It’s Insurance Assessment Time For Your Peace of Mind
First, we want to recognize that the social worker profession is noble and founded on service, integrity, and clinical expertise. At times, it can be a stressful and hazardous occupation. The nation is grateful for what you do. AND SO ARE WE! Thank you!
Here is the key takeaway of this article.
At year-end, a definite “To-Do” is to assess your insurance coverages. That goes for your…
- Auto & Homeowner’s or Renter’s policies (did you change vehicles, home, or remodel your home?)
- Personal Property Endorsement (did you buy expensive jewelry, musical instruments, or other items you wear or use outside the home that your Homeowner’s policy will not cover?)
- Professional work-related policies – Your Professional Liability policy may need to have added endorsements for expanded coverage limits that some states now require, contractors and employees added to your practice, changes in practice venues, and animal therapy, for example. As Landlords now require, you may need a General Liability policy and a higher per-occurrence limit. You may need to add a Cyber Liability policy to protect you from third-party information breach of your client records that holds you personally responsible as stipulated by HIPAA HITECH 45 CFR Part 160.
- Business Owners Policy (BOP) – That covers property and other perils in your practice.
- EPLI policy and Worker’s Compensation policy – You may want an employer’s liability policy to protect you from employee complaints and contractor billing matters and a Worker’s Compensation policy to cover the state’s required employee injuries.
- Credit Life & Disability – You may want to buy this coverage when you get a mortgage and have credit card debt. Also, consider accidental death and dismemberment coverage.
- Life Insurance – Often overlooked because these policies are voluntary.
Life insurance is the critical focus of this TIP article because Life insurance can be considered a social value, especially after the COVID-19 pandemic. As we saw hospitals overloaded with people dying, leaving their loved ones in financial desperation, life insurance took on a greater meaning, and sales increased.
Life insurance is voluntary, so frequently, it shares little wallet space. It is a legally binding policy contract providing a death benefit when the insured dies. The death benefits are tax-free and received by the beneficiary outside the insured’s Estate. Most employers offer free coverage to each employee, sometimes as a fraction or multiple of the annual salary. The two main types of life insurance are term life and whole life insurance.
A Term Life policy is a fixed term. It is a good entry point into a life insurance purchase because it is relatively affordable, simple to understand, easy to underwrite, and often guaranteed to be an issue that does not require a medical exam.
Typical questions that affect the premium are the insured’s gender, age, tobacco use, and perhaps a few other check-the-box questions, depending on the insurance carrier. Term life insurance designed for a finite period has typical terms of 1, 5, 10, and even up to 30 years.
A term life policy called burial life or final expense is a premium paid in advance product and guaranteed issue with a low benefit face in the range of $10,000 to $30,000. Many funeral directors sell this type of policy when the insured arranges funeral plans in advance. Funeral directors are among the most insurance-licensed producers in the nation. Usually, when the term life policy expires, there are annual renewal options.
However, as the insured ages, premiums increase. Death benefits decrease, which is why many people buy a permanent or Whole Life insurance policy. The Whole Life policy remains in force permanently and accumulates a cash value, provided premium payments are current.
A Whole Life policy is owned by the insured. It builds cash value for the insured and is considered permanent life insurance. These policies have higher premiums and death benefits; therefore, they are more tightly underwritten and most often require a medical exam. The fixed premiums over the insured’s lifetime suit an aging insured who still wants a life insurance benefit.
The Whole Life policy is a great investment vehicle because the insured earns interest on the cash value. And it’s subsidized by part of the premium paid each year. The insured can borrow from the Whole Life policy’s cash value for education, home repair, and other expenses—the loan interest payments to the insured’s policy have a favorable interest rate. So, the policyholder pays itself back. The remaining money due under the loan is subtracted from the death benefit if left unpaid. Whole Life insurance offers flexibility, ownership, and investment options.
Recognizing inflation is high and squeezes family budgets. Voluntary life insurance options still get a back seat or no share of the wallet. However, there is a solution to obtain insurance coverage.
Many organizations such as associations, banks, credit unions, credit card companies, and employers offer free guaranteed issue AD&D (accident & dismemberment) coverage and some term life coverage for free. The coverage amounts are small, but at least there are some benefits. They also offer upsell options to buy more coverage. Some premium payment plans have payroll deductions, and others through direct payment.
The best way to shop for life insurance is to browse the internet to learn about insurance carriers, how the products are structured, and the premiums. It is wise to shop for whole life insurance at a healthy young age because the premiums are based significantly on age and medical exam underwriting. State insurance regulators regulate all insurance products so that you will be safe in that regard. It is prudent to consider and reconsider your life insurance needs each year, mainly when life events occur, such as marriage, the death of a spouse, divorce, your age, your dependents and children grown and self-sufficient, career changes, and other life event factors.
Thank you for all that you do! Your profession is genuinely noble and needed now more than ever. Good luck, and stay healthy!