Month: June 2021

You hear a lot in the media debating the merits of term life insurance versus the merits of permanent life insurance policies, including whole life and universal life insurance.

Anyone who advocates 100% for or against any kind of life insurance structure is missing the point: The best type of insurance to own is the type that is in place when the insured dies!

And here is the addendum to that rule: The best amount of life insurance to purchase is the amount you can easily afford.There is a place for term life insurance, and a place for permanent life insurance. The most important principles to bear in mind are these: Purchase the policy that:

1.) You can afford, 

2.) Best fits your need, and

3.) Is most likely to be in force when you pass.

Focus on these three things!

Term Life Insurance

Term insurance is designed to be affordable, with a large death benefit.  The trade-off is that term insurance, as the name implies, is temporary. It is valid for a set number of years, typically 10, 15, 20 or 30 years during the set time-period, if you have kept current on your premiums. 

There are new term policies that can run up to 40 years just approved in New York State, so a 45-year-old non-smoker can purchase an inexpensive term policy up to his/her age 85.  This can be a game-changer!

The younger you are when you purchase term life insurance the better, because your rates are locked in. Conversely, the older you are when you first buy the policy, the more expensive the premiums will be. Your health condition will be considered when premiums are set.

Term life insurance can be a good fit for younger families who need a large death benefit at an affordable cost, to protect them against the potentially catastrophic loss of a breadwinner.

Permanent Life Insurance

Permanent insurance is designed to pay a death benefit even if you live to a ripe old age, and it does not expire if you keep paying the premiums. There are two basic varieties: whole life and universal life.

Whole life policies feature a guaranteed death benefit for life, guaranteed-level premiums for life, and guaranteed growth in cash value. In other words, it has a death benefit, and the savings component has a fixed interest rate that builds cash value over time.  Usually, life insurance companies will pay a higher interest rate than banks, sometimes as much a 1-1.5% higher.

Universal life policies feature a guaranteed death benefit, along with a cash-value component as well. They offer more flexibility than a whole life policy. For example, universal life policies allow you to increase or decrease your death benefit and the policy’s cash value can eventually grow and result in a zero-cost policy, in which all premiums are paid from the cash value you have amassed. 

Also, the interest rate on the cash value component is not fixed. Instead, it has a guaranteed minimum interest rate, but the rate can change over time based on market conditions.

Upon Review:

Term life insurance is the most affordable protection for young people; however, term policies are actuarially designed to lapse. Only 2% to 5% ever pay a claim.

Therefore, while term provides the most protection for new policy purchasers per dollar of premium, if it is secured later in life, it can be cost prohibitive.

With permanent policies, it is quite the opposite. Whole life policies require a larger premium commitment for the same amount of death benefit. It is like owning vs renting a house.  Owning costs more/month; however, you are building equity and can turn a profit later. 

A universal life policy costs less (it can be 20-40% less) out of pocket than whole life. If the policy owner contributes enough premiums into the policy, they can build cash value very quickly. In the long run, if you live to your actuarial life expectancy, you will receive more benefits from a whole life policy than you put into it, either via cash value or via the death benefit.

In addition, the newer policies have living benefits (long-term care like riders) that you can access to pay for some health care needs later in life while you are still living.

Are you confused yet?  We have access to more than 100 A-rated life insurance companies.  Newer policies have living benefits that older policies do not.  Do yourself a favor and review your life insurance.  Feel free to reach out to me for a free review at Rob@InsuranceDoctor.us!

Americans love their pets! Almost 7 of 10 households in America have a pet, many treat their pet like a family member.

The number of pets has increased in the past year due to the pandemic.  There are health benefits (mostly with dogs) to owning a pet, such as more exercise and lower stress and depression levels.  Dogs have 60 times more sense of smell than humans.  This allows them to detect illnesses, such as epileptic seizures and the presence of some types of cancers. 

It can be heartbreaking when a pet becomes ill or passes away.  Pet illnesses can also break your bank account!  I have seen Veterinarian bills in the thousands!  Just like shopping for your own health insurance, pet health insurance (PHI) can be complicated and expensive.  “Lassie,” America’s favorite canine TV star, was issued the nation’s first pet insurance policy in 1982.

Pros to buying a pet policy include, but are not limited to:

1. Eligibility: Cats and dogs are eligible for pet health insurance (PHI) as young as 8 weeks, up to 12 years old.
2. Premiums: Premiums are lower when your pet is healthy (no pre-existing conditions) and the younger, the less expensive.
3. Networks: Most policies (mainly reimbursement types) do NOT have networks, so you can choose your own Veterinarian.
4. Coverages: Some policies cover up to about 90% of the cost of emergency care and unexpected illnesses. 
5. Stop Loss: Having a (PHI) policy gives you piece of mind and caps the amount you would have to pay out of pocket when the unexpected happens to your beloved pet!  The worst scenario is called “economic euthanasia.”  This is when you must euthanize your pet because you cannot afford Veterinarian care.

Cons to buying a PHI (pet health insurance policy) include:

1. Pre-Existing Conditions: Your pet’s existing illnesses/issues will typically not be covered. 
2. Coverages: Not all policies cover preventative care, such as routine visits and vaccinations, or they assess and charge extra.
3. Costs: Older pets cost more as do purebred dogs and cats to insure.
4. Dealing with Insurance Companies: Many policies are reimbursement so policyholders pay Veterinary costs upfront, then file a reimbursement claim with the insurer.

Like any type of insurance, it is important to do your due diligence.  A great mentor of mine used to say, “the situation is the boss.”  One size does NOT fit all with pet health insurance, so doing the proper research is critical!

Money magazine’s top picks for Best Pet Insurance by Category for 2021 include:

• Healthy Paws– Best Overall Value
• ASPCA– Best Budget Coverage
• Figo– Best 100% coverage
• Trupanion– Best for Hereditary Conditions
• Embrace– Best for Dental Illnesses
• Nationwide- Best for Exotic Animals
• PetFirst- Best Preventative Care

Things to look for when comparing policies are deductibles, annual benefit caps, coverages, waiting periods, and premiums per month.  PHI premiums can range from $25-$150 per month based on your pet’s age, size, breed, and pre-existing conditions.  Cats can cost up to 60% less to insure than dogs.

For those people that do not want to buy a policy but would be interested in paying less for services, there are pet care monthly membership discount programs.  One interesting program (that we have access to) is the Pinnacle Pet Care Prime Membership Plan.  This “discount plan” offers unique discounted services with no forms, deductibles, or dealing with insurance companies.  Coverages include a discounted drug card, 24/7 telehealth, cashback shopping (with Target, Walmart, and Petco), dog sitters, special pet pharmacies, and lost pet recovery services.  The discount membership programs usually range from $25-$50/month.

Pet health insurance (PHI) and discount membership plans are not for everybody; however, they can really come in handy when you and your pet need it most.  My suggestion is to contact your Vet and ask if they take pet insurance and/or participate in pet discount programs.  For those interested in the discount program, feel free to reach out to me at Rob@Insurancedoctor.us.