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Tuesday, July 31, 2012

MYTH: I can always buy Long Term Care insurance later

I know it must be irritating to you.  But I won't stop doing it.  That is, regaling you of the steadily shrinking options for reducing your financial risks.  The quantity and quality of techniques to protect yourself and your money are in an entropic spiral.
For example, I've mass emailed ad nauseum about the financial safe haven of annuities (which, not surprisingly, the Wall Street owned corporate press continue to trash).  My best company, Aviva, just reduced their minimum interest rate to 1%, making it not much better than the average CD (if it weren't for the additional benefits of tax deferral and guaranteed income).
Long Term Care risk management strategies have also been dragged onto the chopping block virtually every month.  Several big names have pulled out of the market altogether, such as Prudential and MetLife.  Others have discontinued lifetime benefits and what are called "limited pay" premium schedules.  Used to be that you could pay larger fixed premiums for 10-20 years thereby eliminating the risk of future rate increases.  All have increased their rates on new applicants and existing policyholders alike.  My own premiums have doubled in the last 10 years, but are still 1/2 the cost of a similar policy these days.  Pays to buy it early!
But sadly, the best buy in Oregon for healthy nonsmokers, United of Omaha, is discontinuing lifetime benefits, group plans, and limited pay options effective with applications signed by tomorrow, August 1.  They just told me this today!  They also implemented a healthy rate increase a month ago.
What does all this mean?  It means that long term care is a serious risk, so serious that it has the insurance companies running scared.  The good news is, if properly structured, sufficient protection is still very affordable.  With Federal deductibility of premiums and 15% Oregon tax credit, this type of insurance is heavily favored by not only the tax code but several other State and Federal provisions, such as the Partnership Program.

Monday, July 9, 2012

MYTH: Financial rewards are the best motivation

I must give credit for this post to Paul Begala, political writer for Newsweek.   In the June 25th issue he passed on an anecdote which, whether true or not, epitomizes a major destructive attitude, a cultural virus in our country.  I quote it directly:
I have a wealthy friend who lives in a wealthy neighborhood.  One day he was in his front yard, chatting with his next-door neighbor, a Republican, who asked him why he's a Democrat.  My friend said he'd grown up poor but had gotten a good public education, worked his tail off, and made it.  Then he pointed to the gardener across the street.  "Don't you want that gardener's son to live the same American Dream we have?"  His neighbor shot him down, sniffing, "That gardener's son will be my son's gardener".
This is entitlement thinking- and parenting -at its worst.  I like Warren Buffet's philosophy that you want to give your children enough so they can do anything, but not too much so they don't have to do anything.  The guy in the story has embodied the mentalities that we came here to this continent to escape; nepotism, meritless accumulation of wealth and power, repression of the virtue, hard work and intelligence of our fellow citizens.  What if his son turns out to be a lazy jerk?  And the gardener's son a brilliant inventor who, for lack of basic education fails to blossom?  We, as a society, lose.  The rich son loses.  The gardener's son loses.  Personally, I expected my son to make his own mistakes, take some hard knocks, and learn to rely not only on his own brains and initiative but also to seek out help and partnerships from others, while pursuing work that he enjoys and is good at.  After an excellent education in our public schools and universities, he makes a great living and loves his work.  He has become a healthy adult, highly valued in our economy.  The question is not what we get in this life, but what we become.  I know I've said that many times.  It's worthy of repetition.
People who are insecure & afraid can become greedy and lose their compassion for others.  Another favorite quote:  The highest expression of human intelligence is kindness.  (And I don't mean shallow courtesies.)  Although our Republican Congress is not the exclusive domain of this sickness, they dominate the field.  Rather than skillful statesmen ( remember Mark Hatfield?) they have become small-minded, mean-spirited, irrational sycophants, creating a death spiral to the bottom of dysfunction by institutionalizing the "virtue" of aggressively self-imposed stupidity.  As a result, the self-destructive culture they have created, after a 30-yr. concerted effort, is harming themselves more than the issues they fear (gays, taxes, government regulation, dark-skinned people. non-Christians, equal opportunity etc.)  In fact, their fears have been baseless all along.  They have met the enemy in the mirror.