Long Term Care Insurance: When Should I Buy It?

Image via WikipediaI am finally old enough to worry that I may need long term care insurance. I worry if I get sick and need long term care that it will probably bankrupt me. Still with kids in college and a 11 year old to raise maybe it's time to take the plunge.

The facts are if you obtain a policy at age 50 it will be cheaper than if I start one at age 60. Tempting the fates and waiting till 60 seems like a good idea because according to the Long Term Care Industry statistics, 90% of long term care claims do not occur untill the person is over age 70. So if your feeling lucky, maybe you should play the odds and wait.

The only problem with that decision is your health may decline before this time arrives, causing you to pay higher premiums or just being declined any insurance. You have to juggle this decision with the odds of you getting sick before then. The question also is does your family have any history of debilitating diseases that you probably will get. If you are looking at this future, the decision is almost made for you to get long term care insurance.

What if your healthy and your parents are in their 90's and completely healthy, will that effect your decision? 

I checked for some answers on this decision by going to DaveRamsey.com. Dave Ramsey has held the position that you should wait till 60 to purchase long term care insurance. He is totally against buying it early only to get a better deal. Dave came up with a good example of how to make the decision:

"The average LTC premium for a healthy 50-year-old man is $1,340 per year. If the policy remains in effect until this person is 95, he will spend $60,300 in LTC premiums. For a healthy 60-year-old, the average premium is $2,170; it will cost him $75,950 to keep the policy until he is 95. So buying LTC at age 50 is $15,650 cheaper than buying it at age 60."

Dave Ramsey suggested to invest the $1,340 each year from age 50 to 60.

"If his investment averages just 5% growth per year, he will have $17,412 when he turns 60—that’s all it takes to beat the “savings” on premiums for buying LTC at age 50. If he keeps that money invested until age 95, and never added anything to it, he’d have nearly $100,000 at 5% growth, and that is the low end of how he can expect his 35-year investment to perform."

It's a big decision and not knowing when to make the move just complicates it. These types of decisions have to be made using the math first but later the true reason is to decide is will the decision make you lose sleep or will you rest better because you know everything is taken care of for you and your family. Always seek professional counsel on important decisions.

A New Way to Lend Money To Family and Friends

Loans (Photo credit: jferzoco)You just got asked to lend a family member some money for a car repair. It's a legitimate request and the person asking for it is really a responsible person. The odds of getting paid back are quite high. Should you do it?

When circumstances like this happen you have to be careful and examine the situation. What would happen if the person lost their job or fell sick with major medical bills. Would you still get paid back?

Personal loans between family and friends occur because the person has tried all their other sources and are desperate. Desperate means broke. You should do your best to try and get out the situation. But if your trapped there are a few new ways to make the money lending process go a little easier.

Put the lending agreement in writing with specific terms as interest, length of loan, and payment due dates. You can do this yourself and hope for the best or try something new. There are two websites that will draw up the paperwork and give you and your borrower legally binding documents. At LendingKarma.com and LoanBack.com you can have legally binding loans set up, including payment schedules, record keeping and e-mail reminders. Each site charges a $30 fee to do this for you.

Another way is at Prosper.com, a borrower could take out a Friends and Family Loan from just you or from multiple people. The site arranges automatic bank-account withdrawals free and charges a closing fee as a percentage of the loan.

By using these services you will have your loan process and servicing done professionally. This could mean the difference between you being stuck and being paid back. It's possible by using these services your prospective borrower may be scared away and you can avoid the whole ordeal.

Fixed Rates as low as 6.59% APR from Prosper - Peer to Peer Online Borrower & Lending

I Can't Pay My Taxes - What Should I Do

Image via WikipediaIf this year’s tax filing deadline will be a “pay” day for you and you cannot pay the full amount that you owe, you should still file your return by the due date and pay as much as you can. The IRS may allow you to pay any remaining balance over time in monthly installments through an Installment Agreement or possibly even settle for less than the full amount owed through its Offer in Compromise program.

If you find that you cannot pay the full amount by the filing deadline, you should file your return and pay as much as you can by the due date. To see if you qualify for an installment payment plan, attach a Form 9465, “Installment Agreement Request,” to the front of your tax return. The IRS has streamlined the approval process if the amount owed is not more than $25,000 and can be paid off within a five-year period. Be sure to show the amount of your proposed monthly payment and the date you wish to make your payment each month.

The IRS charges a $43 fee for setting up an installment agreement and you will also be required to pay interest plus a late payment penalty on the unpaid balance. This penalty, usually 0.5 percent of the balance due per month, drops to a 0.25 percent rate when the IRS approves the installment agreement if your return was filed on time and you did not receive a levy notice from the IRS.

Besides possibly qualifying for the reduced late payment penalty, you have another reason for filing your return by the due date — you avoid the late filing penalty, 5 percent per month of the balance due. Paying as much as you can when you file your return will reduce interest and penalty charges.

If you find that you cannot possibly come up with the money to pay your taxes, even through an installment plan, you may apply for an “offer in compromise” to settle your tax debt for less than the full amount owed. The IRS will review your financial situation and future income potential to determine whether your offer is appropriate. Send Form 656, “Offer in Compromise,” and Form 433A, “Collection Information Statement,” to the IRS to determine your eligibility.

The IRS Web site at www.irs.gov has interactive sections to help you determine your eligibility for an installment plan or an offer in compromise. You can also download all the necessary forms from that site. The forms are also available by calling toll free 1-800-TAX-FORM (1-800-829-3676).

Lower Your Home Insurance Costs

Image via WikipediaIn my state, we are bracing ourselves for the next round of home insurance premium increases. It seems that even though we haven't been hit by any major weather events over the last several years, the insurance companies fund to cover such things is highly underfunded. 


Price increases for home insurance are not the kind of expenses you can cut back on, they have to be paid.

Finding ways to reduce or slow the increase of your home insurance bills are possible. It will take some effort, but it is possible to save yourself some money.

Raise Your Deductible.

A deductible is the amount of money you are going to pay toward the loss before the insurance company begins to pay a claim. Presently, most insurance companies recommend a deductible of at least $1000. Why not increase the deductible to $1500 or $2000. See how much you will be saving and with the two options. If it will save you a substantial amount, why not change it. Try it for a year, if your fearful it's to high, change it back. The insurance company will gladly take your money.

Improve Your Homes Resistance to Damage.

Insurance companies are very helpful in offering discounts for a smoke and fire alarm. Ask for a list of these discounts. A burglar alarm with central station monitoring will reduce your insurance costs. Check to see if your insurance company will give you a discount for new dead bolts and other security monitoring.

If you live in areas with major weather events and natural disasters, you may be able to save on premiums by adding storm shutters, strengthening your roof or replacing it completely. Finding ways to make your home more modern and up to the newer building codes for your heating, plumbing and electrical systems to reduce the risk of fire or water damage will reduce insurance costs.

Shop Around.

Always remember you are not tied to one insurance company. Seek out several home insurance companies for a quote. Check consumers reports, independent insurance agents, and online insurance quote websites. Be sure to weigh the best price with the quality of the company. Go online and search for complaints against your insurance company. Make sure your insurance company is rated well by the state and has the financial capacity to be able to pay when the time comes.

Combine Home and Auto Policies With The Same Insurer.

Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies.

Make Sure Your Credit Report is Good.

It may seem to not be fair to link the amount of your home insurance premium with your credit score but it is a regular practice of insurance companies. When you apply for credit, a low credit score is punished by paying a higher rate on borrowing money. So it is with insurance companies, you will be judged a higher risk and charged more for your premium.

Finally, review the cost of rebuilding your home and make sure you are paying the right amount of insurance for it to be replaced. A newer home will sometimes have a lower premium because the age of the house makes a difference. The quality of you fire department is taken into consideration. If you live in a urban or rural community, it will affect the price of your premium.

There are many ways to save money on your home insurance costs, it just takes working closely with your insurance agent to make sure every discount is taken.