Insurance World

As we work our way through life, time and experience answer a lot of questions, yet somehow, a few linger – such as life insurance. For many people, life insurance remains one of the enduring mysteries of adulthood: Do I really need it? How much? What kind? Who should I get it from?

“Determining how much life insurance you really need, and what kind is best for you, doesn’t have to be complicated,” says Patty Reiners, assistant vice president of marketing for Ameritas Direct, a division of Ameritas Life Insurance Corp. “You can begin by asking yourself some basic questions.”

* If I die tomorrow, will my life insurance cover my family’s debts?

“First, the amount your family receives must at least be adequate to pay off your personal debts such as credit cards, mortgages, student loans, etc., so you don’t leave them in a hole financially” says Reiners. “Totaling up those debts gives you a starting point to determine the most basic level of death benefit amount your family will need.”

* Will my life insurance protect my survivors’ current standard of living?

“Will your family be able to maintain their current lifestyle – stay in your house, keep kids in school, or your spouse at home?” Reiners says. “This can include extras like vacations or anything you think is important that they not have to give up for financial reasons. If your surviving spouse will likely be retired, look at your existing sources of retirement income and consider how much death benefit may be needed to bridge the gap between income and expenses.”

* What will my children need?

“Next, if you have children still at home, consider how much additional money they will need to get them to a successful adulthood,” Reiners advises. “Special opportunities such as club sports, camps, school and travel opportunities take money. Funding for extra education activities, trade school, college or even graduate school needs to be taken into account. Whatever your goals or plans for your children, they will require money to make them realities if you’re not there to fund them.”

* Do I have any special considerations?

Are you currently taking care of an elderly parent or a child with special needs? Your life insurance can help ensure they continue to be cared for if something happens to you. Do you own a business that you would like to see continue to operate? Life insurance can provide a buffer or financial support during the transfer and learning curve of new leadership. Is there a charity or organization that relies on you for support?

*What kind of life insurance should I look at?

There are two basic types of insurance to help you meet your needs: term and permanent. “Term is the most common,” Reiners says. “Term policies offer lower annual premiums, and a definitive cost for the amount of coverage.”

“Term can be right for people who want coverage for a very defined need or time frame,” Reiners says. “It’s a good choice for people with limited resources but who want to ensure income replacement. Plus, most term policies can be changed to permanent insurance at any time the policy is in effect.”

“With permanent insurance, you pay more than is needed to cover the cost of the policy. The extra builds up as cash value,” Reiners advises. “The cash value can provide flexibility, emergency cash, extra income, and can grow tax-deferred.”

Health Savings Accounts offer tax deductions for medical expenses, and the opportunity to set up an additional retirement account. But regardless of any other positive benefit of HSAs, lower premiums are the primary reason that thousands of Americans have chosen Health Savings Accounts as the best way to protect their family’s health and assets. Here are some key suggestions on how to keep your health insurance premiums low.

1. Choose an HSA-qualified plan for lower rate increases.

Average group health insurance premiums rose by 9.6% last year and rose over 10% for each of the previous six years. Individual plans went up even more. Yet it is expected most HSA plans will experience much lower rate increases. A very large study was recently published showing that rate increases over the past year for consumer-driven plans such as HSA plans was only 3.4%. Blue Cross of Minnesota has reported that its HSA customers spent 8% less than their traditional insurance clients. Humana has reported claims’ costs of 4.9% for consumer-driven plans, versus a 19.2% increase in claims for other plans. In fact, average HSA premiums for individuals have actually dropped 19.5% over the last two years.

The reason these plans have lower rate increases is that people who have HSA-qualifying high-deductible health plans are likely to pay closer attention to costs, and take better care of their health. For instance, an HSA owner offered a statin drug to lower her cholesterol may be more likely to request a generic version, or ask her doctor if inexpensive nutritional supplements such as niacin or fish oil may be a solution. These actions save the insurance company money and should result in lower rate increases.

2. Raise your deductible as your HSA account grows.

When you fund your account you build up a financial “cushion” which allows you to raise your deductible as your account grows. Every time you raise your deductible, your premium should go down.

By the way, don’t forget that every time you fund your account you get an instant tax-deduction. When you offset the tax savings against your premiums, you’ll find your net cost for an HSA plan can be very low.

The maximum allowable contribution goes up every year with the rise of the Consumer Price Index. Currently, the individual contribution limit is $2,700, and the family limit is $5,450. So each year you can deposit greater amounts into your HSA and continue to raise your deductible, if you choose.

3. Stay healthy, so you can switch plans.

All health insurance plans have rate increases, and we’ve even seen premiums jump on some HSA plans. If a rate increase happens to you, you can switch to a different insurance company – but only if you pass their underwriting requirements. If chronic disease develops, you may be stuck with your current plan, and its accompanying rate increases, for eternity. Or at least it may seem that long…

If you pay attention to the pharmaceutical commercials, you learn lifestyle really has nothing to do with disease, and it is natural and healthy to be on many medications for the rest of your life, which will then solve your health problems.

If you pay attention to the science, you know the truth is quite different. It appears lifestyle is probably 95% of the picture, and we know the occurrence of degenerative disease can be dramatically reduced and even prevented.

Fortunately, most HSA owners are interested in health, wellness, and disease prevention. After all, they’re paying for their own doctor visits if they do get sick. HSA owners are also “forward thinking” people, and like to plan for their future – both financial and physical. You can improve your odds of excellent health with just a few key habits:

- Eat very high quantities of fresh vegetables and fruits. Shoot for 35% of your calories. This will lower your risk for diabetes, high blood pressure, heart disease, cancer, and much more.

- Limit your intake of sugar and starchy carbohydrates like bread and pasta. The majority of health problems in the U.S. are related to metabolic diseases that involve insulin resistance.

- Exercise and lift weights. Exercise guru Jack La Lanne turns 93 on September 26, and he says if you have muscles you never feel old.

4. Compare your plan to other available plans at least once a year, or whenever you get a rate increase.

Often-times people keep their plan much longer than they should, and end up paying too much. If your rates go up, you should compare a wide variety of plans to determine if you are in the right plan for your needs and budget.

By using these four strategies, the typical family can save thousands of dollars in health insurance premiums and still protect themselves against unexpected major medical expenses.