There are three financial exposures that individuals face in the area of health. The first is the cost of medical care. Second is the loss of income due to disability. And third is the expense of long-term care. This module deals with all of these exposures.
Health problems can cause havoc in an individual’s life, and serious health issues are emotionally stressful on the entire family. Your job as a planner is to help clients make sure they aren’t having to deal with a financial crisis at the same time. Most health insurance in the U.S. is acquired and maintained through employment, but that picture is changing. Today as a planner you need to understand and help guide your clients through the many choices available at different stages of their lives.
This module begins with the rights and requirements for clients related to health care. It examines the operation of the major categories of managed care plans. In today’s marketplace, there are many plans that have attributes of more than one type of plan. As a planner, your job is to understand how the plans that your clients have function for them rather than to be able to put each plan in a specific category. However, knowing the differences among the various plans will help you know what you might find in a specific health care plan.
When a person is sick or injured, two economic issues come to the forefront. If the person was employed, his or her income is impacted. It could entirely stop or it could be reduced based on Social Security, employer benefits, or personally owned disability policies. A second issue that can occur is that the person needs assistance beyond what health care covers, such as long-term care. Most often, the long-term care needs of an individual arise when he or she becomes incapable of living independently. Disability income insurance and long-term care insurance can help ease the financial strain that generally exists at these times.
In the second part of this module, the disability income policy and the features that are critical in determining the adequacy of a policy—definition of disability, elimination period, monthly benefit payment, maximum benefit period, and renewal provisions—are discussed. In addition, you are familiarized with essential terms used in disability income policies and riders. You will receive some insight regarding qualifications for obtaining this type of insurance and why it is important to have it.
We will conclude this module with a discussion of long-term care expenses and the insurance available to cover them. As the baby boom generation ages, financial planners need to be aware of this form of insurance and the high cost of long-term care, even if received in the home.
David Mannaioni, CFP®, MPASSM is a professor at the College for Financial Planning. Utilizing his 30+ years of experience in the financial services industry, David also maintains a financial planning practice where he works with his clients in all areas of financial planning. In addition to his certifications, David holds life and health insurance licenses in several states, as well as the Series 6, Series 7, and Series 63 registrations with FINRA. You can contact David at email@example.com.