Insurance

How Insurance Works: The Law of Large Numbers

Insurance is a financial product that helps individuals and businesses protect themselves from financial losses. At its core, insurance works by pooling risks. By spreading the risk among many, the insurance company can provide financial protection to each individual without any one person bearing the full burden of a catastrophic loss.  The Law of Large Numbers The foundation of insurance is built on a key principle in statistics: the Law of Large Numbers. This law states that as the size of a group of insured people (the "pool") increases, the actual results will become more predictable and stable, aligning closely with the…
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Common Features of Traditional Long-Term Care Policies

Long-term care (LTC) policies are financial tools designed to cover expenses associated with long-term care services. These services are often necessary for individuals who are unable to perform basic activities of daily living (ADLs) due to chronic illness, disability, or cognitive impairment. Traditional long-term care insurance policies have several common features that are essential for potential policyholders to understand. This article provides an overview of features commonly found with Traditional Long-Term Care Policies. This list is not exhaustive and policies issued by companies may deviate from the descriptions provided. It is important to review your own policies for complete descriptions and…
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Preparing for Long-Term Care: Statistics and Financial Insights

When planning for your financial future, determining how to address the potential for a long-term care event will be one of the hardest decisions to make. The topic is particularly complex given the uncertainty around whether or not you will even have a long-term event; and if you do, how long will it last, what will it cost, and when will it occur. The decision is complicated even further by the higher cost of insurance or the high cost of long-term care planning strategies.The purpose of this article is to educate on the prevalence of long-term care and provide context on…
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7 Reasons Your Group Disability Benefit Might Be Less Valuable Than It Seems

Disability insurance is a critical component of a comprehensive financial safety net, providing income protection in the event of an illness or injury that prevents one from working. Group disability insurance policies are a common benefit offered by employers, particularly larger employers.However, these policies often contain limitations and shortfalls that may not fully meet the needs of higher earners or those in upper management. Here, we explore key issues such as benefit caps, tax implications, occupation-specific coverage limitations, income covered, and portability concerns. 1) Benefit Caps Group disability insurance is typically structured as percent of income with the most often…
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