Tag: Insurance

Old Policies, New Problems: When to Rethink and Review Your Insurance

Posted on by Brian Colvert

Is it time for an Insurance Review?

Most people wouldn’t dream of ignoring their investment portfolio for decades. Yet that’s exactly what many do with their insurance policies.

You might glance at your 401k quarterly. You probably know how the S&P 500 is doing right now. But when’s the last time you did an insurance review or even pulled out your life insurance paperwork?

If it’s been a while, or if you don’t even remember where it is, you’re not alone.

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The Case for an Insurance Review

An insurance review is the financial equivalent of a health checkup. It doesn’t mean anything is necessarily wrong, but it ensures that what you put in place years ago still works for your life today.

Life changes. So do your financial goals. The insurance industry itself has evolved in ways that might give you better options, more flexibility, and even save you money.

Take, for example, a recent client of ours who had been paying premiums on a whole life policy for decades. As he approached retirement, that premium became a growing concern for his monthly cash flow. After an insurance review, we were able to convert it into a paid-up plan with a higher death benefit and added long-term care coverage, without any new out-of-pocket costs.

It was a win on every front.

Insurance Isn’t an Investment, But It Protects One

Let’s clear something up: insurance is not an investment. When you buy a stock, you’re hoping it goes up in value. You expect returns.

Insurance, on the other hand, is a tool to protect your investments. It’s a hedge against life’s unpredictable events, death, disability, and disasters that could otherwise dismantle your financial plan.

Think of it this way:

  • Your home may appreciate in value, but you buy homeowner’s insurance to protect it from fire, theft, or natural disasters.

  • Your car may be paid off, but you still insure it because accidents happen.

  • Your life is your most valuable asset. Life insurance isn’t a be, it’s a safety net.

An insurance review ensures that safety net is strong, relevant, and still serves your current needs.

When Life Changes, So Should Your Coverage

Most people buy life insurance at major life milestones: starting a family, buying a house, or getting married. But they rarely revisit those policies when things shift again.

What happens when:

  • The mortgage is paid off?

  • The kids graduate and move out?

  • You’re preparing to retire?

These are key moments when your financial priorities change. That old policy might no longer be the best solution—or it might be missing new features that would better support your current goals.

A review can help answer questions like:

  • Do I still need this much coverage?

  • Am I paying more than I need to?

  • Can I add long-term care or other benefits?

  • Would a different structure serve me better in retirement?

The Hidden Costs of “Set It and Forget It”

Insurance is often on autopilot. Policies are drafted, premiums are set on auto-pay, and years go by with no changes. But while you’ve changed, your policy hasn’t.

This can lead to:

  • Overpaying for coverage you no longer need

  • Missing out on newer products with better terms

  • Gaps in protection due to outdated coverage

  • Lack of clarity around cash value, death benefits, or premium structure

A proper insurance review isn’t about selling you something new, it’s about aligning your current coverage with your current life.

Common Review Triggers

Here are a few specific times when it makes sense to schedule a policy review:

1. Approaching Retirement

As income changes and fixed budgets become more important, reviewing insurance premiums and benefits is essential. You may discover ways to free up cash flow or convert policies into paid-up plans with no more premium obligations.

2. Family Milestones

Getting married, having children, or becoming empty nesters are all good times to reassess. Do you have enough coverage to support your dependents? Is your spouse adequately protected?

3. New Property or Debt

A new home or loan may require adjustments in your umbrella or life insurance coverage. Don’t let your protection lag behind your liabilities.

4. Business Changes

Whether starting, selling, or inheriting a business, your risk exposure and protection needs change. Business succession plans, key-person insurance, and buy-sell agreements may need review.

5. Health Events

If you or your spouse experience a major health change, reviewing your insurance ensures your plan is still feasible—and if applicable, prepares for long-term care needs.

6. Policy Age

If your policy is over 10 years old, it’s worth looking into. Even if your situation hasn’t changed much, the insurance industry has. New riders, features, and products may offer better options today.

What to Expect in an Insurance Review

A thorough insurance review should include:

  • Review of Existing Policies: We look at what you have—term, whole life, universal, etc.—and how they’re structured.

  • Needs Analysis: We assess your current stage of life, goals, cash flow, liabilities, and protection gaps.

  • Product Comparison: If applicable, we compare alternatives, including newer products that may have better features or cost structures.

  • Tax Considerations: Some policies accumulate cash value and may offer tax-advantaged features that should be weighed carefully.

  • Estate Planning Fit: For high-net-worth individuals, life insurance often plays a role in estate planning and wealth transfer. A review ensures your policy still fits within your long-term strategy.

Real Talk: Commission vs. Fiduciary

It’s important to understand that insurance products can carry commissions. This doesn’t mean they’re bad, but it does mean you should be cautious of who’s giving you advice.

Whenever possible, seek out a fiduciary advisor, someone legally required to put your interests ahead of their own. This ensures that the advice you receive is based on your needs, not the advisor’s commission.

At Bonfire Financial, for example, we’re fiduciaries. We disclose any potential conflicts of interest, and we’re focused on long-term relationships, not one-time sales.

The Retirement Angle: A Missed Opportunity?

Many retirees continue paying life insurance premiums because that’s what they’ve always done. But at this stage, their needs have shifted from income replacement to legacy planning, long-term care, or cash flow optimization.

Sometimes, a review reveals an opportunity to:

  • Convert to a paid-up plan and stop future premiums

  • Tap into existing cash value

  • Exchange an older policy for a new one with long-term care features

  • Reduce the death benefit in favor of lower costs or supplemental retirement income

Every situation is different, but what’s common is this: without an insurance review, these options remain invisible.

Other Policies That Deserve a Look

It’s not just life insurance that should be reviewed. You should also periodically review:

1. Homeowner’s Insurance

If your property value has changed or you’ve made renovations, your policy may be out of date. Rising construction costs and natural disasters can also impact premiums and deductibles. Take the time to review your homeowner’s coverage.

2. Auto Insurance

If you’re driving less, bundling with home insurance, or have a teen driver now on the road, your policy should reflect these changes.

3. Umbrella Policies

These policies offer extended liability protection. As your net worth grows, your coverage should grow too. Many people outgrow their umbrella coverage and don’t realize it.

4. Disability Insurance

Often overlooked, disability coverage is a key protection during working years. If your income has changed or you’ve started a business, your existing policy might not provide enough replacement.

A 1% Change Can Yield Big Results

You don’t need to overhaul everything. Sometimes, small changes during a review, like adjusting a deductible or adding a ride, can lead to better protection and long-term savings.

Think of it as optimization. Even a 1% improvement compounded over time can add up to thousands in savings or value gained.

And sometimes, the biggest win isn’t financial, it’s peace of mind.

How Often Should You Review?

At a minimum, conduct a full insurance review every two years. But if you’ve had any major life events,  or your policy is more than a decade old, don’t wait.

If you’re unsure where to start, work with a qualified advisor who can walk you through the review process, explain your options in plain language, and help you make confident, informed decisions.

Final Thoughts: Protect What Matters

Your investments, your family, your home, your health, these are the things that matter most. Insurance doesn’t grow your wealth, but it shields it.

Make sure that shield is still strong.

If you haven’t reviewed your insurance in years (or ever), now is the time. Don’t let an old policy create new problems.

Need a second opinion on your coverage?

We offer comprehensive insurance reviews with no obligation. We’ll help you understand what you have, what you might need, and whether there are smarter ways to protect your financial future.

Let’s talk… schedule your call now, because when life changes, your insurance should too.

The Difference Between Permanent Life Insurance and Term Life Insurance (and Why It Matters)

Posted on by Brian Colvert

Permanent Life Insurance vs Term Life Insurance

Which to choose? If you’ve ever felt confused about the difference between permanent life insurance and term life insurance, you’re not alone, and today were are here to help you cut through the noise. When it comes to life insurance, few topics are more misunderstood or misrepresented. Many people find themselves signing up for a policy based on fear, a persuasive pitch, or a recommendation that doesn’t actually suit their needs. The good news? Understanding the difference empowers you to protect your loved ones without overpaying or being misled. Let’s dive in.

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What Is Term Life Insurance?

Term life insurance is exactly what it sounds like: coverage for a specific period of time, often 10, 20, or 30 years. If the policyholder dies during that term, the death benefit is paid out to the beneficiaries. If the term ends and the policy hasn’t been used, it simply expires with no payout.

Pros:

  • Affordable premiums: Term insurance provides the most coverage for the lowest cost.
  • Simple to understand: You pay for a set number of years; if you die during that term, your beneficiaries receive the payout.
  • Ideal for younger families: It covers you when you have the most financial obligations—mortgage, children, and debt.
  • Customizable terms: You can choose a term that aligns with your needs, like the length of your mortgage or years until your kids are financially independent.
  • Convertible options: Some term policies allow you to convert to permanent insurance later, without new underwriting.

Cons:

  • No cash value: Unlike permanent insurance, there’s no savings or investment component.
  • Expires: If your policy ends and you still need coverage, a new policy may be more expensive due to age or health changes.
  • No refund: Unless you purchase a return-of-premium rider, the money you pay into the policy is gone if you outlive the term.

What Is Permanent Life Insurance?

Permanent life insurance lasts your entire life, as long as you pay the premiums. This category includes whole life, universal life, variable life, and others. These policies often come with a cash value component that can grow over time.

Pros:

  • Lifetime coverage: Your beneficiaries are guaranteed a death benefit, no matter when you die.
  • Builds cash value: You can borrow against it or even use it to pay premiums.
  • Can offer tax advantages: In some cases, the cash value grows tax-deferred.
  • Flexible options: Some types, like universal life, allow you to adjust your premiums or death benefit.

Cons:

  • Expensive: Premiums are significantly higher than term insurance for the same death benefit.
  • Complex: Fees, interest rates, investment risk (depending on type), and policy rules can be hard to follow.
  • Lower ROI: Often marketed as a savings vehicle, but you may do better investing elsewhere.
  • Sales-driven: Many policies are sold with incomplete information about long-term costs or downsides.

The Sales Pitch Trap

One of the biggest problems in the insurance world is the sales pitch. Many permanent life insurance policies are sold using emotionally charged scenarios:

  • “Don’t you want to make sure your kids are taken care of, no matter what?”
  • “This policy builds wealth while protecting your family.”
  • “It’s a forced savings account with tax advantages.”

These statements can be true, but only in the right context. Understanding the difference between permanent life insurance and term life insurance is important. For many people, especially younger families, a term policy covers their needs more appropriately, while allowing them to invest elsewhere with higher returns and more flexibility.

Real-Life Scenario: The General

One particularly painful example is that of a retired general who, as a young enlisted servicemember, was sold a permanent life insurance policy. It sounded good at the time, but as years passed, he couldn’t keep up with the premiums. Eventually, the policy lapsed, and he had to pay money just to get out of it.
This is not an isolated case. Many financial advisors have stories of clients who unknowingly signed up for policies that made more sense for the insurance agent than for the client.

When Does Term Life Insurance Make Sense?

Term life insurance is a great fit when:

  • You’re in your 20s, 30s, or 40s
  • You have young children
  • You have a mortgage or other debts
  • You’re the primary income earner
  • You’re still building wealth
  • You’re looking for the highest death benefit at the lowest cost

Many people choose a 20- or 30-year term that lines up with their working years, their mortgage, and their children’s timeline to adulthood. A typical example:

  • Age: 35
  • Kids: Ages 3 and 5
  • Mortgage: 25 years remaining
  • Goal: Provide income replacement until kids are grown and debt is paid off

In this case, a 30-year term policy with a $2–3 million death benefit may cost a few hundred dollars a year. After 30 years, ideally, you’ve built enough wealth that insurance isn’t as necessary.

When Does Permanent Life Insurance Make Sense?

Permanent life insurance might make sense when:

  • You have a family history of medical issues and want guaranteed lifetime coverage
  • You need coverage for estate planning purposes (e.g., estate tax mitigation)
  • You’ve maxed out other tax-advantaged accounts like Roth IRAs and 401(k)s
  • You need a tool for legacy planning or charitable giving
  • You’re extremely high net worth and looking for a unique tax-advantaged vehicle

Even then, it should be carefully evaluated with an advisor, not just purchased because it “sounds good.” Also consider:

  • Trust planning: Permanent policies can be structured within irrevocable life insurance trusts (ILITs) to reduce estate tax burdens.
  • Business succession: Some owners use permanent policies for buy-sell agreements or to fund key person insurance.

Key Questions to Ask Before You Buy Life Insurance

  • What is the purpose of this insurance? Is it for income replacement? Paying off debt? Estate planning?
  • How long do I need coverage? Do you just need protection while raising kids and paying off your house, or lifelong?
  • Can I afford this long-term? Many permanent policies are expensive and can lapse if not maintained.
  • Have I maxed out other savings tools? If not, insurance shouldn’t be your investment strategy.
  • Do I fully understand the fees, structure, and returns? If it sounds too good to be true, it usually is.
  • What happens if I need to cancel or pause my policy? Know the surrender charges, risks of lapsing, and options for flexibility.
  • Is the recommendation coming from a fiduciary advisor or a commission-based sales rep? This distinction matters a lot.

Life Insurance in a Holistic Financial Plan

Life insurance is not a standalone decision. It should fit within a bigger picture of your overall financial life.

  • Budgeting: Ensure the premium fits your cash flow.
  • Investing: Term insurance frees up funds to invest in retirement accounts or taxable brokerage accounts.
  • Debt management: Life insurance can ensure debt doesn’t burden your loved ones.
  • Legacy goals: Permanent insurance might support charitable gifts or leave behind wealth.
  • Retirement: Term policies typically expire as you near retirement, ideally when your need for income replacement is reduced.

How to Review Your Existing Policy

If you already have life insurance, it may be time for a checkup. Ask yourself:

  • Does this policy still fit my current needs?
  • Have my income, debts, or family circumstances changed?
  • Am I paying too much for too little?
  • Have I been properly informed of all the features and downsides?
  • Could I switch to a more cost-effective or appropriate policy?

Work with a fiduciary advisor to evaluate your options before canceling or replacing any policy.

Final Thoughts:

What’s right for you now that you’ve reviewed the difference between permanent life insurance and term life insurance? There’s no one-size-fits-all answer, but for many people, term life insurance provides the protection they need at a cost they can afford, especially when they’re just starting out, raising a family, or growing their career.

Permanent life insurance has a place, but it’s more of a niche solution. If someone is pushing it on you before fully understanding your financial picture, that’s a red flag. As with most things in financial planning, the key is to stay informed, ask the right questions, and work with someone who’s willing to walk through your goals and your numbers, not just sell you a product.

Need Help Deciding?

At Bonfire Financial, we walk clients through life insurance options in a way that’s educational, not sales-driven. We’ll show you the actual numbers and help you choose what works best for your stage of life and financial goals. Schedule a call with us today!

Learn More About Choosing the Right Term Policy

If you’re ready to dive deeper into your options, check out our guide to the Best Term Life Insurance. It breaks down the top providers, features to look for, and how to get the most value from your policy.

The Hidden Risks, and Realities, of Insurance for High-Net-Worth Individuals

Posted on by Brian Colvert

Insurance for high net worth individuals

For high-net-worth individuals, wealth offers a sense of freedom, security, and choice. But with greater assets comes greater risk. While insurance is often seen as a check-the-box necessity, the truth is that many affluent individuals are unknowingly underinsured. This leaves them exposed to potential financial disaster in the event of a major claim.

Today we’re breaking down the hidden risks and how high-net-worth individuals can better protect their homes, vehicles, and lifestyles with the right insurance strategies. Drawing from a recent conversation with Jacob Morgan, a top 1% Farmers Insurance agent and President’s Council member, we’ll uncover the current trends, common mistakes, and smarter moves you should be making today.

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—–

Why Standard Insurance Isn’t Built for the Affluent

Most people begin their insurance journey by shopping for the cheapest premium. It makes sense when you’re starting out. But as your assets grow, that approach quickly becomes dangerous.

Standard policies often have coverage caps that don’t align with the true value of luxury homes, exotic cars, or high-end personal items. Additionally, claims service, deductibles, and replacement cost policies may not be designed for unique needs.

Jacob Morgan puts it plainly: “If you’re worth $10 million and living in a fire-prone area with a custom-built home, you’re in a totally different risk category. You’re not just another house on the block. You’re a one-of-a-kind risk.”

The Reinsurance Crisis: Why Premiums Are Skyrocketing

One of the key drivers of rising insurance premiums in recent years is the cost of   . Reinsurance is essentially insurance for insurance companies. When disasters like hurricanes, wildfires, and massive hailstorms happen, the losses get passed up the chain—and ultimately, back down to consumers.

In 2023 alone, the insurance industry lost $43 billion. By mid-2024, the industry had already hit that figure again. Reinsurance markets are tightening, especially in high-risk zones like:

  • California (wildfires, earthquakes)
  • Florida (hurricanes)
  • Colorado (hail, wildfires)
  • Texas (wind, flood)

These macro pressures are pushing premiums higher, and in some cases, making coverage harder to find altogether. For high-net-worth individuals, this means more scrutiny and significantly higher costs to insure homes in these areas.

Why Wealthy Individuals Are Hit Harder

Affluent clients often find themselves on the losing end of insurance pricing, but not by accident. The very things that make luxury living so desirable—beautiful locations, expansive properties, custom features—also make them high-risk to insure. Insurers are increasingly scrutinizing these properties and passing along higher costs to cover the growing risks and potential losses. Here’s why:

  1. Aggregation of Risk: Insuring a $20 million mansion is not the same as insuring ten $500,000 homes. A single loss can devastate a carrier’s bottom line.
  2. Location, Location, Risk: Luxury homes tend to be in scenic, exclusive areas—on the coast, in the mountains, or in rural getaways. These spots also happen to be more vulnerable to disasters and far from emergency services.
  3. Luxury = Higher Replacement Costs: A tile roof on a million-dollar home isn’t just more expensive—it can be exponentially more expensive. Add in custom cabinetry, imported finishes, and high-end tech, and you’re looking at rebuild costs far beyond what standard policies account for.

Common Insurance Mistakes High-Net-Worth Individuals

Despite having the means to afford proper protection, many wealthy individuals unknowingly fall into common insurance traps. These oversights often stem from a set-it-and-forget-it mentality, or from applying the same logic they used in their early financial lives. Let’s explore the most frequent mistakes and how to avoid them.

  1. Staying with the Same Policy for Too Long: Jacob shares that before he opened his agency, he had the same policy for 12 years without ever reviewing it. He later discovered major gaps in coverage. Your lifestyle evolves—your insurance should too.
  2. Chasing the Lowest Premium: While it might be tempting to price-shop insurance the same way you do flights or hotel rooms, this can lead to inadequate coverage. Insurance companies don’t create all policies equally—especially when it comes to endorsements and exclusions.
  3. Low Deductibles on High-Value Assets: Affluent individuals often keep deductibles low out of habit, but this can cost you thousands in premiums. Raising deductibles on high-value items like homes and luxury vehicles can significantly reduce your annual costs while making sense for your cash flow.
  4. Overinsuring Market Value Instead of Rebuild Cost: Many homeowners assume they should insure their home for its market value. In reality, insurance covers rebuild costs, not what Zillow says your home is worth.
  5. Skipping Liability and Umbrella Coverage: As wealth grows, so does visibility and the likelihood of being targeted in a lawsuit. Umbrella policies can be an inexpensive safeguard—often as little as $500 per year for millions in added protection.

Smarter Insurance Strategies for High-Net-Worth Individuals

If you’re building or preserving significant wealth, your insurance strategy needs to be just as sophisticated. It’s not only about coverage amounts. It’s about who manages your coverage, how often it’s reviewed, and what protections are in place when the unexpected happens. Here are some high-impact strategies that can dramatically improve your risk management approach.

  1. Work with an Agent Who Specializes in Affluent Clients: A knowledgeable agent can tailor policies based on your asset mix, lifestyle, and risk exposure. For example, a home in Vail, a yacht in Miami, and a classic car collection all require different layers of coverage and carriers that understand the nuances.
  2. Bundle Strategically: While bundling home and auto can provide discounts, sometimes splitting carriers is the better choice—especially if you have properties in multiple states.
  3. Review Policies Annually or After Major Life Changes: If you renovate your home, buy a new vehicle, acquire art, or add a vacation home, it’s time to review your policies. Even if nothing major changes, plan on an annual review to ensure you’re not overpaying or undercovered.
  4. Customize Coverage With Endorsements: High-value personal property often needs specialized endorsements. Think: collectibles, watches, wine collections, sports memorabilia, home offices, or smart-home systems. Avoid assuming that a standard policy fully covers these items.
  5. Embrace Higher Deductibles Where It Makes Sense: As Jacob suggests, if you can easily afford a $2,500 or $5,000 deductible on your home or car, consider increasing it. Use the savings to enhance your liability limits or invest in umbrella coverage.
  6. Invest in an Umbrella Policy: Liability claims can come from car accidents, injuries on your property, or even social media defamation. Umbrella insurance picks up where your primary coverage stops, providing extra peace of mind.

Jacob noted that in his book of business, only two umbrella claims have been made. Both were worth more than the premiums collected from hundreds of policies—and they saved the clients from serious financial harm.

Final Takeaway: Don’t Set It and Forget It

Insurance for high-net-worth individuals is not just a formality, it’s a strategic pillar of wealth protection. Unfortunately, too many people spend decades building wealth—only to risk it all on outdated or inadequate insurance coverage.

Here’s what to do next:

  • Review your current policies with a trusted agent
  • Assess your liability exposure, especially if you have multiple properties or vehicles
  • Ask about umbrella policies, higher deductibles, and tailored endorsements
  • Re-shop or review annually, especially if you live in a high-risk area

As Jacob Morgan put it, “Why would you go your whole life building wealth, only to lose it over a $500 insurance decision?”  Well said.

Ready to Protect What You’ve Built?

When it comes to high-net-worth insurance, working with the right expert makes all the difference. Jacob Morgan and his team specialize in protecting complex, high-value portfolios—from luxury homes and vehicles to vacation properties and beyond. Whether you’re reassessing your current coverage or building a more strategic risk management plan, Jacob can help ensure your insurance is aligned with your wealth.

Already working with us on your financial plan? Perfect. We’ll collaborate directly with Jacob to create a seamless, coordinated strategy that protects both your assets and your future.

📞 Contact Jacob Morgan at (719) 576-2638
📧 Email: [email protected]

Just mention this blog/podcast so he knows we sent you!

6 important things to do when turning 65 – A Retirement Checklist 

Posted on by Brian Colvert

Turning 65 – A Retirement Checklist

Are you turning 65 soon? Turning 65 is a major milestone and pivotal age for your retirement planning. Not only is this an important age for government programs like Medicare and Social Security, but it’s also a perfect time to check other parts of your financial plan, particularly if you’re about to retire. Here are 6 important things to do as you get closer to your 65th birthday to make sure this year and the many years that follow are amazing!  (P.S. Read to the end for a special bonus gift for turning 65!!)

What to do when turning 65 and planning for retirement:

  1. Prepare for Medicare
  2. Consider Long Term Care Insurance
  3. Review your Social Security Benefits
  4. Review Retirement Accounts
  5. Update Estate Planning Documents
  6. Get Tax Breaks

“Every day, about 10,000 people in the United States turn 65 — a milestone that triggers important decisions about Medicare, Social Security, and retirement planning.” –   Pew Research Center

1. Prepare for Medicare

Medicare is the most common form of health care coverage for older Americans. The program, established in 1965, provides essential health insurance for people age 65 and older, as well as certain younger individuals with disabilities. For many retirees, Medicare replaces employer-sponsored coverage and becomes the foundation of their health care plan. Understanding how and when to enroll, what each part covers (Parts A, B, C, and D), and how it fits with other insurance options is a key part of financial planning as you approach retirement. Making the right decisions can help avoid penalties, reduce out-of-pocket costs, and ensure you’re fully covered.

What is Medicare?

Medicare is basically the federal government’s health insurance program for people 65 or older (or younger with disabilities). Medicare is primarily funded by payroll taxes paid by most employees, employers, and people who are self-employed. Funds are paid through the Hospital Insurance Trust Fund held by the U.S. Treasury.

When can I enroll in Medicare?

Starting 3 months before the month you turn 65, you are eligible to enroll in Medicare, you can also sign up during your birthday month and the three months following your 65th birthday. Essentially, you have a seven-month window to sign up for Medicare. Be mindful of your timing and enrollment because Medicare charges several late-enrollment penalties.

What does Medicare cover?

Medicare benefits vary depending on the enrollment plan you choose. Medicare is made up of four enrollment plans:  Medicare Part A, Part B, Part C, and Part D.

Here is a quick breakdown of the four parts of Medicare:

Medicare Part A: Know as the Original Medicare, Part A covers inpatient hospital care, home health, nursing, and hospice care. Part A is typically paired with Medicare Part B.

Medicare Part B: Still considered part of the Original Medicare, Part B helps cover doctor’s visits, lab work, diagnostic and preventative care, and mental health. It does not include dental and vision benefits.

Medicare Part C: This option offers traditional Medicare coverage but includes more coverage for routine healthcare that you use every day, routine dental care, vision care, and hearing. Plus, it covers wellness programs and fitness memberships. Medicare Part C is also known as Medicare Advantage and is a form of private insurance. Note that you will not be automatically enrolled in these benefits.

Medicare Part D: Medicare Part D is a stand-alone plan provided through private insurers that covers the costs of prescription drugs.  Most people will need Medicare Part D prescription drug coverage. Even if you’re fortunate enough to be in good health now, you may need significant prescription drugs in the future.

Age 65 Medicare

While Medicare is great it’s not going to cover all your medical expenses. You’ll still be responsible for co-payments and deductibles just like on your employer’s health plan, and they can add up quickly.

To offset these expenses, a Medicare Supplement (Medigap) insurance policy could be a good option as well. Medigap is offered by private insurance companies and covers such as co-payments, deductibles, and health care if you travel outside the U.S.

How can I enroll in Medicare?

For most people, applying for Medicare is a straightforward process. If you already receive retirement benefits from Social Security or the Railroad Retirement Board, you’ll be signed up automatically for Part A and Part B.

If you aren’t receiving retirement benefits, and you don’t have health coverage through an employer or your spouse’s employer, you will need to apply for Medicare during your 7-month enrollment window.

You can sign up for Medicare online, by phone, or in-person at a Social Security office.

Please note that if you have a Health Savings Account (HSA) or health insurance based on current employment, you may want to ask your HR office or insurance company how signing up for Medicare will affect you.

2. Consider Long Term Care Insurance

Another prudent thing to do when you are turning 65 is to consider your long-term care insurance options before retirement.

What is long-term care insurance?

The goal of long-term care is to help you maintain your daily life as you age. It helps to provide care if you are unable to perform daily activities on your own. It can include care in your home, nursing home, or assisted living facility.  The need for long-term care may result from unforeseen illnesses, accidents, and other chronic conditions associated with aging.

Medicare often does not provide long-term care coverage, so it is a good idea to factor this additional coverage in.

Why do I need long-term care insurance?

While it may be hard to imagine needing long-term care now, the U.S. Department of Health and Human Services estimates that someone turning age 65 today has almost a 70% chance of needing some type of long-term care service in their lifetime.

Unfortunately, long-term care coverage is often hindsight, only thinking about it once it is needed. Planning for it now can help you access better quality care quickly when you need it and help you and your family avoid costly claims.

How do I get long-term care insurance?

First, talk with a CERTIFIED FINANCIAL PLANNER™ about whether long-term care insurance makes sense for you. Coverage can be complex and expensive. A good Financial Advisor can help guide you to a plan that is right for you.

Most people buy their long-term care insurance through a financial advisor, however, some states offer State Partnership Programs and more employers are offering long-term care as a voluntary benefit.

It is important to start shopping before you would need coverage. While you can’t predict the future, if you wait until you are well into retirement and already having medical issues, you may be turned down or the premiums may be too high to make it a feasible option.

3. Review your Social Security Benefits

If you haven’t yet started to collect Social Security, your 65th birthday is a great time to review your Social Security strategy to help you maximize your benefits.

Age 65 Social Security

When can I take Social Security?

The Social Security Administration (SSA) considers the full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. For anyone born in 1960 or later, full retirement benefits are payable at age 67.

In deciding when to start receiving Social Security retirement benefits, you need to consider your personal situation.

How can I maximize my Social Security Benefit?

Turning 65 might raise questions about how to maximize your Social Security befits in retirement. Rightfully so. Receiving benefits early can reduce your payments, however, the flip side is also true. If you’re still working or have savings that will allow you to wait a while on receiving benefits, your eventual payments will be higher. Your benefits can stand to grow 8% a year if you delay until age 70. Plus, cost of living adjustments (COLA) will also be included in that increase.

In addition to delaying receiving your benefits, it is important to make sure all your years of work have been counted. SSA calculates your benefits based on the 35 years in which you earn the most. If you haven’t clocked in 35 years, or the SSA doesn’t have those years recorded, it could hurt you.

Be sure to create a “My Social Security” account and check to make sure your work history is accurately depicted. It is wise to download and check your social security statement annually and update personal information as needed.

Another potential boost in your benefit can come from claiming spousal payments.  If you were married for at least 10 years, you can claim Social Security benefits based on an ex-spouse’s work record.

Everyone’s financial situation is different, but it can be helpful to have a plan for how you’re going to approach Social Security before you turn 65.

4. Review Retirement Accounts

Even if you are not planning to retire soon, now (and every quarter for that matter) is a good time to check in on your retirement accounts. Is your portfolio allocated in a way that lines up with your target retirement date? When is the last time you met with your financial advisor? Do you need to catch up a little?  Do you have a plan for your Required Minimum Distributions?

Meeting with a CERTIFIED FINANCIAL PLANNER™ can help you evaluate your risk tolerance in comparison to your retirement goals, make sure your investments are aligned to help you retire when you want, and make a plan for you to maintain the lifestyle you want in retirement.

A financial advisor can also help with planning for 401(k) catch-up contributions, RMDs, early withdrawals, or completing a Backdoor Roth.

A big hurdle as retirement approaches is often all the homework you have to do. Penalties, enrollments, coverage gaps, deadlines, etc. A great financial advisor can help guide you through this process.

If you are wondering how to find a great financial advisor, we have put a simple guide here. Or, we would love for you to schedule an appointment now to meet with one of our CERTIFIED FINANCIAL PLANNERs™.

5. Update Estate Planning Documents

The next item on the retirement checklist of important things to do when Turning 65 is to get your estate planning documents and legal ducks in a row. If you do not yet have an estate plan, will, medical directive, or financial power of attorney, it is time to get those in order. It is not too late! If you do have them, take some time to update them.

Have you had recent changes in personal circumstances? Do you need to update beneficiaries? Reviewing your plan at regular intervals, in addition to major life events, will help ensure that your assets and legacy are passed on in accordance with your wishes and that your beneficiaries receive their benefits as smoothly as possible.

Further, it is also a good idea to take inventory and organize all your financial documents. Keep a list of all your accounts (banking and investment), insurance, and estate documents as well as key contact information in a safe place. Make note of any safety deposit boxes you have. Keeping all this info organized and in one place will be a big help to your loved ones during a difficult time.

You’ll feel great knowing that you and your family are prepared

6. Get Tax Breaks

Finally, don’t let Medicare be the only gift to you when you turn 65. Starting in the year you turn 65, you qualify for a larger standard deduction when you file your federal income tax return. You may also qualify for extra state or local tax breaks at age 65.

Many states also offer senior property tax exemptions as well. For example, in Colorado for those who qualify, 50 percent of the first $200,000 of the actual value of the applicant’s primary residence is exempted. Check with your local tax assessor to see what property tax breaks may be available to you.

Turning 65 Birthday Advice

Relax and enjoy it. As much as turning 65 is a time to plan for retirement, it is also a time to celebrate.

If you plan to indulge in a much-deserved tropical getaway or a quick trip to visit your grandchildren, you may be able to take advantage of new travel discounts. Delta, American, and United Airlines all offer senior discounts on selected flights. Additionally, many hotels, car rental companies, and cruise lines all also offer senior discounts. So treat yourself!

Happy 65th! Cheers to many more!

Bonus Gift  FREE Social Security and Medicare  Cheat Sheet  Updated Annually 

Want this all simplified? Grab your Free Social Security and Medicare Info Guide and Cheat Sheet

Social Security & Medicare Cheat Sheet Post

Have more questions about turning 65 and retirement? We’d love to talk. You can reach us directly at 719-394-3900 or you can schedule a call here!

Is Insurance an Investment?

Posted on by Brian Colvert

Is Insurance an Investment?

The simple answer is no. You don’t view car insurance as an investment, so why would life insurance be?

If insurance is not an investment, why do we have insurance? Simple, it is for protecting your assets and for protecting your loved ones.

Think about this… You have car insurance and homeowner’s insurance, but why?  It’s so you will be covered if you get into an accident, or are stuck in an unreal hail storm, or if the water heater breaks and floods the basement, or in the unlikely event your house catches fire.

In all these cases people purchase insurance to make sure that they are not going to have to pay the full amount to get back to whole after something terrible happens. That’s it.

We have yet to meet a person who bought car or homeowners insurance as an investment thinking they were going to make money or get returns off the insurance.

Why is life insurance different?

It’s so that your loved ones are taken care of if something happens to you.  If you are no longer here, who or what is going to replicate the income you generate? Most people say that if they pass on early or unexpectedly they want their family to be able to maintain the same quality of life.

The important questions to ask yourself are:

  1. How much do I need to achieve the goal?
  2. What is the most effective and inexpensive way to achieve that goal?

There are certain factors to think about that will help determine what kind of insurance to buy and how much. These factors include your time frame, health, and resources (other investable assets).

When you ask these questions you are looking at insurance from a needs-based approach. It helps you find a solution that fits your particular situation.  When acting from this point of view, very rarely does a whole life or universal life product make sense.  Term life insurance normally gives you the greatest amount of coverage for the least amount of money.

Why do people say life insurance is an investment?

Well, have you ever gone to see a movie and walked out a little disgruntled saying “Man, the best parts were in the trailer, why did I even go?!”  That is the feeling most people get when they buy insurance as an investment. The story or sales pitch was better than the product and the only winner was the one selling the insurance.

In the end, people often say “my advisor said it would be like a forced savings that I can borrow against, but I have no idea what it is” or “they said it grows tax-free or something like that” It is one thing to waste your money on a $15 movie, it is another thing to waste thousands of dollars on insurance you think is an investment but in reality doesn’t meet your needs.

If your financial advisor has tried to pitch you insurance as an investment, you don’t have a financial advisor, you have a salesperson. 

Insurance is not an investment.

Here are some facts on whole life insurance, universal life insurance, portfolio or permanent life :

  • They cost a lot more to get the same amount of coverage as a term policy.
  • There are hidden fees.  You can find them buried in the 8 pt. font 20+ page contract. Are you up for some “light” reading?
  • These products pay big commissions to the insurance salesmen, which they do not have to disclose to you.
  • If you borrow against it, your death benefit will be reduced, and your loved ones will be left with less.
  • If you do mix investment with insurance, i.e. you ‘invest’ in insurance products like endowment or money-back plans, your returns are bad, and limited at best. Usually less than 3 or 5%.
  • When you die with a cash value, they only pay out the face amount, not the extra money you’ve put into it. Your extra investment vanishes- they keep it.
  • And finally, you are borrowing the money so there is interest to be paid, which means you pay even more.

These products have many moving parts and are quite convoluted. Many clients come to us asking for help to understand what they bought from someone else and how it works.

In most cases, we end up having to call the insurance company to get full indoctrination of the product so that we can understand that if this happens, that happens, and so forth and so on. Whole life and universal life products simply have too many variables.

Insurance unfortunately is unnecessarily complicated, but it doesn’t need to be.

If you understand that insurance is not an investment, the picture can come into focus. Term life is more than often the best solution for the lowest cost. The best way to buy it is through a broker or advisor who shops several companies to get you the best deal. Which, by the way, is what we do.

We’d love to discuss this more with you, help you review your current insurance, and truly find a solution that meets your needs, so give us a call and join us around the fire.

Interested in listening to a Podcast on all of this? Tune in here!

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