What caregivers should know about insurance needs

Becoming the caregiver for a parent or loved one involves many new responsibilities. As a caregiver, you are responsible for the health and well-being of your loved one. In addition to the physical responsibilities, you may assume certain legal and financial responsibilities.

You may be appointed the power of attorney or trustee over assets, accounts and trusts. You could be named executor of a will or a beneficiary of a life insurance policy. While most caregivers take on these duties with a love and dedication that is incomparable, many are inexperienced in the type of financial planning they should be implementing for themselves in order to protect their loved one in the event of the caregiver's death.

Protecting your loved one

In some caregiving situations, the parent or loved one receiving the care will have Social Security and retirement funds turned over to the caregiver to help defray expenses. While this can be a big help, you still must consider protecting the regular household income your family's breadwinner brings in. By adding disability insurance coverage to your family's financial plan, you can make sure that some portion of your normal household income is retained in the event of the disability of you or your spouse.

A Medigap insurance policy on your loved one can help bridge the gap between the cost of medical care and the reimbursements Medicare provides. This relieves some of the financial burden on you, or your loved one, although it will require the payment of premiums for the added coverage.

Life Insurance on the caregiver is also a critical consideration. In the event that something happened to you, who would be in a position to assume the caregiver role? When determining how much life insurance to buy, you must first ask yourself:

* Will another family member be able to step in and care for your loved one?

* Will your loved one's retirement income and savings be available to cover living and health care expenses?

* Does your loved one have a long term care policy that can provide nursing home care or care at home?