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, or person designated to receive the money. It requires a premium payment in return for a predetermined amount of financial protection for your loved one or designated recipient.
- 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. Consider life insurance at a younger age to prevent higher costs.
- When to Use: It’s important to consider life insurance when you are at a stage in life when someone depends on your income. Whether that is a spouse or a child, life insurance helps cover future costs. Marriage and the birth of your first child are typically milestone events that go hand in hand with life insurance policies.
- Financial Factors: When considering life insurance, take a look at your full financial landscape. What costs would need to be paid? Things like mortgage payments, kids’ college, or simply supportive funds would all need to be examined. Working with an insurance agent can help determine the amount of life insurance you need.
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.
