financial freedom. Financial freedom being the ultimate goal, of course, before achieving that, we need to know the two pillars supporting the freedom; these are financial stability and financial security. The two pillars are the basic fundamental of being financially free; it is like the foundation of a skyscraper that is built on a strong concrete foundation, in case of financial freedom, it is built on financial stability and security. In short, in order to achieve financial freedom, we must first achieve financial stability and then financial security.

Definition of Financial Stability

Financial stability is achieved when one person is able to live his life without income for 6 months or more. Wealth is measured by time instead of amount of money you have. Take the example of a fashion designer whose monthly income of 10,000 with monthly expense of 8,000 and a school teacher who only earns 2,000 with monthly expense of 500. Who do you think live a more stable financial? The answer is the school teacher. If both person lose their job, the fashion designer who lives a high maintenance life style would not live through a month to go bankrupt, but for the school teacher, with a saving of 1500 per month in minimum, she can easily live for another 3 months without active income, this provide her ample of time to look for new source of income. In the first step in our road path to become financially free, we need to make sure we are financial stable before we can talk about financial freedom.

Action Plan to Financial Stability:

Now think. If you have less than 6 months to go into bankruptcy without a job, you need to start doing something. Below are some typical scenarios:

If you are living on a mountain of credit card debt, and you can’t seem to reduce the owing balance each and every month, you have to do something different. From you credit card bill, list out items that you don’t need to spend. Without this desire items, it is easier to pay off the credit card. When you can’t seems to save even though you are not on any retail/credit card debt. This happens when you pay yourself last. In order to save, you need to pay yourself first. Every month when you get your paycheck, put aside a percentage into saving first and spend the difference. An average person will do the opposite that’s why they can never save, and the worse is they don’t even know where the money goes.

In the action plan, one needs to state how much money to allocate in each month to clear off debts with a deadline. Only after all accumulated debts are cleared off, one can start saving for financial stability. Subsequent action plan needs to find out total expense of one self. Since financial stability is defined to be ones ability to live through 6 months without any income before going into bankruptcy, thus the amount of money to achieve financial stability will be total expense times 6 (months), let us call it Financial Stability Amount Requirement FSAR. Next, state how much money you committed to save every month, and let’s call it monthly saving commitment MSC. With all these figures: FSAR and MSC, one can easily find out how long he/she needs to achieve financial stability. Simply divide FSAR by MSC. The result of calculation is the duration (in month) required to achieve financial stability, one will know exactly the date he/she obliges to achieve financial stability. Now with the action plan in place, a committed and disiplined person will only have to follow it and ultimately achieve it.

Did you catch the President’s speech on the Financial Bailout Plan? No? Well Then Where Have You Been? Maybe you’re not a big fan of any of that political stuff or don’t watch TV that much, but this topic is extremely important for us all, why?

Because being aware of how the economy works and knowing the current state of business, will definitely help any Internet marketer make more money online. The reason I mention this is because business owners and even regular consumers will be watching how the Financial Bailout Plan develops and they’ll decide to buy or invest in our products and services based on how well they feel the Financial Bailout Plan is working.

Go ahead and do a Google search for Financial Bailout Plan and you’ll find that there are millions of listings. I’m a pretty good gauge of where markets are going and what is currently important for online buyers. By looking at the trends in the economy, I’m certain that the Financial Bailout Plan will be a huge topic for a lot of people in the days and months to come.

I’m confident that a lot of people will be interested in the Financial Bailout Plan and they’ll be doing a lot of web searches to find more information about what it all means.

To me this presents a huge opportunity to generate traffic to this website, so I just snagged the domain name FinancialBailoutPlan.com and I’ve added the term to my promotional plans. Currently I’m directing the traffic that this domain generates.

The idea behind this is to give you a real world example of how my Domain Landmine Strategy works. Registering the domain name FinancialBailoutPlan.com and then explaining what is going on with it here in this article helps the site rank higher in the search engines for the keyword term Financial Bailout Plan.

The goal is to rank high for as many relevant search terms that relate to what this website is about. The more high ranking relevant search terms a website has, the more FREE search engine traffic the site will get. If I do this correctly, and I usually do the traffic it produces will be highly targeted for these search terms and that should translate into significantly more online sales. I wish you all the best,

One of the smartest things consumers can do is to perform an annual audit of their insurance needs. From homeowners insurance and car insurance to specialty products like RV and boat insurance, it is important to know where you stand, both in terms of liability protection and in terms of protection of your personal property.

It is also a good idea to include your insurance holdings when you sit down with a CPA or financial planner. Providing a list of your insurance holdings will help this financial professional determine whether or not you have the protection you need. This kind of review is particularly important if you have a great many assets to protect, but it can be a good exercise even for individuals of more modest means.

One of the most common findings of this type of insurance and financial review is that the driver is not adequately protected against liability claims. Many people make the mistake of not raising their liability limits as they get older and accumulate more assets. But in fact it is essential to periodically review your liability coverage to make sure it still meets your needs. For younger drivers who rent their homes and have little in the way of assets, the state mandated minimum coverage levels may be adequate, but those liability protection requirements will change over time.

Taking the time to review your current level of coverage as part of your overall financial review can be quite illuminating. By looking at your insurance coverage as part of a larger overall picture you will be able to see exactly what you have to protect, and you will be able to make the necessary adjustments in your auto insurance policy to provide that protection. For instance, if your financial assets are valued at $100,000 you need at least that level of liability coverage on your car insurance policy. Carrying a lesser amount of coverage could leave you on the hook for additional damages in the event of an accident that causes serious bodily injury to another driver or passenger.

The timing of this annual insurance and financial review is up to you, but many people find it helpful to schedule the annual review for early in the year. Many drivers find that reviewing their financial situation and insurance needs around tax time is easier, since those financial documents have already been gathered for tax preparation purposes. Doing your annual insurance review around tax time also allows you to get rid of two potentially unpleasant tasks at the same time. No one likes to pay taxes, and very few of us look forward to poring over insurance records and financial documents. Even so, both taxes and insurance are important parts of life, and taking the time to review your coverage can pay big dividends.

In the end, when you schedule your insurance review is not important. The important thing is that you take the time to ensure that the coverage you currently have is sufficient for your needs. Life changes, and it is important hat your car insurance protection change with it.

Financial planning is about building an objective plan for your financial future. You should follow these principles to ensure that every aspect of your financial life is covered, and therefore build a solid foundation to meet your goals.

Your goals will depend on your own personal situation and what you want for the future. For example, you might want to plan for retirement, buy a second home or send your kids to private school. The list is only limited by your imagination.

This is all based on a common sense approach. Anyone can do it, you just need to be methodical and objective.

What about financial advice?

Unfortunately, most financial advisers do not offer comprehensive financial planning. Most of them are glorified sales people. This is proved by the fact that they usually sell products rather than plans. If your financial adviser starts by talking products he is thinking about himself rather than your future!

Of course, there is a place for products, but only at the end of a comprehensive analysis of the reasons why you need that solution. What’s more your financial plan might reveal that you do not need further products!

What should be in my plan?

Here are the main areas which need to be covered. There may be other areas, depending on your own circumstances.

Gathering data

You need to think of your plan as a whole because your financial decisions are inter-linked. For example, if you have an expensive mortgage this may impact on your ability to save for the future. You will need to get together data on every aspect of your financial situation.

Setting goals

Without an end in mind, it will be difficult to evaluate your progress. Therefore you should think carefully about what you want your future to look like. These goals should be measurable.

Income and outgoings

This is fundamental to building your plan. If you spend less than you earn, you have a chance to affect your financial future. If you spend more than you earn you will have limited options and could spiral into debt. Understanding tax is a big part of this.

Assets and liabilities

You need to build up assets to underpin your financial future. And more importantly you need to build up the right kinds of assets. The sooner you can be debt free (unless it is the ‘right debt’), the sooner you can be in control. For planning purposes we ignore certain types of assets.

Emergency funding

Making sure you can cope with short-term crises is vital. We recommend that you set aside 3-6 months worth of outgoings.

Protecting what you have got

You should think about what happens if things go wrong. This includes all types of insurance to ensure your lifestyle is defended from catastrophes. You should also consider making wills and powers of attorney etc.

Paying off debt

Generally, any debt is a barrier to your future prosperity. The sooner you become debt free, the sooner you have control over your future. Remember that your bank manager includes your mortgage as one of his assets!

Saving for the future and investing wisely

You need to work out how much will be needed to fund your future goals, how much risk this requires, and the effect of external forces such as inflation, charges and future legislation.

Tax

While this should not drive your plan, it is certainly an important part of the equation. Understanding how tax affects your life should run throughout your plan.

Monitoring your progress

Financial planning should be much like servicing your car. You would not spend £20,000 on a new car and then never take it to the garage for a service. Likewise, you should regularly review your plan to ensure your remain on target to meet your goals.

Of course, your circumstances will also change over time, so your ultimate goals may also need a tweak from time to time.

Conclusion As you can see, a proper financial plan should be extremely detailed, and will take some work. However, the rewards will really benefit you as you will be back in control of your life.

Want some help?

We work closely with our clients to develop and maintain their financial plans. If you would like some help in preparing your plan, please contact us.

What should be in your comprehensive financial plan?

Your plan should address each of the following areas, preferably in this order, although you will alter it to match your needs:

Your goals

Go back to your goals and take the most important to you at present. Your plan will aim to achieve these over time. These goals may change in the future as your circumstances change, and as you achieve them, you will no doubt add more.

Assumptions & attitudes

Bring together all your assumptions on how the future may change your plan, using measures like inflation and investment growth.

Income

Revisit your income sources now, and use the assumptions you made to project forwards each year, calculating how much you will pay in tax and what you will be left with. This will be the basis of the future plans. Don’t forget to include an assumption for how your income producing assets will grow and therefore how the income from these assets will be factored into your calculations.

Expenditure

Extrapolate how your expenses will change over time as inflation increases costs, and some outgoings change (get paid off or increase for other reasons).

Assets

Use your calculations to work out how your assets will grow in value using your assumptions, and also how you will add to these by saving any excess income into various investments.

Liabilities

Work out how you will reduce your liabilities by paying them off over time, and how this will affect your expenditure.

Emergency funds

You should aim to put aside at least 3-6 months worth of expenses in an instant access account.

Protecting what you have got

Your next priority should be to protect what you have got, should the worst happen. This can range from death to serious illness.

Paying off debt

Loosely speaking, you should pay off debts before you save for the future. Working hard at this can pay off great dividends at a later stage.

Saving for the future

Once you have all the basics covered, you can start to save for the future – meeting your goals.

Reviews

Put in a date for a future review and hold yourself to it. After all, your circumstances are likely to change.

Cash flow planning

Your plan is really about mapping out your personal cash flow into the future using what you know about your current situation, and taking account your goals. We usually break this down into 3 categories:

Not enough

If you fit into this category your current course will not be enough to achieve your desired goals. You will need to do more to reduce expectations, lower costs, earn more or put back your desired goals in time. This may seem daunting if you do not have enough to achieve your goals, but by knowing your status you will have something to work towards; surely knowing where you are going is better.

Too much

If you have actually accumulated too much this means that your family may pay too much in tax when your die. Alternatively, you may have been able to retire earlier and enjoyed more of your life rather than working. We have all heard of the people who worked their fingers to the bone for 40 years, and retired only to become ill shortly after retiring. Surely it would be better to spend more time doing the things you really want to do while you can still enjoy them, rather than wasting time accumulating money you will never need. Your plan is about showing you how much is actually enough.

Just right

You should aim to have enough in your pot to achieve your lifestyle requirements, with a bit to spare, and being cautious in your assumptions. If you can achieve this then your future lifestyle will be secure, and you will lead a happier life as a result.

Building scenarios

You can use your plan to work out what would happen if you take each course of action in your plan. This is particularly important to be able to compare where you are now against your future financial plan; also, you will want to examine how your finances will be affected by illness or death in the family.