The insurance industry in Louisiana has been getting a lot of attention. But while flood and home insurance have dominated the headlines (and the Legislature) lately, life and retirement insurance can be just as important for securing a future for yourself and your loved ones.
On that note, there are some important changes that have been made recently.
For instance, investing in an IRA has long been a great way to save for retirement, and even provide for beneficiaries upon your death. Until recently, your beneficiaries could “stretch” required withdrawals over their life expectancies.
“These required withdrawals were generally taxable, so this ‘stretch IRA’ was a good way to reduce the annual taxes due and benefit from longer tax-deferred growth potential,” said Frank Toro, a financial advisor at Edward Jones.
But Toro said recent legislation has greatly limited the stretch IRA strategy, which may push people to look for alternatives.
“For example, you could convert your traditional IRA to a Roth IRA during your lifetime,” Toro said. “By doing so, you would pay taxes on the amount converted, so your heirs could generally take withdrawals tax-free.”
Another option is to purchase life insurance to ensure a specific dollar amount is passed on or to help your heirs cover taxes on their inheritance. But as we head into a period where there will be inflation, at least in some form, it’s important for people to assess and reassess their goals and priorities.
José S. Suquet, chairman of the board and CEO of Pan-American Life Insurance Group, said the effects of the pandemic shifted the way people think about insurance — especially younger families.
“We have paid over $134 million (2020 and 2021) in life and health insurance claims during that time,” Suquet said. “This period also showed an increase demand for our products as families re-examined the need for life insurance coverage.”
Both Suquet and Toro also addressed long-term care insurance, which helps cover a variety of health-related expenses ranging from occasional visits from a home health aide to full-time residency in a nursing home.
“These types of care [home health aides and nursing homes] may vary in duration and intensity, but they all have one thing in common — they’re expensive,” Toro said. Genworth, an insurance company, reports median annual costs of over $100,000 for a private room in a nursing home and over $60,000 for the services of a home health aide.
One option to help meet these potential challenges is to add long-term care coverage through a “rider,” or optional add-on to a life insurance. With this type of policy, you can use some of the death benefit to pay for long-term care needs.
“We all want to stay healthy and live independently throughout our retirement years,” Toro said. “Unfortunately, that won’t be possible for some of us, so it’s a good idea to be prepared for health-related challenges”
Frank Toro
Financial Advisor
Edward Jones
Which policy is best for you? There’s no one right answer for everyone. A financial professional can help you evaluate all your options within the context of your overall investment and protection strategies. But keep in mind that all long-term care policies tend to get more expensive as you get older, so if you’re considering this type of coverage, you may want to get started sooner rather than later.
José S. Suquet
Chairman of the Board and CEO
Pan-American Life Insurance Group
Our industry is coming into a very bright time. The effects of the pandemic have brought on a new awareness of the needs for life insurance. This is especially true for younger families. This, coupled with the benefits of cash value life insurance as part of a well-rounded portfolio, combine to give the industry a bright future.
