Listener Questions: Long-Term Care Insurance
MADELEINE BRAND, host:
This is DAY TO DAY. I'm Madeleine Brand. If you're confused by the world of finance or aspects of it, prepare to be enlightened. Our own personal finance guru, Michelle Singletary, joins me now to answer some of your questions. She writes the syndicated column The Color of Money. And welcome back to DAY TO DAY, Michelle.
MICHELLE SINGLETARY: Thank you.
BRAND: Here is the first question from a listener. This listener writes, I have two children in private colleges. They'll each have $20,000 in loans when they graduate. I was planning to help each of them by paying $100 a month on their loans, but would my children be better off I put that $100 a month into retirement accounts or mutual funds for them and let them pay down the loans themselves?
SINGLETARY: I think you would be better off helping them pay those student loans now. The present value of money is worth more right now. And let them save for their retirement themselves. That's something that you should do as an adult. Your parents shouldn't be paying for your retirement.
So absolutely pay that $100 on their student loans when they graduate. They will be grateful.
BRAND: Mm-hmm. Okay, next question this listener writes, Michelle you recently talked about financial documents to keep in case of an emergency. Most of my financial information, investments, bank accounts, insurance - most of that is available online. Do I need paper copies of those things?
SINGLETARY: Absolutely. If you're in an area where say a hurricane hits or an earthquake, all the equipment, all the online sources are going to go down - not just at your house. So let's say you want to go the bank and take out some money, what proof do you have that you have an account there? You don't want to totally rely on the institution to have your own information.
BRAND: And Michelle, it goes without saying that your record should be not where the hurricane will hit - your house, potentially - but somewhere else, somewhere safe.
SINGLETARY: That's right. I mean, even if the bank may have some other facility that would have hard drives with all your information, you personally need to keep your copies. And you might want to have it in a fireproof box that you could quickly grab if you need to run out of your house, or you might want to mail those to a very trusted friend in another state. But you definitely should have your own copies of your important financial documents.
BRAND: Okay, last question. I am 62 years old and so is my husband. He has high blood pressure, under control with medication. We're both in good health and quite active - we bike, ski, walk. I don't want to be a burden on my children, so I'm wondering if I should purchase long term care insurance.
SINGLETARY: I think they definitely should consider getting long term care insurance. The problem is it could be very expensive, but they ought to look into nonetheless because it could save them some money down the road. But there are so many policy options, conditions, restrictions to think about - I mean more than all of the flavors at Baskin Robbins. So they really need to do their research and do it well.
BRAND: And Michelle, where should they start with their research?
SINGLETARY: A good place is the National Association of Insurance Commissioners. They have a shopper's guide to long term care insurance. It is excellent. They could also go to AARP.org, which has an entire section on how to buy long term care insurance - all the different options you should consider, such as inflation protection. You want to look at the type of the benefits you get per day. There's a lot to think about once you decide that you should get it.
BRAND: Okay, great. Thank you, Michelle.
SINGLETARY: You're welcome.
BRAND: Michelle Singletary is our regular guest for conversations about personal finance. Her latest book is Your Money and Your Man: How You and Prince Charming Can Spend Well and Live Rich.
And if you have a money question for Michelle, please go to our Web site, npr.org. Click on the Contact Us link - that's at the top of every page - and be sure to include Michelle in your subject line.
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