Hierarchy of Insurance?

[Guest]

Hello,

James wrote the following treatise

http://www.insurance-forums.net/viewtopic.php?t=475&start=30

starting about two-thirds down the page.

Anyway it discusses buying DI and LI contracts (separate contracts, not a DI rider to a life insurance policy). So it got me to thinking.

Is there any standard recommended approach to which policies a person should generally buy first. What I mean. You buy a car, obviusly you will buy auto insurance, a home, homeowners insurance.

But now let's say you get married. You are young, in your 20's. You have a modest income, just starting out as a couple.

Well upon marriage do you buy insurane? Or is it just when the wife gets pregnant. Now, how much should be budgeted for a premium (as a % of discretionary income or a % total income). What do you buy as your first policy DI or LI? Does the DI take priority over the LI or vice versa. What are the deciding factors to be considered over which policy gets the priority (remember young people in their 20's, not alot of money).

At what point in time or at what age, or stage in life does one buy DI. At what point LI. Are there deciding parameters or guideliness if a person can only afford one or the other? If a person can afford both, but not this year lets say one this year, the other one in 3 or 4 years, which should come first? Why?

How about LTC, at what point is the LTC competing with DI and LI dollars.

Thanks.

 

[midwestbroker]

From what I have seen and been learned...

LI is for income replacement. So, if you plan on being alone all your life, then you would not really need life insurance. However, if you think that you will have a family one day, then you should buy when ever you get out from your parents wings.

In what I know, most people do not buy additional DI insurance, they use the DI that comes packaged in their group benefits package.

And that is all I have to say about that...

 

[James]

I'm not going to play that young people in their mid 20's can't afford insurance, this year is expected to set records on demand of employers competing for new college grad's, great news!

I also don't think their is a industry standard on this issue, yet we can look at the odds. The odds are clear, a young person today is far more likely to be involved in a disability injury than face death. Plus if we look at the effects of the two, total disability is far more devastating than death on the pockets. When you are dead your dead, but if you become totally disable than you lose your income but still around an have financial needs, which is double whammy than death to the survivor. Plus, this is not saying anything good about us men, when a man becomes disable more than likely the woman sticks with him. Now if the woman becomes disable (according to all studies I have found) the man will take off sooner or later, which really sucks for the woman. Obviously women need DI more than men!

So I say this, DI as soon as you can afford a solid individual policy to age 65 with a "Own Occupation", or the best depending upon the occupation. Of course only the poorest of the poor 20 year olds can't afford a term policy so that is a no brainer. I would never suggest buying a WL or UL before a DI policy is funded. I would also suggest issuing a second DI policy to cover retirement savings, as it looks now some carriers will issue this policy base upon "Qualified" savings, such as a 401, Roth etc etc..

 

[midwestbroker]

James I agree with you.

But you know that you cannot change the channels or drive you policy ie. people worry more about their car and cable then insurance.

 

[Crabcake Johnny]

Are we all really expected to have auto, homeowners, health, life, ltc and disability?

If auto wasn't a law I'd drop it tomorrow morning. What a con - file a claim and the rates go up or you're cancelled. Same with homeowners - another con. Homeowners companies especially will find a way not to cut that check. Disability? Another nightmare - especially long-term disability. Unless you're clearly disabled (like Christopher Reeve) expect a huge fight with the insurance company and long delays on receiving benefits while they "investigate." Go ahead and purchase LTC, then 10 years later then actually need to use it. Financially it'll be like getting hit by a bus instead of a train.

So a tornado hits your home and you're covered? Yeah...right: http://www.cnn.com/2006/US/05/26/statefarm.verdict/

Aside from health and life it's all just bullshit. And to even bust on what I sell, do you think people are covered in a MAJOR health event? Hell no. They'll hit caps like in and outpatient therapy and go BK. Case managers take over for very expensive illnesses and dictate the level of care. So you're getting a heart pump? Sure your policy covers durable medical equipment? http://www.rd.com/content/openContent.do?contentId=26204

You have a 5, 6 8 million dollar policy? You won't get within missile distance of those numbers before the insurance company stopped authorizing treatment and procedures. "5 million" is an adversiting gimmick.

 

[midwestbroker]

People want a National Helathcare System. What about a National Auto Insurance System. Stabilize the rates and everyone with a license would have it and pay for it annually just like their plates.

 

[Guest]

James, you stated:

I would also suggest issuing a second DI policy to cover retirement savings, as it looks now some carriers will issue this policy base upon "Qualified" savings, such as a 401, Roth etc etc..

May I ask what does that mean?

- - Is one able to get a DI that will keep funding a qualified retirement plan if one is dissabled?

- - Is it something that matches the dollar amount in one's qualified savings so one does not have to draw from the plan to pay for medical expenses?

I have no clue what that means.

Thanks

 

[Guest]

John,

If auto wasn't a law I'd drop it tomorrow morning. What a con - file a claim and the rates go up or you're cancelled. Same with homeowners - another con. Homeowners companies especially will find a way not to cut that check.

May I ask, do you have homeowner's insurance?

 

[James]

James, you stated:

I would also suggest issuing a second DI policy to cover retirement savings, as it looks now some carriers will issue this policy base upon "Qualified" savings, such as a 401, Roth etc etc..

May I ask what does that mean?

- - Is one able to get a DI that will keep funding a qualified retirement plan if one is dissabled?

- - Is it something that matches the dollar amount in one's qualified savings so one does not have to draw from the plan to pay for medical expenses?

I have no clue what that means.

Thanks

Simple, if one has DI the amount generally is 60-65% of income, obviously they can not make their retirement funding as they were when working. Lo and behold, get a second policy for a limited amount to cover the pension investment dollars that is obviously can't be funded in the case of disibility. Now this is coming of age since some companies as Berkshire has given it a name!

Read about it here: http://www.lifeinsuranceselling.com/NR/exeres/63671A1B-B68A-4A3A-B2E1-558B601E84D5.htm

 

[Guest]

You have a 5, 6 8 million dollar policy? You won't get within missile distance of those numbers before the insurance company stopped authorizing treatment and procedures. "5 million" is an adversiting gimmick.

Isn't that why we have lawyers and the DOI? You're telling me that Assurant won't pay the full 8 million if you buy that rider? That's news to me. How are they going to not pay... how will they get away with it?

If so, maybe what we need to sell in conjunction with insurance is a pre-paid legal policy with a law firm that targets insurance companies? That might be a winning combo of products.

Al