By Leonard J. Hansen
Seniors are inundated with a never-ending onslaught of insurance offers. Disability insurance, Medigap, supplemental, mortgage life, self-funded healthcare, long-term insurance, permanent life, term life…and the list goes on.
Salesmen use many questionable tactics to get seniors, who are often times too trusting and too easily fooled, to buy insurance policies they don't need. For example, the pitch may offer a very low-cost first month premium, but the small type grants the insurer the right to charge your parent's credit card at a greatly inflated rate every month. They might try to sell your parent a long-term care policy which, because of the person's age at the time of purchase, is very expensive while providing very little financial benefit. Or, a salesman will scare your parents by saying their current policies are in danger of being canceled or the insurer not able to pay out.
Anyone caring for an aging parent should know what policies their parent has and be involved in future purchasing decisions. If you are not aware of what policies your elder parent has, now is the time to do some research. Checking your parent's insurance coverage will not be your most exciting caregiver assignment, but it may prove to be one of the most important. Identify questionable policies and pricing so that unnecessary coverage be canceled or changed.
How to Protect Your Elderly Mother and Father's Insurance
- Talk Insurance
Explain to your elderly parent that an important part of your role as caregiver is to know about their insurance policies, so that you can help file claims and can help them decide if they need more or less coverage. Of course, having financial discussions can be tricky. Parents may feel a loss of control or violation of privacy.
- Organize their Policies
Create a file folder for each of the policies, into which you'll deposit a copy of the policy and any correspondence. Try to get credit card statements and checkbook records listing the payment amounts and dates for each of the policies to include in these files.
- Analyze Each Policy
Tackle one file at a time, reading everything plus making notes regarding the type of policy, premiums paid each year and the actual or probable cash or payment value from the policy. Identify the beneficiaries of the policy plus the name of the person or persons authorized by your parent to be able to ask questions, make claims or even cancel the policy. If an older policy, you may find that a beneficiary or three may no longer be alive.
- Ask "Why" About Each One
You don't have to be an expert on insurance to discover a policy for which there is no reason or value. Not canceling unnecessary insurance could be costing your parent hundreds, or even thousands of dollars each year. Refer to the policy for cancellation instructions. When dealing with insurance companies, identify yourself as the recognized caregiver for your parent.
- Check Their Automobile Pollicy
When they purchased the policy years ago, your parent may have been driving the typical 12,000 to 15,000 miles per year. They are probably being charged the mileage rate, even if they are only driving only 1,000 miles per year. By restating the correct mileage, the insurance cost may be reduced significantly. If the car and insurance policy were bought, perhaps, 10 years ago, the vehicle, at current Kelly Blue Book valuation, may be less than a third of the original purchase price. You can reduce the valuation by a simple statement to the insurance broker; and, thereby, reduce the premium.
- Contact The Local Insurance Broker
If your parent bought a policy from a quality company, the local broker involved is probably ready to meet with you and adjust the coverage and benefits, and then reduce the premium cost. Take the initiative and make the first move. It is not the broker's job to evaluate the insurance coverage each year.
- Check for Life Insurance
If your elderly parent bought a life insurance or long-term care policy in the last three years, it is almost predictable that the annual premium will cost more than the payment benefit. Such a policy can be canceled and the previous premium cost could be shifted to a special bank or trust account which earns interest income each and every year. A counselor at your parent's bank can offer solid advice and set up the account at no cost for the service.
- Ask for Help from Friends and Family
If you do have questions about the insurance policies purchased by your parent, ask for assistance from a qualified family member or friend who works in the financial or insurance industry.
- Stop Mail and Telephone Pitches
If your parent has responded to insurance pitches in the past it is certain that he or she is on a sucker list. Register your parent's name and contact information in the Do Not Call and Do Not Mail list services. Visit the National Do Not Call Registry's website.
- Seek Help from Elder Advocates
The local senior center or Area Agency on Aging may have volunteer consultants in the field of insurance.
Doing your homework can save future cost and frustrations, so take the necessary steps now, and get peace of mind for later.
Leonard J. Hansen is a pioneer in writing and editing to, for and about mature adults. He has received more than 100 awards and fellowships for his creative work.