6 Types of Insurance You Should Have After Retirement:
Retirement is a game-changer in how you’ll decide to spend and save your money. You’re transitioning from receiving a steady paycheck from your employer to spending the savings you’ve built up over the years. The last thing anyone wants is more bills to pay when they’re living on a fixed income. That said, insurance is something that you’ll hate paying for now but be thankful for later.
Aside from Medicare, here are 6 types of insurance that could help you have a worry-free retirement:
1. Long-Term Care Insurance
Long-Term care can generally be described in one word: expensive. And Medicare doesn’t always cover ongoing assistance for individuals living with disability or chronic disease. Long-term care insurance will help protect you by covering a range of services such as nursing home or in-home help (with basic tasks of daily living such as bathing, grooming and eating).
According to 2018 AARP data, out-of-pocket costs for long term care run about $140,000 on average. Most long-term care insurance plans can cost up to $2,000- $3,000 per year. Although many could think $2,000- $3,000 may be a lot to spend when you’re living on a fixed or limited income, buying a plan could still end up saving you (and your loved ones) a significant amount of money in the long run if you end up needing long term care.
If you’re still uncertain if you may need long-term care insurance, you could also look to buy a combination life insurance policy that includes long-term care as a part of its coverage. These types of plans are more expensive, but they can maximize the benefits you get for your money.
2. Medical Insurance
It’s an unfortunate truth: our bodies just don’t work the same way as we get older. Paying for health care can be one of the largest expenses for people in retirement. In fact, medical debt contributes to nearly half of all bankruptcies in America according to the Kaiser Family Foundation. Selecting the right retirement heath insurance for your individual situation can give you peace of mind. This includes supplemental Medicare (sometimes referred to as Medigap), dental insurance and vision insurance.
Supplemental Medicare Insurance After Retirement
Medicare pays your medical bills first after you retire, then any retiree coverage you may have (if you were lucky enough to have an employer who offered this program) or Medigap will pay second. Retiree coverage isn’t the same thing as a Medigap policy but, almost the same, as it usually offers benefits that fill in some of Medicare’s gaps in coverage, such as coinsurance and deductibles. Medicare Part B, C and D also cover costs that Medicare Part A does not.
If you don’t have retiree coverage from your employer, you should look to buy a Medigap policy, or add on Medicare Part B, C and/or D during your 6-month Medigap open enrollment period. Even if you currently have health problems, during your open enrollment you can buy any policy for the same price as people who are considered to be in good health.
If you apply for supplemental coverage after your open enrollment period, insurance companies may not agree to sell you a policy at the same price (or even at all) depending on your current health status or if you do not meet their medical underwriting requirements.
Look into Types of Dental Insurance After Retirement
Did you know that Medicare doesn’t cover most routine dental care or procedures?
The good news is that it is generally affordable to add dental insurance onto any existing coverage you may have to cover bi-annual preventive visits or any unexpected procedures you may need to have.
Bottom Line: You’re never too old for cavities or gum disease.
Look into Types of Vision Insurance After Retirement
Vision insurance will help cover the costs of routine preventative eye care, such as screenings for glaucoma, macular degeneration and cataracts.
Even if you only purchase a new pair of glasses once every few years, vision insurance can help offset the hundreds of dollars that contacts or glasses may cost you if you aren’t covered.
3. Homeowner / Renter’s Insurance
The higher the value of your home or possessions, the higher the need may be for you to have insurance for your residence and the items inside it.
Homeowners and renters insurance helps to protect you against the loss of property and possessions (and can also provide liability coverage). Without homeowners or renters insurance, it’s up to you to replace your belongings if they are lost in a fire, flood, earthquake, burglary or some other type of disaster.
Note: Seniors who have valuable jewelry, art or other expensive items may need to add a rider to their policy to fully insure these things.
4. Car Insurance
It is against the law to drive around uninsured. It can cost you significantly more in the long run if you get into an accident.
There are 3 types of car coverage that you may want to look into. Each type has has different price point based on the level of coverage you would like to have. Check with your insurance agent or shop around to find out what type of car coverage you should have based on your individual needs and your State’s requirements.
Note: Some states require you to have a “minimum amount of coverage” on your vehicle.
Types of Car Insurance
There are three main types of car insurance to help cover the costs of damage.
Liability coverage
Liability coverage covers the costs of any injuries or property damage caused in a car accident if YOU cause it.
Collision coverage
Collision covers the cost to repair (or replace) your car if it is damaged or destroyed in a wreck.
Comprehensive coverage
Comprehensive insurance will protect your car from things that are not caused by an accident. Examples include hail, fire, flood, theft or vandalism.
5. Plan Gap Social Security Protection
By the year 2034, the number of Americans age 65 and older will increase significantly and so will the number of people relying on Social Security benefits in retirement.
However, according to the Social Security Administration’s 2022 Annual Report, the Social Security program’s cash reserves will be exhausted by 2034, and at that time, they will only be able to pay out 77% of promised benefits.
For Americans worried Social Security benefits will be reduced, there is now a solution: Plan Gap. It is the first ever financial product that allows people to protect themselves against any future reduction in Social Security benefits while still earning a guaranteed interest rate.
If Social Security benefits are reduced (via government action), policyholders will receive a PlanGap Bonus to help fill the income gap. Plan Gap pays policyholders a sum based on the amount of coverage chosen at the time the annuity was purchased – and this “Plan Gap Bonus” escalates over time and caps at 30 percent of initial annuity value.
If benefits aren’t reduced or Social Security’s issues are resolved – and policyholders no longer feels the need for the insurance – he/she can withdraw the initial premium, the interest earned and a Flexibility Bonus at the end of any five year anniversary of the policy.
Learn more at PlanGap.com
6. Life Insurance
This type of insurance is less about you, and more about your dependents. Although life insurance does not need to be a part of every person’s estate plan, it can be useful, especially for parents of young children and those who support a spouse or a disabled adult or child. Life insurance can also provide immediate cash at death to help pay off any of your current debts, taxes or final expenses.
Here are some questions that may help determine if you need a life insurance policy:
- How many people depend on your income?
- How much money would your dependents need for their living expenses?
- After you die, what property/assets will be given to your inheritors? How long will they have to wait?
- Will your estate owe significant debts and taxes after you pass away?
Having a life insurance policy also helps your loved ones avoid having your property and assets go through probate court. Furthermore, if you are the owner of a life insurance policy at the time you die, the proceeds are included in your taxable estate.
Other Insurance Types Worth Considering As You Prepare For Retirement
Here is a list of some “honorable mentions” that are worth considering if your life situation allows for them.
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Umbrella Insurance
- Umbrella policies provide additional liability coverage above and beyond what’s included in homeowner and car insurance. For example, if you’re at fault for a car accident – the medical bills and property damages could quickly add up to more than your auto insurance will cover, and the umbrella policy would protect you from having to sell off further assets or deplete your savings to cover the additional costs.
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Identity Theft Protection
- According to a Javelin Strategy Research study, 16.7 million people were impacted by identify theft in 2017 and had $16.8 billion in assets stolen. This includes employment/tax related fraud, credit card fraud, phone fraud, utility fraud, bank fraud, loan fraud and government benefit fraud. ID theft protection can help replace stolen funds. It can also provide you with lawyers and experts to help you resolve your case.
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Annuities
- Annuities protect you from running out of money. One of the most common types is a fixed annuity, where you get a set payment amount each month for the rest of your life. Another common type is an immediate annuity – where the insurance company that you purchase the plan from will provide you with immediate regular payments in exchange for a lump-sum investment. These payments are guaranteed to last for life (or a specified period of time). A third type is a deferred annuity – where pay outs start after a lapse of time (based on the plan you buy) after the final purchase premium has been paid.
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Travel Insurance
- You’re in a time of your life where you may need medical coverage that you didn’t need in your younger days. Travel insurance could help cover any medical and emergency services while you’re out of the country; but also for travel delays, cancellations and other unforeseen circumstances. Costs of travel insurance typically depend on your age, trip duration, the overall cost of your trip and your destination.
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Early Retirement Insurance
- If you are retiring before age 65, you could buy “gap” insurance until you can qualify for Medicare. Furthermore, this could prevent a lapse in coverage. Read our article about early retirement insurance here.
Kate writes about retirement benefits for retirementinsurance.org. She has a Masters Degree in Social Work (MSW). She has over a decade of experience in assisting elderly and disabled populations navigate governmental and private programs to obtain the monetary assistance they need to lead better lives. As she watched her parents begin their own retirement journeys and navigate similar systems to obtain Social Security, Medicare and other retirement benefits, she gleaned a further personal knowledge about the topic and is eager to share what she has learned with others.