Younger Consumers Favor Income Stream Life Insurance Benefits

Forty percent of consumers under 40 prefer a monthly life insurance income benefit while about 30% favor a lump-sum payment, according to a LIMRA survey. Scott Kallenbach of LIMRA noted that life insurance is most often paid as a lump sum. But the study reveals that products offering monthly income would have strong appeal among younger and middle class consumers. Offering these products could be a way to reach these consumers more effectively. Sixty-one percent of all consumers own life insurance to replace lost income, and 44% own life insurance to supplement retirement income. When consumers were asked about a policy that could change with their needs, 70% expressed interest with one third being very or extremely interested in these flexible products.

New Law Voids Life Insurance Suicide Exclusion for Terminally Ill

dignity

The End of Life Option Act, Assembly Bill X2-15 (Eggman) is now in effect. Under the new law, if a terminally ill Californian, who meets the criteria in the law, takes medication to end their own life, it is not considered a suicide, so life insurance policy exclusions for suicide do not apply. Under the Death with Dignity law, patients of sound mind who who have a terminal illness and meet certain qualifications can request aid-in-dying medication. Commissioner Jones said, “Terminally ill patients in California now have a choice when facing end-of-life decisions and do not have to worry that the choice will cause them to lose their life or health insurance or annuity policy…This law will make it possible for those who meet the protections in the new law to have the option to get a prescription for an aid-in-dying drug from their physician.” Consumers and their families with questions about the new law or its application are encouraged to contact the department online or 800-927-4357. 

No-Exam Life Insurance Policies Soar in Popularity as Prices Drop to All-Time Lows

LifeQuotes.com has good news for those who want to skip the traditional medical examination: An increasing number of highly-rated life insurers now offer no-exam underwriting up to $500,000, which dramatically simplifies and speeds up the purchase process for life insurance shoppers. Some no-exam plans offer instant-decision underwriting, depending upon the applicant’s age and state of residence. LifeQuotes.com founder and CEO, Robert Bland said, “A sea change of product improvement is under way in the U.S. life insurance market, and the news could not be better for middle market consumers. More and more life insurers are adding no-exam plans up to $500,000 that offer instant underwriting at unheard-of rates, which puts high quality life insurance within reach of every American adult who has dependents and a need for life insurance.” Rob Goss, executive vice president said, “The new generation of no-exam plans offer a full suite of initial rate guarantee periods, typically ranging from 10 years to lifetime and there is very competitive pricing available for individuals who have non-life threatening health conditions.” Underwriting for most no-exam plans involves e-signatures and/or recorded telephone interviews. The no-exam insurers typically require U.S. citizenship, a valid Social Security number, and a valid U.S. residence. In some cases, coverage may be available to U.S. residents who are temporarily living abroad.

Millennials Are Less Interested in Workplace Benefits

Today’s youngest workers are less interested and knowledgeable about their benefits, and prefer life insurance over health insurance, according to a study by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates. (Millennials were born 1982 to 2002; Baby-Boomers were born from 1946 to 1965; and Generation Xers were born from 1966 to 1976). The study reveals the following about Millennials when compared to GenXers and Baby Boomers:

  • Millennials are less likely to say that health insurance is the most important benefit.
  • Millennials are more likely to say that life insurance and paid-time-off are the most important benefits.
  • Millennials are less likely to say that benefits are extremely important in their decision to accept or reject a job.
  • Millennials are more likely to be open to non-traditional ways of obtaining benefits.
  • Millennials are more likely to say they don’t know about their benefits.
  • Millennials have lower participation in various employee benefit programs.

Financial Impact from Death of Spouse or Partner Has Grown Since Recession

The premature death of one’s spouse or partner brings even greater financial consequences than it did several years ago, according to a study by MetLife. Previously conducted in 2009, the study found that fewer surviving spouses or partners say they are very financially secure, and 32% say they are not at all financially secure a year after their partners’ deaths. The study looked at surviving spouses or partners of people who
died before 63 over the past seven years.

Many who thought themselves relatively well-insured found their insurance coverage insufficient in today’s economic climate. Only 68% of those with life insurance benefits representing three times the annual incomes of their late spouses or partners found the proceeds very helpful, down from 81% in 2009. Surviving spouses’ incomes one year after their partners’ deaths are lower than in 2009, and they are more likely to report a marked impact on financial security and lifestyle (e.g., having to move, reducing spending or borrowing money). Only 49% of families say they have completely or somewhat recovered financially from a death that occurred as many as seven years ago.

Only 49% of surviving spouses were involved in selecting their partners’ life insurance policies and values, and only 26% of deceased spouses had a will at the time of death. As economic pressures have raised the downside risks of being under-insured, employees remain largely dependent on workplace policies. Three in four deceased had policies through their employers, and 71% of all insurance proceeds that survivors got came from group policies. With coverage fully paid by the employer less common now than in 2009, it has become more important for employees to have the opportunity to purchase life insurance in the workplace, where they often have the convenience of payroll deducted premiums and competitive group rates.

Survey Finds Gaps in Latinos’ Understanding of Employee Benefits

Only half of Latino employees say they know how much they spend monthly on their benefits, how much life insurance coverage their family needs, whether they are on track to retire comfortably, and how much they should be spending on their benefits. according to a Mass Mutual study.

Many Latinos surveyed said that learning more about their finances is too complicated, confusing, and time-intensive. Seventy-six percent of Latino employees don’t use an online financial tool to manage their retirement, healthcare and other forms of insurance. However, 81% say that would be likely to use such a tool if it were free. This study finds that many Latino employees cite difficulty, time, and a lack of information about where to go and whom to trust as the reasons for not knowing more.

To help provide more educational resources, MassMutual launched MapMyBenefits (available in English only), a free, online tool that enables employees to prioritize their benefits choices and make the most of each benefit dollar based on life stages, financial goals and personal finances. The holistic approach to financial planning at the workplace combines retirement readiness, healthcare coverage and preparation for life’s unforeseen events.

Five Steps For Tracking Down A Lost Life Insurance Policy

The Insurance Information Institute offers the following steps to uncover unclaimed life insurance benefits:

  • Look for insurance-related documents: Search through files, bank safe deposit boxes, and other storage places for insurance-related documents. Also, check address books where insurance agents or companies may be listed. The insurance professional who sold the deceased their auto or home insurance may be able to confirm the existence of a life insurance policy.
  • Contact the most recent employer: If the deceased was working at the time of death, they might have been covered by an employer-sponsored life insurance policy. If not, the deceased may have converted their employer-sponsored life insurance into a permanent individual life insurance policy when the job ended.
  • Review bank books and canceled checks: Look for any checks paid to a life insurance company.
  • Check with the state’s unclaimed property office: If a life insurance company knows one of its life insurance policyholders has died but cannot find the beneficiary, the company must turn the death benefit over as unclaimed property to the state in which the policy was bought. If you know where the individual life insurance policy was purchased, you can contact that state’s government to see if it has any unclaimed money from life insurance policies belonging to the deceased. The National Association of Unclaimed Property Administration is a good place to start.
  • Try the MIB database: The not-for-profit MIB Group, Inc., a consortium of life and health insurers, maintains a database of individual life insurance applications underwritten since 1996 by MIB member companies.

There is a fee of $75 per search. For more information, visit iii.org.

Life Insurers Want to Make It Harder to Collect on Policies

Life Insurers Want to Make It Harder to Collect on Policies
Life insurance companies and other corporate interests are pushing for a change to the Uniform Unclaimed Property Act that would make it harder for people to collect on life insurance policies, according to a report from Allied Progress.

They are pushing to allow corporations to limit the time in which property must be claimed. They also want to make it harder for states to use non-governmental professional auditors to enforce existing unclaimed property laws and ensure such property is reported by large multi-state corporations.

In addition to pressure from these corporate interests, the report details how a longtime ULC commissioner responsible for co-chairing the drafting committee has worked to undermine state unclaimed property laws and is a partner in a law firm whose clients would benefit greatly if the Act were gutted.

In addition to life insurance, efforts are also being made to change provisions of the Act as it relates to forgotten bank accounts, unused gift cards, and other unclaimed property. Among those leading the charge for changes are the U.S. Chamber of Commerce and the American Council of Life Insurers.

Allied Progress executive director Karl Frisch said, “You’re talking about people who don’t even know they are entitled to a life insurance claim. To make it easier for a corporation to hold onto these benefits and keep them from the rightful owners…is unconscionable. Members of the Uniform Law Commission need to stand strong in the face of these powerful corporate interests.”

The report, “Death Trap: How Powerful Special Interests Are Looking to Cash in on the Bereaved and Unsuspecting,” comes as a drafting committee of the Uniform Law Commission (ULC) meets in Washington, D.C.  to discuss possible changes to the longstanding Uniform Unclaimed Property Act. These changes could be recommended to state legislatures. To date, around 40 states have adopted some version of the Act over the years.

The ULC most recently made changes to the Uniform Unclaimed Property Act almost 20 years ago, stating that the measure was aimed at preventing “ordinary people for the most part, from losing their rights to property that is justifiably theirs. It is theirs because they earned it, inherited it, or were given it.”

Busting Employee Benefit Myths

Busting Employee Benefit Myths

  • Adding non-medical benefits would break the company’s budget:Affordable group dental, disability, vision, and life insurance options are available for companies with two to 99 employees. Adding benefits doesn’t have to mean adding to the benefit budget. Fifty-six percent of employees are willing to bear the cost of ancillary benefits, according to a recent MetLife study. Sixty-five percent of employees agree that having customized benefits would increase their loyalty. Employees who are satisfied with their benefits are nearly four times as likely to be satisfied with their job. A study from the Center for American Progress estimates that replacing an employee costs an average of 20% of their annual salary. So if a worker making $50,000 a year quits, you’ll pay roughly $10,000 to cover the lost productivity and then recruit and train someone new. It’s a better strategy for employers to focus on retaining key employees and driving increased satisfaction through benefits. This is especially important for small businesses where the cost of replacing an employee may be higher because it may be less likely that other employees have been cross-trained to fill in the gap. Brokers should discuss how the cost of benefits can be shared and that employees are willing to take some of the responsibility. Also, address the financial implications early on to show small business decision makers how non-medical benefits can add to their businesses.
  • Administering Group Benefits Is Too Time-Consuming: Consolidating multiple coverages with a single carrier can reduce administration. Exploring new channels, such as private exchanges, can help identify opportunities for increasing benefit choices while reducing administrative burdens. Making carrier recommendations based on services, ease of implementation, educational resources, and customer understanding as well as price will give small business decision makers the support they need.
  • Dental Insurance Isn’t Important: Dental insurance is a benefit that is in high demand—and highly utilized—by employees. Sixty-three percent of Gen Y and Baby Boomers are interested in purchasing dental insurance at work. More than half of Gen X are interested in purchasing this coverage. According to the National Association of Dental Plans (NADP), people without dental insurance are less likely to get dental care, which means missed opportunities for prevention and early treatment. In fact, the NADP finds that those without dental benefits report higher incidences of other illnesses: sixty-seven percent are more likely to have heart disease; 50% are more likely to have osteoporosis; and 29% are more likely to have diabetes. The Centers for Disease Control and Prevention finds that more than 164 million work hours are lost each year due to dental problems. By offering dental benefits, employers can capitalize on the link between oral health and overall health and lay the foundation for a healthier, more productive workforce. Small business brokers should discuss this link with their clients.
  • Benefits Won’t Help Attract Employees: According to a 2014 study from the Employee Benefit Research Institute, 76% of employees say benefits are a very or extremely important in their consideration of a job offer. Brokers should explain how small business owners can leverage the benefits they provide.
  • Benefits Won’t Help Retain Employees: According to Glassdoor.com, 48% of employees are confident that they can find a job that matches their compensation level within six months of starting a job search. With that in mind, small business owners need to evaluate what they are offering to employees beyond salary. What added perks will make employees feel valued enough to keep them from looking around in the first place?  CareerBuilder reports that 58% of respondents identified better benefits as the best way to improve employee retention. Offering better benefits means offering a range of benefits to meet a variety of employee needs; this includes medical plus ancillary options that employees can choose from and pay for on their own. Employees who are satisfied with their benefits are nearly four times more likely to be satisfied with their jobs, according to MetLife’s study, once again reinforcing the impact benefits can have on existing talent. Not offering a range of employee benefits opens the door to competitors looking to attract high-performing employees.

Lack of Understanding Leaves Almost Half of Americans Without Life Insurance

Only 51% of Americans own life insurance; a primary reason is that the product is highly misunderstood, according to a Northwestern Mutual study. Fourteen percent of U.S. adults say they don’t own life insurance because they don’t know much about it or never thought about it. Forty-three percent say that life insurance is too expensive, and 31% say that it’s a low priority compared to other expenses. The survey also reveals the following:

  • Only 23% know that life insurance can be used to pay mortgages and debts.
  • 15% know that life insurance can be used to pay estate taxes.
  • 12% know that life insurance can be used to instantly create an estate.
  • 8% know that life insurance can be used as a source of cash flow in retirement.
  • 5% know that life insurance can be used to help pay for college.

Last Updated 10/28/2020

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