What is a Medicare Surety Bond and Should I Get One?
May 28, 2009
Did you know that a surety bond, in its simplest form, be it for Medicare or anything else, is insurance on a loan, against the debtor defaulting. The way that this works is that the creditor will buy a security from the insurance company, typically for an amount of money that is owed quarterly, annually, or on some other schedule of payments. If the debtor defaults on their loan, then, depending on the type of medicare bond, the person who bought the bond will either be paid off in the remaining balance of the loan, or some other predetermined amount.
The reasons why you would want to buy a surety bond for Medicare are pretty obvious. It has long been predicted that Medicare and Social Security may soon be insolvent. Recently, the government released some statistics that imply that the situation is even worse than we had originally anticipated. For the reason, it could be smart for either a young person, who is approaching the age at which they may collect Medicare, or someone who is already collecting, to buy a Medicare surety bond. In fact, it might even be smart to get a Social Security surety bond. Either way, you are giving yourself a bit of a safety net.
There is one large problem with this. The problem is that, like everything else in the world, the people who sell these surety bonds are in it for the money. Therefore, they will be priced so that you are likely to lose money. Similar to a lottery, it is more likely that you will be buying peace of mind when you get one of these than that you will ever need it, especially considering that the federal government has never defaulted on a loan before. Therefore, you have to ask yourself how much peace of mind is worth to you. Is it worth paying a percentage of what your Medicare benefits will be until you retire or don’t need Medicare any more? If the answer is yes, then you should buy yourself a Medicare surety bond.
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