A Different Way

to look at Life, Health, Business and Politics

Build your health. Keep your wealth.

Posted by Marietta chiropractor on February 11, 2008

Build Heath. Keep Your Wealth
In my networking circles, I have many friends that are in the financial planning business. It’s always amazing to me the role that insurance plays in what many of them do. Being in the healthcare business, insurance always strikes a chord with me. My natural response is “Is insurance a buffer against loss or is it really someone betting against themselves?”
When I was younger, I was constantly being approached by insurance agents telling me I needed a whole life insurance policy. The thinking was that while I was protecting my assets (and my family) against loss in the event of my death I was also building an investment in the future. Made sense to me. Then a guy named A.L Williams came along and said “Buy term and invest the rest”, which made sense to me and millions of other buyers of life insurance. Needless to say, he revolutionized the life insurance business.
These days, many of the financial planners I know are selling Long-term care insurance. The premise of long-term care insurance is that you buy this coverage so that in your final years you can pay a nursing home to take care of you when you can’t do for yourself. I understand the concept. But, have you been to a nursing home lately? Is THAT how you want to spend the last few years of your life? And, will long-term care end up like all other forms of insurance: too expensive to afford, insufficient to do the job right, managed by bean counters instead of those providing the care, and virtually impossible for the insured to manage without a lawyer?
I wonder. What kind of wealth could you amass by investing what you would normally spend on long-term care insurance? And if you compared that wealth with what long-term care insurance could be expected to pay given the same investment, what would be your best bet? Ask your financial adviser to compare what you would have if you invested the equivalent long-term care premium in a mutual (or index) fund from now until the age you’d expect to need a nursing home with the benefit you’d receive from your policy. Unless you’re in your late fifties or sixties, my guess is your investments would be the better bet. Is it smart to bet against yourself?
The same goes with so-called health insurance. Do you carry health insurance through your employer? Does it cover everything and have low deductibles and copays? If so, you might be wasting a lot of money that could be invested in your future and not just potential sickness and infirmity. Most employers these days offer “flexible spending accounts” that allow you to pay typical out-of-pocket expenses and services not typically covered by your “health insurance” policy. These flexible spending accounts are deducted from your pay before taxes making them a great investment IF you use them.
If you don’t, you lose the benefit. Many folks either don’t have or don’t qualify for flexible spending accounts but may use something similar called “health savings accounts” that work something like your traditional IRA. Contributions to a certain level are tax-deductible and the part you don’t use for current healthcare expenses are invested and grow on a tax-deferred basis until you reach the point in your life when you begin to spend more money on your own health care. The beauty of both the “flexible spending accounts” and “health savings accounts” is that they allow you spend less each month on “health disaster insurance” while investing more in your own wealth.
Here’s the exciting part. By investing in your wealth instead of your death and demise, you build wealth that could help you weather any storm with more certainty and more present and future rewards, as well.
To make certain you actually get to enjoy to wealth you’re now building, I want you to be building your health at the same time. If you’ve been awake at all over the last few decades, you pretty much know how to do that. Exercise, drink lots of water, eat right, learn to deal effectively with stress and maintain healthy nerve function. It’s funny that the things that keep you healthy, your “health insurance” hardly ever pays for, like health clubs, smoking cessation, nutritional counseling, life coaching, wellness care lie chiropractic and massage, as well as stress management. Yet, by including these strategies in your life now, you’ll have to rely less on your “sick insurance” to get you through the maze AND keep you healthy enough to actually ENJOY the wealth you built in your youth.
What a shame to spend your youth making a living only to spend it on a nursing home in your later years. Why not build health and wealth together and enjoy your twilight years without fear of sickness, infirmity or bankruptcy.
Advertisements

3 Responses to “Build your health. Keep your wealth.”

  1. I enjoy reading your article. Continue the good effort.
    Thanks,
    Dean

  2. Hi, Dr. Tim.

    You have a very interesting blog.

    A few quick comments:

    I certainly would not spend good money on an insurance policy that only paid for nursing home care. That’s the last place anybody wants to be.

    Fortunately, today, the majority of long term care insurance policies will pay benefits for care that is received at home, as well as for care that’s received in a facility. In fact, most long term care today is provided at home. There’s only about 1.5 million nursing home residents today, but well over 7 million people at home who currently need some type of assistance with Activities of Daily Living (bathing, dressing, etc…).

    Most people who are in nursing homes are there because they don’t have long term care insurance and they have spent down their savings and have to rely on the state to pay for their care through Medicaid.

    Using a handy dandy financial calculator that I found on google, I figured out that if I invested $3,000 per year over 30 years, (assuming an after tax return of 8%) (which is pretty darn high), I’d have $367,000 after 30 years. That’s the good news.

    The bad news is that the cost for one year of long term care (either in a nursing home, assisted living facility, or at home) is projected to cost about $350,000 per year in 30 years (and that’s in the cheaper parts of the US, like Georgia.)

    Three years of care (which is the average) is projected to cost well over a million bucks. OUCH!

    But, to be frank, I would never buy an insurance policy to protect me from a risk that I may face 30 years from now.

    The real risk is what if I need care 5 years from now? or 10? How will that affect my wife and all of our financial plans?

    I met a man in NJ who had a massive stroke in his mid-50’s. He lost most of his memory and was completely paralyzed on one side.

    His wife and sons visited him everyday. He was in a beautiful facility with a very caring staff. It’s sad enough that his wife has essentially lost the love of her life. No more dancing, no more traveling, no more romantic getaways. Her life completely changed in a moment and she essentially lost the love of her life, in a flash. Although the emotional burden on her is immense, the financial burden makes it unbearable. She’s having to pay close to $100,000 per year out of their retirement savings for his care. It is having a huge impact on her financial future.

    The emotional burden is tough enough.
    The financial burden makes it even worse.

    I think that one of the most loving things spouses can do for each other is protect against this risk.

    I’ll get off my soap box now…. but I hope your readers think about what I’ve written.

    Scott A. Olson, CLTC
    http://www.LTCInsuranceShopper.com

  3. diet said

    diet…

    […]Build your health. Keep your wealth. « A Different Way[…]…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: