MetLife has a creative new ad campaign.
Life, if belongs to you. Replace today's uncertainties with certainties. Guarantees for the if in life
Clearly insurance is all about risk. Some don't like paying premiums because they don't think they'll ever get hurt, be in an accident, ever need long term care, die too soon, outlive their assets, or think they'll do better in the stock market. The point of the MetLife ad and this post is that you control your own risk management.
Examples of Life Risk Management "Ifs" that You Can Control
Long Term Care I've had Long Term Care insurance ("LTC") for 7 years. Doing what I do for a living one can't help but become acutely aware of the cost of long term care. While the perception of many people is that LTC is for the elderly, nursing homes and Alzheimer's, if you are in an accident you may need it well before you get to old age. Setting aside the fact that its cheaper to buy it when you're younger, if you are rendered paralyzed or suffer a traumatic brain injury in an accident with someone who has $50,000 limits and no assets you may be limited to the limits of your underinsured motorists coverage. Heavy medical bills could drain your assets and your and/or your family's financial security. The lifetime costs could be in the millions! The $83.64/month I am paying initially gave me $200/day of lifetime coverage, which has increased with a 5% COLA to $268/day. That's almost $98,000 a year plus 5% COLA that doesn't come out of my pocket if the big if becomes reality. A cheap price to pay to replace the uncertainty of the exposure with a guarantee.
Disability or Sickness How long could you go without a paycheck? If the answer is not very long you need disability coverage. Say you're 45 and you expect to work another 20 years, here are your lifetime earnings at various levels (assuming your income increases 5% each year):
- $100,000/year incr. 5% means $ 3,306,595 over 20 years
- $150,000/year incr. 5% means $ 4,959,893 over 20 years
- $350,000/year incr. 5% means $11,573,084 over 20 years
The cost of disability insurance is a fraction of the lifetime exposure to satisfy the big if
The sad thing about Long Term Care Insurance, Life insurance and Disability Insurance is that if you avoid it now and then you need it you may not be able to qualify for it. Adverse medical history impacts your ability to solve these uncertainties through buying coverage at a time when the if becomes reality.
Annuities answer the longevity "if"-having the potential problem of outliving your assets. An annuity is the only vehicle that can contractually guarantee lifetime income, even if that means to over age 100!
- Structured settlement annuities solve many ifs for injured parties and survivors.
- Structured sales annuities through a structured sale transaction help mitigate upfront capital gains exposure.
- Annuities in a divorce scenario can bridge gaps and provide a means to secure alimony and child support.
- Deferred income annuities permit average Joes like you and I to buy future income to eliminate uncertainty.