I suffer no illusions that this will be an easy process. It will be hard. But I also know that nearly a century after Teddy Roosevelt first called for reform, the cost of our health care has weighed down our economy and the conscience of our nation long enough. So let there be no doubt: health care reform cannot wait, it must not wait, and it will not wait another year."
– President Barack Obama, February 24, 2009

Progress

The President signed the Children’s Health Insurance Reauthorization Act on February 4, 2009, which provides quality health care to 11 million kids – 4 million who were previously uninsured.
The President’s American Recovery and Reinvestment Act protects health coverage for 7 million Americans who lose their jobs through a 65 percent COBRA subsidy to make coverage affordable.

• The Recovery Act also invests $19 billion in computerized medical records that will help to reduce costs and improve quality while ensuring patients’ privacy.
• The Recovery Act also provides:
  $1 billion for prevention and wellness to improve America’s health and help to reduce health care costs;
• $1.1 billion for research to give doctors tools to make the best treatment decisions for their patients by providing objective information on the relative benefits of treatments; and
  $500 million for health workforce to help train the next generation of doctors and nurses.

Guiding Principles

President Obama is committed to working with Congress to pass comprehensive health reform in his first year in order to control rising health care costs, guarantee choice of doctor, and assure high-quality, affordable health care for all Americans.

• Learn about the fundamental health insurance consumer protections included in reform.

Comprehensive health care reform can no longer wait. Rapidly escalating health care costs are crushing family, business, and government budgets. Employer-sponsored health insurance premiums have doubled in the last 9 years, a rate 3 times faster than cumulative wage increases. This forces families to sit around the kitchen table to make impossible choices between paying rent or paying health premiums. Given all that we spend on health care, American families should not be presented with that choice. The United States spent approximately $2.2 trillion on health care in 2007, or $7,421 per person – nearly twice the average of other developed nations. Americans spend more on health care than on housing or food. If rapid health cost growth persists, the Congressional Budget Office estimates that by 2025, one out of every four dollars in our national economy will be tied up in the health system. This growing burden will limit other investments and priorities that are needed to grow our economy. Rising health care costs also affect our economic competitiveness in the global economy, as American companies compete against companies in other countries that have dramatically lower health care costs.

The President has vowed that the health reform process will be different in his Administration – an open, inclusive, and transparent process where all ideas are encouraged and all parties work together to find a solution to the health care crisis. Working together with members of Congress, doctors and hospitals, businesses and unions, and other key health care stakeholders, the President is committed to making sure we finally enact comprehensive health care reform.
The Administration believes that comprehensive health reform should:

• Reduce long-term growth of health care costs for businesses and government
• Protect families from bankruptcy or debt because of health care costs
• Guarantee choice of doctors and health plans
• Invest in prevention and wellness
• Improve patient safety and quality of care
• Assure affordable, quality health coverage for all Americans
• Maintain coverage when you change or lose your job
• End barriers to coverage for people with pre-existing medical conditions

Please visit http://www.whitehouse.gov/issues/health_care/#TB_inline?height=220&width=370&inlineId=tb_external&linkId=4 to learn more about the President’s commitment to enacting comprehensive health reform this year.

Baby Bommers

Reason #2

"Risk! So What? Not only are we the inflation generation, we are children of the nuclear age. We've lived our entire lives with the risk that some lunatic would press the wrong button. We live in an age were there is no security. Fortune 500 companies go bankrupt, college graduates are working as waiters and we have armed guards in high schools. A little more risk with the possibility of reward is no biggie.

Hence the birth of the pharse: "Buy Term Insurance because you can buy alot for a little and invest the difference that you would have paid for a Whole Life policy in a higher yield product". The baby-boomers began telling the insurance industry that we would buy their Term, but we would "invest the rest" elsewhere and if we could not do better, we would take the money to Las Vegas and at least enjoy losing it.

Term Insurance is designed to provide Death Protection Only for a definite and limited period of time. If the insured dies during the term, the policy matures and the insurance company pays the face amount of the policy to the beneficiary. If the insured doesn't die during the term, the policy expires. It is particularly suitable for a person who has only a temporary need for insurance, for a person who may want permanent insurance in the future, or for the person who has the discipline to by term and really invest the rest.

Whole Life

In our parents' day or grandparents' day, life was reasonably predictable. In your twenties, you got married once and stayed that way. By the time you were 25, you had the job you would still hold at 65; you had one litter of children who left the nest by the time you were 40 and had finished college by the time you were 45. This left you 20 years to prepare for retirement at 65 and you were dead by 75.

Prior to the early 1970's, Whole Life insurance was the workhorse of the life insurance industry. To better understand why, let's review the key characteristics of Whole life.

Whole Life insurance offers death protection that builds cash value. The cash value is absolutely guaranteed to build at a rate which will cause it to equal the face amount of the policy when the insured would reach age 100. With Whole Life, the insurance company makes an either/or promise. The company will either pay the face amount upon maturity(the insured's death or attainment of age 100, whichever comes first) or return the guaranteed cash value if the policyowner surrenders the policy or stops paying premium.

Locked-in Guaranteed premium for life

Locked-in guaranteed Death Benefit

Locked in guaranteed growth of cash value

These locked-in, guaranteed features of Whole Life have long been considered its greatest strength. They provided unshakable stability. However, for the last 30 years or so, Whole Life has become the object of a great deal of criticism. Why, for two reasons.

Reason No. 1 -- New Lifestyle Patterns

Today, Divorce is commonplace; children under one roof may be yours, mine and ours. Some people don't even get married until well into their thirties and some couples don't start having children until they are into their forties and fifties. People change jobs, mates and economic levels frequently. Some families even have tag team breadwinners -- "You work while I go to school and then I'll work while you go to school unless I join a cult, marry my receptionist and leave you with the kids!

Even without going through all of the soap opera possibiliies, the odds today of making one life insurance purchasing decision that would last a lifetime are infinitesimally small.

Economic Death

Economic death occurs when a breadwinner loses the ability to earn. If the breadwinner’s risk has been transferred to an insurance company, the company pays a claim for this economic death or loss. The insurance company cannot replace a human being like it can a car or a building, but it can replace the dollars that he or she could have earned had there been no disruption.

Physical Death:

A breadwinner dies during the earning period of life. All life policies are designed to provide for the contingency of premature physical death. (Life Insurance)

Retirement Death:

A breadwinner reaches retirement without accumulating adequate cash to provide for a reasonable retirement income. Not surprisingly many more people experience retirement death than premature physical death. Some life policies can help accumulate the funds necessary to reduce the possibility of retirement death and many of the traditional retirement plans can be funded by products sold by life insurance companies. (Annuities—a way of purchasing a guaranteed income for life)

Living Death (Disability):

This sounds worse than death and it probably is. If you are a single person and die, your income stops, but so do your expenses. It’s not a desirable state, but it does balance. If you become disabled, you have not one problem but several. Your income stops, your normal expenses continue, and on top of it all you have a new layer of expenses in the form of medical bills. The two basic forms of health insurance are necessary to handle these problems. Disability Income policies can replace lost income and Medical Expense policies can pay for medical bills.

Time Travel

The easiest way to gain an understanding of why people buy life insurance is to take a quick economic time travel tour of this country from the early 1900's to the present day. From the very beginning, the proceeds of life policies have been used to pay for the funeral of the deceased. The next tiny step was to increase the death benefit to cover the funeral and the final expenses of the deceased. Final expenses could include medical bills incurred shortly before death, ambulance charges, cemetery costs and even short term debts and installment loans left by the deceased. This gave life insurance an element of survivor protection it had not had before.
By mid-century, many policyowners sought to use insurance as an estate creation or estate protection vehicle. The estate creation thinking was that "if I live, I will put money aside each month for our retirement and possibly an inheritance for the kids - if I die prematurely, I want to do the same thing". Of all the financial vehicles available, only life insurance can instantly create an estate.

As we reach the close of the twentieth century, the newest innovation of life insurance is the use of Accelerated Death Benefits. a person suffering from a critical, chronic or terminal illness may incur some huge medical bills. Companies now offer options which allow the policyowner to obtain a significant amount of the death benefit Before death actually occurs.

Why Buy Life & Health Insurance

What is your greatest asset?

Without a lot of thought, many of you might say, "my house, my car, my boat or my bank account". But for most of us, that answer would be wrong. For most of you, your Earning Ability is your greatest asset. Your ability to go into the workplace and bring home a paycheck is Your Greatest Asset. Any disruption could be viewed as a Financial Loss.

Life and Health insurance became important products as we began to recognize that the greatest asset of most individuals is their ability to earn. Since your earning power can be disrupted by economic death in the form of physical death, retirement death or living death, you must deal with that risk or chance of loss. Most of us try to transfer some or all of our risk to an insurance company.

In The Begining

Many insurance historians trace the basic concept of insurance back many centuries to the Chinese. In a principally agrarian society, Chinese farmers were faced with the problem of getting their crops to market. Most of them simply loaded their crops on a boat and used the rivers as transportation. Occasionally though, a boat would overturn and an entire harvest would be lost. The farmers began to transfer this risk to other farmers in a brilliantly simple way. Ten farmers from one area would get together at harvest and load the boats by putting one-tenth of every farmer's crop on each boat. If a boat sunk, each farmer lost a little, but no one lost everything.

This concept of sharing risk is the basis of all insurance products. A modern-day policy owner trades a small known loss (premium) for the insurance company's promise to pay for a large, unknown loss should it occur. all of the policy owners lose a little, but no one has to take the risk of losing everything.