Auto, life, fire, and health. It is all pretty boring and often not pleasant to think about but understanding insurance and choosing the best options available to you can be a big boost when life goes sideways. Ryan and Leslie discuss the basics.
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Show Notes & Helpful Links
Set the table
So very dry but so very big in life: insurance.
What types do most people need?: Property, Life, and Health. Start with Property because others require a little background on employment, or why American insurance is tied to employment. Ironic story about planning for surprises about life’s most certain things: death and taxes. Actuaries use Seldon levels of data to figure out the present value of accidents, injuries, early death, and charge a monthly or by-yearly premium to cover the cost of restoration payments for those who do have the accidents.
Segment 1: Home and Auto, or Property Insurance
Ryan: What is property insurance?
Leslie: pays you to restore your property or other’s property (liablity insurance)
Recovery for cost to replace property you lost at its current value. If it’s someone else’s property, it is liability insurance.
Ryan: What are typical policies
Leslie: Homeowners, including fire, flood, Auto, and specific property, say an art collection.
Segment 2: A little history on Insurance and employment
Ryan: People go out and buy those policies, so why is American health insurance tied to employment?
Leslie: New Deal wage caps coincide with improvements in healthcare, so insurance becomes an income perk to get around the wage caps. After wage caps ended, became a tax shelter. Fast forward a decade or so, and tying health insurance to employment is habit even though it doesn’t work as well now. Part time, independent contractors, gig economy
Segment 3: Health and Life Insurance
Ryan: What’s the difference between health and life?
health covers your healthcare costs
life is a safety net and sometimes an investment that covers your death
type you need depends on stage of life and circumstances.
Life has options: Whole life, annuity.
Health has been overgeneralized
Ryan: So how to get health insurance?
Through your employer, or spouse’s. Be aware of Life Planning. For instance, if one is planning to do less than a full time position for kids, put the fam on the other plan.
kick back to Ryan for self employed getting on exchanges
Ryan: Other types we did not cover?
professional insurance like med mal for doctors
Ryan: You say this is about math and the bigger the number the more accurate the pricing, but have the actuaries ever gotten the math wrong?
Leslie: Yes, with long term care insurance in the 70/80’s
Basic explainer of whole and term life insurance policies