QUESTION: Alicia and her husband have a son with special needs, who had a frightening episode a few months ago. She asks Dave if it would be wise to take advantage of the inexpensive child rider on their insurance policy, since they are still two or three years away from being debt-free and having a fully funded emergency fund.
ANSWER: Yeah, I would do that at this stage of the game. A child rider is guaranteed issue in most cases, meaning they don’t do a medical exam or they’re not going to worry about the special needs issue — most of the time. Just make sure that it is what they call “guaranteed issue,” meaning there’s no medical exam needed on him for that to be issued.
I definitely would pick that up, even if you weren’t facing the things you’re facing. We carried them on our kids for a period of time, and they were not kids with special needs and didn’t have any medical issues. We carried child riders until we had enough wealth to, God forbid, pay for funeral expenses if something had happened to one of them.
Thank you for your call, and thank you for having the heart of a mother.
QUESTION: Anna and her husband areself-employed. They currently pay almost $1,000 a month for health insurance.She has heard Dave talk about the potential for rates to increase as much as 40to 60 percent next year, and she asks about other options such as just savingthe money in case of medical emergencies.
ANSWER: You don’t want to go completelywithout insurance, because you’ll get penalized by the government. The problemis not an $8,000 kidney stone or a $1,500 bill at the emergency room for a bumpon the head and stitches. The problem is a cancer hit that’s $750,000.
You can go with an HSA-type of plan within the exchanges.Another thing you could look at is one of the medical sharing programs througha Christian organization such as Christian Healthcare Ministries. Of course, ifyou’re not a Christian and the religious ties bother you — and it’s really morethan a tie, it’s a requirement — then it would be hard to be part of that andstill be truthful.
If you could go with a higher deductible, HSA-type plan,hopefully it would help keep your premiums down. But this is what Obamacare hasdone to independent people like you and me who are self-employed. It’s justdestroying small group plans, and I guess that was their intent. I guess theywanted to put those companies out of business, so that the government couldtake it over.
QUESTION: José follows Dave on Twitter. He asks if there is a maximum amount that should be invested in a single mutual fund. Dave gives him a quick primer on mutual fund investing.
ANSWER: I suggest that you do your investing equally across four types of mutual funds. Those categories are growth, growth and income, aggressive growth, and international. So that would be 25 percent in each type.
I probably wouldn’t go as high as $25 million in each one, but until you have over $10 million I really wouldn’t worry about it much. If you want to spread out some and have a couple of families of funds, that’s fine. I only have about three families of funds, so I don’t spread it out that much. And I own less than 20 mutual funds, maybe even less than 10, but with substantial money in each one.