This question comes up a lot in my circle of friends as some are retired and a lot are turning sixty and getting ready to pull the pin on working life.
There are so many types of insurance and WOW a couple can really go insurance poor if you don't get a grip on these costs. They can really add up on a monthly basis and severely crimp your cash flow.
When I retired from the military in 1997 I decided to sign up for the PSHCP (Public Service Health Care Plan). I pay $131.62 monthly for drug, vision, hospital and travel insurance costs.
I further insured my wife and I under the separate Dental Plan (PDSP) at $36.85 a month.
A further $6.66 a month is deducted which is called a Supplementary Death Benefit which provides my wife with a lump sum death benefit of 74,250.
At age 70 the premium ceases and the benefit payable is $5,000.
I have not went out and comparison shopped a plan in years but when I did, Blue Cross wanted close to $700 a month for a family of four which I had at the time. We just paid out of pocket until I researched what we could get should I joined the subsidized PSHCP. Good choice because it looks like a steal.
Insurance Products to Consider or Not
Life
I have no life insurance on my wife. She smokes and is about to turn 57. Our house is paid for and believe we have sufficient assets to take care of myself should that need arise.Other than the small premium I mentioned above is all the life insurance we carry.
I firmly believe once your house is paid off and you retire completely this is just a wasted expense. Use the extra monthly premiums to live your life. Your life insurance needs such as replacing lost income are over and not necessary.
Accident
I don't believe I have any accident benefits and don't need them. Other than what comes with auto insurance.
Health
Our plan is very cost effective and is a pretty typical 80/20 co-pay plan you find here in Ontario Canada. Always check with your employer when you retire for subsidized options that may be available to you.
Don't forget that as you age you're going to need glasses and or a hearing aid. It's nice to have coverage for glasses at $275 every 2 years. Not a lot but something. Our eye exams are not covered.
Dental
Annual check up and cleaning costs almost $300 a piece. This monthly premium more than pays for itself. You are going to find in a lot of cases it's cheaper to self insure for all your dental needs. These private plans are very expensive just like the dentists that provide them.
Dentists set their own market prices and don't have to worry about to government regulation that comes with health care plans.
Disability
We don't have it, don't need it. If you're still working it's good to look into and consider. It will help replace lost income even if your employer provides short term disability payments. I never insured for this product.
Critical Illness
Usually provides a lump sum payment. The costs to me are too high. Not worth it and justifying the illness with insurance companies is a hassle, so I hear.
Long Term Care
With our house paid off if something happens then it's time to sell assets. We will just go into a long term care facility that the province provides. Get on the waiting list early as it takes up to 3 years to get in.
Travel
We have up to $500,000 of medical coverage. Is it enough? I don't know it seems a little light when you hear some of the horror stories out there. It is included with our PSHCP so we have the option to buy more.
Expenses up to $150 a day also provide for meals and accommodation for your spouse or family member if required. Return flight costs also covered if you can't make your flight home due to illness or hospitalization.
Whatever you do get some travel insurance when you leave the country.
House/Condo
Have to have it. Some people own houses and it would devastate them financially if they got burned out without insurance. We live in a condo townhouse and as a requirement of ownership have to carry content condo insurance to live here.
This is a necessity along with auto insurance.
My Final Takeaway
We have health/dental/condo and auto insurance. I believe this is all we need now and in retirement. You may need more but don't insure yourself to death and make sure you reassess your needs every year just like updating your will and re-balancing your portfolio.
Related Posts: Protecting Canada's Seniors
Recommended Reading: The Essential Retirement Guide
Anyone still working or if their income would not support their spouse should have some type of insurance. Having said that, once we retired we dropped all insurance, other than house & auto. I read an article where someone was complaining to their Ins Co about something, and the response was: "We are not in business to loose money".
ReplyDeleteWe do have Blue Cross also.
DeleteHaha great reply. I'm sure they never lose money as defined by the enormous office towers on Bay St. If you work you definitely need insurance to replace income. Home and auto is all we have too.
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