This content is provided by Aon’s Affinity Insurance Services and reflects their views, opinions, and insights.
Although some AIChE members might not have invested in insurance protections, they do understand the importance of having coverage. Here’s a short conversation on the subject with Mark Thomas, a licensed agent for Aon’s Affinity Insurance Services (AIS). AIS is the administrator of the AIChE Member Insurance Solutions, which offers a variety of coverage designed for chemical engineers, including life insurance and disability insurance.
What are some common misconceptions you hear when talking to people about life and disability insurance?
The biggest thing we hear is that younger people don’t understand the value of having coverage right now. Usually that’s a combination of a few things. They have some new financial obligations in their lives and think securing life insurance will be expensive on top of that. And they’re young and healthy, and sometimes not at a life stage where they have a family they want to protect.
So let’s take those one at a time. First, the cost. Life insurance isn’t as expensive as most people think. A recent study found that a majority of Americans overestimate the cost of life insurance by more than three times.1 If you’re a person who thinks life insurance is going to cost $60 a month, finding out it’s less than $20* might change the math for you. There’s a range of coverage levels out there, and most people should be able to find a cost comfortable to them.
Which leads to the young and healthy part. Life insurance can get more expensive as you age and as health issues develop. Locking in a life insurance price when you’re young and healthy can save you money on premiums in the long run. About 40% of Americans wish they had purchased life insurance when they were younger.2 Even if you aren’t married with kids, getting coverage now can help protect you with other financial obligations like a mortgage, or just secure a lower cost for whatever protection you may eventually want in the future.
AIChE members have a lot of options when they’re looking for life insurance or disability insurance. Why should they look into the coverage available at AIChE Member Insurance Solutions?
There are many reasons. For starters, no one wants to pay any more than they have to, and the program gives members access to group rates. The Term Life Insurance available through the program goes even a step further, with group rates that include a 20% discount for all eligible AIChE members.
The program makes it easy for members to get valuable information before buying. Coverage details are laid out online, including rate calculations that provide costs instantly, without having to first provide a name, email address and other information, and then waiting to get a cost.
The coverage is also portable, which is an insurance term for the fact that it’s not dependent on who your employer is, and instead can stay with you through any change of employer or career change.
And not insignificantly, these policies are underwritten by New York Life Insurance Company, which has the highest financial strength ratings currently awarded to any U.S. life insurer from all four of the major credit rating agencies.3
Many AIChE members already have employer-paid disability insurance. Why should they consider more coverage from AIChE Member Insurance Solutions?
What many people don’t realize is that any benefits received from disability insurance paid on your behalf by an employer would be taxed as ordinary income.4 Because of that, employer-paid disability might replace less than half of a member’s income after taxes.
Now let that sink in. Unable to work because of a serious accident or illness, and then having to get by on less than half of what you’re used to. For example, say you make $100,000 a year. Even if you have disability insurance through your employer, it might be for only $50,000 a year, and that’s before taxes.
In that scenario, AIChE Member Insurance could add another $10,000 to your annual coverage because your total combined benefit amount (AIChE and any other disability insurance) can be up to 60% of your average monthly income. The AIChE benefit would be tax free because you pay the premiums yourself.5 And if you didn’t have any existing disability coverage, you could get up to $60,000 of AIChE protection yearly.
The disability coverage available to members through this program is a valuable way to supplement any employer-paid coverage and “top off” total disability protection, up to the allowable total coverage limits.
If a member’s job isn’t hazardous, is disability insurance really that important?
Most disabilities aren’t work-related at all. Keep in mind that accidents and sickness can happen to anyone, anytime. More than 25% of American workers will suffer a disability lasting at least a year sometime during their career.6 And 90% of disability claims are the result of illnesses rather than on-the-job injuries eligible for workers’ compensation.7 Disability insurance isn’t just for workplace accidents but for any covered illness or injury that prevents you from working.
One thing we hear from members on purchasing life insurance is they’ve heard it’s a huge hassle. How would you respond?
One advantage of new technology is that it significantly cuts down the time and effort to get insured. Gone are the days of having to meet with an agent – our applications can be submitted online in a matter of minutes.
Another way we aim to ease the application process is with QuickDecisiontm, which allows a fast underwriting decision, as soon as the same day, for applicants under age 65 on traditional term life insurance coverage amounts up to $500,000. QuickDecision doesn’t require a medical exam. Instead, underwriting is based on answers to health questions, as well as existing database information (prescription drug, motor vehicle, Medical Information Bureau).
Any final thoughts?
We would encourage all AIChE members to explore the program and consider adding protection. Think how hard you’ve worked to build your career, family, and savings. It’s critical to safeguard what matters most from unexpected misfortune. Major life events like marriage, children, new house, or new job are good times to consider your coverage, but the fact is you should always be prepared ahead of time.
In addition, you always have a 30-day no-obligation free look once coverage is approved. If for any reason you are not satisfied with the terms and conditions of coverage, just return it within the 30-day free look period, without claim, for a full refund of any premium paid.
Mark Thomas is a licensed insurance producer with Affinity Services Insurances, Inc., the administrator for the AIChE Member Insurance Solutions Program.
1, 2 LIMRA 2021 Insurance Barometer Study (https://lifehappens.org/research/life-insurance-is-on-peoples-minds/)
* A 35 year old male who qualifies for Preferred non-smoker rates can get $500,000 of 10-Year Level Term Life Insurance for $17.50 a month.
3 A.M. Best (A++), Fitch Ratings (AAA), Standard & Poor’s (AA+), and Moody’s Investors Service (Aaa). (Third Party Ratings Report as of 10/15/20)
6 Social Security Administration, Disability and Death Probability Tables for Insured Workers (https://www.ssa.gov/oact/NOTES/ran6/index.html)
7 Business Insider, 3 things to know about disability insurance during a global health crisis (https://www.businessinsider.com/personal-finance/how-does-disability-ins...)
8 Includes features, costs, eligibility, renewability, exclusions and limitations. Underwritten by New York Life Insurance Company, NY NY 10010 on Group Policy Form GMR.
This information is provided for general informational purposes only and is not intended to provide individualized advice. All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.
The AIChE Insurance Plan is administered by Affinity Insurance Services, Inc.; a licensed producer in all states (TX 13695); (AR Ins. Lic. 100106022); in CA & MN, AIS Affinity Insurance Agency, Inc. (CA 0795465); in OK, AIS Affinity Insurance Services, Inc.; in CA, Aon Affinity Insurance Services, Inc., (CA 0G94493), Aon Direct Insurance Administrators and Berkely Insurance Agency and in NY, AIS Affinity Insurance Agency.