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 advisor 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. |
