Health insurance is not Health Care, Life insurance does not guarantee immortality and Long Term Care insurance does not build nursing homes. All that insurance does is provide money when those hazards happen. It allows you or your survivors to pay bills when there is not enough money in savings.
Health insurance pays the doctors. Life insurance pays the expenses of raising a family if the wage earner is taken out of the picture. Long Term Care insurance provides the funds necessary to hire a Home Health Aide, rent an apartment in an Assisted Living facility or pay a skilled nursing home.
There is no insurance policy that is basically “evil.” Insurance policies can be used in an “evil” way. It is important for you to remember that the purpose of insurance is to create money when money does not exist. Some will try to make insurance plans do things that they were never intended to do.
In recent years much has been said about health insurance by politicians, press and pundits. Before the present presidential administration, Major Medical insurance was different from Health Care. People understood that health insurance was nothing more than a bill paying service. It paid the bills that were presented for the health care of its members. Health Care was provided by doctors, hospitals and pharmacies.
Except in the case of those who elected to obtain their health care through insurance company owned HMO hospitals, the insurance company had very little say in how much the doctors and hospitals charged.
I remember being trained in 1987 that Life insurance can be used to pay for college education and retirement expenses. Over the years I have learned that there are better tools that can be used for those bills. Life insurance cannot be beat as a vehicle to make certain that those expenses are paid if a wage earner dies prematurely. Many insurance agents would have you believe that a permanent life insurance policy can meet all your long-term financial needs.
A few moths ago I wrote, “The Secret That Life Insurance Agents Will Not Tell You But The IRS Will.” In that article I outlined just one of the dangers of trying to make insurance do more than it was designed to do. Early in my career I had the fortune to have a corporate V.P. who still understood what insurance is all about. He advised me to resist the urge to call myself a financial planner, estate planner or any of the misleading titles of that day. He told me that when I am asked what I do, I should square my shoulders and proudly say, “I sell life insurance.”
When someone dies, only two people show up at the wake with hope. The minister provides spiritual hope for the survivors. As a life insurance agent, I show up with financial hope. I will give them a check to pay all the education expenses for the children, pay off bills and replace a lost income so that a widow does not have to “go back to work” unless she wants to.
LONG TERM CARE INSURANCE (LTCI)
LTCI does not guarantee that you will not lose some of the abilities to function that you currently take for granted. It just provides money to pay for help if you lose the ability to perform 2 of the 6 Activities of Daily Living. I have witnessed a grandmother, father, brother and sister suffer from Huntington’s disease. LTCI was not available to them.
I witnessed the toll that disease takes, not only on the victim, but also on the spouses. LTCI provides the money necessary to allow those spouses to hire professional help with the Long Term Care needs of their loved ones. It does not erase the sorrow of having to watch the love of your life decline but it will help ease some of the physical exhaustion that can happen to a care-giver. They will have the money to hire help.
The lesson to be learned is that all insurance is nothing more than money when you need it. Auto insurance does not make you a car. Homeowner’s insurance does not make you a house. However, if your car is damaged in an accident or you home is burnt in a fire, your insurance will give you enough money to buy another similar car or rebuild your house. Regardless of what any politician or insurance agent tells you, Life, Health and Long Term Care insurance does nothing more than, “Let the problem that causes the problem, solve the problem.”
Insurance will not cause you to live longer or healthier lives. It just provides the money to allow you or your loved ones pay the bills when you die or get sick.