Insurance Planning

Group coverage is set by your employer’s plan and is tied to that job, so it usually ends, or can only be converted at individual rates, when you leave, are laid off or retire. If you have a mortgage, young children or are the main earner, group coverage typically fills only part of the gap. We add up the mortgage balance, several years of living expenses and education costs, subtract existing savings and coverage, and the difference is what you may need to cover yourself.

Term insurance covers a set period, such as 20 or 30 years, at a lower premium, which suits obligations with an end date like a mortgage or raising children. Permanent insurance lasts for life and costs considerably more, so it is usually considered when the need itself has no end date: paying estate tax, providing for a child with special needs, or funding a buy-sell agreement between business owners. When the main concern is lost income, we first see whether term coverage solves it, then discuss whether anything left needs permanent coverage.

Under IRS rules, a death benefit paid to a beneficiary is generally not taxable income, but if the insured owns the policy, the proceeds are included in his or her estate and can push it over the estate tax exemption. A common approach is to have an irrevocable life insurance trust (ILIT), a trust that cannot easily be changed and exists to own the policy, buy the coverage and be the beneficiary, which generally keeps the proceeds out of the estate. If an existing policy is transferred into an ILIT and the insured dies within three years, the proceeds are pulled back into the estate (IRC §2035), so whether to transfer or have the trust buy new coverage is decided with the partner attorney.

Long-term care means help with daily activities such as bathing, dressing and eating because of age, chronic illness or cognitive decline, and Medicare generally does not pay for this kind of ongoing custodial care. Whether separate coverage makes sense depends mostly on assets: families with modest assets tend to rely on Medicaid (Medi-Cal in California), very wealthy families can self-fund, and families in between have the most to compare. Age and health affect both eligibility and price, so we usually review it with clients in their mid-fifties to early sixties.

Medicare is the federal health insurance program for people 65 and older. Your first enrollment window runs seven months, from three months before the month you turn 65 to three months after; if you miss it and are not covered by an employer group plan based on current work, you may pay a Part B late enrollment penalty for as long as you have Part B. The standard Part B premium for 2026 is $202.90 a month, and higher earners pay a surcharge (IRMAA) based on income from two years earlier, so income in the years before retirement affects Medicare costs as well.