With the start of a new year, many of us have embarked on self-betterment resolutions. The vast majority of these are health-related: Eat healthier, get more exercise, sleep better, stay fit, lose weight.
But what about financial health? Many of us are resolving to get our financial house in order, too. It turns out the two are closely related.
Policygenius, a leading online insurance marketplace, was curious about how people applying for life insurance compare health-wise to the nation at large — and where in particular certain conditions, like tobacco use, heart disease or diabetes, are above or below the national average. Additionally, we looked at the financial costs associated with these conditions as compared to a healthy lifestyle.
We’ll explore these topics in depth. Here’s a summary of our findings.
- Surprisingly, life insurance applicants overall have lower rates of high cholesterol, tobacco use, high blood pressure, diabetes, sleep apnea, asthma, and depression than the average American — but figures vary widely by state.
- Life insurance applicants in North Dakota (34.8%) have much higher rates of tobacco use than the national average (20.5%), while those in Utah (8.2%) have much lower rates.
- Life insurance applicants in South Carolina (17.3%) have much higher rates of high cholesterol than the national average (11.8%), while applicants in Montana (2.1%) have much lower rates.
- Smoking has the highest impact on life insurance premiums (342% increase), while high cholesterol has the lowest impact (31% more).
Now, let’s take a deeper look at the data.
Life insurance applicants are healthier than average
One might expect unhealthy people to apply for life insurance more than healthy people, since they’re at higher risk of no longer being there to support their families. Counterintuitively, the opposite is true: People applying for life insurance pursue healthier lifestyles than average.
We looked at two years worth of anonymized data (11/2015 to 11/2017) from life insurance applicants with various providers. To ensure the highest accuracy, we limited our data set to phone-verified applicants. For the national data, we used figures from the Centers for Disease Control and Prevention, American Heart Association, American Diabetes Association, National Institute of Mental Health and others. At 38 years old, the median age of our applicants matches the national average provided in 2015 census data.
Interestingly, the average life insurance applicant in our data set had lower percentages of ailments across the board.
Life insurance applicants, on average, have lower rates of high cholesterol (25% less than national average), tobacco use (22%), high blood pressure (14.4%), diabetes (7.1%), sleep apnea (4.2%), asthma (3.6%) and depression (0.7%).
Let’s take a look at how health varies geographically.
Health conditions vary widely cross America
Though life insurance applicants are healthier than the average American, it largely depends on where they’re from.
To get a bigger-picture sense of this, we broke down each health condition by state. Averaging out the percentages for all ailments across states, here are the top 10 healthiest (and least healthy) states:
Overall, folks in Montana and Wyoming are tied for healthiest life insurance applicants. The western U.S. seems particularly healthy, claiming four of the five top states. On the flip side, the southern U.S. seems particularly unhealthy: though North Dakota claims the top spot (12.4% of insurance applicants have an ailment there), the South takes three of the top five positions.
Next, let’s get into more granular detail by breaking down each ailment on a state level. Starting with high cholesterol, we can see there’s a wide variance.
Life insurance applicants in South Carolina (17.3%), West Virginia (16.7%) and Idaho (16.4%) have much higher rates of high cholesterol than the national average (11.8%). Meanwhile, applicants in Montana (2.1%), New Mexico (3.1%) and D.C. (5.6%) have much lower rates.
Life insurance applicants in North Dakota (34.8%), Vermont (28.6%) and Kansas (27.2%) have much higher rates of tobacco use than the national average (20.5%), while applicants in Utah (8.2%), Idaho (8.2%) and Hawaii (8.9%) have much lower rates.
Life insurance applicants in Alabama (23.2%), Louisiana (22.4%) and Mississippi (22.2%) have much higher rates of high blood pressure than the national average (14.6%), while applicants in Montana (2.1%), D.C. (6.8%) and Rhode Island (7.1%) have much lower rates.
Life insurance applicants in Kansas (6.1%), Louisiana (4.8%) and North Dakota (4.3%) have much higher rates of diabetes than the national average (2.3%), while applicants in Missouri (0.4%), D.C. (0.6%) and Wisconsin (0.7%) have much lower rates.
Life insurance applicants in Iowa (5.5%), Missouri (5.2%) and Indiana (4.8%) have much higher rates of sleep apnea than the national average (2.4%), while those in Oklahoma (0.8%), Michigan (1.1%) and D.C. (1.1%) have much lower rates.
Life insurance applicants in Rhode Island (11.9%), D.C. (7.9%) and Hawaii (7.1%) have much higher rates of asthma than the national average (4.4%), while applicants in Maine (1.4%), New Mexico (1.5%) and Idaho (1.6%) have much lower rates.
Life insurance applicants in North Dakota (17.4%), Iowa (12.7%) and Delaware (10.3%) have much higher rates of depression than the national average (6.3%), while applicants in Louisiana (2%), South Dakota (2.4%) and Alaska (3.1%) have much lower rates.
Keep in mind, these figures don’t speak to the overall averages of these conditions in each state, but rather the averages among life insurance applicants.
How does my health impact my finances?
Though life insurance applicants seem to be healthier than the average American, those who do have health ailments and/or certain habits end up paying significantly more money for their policies.
To find out exactly how much more, we used a profile of the average life insurance applicant — a 38 year-old male applying for a $500,000, 20-year term policy, which will cost $25.37 per month.
Far and away, smoking causes the highest increase in a policy’s monthly cost. Smokers pay $112.23 — or an astounding 342% more than average. Over 20 years, the smoker will pay about $21,000 more than the non-smoker for the same coverage.
This is likely because smoking increases death from all causes in both men and women, and is the leading preventable cause of death in the U.S.
Diabetes also ranks highly, at 210% more, as do (somewhat surprisingly) sleep apnea (190%) and asthma (152%). High cholesterol and high blood pressure, equally surprisingly, seem to have less of an effect on insurance costs.
To conclude, our report shows people applying for life insurance, on the whole, are healthier than the average American. Aside from certain regional outliers, this proves to be true across the board. Additionally, a healthy lifestyle comes with significant savings on financial protection.
Those making New Year’s resolutions to improve their physical and financial health are in luck — the two go hand in hand. If you’re a smoker who plans to enroll in a life insurance plan, it’s pretty clear what your 2018 resolution should be. That is, unless you’d like to pay 3.5x more for your coverage.
Have a health condition? Here’s everything you need to know about finding an affordable life insurance policy.
This article originally appeared on Policygenius.
More than 75% of workers say that the employee benefits package is extremely important when they’re deciding whether or not to take a job. Think about it: if you’re looking at two jobs that both pay $60,000 per year, but one offers a ton more benefits, which is more attractive?
But it doesn’t always make sense to participate in your employee benefits, especially when private options may be less expensive or provide you with more choice. In this article, we’re going to look at four popular employee benefits — health insurance, 401(k)s, disability insurance, and life insurance — and walk you through whether or not you should opt-in or opt-out, along with our investigation of what your alternatives are.
According to the 2015 Bureau of Labor Statistics’ National Compensation Survey, 72% of workers have access to health insurance as an employee benefit. Out of all workers, only 53% participate in an employer-provided health insurance plan. Why do the 19% of workers who opt out of their employer’s coverage do so, and what do they do instead?
Top reasons to opt out of your employer’s health insurance
There are several reasons you may want to opt out of your employer-provided health insurance plan. Let’s go through some of the most common scenarios.
The most common reason people opt out of employer health insurance coverage is because they’re already covered. A few examples of outside coverage you may already have:
- If you’re under 26, you may have coverage under your parent’s plan.
- You may have coverage from a spouse’s plan.
- You may own your own plan.
If you’re coming into a job with health insurance coverage already, you’re probably already leaning towards keeping your existing coverage. You should consider, however, whether or not your employer’s benefits may fit your needs just as well (or better) and can provide you with some potential cost benefits.
For those of you under 26, there’s a good chance you’re not paying to be a dependent at all, while you likely have to pay some amount for your employer’s health coverage. However, there are three big reasons you may want to switch over to your own health insurance plan:
- You’ve moved out of state.
- You’re concerned about your privacy.
- You’re planning on having a kid.
If none of those apply to you and you’re happy with your current coverage, there’s little reason to switch to your employer’s plan.
For those of you who are dependents on a spouse or partner’s health insurance plan, consider the cost — if your employer’s plan covers the same doctors, hospitals, and prescriptions, but costs less than what you and your partner have to pay for dependent coverage, you might want to consider it. Take a look at the deductibles, too — your employer coverage may cost less, but have higher deductibles (or vice versa).
Another reason that people opt out of their employer’s coverage is that it’s unaffordable and they would prefer to shop on their state or federal marketplace.
Your employer’s plan may also fail to cover your preferred doctors, hospitals, or necessary prescriptions, forcing you to look for coverage elsewhere.
Regardless of the reason behind opting out of your employer coverage, you still need to make sure you have a backup plan. If you’re opting out because you’re already covered, great — just make you stay covered (it’s the law). If you’re opting out because you want to look for better coverage, make sure you know exactly what you need.
Health insurance is one of the more complicated types of insurance to buy because it requires a series of trade-offs. To use the above example on deductibles — if you want a lower deductible, you typically have to pay a higher monthly premium and vice versa. Not all plans will offer exactly what you need, so the best way to go into a shopping experience is to know what it is that you need. If you’re opting out of your employer plan because it doesn’t cover your preferred doctors, for example, consider that a high priority for your privately purchased plan. Same goes for hospitals or prescriptions covered.
You can look for health insurance plans on your state or federal marketplace during Open Enrollment or, if you just recently changed your job, during a Special Enrollment Period. Open Enrollment for 2017 starts on November 1, 2016 and ends January 31, 2017.
Some businesses may offer you a waive allowance if you choose to opt-out of your health insurance policy. This typically isn’t very large — anywhere between $25 to $200 depending on the size of your company. If you’re opting out of your health insurance plan, ask about a waive allowance, but don’t be surprised if your company does not offer one or offers only a nominal amount.
57% of workers have access to a defined contribution retirement plan, which most commonly manifests itself as a 401(k) plan. But, according to the National Compensation Survey, only 39% of workers take advantage of their employer’s 401(k) plan. Why do 18% of workers who have access to retirement benefits choose not to take advantage of them?
Top reasons to opt out of your 401(k) plan
There’s a good chance that most of those 18% aren’t actually opting out, they just never opted in in the first place. Why? A major pain point for employees is that their 401(k) benefit is not effectively communicated to them, causing them to feel intimidated by the process of signing up for the plan.
Even if you’re not intimidated by signing up, there are still other reasons that people don’t sign up for their 401(k). Not all of these are good reasons, however. For example, you may feel that you don’t have enough money to put aside for retirement, perhaps because you’re feeling the crush of student loans or other debt. Depending on your financial situation, this might make sense — many financial experts, such as Dave Ramsey, suggest putting off retirement savings if you’re in severe debt or don’t have an emergency fund.
But it’s also likely that many people could find room for retirement savings in their budget if they cut spending from somewhere else. The cliche example is the savings you’d gain by cutting your morning latte, but let’s face it: we need our morning lattes. Instead, it’s likely that you’re overspending on other items or have hidden monthly expenses, like subscriptions, that you don’t even realize are taking up a huge amount of your paycheck. Implementing a budgeting solution such as You Need A Budget can help you carve out a space in your budget for savings.
We suggest putting money into a 401(k) specifically because of matching employer contributions. If your employer offers it, they’ll actually match your contribution with one of their own up to a certain amount. For example, if you put 1% of your income into your 401(k) every month, the company will match that 1% out of its own pocket. This can easily double the amount you’re saving for retirement without taking any additional money out of your paycheck.
Not all employers offer matching contributions, however, which is one good reason not to participate in your 401(k) plan. However, not participating in a 401(k) plan does not mean you don’t have to save for retirement.
The most popular alternative to a 401(k) is an IRA, or individual retirement account. Unlike 401(k)s, you don’t sign up for an IRA through your employer. Like a 401(k), the actual investment or savings product inside the IRA differs depending on who is administering the product. However, the tax benefits are consistent between providers. IRAs can also complement your 401(k), if you want to save even more money.
You don’t necessarily need an IRA to put money aside for retirement (though the aforementioned tax benefits do make them more attractive). Apps like Acorns or Stash market themselves specifically to people who don’t feel like they have the money to invest or are otherwise intimidated by it. Other companies you may have heard of, like Betterment or Wealthfront, allow you to set up an automatic deposit every month.
While you may get a better deal or better investment opportunities by investing somewhere other than your job’s 401(k), one huge benefit of the 401(k) is that you can set it and forget it. Once you opt-in, it usually automatically deducts your contribution from your paycheck. Most people, once they decide not to enroll in a 401(k), don’t set up an automatic contribution elsewhere, and let retirement savings fall by the wayside. Don’t be that person. Find the product that works for you and set up an automatic deposit.
Short-term and long-term disability
Disability insurance is usually not at top of mind when you think of employee benefits. However, according to the Council for Disability Awareness (CDA), the number of companies offering long-term disability is on the rise. Unfortunately, in that same report, the CDA estimated that fewer workers are participating in their employer-provided disability policy.
Top reasons to opt out of a disability plan
Before we get any further, let’s explain exactly what disability insurance does. Both short-term and long-term disability protect you during periods of disability where you’re unable to work. If you’re in your twenties, you have a one in four chance of experiencing a disability at some point before you retirement. What you may not realize is that most disabilities are temporary and due to illnesses, not debilitating workplace accidents. According to the CDA, the most common causes of long-term disabilities are back injuries, cancer, and heart disease, and the average absence lasts just over two years.
The difference between short-term disability (STD) and long-term disability (LTD) is that short-term disability only protects you for the one to six month period after your disability begins (the exact length depends on the policy). Long-term disability, on the other hand, kicks in three to six months after your disability begins and can potentially last for the rest of your working years (again, depending on the policy).
Our resident disability insurance expert, Tyler End, CFP, says that it’s usually smart to take a short-term disability policy from your employer. “You can buy a private STD policy, but it’s very expensive. It’s better to accept an STD policy from your employer and use your money to build up an emergency fund.” When it comes to long-term disability, you may be better off turning down your employer’s coverage. “Your employer may not offer strong coverage,” says End. “I talk to a lot of young people who decline employer coverage and buy a stronger policy that is portable, which means they can take it with them if they change jobs.”
If you decide to turn down your employer-provided long-term disability insurance, you should immediately start looking for a private option. Our guide to long-term disability can help you with some of the basic terminology you’ll need to know when researching a policy. You can also get long-term disability quotes from our quote engine.
Life insurance is actually one of the more popular employee benefits — according to a study from LIMRA, 70% of employees have life insurance as an employee benefit, and 80% of those employees participate.
Top reasons to opt out of a life insurance plan
Most employer-provided life insurance coverage is entirely paid for by the employer; companies can deduct life insurance premiums as a business expensive on their taxes. If your company pays for your life insurance premiums, it doesn’t make a lot of sense to opt out of the coverage. Even if you don’t think you need it — you’re young and don’t have any dependents, for example — you should still take it and mark your parents (or whoever else would be responsible for your funeral) as the beneficiary. This holds true if you have a privately purchased life insurance policy as well.
But what if your employer requires that you pay your own premiums or offers additional coverage that you can pay for? If you already have a life insurance policy, this is a personal decision as to whether or not you want to pay the additional premiums; there’s no other detriment to having multiple life insurance policies from multiple sources. If you don’t have a privately purchased life insurance policy, I would encourage to look at private options before purchasing coverage through an employer. Privately purchased life insurance may be cheaper and you’ll be able to take it with you if you change jobs.
The alternative to employer-provided life insurance is a privately purchased life insurance policy. A privately purchased policy is not always a true alternative, however. More frequently, the two policies complement each other. Employer-provided life insurance coverage is rarely enough to cover your needs, and many workers choose to buy a private policy to cover the gap.
What’s your experience with employee benefits? Do you prefer to always opt-in, or do you scrutinize all of your options? Tell us your story in the comments below.
This post originally appeared on PolicyGenius