Thinking About Insurance, Part Two

It’s important to reassess your needs as you near retirement.

Last week, we began looking at how the need for various types of insurance changes as you progress through your career, focusing on the first two stages of the typical working life: early- and mid-career. This week, let’s look at the latter two stages: pre-retirement and retirement.


Pre-Retirement


Health Insurance: At this stage of life, you need to be sure that your health insurance coverage matches your health concerns. Do you have a chronic illness that requires expensive therapy or prescription drug treatment? Are you at risk of  heart disease, stroke or diabetes? Do you see a specialist on a regular basis? You should have a comprehensive health plan. Review your deductibles, coinsurance and catastrophic protection of your existing Federal Employees Health Benefits Program coverage. Compare your plan to others available to you, using the Office of Personnel Management’s online FEHBP tool.


It’s important to remember that health and life insurance coverage ordinarily must be in effect continuously for at least five  years before your retirement date or you will be ineligible to carry this benefit into retirement.


Life Insurance: By this stage, your needs for life insurance may be diminishing. Are your children grown and not as financially dependent on you? Is your mortgage almost paid? How much is in your Thrift Savings Plan account? This investment is now part of your retirement income that is available to you as well as to your beneficiary should something happen to you.


It’s a good idea to re-evaluate your life insurance coverage every five years. Consider that Federal Employees Group Life Insurance coverage will cost 13 cents per $1,000 biweekly at age 50; 23 cents per $1,000 at age 55; 52 cents per $1,000 at age 60; and 62 cents per $1,000 at age 65. The cost continues to rise every five years to age 80 when it levels off at $2.40  per $1,000 biweekly. There’s more information on OPM’s life insurance page.


You may cancel your FEGLI coverage at any time, unless you have assigned your insurance to another party.


Survivor Benefits: At pre-retirement, you should begin to request annuity estimates that will not only show you the value of your retirement as of a given date, but also provide you with the information regarding the value of survivor benefits and insurance coverage. An annuity estimate under either the Civil Service Retirement System or the Federal Employees Retirement System also will reveal any inconsistencies in your federal service history and the need to address any service credit issues. Here’s more from OPM on the subject of planning and applying for retirement.


Social Security: To find out what your spouse and dependent children would be entitled to from your Social Security record, set up an online account and check your latest personal benefits statement.


Long-Term Care Insurance: You’re at the age where most people have made up their minds about long-term care coverage. A 60-year old could purchase a $365,000 lifetime benefits for a little more than $300 per month, including a 5 percent automatic inflation protection feature and comprehensive coverage that pays for in-home care as well as facility care. The 5 percent inflation feature means that every 14 years or so, the amount of the benefit doubles. Use this online calculator to price the cost of Federal Long-Term Care Insurance Program coverage.


Retirement


Health Insurance: After your career officially ends, you presumably will carry your FEHBP coverage with you into retirement. At this stage, if you’re approaching age 65, you should consider Medicare. I explored the relationship between these two types of coverage in a column last year. It also links to a series of previous columns on the subject.


Life Insurance: Once you retire and reach age 65, your FEGLI insurance may begin reducing, depending on the options you selected at retirement. In many cases, you will be left with no premiums, but only a minimal amount of remaining coverage. If your needs are mainly for final expenses, then there is no longer a need to pay high premiums to maintain your pre-retirement level of coverage. This is an area where retirees will generally spend less money in retirement.


Survivor Benefits: If you were married at retirement, you probably elected a spousal survivor annuity. Your latest statement from OPM will show you its current value. This is a very valuable benefit to a surviving spouse as it will provide a partial replacement of your retirement benefit should you die before your spouse, and will protect your spouse’s right to maintain FEHBP coverage.


Social Security: Now that you have retired, you must consider when is the best time to apply for Social Security retirement benefits. You have an eight-year window from age 62 to 70. Here’s more information from the Social Security Administration. Remember, if you’re still working, there’s an earnings limit until you reach your full Social Security retirement age. SSA also offers an earnings test calculator.


Long-Term Care Insurance: By now, you’ve probably made a decision regarding your need for long-term care insurance. As you get older, it is more difficult to purchase this type of insurance, since there are questions to answer about your health and the monthly premiums are higher when you purchase at a later age. Remember, although the cost of insurance is expensive, so is the cost of care. For example, in the Washington metropolitan area, the cost of nursing home care costs an average of $90,520 per year with an average two-year stay.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.