How to Deal With Rising Insurance Costs
Most financial experts will advise the young workers to start saving early. If you save early, you’ll have more time, freedom, and flexibility to let your money grow. One way of doing that is through acquiring an insurance to either protect yourself, your family or your properties.
Not only does it cover the fees should something happen to you or your properties, but your money continues to grow and it’ll help you use this fund to shoulder your future costs and expenses, especially when you retire. While the thought of having insurance gives a sense of ease and security for us, you might want to keep monitoring your costs.
Otherwise, you might be carrying the burden of paying for its rising costs. Consult with your financial advisor to help you deal with these increasing costs and how you can avoid it.
For the last three years, some major insurers have decided to increase the premium rates of their customers’ life insurance policies without informing them explicitly. They just carry over the increased costs in their customer’s annual summary billing statements.
To better understand this scenario, the financial experts have laid out an example in the 2nd most popular insurance: the homeowners’ insurance policy. Imagine if your client bought a homeowners insurance policy last year. Your insurer realized the company needs to increase their premium rates to keep up with the demand.
Typically, the insurer needs to send his client a bill with the updated information on the increased price. The client has to pay the updated premium prices to continue his coverage for another year. Now imagine if your insurer decides not to inform you of the increased prices, you would suffer a loss and soon discover you weren’t covered just because your policy expired due to the higher costs.
You’ll end up getting frustrated because you’re paying for an insurance you thought will help you in times of need, only to find out you weren’t covered anymore. This type of SOP is also affecting the consumers who bought non-guaranteed life policies.
The Alarming Trend
This alarming trend prompted the American Bar Association to publish a book entitled The Life Insurance Policy Crisis in 2017. The said book tackled about 45-55% of non-guaranteed life insurance policies that currently exist in the United States.
The Wall Street Journal also published a one-page report cover story on September 30, 2018, featuring the plights of certain individuals who’ve been affected of this increased COI for the first three years, when they have been paying for these non-guaranteed life policies for over 25 years already.
Instead of anticipating their claims, they’re now forced to pay significantly higher premiums to maintain their policies. What’s worse, the insurer has to keep all the premium without paying out their clients a death benefit should they fail to pay the increase according to the report.
How to Protect Your Insurance Costs?
If you haven’t already done so, consult your financial advisor to determine if your individual life insurance policy is sufficiently funded. The same is true for trust-owned policies. If your financial advisor doesn’t have the necessary knowledge to know, it’s important for the both of you to consult with an independent insurance consultant to evaluate your policy’s performance.
While a majority of consumers think life insurance policies only provide death benefits, most executives and business owners use their policies’ living benefits to sustain their deferred compensation and retirement plans. If the internal costs increase, it can reduce their cash value accumulations significantly.
You can also avail of a hybrid life insurance policy with investment tie-up to build your cash fund in addition to the life protection. In this way, your accumulated cash funds from your investment section can help cover for your increased costs according to most financial advisors.
More in Insurance
Tips to manage Stress and Be Careful Once Offices Resume Post Lockdown
There would hardly be anyone who’d not be excited to get back to work after the Coronavirus lockdowns are lifted. It’s...June 27, 2020
If You’re Struggling to Pay Rent or Mortgage During COVID-19, These Tips Will Definitely Help You Out
Let’s face it- when talking about monthly bills, your rent and mortgage bills sit right at the top of the list....June 26, 2020
Struggling to set your Career straight? Take a look at These Tips that are Sure to Help
The pandemic has created havoc in many industries, and thousands of people are left without jobs. If not entirely out of...June 26, 2020
How to Build a Successful Career in Event Management – Expert Tips
Unlike earlier times, today’s younger generation has a variety of career choices. Current opportunities are usually based on either the global...June 23, 2020
Struggling to Figure Out Your Next Career Move? Here’s How You Can Keep Your Professional Progress On Track With These Expert Insights
We know that planning your next career move is the last thing on your mind right now. With companies closing and...June 23, 2020
Financial Mistakes Most Millennials Regret Making During College
Getting ready for college could be one of the highlights of your life, personally and professionally. A lot of opportunities open...June 17, 2020
Here’s How Americans Are Spending their $1,200 Stimulus Checks
When the Great Recession wreaked havoc in the economy in the late 2000s, Americans received stimulus checks from the federal government to help...May 20, 2020
Students Looking for Extra Income Can Apply for These Three Online Jobs
Students usually have limited budgets. And with unexpected expenses threatening to mess with those funds, most of them are now considering...May 15, 2020
The Five Most Important Things You Need To Consider When Getting a Personal Loan
A personal loan means borrowing from a lending entity, may it be a bank or some other credit provider. It’s...May 15, 2020