Joe and Lisa White are a married couple. Joe is 63 and Lisa is 61. Joe is thinki
ID: 2749855 • Letter: J
Question
Joe and Lisa White are a married couple. Joe is 63 and Lisa is 61. Joe is thinking about retiring in a few years, and the Whites have come to you for an insurance evaluation. Lisa plans to continue working even after Joe retires. The following provides a summary of the Whites’ insurance planning situation.
Life Insurance
Joe owns a $500,000 universal life insurance policy. Joe is the insured and their son David, age 37, is the beneficiary. The policy has a cash value of $50,000 and a living benefits provision; all account earnings are used to offset premium expenses. Lisa owns a 20 year $350,000 level term life policy that she purchased five years ago. She pays approximately $1,000 per year in premium costs. Lisa is the insured and Joe is the beneficiary.
Property and casualty insurance
Joe and Lisa own a home as JTWROS. The home has a market and replacement value of $675,000. The house is insured with the standard HO-3 policy for $550,000. The policy requires that the Whites pay a $500 deductible per claim occurrence. Other provisions include the following:
10% coverage on detached structures
Coverage up to $250 for cash
Coverage up to $1,500 for collectibles, artwork, and similar assets
Personal property contents coverage equal to 20% of the insured dwelling
Living expenses coverage for six months
Coverage up to $100,000 for personal liability
A replacement cost coverage endorsement is in place
The Whites’ two cars are insured under a personal automobile policy with split limit coverage of 250,000/500,000/50,000. They also have a $1 million excess liability policy.
Health insurance
The Whites are covered under Lisa’s group health insurance plan. The traditional plan has a lifetime maximum benefit equal to $5 million for the family, a $500 per person deductible, and an 80% coinsurance clause, with the family stop-loss limit of $2,500.
Using this information, please answer the following questions.
9. The Whites are curious about the alternatives available when planning for possible nursing home care costs in the future. They have discussed Medicare, Medicaid, and using their savings. What would you recommend for the Whites and why?
10. Currently neither Joe nor Lisa has disability insurance coverage. Joe and Lisa would like more information from you about disability insurance. What recommendations would you make to them? Include a discussion of the elimination period, taxation of benefits, own-occupation vs any-occupation, and guaranteed renewable options.
Explanation / Answer
9) The whites do not require a separate home they want the possible nursing home care at home only so the possible alternatives would be Medicare Pace program where a combination of services is provided to the individuals which allow them to living in their homes.Other is Medicaid where HCBS(Home and community Based services) provides a variety of care services and non medical support for the elderly specifically needed to prevent nursing home placement and allows seniors to live at their home.Other is adult foster care where services are offered in homes only where 1-3 seniors live and receive personal care.This does not require any external support from other family members therefore seems appropriate for the whites to choose this alternative.I would recommend whites to choose adult foster care where they would not be depended on others the services shall be provided to them at home only.
10)
Disability Insurance, often called DI or disability income insurance, or income protection, is a form of insurance that insures the earned income of beneficiary against the risk that a disability creates a barrier for a worker to complete the core functions of their work. For example, the worker may suffer from an inability to maintain composure in the case of psychological disorders or an injury, illness or condition that causes physical impairment or incapacity to work which would result in the loss of income for the individual.
There are two primary types of disability insurance: short term and long term. A short-term policy typically is designed to replace 80% or more of your gross income for a short duration of time. The duration may range from 60 to 180 days, depending on the policy. Need to wait for an “elimination period” five or 10 days before the coverage kicks in and you start receiving money from the policy. A Long-term policy typically is designed to replace about 60% of your gross income for a long duration of time. The duration may range to years, depending on the policy. Need to wait for an “elimination period”—say six months—before the coverage kicks in. The benefits received from the policy are taxable. The guaranteed renewable options available are Non-cancellable and guaranteed renewable where the insurance company offering the policy cannot renew and guarantee that the terms of the policy shall remain the same, even with the change in occupation shall not change the policy terms. The guaranteed renewable option allows the company to change the terms of the policy. Third option the conditionally renewable offers no guarantee for the disability insurance policy. For whites I would recommend to go for the are Non cancellable and guaranteed renewable disability insurance policy.
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