Covid19 Insurance Update
Hello Colleagues:
Its' been said that the only constant is change. We're experiencing quite a change. As a former social worker and insurance broker, I know that one way to cope with uncertainty is to be pro-active. This includes an optimal work-life balance, resisting the urge to spend more than we should, and assessing our plans, goals and our WHY.
Insurance helps us maintain stability through planning and protection. We can also save money and reduce risk for our college, retirement, and 'rainy day' savings. One reason I offer a variety of insurance is because I have significant healthcare, retirement plans, and insurance experience. The other reason is so your family and/or business can have one point of contact to handle your insurance policies, answer your questions, and advise you about certain State and federal programs. The point of insurance is peace of mind, so not wondering who to call for what coverage only solidifies this effort.
Here are some tips for the near future regarding some of your insurance.
Auto Insurance
As you may know, some carriers are offering a 10-15% discount for April and May. This should be automatic, though plan on reviewing both correspondence from your carrier and your bill, to ensure you've received the correct discount. What you may not know is that some carriers are offering this discount to NEW clients as well. So, now would be a great time to compare rates.
Especially since most carriers are offering discounts, don't over-adjust your mileage. For example consider not changing from 15,000 to 8,000 miles. You may drive more than usual when restrictions are lifted and carriers may question 8,000 miles in California.
If there's a car you aren't going to be driving, instead of canceling the policy, keep comprehensive coverage. This is so that its protected for loss due to theft, vandalism, etc.
Health Insurance
Around this time of year, people usually can't enroll in or make health insurance plan changes. However, California has a special enrollment period due to the Covid19 pandemic and response. If you've lost coverage due to Covid19, you can shop for and enroll in a new health-plan. If you have a plan through Covered California and experienced an income change, you can see if you are eligible for additional assistance from the State and federal government or change plans.
With that being said, consider that if you've spent money towards your deductible, changing plans means starting over with a new deductible. Related to this, you may now believe that either your plan has higher out-of-pocket costs than you'd expected or you've realized its more likely that you'll need healthcare services than when you purchased coverage. There is a way to affordably address this problem without necessarily changing plans. Supplemental insurance like hospital income, accident, and critical illness coverage can help you with these costs. This way, you don't start over with a new deductible, don't face the possibility of changing providers, and don't have to address approvals for specialists or medication you may have already received.
Life Insurance
People are asking if now is a good time to consider buying life insurance, what might the marketplace look like in the future, and if their current policies are safe. Now is a good time to buy life insurance and here's why. Over the last 5-10 years, life insurance premiums have decreased. We can't say that about most other products and services. However it's expected that premiums will remain level or increase given the uncertainty of Covid19, as well as that it reminds the industry how quickly a pandemic can occur and have drastic effects on the country.
Its also a good time to buy life insurance because underwriting criteria will probably become a bit tighter. Some carriers are starting to add more questions to their applications regarding travel, recent illnesses, and exposure to people with Covid19. Additionally, some carriers are not considering what may have been considered a borderline case, based on age, medication, and or health conditions. These trends will only increase and continue in the future.
Especially in a state like California, your current life insurance policy is safe. The State requires that carriers have the resources (and reserves) to pay claims, including when a higher volume of claims are submitted than anticipated. So, there's little reason to doubt that your current policy is reliable.
A separate question is whether your current policy still meets your needs. For example, if you have a term policy nearing the end of the 5, 10, or 15 years, it may be time to consider a new term policy or conversion to a permanent policy. You would also benefit from re-assessing your life insurance needs. For example, if, when you bought your policy, you owned a home, though now have nearly paid-off the mortgage, your needs have changed. If you were renting when you bought your policy and now own a home, your needs have increased. Additionally, if you didn't have kids and now do, you will want to name them as beneficiaries. On the other hand, if your adult children are quite successful, you may want to change beneficiaries.
I've alluded to permanent insurance. This allows you to accrue cash value, which can be borrowed against, guarantees coverage for your lifetime, and may include coverage for chronic or severe illnesses. You may have read stories where a business owner's life insurance policy saved her business. This is because she could borrow from the policy and continue to meet expenses, including not having to drastically limit her marketing budget. This pandemic has reminded us that no one has a crystal ball and being offered affordable life insurance coverage is not guaranteed. So, permanent coverage now has even more value.
Disability Insurance
This is one of the most overlooked kinds of coverage. Many have seen that the likelihood of a hospitalization and missed work is higher than previously thought. You protect your car, home, and possibly your phone. Why not protect your income? Disability insurance benefits cannot exceed 66% of your income. Let's take this a step further. If your income is $40,000, 66% is $26,400. If you have a group disability plan, the benefit is taxable. So, if you are at the 25% tax rate, this $26,400 becomes $19,800. In reality, this is 50% of your usual income. So, it makes sense to consider an individual disability plan. Because these policies are purchased with 'after-tax' dollars, the benefits are not taxable. Therefore, the $26,400 benefit is your true 'take-home' benefit. This is a $6,600 difference on an annual basis. $6,600 / 12 is $550 per month. Considering that, based on this income, its unlikely the premium will be $550, an individual policy provides significant value.
Annuities
Annuities are technically an insurance product that offer an alternative to common types of investments. Traditional annuities accrue interest based on a modest rate. Newer, indexed annuities pay interest based on an factor related to a market index or similar. Though, you typically can't lose principle and will not earn as much as if you had a market-based investment. Something else to consider is the Moody's, Fitch or A.M. Best rating of the carrier. This -suggests- the carriers ability to continue to make good on its obligations. As with anything else, something that sounds too good to be true, probably is. So, significant diligence is necessary when considering an annuity.
As the song goes, "The times, they're always changing." So, its important to slow down, assess where you're at, overcome any irrational thinking, and discuss your concerns with family, friends and financial and insurance professionals. We're here to help.
Courtesy of: Marc J. Feldstein Feldstein Insurance Services 951-384-1857 [email protected] Cal. Lic. 0K28918