Author: Insurance Forums Staff

Dear Reader,

This is one of those headlines that makes you stop and think about your own situation:

About 45% of Americans will run out of money in retirement…

That headline, from Business Insider, actually went on longer—another dependent clause and another full sentence. So basically, the headline was really the full CliffsNotes version of the story.

But no matter, because all I really care about is that 45% of Americans running dry financially before their internal oxygen tank runs dry.

That number comes from Morningstar’s Center for Retirement and Policy. I don’t know the methodology Morningstar employed, and Business Insider doesn’t really spell it out. So I’m just going to assume the methodology was spot-on, the research was flawless, and the resulting number is correct.

What that leaves us with is… a crisis.

Nearly half of Americans who reach 65 face the prospect of running out of money while they’re still breathing. Clearly, that’s going to be a stressful moment. Probably a stressful many years actually, because people are smart enough to realize that their nest egg is dwindling, which is when the stress is going to start.

By the time the end-of-the-money event arrives, the stress will have been so pervasive for so long that the event itself won’t mean much.

Of course, people aren’t going to literally run out of cash and end up on the streets begging for handouts. They will have Social Security coming in, which will cover 20% to maybe 30% of their post-empty-bank-account lifestyle.

Still, living on a fraction of what you used to live on is bound to be emotionally painful and the source of a whole new bout of stress.

But there is an answer…

I talk about this all the time. And you probably know where I am going next.

But read on anyway. Repetition is what gets the mind to think and ultimately act.

My solution: Think about moving abroad, either in retirement or, if you can swing it, before retirement when you’re still working.

Those who are still employed and living overseas have access to a massive tax break—Uncle Sam’s Foreign Earned Income Exclusion—that allows you to avoid paying personal income taxes on as much as $126,500 for tax year 2024. And if you choose a low-tax country, or one where the local government has implemented tax incentives to attract foreign workers, then you will owe little or nothing in your adopted country.

Both of those tax advantages—along with the lower cost of living overseas—mean your income will stretch much, much farther, allowing you to then pump up the volume of savings and investing you’re able to pursue… which will help you beef up your nest egg, so that you won’t fall into the 45% in Morningstar’s research.

If you’re already retired, well, you’re not going to benefit from the Foreign Earned Income Exclusion (unless you’re still earning some cash from a side-hustle). Nevertheless, you can still benefit from tax incentives that certain countries offer to foreign retirees who decide to live locally.

Plus, there’s the cost-of-living matter to consider.

As I have written many times, America’s cost of living has jumped the shark. Every time I’m back in the States, I am in awe at how pricey the joint is. I always overspend because the costs I end up paying for basic meals exceed my expectations.

If I go to just a basic, blue-plate-special kind of restaurant for lunch, it’s going to cost me $20 at least, including the tip.

Just down the street from me here in Lisbon, I can pop into the same kind of blue-plate-special eatery where everyday locals head for a cheap and cheerful lunch of half a roasted chicken, potatoes of some kind, bread, and a drink… and it’s going to cost me about $8. No tip needed.

I pop into US grocery stores and pharmacies when I’m home because I load up on OTC meds I can’t find in Europe, as well as all manner of ingredients, spices, and food items I miss (Pop-Tarts are the single greatest culinary creation to emerge from America’s corporate test kitchens. Facts! Also, Cracklin’ Oat Bran cereal.)

But the prices metaphorically gauge out my eyeballs when I see them. I just can’t believe how expensive America is relative to Europe. (And I’ve bought groceries in at least a half-dozen European countries over the last six years of living in the Czech Republic, Portugal, and temporarily in Ireland.)

Health insurance and healthcare costs are also extremely cheaper, and the quality is superb.  (Good old USA is rated 33^rd Globally, while France is sixth).

Car insurance, assuming you need or want a car in Europe, is radically less costly than what I paid in the US. My annual premium in Lisbon for my 2024 Mini Cooper Countryman is about $900. I was paying more than $2,500 per year for a Mini Cooper I owned in the US.

My internet/cable/Wi-Fi package is about $110 for three phones (unlimited data), a vast assortment of TV channels, and 1-gig internet service. Electricity and water combined are about $100 per month. I was paying between $200 and $300 every month just for electricity back in the States.

My point is that a nest egg lasts a lot longer overseas because daily living costs are so much more affordable.

To be fair, that is not necessarily true if you’re looking at high-cost countries and cities such as Ireland, the UK, Paris, London, Zurich, Oslo, Vienna, etc. Those places can be very taxing on the pocketbook.

But Portugal, Spain, France, Italy, Greece, Montenegro, Croatia, the Czech Republic, Poland, Germany, even non-Parisian parts of France… they are Kmart Blue Light Specials in terms of living costs.

And they’re really quite lovely places to live. You won’t be slumming it. You’d very likely gain a lifestyle that exceeds the one you’re living now, only much cheaper. Oh, and you’re going to get by in English just fine.  Really.

So that’s my message today.

If you’re worried you might just fall into that Morningstar 45%, there’s a solution for you.

And even if you’re not likely to live a “Morningstar 45%” retirement, consider retiring abroad anyway… because this is the grandest adventure you can have in the third stage of life.

 

Jeff Opdyke

Not much to say about that, really. It is what it is.

The economy isn’t horrible, though it’s certainly not all that and a bag of chips, given the financial strains on much of middle-class America, the rising number of bankruptcies, the increasing number of car payments in default, the rapidly escalating balances on credit cards, etc., etc.

But there is something I want to talk about regarding the stock market and our future economy…

I do not mean this to be political in any way, and I am not advocating for one side or the other in the coming election.

This is purely an educational dispatch.

In truth, both Red and Blue politicians represent everything that is wrong with America’s finances, particularly anything centered around the debt. One side is going to blow out the debt through student-loan forgiveness and aggressive spending on healthcare and other social programs.

The other side is going to blow out the debt through unwise tax cuts and no logical way to pay for them.

That’s not me talking (though I don’t disagree with the assessment), that’s the analysis of the Congressional Budget Office, various economists, and others who have deconstructed the Red and Blue taxation and spending plans.

What I want to address in this dispatch is two recent claims from the Red Team: The idea that tariffs are a solution to America’s problems, and the idea that energy prices can be cut by 50% in the first year of a Red presidency.

In a word: Absolute and total BS! (OK, that’s a phrase and not a word.)

Again, this is not political. This is purely economic education because I want my readers to fully understand how this works, because the impacts will hit the US economy as well as the stock market… both negatively.

 

First, Tariffs.

Tariffs are NOT a tax that a foreign country pays. 1,000% wrong.

A tariff is a tax an importer pays to import a particular product into a country.

So, if Billy Bob’s Chicken and Waffles Emporium in Duluth, Minnesota imports maple syrup from Hoser’s Great White North Maple Syrup Bodega in Quebec, Canada, and there’s a 200% tariff on Canadian-made maple syrup… well, Billy Bob pays that tariff.

Hoser’s Great White North pays nothing. Canada, the country, pays nothing.

Hoser’s Bodega sells the syrup to Billy Bob for the same price as always, but Billy Bob’s—a US company—has to pay Uncle Sam a 200% surcharge to import the liquid amber.

That is how tariffs have always worked. Period. End of discussion.

But what does that mean in practical terms?

Well, it creates inflation (higher prices) in America that American consumers must deal with.

Suddenly, syrup is more expensive in America because syrup importers like Billy Bob’s are paying a massive tariff. They are not going to absorb that cost through the goodness of their heart. They’re going to pass along the added cost to their customers in the form of higher prices at the supermarket or on the menu.

Now, apply that simple syrup example to thousands and thousands of products that potentially face a Red Administration tariff hike, and you can see that US consumers face unrelenting inflation.

And let me disabuse any notion that this just means more jobs for US producers.

Again, no.

Many products America imports have no US producers, and won’t because of labor issues. And for those that do, the tariffs just mean that US producers can (and will) raise their prices to just below the higher cost of the tariff-afflicted foreign products in order to gain market share.

Either way, you get inflation.

As for cutting energy costs by 50%… that is A) a disaster for the US energy industry, and B) impossible to do in 12 months in terms of cutting electricity costs, which is what Team Red claims it aims to do.

US natural gas prices, currently at $2.60 per million BTUs, are deeply low already. West Texas Intermediate Crude—the US benchmark oil price—is at about $71 per barrel. Not really high, but not really low. Let’s call it a Goldilocks price.

If oil prices collapsed to $35 per barrel and natural gas collapsed to $1.30, the US energy industry would fall apart. Bankruptcies and joblessness would race through the sector. Drilling for new reserves would evaporate. I know this because it’s exactly what happened during the last Red Administration when Team Red convinced Saudi Arabia to ramp up production in order to bring lower gas prices to American drivers.

Well, that happened because oil prices fell from the mid-$80s to the low-$50s.

Gasoline prices did fall a bit, but at what cost?

The oil industry went into freefall; the stock market fell, too. Energy industry bankruptcies soared in 2019. Jobs in the oilfield evaporated.

That would happen again. No question. It’s the very simple math of life in the oil patch, which I’ve seen first-hand since the mid-80s, as someone who grew up in oil country and who spent part of his career hanging out with oil pros in Texas when I worked as an investment writer for The Wall Street Journal.

Now, the idea that Team Red wants to cut electricity costs by half within the first year, which is a pledge recently made, is illogical.

Electricity prices are set by contractual agreements negotiated over months, sometimes years between thousands of public and private utility providers across America, and the various state utility commissions that regulate electricity providers locally and determine the rates they can charge to recoup their costs plus an agreed profit margin.

There’s not a snowball’s chance in Hell that any politician on any side of the political spectrum can step in and break all of those contracts in order to force utility costs 50% lower.

If that were to happen through some bizarre executive order, the number of lawsuits would overwhelm the courts and it would be hung up in litigation for years. Forcing rates lower would destabilize the entire utility industry, lead to massive layoffs, and, again, slam the stock market, since utilities represent about 3% of the value of the S&P 500 (that’s not insignificant).

What I’m ultimately getting at here is this: Politicians can have outsized impacts on the economy and the stock market through the policies they push. Sometimes those policies, even if painful in the short term, make a lot of sense for the long term.

And other times, the policies make no sense on any level across any period of time.

All they do is threaten to destabilize the economy and undermine the financial markets, all in the pursuit of votes and power.

I’m not telling you how to vote. Like I said, both parties represent bad news for America’s debt.

But I want everyone to understand how tariffs and energy policy work, because they will have a direct—and negative—impact on inflation, declining economic growth, rising unemployment, and falling stock prices.

Again, that’s not me telling you that.

It’s basic Economics 101.

Jeff D. Opdyke

If you owe the bank $100, that’s your problem.
If you owe the bank $100 million, that’s the bank’s problem.
 – J. Paul Getty

Welcome to America’s problem.  Your problem, – and you don’t even know it!

And it’s a big, big, big, big problem.  (I could put a lot more “Bigs” in there.)

Maybe you’ve heard that China and Japan are selling out of the US Treasury paper they own. I touched on this in the past, reporting that Japan’s Norinchukin Bank had announced plans to dump about $63 billion worth of sovereign debt from various nations—largely the US.

Well, now things have taken a darker turn.  (Cue ominous music)

See, China has been selling—and continues to sell—large bags of Treasury paper. Chinese holdings of US debt are now below $800 billion, down from $1.1 trillion as recently as 2021, a meaningful 30% plunge. 

Among foreign investors, China once held about 50% of all US debt. That’s now down to about 27%.

And now we have more bad news from Japan…

The Land of the Rising Sun is sinking financially. Decades of government money-printing have failed to accomplish much of anything, other than saddle Japan with extreme debts, alter Japanese society, and now sink the yen to lows not seen since the mid-1980s.  (Think US economy over last 4 years!  Are you getting the picture yet?)

For all those decades, however, Japan put on a good face and continued to buy and own US debt. So much US debt, in fact, that the Japanese were the #2 holder of Uncle Sam’s IOUs, trailing only China.

Now, the Wall Street Journal is reporting that Japan’s state-owned Government Pension Investment Fund, which holds the Social Security reserves for most Japanese workers, is looking to dump $400 billion of US debt it holds. Those proceeds are supposedly earmarked for Japanese bonds and the Japanese stock market—an effort by Japanese officials to continue smiling to the world as they race around in their ever-more desperate attempt to stave off sovereign collapse.

But wait!

There’s more!

Japan’s government pension fund is the “caller” in a square dance of all Japanese pension funds—the dude directing the dancers to do-si-do and roll away to a half sashay. Which means, don’t be surprised when other Japanese pension funds (largely private) start shedding their holdings of US debt, too.

Combined, all the other pension funds in Japan hold about the same amount of assets as does the state plan. So, could another $400 billion-ish worth of Uncle Sammy’s debt soon come to market as well?

Hard to say.

But given the sway of the state plan, that path seems logical.

But wait!

There’s even more!

Norinchukin Bank is dumping the US debt it holds to repair its troubled balance sheet. Troubled, in part, because America’s Federal Reserve jacked up interest rates too far, too fast, and the value of existing US debt—the debt that banks like Norinchukin have on their balance sheets—plunged… which befouled the balance sheet.

So, Norinchukin’s only solution is to sell US debt in an effort to repair its own finances.

Norinchukin is Japan’s #5 bank. Not small, but certainly not the Big Kahuna.

The question is: What if the Bigger Kahunas start selling their US debt, too?

There’s talk now that larger Japanese banks could follow in the footsteps of Norinchukin. If so, then we’re talking about Japanese banks vomiting up hundreds of billions of dollars of US Treasury paper.

Japan Post Bank, which is slightly larger than Norinchukin, owns about $200 billion in US debt, and another $350 billion of “investment trusts” that largely own… US debt.

It’s a little late for me to tell you this but Japan and China selling US debt isn’t a Japan and China problem. It is, to paraphrase J. Paul Getty, it’s a Treasury Department problem.

Which means it’s America’s problem.  Read – It’s a “YOU” problem coming soon!

The Treasury Department regularly sells new tranches of Treasury paper to fund the government. As Japan and China dump tens and hundreds of billions

of dollars of American debt onto the market, the price for American paper dives, meaning the yields on that paper rise. (Falling bond prices mean yields go up; rising bond prices mean yields go down.)

So as Treasury sets out to sell new paper, it’s forced to sell it at yields higher than Treasury would like, because otherwise the buyers that still do exist for American paper would just buy the old debt and earn a higher yield.

Which means Uncle Sam’s debt-repayment costs are higher because he’s forced to pay higher interest rates on the new debt, he has to sell to keep the lights on in the White House.

This is all part of the pending debt/monetary crisis America faces—which I’ve been warning about for a while.

This is what happens when the politicians running a country care not about the finances of the country, and only care about their re-election to the easiest and most overpaid job in the land. Both parties!

What’s going on in Japan and China should be a far—far!—bigger concern for politicians and the financial media.

I’ve yet to see a single politician talk about this. And the only media coverage is the matter-of-fact announcements that China is selling more US debt, and that Japanese banks and pension funds are selling debt to shore up potholed balance sheets.

I don’t see much coverage explaining those events and the dots that will emerge in the American economy as a consequence.

Those dots will appear soon enough, though, and prominently—like financial chicken pox.

And the media still wonder why gold prices keep going up.  Duh!

Another save haven maybe is some crypto now that the democrat talking heads are readjusting their minds towards it.  The big “stable” ones.

Japan and China selling US debt is part of the storyline for gold, because even if the media is missing the story, gold buyers fully understand how and why these vast sales of Treasury paper help precipitate a crisis to come.

And, so, they’re loading up on ever more gold as their financial insurance policy.

Unfortunately, much more to come, soon…

Lance Mays
Lance@WCIBrokerage.com

That headline hints at a tipping point that, if it’s not already afoot, soon will be.

You wouldn’t necessarily know that from the noted $1.14 trillion, a number pulled from the US Department of the Treasury’s Monthly Treasury Statement that details Uncle Sam’s receipts and outlays—his income and expenses—for the fiscal year so far through June 2024.     As of July 30, 2024 – The US Debt is over $35,000,000,000,000! (Trillion) Or – You and I and everyone in the USA owes an additional $105,000!

You have to swim through the 40-page report to understand the context.

I won’t subject you to all the mind-numbing data. What I will share with you, though, is this fact: The $1.14 trillion in interest payments on US debt this year represents 76% of the country’s expected income-tax receipts.

In plain terms: How secure would you feel in your financial life if the interest payments due on your credit cards every month—just the interest payments—sucked up 76% of your paycheck?

We are spending over $2 Billion per Day just on the interest due!

If that’s not a tipping point accelerating your personal finances toward disaster, then it’s certainly tipping-point adjacent.

Back to Uncle Sam…

No country can survive for very long when almost all of its personal income-tax revenue must fund just the interest expense on the debt. And I want to over-emphasize and highlight that point again: The 76% is just for interest payments. Not principal reduction.

Just interest.

That leaves 24 cents of every tax dollar raised to fund the rest of the country’s ongoing needs.

This is why America has to borrow so heavily and why it must continually borrow ever-more money every year. Twenty-four cents of every tax dollar is not enough money—not remotely enough—to run the country.

But here’s the bigger problem: That 76% will, guaranteed, grow to 80%. And then to 90%. And then one day we will see a headline noting that America’s interest payments are consuming more than 100% of tax revenue.

That’s not a guess. That’s not me being some curmudgeonly writer. That’s not me being some kind of perma-bear who has a bad attitude toward the US economy.

It’s just the natural progression of extreme debt.

The US borrows money just to repay the interest on previous borrowings. It’s not paying down principal; it’s adding to the principal owed. Which is why the debt keeps growing larger every year.

And the debt growing larger every year logically means that interest payments on the debt grow larger every year (unless the Federal Reserve takes interest rates back to near 0%).

Again I’ll ask: How would your life crumble if your monthly paycheck wasn’t big enough to cover just the interest payments on your credit cards? How would you afford rent or mortgage? Electricity and water? Insurance? Food? A car payment… or, heck, a bus pass?

There is simply no way the math works—for families, businesses, or governments.

I don’t care what brand of economic voodoo DC subscribes to, Uncle Sam spending 76% of his tax haul on interest payments is a tipping point that will lead America into a financial crisis.

Of course, it’s not like this was unexpected.

Last fall, I warned that the US was racing toward $1 trillion in annual interest payments. I tweeted about it too, only to have an actual economist tell me how wrong I was.

Yet here we are — I did undershoot expectations.

I thought we’d “approach” $1 trillion in annual interest payments. I didn’t expect we’d blow past it so forcefully.

Worse, we have a presidential election coming up, and regardless of who wins, Sammy’s debt problem will worsen. Which means the 2024 election will likely hasten America’s date with Debt Doom!  (My bet: A crisis lands in the 2027-28 time frame.)

I want to tell you that the Fed can reduce Uncle Sam’s pain by trimming interest rates, which would reduce debt-repayment costs. But that’s a lie. The global bond market is setting rates on US Treasuries, and with China and Japan madly dumping tens of billions of dollars of US paper, the value of US debt is diving, forcing rates higher on the new debt America must sell.

I didn’t start this column with the intention of segueing into a crypto takeaway. But the fact is that once Main Street Americans realize the depths of the dollar crisis to come, gold and crypto (and Swiss francs) are going to be the safest ports in the storm.

Which means gold and crypto are likely to face their own tipping point soon.

Better to have some money there before that happens…

Lance Mays
Lance@WCIBrokerage.com

Dear Mr. & Mrs. America,

The problem with lies is that the truth exists.  Somewhere anyway.  Not necessarily from who told it to you.  Family, friend, boss, the Government?

And when you see the truth… well, it makes the lie obvious.

The lie we’re discussing today: The US economy is rocking and rolling and the envy of the world.

The truth: Domino’s carryout pizza business is booming.

Seems like an odd non-sequitur…

But the path from lie to truth isn’t very hard to follow.

We start with a couple of numbers…

Domino’s Q2 carryout sales grew 7.9% on a comparable basis, year over year. Delivery sales rose just 2.7%. As Domino’s CEO noted of the results: “This is something we didn’t even contemplate [as possible] years ago.”

When you stop and think about it, you begin to see how these figures from Domino’s expose the lie that the US economy is a beast…

Two types of people order pizza from Domino’s:

1. The Convenience Seeker: These pizza eaters just don’t feel like cooking, nor do they feel like hopping in their car to go in hunt of sustenance. Instead, they call Domino’s and gladly pay the added cost for delivery and a tip. Money is not an issue. They only care about the convenience.
2. The Financially Strapped: For these folks, money is entirely the issue. The inconvenience of driving to Domino’s to pick up a carryout pizza is offset by the fact that they don’t have to pay delivery fees or proffer a tip to the driver—money that is very often plenty enough to afford another pizza later.

Thus, the fact that Domino’s is seeing a surge in its carryout business that the king of pizza delivery never even contemplated says a lot about the financial straits middle America finds itself in.

So much wealth has been extracted from the middle class over the last 40-plus years that the new American Dream is the ability to one day afford a pizza delivery again.

The elites in the financial media and the bureaucrats running the country tell us that the US economy is a stallion—and yet the middle class increasingly shuns delivery for carryout as a way to save a few bucks…

That math – don’t math.

Why is this the way it is in America today?

Well, lots of culprits come to mind…

• A legislative and judicial agenda since the Clinton years that has systematically destroyed the working class and given voice to the corporate class instead.

• Presidents on both sides who have passed tax reforms that benefit the wealthy by sticking it to the middle class.

• Technology that has made workers redundant.

• Government debt that pulls money out of the productive economy to fund government spending, which increasingly is nothing more useful than repaying interest on old debt, a complete waste of a nation’s treasure.

Little wonder a New York Times headline earlier this year spoke of “The Income Gap Jeopardizing Retirement for Millions.”

What I found particularly interesting in that piece was this:

Drawing on data from the national Health and Retirement Study between 1994 and 2018, the researchers found “a bifurcation” among Americans in their mid-50s…

In effect, they now divide into two middle classes: the more secure upper tier (which, in 2018, had on average more than $90,000 per person in annual resources, including income and the annualized value of home equity, retirement savings and pensions); and the increasingly precarious lower middle class. In 2018, people in that group had average annual resources of less than $32,000.

In the early 1990s, by contrast, “our lower-middle-class group had pretty comparable outcomes to the upper middle class” in measures of health and economic well-being, [study author] Mr. Chapel said.

No more. In two dozen years, the gap between them widened. Homeownership, for instance, declined by 5 percent in the upper middle class but declined by 31 percent in the lower middle class, only 54 percent of whom owned homes in 2018.

In short: America’s much-vaunted middle class is hollowing out. Some are progressing toward the “mass affluent” while the rest are sinking toward poverty. Even though they have jobs, the NYT reports, they are still hitting up food banks regularly.

Or ordering carryout pizza instead of delivery…

This does not, even remotely, speak to a robust economy.

It speaks to an economy that only works for certain Americans. And there’s no way such an economy is healthy.

Elitist financial writers like to point to the low jobless numbers and supposedly strong employment as proof that the American economy is rock solid. But they fail to acknowledge that a great number of the American workforce are juggling two or even three jobs to make ends meet… and that the greatest job growth is generally happening in lower-wage industries.

A report this past spring from the Center for Economic Policy and Research noted that healthcare, private education, and social services accounted for more than a quarter of all post-pandemic job growth.

Those are generally not high-dollar jobs.

Indeed, though healthcare is insanely pricey in America, it pays dirt unless you’re a doctor or specialist or in the C-suite. The healthcare jobs growth is happening with aides, and home-health workers, and such—positions that often pay minimally.

What I’m ultimately getting at is this: America is a nation in decline, despite the reported numbers.

I could tell you that the economy is robust, that there are plenty of jobs for everyone, that salaries are on the rise, that unemployment is near record lows, that the sun will come tomorrow, and that you can bet your bottom dollar that tomorrow there’ll be sun.

But when a basic-foods company like Domino’s tells you that the carryout business is booming, well, that tells you that the core of the economy—the middle class—is struggling mightily.

And a struggling middle class does not speak to a healthy economy.

It speaks to an economy filled with rot and that cannot easily be repaired. After all, reaching this point took us 40-plus years. Fixing the problem will require a severe reckoning and years of reconstructing.

As I say all too often: This is not going to end well.

A crisis cometh.

Prepare now.

Lance Mays
Lance@WCIBrokerage.com

With COVID-19-related deaths in the U.S. now surpassing 800,000 according to the Centers for Disease Control (CDC), a life insurance company executive sounded the alarm about working-age death rates recently during a Dec. 30, 2021, virtual news conference sponsored by the Indianapolis Chamber of Commerce and the Indiana Hospital Association.

“We’re seeing right now the highest death rates we’ve ever seen in the history of this business,” said OneAmerica CEO Scott Davison. And it’s not just at OneAmerica: “The data is consistent across every player in that business.” Davison said death rates among working-age people—those 18 to 64-years-old—are up 40% in the third and fourth quarter of 2021 over pre-pandemic levels. “Just to give you an idea of how bad that is, a three-sigma or a 1-in-200-year catastrophe would be a 10% increase over pre-pandemic levels,” Davison said. “So, 40% is just unheard of.”

OneAmerica CEO Scott Davison 

One of OneAmerica’s lines of business is group life insurance, which is being greatly impacted by the pandemic. “What the data is showing to us is that the deaths that are being reported as COVID deaths greatly understate the actual death losses among working-age people from the pandemic,” Davison said. “It may not all be COVID on their death certificate, but deaths are up just huge, huge numbers.” He noted the company is also seeing a huge surge in short- and long-term disability claims as a result of the pandemic. “At OneAmerica, we expect the cost of this is going to be well over $100 million, and this is our smallest business. So it’s having a huge impact on that,” Davison said. He said the costs will have to be passed on to employers purchasing group life insurance or disability policies, who will have to pay higher premiums.

Another point Davison emphasized during the news conference was the pandemic’s impact on the company’s own employees in terms of working remotely for essentially the past two years. Davison noted that OneAmerica is a billion-dollar company with 2,400 employees, and about two-thirds of them would be working in downtown Indianapolis were it not for the pandemic forcing them to work remotely. He added that about 84% of OneAmerica’s workforce is vaccinated, and “we have heard loud and clear from our vaccinated employees that they want no part of working in an open office environment with unvaccinated associates,” Davison said. “We’re getting to the point where that’s just not working anymore, and we feel very strongly that for us to be fully effective as a business that we need to have people back in on a hybrid schedule. We feel that once we get through this Omicron wave that we need to be back in on a hybrid schedule.” And to accomplish this and not risk losing many quality associates, Davison said the company has made the “hard decision” to require vaccinations. He said some vaccinated employees “made it very, very clear that if we try to commingle them with unvaccinated people, they’ll consider the workplace is unsafe.”  

There’s a difficult balance to achieve what we all want.

There is no better time than now to get your affairs in order and have peace of mind. For a personal review of your estate and retirement needs, schedule a complimentary one-hour consultation with Mr. Mays or one of our licensed representatives directly. 800.630.4146 or find us on Facebook.

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Reference: [https://insurance-forums.com/author/insurance-forums-staff/]

The nation’s long-term care insurers paid out $12.3 billion in claims during 2021, representing a significant increase over prior years, according to new data from the American Association for Long-Term Care Insurance (AALTCI).

“Take note if you doubt the value of long-term care insurance protection or question whether insurers are paying claimants,” said Jesse Slome, AALTCI’s director. “The amount of claim benefits paid to policyholders grew by approximately $700 million compared to the 2020 payout.” 

According to the Association’s annual report of claims paid, the $12.3 billion paid represents an increase of $2 billion over the total claim benefits paid by the industry in 2018. “Claim benefits were paid to some 336,000 policyholders,” Slome shares. “Some claims amount to small amounts, and some can be significant, totally over $1 million,” Slome added. “Even if you do a simple calculation, the average claim amount paid out for the year would equal $36,600. And, claims can last for several years.” The number of individuals paid during 2021 grew by roughly 11,000 compared to the prior year.

The amount reported represents claims for those owning traditional or health-based long-term care insurance. The Association report does not include data for those who have purchased a linked-benefit policy. These include life insurance or annuity policies that can also provide a payout for qualifying long-term care needs.

Data on long-term care insurance claims paid in 2021, along with other current long-term care insurance statistics, can be accessed on the Association’s website. To see 2020 statistical reports, go to www.aaltci.org/LTCFacts-2022.

The American Association for Long-Term Care Insurance advocates for the importance of long-term care planning. The organization connects consumers with knowledgeable professionals who are independent advisors. These specialists can provide information along with long-term care insurance quotes and policy comparisons for both traditional and linked benefit long-term care insurance options.

Note: What this actually means, is that not only are Long Term Care Health Care costs going to be increasing steadily… BUT the cost for Long Term Care (LTC) policies and linked benefits are going to be skyrocketing or flat out canceled or not available for a lot of people to purchase or maintain.

Lance

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New research from the American Council of Life Insurers (ACLI) shows that life insurance companies paid more than $90 billion to beneficiaries of life insurance policies in 2020, the highest ever in any single year. It also represents a 15.4% increase in payments over 2019, which is the largest year-to-year increase since the 1918 Influenza Epidemic. The data was included in the 2021 ACLI Life Insurers Fact Book that was released Dec. 9.

“The data tells a compelling story about the resiliency of life insurers and their ability to protect Americans’ financial futures at all times,” said Andrew Melnyk, ACLI Vice President, Research & Chief Economist. “In a year that was taxing for everyone, life insurance benefits provided families with the means to endure financially after the loss of a loved one.” 

According to the 2021 Fact Book, total life insurance coverage reached $20.4 trillion in 2020, with a record $3.3 trillion in life insurance coverage purchased. In total, 43.1 million life insurance policies were purchased last year.

“Behind every data point, every payment, and every policy, there are stories of real people and families who have found some peace of mind during a difficult time,” said Melnyk. “That is the mission of the life insurance industry and one we’re prepared to fulfill no matter what.”

Other selected highlights of the new Fact Book:

• Sales of group life insurance policies, which are primarily available through employers, increased 19% from 2019 to 2020. Individual coverage increased nearly 3%.
• Annuity payments to consumers increased in 2020 to $91 billion, a 3.9% jump from the previous year.
• Industry assets in 2020 totaled $8.2 trillion, a jump from $7.6 trillion—a 7.7% increase.

The 2021 Fact Book contains aggregated 2020 life insurance company data that is filed with the National Association of Insurance Commissioners (NAIC). ACLI’s calculations of NAIC data is used with permission.

With 12 chapters covering industry products, income, and investment data, and more, the Fact Book has been a go-to source for industry professionals, policymakers, and the public for generations. The new edition marks the 75th anniversary of the ACLI Fact Book.

Note: This is a real wake-up call I hope to all peoples of all countries worldwide. You’re here today – dead tomorrow or next week. What happens next? What happens to your family? Your house, etc…

Lance

It is never too soon to ensure your future, your family, your assets, and your estate are safe and secure. We are committed to maintaining the highest standards of integrity and professionalism in our relationship with you and will provide only the highest quality services.  Call us to schedule a complimentary consultation today.
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Reference: [https://insurance-forums.com/author/insurance-forums-staff/]