Smart Money: Supplemental health coverage worth extra cost

Dear Bruce: My parents are questioning the need for supplemental health insurance. They currently receive Medicare and have little income apart from Social Security; both are in their 70s. Their health is good, and they only have monthly expenses. My dad doesn’t like the fact that he has to pay an extra premium even though they’ve had no major medical issues; to him, it’s a waste. Where can they get some advice on handling their finances without it costing an arm and a leg? —L.J., via e-mail

Dear L.J.: Your parents are fortunate to enjoy good health at this point in their lives, and it’s possible they will continue to be healthy. However, it is not realistic to consider the supplemental an expense. Over a period of time, in almost every case, you will take out more than you put in. Although paying that extra premium can be troublesome for those with a modest income, a serious illness could be devastating.

Viaticals may benefit terminal patients

Dear Bruce: Could you please explain the investment term “viaticals”? —G.K., via e-mail

Dear G.K.: Viaticals allow a person with a terminal illness to collect on his or her life insurance before death. An investor will put up to 60 percent of the money to be paid by the insurance company upon the person’s passing. The investor then becomes the beneficiary of the policy and pays the premiums. Upon the death of the insured, the investor receives the money back plus the profit. Viaticals certainly have an important place in our spectrum of financial vehicles, but unfortunately, like many fields, rascals have invaded and it’s important to know with whom you are dealing before you become involved.

Long-term-care coverage not for all

Dear Bruce: I am 52 years old and have been widowed for 20 years. I no longer work due to a health condition. I own two homes (both paid for), and divide my time between the two. I do not have children. I have $90,000 in retirement, money market and regular savings accounts. The homes, land, auto and other personal property have a value of $350,000. I live comfortably, but not extravagantly. I have a standard will, leaving my estate to my sister, nieces and nephews. In your opinion, is the will sufficient? Or do I need a trust or irrevocable trust? Should I sell one of the homes and put the proceeds in some type of investment for the future? If so, what type investment would you suggest? Since I have no children, do I need to purchase long-term-care insurance? —F.P., via e-mail

Dear F.P.: You asked a number of questions. You say you divide your time between the two homes. Since you don’t need the money right now, why upset your lifestyle? Enjoy what you’ve worked for. I see no reason for any kind of trust. You say you have a properly drawn will and the will reflects your wishes. Sounds good to me!

As to long-term-care insurance, since you are not concerned about leaving money to heirs, the worst that could happen is that your estate would be diminished by whatever care you require. Why would that be a problem? I would go on just as you are and enjoy your life. If you have to convert some of your assets to cash sometime in the future, so be it. I would suggest you find someone to handle these matters should you be unable to – perhaps your sister or one of the nieces and nephews. A trusted financial institution can handle the task, too.

Cancel formerly free policy cautiously

Dear Bruce: I am 72 years old, retired and in fairly good health. I have Medicare, and my wife has health/hospitalization insurance. When I retired, my health/hospitalization cost me nothing. As the years pass, my coverage dwindles, and now it costs $80 a month and could go up. I think this is a waste of money. What do you think? —Reader, via e-mail

Dear Reader: From the limited information you have provided, it seems reasonable to conclude there is an unnecessary redundancy of coverage. When the cost was nonexistent, it didn’t matter much. But now that you are being charged for it, I can appreciate your concern. If I were in your position, I would seek out a knowledgeable insurance agent. You may have to pay him or her a few hundred bucks to analyze what you have. Be careful, however, in making your decision. If you cancel a policy, I doubt you will be able to get it back.

Mom’s health limits property options

Dear Bruce: My mother is in her mid-70s. She has been in a mental institution most of her life. She has some property in Florida, which her parents left her. For the past couple of years, I have been paying the taxes on this property, which are increasing. Is there a better way to handle this? I do not have any power of attorney and am only considered a guardian. Would it be better to sell the property so that she could use the money now? We live in different states. – W.A., via e-mail

Dear W.A.: You should consult an attorney. I see no reason to leave the property in your mother’s name and, indeed, perhaps there’s no reason to keep the property. Your rights as guardian depend on state law. You also didn’t indicate the property’s worth. Given your mom’s health issues, you should know what your options are. Again, consult an attorney. The lawyer should reside in the state where your mother is living.

Bruce Williams is a national radio talk show host and syndicated columnists. He can be reached at bruce@brucewilliams.com.