The entire course runs for a full month. You literally get admitted to Ayurvedic hospital for the entire duration. You follow a strict diet and they go through different massage and cleansing processes.

Also learn a few yoga and keep yourself safe from periodic allergies and even long term terminal diseases.

Cheers…

1) Disability Income (DI):
This protects against loss of ability to continue to perform one’s current occupation or any occupation which is appropriate to his level of education, skills or training (Occupations: e.g. Doctor, Lawyer, Engineer, Accountant, Professor). So, for example, if a surgeon is diagnosed with stroke and cannot perform any occupation that is appropriate to his level of education, skills and training, and if he bought a DI covering US$7,500/month of benefits, he file a claim for US$7,500/month until the expiry of this insurance, say when he reaches age 65. If he may perform another job, say lecturing or consulting though he can’t perform surgery, he may file for a lower level of benefits, say US$5,000/m instead of the full $7,500, because he is earning a reduced income. Certain DI policies also offer an escalating level of benefits of, say, 3% increase per annum. Most DI also have a waiting period like 3 or 6 months, meaning an insured can claim only after 3 or 6 months of continued occupational disability.

As such, DI is usually needed to protect against loss of income earning ability by a person who needs to work in order to accumulate more retirement savings. That’s the reason why I didn’t suggest that nomads —those who had accumulated enough savings, are not working, and are not concerned about their ability to work for more income– consider DI. But for aspiring nomads who are working towards the goal of accumulating enough savings, they should consider this insurance which protects them against not being able to work in order to accumulate the targeted savings.

2) Critical Illness (CI):
This pays a lump sum upon diagnosis of any of a list of CI such as Major Cancer, Heart Attack, Stroke, etc.. This is taken primarily to:
1) replace one’s salary when he is down with a CI because he may not be able to work for a few years or even longer.
2) pay for medical expenses or medical expenses not covered under typical H&S.

Should nomads keep CI? I think it is good to keep a small one to cover part (2). Since he is no long needed to work, there is no salary to replace.

3) Life Insurance (LI):
This is create an Estate that has not being accumulated yet. So, a person may not have accumulated $1m, but he may buy an insurance with a death benefit of $1m to create an Estate of $1m. If he dies, his family or charity may get $1m though he had never earned that much.

Does a nomad need Life Insurance? It depends on whether he has any dependants and whether he wishes to give a legacy to any cause.

While a person who is working and still needs to work in order to accumulate enough savings for retirement needs to protect the ability of him to continue working, a person who had retired would need to protect against LTC depleting his retirement fund. That’s the difference between Disability Income insurance and LTC insurance. LTC insurance is different from DI in this fundamental aspect.

The same goes for H&S: protect against medical expenses depleting one’s nest egg.

Now, should a nomad have both insurance? It depends on whether the premium is excessively high. If the premium is under 10-15% of his annual retirement income, I think it’s worth considering, For example, for a nomad with an income of US$12,000/y (e.g. from a nest egg of US$300,000 generating 4% per year), if the premium for both insurance is below US$1,200-1,800/y, leaving US$10,200-10,800 per year for other expenses, then it is worth considering.

But in certain countries like US the premium for both insurance is very high. It may eat too much into the regular retirement income and leave too little for his expenses.

That’s why I suggested considering to buy insurance from an Asian country like Singapore, Malaysia, Thailand or the Philippines. The premium is usually lower. Also, a nomad in this region usually needs medical care or nursing home here, so it makes sense to be insured by an local insurer.

For an early retiree, the worst that can happen is he becomes disabled not occupationally but in terms of Activities of Daily Living (ADL), meaning he can't perform 3 or more of the 6 essential activities that we healthy people usually need no help with: transfering, dressing, showering, toileting, feeding and mobility. Now, when a person needs help with these, he may need to hire a maid or to be sent to a nursing home, and this costs money.

So LTC insurance to to insure the financial loss to his retirement nest egg's depletion caused by ADL disability, not financial loss due to him not being able to work and earn an income.

Which is why I mentioned LTC insurance, not DI and Critical Illness (CI). People who are down with cancer, for example, may not be able to work for a few years, and the insurance for CI is meant to cover the income loss during this period plus treatment costs that are not covered under a typical Hospital and Surgical insurance (H&S). H&S may not cover all outpatient treatments.

Now, when a person has retired, the two most important insurance would be:
1) LTC (explained above, it may deplete his nest egg)
2) H&S (same reason as above).

The need for CI would be less because the need to cover risk of temporary loss of earning ability is less, since the retiree would presumably no longer be required to work for an income. As for DI, he would not be eligible if he has no occupation as a retiree.

Now, the problem with those who retire in USA is both LTC and H&S insurance are very expensive. So, if you had read my comments, I suggested that if the retiree relocates to Asia like Chris did, then buying both these insurance from an Asian insurer may be financially sound if the premium is low and the retiree is still healthy, hence insurable without exclusions. If the premium is under US$1,000/y, it would be quite affordable. Fortunately, the premium rate may be this low for basic coverage in both areas in certain Asian locations like Thailand and SIngapore. In the USA, the premium should be much higher.

In both Thailand and Singapore, there are high-quality hospitals and nursing facilities. But as I also suggested earlier, a nomad might consider investing in a long-term VISA programme in one of the Philippines (SIRV), Thailand and Malaysia (MM2H). The reasons, beside those I mentioned, include the option to be nursed or treated there should LTC or serious hospitalisation be needed. Among these, the Philippines seems to be the best. There are good hospitals and nursing facilities near Manila. They speak good English. Cost is low.

SO, you might be interested to get a long term visa there and look at LTC and hospital insurance available in the Philippines. Worst come, you can use the insurance to cover for your hospitalisation and nursing care there. If the premium is within the range of US$1,000, I think it is stilll affordable.

And yup, Health Insurance, other Insurances and ones budget are highly subjective issues. I don’t comment on every request here anymore, as some items are more agreeable for others. But that’s just life and everyone should find his demand, how much or little one want to be insured to feel save enough to live ones life – small town in the US, beach life in Thailand, Bali, Boracay or wherever. Life is simply too beautiful to stay worried all day.

@Sunny, good for you to point out that not everyone wants to live in Small Town, USA. I, for one, don’t want to live in a small town USA for the rest of my life. I have already done it once in Colorado. It was a fun time for me at time because I was really into bicycle racing, and Colorado has a great cycling culture, but beyond cycling and skiing, there isn’t that much diversity or fun. That’s why I moved back to the East Coast. It probably will be fun to bum around a ski or cycling friendly state for a year or two, living out of an RV or a cheap rented apartment, but to be permanently tied there? No thanks.

@adventureaddict: As another finance guy, my take on insurance such as disability and LTC is that they insure against the insured person’s potential loss of future earned income. If the insured person is already early retired and do no plan on earning much future income, then the need for these types of insurance is minimal — unless one projects that the daily cost of being disabled or in need of long-term care to be much greater than being retired early and traveling. However, I still would get a very high deductible health insurance policy. It’s really not a health insurance as much as it is a portfolio insurance against being wiped out by a major hospitalization.

@Sunny. I have read on various Thailand retirement forums that a comfortable level for retirement in Southeast Asia is $2,000 USD/month in today’s dollars. I haven’t lived in SE Asia since coming to the U.S. as a teenager, but if we use Chris’ budget of $800/month as a baseline, I think $2,000/month may not be that far off if one wants a condo with a gym and a pool and nights out on the town.

Another product that is more volatile but investor-friendly is mutual funds with a targeted date of retirement. For example, if you are 20 years away from intended retirement age, then you could choose a mutual fund with ‘2030′ (2010+20=2030). It will adjust the allocation between stocks and bonds for you automatically, with more allocation being put on bonds and less on stocks gradually. This will reduce the volatility gradually. You could purchase and accumulate units in such a fund gradually. Instead of you adjusting the allocation every year, the fund manager does it for you.

For those who are investment savvy, they could buy stocks or mutual funds themselves. Generally, if you are young and are at least 20 years away from intended retirement age, you should focus on equities. Perhaps 50-80% in equities and the rest in bonds, depending on how much volatility you are prepared to experience. As you are nearer to your retirement, you generally don’t want to be upset by a major unexpected financial crisis, so you may gradually reduce the stocks %.

But whether you buy mutual funds, traditional insurance or pure stocks, the point is you are doing something, and saving bit by bit.