In the work of the community broker of the American Life Insurance Guide Network, policyholders often ask, “Hello, I want to buy insurance”. In further communication, the policyholder will further indicate that what is needed is car or house insurance. At this time, the community insurance consultant will conduct a voluntary science popularization work: insurance such as auto insurance and house insurance belongs to the field of consumer insurance, while American life insurance belongs to the insurance with cash value and belongs to the field of wealth management insurance.
In addition to the commonality of the word “insurance” in their names, “consumer insurance” and “financial insurance” belong to completely different professional fields. If policyholders choose wealth management insurance according to the inertia of thinking about consumer insurance, they are likely to face relatively large losses and risks.
In order to correctly distinguish these two types of insurance, American Life Insurance Guide will use this article to help policyholders understand What isConsumerInsurance< /strong>Insurance, what is financial managementfinancialinsuranceinsurance , what is the difference between them >, which insurance are consumer expenses, and how to purchase< /strong>Knack of Experience.
What is consumerconsumertype insuranceinsurance?
Consumer insurance is a kind of consumer insurance, that is, the customer signs a contract with the insurance company. If the insurance accident stipulated in the contract occurs within the agreed time, the insurance company will compensate or pay according to the originally agreed amount; In the event of an insured accident, the insurance company will not return the premium paid.
We use an easy-to-understand way to understand “consumer insurance”, which is something we buy from insurance companies with money. The money handed over will be paid as soon as it is paid, as the cost of purchasing this “commitment”.
Common types of consumer insurance include:
- Home Insurance
- Car/Motorcycle/Truck/Yacht/Aircraft Insurance
- Health insurance
- Pet Insurance
- Commodity/Product Insurance
- Term Life Insurance
- Other…
What is financial managementfinancialinsuranceinsurance?
Financial insurance is different from consumer insurance. Consumer insurance does not have a cash value, while financial insurance has a cash value. To use a metaphor to understand “financial management insurance”, the policyholder goes to the insurance company to open a savings and financial management financial account, then deposits the money in it, hands it over to the insurance company, and obtains the benefits promised by the insurance.
Common types of financial insurance include:
- Participating Insurance
- Index Insurance
- Universal Insurance
- Securities investment insurance
- Annuity Insurance
- Hybrid long-term care insurance
- Other…
From this comparison, we can see that “consumerfeetype insuranceinsurance”, we we use money to pay< strong>Changea serviceCome back, wewelost all strong>moneyownershipright;“management</strong >WealthInsuranceInsurance”, it’s usWeWe strong>openset a financial account, you can access, I< strong>Wehave not lost allmoneyownership. There is such an essential difference between the two.
If we treat the allocation of “cash value insurance” according to the inertial thinking of purchasing “consumer insurance”, we will find that a policy with an insured amount of $1 million, the same brand and the same product, can be bought for $700/month, and $1500/month It is easy to get confused if you can buy it, so how should we choose? May wish to continue to look down.
How toChooseConsumerExpenseInsurance ?
The purchase of consumer insurance is a simple process of purchasing goods, through comparisoncomparison of different insuranceinsurancecompany credit and price , you can quickly make a judgment.
For example, a car insurance with a payout amount of $100,000/$300,000, and other compensation conditions are the same, but the premium of company A is $100/month cheaper than company B on average. If both companies have good credit ratings, then buy the insurance People usually choose A company’s products with higher “cost performance”.
In addition, because consumer insurance products are easy to standardize, many subdivisions have fully realized Internet insurance and claim settlement. This method can help insurance companies and agents reduce labor costs and bring benefits in terms of brand prices to policyholders. like:
Internet Car Insurance: Root
Internet home insurance brand: Hippo
Internet Renter insurance brand: Lemonade
Internet consumer term life insurance brands: Ladder / Banner / Haven
How to choose financial insurance?
Because financial insurance is essentially a “personal financial account”. How much money should be put into this account can be deduced according to the following two steps:
- Needs: Clarify “What exactly do I want?”
- Product selection and design: Policy selection and comprehensive design based on demand
1.Needs, what do I want?
To configure financial insurance, first of all, it is a selection process of requirementguideddirection (what I want).
On the demand side, from comprehensive sickness protection, tosupplementaryretirement incomeplanningtrusts and < /strong>assetssegregation,estate planningand wealth transmission Admittedly,The field of wealth management insurance has formed a set of rigorously segmented professional markets.
Every financial insurance company that enters this field has its own segmented field of expertise. Different policy products are suitable for different stages of life or different needs. A situation where one company or one product takes all does not exist and cannot exist. Only with correct product selection and reasonable allocation can the interests of policyholders be maximized at all stages.
So, returning to the above question, how much money we need to put in our policy account, whether to deposit $700/month or $15,000/month, It is completely based on the needs and goals of the policyholderGoal , choose product and program design these to decide .
2. How should I choose products and design solutions?
In the survey conducted by the American Life Insurance Guide community for policyholders, it was found that policyholders do not lack trust in “insurance”.
Some policyholders worry that insurersinsurance brokersor financial advisors themselves know and learningknowledgeand training >, is a higher level organization, knowledge of Framework deliberately filtersresults. In this training given by the upstream organization Under the framework, insurance brokerspersons or financial advisorsaccepted and mastered “KnowledgeKnowledge“ frame, yes“ Natural”withinclinations and limitations. In this case,forfrombusiness and policyholders are not beneficial.
In response to this situation, at the product selection stage, we recommend that policyholders learn and understand the relevant basic knowledge of cash value whole life insurance in advance, and have a preliminary understanding of the key questions of various design schemes—this is also what the American Life Insurance Guide Network has always advocated. Learn Before You Buy” insurance concept.
Ultimately, policyholders need to cooperate with professional independent market agents or insurance consultants, or purchase insurance from professional consultants with fiduciary responsibilitiesBuying insurance is a way of risk management. Pay a certain premium to the insurance company. When encountering a possible accident as stipulated in the contract, the economic loss suffered can be compensated by the insurance company.
Some friends may have had such an experience. When buying insurance, they thought it was too expensive and troublesome. In the end, they regretted that they bought less when the insurance was settled. In the current era where risks are ubiquitous, buying enough insurance is a reliable life guarantee for yourself and your family.
The insurance market in the United States is mature, and there are many kinds of insurance products, from car insurance to medical insurance, from life insurance to house insurance, from accident insurance for air travel to various after-sales insurance when shopping…all risks are covered. Can be converted into $$$ to measure.
Choosing the right insurance can maximize the financial stability of a family, but some insurance is not necessarily worth investing in. A certain Rain is now going to share his homework notes with everyone to see which insurances to buy and which ones to save.
Five types of insurance that are most needed
Auto Insurance
Needless to say, auto insurance, there are laws in almost all parts of the United States that require drivers to have insurance before they can go on the road. If you don’t buy insurance for driving, or don’t buy enough insurance, in case of an accident, you have to pay for the medical expenses of the injury, the repair expenses of the car, and everything else. If the responsibility is on one’s own side, and it causes others to suffer some serious permanent injuries, such as paralysis and disability, the amount of long-term medical expenses and other liability compensation is very high.
Don’t be lucky. According to statistics, there are 6 million recorded car accidents in the United States every year, nearly 40,000 people die in car accidents, and about 2 million people are permanently injured in car accidents. According to the data released by the CDC in 2010, the medical and compensation expenses caused by car accident injuries and deaths in the United States totaled more than 99 billion US dollars within one year.
Therefore, if you want to save on car insurance, you can consider increasing your self-payment limit or buying half-insurance if you drive an old car, but the amount of liability insurance must not be reduced. Many professionals recommend buying more than your total net assets. The value of the total liability insurance sum insured. Of course, friends who have extra money to drive a new car should also consider collision insurance and comprehensive accident insurance. If their car is damaged and needs to be repaired, the insurance can also be reimbursed to reduce out-of-pocket expenses.
Health Insurance
The so-called “health is the greatest wealth in life”, in the United States, medical insurance is also indispensable. Most regular medical insurance allows you to have regular physical examinations and vaccinations for free or at a very low cost, and can reimburse most of the medical expenses when you are sick, ensuring that you can afford it.
A study once said that the number one reason Americans go bankrupt is medical expenses →_→
Medical expenses in the United States are very expensive. It costs two to three hundred dollars to see an ordinary family doctor. The cost of surgery and hospitalization, tens of thousands are nothing. Ordinary working families, once seriously ill, are not far from bankruptcy.
So even buying medical insurance itself is not cheap, but many people would rather have the most basic insurance than nothing at all. Many young people in the United States cannot afford regular medical insurance premiums, so they will buy a cheaper Short Term Health Insurance (short-term medical insurance) or Hospital Indemnity Insurance (hospital fixed claim insurance), at least in case of a serious illness. Insurance can help with reimbursement.
Fortunately, many employers also provide medical insurance benefits, which can save ordinary wage earners a lot of insurance costs. Therefore, when you are looking for a job, in addition to looking at the salary, you must also consider whether there are other benefits such as medical insurance. This is also a hidden wealth that cannot be underestimated.
Home Owner’s/Renter’s Insurance
In the United States, if you have a loan to buy a house, the bank will force you to purchase Home Owner’s Insurance housing insurance, in case the house is damaged due to fire and wind, or the home is stolen or destroyed, or the owner is sued. In the case of compensating others, etc., the home insurance will compensate the loss of the homeowner, and also guarantee the homeowner’s ability to continue repaying the loan.
Even if it’s not mandatory, homeowners’ home insurance is a smart investment. Because in addition to protection for the building of the house, home insurance usually also includes claims for the loss of the owner’s personal belongings. For example, if your car is smashed and the laptop in the car is stolen, the comprehensive accident insurance of the car insurance will only pay for the cost of repairing the car, but personal property such as the laptop is not covered, and the house Insurance can cover such losses.
In addition, home insurance usually also includes homeowner liability insurance. For example, if someone falls and is injured in your territory, the home insurance will reimburse medical and related expenses; The cost and compensation can also be covered by the home insurance.
However, homeowners should also note that general home insurance does not cover losses caused by natural disasters such as floods, earthquakes, and landslides. If your home is located in a high-risk area where such natural disasters often occur, it is best to consider purchasing additional insurance.
Although the tenant does not need to consider the loss of the building, the tenant insurance will include personal property insurance and personal liability insurance. For example, if the apartment is temporarily unable to live due to fire and reconstruction, the tenant insurance will also reimburse the rental hotel or other during this period. local fees. The average renter’s insurance in the United States is only $187/year, and generally only $15~$30/month. It’s still very cost-effective to afford it without going out for a meal.
Disability Insurance
Unpredictable things happen. If accidental injury, serious illness, etc. make you unable to go to work and lose your salary, it may affect your normal life (including paying rent, mortgage, water and electricity, etc.), and the purpose of purchasing disability insurance is to When you lose the ability to work, insurance can protect your income in another way.
Although the social security system in the United States is relatively complete, Workers’ Compensation only covers work-related injuries. Unemployment does not care about the loss of labor capacity. It generally takes at least 5 months to apply for Social Security Disability Insurance (SSDI), and the approval is very strict. It is easy to be rejected, and even if the application is successful, the average benefit in 2018 is $1197/month, which is far from making up for normal income.
Disability insurance is mainly divided into two categories: Short-Term (short-term, referred to as STDI) and Long-Term (long-term, referred to as LTDI). Most of them will pay about 60% of their pre-tax income, because if an individual purchases this type of insurance, the benefits are usually It is tax-free, so it is almost the same as the actual money that is actually received after tax deduction.
Short-term disability insurance generally takes a relatively short time to pay, about three months to one year, but you can start receiving benefits earlier (usually 1 to 14 days later); while long-term disability insurance has a longer waiting time to start receiving benefits, usually 90 days Days later, but the time to pay the compensation will be relatively long, which can be several years or even until retirement. The cost of disability insurance is usually about 1% to 3% of the original income, depending on the terms of the insurance, usually the waiting time, payment ratio, payment period, etc. are optional.
Many employers also provide disability insurance benefits, you may wish to consult with HR. But be aware that if the insurance is purchased by the employer, or if you choose to purchase insurance with pretax income, you will need to pay taxes in case you need to apply for benefits. In addition, according to the information from the Human Resource Management Association SHRM, there are five state governments in the United States that provide or require employers to provide short-term disability insurance, namely: California, Hawaii, New Jersey, New York, Rhode Island, local friends can Check the official website for details.
Life Insurance
Death isn’t cheap in the U.S. According to the GoBankingRates website, the average cost of death in the U.S. is $11,618, while the median out-of-pocket funeral expenses (including visitation and cremation) is $7,360. If you are the main source of income for your family, then touch wood said that in case of XXX, your family members are likely to fall into financial difficulties, and purchasing life insurance can provide protection for your loved ones.
There are many different types of life insurance, but the most basic can be divided into two categories: Term Life Insurance (term life insurance) and Whole Life Insurance (whole life insurance).
The so-called term life insurance is to provide insurance protection for the insured within the period specified in the insurance contract (Term, usually ranging from 5 to 30 years). The period specified in the policy will remain valid until the death of the insured, and whole life insurance usually has the function of deposit investment, which can accumulate cash value, and you can also “borrow” the cash amount for use when you need it.
The premium of life insurance depends on the age and health status of the insured, and the price of whole life insurance may be several times more expensive than term life insurance for the same person purchasing the same amount of insurance. However, the price of term life insurance is usually affordable by ordinary people, and it is still worth buying a term life insurance when you are not well-off.
Especially for those who are the breadwinner of the family and who are providing houses and cars, purchase an insurance policy that is long enough (such as guaranteeing the entire loan period or until retirement age) and is sufficient to pay all debts and future living expenses of the family Life insurance is very important.
Of course, if you have won a lottery with a lot of money, your family is very rich, and your family will not have any financial pressure, then buying life insurance may not be necessary.
Five types of insurance that are least worth buying
Flight Insurance
Flying can actually be said to be the safest way of travel. It is a bit wasteful to spend money on insurance for such rare accidents, and if you have purchased life insurance, you are already covered.
Mortgage Protection Insurance
This insurance is similar to term life insurance, but the claims are limited to paying off the mortgage. Unless you are rejected by the insurance company due to health conditions, otherwise, it will be more cost-effective to buy term life insurance directly.
Cancer/Disease Insurance
It is more worthwhile to spend the money on a good medical insurance. This kind of insurance that only covers a certain disease is not necessary.
Credit Card Insurance
While there are a lot of ID Theft issues out there these days, identity theft generally doesn’t cost you much real money as long as you report it properly. Because the federal law stipulates that if the credit card is stolen, the personal liability amount is up to $50, and many banks themselves also have Zero Fraud Liability. As long as you report it in time, it will not even cost you a penny. As for the issue of credit repair, these can be done for free by yourself, it just takes some time and effort.
Child Life Insurance
As mentioned earlier, buying life insurance is mainly for people who are the economic pillar of the family to buy protection for their family members, and children do not make money, so there is really no need to buy insurance; even if whole life insurance has a certain function of investment preservation, its return on investment The rate of return may be much smaller than that of 529 Plan, IRA and other accounts. However, if your child is a small star and helps the family income, it is worth buying an insurance for the child.
