04/04/2022 Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it. Thing One Life Insurance Is back On The Radar It’s not something any of us like to think about, but none of us will live forever. As such, and considering that many of us will not have saved enough to look after our loved ones should we pass away prematurely, life insurance has a critical role to play in our financial planning. The older we get, the more we think about that idea but lately, even the younger crowd is thinking about mortality. To that end, the following is an excerpt on the topic from the Wall Street Journal: “…More younger adults have been looking for life insurance since the pandemic began. Applications for life insurance policies jumped 3.9% year-over-year in 2020 in the U.S., according to MIB Group’s Life Index—the biggest annual increase in records going back to 2012. Applications were up nearly 8% in 2020 among people under age 45. In 2021, applications rose 3.4%, with the most growth coming from those ages 31 to 50. One source of the increased interest in life insurance was people whose jobs exposed them to Covid-19 before vaccines became available—service workers, first responders, teachers, healthcare workers… But the effects of the pandemic made many people of all kinds consider their mortality and re-evaluate their finances…” The young author of the piece from which the excerpt above was taken also offered a personal take on the topic: “…For Ryan and me, one of the driving forces behind our decision to get life insurance was the death of my father-in-law at the end of 2020. As our family grappled with the sudden loss and the many loose ends Ryan and his brother were left to tie up in the wake of such a loss, I was a witness to the pile of costs that were left to the survivors: attorney’s fees, remaining bills, cremation costs. His father had some life insurance that eased the burden on the two sons. The pandemic—especially before vaccines were available—made everything feel uncertain for us. We isolated ourselves entirely and took every precaution to avoid possible infection, but we worried that at any moment one of us could fall ill and leave the other in the lurch. Our youth gave us little comfort as we watched the death toll rise. I thought of what Ryan would be left to cover in the event of my death. He would be responsible for the entirety of our Brooklyn rent, which neither of us could afford alone, and we were looking at buying an apartment in Manhattan, which would be just as costly. Ryan would lose my health insurance coverage, and the costs of his chronic health condition would soar as they had before we were married. I thought, too, of my younger brother, who was nearing the end of high school. I had hoped that once he started college I could help him pay for textbooks or other incidentals. I imagined what it would be like if I wasn’t around. Ryan did similar calculations, had similar thoughts, and we came to the same conclusion: Whatever we could do to be prepared, we would do…” Again, nobody likes to think about life insurance, but almost everybody should. And the younger you are the better as age and health are the key determinants in pricing. As with most of the topics discussed in this newsletter, we can help.
Thing Two Are You Getting All The Discounts? Property and casualty insurers often offer discounts to their customers. If you aren’t getting all of them, or at least most of them, you should take the advice the famous Mowtown singer, Smoky Robinson, attributed to his mama. More on that later. For now, if you own a home and a car, you’re likely at least familiar with the “bundling” concept, which is an arrangement in which an insurer will offer a discount to a consumer for agreeing to purchase both policies from them. But there are other discounts offered by P&C insurers that, when stacked together, can be substantial. Typically the discounts are the most advantageous to “good” consumers (low claims profiles) with long histories with a previous carrier. See below for an actual example of the discounts offered by one property and casualty insurer in Georgia: Paid In Full Discount (12%) – Most people are conditioned to pay their insurance monthly so they don't consider this one, but the savings can really add up. Prior Carrier Tenure Discount (Up to 32%) – If you’ve been with your prior insurer for 72 months or more, and don’t have lots of claims, this insurer will give you a massive discount. But even if you haven’t been there that long, they’ll give you a break in 1-year increments up to the max of 32% off at six years. Advanced Notice Discount (Up t0 18.5%) – If you intend to switch to a new carrier, this insurer will give you a 10% discount for a 1-day notice and an 18.5% discount for 15 or more days of notice. Taken all together, the savings (from discount stacking) off the list price could be quite significant for a person with a multi-policy, long-tenured, profile in which they provide the insurer with advanced notice of their intent to switch. Again, these numbers apply to a specific insurer but the marketplace is competitive, so other insurers offer similar discounts. This is just one more reason for the consumer who has gotten comfortable with his current insurance provider to heed Smoky’s mama’s advice: You’d better shop around.
Thing Three Just A Thought "Courage is not the absence of fear, but rather the assessment that something else is more important" - Franklin Delano Roosevelt