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Focus on Financial Wellness This Year

Dec 02, 2022 Piggy bank and stethoscope depict financial wellness.

The new year marks the perfect time to reset wellness priorities. Some people will set goals to exercise more and improve their physical health. Others will take up meditation to reduce stress and safeguard their mental well-being. For a complete wellness plan, financial health also should be prioritized. Consider taking these three sometimes-overlooked steps along your financial wellness journey.

Consult Your Insurance Broker About Home Replacement Coverage

Every property insurance policy contains a property limit of insurance. If an insured home is destroyed by catastrophic weather, for example, the limit of insurance is used to reimburse the insured for the cost of replacing the home.

Unless a policy has been reviewed recently, a gap may exist between the stated property value and the actual cost of rebuilding if something were to happen. This is due to the steep escalation of construction material costs and labor costs brought on at least partly by the pandemic.

Homeowner policies may contain language stating that the insurer will guarantee replacement cost if the home is damaged or destroyed by a covered peril. A policy also may include extended coverage (e.g., 20%, 50%, 100% above the policy limit) to restore or rebuild a home. Homeowners would be wise to review their coverage or contact their insurance agent as soon as possible to confirm that they are protected.

Business property policies, in contrast, contain no safety net. For example, if a property was valued and insured three years ago for $1 million, but it actually costs $1.5 million to rebuild today, the insured must find a way to bridge the $500,000 gap. This is especially important for owners of small businesses to understand because their personal wealth often is at risk.

Protect Your Digital Footprint

According to the FBI, the American public submitted more than 847,000 complaints to the agency’s Internet Crime Complaint Center last year, a 7% increase over the previous year. The crimes represented possible losses of more than $6.9 billion.

To better manage risks and protect your financial wellness, put a credit monitoring service in place if you haven’t already. Hylant makes IDTheft Assist available to clients and friends.

IDTheft Assist is a comprehensive, affordable credit monitoring and restoration service. A monthly subscription gives users and their immediate family members access to 24/7 response services, including a designated U.S.-based advocate who does all the work necessary so that subscribers can get back to their everyday routines.

The restoration process includes the following:

  • Compiling the facts. IDTheft Assist assigns an advocate to the subscriber’s case. The advocate pulls a real-time credit report and attacks the case of fraud or theft hands-on.
  • Contacting creditors. IDTheft Assist notifies the credit bureaus of fraudulent activity, submits affidavits to the Internal Revenue Service or any involved creditors, submits dispute packages on the subscriber’s behalf to involved entities, alerts ChexSystems, notifies the postal inspector of the incident and disputes medical fraud.
  • Restoring credit. IDTheft Assist places alerts or security freezes on the subscriber’s behalf with the credit bureaus, submits disputes on each fraudulent entry on the credit report, alerts creditors and submits dispute packages on the subscriber’s behalf, and obtains clearance notifications regarding the fraudulent accounts.

View the comparison chart to see how IDTheft Assist compares with other credit monitoring services

Plan Now for the Future

While most of us look forward to retirement, financial planning for those years is tricky. Not only do you need to consider at what age you will retire, but also how long you will live. How do you plan for that?

While most people who are 65 today can expect to live into their mid-80s, according to the Social Security Administration (SSA), one in three will live beyond 90. One in seven will live beyond 95. How long will your savings last?

Another consideration is what will happen if you can no longer take care of yourself at some point. Could you afford in-home support or live in the type of assisted living facility you would choose for yourself? Traditional health insurance and Medicare don’t cover these options.

Two financial retirement planning tools are available to protect your lifetime income and help put you in control if you ever need care not covered by your health plan: annuities and long-term care insurance.

Annuities: Investing in an annuity provides the account owner with an ongoing revenue stream. There are two types: deferred and income.

With a deferred annuity, the investor puts money into an account and accumulates income on the investment. The income generated exceeds that which a savings account or CD would generate, and tax isn’t paid until the account owner begins withdrawing funds—typically after retirement when the annual income (and income bracket) is smaller.

An income annuity begins paying immediately once the account owner makes the investment. This type of account pays the owner as long as he or she lives, no matter how long that is. The principal, however, cannot be touched, and the amount of income generated can fluctuate over time.

Long-Term Care Insurance: According to the U.S. Department of Health and Human Services, someone turning age 65 today has almost a 70% chance of needing some type of long-term care service during his or her lifetime. These could include things such as assistance with bathing and dressing at home, enrollment in adult day care, or living in a facility that cares for those with Alzheimer’s or other chronic diseases.

Most people who purchase this insurance do so in their 50s or 60s; only people who have not developed a serious medical condition are eligible. Pricing varies for this type of insurance, depending on whether you choose long-term care insurance only or long-term care plus life insurance. The premium also can change yearly.

Planning for all aspects and possibilities of retirement is complicated, and there are pros and cons related to all of these decisions. Working through it while you are healthy and relatively young, though, will yield the most and best options. For more information, visit Hylant’s resource center.

Reduce Financial Stress to Improve Quality of Life

Financial stress can negatively impact physical and mental wellness. Take steps now to protect all areas of your life this year.

The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.

Matt Hylant