Us older millennials (which I classify myself as, regardless of what my coworkers say) recall the days when Michael Jackson was Moonwalking, good music was still being made, thermal fax machines were a new invention and the Internet was just a baby. Ah, the 80s, life was so much simpler then. But does simpler mean better? Back in the 1980s there was no long term care insurance being marketed, as your life insurance options were a one-year term or permanent life insurance, and to compare your auto or homeowner’s policies you had to pick up a phone and TALK to someone.
I can hear the audible gasps from the younger readers of this. Yes, back in the day somewhere in time before the Internet and after smoke signals the only way to compare policies or review coverages would be to pick up the phone and discuss it with a live human being. So now fast forward from 1985 to 2019 and what has changed? Well, I think this thing called the Internet might be here to stay, so we better learn to grasp the impact this might have on the most exciting of topics, insurance.
I remember when I was with MetLife back in 1988 and we got our first thermal fax machine in the office. You would get a 22 page fax that would take about an hour to print and then you had to unroll and organize the Dead Sea Scrolls it resembled for the next 30 minutes. So was that better? Probably not, but if we didn’t compare to what is in existence today then maybe it isn’t so bad. The same could be said about insurance. Just because the policy you bought five, ten, twenty or thirty years ago was right back then does not make it right for your circumstances today. This is the biggest mistake I see today, is that people don’t periodically review their coverages and ask themselves (and hopefully, their agent) why do I have this policy, it is it still right for me today and is it the best that I can do for the money that I am spending?
I just read yesterday that Nationwide is introducing a program that will charge individuals for their usage and driving habits for their automobile coverage as determined by the little black box they would get installed on each vehicle. If you recall I believe that sage of insurance known as the Vienna Visionary (i.e., me) wrote about that little black box and the changes that it might bring about a few years ago. Is this right for you or not is another topic, but it should definitely be something that you consider when looking at your auto coverage. You might say, "That is fine Vienna Visionary, but what about my other policies like life insurance or long-term care insurance?” For the answer to this question I thank you for a wonderful segue to my next discussion.
Back in 1988 when I was unravelling the fax I had just received, the universe of life insurance was either permanent life insurance or term insurance. The term insurance existing back then was most often a policy where premium adjusted annually (known coincidentally as One Year Term). Some companies offered terms guaranteeing premiums for five years, but at substantially higher premiums. Then the Internet came along and the universe exploded with a myriad of different options with policies where the premiums guaranteed anywhere from 1- 40 years or more and comparisons became just a point and click away. The idea that everyone needed permanent life insurance faded as pensions become less than the norm and more the exception. So now I probably don’t need lifetime coverage as my death in retirement would have little financial impact upon my survivors. So does this mean the policy I bought five, ten, or fifteen years ago needs to be reviewed?
The simple answer is YES because life happens. You need to know the following: if the policy you have is currently needed?; is it the right amount and duration?; is the premium competitive?; how does it fit into my overall financial plan?; and if you are not doing this as part of a financial plan I would suggest that you do so. Now you have policies combining long-term care insurance with permanent life insurance to assure policyholders they will either get use of their long-term care benefits or their beneficiary will get a death benefit from the life insurance associated with that contract. Is this type of policy right for you? And the answer is….. Who knows? The one way you will find out the answer is to sit down with a financial professional and discuss the options. Perhaps it is perfect for your situation or maybe it makes no sense at all, but if it is not at least considered as part of an overall financial plan, then you could be making a costly mistake.
The conclusion to this is simple: review your insurance because otherwise it might be as useful as that thermal fax machine.