Health Insurance Investment – Investing in Health Insurance Companies

A health insurance investment can be a great idea for investors expanding their portfolios. It is not an industry exempt from economic hardship, but it is one that can withstand problems better than other types of investments. This type of insurance is a product that provides necessary services. Most people and companies are not likely to ditch their health insurance in bad times. But they will cut back on it. It is a fairly safe investment as far as investments go, but it also takes a hit in hard times.

Before considering this type of insurance investment, you should have a good idea of the basic workings of it. There are several categories of health care insurance companies. Most of these can be distinguished by the payor structure. Some companies will have payors from all the categories and some will specialize in one. Payors can be individuals, private companies, and government. Most large insurance companies have a basis of several types of payors. Understanding the payors helps you to know better what risks, cash flows, and profitability you are getting into. Of the three payor categories, private companies are considered the most stable. Each type of payor administers the insurance differently and has different products. This can also have an effect on the success of the insurance company.

When looking into such an investment, it is a good idea to draw up an MCR, or medical cost ratio. This will help you crunch the right numbers so that you can see exactly what the medical costs verses the premiums will be. In other words, it tells what percentage of the premiums are medical expenses. A low medical cost ratio makes for a better investing scenario. It is also helpful to compare the rise in medical expenses and pricing over the years. If the two are close to the same, pricing yields are lower and investing a better idea.

A health insurance investment is a great idea because it is generally safe from economic downturn because it offers a necessary service. But it is not completely safe during hard times either. As new employment slows, so does the rate of new members requiring health insurance. Companies cut back on services and raise employee deductibles in an attempt to keep overall premiums lower. That means that the insured will use the insurance less thus affecting the medical costs for the insurance company.

Watch Out, Long-Term Care Insurance Premiums Are On The Rise

Many New Seniors signed up for long-term care insurance as part of their retirement plan. The idea was to provide a hedge against the cost of extended health care needs beyond those covered by Medicare and supplemental insurance. Most policies pay for assisted-living facilities or home care, with premiums waived once benefits go into effect. Now policy holders are experiencing premium hikes that may make these policies unaffordable for some retirees.

Several insurance companies have applied to states for rate increases of up to 40%. At the same time some insurers are no longer accepting applications for employer programs and becoming more particular in writing individual policies. Insurers argue that as people live longer the claims increase over time, resulting in higher costs for the companies. Additionally, low interest rates are not helping the problem, because the insurers’ investment portfolios are producing moderate returns at best. Therefore, the only way they can continue to cover policyholders is by raising premiums.

Over the past 10 years long-term insurance premiums have remained relatively stable. That was before the firms reworked the numbers and reevaluated the costs for servicing policies in light of the baby boomers turning 65 starting next year. As they become New Seniors at the rate of one every ten seconds through 2030, the insurance companies will have more people than the current 8 million holding long-term care insurance. And these folks are expected to live longer than existing policyholders.

Those on fixed budgets are already concerned about the increasing costs for maintaining coverage. As more people retire, fully or partially, escalating premium costs could lead to some canceling their insurance. However, dropping coverage amounts to throwing money away, since the policyholder gets nothing back from payments already made. Putting off buying a policy only leads to higher premium costs. So, it’s best to review an existing policy or shop around before committing to a new one.

Although it may not appeal to everyone, having the grown children pay for the premiums, or at least the increases, is a sound solution; because it is the heirs who may be faced with picking up the cost of assisted-living or nursing care if there is no insurance. Short of that, longer waiting periods before benefits start, higher deductibles or reduced daily/monthly coverage can be renegotiated with the insurance carriers. Reduction in the number of years covered is also something to be considered. Paying higher premiums earlier, when income is still being generated; or signing up for a combination policy that offers both an annuity and long-term care are also possibilities.

The peace of mind that comes from the financial security of having long-term care insurance is important in these troubled times. Even greater is the quality care this will provide you or a loved one as you continue to live and enjoy the life of a New Senior.

Are Annuities Insurance?

Even though they are created, marketed, managed and guaranteed by insurance companies annuities are not insurance. An annuity is actually a means of ensuring payment to a beneficiary not an insurance policy. Unfortunately many people confuse them with insurance because they may provide some of the same benefits as policies.

Annuities vs. Insurance

An annuity is a contract that obligates an insurance company to make payments to a beneficiary for a specific period of time. The payments are usually funded by money used to purchase the contract. These funds can be supplemented or increased by investments in the stock market or bonds in some classes of annuity such as indexed or variable contracts.

The main difference between an annuity and an insurance policy is that the funds in the annuity have to be paid out. The money in an insurance policy is only paid if a certain risk occurs for example the death of a person covered by a life policy. Annuity payments are made automatically. Another difference is that an annuity can gain in value most contract earn interest at a fixed rate like a savings account. Variable or indexed contracts can be invested in other vehicles such as stocks or bonds.

A final difference is the basic purpose of the two instruments. An insurance policy is designed to insure against risk. An annuity is designed to protect and preserve income and ensure that it reaches the person it was intended for.

Insurance Aspects of Annuities

Part of the reason why people get confused is that annuities have some aspects or characteristics of insurance. They are an insured investment the insurance company guarantees payment. In a lifetime annuity the company guarantees a lifetime stream of income.

Many annuities also contain an insurance benefit. Some contracts contain a life insurance policy that guarantees a death benefit. Such a feature is actually a separate insurance policy that is purchased at the same time.

Most annuity contracts are also regulated by the same state agencies that regulate insurance. State governments also insure the contracts. It should be noted that variable annuities are now regulated by the Securities and Exchange Commission because they are considered an equity and not insurance.

Longevity Insurance

Some people also use annuities as a kind of insurance policy. Some contracts are even marketed as “longevity insurance.” This means are sold as a source of guaranteed income for older people.

The idea is to provide a person with a permanent source of income to augment savings and Social Security. This is not an insurance policy because it will pay out. Even though it protects a person against a risk (outliving his or her money) it also provides a regular income.

Another kind of contract that offers a sort of insurance is an indexed annuity. Some indexed contracts have provisions that are supposed to protect beneficiaries against market losses. The provision locks in higher rates of return from bull markets so the funds in the contract will not go down during bear markets. The idea behind this is to guarantee a steady stream of income for the beneficiary despite market performance. Such a provision can be thought of as a sort of insurance against the risk of market losses.

Even though they can contain insurance features and serve some of the same purposes as insurance policies annuities are not insurance. Instead they are investment designed to provide additional income for beneficiaries.

Considering Everything Before Taking Out Renter’s Insurance

For almost any kind of neighborhood you’re likely to pick a home to rent in, renter’s insurance has to be one of the cheapest and most worthwhile kinds of insurance investments you can find. For nothing more than a handful of dollars a month, you can rest in peace that your property is insured for whatever it is worth. Renter’s insurance will protect your possessions from all kinds of dangers – from theft if there is a break-in, from fire if someone leaves an electrical appliance running and sets the house on fire, and all kinds of other dangers you never would’ve suspected could befall a rented home. If this is your first time trying out renter’s insurance, here’s what you need to know before you sign on that dotted line.

The first thing you need to make your mind up about is the kind of coverage you’re looking for. Should something happen to your home, do you want to be covered so well that you can buy everything that’s damaged over again? Or do you want merely to be compensated for what those things may be worth if you sold them on the market in its condition? The latter is called cash value – it’s the worth your stuff has when it’s secondhand. If you want to be compensated for the money it will cost you to buy everything new all over again, that’s called replacement value renter’s insurance, and not only is it more expensive to get, it isn’t even easy to find. If you are intent on getting this kind of insurance, you’d better prepare yourself to search quite a bit.

If you hate the way medical insurance comes with a standard deductible for every procedure, you’re completely familiar with the way renter’s insurance operates too. The moment you go in for a claim, they’ll show you their boilerplate for the kind of deductibles they expect you to pay for each claim you make. Typically, you want renter’s insurance that asks for as little as possible in deductibles. Renter’s insurance isn’t like life insurance. You don’t get anything at the end of the term if you don’t make a claim. So technically, you’re allowed to make the premium payment at one single go – if you can swing it. If you feel better making your payments in installments, certainly, it’ll cost you a couple of dollars for the facility.

Renter’s insurance can be expensive or not depending on how much the stuff in your home adds up to. Many people are just plainly surprised to see that the stuff they’ve accumulated over the years can add up to as much as it does. Ask your friends and family about what they consider to be the best option, and go for it. One day, you could be glad you did.

Life Insurance Investment – Gains Profit, Like an Investment

The need for a life insurance is most felt when you have a family that depends on you. Insurance is important to help provide for you and your loved ones in the future. One type of insurance that is of interest is life insurance investment. It is so called because, like an investment, it gains profit.

A life insurance investment is also more commonly known as whole life insurance. There are advantages and disadvantages to this type of insurance. You must be able to study them carefully so as to arrive at an informed decision

A whole life insurance investment policy provides coverage for you for your whole life. It is unlike other life policies, such as the term life policy, whose coverage will expire after a specified period of time. If you also want to secure funds for your retirement, getting a whole life insurance is one of the effective ways to do that.

What can be considered a disadvantage with whole insurance are its substantially bigger premiums. This is understandable, though, because you are not only paying for death benefits, but you are also paying for the savings account. Because of very high monthly bills for whole life policies, many believe that it is better to choose a policy that has best premiums. Best premiums are usually offered by term policies. You may then be able to invest the money you saved from having a term policy instead of a life policy somewhere else.

Since a term insurance only lasts for a period of time, you will have a chance to get another policy with a better deal when your term policy ends. For instance, if you realize that you need another kind of coverage or if you like to have another kind of policy. Some people, on the other hand, have qualms about having their coverage discontinued. Also, when you get an insurance policy at an older age, this will typically be pricier. And though you can renew your term insurance should you want to retain it, you still need to plan ahead.

In the case of whole life insurance investment, your coverage is not disrupted no matter what changes your health condition may encounter. This is why more and more people are choosing this type of insurance policy. Having the security and peace of mind it offers are worth the high price.

The choice differs from one person to another. Depending on their needs, financial capabilities and preferences, one might choose to have a term insurance, while the other may prefer the whole insurance, while another still may want something else. Whatever your preference is, what is imperative is you do serious studying, researching and comparison-shopping of the various insurance types being offered. In the end, what you should arrive at is one that not only caters to your coverage needs but also offers you the optimum price.