42% of Americans can’t explain this simple health insurance term

Caitlin Bronson | Aug 28, 2014


November’s healthcare open enrollment period is less than three months away, but many Americans are still woefully ignorant when it comes to healthcare. Roughly 42% of Americans—including those with earnings near the federal poverty line, who stand to gain the most from health reform—are unable to explain what a deductible is.

Another 62% don’t understand the difference between an HMO and a PPO, and a full 37% of people are unaware there is a penalty for not having health insurance.

Those are the findings from a study performed by researchers at the USC Schaeffer Center for Health Policy and Economics and the USC Dornisife Center for Economic and Social Research.

“The results are worrisome because the success of the Affordable Care Act hinges on competition among insurers lowering premiums and increasing the quality of coverage,” said lead author Silvia Helena Barcellos. “This only happens when people know what they’re choosing. There is no incentive for insurers to offer their best plans if people are not making informed decisions when choosing among these plans.”

The lack of knowledge is not to be blamed on the insurance community, however, says Bankrate.com analyst Doug Whiteman.

“There is a big push to get the world out to demographics like lower income people, but they can be very difficult to reach. These are people working more than one job, who are looking after their families,” Whiteman said. “They are very busy people who don’t have time to watch TV or pay attention to the news.”

Whiteman added that much of the lack of awareness is also likely self-imposed. According to a recent Bankrate survey, 17% of Americans who are planning on remaining uninsured past the March deadline are doing so primarily due to their opposition to the Affordable Care Act.

“That is a staggeringly high percentage,” he said.

The Bankrate survey also concluded that up to one-third of uninsured Americans plan to remain without health coverage despite the looming deadline. While Whiteman said he is hopeful some of these individuals will “wake up” in the coming days, he is still shocked and worried over the number.

Already, lack of signups from young and healthy Americans—coupled with little information on enrollees in general—is causing health insurers immense difficulty in assessing rates for 2015 plans.
 
“Are [rate increases] going to be double-digit, and are we going to get beat up because of the double digit, or are we going to just have to pull out of the program? Those questions can’t be answered until we see the population we have today,” said Aetna CEO Mark Bertolini.

This demographic avoids all types of insurance

by Brent Harrison | Aug 28, 2014

A recent study has found millennials are the least likely of any generation to have any type of insurance including health, auto, renters, homeowners, life and disability.

The survey from Princeton Survey Research Associates International, commissioned by insuranceQuotes.com, found millennials have grown up with overprotective parents, in turn decreasing their level of fear – a fundamental factor for buying insurance.
 
“Like anyone who’s young, they’re 10-foot-tall and bulletproof,” said Kile Lewis, co-CEO and co-founder of oXYGen Financial, a financial planning firm catering to generations X and Y.

Kit Yarrow, a financial psychologist at Golden Gate University in San Francisco went on to explain, “They tend to be a pretty optimistic crowd, and their view on money is that they're going to be OK."

Approximately, 25 percent of individuals aged 18 to 29 do not have health insurance, double the rate of all other adults. Only 64 percent of Americans in the same age group have auto insurance, compared to an average of 84 percent for all older consumers. Homeowners insurance is purchased by 10 percent of adults under 30, attributable to less Gen Yers buying houses and living at home, but interestingly only 12 percent of the same group of have renters insurance. 13 percent of consumers 18 to 29 have disability insurance, compared with 37 percent of those 30 to 49.

The survey also took a look into the decisions behind millennials being under-insured, concluding misinformation as a dominant influence. For instance, the primary reason (33 percent) consumers’ ages 18 to 29 gave for not having life insurance is they cannot afford it.

Considering these trends, here are three tips for providers when dealing with millennials:

1.    Explain policies aren’t necessarily too expensive
The National Association of Insurance Commissioners found the average renters’ insurance policy costs $10 to $30 a month.

2.    Illustrate why bare minimum coverage may not be the best idea
For example, buying only the mandatory state minimum amount of auto insurance can open them to financial risk if they were involved in a lawsuit.

3.    Point out no one is invincible
Disability insurance replaces part of your income if you become disabled and can’t work. Roughly 1 in 4 of today’s 20-year-olds will become disabled before retirement, according to the Council for Disability Awareness.

Lloyd’s branches out into commercial marijuana industry

The increasingly profitable commercial marijuana industry is starting to attract a few more market entrants, including several Lloyd’s of London syndicates.

Wellness Medical Protection Group, a Chicago-based unit of Creative Edge Nutrition, is now offering coverage of up to $2 million per occurrence and $2 million aggregate to segments of the commercial marijuana industry.

Written through various Lloyd’s syndicates, which were not identified, the policies cover risks like theft and bodily injury with a typical $5,000 retention. Professional Program Insurance Brokerage is the managing underwriter for the program.

Wellness Medical Protection Group President Edward Kuhn attributed the decision to enter the market to “a lot of premium potential.”

“You could be looking at premium as high as $25 million in the next 12 months,” Kuhn said.

This insurer interest hasn’t always been there, however. As an independent agency owner specializing in covering marijuana operations since 2009, JB Woods of Parker, Colo.-based Greenpoint Insurance has seen market appetite fluctuate greatly over the years.

“When I first started out, it was only boutique underwriting groups that were willing to step out on a ledge,” Woods told Insurance Business. “In the last years, I’ve seen more interest from very, very large groups. It’s pretty interesting because they wouldn’t touch this stuff five years ago—nobody would.

"Now all of a sudden, it’s funny how—with the money flowing—major groups are interested in marijuana."

FDIC Announces Settlement With Bank of America

Press Release

FDIC Announces Settlement With Bank of America

Settlement of Claims Totals $1.03 Billion

FOR IMMEDIATE RELEASE August 21, 2014 Media Contact: David Barr (202) 898-6992 dbarr@fdic.gov

The Federal Deposit Insurance Corporation (FDIC) as Receiver for 26 failed banks has announced a $1,031,000,000 settlement with Bank of America Corporation, Banc of America Funding Corporation, Banc of America Securities LLC, Banc of America Mortgage Securities, Inc., Bank of America, N.A., NB Holdings, Inc., Countrywide Financial Corporation, Countrywide Securities Corporation, Countrywide Home Loans, Inc., CWMBS, Inc., CWALT, Inc., CWABS, Inc., CWHEQ, Inc., Countrywide Capital Markets, LLC, Merrill Lynch Mortgage Capital Inc., Merrill Lynch Mortgage Investors Inc., and Merrill Lynch, Pierce, Fenner & Smith Inc. (BofA Entities) of certain of the receiverships' claims. The settlement funds will be distributed among the 26 receiverships.

The settlement resolves several sets of claims. One set of those claims is federal and state securities law claims based on misrepresentations in the offering documents for 155 residential mortgage-backed securities (RMBS) purchased by failed banks in FDIC receivership. As receiver for failed financial institutions, the FDIC may sue professionals and entities whose conduct resulted in losses to those institutions in order to maximize recoveries. From January 2011 to January 2014, the FDIC as Receiver for seven failed banks inherited or filed 14 lawsuits against the BofA Entities and other defendants for violations of federal and state securities laws in connection with the sale of 63 RMBS. In October 2013, the FDIC as Receiver for 19 failed banks objected to a proposed class settlement of claims arising from their purchase of 92 RMBS in three class action lawsuits based on misrepresentations in RMBS offering documents. As of July 31, 2014, the FDIC has authorized lawsuits based on the sale of RMBS to a total of eight failed institutions and has filed 19 lawsuits, including the 14 lawsuits against the BofA Entities, seeking damages for violations of federal and state securities laws. The settlement resolves the FDIC's claims against the BofA Entities in those 14 lawsuits and the three class action lawsuits.

Other claims resolved by the settlement include breach of contract claims brought by the FDIC as Receiver for Colonial Bank against Bank of America, N.A., as custodian and bailee for 4,808 Colonial Bank loans, tort claims brought by Bank of America, N.A. against the FDIC as Receiver for both Colonial Bank and Platinum Community Bank, a related Administrative Procedure Act claim brought by Bank of America, N.A. against the FDIC as Receiver for Colonial Bank, and a FOIA claim brought on behalf of Bank of America, N.A. against the FDIC in its corporate capacity.

Additional background on Professional Liability Suits

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Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 6,730 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-69-2014

The FDIC does not send unsolicited e-mail. If this publication has reached you in error, or if you no longer wish to receive this service, please unsubscribe.

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"Tax and/or legal advice not offered by Virtual Financial Group or its affiliated companies. Please consult with your personal tax professional or legal advisor for further guidance on tax or legal matters. Many people have experienced different levels of success with Virtual Financial Group. However, individual member experiences may vary. This is not intended to, nor does it, represent that any current member's individual results are representative of what all participants achieve when following the Virtual Financial Group system. Virtual Financial Group is a financial services marketing company that is associated with World Financial Group, Inc. (WFG) a Transamerica company. WFG is a financial services marketing company whose affiliates offer a broad array of financial products and services. Insurance products offered through World Financial Group Insurance Agency, Inc. (WFGIA), World Financial Group Insurance Agency of Hawaii, Inc., World Financial Group Insurance Agency of Massachusetts, Inc., World Financial Group Insurance Agency of Wyoming, Inc., World Financial Insurance Agency, Inc. and/or WFG Insurance Agency of Puerto Rico, Inc. WFG and WFGIA are affiliated companies. Virtual Financial Group Headquarters: 826 Orange Ave Coronado CA 92118 Phone 619-663-6607. VirtualFinancialGroup.com WFG and WFGIA Headquarters: 11315 Johns Creek Parkway, Johns Creek, GA 30097-1517. Phone: 770.453.9300. WorldFinancialGroup.com.

Which life insurance policy is right for you?

Life insurance is a complex amalgamation of legal, tax and economic elements. Basically, it is a unique wealth creation tool that assures the accumulation of a desired amount of liquid capital at death. Depending on the plan of insurance, it may also create more or less capital for lifetime needs.

Through its unique capital creation feature and tax advantages, life insurance can help people solve a host of personal and business problems. However, insurers offer a wide variety of life insurance policies that are suited to a broad host of financial planning problems. Once an advisor identifies a client's problems, the advisor must match the appropriate life insurance products to the problems. To do so, the planner must first fully understand the legal, tax and economic elements of life insurance and the particular features of each type of policy.

This primer provides an overview of the products available, and is designed to help you gain perspective and balance in your practice. 

Advantages

The advantages offered by life insurance vary with the type of policy and the problem to which the policy is applied. However, all types of life insurance policies provide certain favorable features, which are listed below.

1. Life insurance provides a guarantee of large amounts of cash payable immediately at the death of the insured. The amount of the death benefit payable is usually significantly greater than the premiums paid for the policy.
2. Life insurance proceeds are not part of the probate estate. The only way life insurance benefits become part of probate is when they are paid to or for the benefit of the estate of the insured. Therefore, the insurance company can pay death proceeds to the beneficiary without the delay caused by administration of the estate.
3. There will be no public record of the death benefit amount or to whom it is payable.
4. Life insurance policies generally have some protection against creditors of both the policyowner and of the beneficiary. The amount of protection varies from state to state.
5. Life insurance cash values provide instant availability to cash through policy loans. The interest rate (or interest-rate formula) for policy loans is known in advance and is usually lower than the rate applicable to loans from other sources.
6. The death benefit proceeds from a life insurance policy generally are not subject to federal income taxes.
7. The increases in the cash value of a life insurance policy enjoy federal income tax deferral. Interest earned on policy cash values generally is not taxable unless or until the policyowner surrenders the policy for cash.
8. Life insurance proceeds often are exempt from state inheritance taxes.
9. Despite some highly publicized life insurance company insolvencies, the life insurance industry remains unparalleled in safety among the financial intermediaries such as the savings and loan, banking, and mutual fund industries. It is commonly noted that not a single dollar of death claim has been lost or denied because of a life insurance company insolvency or failure.

Disadvantages

1. Life insurance is not available to persons in extremely poor health (although almost all individuals in poor health can obtain insurance).
2. Life insurance is an extremely complex product that is hard to evaluate and compare. The time required to gather policy information, decipher it, and compare it with other policies discourages purchasers from engaging in comparison shopping.
3. The cost of coverage reduces the amount of funds available for current consumption or investment.

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