Insurance has been around since the days of the Greeks and Romans. For almost every American family having insurance is a must. Yet, just because your family has insurance doesn’t mean everything is covered when it counts. Sometimes, the best of plans a consumer buys turns out to be far less than expected and at worse worthless coverage. According to the Insurance Information Institute, each year Americans spend more than one trillion dollars on insurance premiums. Mark and I are no different than the average consumer; we both own multiple types of insurance coverage and are always looking for the best bang for our buck. So how does the average consumer or retiree really know what type of insurance they need and which insurances they might be wasting money on? Here are a few guidelines our roughly 40 years of combined licensed experience can share with you.
Policy owners should always read their contracts and make sure they understand what is and what isn’t covered. Let me share a story with you. Mary came up to me at a public workshop before the presentation started and pulled me to the side of the room. She came to the workshop because she wanted to share with the attendees what happened to her. What she told me and later the group is the fact that she lost her husband and got nothing from his life insurance. Come to find out her husband had only accidental life insurance, meaning that death benefits were only paid if her husband passed away in an accident. Since he died of natural causes, zero benefits were paid. Had she understood before the fact on how her husband’s life insurance paid out, a different type of life insurance policy could have been chosen years ago.
Another policy owner that I know had a terminal illness rider on his life insurance policy. Unfortunately, he was diagnosed with terminal cancer. But because his policy had the rider, he was able to use a portion of his life insurance benefits while he was alive to take time off work and spend time with his family. Thus, make sure you know how the life insurance policy you own works and what riders and benefits are included.
Protecting assets from a health care crisis is often a concern for many seniors and retiree’s, but is buying traditional long term care insurance the best option for your family? Many consumers assume that traditional long term care insurance is the only option, yet at least 4 other options are available. Along with buying traditional long term care insurance the other options are asset based planning, life insurance policies with LTC riders, Veterans benefits, and Medicaid planning. If a health care crisis happens having traditional long term care insurance can be a great benefit. Yet, if no crisis ever happens a policy owner could have paid in thousands of dollars and received zero benefits paid out. I would recommend that consumers should become educated all each of the options to protect their assets and then make a decision based upon their own individual situation.
Annuity guarantees are also a major focus by the insurance companies of America for seniors and retirees. Our company does recommend annuities for certain situations, but it has been our experience that this is an area the average consumer is very confused on how the guarantees really work. One problem is the vast difference in types of annuity guarantees. Not only do guarantees often vary depending upon fixed, indexed, or variable annuities, but they also vary based upon various products offered by the same insurance company. Knowing how benefits work can mean literarily the difference between a family having income for life or running out of money when they least expected it. If you have an annuity or are considering an annuity, make sure you read the contract and ask questions on how and when benefits will and won’t be paid.
New insurance rates and benefits change on a regular basis. Sometimes the policy that was purchased years ago still offers better guarantees than what a new product would offer. At other times, new product designs and benefits might offer the consumer more cost savings or bang for their buck. The best thing a consumer can do is every other year do a complete inventory of all of their insurance coverage and become educated on what is really covered and where there could be gaps in coverage. Just remember to read the entire contract for a complete understanding of coverage.
