4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea

By Melissa Horton | February 21, 2016

Purchasing life insurance coverage is often low on the financial planning priority list for individuals who are young and healthy. The need to have assets set aside to cover final expenses, debts or income replacement for a spouse and dependents is hardly a pressing thought when health concerns and thoughts regarding the reality of mortality are not present; however, the cost of waiting to secure life insurance coverage can be insurmountable should something unexpected happen. Regardless of the type or amount of life insurance coverage purchased, there are compelling reasons to have coverage sooner rather than later.

Ease of Qualifying

The majority of term and permanent life insurance policies require a degree of medical underwriting, which often includes the completion of a truncated medical exam and questions regarding personal medical history and family health history. An individual who has had past medical issues will face difficulties in qualifying for a new life insurance policy as the insurance carrier will view him as a higher risk. Additionally, an older individual may not be eligible for coverage after a certain age, regardless of his health profile. Applying for life insurance coverage when health and age are of no concern allows an individual to qualify without the risk of being declined from an underwriting perspective.

Cost Savings

Life insurance coverage is based on the current age and health of the proposed insured. Insurance companies price life insurance coverage more favorably for individuals who are young and relatively healthy compared to individuals who are older and more susceptible to medical issues. For example, $500,000 of 30-year term life insurance coverage for a man at age 30 costs, on average, $34.54 each month. The same amount of coverage for a man at age 55 costs an average of $265.91 each month. Permanent insurance policy premiums can have even greater swings in cost based on age, as these policies are designed to last for the duration of one's life, unlike term policies. Cost savings represent a substantial benefit of securing life insurance coverage earlier in life.

Covering Future Expenses

The majority of young, healthy individuals are not actively thinking about ways to cover future expenses because those expenses may not yet exist; however, it is easy to cover final expenses, spousal income replacement, dependent care expenses and debt coverage with life insurance well before the need for coverage is apparent. Because life insurance death benefits are tax-free to beneficiaries, a policyholder has the opportunity to establish a financial safety net to cover future expenses fully at a much lower cost based on age and health.

Conversion Options

An individual who secures term life insurance coverage earlier in life often has the option to convert a portion of the policy to permanent coverage down the road. A life insurance conversion allows the insured to transition some or all of a term insurance policy into a permanent policy at the same health rating assigned at the time the original policy was issued. For example, an individual who has a $500,000 term policy can choose to convert $100,000 to a permanent policy, leaving him with the same amount of total coverage. The permanent insurance is still in place after the term expires, which is beneficial in estate planning and long-term financial planning strategies.

Because conversion of a term policy does not generally require medical underwriting, an individual avoids the risk of receiving a lower health rating based on current medical conditions and, therefore, higher premiums. Instead of undergoing a new medical exam and filling out a new health questionnaire, the insured simply completes a short application for conversion with the insurance carrier. The premium for the term insurance coverage is reduced based on the lower death benefit amount, while the premium for the new permanent coverage is based on the initial health rating and the current age of the insured. Conversion provisions within a term policy can be an incredibly valuable tool for an individual who is in need of long-term insurance coverage but may not qualify for a favorable health rating.

Read more: 4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea | Investopedia http://www.investopedia.com/articles/personal-finance/022116/4-reasons-why-waiting-buy-life-insurance-bad-idea.asp#ixzz40sHsU9eI 

How America’s Dullest City Got Cool

One meeting, a visionary planner and old-fashioned Iowan cooperation reinvented Des Moines.

By Colin Woodard

January 21, 2016

he capital of Iowa has long had a reputation as one of the least hip, least interesting and least dynamic cities in the Western world, a dull insurance town set amid the unending corn fields of flyover country, a place Minneapolis looks down on and the young and ambitious flee as soon as they graduate. “Usually you are born here or marry into here or get transferred here,” says local entrepreneur Mike Draper. “Not many people come to chase their dreams. If they did, you’d be like, ‘What, you want to be an actuary?’”

But unbeknownst to many outside the Midwest, over the past 15 years Des Moines has transformed into one of the richest, most vibrant, and, yes, hip cities in the country, where the local arts scene, entrepreneurial startups and established corporate employers are all thriving. Its downtown — previously desolate after 5 p.m. — has come alive, with 10,000 new residents and a bevy of nationally recognized restaurants. A few blocks away, the uber-cool Des Moines Social Club draws 25,000 people a month — more than a 10th of the city’s population — to take part in everything from Shakespeare and avant-garde theater to live music and aerial gymnastics classes. Former Talking Heads frontman David Byrne showed up at its opening in 2014 because he thinks a city once called “Des Boring” may be America’s next creative hub.

The city that a legion of presidential campaign staffers and journalists are now swarming over is not the one many of them might recognize from cycles past. No longer just a drab dateline from the first battleground state, this metropolis is riding high in the polls. In recent years Des Moines has been named the nation’s richest (by U.S. News) and economically strongest city (Policom), its best for young professionals (Forbes), families (Kiplinger), home renters (Time), businesses and careers (Forbes). It has the highest community pride in the nation, according to a Gallup poll last year, and in October topped a Bloomberg analysis of which cities in the United States were doing the best at attracting millennials to buy housing. “Never mind California or New York,” Fast Company declared two years back. “By some important measures, Des Moines is way ahead of its cooler coastal cousins.” Not bad for a metro area of half a million located hundreds of miles from either mountains or the sea.

Cities don’t, as a rule, change their identities. They might accentuate a characteristic they already possess, but plow horses don’t become thoroughbreds. So how did Des Moines pull off the urban equivalent of a Triple Crown win?

Call it radical cooperation. Des Moines tapped the latent power of the heartland — a cultural ethos of working together and good manners that’s helped account for Iowa’s stability — and harnessed it to an ambitious plan to jump-start downtown by building cultural amenities, attracting creative class types and retaining big employers. Des Moines’ civic leaders realized the city wasn’t going to transform itself without a clear long-term vision, so in an almost hyper-Iowan way they did something almost unheard of. They took it upon themselves to bring in an outside visionary and then tied together the destinies of the various projects he envisioned, forging an almost ego-less, private-sector-driven renaissance that has continued to flower over the past decade.

Seventy years ago, a Saturday Evening Post profile likened Des Moines to “a decent kindly man with a fixed income [who] has learned his station.” Even before the I-235 punched its way through the north side of the city, encouraging a late-1950s commuter exodus to suburban West Des Moines and Altoona, nobody had lived downtown, even though most everyone worked there.

“There were women in hats and white gloves at the tea room or the department stores during the day, and men in hats and ties working in the insurance companies and banks,” Michael Gartner, owner of the city’s Triple-A Iowa Cubs baseball team, recalls of his childhood in the late 1940s. “At 5 o’clock they would get onto their buses and go home.”

Highways killed the downtown department stores, and by the late 1960s the central city had become little more than an office park for its leading industries: insurance, agricultural support services, and government. In the 1970s and 1980s, the city tried to turn things around by installing suburban conveniences, including an enclosed system of skywalks, allowing people to get from building to building and through new indoor shopping malls without putting on their coats, which only furthered the abandonment of the sidewalks and the storefronts. On Friday and Saturday nights, bored teenagers raced their cars through the empty streets, circling the downtown loop from Grand to Locust Avenue over and over again. “This was supposed to be a menace to society,” Des Moines Register columnist Rekha Basu recalls. They would have been perhaps a greater menace had there been some risk of hitting a pedestrian.

By the late 1980s, the city’s leaders realized they needed to do something uncharacteristically bold. The big private employers — the insurance companies Principal, Nationwide, EMC and Wellmark; publishing giant Meredith (Better Homes and Gardens); Wells Fargo — had a lot riding on the central city, where they maintained offices for tens of thousands of employees. “They said, 'Look, we have a tremendous investment here and we want to be able to attract and retain people,'” says Mary O’Keefe, who was Principal’s vice president for marketing for 25 years. “The business community here is really strong and responsible and they took leadership on these things out of enlightened self interest.” They also realized they needed fresh ideas.

Ironically, the critical link was made by art collector Melva Bucksbaum, whose husband, Martinpioneered the suburban shopping center, founding General Growth Properties, the mall-making behemoth behind everything from Tyson’s Galleria in suburban Washington, D.C. to Chicago’s Water Tower Place. In the spring of 1987, Bucksbaum took a well-timed call from a friend of hers, architect Bruce Graham, whose buildings — including the Sears Tower and John Hancock Center — had transformed Chicago’s skyline. Graham had a colleague to recommend, an innovative urban thinker looking for a Midwestern city to experiment on. Bucksbaum was thrilled. Soon that visionary, Mario Gandelsonas, found himself in a car hurtling up Fleur Drive from the Des Moines International Airport, headed for downtown.

He was horrified at what he saw.

***

In the summer of 1987, Gandelsonas was a 49-year-old professor at the Yale School of Architecture. Born and raised in Argentina and educated in Paris, he’d long had a fascination with Alexis de Tocqueville’s observations on the social groups and civic associations that give American democracy its distinct bottom-up power. “This civic spirit still exists,” Gandelsonas said, “but I think they are much more visible in a small city in the heartland than in a place like New York.” Graham, his mentor, suggested Des Moines might be the perfect place for him to put into practice his theories that the future of cities might lie in such unlikely places. Des Moines had strong cultural associations, an engaged leadership eager for new ideas and was surprisingly wealthy, meaning there were resources available to implement a good idea.

Gandelsonas’ urban planning philosophy was simple: don’t treat a city like a map that needs to be redrawn and corrected, but as a living organism with its own purpose, personality and innate characteristics. Successful interventions are ones that enhance and enable the organism’s socio-economic metabolism by removing blockages or creating new centers of potential growth. Instead of producing a total and comprehensive master plan for a city, Gandelsonas sought to identify a series of “moments,” civic projects that would enhance its fabric and unleash its potential. Or so the theory went.

The car ride in from the airport was sobering. At the central city’s gateway, what Gandelsonas called its “front yard,” travelers were greeted by a gas station and seven blocks of car dealerships set among radiator shops and pawn brokers. Downtown itself “looked like science fiction,” he recalls. “It was mid-morning and there were no people on the streets. At lunchtime, the streets were still empty, but for about an hour the skywalks were full of people. At 4:30 they started filling up again as everyone rushed to the nearest parking structure and then for half an hour there was a full-on traffic jam as 50,000 people tried to get to West Des Moines. Then the city was empty again. For me this was the perfect picture of a place that was totally dysfunctional.”

Read more: http://www.politico.com/magazine/story/2016/01/how-des-moines-iowa-got-cool-213552#ixzz40sHOICsD

How To Get Yourself The Right Health Insurance

Health insurance isn't cheap, but it's really important. In addition to subjecting yourself to a potentially hefty fine if you don't enroll, an unexpected medical emergency could result in medical bills running into the six figures — which you'll be on the hook for.

The end of the health care open enrollment period is fast encroaching (January 31st!).  If you're still unclear on how to get yourself insured and what you should be looking for in a health plan, here's a quick primer. 

TAKE A DEEP BREATH

First, Understand Your Situation

Got employer insurance?

Congrats! Getting insurance through your employer makes your life a lot easier, but employers often offer different plans, and it's not always clear which makes the most sense for you. Check the terminology guide down below to start figuring out what works for you. 

On the market by yourself?

Before you do anything, check if you're eligible for Medicaid and/or subsidies, using this tool. 

If you're not eligible for Medicaid, then HealthCare.gov — or, if your state has set one up, your state marketplace — is your best bet, though not your only one: eSurance, HealthSherpa and others offer marketplaces that also allow you to search for plans. 

Losing your employer-based insurance?  

If you leave or lose your job, COBRA — which allows people to continue their old job-based coverage, at a higher cost — used to be the best option, but these days you're better off on the exchanges: 

Because people have to pay the entire premium plus a 2 percent administrative fee, however, [COBRA] coverage can be a financial hardship for people who are scrambling to keep up with expenses after losing their jobs. Many of these people will likely be better off buying a plan on the state health insurance marketplaces, also called exchanges... Signing up for COBRA instead of an exchange plan could have serious financial repercussions.

[NPR]

DO THEY MAKE IT HARD ON PURPOSE?

Then, Understand The Terms

Health insurance plans are a lot of things. One of those things is not "easy to understand." Terms are often vaguely defined (HMO?) or seem to have similar meanings (how are deductibles and out-of-pocket maximums different, again?). Here's a breakdown of the some of the most important (and most confusing) terms:  

What's In Health Insurance? 

The key parts:

Network coverage: Different healthcare providers (doctors, hospitals, etc.) accept different insurance companies. If you go to a healthcare provider that's not in your insurance company's network, you'll probably end up paying more of the cost.  

Premium: What you pay per month. 

Deductible: The amount you have to pay before your insurance company starts paying. This differs from the out-of-pocket maximum (see below). 

HMO vs. PPO vs. EPO

HMO (Health Maintenance Organization) and EPO (Exclusive Provider Organization) plans differ mainly from PPO (Preferred Provider Organization) plans in how strict they are about covering doctors outside the insurance company's network. 

Here's a quick breakdown of the main features of each, and Nerdwallet put together this helpful chart:

 Nerdwallet

Of course, insurance companies being insurance companies, these rules aren't set in stone:

Some plans labeled as PPOs don’t offer out-of-network services at all, experts say. On the other hand, some HMOs have an out-of-network option that makes them seem similar to PPOs.

[Washington Post]

Deductible vs. out-of-pocket maximum

If you look up "deductible," chances are the definition will read something like this:

A deductible is a dollar amount your health insurer may require you to pay out-of-pocket each year, before your health plan begins to pay for covered medical expenses.

[eHealth]

But then you look at your insurance options and see that the deductible and out-of-pocket maximum amounts are... different. Here's why: 

[Out-of-pocket maximum] is the most you will ever have to pay out of your pocket for health care during the year, not including premiums, but definitely including the deductible AND the copays and coinsurance you will continue to pay after you hit the deductible. If you hit your OOP for the year, your insurance will pick up 100 percent of costs thereafter.

[Consumer Reports]

Copays and coinsurance

As the "co" implies, these are payments that you share with your insurance company. Copays are the (relatively) small fee you pay during doctor's visits, and they are generally separate from your deductible — though not always, so make sure to check. 

Coinsurance is the payment plan that kicks in once you've paid your deductible: 

Let’s say you have a policy with 20% coinsurance. That means the insurance company will pay 80% of covered services after your deductible has been met and you pay the remaining 20%. But you won’t have to pay that 20% forever. You pay until you reach your out-of-pocket maximum.

[Cigna]

Catastrophic coverage

A "catastrophic" insurance plan isn't a plan that offers more coverage than the average plan — it offers a lot less. Catastrophic plans take the tradeoff of a high-deductible plan to the extreme:

Catastrophic health insurance plans have low monthly premiums and a very high deductible — $6,850. They may be an affordable way to protect yourself from worst-case scenarios, like getting seriously sick or injured. You pay most routine medical expenses yourself.

[HealthCare.gov]

ACTION! 

Finally, Figure Out What's Right For You

HMO, PPO, or EPO? 

Consider what your wants and needs are:

If you prefer to have your care coordinated through a single doctor, an HMO plan might be right for you. If you want greater flexibility or if you see a lot of specialists, a PPO plan might be what you’re looking for. And if you're interested in saving money by using a smaller network of doctors and hospitals, an EPO plan might be a good fit.

[Blue Cross Blue Shield] 

Since different HMOs, PPOs and EPOs vary in what they actually offer, evaluate plans according to these questions: 

- Is there out-of-network coverage?
- Does that out-of-network spending accrue toward the member’s out-of-pocket maximum? Legally it doesn’t have to, but some plans include it.
- Do members need a primary care physician gatekeeper?

[WebMD]

High-deductible or low-deductible? 

Choosing between a high-deductible plan and a low-deductible plan is one of the most important decisions you'll make when purchasing insurance. High-deductible plans have lower monthly premiums, but if you do run into major medical expenses, you'll be on the hook for a lot more money before your insurer takes over.

On the other hand, if you're generally healthy, paying the high monthly premium for a low-deductible plan might not make sense. Recent changes to preventative care pricing under the Affordable Care Act also make high-deductible plans more affordable:

Because preventive care is free under the Affordable Care Act, and many policies allow you to see your primary care doctor with a copay rather than paying toward the deductible, a few visits to the doctor per year won’t be a financial setback for an otherwise healthy person.

[Forbes]

Does a catastrophic plan make sense for you? 

In most cases, probably not. While these plans do offer the cheapest premiums, you're looking at a $6,850 deductible if anything goes wrong — and you're not eligible for subsidies:

[U]nlike the metallic plans, catastrophic plans don't offer potential discounts through tax subsidies... Even though they seem more expensive, bronze plans may still be a better deal not only because of the potential financial assistance available through the subsidies, but also because those plans must cover "essential health benefits," including emergency services and prescription drugs, which catastrophic plans may not cover until the deductible is met.

[Bankrate] 

With that said, a catastrophic plan is, of course, better than no insurance at all. You'll still be paying the fine for not being insured — and you won't have any protection in the case of a medical catastrophe.