A recent study that used data from 2017 found that San Francisco ranked lowest in terms of insurance coverage in the Bay Area and 29th in California. Researchers gave equal weight to each type of insurance when deciding a county’s ranking. They relied on reports from the U.S. Census Bureau, the American Council of Life Insurers and the Insurance Information Institute.
It seems that although 95% of San Francisco residents had health insurance, only 77% had auto insurance and an even lower 15% had life insurance.
The highest proportion of insured residents is in Marin County, where 95% have health insurance, 86% have auto insurance, and 22% have life insurance. This contrast is not shocking since the median income in Marin is among the highest in the state ($136,000 in 2019). People with higher incomes and wealth will want to get insurance to protect themselves against financial loss.
Marin County is followed by San Mateo with 94% of residents having health insurance, 85% auto insurance and 24% life insurance.
The large difference between San Francisco and Marin County can have several explanations. We need to consider the fact that Marin County is home to a lot of retirees who have accumulated significant wealth and have owned property in the region for decades.
In San Francisco, the booming tech industry has caused a significant increase in the cost of living, especially in regards to rent. This, however, does not deter young professionals from moving there in the hopes that they will find the connections and resources to make their mark in the industry. It’s possible that many of them try to save where they can, and insurance coverage is not high in their list of priorities.
How Will the Corona Virus Affect Insurance Premiums?
The coronavirus outbreak has had a significant impact on daily life in the U.S. and will most likely cost our health system a lot of money if we don’t manage to get it under control soon. But will it lead to much higher insurance premiums in the following year?
According to California insurance market analysts, on a national level, insurers might end up spending up to $251 billion to cover the cost of health care for coronavirus patients. With that being said, they can’t legally hike up their rates for next year in order to cover these expenses. State regulators can push back against unjustified premium increases as their proposed rates have to reflect the expected costs for 2021 regardless of what they spent in 2020. In other words, if the pandemic will be limited to 2020, premiums should not increase as insurers are not allowed to include past losses in their future rates.
This means that if you already have life insurance, your rates are locked in for the entire duration of your policy so whether or not you are in an affected area, nothing will change because of the virus. In case you don’t have life insurance, now is a good time to apply considering potential future fluctuations. You can find out more about the different types of life in the guide provided by “Life Ant”.
Insurance prices can fluctuate as a result of many different factors, such as market and interest rates. An influx of fatalities caused by the coronavirus pandemic would most certainly impact life insurance premiums. Again, this is if the crisis is not brought under control by 2021.
It’s too early at this point to make predictions regarding how things will develop. In the long term, anything can happen.
In the first stimulus measures passed by Congress, insurance companies were not among the sectors to receive a bailout, but they’re still pushing to get help from Washington. The key insurance industry trade groups have sent a letter in mid-March explaining their requests and detailing the need for a risk mitigation strategy in case of significant financial loss.
We need to keep in mind that future record-low interest rates could also pose a threat to the life insurance industry as it will disrupt its investments and profitability.
Life Insurance vs Health Insurance
There’s considerable comfort in knowing that you and your family are financially protected in case your health takes an unexpected turn. However, many people seem not to be aware of the difference between life insurance and health insurance.
Life insurance serves a different purpose than health insurance. In the event of premature death, your beneficiaries will receive a death benefit. This death benefit serves to cover future income loss, funeral expenses and other debts. It can also fund spousal retirement accounts or college savings accounts. This means that your family will not struggle financially after your death.
You may be more familiar with health insurance that helps you pay for your medical expense like hospital stays, tests, medical procedures, doctor’s visits and medications. The purpose of health insurance is to guarantee that you’ll be able to afford your medical bills and stay healthy.
When you have dependents, the fact is that you’ll need both types of insurance – health insurance and life insurance. In reality, depending on what stage they are in their lives, people will have completely different ideas regarding their insurance needs. Young couples are oftentimes encouraged to get both types but, since young people have a significantly lower incidence of health problems, they tend to consider it unnecessary and will want to invest their income in other areas.
You can reduce the cost by only getting as much life insurance as you and your family need. You can multiply your annual wage by a certain amount – generally ten times – and add the expenses you predict your spouse will have to handle if something happened to you. This can include childcare fees, tuition, mortgage, car payments, and so on. Your policy should cover the amount you estimate.
The reality is that when you have dependents, any insurance is better than none, so if you’re currently not in the best place from a financial standpoint, get whatever you can afford at the moment.