Insurance by Allied Brokers
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since 1954

Customer Alert
In this Issue:
LONG TERM HEALTH CARE – PART 1
Client of the Month
Giants Tickets Drawing
June Winner
Homeowners Insurance Tips for First-Time Buyers
Homeowners Insurance Tips for First-Time Buyers
The first thing you need to do when you buy a new home is to consider homeowner’s insurance. Insurance by Allied Brokers will take you through that, but there are a few pointers about homeowner’s insurance you should be aware of. Homeowners Insurance comprises four parts – Structure, Personal Belonging, Liability and Living Expenses.

Structure refers to payment for repairs to actual damage to the house from natural conditions like hail, lightning or a hurricane, or from fire. However this policy will not cover flood and earthquake damage which will have to be bought separately if required.

Personal Belongings covers all property within the house against theft and destruction. The typically recommended amount of purchase should be 50% to 70% of the structure amount. If you have special items to be protected, mention this to the broker.

Living Expenses provides coverage for you and your family should you have to reside elsewhere if your home is rendered unlivable or while it is being rebuilt because of destruction or some other calamity.

Each family has its own needs so discuss with your broker the kind of distribution coverage that best suits your family. Your broker is there to guide you and answer your questions.

Chris Grammer
Chris Grammar
President
Connie Prince
Connie Prince
Personal Lines and
Office Manager
630 Cowper Street
Palo Alto, CA 94301
P: 650-328-1000
F: 650-324-1142
Open M-F 8:30-5pm
LIC# 0525309
Welcome to Insurance by Allied Brokers' July 2010 Newsletter!
Giants Tickets Drawing - June Winner
Winner from June 2010 Drawing

David L. Babby, Consulting Arborist
(Winner from 120 client respondents)

To participate in next month's (June 2010) drawing send us an email with subject as "Giants Ticket - July 2010 Drawing".
Client of the Month
Client of the MonthJulia Truesdale Keady
Realtor

An Insurance by Allied Brokers business
insurance customer profile.

Direct: (650) 400-0100
Office: (650) 323-1111
FAX: (650) 323-1143
DRE License Number: 00893204
www.juliakeady.com


I specialize in Palo Alto, Portola Valley, Woodside, San Mateo, San Carlos, Redwood City, Los Altos, Los Altos Hills, Mountain View, Menlo Park, Atherton, Sunnyvale, Cupertino, Saratoga, Los Gatos, Monte Sereno and parts of San Jose and Santa Cruz County.

As a native of Palo Alto and having raised three successful children I am very well oriented to the needs of families and individuals residing in the Silicon Valley.

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LONG TERM HEALTH CARE – PART 1
A 100 years ago the average life expectancy in this country was 47. Today it is 77. While this is good news in that people can now expect to enjoy the fruits of their labors during a long period of retirement, the longer life expectancy also brings with it myriad problems and health issues are among the most important of these. While medical advancements allow people to live longer, that does not mean that they will remain as healthy above 60 as they were at the ages of 30, 40 or 50. The body degenerates with time and although medical science can delay and suppress the symptoms of old age, they cannot be completely removed. That is why when planning for the future, especially for retirement, long term healthcare must be given importance.

Why You Need To Be Ready For Long Term Health Care

Mortality is an inescapable fact of life. While science has allowed for the extension of life spans, the fact remains that the longer one lives, the greater the chances of falling sick or having an accident. As the body ages, the likelihood of having health problems increases as does the duration for which health care is needed. Long term care is required because not having the resources to ensure proper health care can reduce the quality of life. Retirement is the time when you plan to do all those things you never had time for when you were working – spending time with your family, pursuing hobbies or getting involved with civic activities. But ill health can limit your freedom and without long term health care, you may never be able to fulfill your dreams.

Secondly, health care will continue to increase in cost. No matter how carefully you may have planned for your retirement, health expenses, especially those of long term care, can make a huge dent in you resources and have a massive affect on your lifestyle. Here are some 2005 figures for long term care:

Home health Aides - $18.54 per hour
One bedroom unit in an assisted living facility - $2,500/month plus one time entrance fee that can go as high as $8,000
A private room in a nursing home - $69,400 per year
These figures do not include the cost of medical treatment and medicines. And keep in mind that these figures will continue to rise with time while your post income retirement will remain static. The impact on your finances can be disastrous.

Thirdly, the costs of long term care may force you to eat into your capital which will not only affect your financial security, but will also affect your family in terms of reducing the estate you planned to leave for your children.

So What If You Have Never Had A Serious Illness?

A lot of people who have lived till 60 without a major illness feel that the health record of the past will hold good for the future. They overlook two things. Firstly past health is no guarantee of the future. As the body ages, it is more prone to sickness, even with the most healthy and active of people. Keep in mind that even Olympic athletes at the peak of their fitness fall sick and are out of action for long periods. And while illness can happen at any time and at any place, the older you are, the greater the chances of serious injury occurring. To think that past good health creates odds in your favor against the need to provide for long term care is to bury your head in the sand. And remember, life is not a game of poker – no matter what the odds, you can’t afford to take chances. The stakes are far too high.

Your Long Term Health Care Options

There are basically four options open to you when considering long term health care costs.

You could look to your family for support and help. While it is true that a family will always help out a member in need, do you want to be a burden on them? When a focus of your life has been to create equity to leave behind when your time comes, why eat into that and the capital that other family members will have created on their own?
You could set aside some portion of your assets to cater for your long term care needs. But how much can you cater for? According to a survey conducted in 2005 by CareScout, an independent research organization, the cost of a 3 year hospital stay, including treatment, medicines and spouse expenses can touch $500,000 in the first year itself and then exceed $400,000 in the second year and $300,000 in the third year. Even if you are able to provide for this kind of expense (and remember that this is only for one instance) the funds you are blocking can be far more efficiently employed in other ways.
Many people feel they can depend on the government for help. While Medicare and Medicaid offer some amount of support, they limit your long term care options. Medicaid will not cover long term care services. Medicare will limit your care and treatment options as per their rules and regulations which may not meet your specific requirements. And finally, it is not you or your medical specialist who determines the level of care that you require, but the government which can greatly reduce the amount of long term care you are entitled to, even if you genuinely need more.
Or you could opt for long term care insurance which transfers the risk and cost to an insurance company and protects your capital at a small cost to you. If your principal is $500,000, the interest (at a rate of 5%) on this will be $25,000. Long term care insurance will cost you approximately $2000 per year. For this small amount, you will be protected from the million dollar plus costs of a 3 year stay of the kind mentioned in point 2.
Long Term Care Insurance Is the Obvious Solution

Long term care insurance does not ensure your good health or replace the need for care. It provides you the resources to ensure that you get the care you may need and that the finances are available for longer and better care. And you get this without the need to be dependant on your family, highly regulated Medicare support, or taking the potentially huge costs into your financial planning.

To learn more about your long term health care options, contact Insurance by Allied Brokers at phone (650) 328-1000, fax (650) 324-1142 or email abcosales@alliedbrokers.com. Or visit our website at www.alliedbrokers.com to learn more about the various health insurance options available to you. We will help you to find the right policy for your needs.
 

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