Insurance Blog

Health Insurance in 2024

No doubt we are all feeling the pinch of the increase in costs across the board in our personal and business lives.  One area that has been effected has been the Health insurance market.  The market has changed by forcing us into higher deductible plans with high premiums.  There are some out of the box ways to think about Health insurance for your family that can lead to good coverage and sizeable savings depending on your situation.

Group plans:

These are plans that your employer sponsors for everyone that recieves benefits at work.  The problem with these plans is that they become very expensive as the group ages.  The group is rated as a whole, so the most expensive members of the group create higher premium for the least expensive members.  Each eleigible member must be accepted if eligible as terms of their employment, so this drives costs and premiums up as the group ages.

Pros:

• Guaranteed acceptenace

• Cannot be dropped

• Can opt back in at each open enrollment

Cons:

• High costs for healthy, low cost members

• As the group ages, fewer insurers want to bid on it, limiting competition

• As the group ages, it becomes exponentially more expensive

Out of the box ideas:

1. If you are healthy, look at a low cost individual plan and compare costs and coverages to you employers group.  Many young, healthy people can pay much less for a good plan!

2. If your employer heavily subsidizes the employee, but not the family, consider keeping yourself on the group plan and finding a private market plan for your spouse and kids.  People have saved thousands of dollars per year doing this!

Click here to get information about using one of these approaches

Individual plans:

These are plans that are underwritten by health insurance companies for individuals and families.  The underwriting department determines your premium, much like your car insurance.  If you are low risk, your premium is lower.  If you are high risk, you can be declined, or charged more for the policy.

Pros:

• low cost option for healthy people

• You can shop around for companies with the best benefits and prices to fit your needs

Cons:

• You can be cancelled or non renewed when you get too expensive

Outside the box ideas:

1. Find a plan with good health benefits for you, and use goodrx to supplement savings on drup plans.  Often, private market plans may not cover the exact drugs you need in the way you want.  You can create your own flexibility this way.

Click here to get information about using one of these approaches

ACA Plans:

Frequesntly referred to as "Obamacare" plans.  These are plans that have been approved by government in your state, and subsidies can help you afford your premium.

Pros:

• Guaranteed acceptance

• Some people qualify for subsidies to lower their premium

Cons:

• High deductible

• High premium

• limited access to providers that will accept the plan

Outside the box ideas:

1. There tends to be a very limited group of people who this is the best fit for.  Consult a broker to help you decide if this is your best option.

Click here to get information about using one of these approaches

Index Universal Life Insurance

Indexed universal life insurance (IUL) is a type of permanent life insurance that combines the death benefit protection of traditional life insurance with the potential for cash value growth based on the performance of an index, such as the S&P 500.

When it comes to buying life insurance for your children and grandchildren, IUL can be a valuable option to consider. Here are a few reasons why:

1. Tax-free death benefit: One of the main benefits of IUL is that the death benefit paid out to beneficiaries is tax-free. This means that your children and grandchildren will receive the full death benefit without having to pay any taxes on it.

2. Potential for cash value growth: IUL also has a cash value component that can grow based on the performance of an index, such as the S&P 500. This means that over time, the policy can potentially grow in value, providing a valuable asset for your children and grandchildren to use in the future.

3. Flexibility: IUL policies also offer flexibility in terms of premium payments and death benefit amounts, allowing you to adjust them as needed to fit your budget and the needs of your children or grandchildren.

4. Living benefits: Some IUL policies also offer living benefits, such as long-term care coverage, which can provide financial protection if your child or grandchild becomes disabled or needs assistance with daily living activities.

5. Potential for policy loans: Another benefit of IUL is that policyholders can take out loans against the cash value of the policy. This can be a valuable resource for your children or grandchildren if they encounter an unexpected financial hardship or opportunity, such as buying a home or starting a business.

6. Potential for more returns than traditional savings accounts: IULs can potentially provide higher returns over the long term than traditional savings accounts, CDs or bonds.

It's important to note that the cash value growth potential of IUL is based on the performance of an index, so you get all of the benefits of the rises in the market. IUL provide additional benefits through Farmers, becasue you cannot take a loss if the index loses value.  In an IUL, you have no ability to lose in your investment, but all of the upside of market gains!

Overall, indexed universal life insurance can be a valuable option to consider when buying life insurance for your children and grandchildren. Its combination of death benefit protection, potential for cash value growth, and flexibility can provide valuable benefits for your loved ones in the future.

Mortgage Protection for your Family

Life insurance is a vital part of financial planning for many people. It not only provides peace of mind for loved ones in the event of unexpected events, but it can also play an important role in protecting one of the largest investments most people make in their lifetime: their home. In this blog post, we will explore how life insurance can protect your mortgage and the benefits it can provide.

When you take out a mortgage, you are committing to repay a large sum of money over a period of time, usually several decades. This means that if something unexpected happens, such as the death of a breadwinner, the remaining mortgage payments may become overwhelming for the remaining family members.

Life insurance can help protect your mortgage by providing a death benefit to your beneficiaries in the event of your unexpected death. The death benefit can be used to pay off the remaining mortgage balance and provide financial security for your loved ones. This means that even if something unexpected happens, your loved ones will be able to keep the home you worked so hard to provide for them.

Additionally, life insurance can also provide other benefits that can help protect your mortgage. For example, if you were to become disabled and unable to work, some life insurance policies can provide living benefits that can help cover mortgage payments and other living expenses. This can provide a level of financial security and help protect your home from foreclosure.

Furthermore, life insurance can also help protect your mortgage by providing funds that can be used to pay for home repairs, renovations, or improvements. For example, if you have a term life insurance policy, you can use the funds to make necessary updates to your home that can increase its value and make it more energy-efficient. This can help you save money on your energy bills and make your home more comfortable to live in.

In conclusion, life insurance can play an important role in protecting your mortgage and the financial security of your loved ones. It can provide a death benefit that can be used to pay off the remaining mortgage balance, living benefits that can help cover mortgage payments and other living expenses, and funds that can be used to pay for home repairs, renovations, or improvements. By considering these benefits and the peace of mind that life insurance can provide, it is a valuable addition to any financial plan.

Auto Liability: What is it, and how much should I carry?

Your auto policy has a number of coverages available.  Today, we will explain the Liability portion and try to clarify what it is, and recommend how you should thin about it.

Auto liability is how much liability coverage you have if you are at fault in an accident.  If you are determined to be at fault, you will have to pay for property damage, and medical expenses for those that are also involved in the accident.  This is where your liability coverage comes in.

The state has a minimum amount that you must carry.  In Illinois, that amount is 25,000 per individual, and 50,000 total.  The property damage minimum is 20,000.  You may wonder, is that enough? What is the “right” amount?

One way to determine how much you should carry is to search for how much the average at fault accident is in your area.  In my area, the amount is just over $300,000 dollars.  Averages like this are difficult because there are always outliers that can skew the numbers, but this is a very good place to start.  In our local area, we recommend carrying at minimum $100,000/ $300,000 and $100,000 as your liability limits.

The problem with liability is that “you do not have to be a millionaire to get sued like one.” Often times, it is vital to protect your investments, retirement, and assets by carrying more liability coverage.  In many states, bankruptcy does not clear at fault accident debts.  If you are sued for more than your liability coverage, you are on the hook for paying for that amount, without any way to discharge it.

As you can see, your liability coverage is quite important, and is often a misunderstood part of your auto policy.  Ask your insurance professional about your coverage and recommendations.  If you do not have a trusted insurance professional, please feel free to call us at the Albers Agency at 618.206.6467 or contact us via the web Albers Agency.

Keith Albers

keith@thealbersagency.com

The IUL as a legacy gift for kids/ grandkids

Once thing parents and grandparents constantly think about is how to provide the best opportunities for their children/ grandchildren.  One of the best things you can do for your children or grandchildren to provide financial security for them in the future is to start an Indexed Universal Life policy for them (IUL).

IUL are great policies because they are indexed against a portion of the stock market, but have guaranteed annual growth with no losses.  For example, we have a policy for our children indexed against the S&P. If the S&P actually goes down one year, we do not realize any of that loss.  However, if the S&P is up 7.5%, we realize that gain.  This allows for money to grow without recession risk or market corrections.  This also presents a tremendous upside from the value that most Whole life policies gain in cash value.

We can invest anywhere within a low range monthly investment to a top end monthly investment.  As the investment grows over time, the value of the investment account (cash value) continues to compound on the indexed growth, without the risk of taking a loss.

First, from a parent’s point of view.  The sooner in life we start the policy for our children, the lower the insurance premium will be, and the more we will build through investment portion. We can then name our children as successor owner.  So after I pass on, my children become the owners of their policy.  They not only have a life insurance plan that I have gifted them, but they also have the value accrued in the investment account.  This value can be used tax free by what is referred to as “borrowing from the value.”

This compounded value of successor ownership is even greater for grandparents.  Grandparents can fund these accounts, name their own children as successor owners, who then in turn name the grandchild successor owner on their own passing.  What a legacy of financial freedom that a grandparent can leave through this plan!

The value of the investment can be borrowed against tax free by our children.  They can use the money to put the down payment on their home. Buy a car, etc.

There is no such thing as too early or too late.  The earlier the better, but today is a perfect time to look into leaving a legacy of financial security for children and grandchildren.  Feel free to reach out to the Albers Agency for more details.  618.206.6467

Keith Albers

The term policy that replaces debt

Term policies are the best value in Life insurance (just ask Dave Ramsey!).  These are the lowest premium life policies you can have, and they serve a very specific purpose in our lives.  In this blog, I am going to explore the layers of purpose for terms life and how to best utilize them.

1.       Mortgage Protection:  If you have a 30 year mortgage on a home you just purchased, you should have a life policy in the exact amount of the payoff to protect your home.  Example, a 30 year mortgage with a principle of $350,000 should be protected with a 30 year term policy valued at $350,000.  What if you bought your home 10 years ago?  If you have a 20 year mortgage, with a principle balance of $150,000, you should have a 20 year term policy valued at $150,000.  You see the pattern?

The last thing we want is to have our loved ones mourn our loss, and then during that same time, have to worry about putting the house on the market to support their financial future without us.  Houses are homes.  They are full of memories.  The idea of coping with loss can be comforted by being able to stay in the home after suffering loss.

2.       Debt protection:  Are there other debts in addition to the mortgage? Business debt from the family business? Autos? Credit Cards? Student loans?  Add these debt amounts to your mortgage amount and look for a policy of that value.  Term policies are the best way to support debt eradication in the event that I pass on, leaving my family to deal with life without me.

3.       Salary replacement:  When I am gone, how many years of my annual salary can I supply my wife and children with?  After I have added up level 1 and level 2, is there an amount I can afford above and beyond that?  Since term policies are the lowest premium, you can supply salary replacement in addition to debt eradication.  For example, if your current salary is 35,000, an additional 75,000 in term life can supply more than 2 full years of the salary you would have earned.  Better yet, we can advise our spouses to invest this salary replacement and take it out monthly to support themselves after we pass, extending the number of years salary we provide them with.

Want help finding a term life insurance amount you can afford? Reach out to us at the Albers Agency.  618.206.6467

Keith Albers