I just met with a wonderful woman about her health insurance and just had to blog about her story. I did not sell her any insurance as what she was being offered was much better and less expensive, but she gave me more than I could have asked of her.
In her sixties, she recently lost her husband. Throughout their life her husband had really good jobs. He was phenomenal at what he did. He even got involved at one point with a financial services MLM and sold life insurance and financial planning. They had set up a few IRAs and even had purchased Term Life insurance to subsidize the small amount he was given through his job. Unexpectedly he past away in his sixties, before his full retirement age and his wife was left to fend for herself. A few years back as the economy took a dive, this couple had to use their retirement accounts to live on. The wonderful term life insurance they had been paying on had the term expire a year prior and they had to lapse the policy as costs went up way too much. The wife was left with a small life insurance policy and a fairly dismal retirement account.
Having no choice, she was left to do what a lot of seniors do at her age and took her Social security widow's benefit. This helped save her in providing just enough income to live, but it has crippled her at the same time. She was able to find work and make some additional income, but if that income rises too high she will have her widow's benefit reduced. Due to her age, finding work can be even more difficult and finding a job where she gets paid what she is worth even more difficult. She is now stuck. Making the same amount of money every moth and not able to lift herself above where she is.
This really made me think about how life does this to each one of us. Trials come and we lose our footing. Whatever plan we made when things were good, quickly gets eaten up when things are bad. It reminds me of the dreams Pharaoh had during Joseph's time in the Old Testament. If you recall, there were 7 fat cows and then 7 lean ones and the lean cows ate the fat cows. So it tends to be in life.
Some things that might have changed their circumstances that come to mind. First off- she said they had some debt. Getting out of debt sooner in life can have lasting effects later on. Imagine if they had no debt, how much easier it would have been to live and be able to not worry when income was lost, as expenses could be minimalized. This also would have allowed them to save more throughout their life.
Life Insurance. I kind of wonder if when they were younger and sold insurance policies, how much a $100k whole life policy would have cost that would have been paid off in 10 years. Would that life insurance policy, that wasn't costing them a dime after all those years, been replaced to pay those bills a few years ago, or could it have been a life line at the end when she got a check to save the day?
Everyone has different circumstances. Life throws everyone different curve balls. It is just a good idea to think ahead. During those good times, are we maybe spending too much, or are we saving? I know Pharaoh enlisted Joseph as one of the first financial advisers to save grains. That investment brought money and life during the times of famine. We too can do the same.
Friday, May 16, 2014
Monday, May 12, 2014
did you buy the right health plan?
Great article posted here http://money.usnews.com/money/blogs/my-money/2014/05/12/4-signs-you-have-the-wrong-health-insurance-plan about some of the mistakes people made when getting their health plan. As an adviser, we make sure and go over each one of these concerns before we put you with a plan. May Americans just purchased a plan on their own. They had no clue what they were doing and hope they are covered when they need it. In Nevada, all of the plans available in the state exchange have limited Nevada only doctor networks. A lot of people don't know that there are plans available in the state that meet all requirements, but are just not sold on NevadaHealthlink.com website. Thats' why it's good to work with a broker that knows all the options.
Read the article above, and make sure you ask yourself those same question.
Read the article above, and make sure you ask yourself those same question.
Tuesday, May 6, 2014
healthcare spending up...great news folks!
http://archive.delawareonline.com/usatoday/article/8570053
My first thoughts when I see this- demand is up. In economics, when demand increases, price increases. We have more people trying to access the same amount of medical services and providers as there were when demand was lower. In order to compensate for larger traffic, doctors and facilities need to increase what they charge to coordinate their wait times and get people to think twice about using that care. Also when we have insurance taking care of the bill, that means more claims are being processed and the premium dollars are going to be going sooner.
The big problem with healthcare, is people don't know what it actually costs. Insurance companies keep that a bit of a secret until after the services are complete. What's worse, is the costs vary across providers, and since you have no clue what each provider charges until after the fact, there is no real market power happening. In short, can costs really go up when there is no market movements? All we have is more people using a system . Maybe that system was under utilized before. There could actually be an economy of scale happening. Now a doctor who saw only 10 patients in a day and twiddling his thumbs and making people wait while he talks to a pharma rep, now has 12 patients and that pharma rep can't schmooze as long. Now that doctor gets to make more due to higher patient loads and gets to work for just as many hours. What a win. There are so many ways to look at this, but boy is it interesting. Little do most Americans know that with the new healthcare law, people who get subsidized costs due to their income, will not see any cost increases or decreases like those who actually pay full price for their insurance. Higher income earners and tax dollars take the brunt of all increases in premiums and will be the ones highly affected.
I think the lesson to be learned is that if we want to be insured, expect to pay more when you earn more and live your live the best you can financially so you don't go bankrupt paying for healthcare.
My first thoughts when I see this- demand is up. In economics, when demand increases, price increases. We have more people trying to access the same amount of medical services and providers as there were when demand was lower. In order to compensate for larger traffic, doctors and facilities need to increase what they charge to coordinate their wait times and get people to think twice about using that care. Also when we have insurance taking care of the bill, that means more claims are being processed and the premium dollars are going to be going sooner.
The big problem with healthcare, is people don't know what it actually costs. Insurance companies keep that a bit of a secret until after the services are complete. What's worse, is the costs vary across providers, and since you have no clue what each provider charges until after the fact, there is no real market power happening. In short, can costs really go up when there is no market movements? All we have is more people using a system . Maybe that system was under utilized before. There could actually be an economy of scale happening. Now a doctor who saw only 10 patients in a day and twiddling his thumbs and making people wait while he talks to a pharma rep, now has 12 patients and that pharma rep can't schmooze as long. Now that doctor gets to make more due to higher patient loads and gets to work for just as many hours. What a win. There are so many ways to look at this, but boy is it interesting. Little do most Americans know that with the new healthcare law, people who get subsidized costs due to their income, will not see any cost increases or decreases like those who actually pay full price for their insurance. Higher income earners and tax dollars take the brunt of all increases in premiums and will be the ones highly affected.
I think the lesson to be learned is that if we want to be insured, expect to pay more when you earn more and live your live the best you can financially so you don't go bankrupt paying for healthcare.
Monday, May 5, 2014
fewer people without health insurance!
I will be the first to say that these numbers actually surprise me. This article published by Reuters here http://www.reuters.com/article/2014/05/05/us-usa-healthcare-poll-idUSBREA440DA20140505 states that uninsured rates have declined by 5%! I honestly thought we would see a shift in who was insured. For instance, we would see those who previously could not afford insurance going on Medicaid and getting subsidized and those who could afford insurance before, but now can't due to high rates, opting out. I think the article agrees there really isn't an exact answer to this though as there are many factors still in play. A lot of people, myself included, have older health plans that still reflect lower rates. My policy isn't set to expire until December and I know most of Las Vegas on those older plans are in the same boat.
I wonder if that 5% represents those who were uninsured because they couldn't get insurance, but could afford it, or if they were the millions of people who previously couldn't afford insurance due to lack of employment and now have Medicaid. I know we got almost 3-5 times the calls for people wanting Medicaid than any other call. A lot of people who got subsidized insurance were just replacing what they already had and/or looking for alternatives to their COBRA options.
I think the real test to this new system is going to be in a few more years when we start seeing some strong economic job growth. The only question is will this law halt that job growth? A lot of socialized countries see higher natural unemployment rates than we do. So maybe we are seeing a new norm? This law will be seen as a success then in getting more people insurance as was intended.
I wonder if that 5% represents those who were uninsured because they couldn't get insurance, but could afford it, or if they were the millions of people who previously couldn't afford insurance due to lack of employment and now have Medicaid. I know we got almost 3-5 times the calls for people wanting Medicaid than any other call. A lot of people who got subsidized insurance were just replacing what they already had and/or looking for alternatives to their COBRA options.
I think the real test to this new system is going to be in a few more years when we start seeing some strong economic job growth. The only question is will this law halt that job growth? A lot of socialized countries see higher natural unemployment rates than we do. So maybe we are seeing a new norm? This law will be seen as a success then in getting more people insurance as was intended.
Friday, May 2, 2014
Financial planners, fees, and retirement
I was at my local library checking out a book about personal finance and a DVD caught my eye. It was from PBS. I am a complete nerd and have always enjoyed public television and radio and the educational material there. The title also caught my eye "The Retirement Gamble." http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/
I figured, this ill be good to watch. I checked it out and watched it just last night. First of all, it was an incredibly good show to watch. As a financial planning professional and an avid student of financial thought and processes, it got my brain juices flowing.
The first thing I really enjoyed is the revelations about how people view retirement plans and the way they look at saving. Most people don't fully understand their money and spend it in many different ways. When they are offered the option to save through a retirement plan at work, they tend to participate because they are told it is a good thing to do. It used to be that companies saved for you and you were committed to that company for the rest of your life, because if you worked long enough, they would fund your retirement. This clearly changed with some tax restructures and new innovations in the market. I could go in on this all day about the economics of labor, but let's skip that for now.
The second thing that caught my attention was talking about growth in these plans. Most people don't know where to invest their money. The choices keep getting larger and larger. There are also more people trying to invest, so everyone wants in on the pie. Where the story gets lost is they look at the people trying to sell their products as "evil" because they want to charge fees for their management services. I know fees can really affect your retirement, but it is no different for you to pay above cost for any product and service. People have this notion that everyone else should work for free, except them. When you hire a professional to grow your money, expect to pay them for their work. If you don't want to pay them, then don't. Stuff your money under your pillow and don't complain. The most complaints tend to happen when people are losing money in their investments. It's not the manager's fault when the markets take a deep dive and then you, along with the rest of the world says "SELL!" at the same time. That's just simple economics and you can't blame them for something that is mostly out of their control.
The third thing they brought up, which I have been a great admirer of, is index funds. One of the greatest things to come out of technology, is the use of computers to match the overall market. In a market economy, people always look for ways to cut costs and get more business. By having a computer run the show, they are able to match the market and do it for a minimal fee. Fund management companies can do what every human has tried to do to match the market, and not have to hire someone. This is market efficiency and automation at its finest. The problem is humans want to preserve their jobs and hate change. They tend to fight automation and naturally try and push their own services without looking at the alternatives. Imagine if your competitor had a better product or services that was completely automated, while you had been doing your job for 20+ years at higher costs. You sure as heck won't want to give up your job just because someone else can do it better.
My final thoughts on the whole thing are to just make good financial decisions and let the new generation enact some change. The government and people have been bent on regulating people and the retirement accounts, when a change has already begun in lowering costs and making the system better for many people. I hope to become the well known adviser who efficiently directs people to making great decisions without much pain and need for hand holding. I am hoping the huge financial losses so many have gone through will get ourselves thinking about saving more and utilizing our brains more to accomplish our money goals. Growing up in Las Vegas, I have seen gambling all my life. When people are winning they are happy and keep trying for that big gain. They don't know how or when to walk away. Maybe people need to look at retirement planning the same way and when they achieve their goals, walk away and get themselves in a good spot so they don't have to freak out.
I figured, this ill be good to watch. I checked it out and watched it just last night. First of all, it was an incredibly good show to watch. As a financial planning professional and an avid student of financial thought and processes, it got my brain juices flowing.
The first thing I really enjoyed is the revelations about how people view retirement plans and the way they look at saving. Most people don't fully understand their money and spend it in many different ways. When they are offered the option to save through a retirement plan at work, they tend to participate because they are told it is a good thing to do. It used to be that companies saved for you and you were committed to that company for the rest of your life, because if you worked long enough, they would fund your retirement. This clearly changed with some tax restructures and new innovations in the market. I could go in on this all day about the economics of labor, but let's skip that for now.
The second thing that caught my attention was talking about growth in these plans. Most people don't know where to invest their money. The choices keep getting larger and larger. There are also more people trying to invest, so everyone wants in on the pie. Where the story gets lost is they look at the people trying to sell their products as "evil" because they want to charge fees for their management services. I know fees can really affect your retirement, but it is no different for you to pay above cost for any product and service. People have this notion that everyone else should work for free, except them. When you hire a professional to grow your money, expect to pay them for their work. If you don't want to pay them, then don't. Stuff your money under your pillow and don't complain. The most complaints tend to happen when people are losing money in their investments. It's not the manager's fault when the markets take a deep dive and then you, along with the rest of the world says "SELL!" at the same time. That's just simple economics and you can't blame them for something that is mostly out of their control.
The third thing they brought up, which I have been a great admirer of, is index funds. One of the greatest things to come out of technology, is the use of computers to match the overall market. In a market economy, people always look for ways to cut costs and get more business. By having a computer run the show, they are able to match the market and do it for a minimal fee. Fund management companies can do what every human has tried to do to match the market, and not have to hire someone. This is market efficiency and automation at its finest. The problem is humans want to preserve their jobs and hate change. They tend to fight automation and naturally try and push their own services without looking at the alternatives. Imagine if your competitor had a better product or services that was completely automated, while you had been doing your job for 20+ years at higher costs. You sure as heck won't want to give up your job just because someone else can do it better.
My final thoughts on the whole thing are to just make good financial decisions and let the new generation enact some change. The government and people have been bent on regulating people and the retirement accounts, when a change has already begun in lowering costs and making the system better for many people. I hope to become the well known adviser who efficiently directs people to making great decisions without much pain and need for hand holding. I am hoping the huge financial losses so many have gone through will get ourselves thinking about saving more and utilizing our brains more to accomplish our money goals. Growing up in Las Vegas, I have seen gambling all my life. When people are winning they are happy and keep trying for that big gain. They don't know how or when to walk away. Maybe people need to look at retirement planning the same way and when they achieve their goals, walk away and get themselves in a good spot so they don't have to freak out.
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