As your career and family grow, your health, your assets, and your family’s future all become increasingly more valuable. There is simply more to protect. In today’s world, it’s hard to know what is coming around the corner, but one thing you can control are the safeguards you put in place protect your future: Insurance.
Navigating the ins and outs of insurance can become complex, so we have compiled a quick guide of baseline insurance products, when to use them, their rate factors, and financial factors to consider before purchasing a policy.
Life Insurance
Life insurance is a binding agreement between you and your insurance company stating that, upon your death, the insurance company pays a cash benefit to your beneficiary — the person you designate to receive the money. In exchange for a premium payment, life insurance provides a predetermined amount of financial protection for your loved ones or designated recipient.
There are different types of life insurance to consider, including term life insurance, which offers coverage for a specific period, and whole life insurance, which provides lifelong protection and can also build cash value over time. Understanding the differences between these policies is essential when choosing the best life insurance for families.
- Rate Factors: The main factors in determining your life insurance rate are health, age, type of policy, and the size of the death benefit. This means the younger and healthier you are, the lower your rate. To secure affordable life insurance, consider purchasing a policy at a younger age to prevent higher costs later on.
- When to Use: It’s important to consider life insurance when you’re in a life stage where someone depends on your income. Whether that’s a spouse or a child, life insurance helps cover future expenses. Major milestones like marriage or the birth of your first child are often the right time to explore your options for the best life insurance for families.
- Financial Factors: When evaluating your life insurance needs, take a comprehensive look at your financial situation. What expenses would need to be covered if you were no longer around? Think about mortgage payments, children’s college tuition, or general support for your loved ones. An insurance agent can help you determine the appropriate amount of coverage and whether term life insurance or whole life insurance is right for you.
Long Term Care Insurance
Long-term care insurance (LTC) is a policy covering costs related to long-term care like nursing home care, hospice services, home aids, and more. The average cost of a private room at a nursing home without insurance can be $7,698 per month[1]. An LTC policy can help reduce your out-of-pocket cost substantially.
- Rate Factors: Multiple factors are evaluated when establishing LTC rates including age and health, gender, type of coverage and type of policy.
- When to Use: LTC insurance is best used at or around retirement as you prepare for senior years. Poor health, age over 80, and pre-existing conditions can increase cost and eligibility so investing in LTC proactively is a wise strategy.
- Financial Factors: According to the American Association for Long-Term Care Insurance, the average cost of LTC for a 55-year-old male is $900 a year. Consider the cost savings on senior care as you hit retirement age to help reduce health-related financial stress on your loved ones.
Medicare Supplemental Insurance
Medicare Supplemental Insurance or “Medigap” is a policy used to aide in health costs not covered by Medicare in individuals over 65.
- Rate Factors: There are nine factors used to impact your Medicare Supplement Rates including location, gender, age, tobacco use, household discounts, how you pay, rate increase history, timing of enrollment and rate locks. For more information on each of these factors, reach out to one of our knowledgeable insurance agents.
- When to Use: After you turn 65 and have established a Medicare plan around retirement years, Medicare Supplemental insurance is a great option to consider. Reducing overall medical costs in senior years helps you enjoy more of your hard-earned nest egg.
- Financial Factors: To lower out-of-pocket costs, create access to a wider network of medical professionals, and manage costs for deductibles and outpatient services, Medigap insurance is a strategic investment in your health and finance management.
Annuities
An annuity is an investment comprised of a group of insurance products that pay tax-deferred income after making payments to an insurance company. It is one other channel to accumulate funds for retirement.
- Rate Factors: Primarily, annuity payouts are based on interest rates and life expectancy. This means women and men are paid out at different rates based on average lifespan. In a higher interest rate environment, like our current economic state, annuity payouts are typically higher.
- When to Use: It is suggested by investment professionals to leverage an annuity after all 401k and IRA options are maxed out due to varying fees. The earliest withdrawal on annuities is 59 ½ making them a prime retirement investment option. Stock market volatility typically has less of an effect on annuities compared to 401k investments making them more secure in times of inflation and economic instability.
- Financial Factors: If you have maximized most investment vehicles and are looking for a stable, tax-deferred channel to invest funds for retirement, an annuity might be right for you.
Bankers Life Can Help
Bankers Life is here to help you with your insurance needs. Click here to get more information on Life Insurance, Long-Term Care Insurance, Medicare Supplemental Insurance, and Annuities, or talk to an insurance agent to get started.
