Insurance or Investment – Which is More Important?

Insurance or Investment – Which is More Important?

This article is written as part of a DollarsAndSense.sg collaboration with For Tomorrow. For Tomorrow is brought to you by Temasek, in partnership with MoneySmart and DollarsAndSense. All views expressed in the article are the independent opinion of DollarsAndSense.sg.
Purchasing insurance and making investments are two of the most important pillars of personal finance. While investing enables us to increase the income we are able to generate through the investments that we make, insurance plays a different role, as it protects the income that we currently generate through our ability to work and earn a living for ourselves.
Both investing and insurance have major implications on our long-term financial well-being, and there is no shortage of finance professionals trying to convince us to buy such products and services from them.
Insurance is a boring topic that many Singaporeans don’t really want to spend too much time to think about, unless you happen to be an insurance agent. It’s also a bad conversation starter in group settings because discussions about it tend to centre around negative things happening in life such as death or illnesses.
In contrast, people love talking about investing. The idea of being able to make money through investing and to enjoy a higher quality of life is something that appeals to most people, even those who are not familiar with the subject.
But which is more important? And which one should we care about first when it comes to planning our finances?
What Is Insurance For?
nsurance can sometimes come across as a confusing topic for those not in the know. That’s because there are many different types of insurance policies out there, all of which are important – at least according to most insurance agents.
To make matters worse, different insurance companies sell their own “unique” products, all claiming to offer the best deals.
To help simplify insurance matters, here are the three main types of insurance policies you need to know.
Generally speaking, insurance is primarily meant for protection. For young Singaporeans entering the workforce, Good health is our biggest asset as it enables us to work efficiently for the next three to four decades.
Yet as we all know, we can never take our health for granted. Neither is it a sure bet that we will continue to remain in good health throughout our adulthood.
Buying the right types of insurance can help protect us and our loved ones from such adverse circumstances, which could rob us of our ability to work and lead us into financial hardships.
As we grow older, our income may increase. Likewise, we will also go through different life stages and have many more responsibilities and commitments. We may have children and our elderly parents to care for, a home mortgage and car loan to pay for in addition to having to think about our own retirement. Hence, it’s important to constantly review our insurance coverage and to add policies accordingly when our needs evolve.
[Read also: Different Types Of Health Insurance In Singapore]
What Is Investing For?
When we invest, our intention is to grow our money for the future. In the long run, we hope to be able to generate money for ourselves from our investment returns rather than to always work for an income.
Investment returns can come in two forms. The first way is the making of money through capital gains. For example, we may buy a stock today for $1 and sell it at $1.50 in the future, thus realising a gain of $0.50.
We can also earn returns from our investments through passive income. For example, we could buy a bond for $1 today that pays out an annual coupon rate of 5%, thus earning us $0.05 in payment each year.
Insurance Protects Our Downside. Investment Increases Our Upside
From a financial standpoint, the roles played by both insurance and investment are on opposite ends of the spectrum.
Insurance is meant to protect us financially when we are not able to work and provide a flow of income for both our families and ourselves. Investment allows us to earn additional returns on top of the salary we earn in our day jobs.
In other words, insurance protects our potential downside while investment increases our potential upside.
A Holistic Financial Plan Requires Both Insurance And Investing. However, You Should Plan Your Insurance Needs First
Having only insurance without investments means we need to rely indefinitely on the income provided in our day job, even during our retirement. If we stop working, we lose our only source of income even if we might be well-protected from adverse circumstances that prevent us from working.
Having only investments without insurance means that even though we may be able to earn more money on the side through our investments, we are always at risk of financial hardship if we encounter an unfortunate event that prevents us from working and earning an income. This is especially so if our investment earnings are insufficient to cover for the loss of income from our job.
Neither insurance nor investments are sufficient on its own, nor is one more important that the other. To truly enjoy a holistic financial plan, we need to buy both the right insurance policies and make the right investments.
However, while both insurance and investing can be seen as equally important aspects personal finance, young Singaporeans who are just starting out in their careers should prioritise getting their insurance plans in order first. The reason is simple; we are only able to start investing once we have obtained extra capital from our job. However, if health conditions do not permit us to stay employed, then we wouldn’t even be able to earn a living for our family and ourselves, let alone find the excess capital to invest.
Furthermore, our investments will take time to pay off while our insurance protection starts immediately, once we have bought our policies.
Our insurance and investment needs are never static. We need to periodically review our insurance coverage to see if it meets our requirements. Likewise, we also need to review our investment portfolio to understand if it’s in line with our investment objectives, and to adjust it accordingly if the need arises.

Labor Commissioner Stresses the Importance of Valid Workers' Compensation Insurance

Labor Commissioner Stresses the Importance of Valid Workers' Compensation Insurance

is reminding employers they must maintain valid workers' compensation insurance coverage or its equivalent. Employers who purchased insurance with American Labor Alliance and CompOne USA are advised that the companies are not licensed to sell insurance in California.
"Employers who bought workers' compensation insurance policies from these two firms do not have policies that meet the requirement to provide coverage and must purchase from a licensed company," said Labor Commissioner Su.
The California Department of Insurance (CDI) last week announced the two companies and their parent agency are barred from selling workers' compensation and liability policies, as they are not properly licensed. Information on insurance companies licensed to sell workers' compensation insurance and an online rate comparison of the top 50 workers' compensation insurers can be accessed on CDI's website.
Failure to maintain valid coverage can result in fines of $1,500 per worker employed during the period the business was uninsured, and could incur additional penalties up to $10,000 and jail time. Additional details on workers' compensation insurance requirements, including FAQs, are posted online.
The Labor Commissioner's Office, officially known as the Department of Industrial Relations' Division of Labor Standards Enforcement, inspects workplaces for wage and hour violations, adjudicates wage claims, investigates retaliation complaints, issues licenses and registrations for businesses, enforces prevailing wage rates and apprenticeship standards in public works projects and educates the public on labor laws. The division's Bureau of Field Enforcement is responsible for investigating and enforcing certain statutes including those that cover group claims of unpaid minimum wage and overtime.
Employees with work-related questions or complaints may contact DIR's Call Center in English or Spanish at 844-LABOR-DIR (844-522-6734).
Members of the press may contact Erika Monterroza or Peter Melton at (510) 286-1161, and are encouraged to subscribe to get email alerts on DIR's press releases or other departmental updates.
The California Department of Industrial Relations, established in 1927, protects and improves the health, safety, and economic well-being of over 18 million wage earners, and helps their employers comply with state labor laws. DIR is housed within the Labor & Workforce Development Agency. For general inquiries, contact DIR's Communications Call Center at 844-LABOR-DIR (844-522-6734) for help in locating the appropriate division or program in our department.

Mother Nature Could Wreak Major Havoc On Your Insurance Rates

Mother Nature Could Wreak Major Havoc On Your Insurance Rates

wild-fire-forest
The wildfires raging out West and the freakish storms that ravaged much of the east have property insurers scrambling to keep up with all the claims.
The current blitz of wildfires in Colorado is already the most destructive in the state’s history, and the blazes are expected to continue burning for days. All told, over 1,500 structures, almost a thousand of which were homes, have been destroyed by fires in western states so far. In Colorado alone, more than 30,000 people have been evacuated from their homes.
Across the plains in the Mid-Atlantic states, the hurricane-force “derecho” storm – so called because of its tendency to barrel forward in a straight path (derecho is Spanish for “straight”) – killed at least 13 people and left over 3 million people without power in the wake of its 700-mile path. It caused the largest non-hurricane power outage in Virginia’s history. Four states and the District of Columbia have declared states of emergency. There are countless downed trees, many of which struck homes and cars. The spontaneous nature of the storm – meteorologists had little warning of its arrival – made matters even worse.
Of course, someone has to pay for all that destruction. Cue the insurance companies, who along with government officials and individual victims, will be calculating the damages from these events for weeks to come.
It’s too early to tally total costs, but one hard-hit Colorado Springs neighborhood has already reported over $110 million in damage. Still, for all of their telegenic mayhem, the wildfires are actually unlikely to result in record damages for Colorado. For this summer at least, that dubious honor goes to the less visibly striking hailstorms and flooding over two days in Colorado last month. They garnered less media attention, but with $321.1 million in damages, they amounted to the fourth-costliest weather event ever in that state.
Back east, the claims process has been complicated by timing – many residents are on vacation this July 4th week and may not even be aware that a tree crashed in on their roof. Still, the derecho has State Farm alone already processing over 22,000 property claims and 7,000 auto claims, with more obviously still coming in, according to a company spokesperson.
In Ohio, the storm is similar in severity to that of 2008’s Hurricane Ike, which wreaked $1.2 billion worth of damage on the state when all was said and done, according to Mitch Wilson, a spokesperson for the Ohio Insurance Institute.
It’s a big outlay for insurance companies to stomach. So how do they cope, and what can policyholders expect from them after the dust has settled? Insurance companies are restricted from raising premiums in response to a single event. However, past events will be factored into predictions for future events. “When they get nervous, their number crunchers take another look at what their exposure is and whether they’re charging enough and that may lead to rate increases,” Amy Bach, executive director of United Policyholders, told The Fiscal Times last year.
“Ohio has had at least 14 storms in the current five-year period with losses near or over $25 million,” says Wilson, “compared to seven in the previous five-year period.” So even if a big storm doesn’t lead directly to increased premiums, in a less direct way, it will encourage higher premiums as insurers reassess the potential damages they could have to pay out if climate change creates more frequent and intense weather events.
This reassessment can happen on a broad level or an individual one. For policyholders, this means that if damage amounts to little more than the deductible on their plan, it may be wise to consider not filing a claim.
On the other hand, insurance companies are structured to be able to absorb the costs involved with an extreme weather event – that’s why most of them spread their risk among diverse geographic locations. In addition, they are required by law to maintain enough in cash reserves to cover any foreseeable event. The real risk for individuals, then, isn’t in paying for the current catastrophe, but in how that payment will be used to assess future insurance rates.

Insurance companies should collect a carbon levy

Insurance companies should collect a carbon levy


Elijah Nouvelage/Getty
February floods forced residents of San Jose, California, to evacuate their homes and abandon vehicles.
Governments juggle too many interests to drive global action on climate change. But the insurance industry is ideally placed. With annual premiums amounting to between US$4 trillion and $5 trillion, or about 6% of world gross domestic product (GDP), the industry's future profitability hinges on limiting the risks of climate change.
Insurers are exposed to the consequences. Before Hurricane Harvey, which is likely to cost more than $100 billion, in 2017 the United States experienced six storms, two floods and one freeze that each cost more than $1 billion in damages. Severe floods, landslides and droughts have struck countries in the Americas and Africa, as well as India, China, Sri Lanka, Bangladesh, Thailand and Indonesia (www.reliefweb.int).
The costs of climate-related damage will grow as the world warms. For the United States, the impact on agriculture, crime, storms, energy, human mortality and labour will cost around 1% of GDP for each 1 °C increase in global average temperature1. If a similar picture holds worldwide, each 1 °C rise will cause about $1 trillion of extra damage per year. For present temperatures above the 1980–2010 average, this equates to about 0.4% of world GDP — damages that are growing at around 0.1–0.2% per decade1, 2.
As claims rise, so do premiums. Insurance cover may be cut, as was reported in 2005 after Hurricane Katrina hit Louisiana2. Some places will become uninsurable. The poorest people will suffer most, despite having contributed least to atmospheric carbon dioxide. Developing countries such as war-torn Yemen, Afghanistan and those in sub-Saharan Africa have scant insurance cover, yet are among the nations at greatest risk from climate change.
Insurance companies can and should do more. They are central to the global climate challenge, helping to redress its consequences. Now they need to lead.
Here we propose that insurers collect a levy from energy producers according to the carbon intensity of their products. The funds generated should be invested in climate adaptation and low-carbon energy. This would be fair — polluters should redress the problems they create. The biggest beneficiaries of fossil fuels would then pay for the benefits they have derived at the expense of others, including future generations.
Willing and able
The world's leading insurance companies have the will and the tools to push for a low-carbon economy. In 2012, 66 chief executives of insurance firms endorsed the Principles for Sustainable Insurance (www.unepfi.org/psi). These require the firms (and supporting organizations) to embed environmental and social concerns in board-level decisions, raise awareness of climate risks with clients and suppliers, work with governments and policymakers, and disclose progress.
Insurers are used to collaborating with each other and with governments, and their role is broadening. The US National Flood Insurance Program, run by the Federal Emergency Management Agency, has covered buildings in threatened areas — such as along the US east coast — since the 1960s. Since 2016, UK legislation has required home insurers to pay a £180-million (US$235-million) levy to a reinsurance scheme, Flood Re, to allow affordable insurance in flood-risk areas. And transport planner Gergely Raccuja's proposal to improve UK roads, which won the £250,000 Wolfson Economics Prize in July, asks car-insurance companies to calculate and collect a distance-based tax from road users. This would use mileage information that the insurers already obtain from their customers.
New products such as multi-year contracts are also being tried3. These can incentivize customers to adapt their properties, for example with flood-proofing. Cheap loans that help towards such adaptations may have even greater potential3.
Insurance can be a tool for regional development. Micro-insurance schemes protect farmers in developing countries from perils such as drought. In 2013, Indonesia passed a law obliging the national and local governments to protect farming through state-owned or private agricultural insurance. In July, the UK government announced a London Centre for Disaster Protection to provide expert insurance advice and help for developing countries.

Noah BERGER/AFP/Getty
A playground structure inundated by flood water in February in San Jose, California.
Insurance companies are directing their vast funds towards low-carbon and adaptation projects. In 2014, a coalition of insurance companies pledged to invest $420 billion over 5 years in energy efficiency, renewable energy and sustainable agriculture4. That sum compares well with the $10 billion pledged by governments to the United Nations Green Climate Fund, or the tens of billions offered by the clean-energy initiatives Mission Innovation and the Breakthrough Energy Coalition over ten years. But it is barely 4% of the $2.3 trillion per year that the International Energy Agency predicts must be invested in low-carbon technology to keep global warming to less than 2 °C.
Two other trends add pressure. Commercial banks, investment funds, university endowments and pension funds are shifting their portfolios away from fossil fuels and towards low-carbon options. They are driven by the fear that trillions of dollars of carbon-intensive assets could be 'stranded' as they become unburnable4. If assets lose value, so will companies and their investors, including insurance firms.
Meanwhile, legal challenges relating to climate change are becoming common5. There were 394 such disputes in the United Kingdom, United States, Australia and Canada between 2013 and early 2015 (ref. 6). In June 2015, a Dutch court ordered the state to reduce greenhouse-gas emissions by at least 25% relative to 1990 levels by 2020. In November, an Oslo court will hear a lawsuit filed against the Norwegian government by Greenpeace and other climate advocates, including US climate scientist James Hansen. They allege that issuing licences to drill for oil in the Arctic violates both the Paris climate agreement and article 112 of the Norwegian constitution, which requires the maintenance of a diverse and healthy environment for future generations.
In future, more courts are likely to agree with the overwhelming scientific evidence that cumulative CO2 emissions are increasing weather-related damage. As British lawyer Philippe Sands puts it: “We have gone well beyond the classical standards on the burden of legal proof, whether it be balance of probabilities, or beyond reasonable doubt.”7
Cases will multiply5, 8, causing economic turmoil. The value of fossil-fuel companies and their investors will be hit. Insurance companies will be exposed through their investments and through third-party liability claims against companies they insure9. The unintended global economic consequences would be damaging to everyone.
Polluter pays
To economists, climate change is an 'externality' — a social cost of fossil-fuel use that is not factored into its price. Conventional economic reasoning supposes that including this extra cost would lower demand for fossil fuels. Cap-and-trade schemes are the preferred means of doing this, by setting a limit on total emissions and by trading emissions permits. But so far, such market-driven approaches have led to modest carbon prices. Government interventions and gluts of permits have weakened the carbon markets.
Instead, we propose a levy managed by the insurance industry to fund adaptation and the low-carbon transition (see 'Energy levy'). Like a carbon or energy tax, it would have the advantage that the revenues go solely into adaptation and mitigation, not government or individual spending. It would have the same value internationally, be led by business and be set by an objective measure.

Sources: IEA/IPCC
We believe that the levy could be paid voluntarily. Large petroleum companies have called for a realistic carbon price to increase the pace of low-carbon investments; an insurance levy would be equivalent. Companies that pay up will attract good publicity and may reduce the risks of future litigation. Governments could legislate that it must be paid, as the United Kingdom has done with Flood Re.
With full participation by energy producers, a levy would raise similar revenue to a $15 per tonne carbon tax paid on all 32 billion tonnes of the energy sector's global carbon emissions. It would initially raise around 0.5% of world GDP per year for a 0.5 °C rise above an agreed baseline global average temperature, such as that when the Intergovernmental Panel on Climate Change was formed (1988) or when the UN Framework Convention on Climate Change was adopted (1992). That equates to roughly $0.5 trillion per year.
The levy would add just 5–7% to the current cost of US petrol, which should be acceptable to energy companies. But it will raise much more than the insurance industry's present $420-billion plan for climate investment. The clear market signal will mobilize the financial resources of energy companies into low-carbon investments, and other investors will follow.
The levy would grow in proportion to the net cost of damages as the climate warms. The cost of cumulative CO2 emissions would be determined from the expected rise in losses. An 'event attribution' methodology would be used — this determines the proportion of damages from each event that should be attributed to climate change, by calculating the probability of damage under different global climates10.
Directed investments
Two further questions must be addressed: who should contribute, and who decides where revenues are directed?
Fossil-fuel extraction companies are obvious candidates to pay the levy. Increased costs will be passed on to consumers of fossil fuels, including the electricity, automotive, chemicals and plastics industries, encouraging the uptake of alternatives. And once the revenues from coal, gas and oil producers fall, other sources will be needed.
“Rather than allocating blame for historical emissions, an energy levy pays back the benefits these technologies have brought.”
We propose that the levy should be aimed at energy producers according to their carbon intensity. It would account for both direct and indirect emissions — those involved in producing the fuel, technology and infrastructure (also known as embedded carbon). For example, if the carbon intensity of coal power is 80 times that of wind, then wind energy would initially pay about one-eightieth of the levy paid by a coal-fired power station per gigawatt hour of electricity production. Overall contributions would increase to retain total revenues as the carbon intensity of energy falls.
Targeting energy use discourages profligacy. And it is a proxy for technological development. It recognizes that all modern civilizations have a 'carbon inheritance': up to 250 years of industrial growth driven by fossil fuels has improved standards of living and health. Rather than allocating blame for historical emissions, an energy levy pays back the benefits these technologies have brought.
Setting the size of the levy according to damages linked to climate change — starting low and building up as impacts mount — is fair. It may also gain legal support. Larger revenues would accelerate the low-carbon transition, but a levy set too high could lead to fewer participants and might dent the economy. A compromise must be reached that the majority of energy companies and non-governmental organizations will support.
The revenue raised would go to a wide range of projects, including producing and storing energy, and carbon capture and storage. A portion might go to basic research. The fraction going to adaptation should rise over time.
Thought needs to be given to how projects will be prioritized. Minimizing losses over the long term requires local knowledge of risks. Individual insurance providers could decide where the money goes, with regulations to limit its use. Business-led decisions can be justified on rational financial grounds, and are less vulnerable to changes in government policy. Some government involvement may be required to integrate decisions with social need. This could be encouraged through tax concessions or by legislating that insurers collect a levy for specific purposes, such as flooding.
Next steps
International organizations such as the Global Federation of Insurance Associations, the Association of British Insurers and the Geneva Association (a risk-management think tank) should discuss the willingness of the industry to organize a levy and explore how revenues might best be collected and redistributed. The Baden-Baden meeting of reinsurers in Germany in October offers an opportunity for preliminary talks.
Insurers, climate scientists and those who model extreme events must meet to determine how best to calculate the levy. They must agree on how carbon-intensity weighting will determine levy size for different energy producers, and whether a levy will account for the longer-term costs and risks from sea-level rise, for example.
Researchers should also determine how to encourage energy companies to voluntarily participate in a levy and how to get environmental organizations to support it. The answers to all these questions will need collating. The Geneva Association is well placed to arrange this, having access to funds, expertise and a network of insurers.
A levy applied by the insurance industry offers a business-led response to climate change. Its success is in everyone's interests.

Trump will sign executive order today changing the nature of Obamacare

Trump will sign executive order today changing the nature of Obamacare

The president will sign an executive order today that undoes at least some of the damage incurred when Democrats passed Obamacare.
In fact, Trump's order will repeal two key parts of Obamacare that made insurance so expensive.  First, his order will allow small businesses and individuals the opportunity to band together to purchase insurance that would be exempt from many of the onerous mandatory coverage required by Obamacare.  This will make health insurance more attractive to younger, healthier consumers who have mostly stayed away from Obamacare plans, driving up the cost of premiums and making it nearly impossible for insurance companies to make money.
The order attacks the very heart of Obamacare, which forces people to pay for coverage they don't need or want.
The second change will also benefit consumers who wish to purchase shorter-term health care plans.  It will extend the time consumers can use these plans from three months to a year.
Reuters:
Experts questioned whether Trump has the legal authority to expand association health plans and whether some plans, but not others, could be exempt from Obamacare rules.
The action could open Trump to legal challenges from Democratic state attorneys general, who have said they will sue Trump if he tries to destroy Obamacare, a law that brought health insurance coverage to millions of Americans.
Please note that the law "brought health insurance coverage to millions of Americans" by forcing them to buy it or get covered under the Medicaid expansion under penalty of a "fee" or "fine," depending on which Obama administration official you believed. 
Experts said the association health plans could attract young, healthy people and leave a sicker, more expensive patient pool in the individual insurance markets created under the healthcare law, driving up premiums and effectively eroding the law’s protection for those with pre-existing conditions.
Conservative groups and lawmakers, including Republican Senator Rand Paul, who said he has worked with Trump for months on the expected order, and Republican Senator Ron Johnson, have cheered the expected order. Paul opposed the Senate's most recent attempt to overhaul Obamacare because he said it left too many of Obamcare's regulations and spending programs in place.
Trump has taken a number of steps since assuming power in January to weaken or undermine Obamacare. He has not committed to making billions of dollars of payments to insurers guaranteed under Obamacare, prompting many to exit the individual market or hike premiums for 2018.
That's an extraordinary misstatement of the facts.  Insurance companies were abandoning Obamacare in droves even before Trump took office.  The reason they are leaving is because they are finding it impossible to make money.  That held true before Trump took office and is certainly true today.
As for younger, healthier consumers leaving current Obamacare plans – they will hardly be missed.  The authors of the law badly underestimated how popular it would be with the "young invincibles."  The numbers of healthier consumers who signed up for Obamacare plans never came close to the number needed for insurance companies to make any money – even with the federal government's slush fund that paid off insurance companies for selling policies on the state exchanges.
The bottom line is that Trump's executive orders won't go into effect immediately because they will be challenged in court.  This means that the best option is still going to be the repeal of Obamacare and a replacement that takes into account market forces and freedom of choice for consumers.
The president will sign an executive order today that undoes at least some of the damage incurred when Democrats passed Obamacare.
In fact, Trump's order will repeal two key parts of Obamacare that made insurance so expensive.  First, his order will allow small businesses and individuals the opportunity to band together to purchase insurance that would be exempt from many of the onerous mandatory coverage required by Obamacare.  This will make health insurance more attractive to younger, healthier consumers who have mostly stayed away from Obamacare plans, driving up the cost of premiums and making it nearly impossible for insurance companies to make money.
The order attacks the very heart of Obamacare, which forces people to pay for coverage they don't need or want.
The second change will also benefit consumers who wish to purchase shorter-term health care plans.  It will extend the time consumers can use these plans from three months to a year.
Reuters:
Experts questioned whether Trump has the legal authority to expand association health plans and whether some plans, but not others, could be exempt from Obamacare rules.
The action could open Trump to legal challenges from Democratic state attorneys general, who have said they will sue Trump if he tries to destroy Obamacare, a law that brought health insurance coverage to millions of Americans.
Please note that the law "brought health insurance coverage to millions of Americans" by forcing them to buy it or get covered under the Medicaid expansion under penalty of a "fee" or "fine," depending on which Obama administration official you believed. 
Experts said the association health plans could attract young, healthy people and leave a sicker, more expensive patient pool in the individual insurance markets created under the healthcare law, driving up premiums and effectively eroding the law’s protection for those with pre-existing conditions.
Conservative groups and lawmakers, including Republican Senator Rand Paul, who said he has worked with Trump for months on the expected order, and Republican Senator Ron Johnson, have cheered the expected order. Paul opposed the Senate's most recent attempt to overhaul Obamacare because he said it left too many of Obamcare's regulations and spending programs in place.
Trump has taken a number of steps since assuming power in January to weaken or undermine Obamacare. He has not committed to making billions of dollars of payments to insurers guaranteed under Obamacare, prompting many to exit the individual market or hike premiums for 2018.
That's an extraordinary misstatement of the facts.  Insurance companies were abandoning Obamacare in droves even before Trump took office.  The reason they are leaving is because they are finding it impossible to make money.  That held true before Trump took office and is certainly true today.
As for younger, healthier consumers leaving current Obamacare plans – they will hardly be missed.  The authors of the law badly underestimated how popular it would be with the "young invincibles."  The numbers of healthier consumers who signed up for Obamacare plans never came close to the number needed for insurance companies to make any money – even with the federal government's slush fund that paid off insurance companies for selling policies on the state exchanges.
The bottom line is that Trump's executive orders won't go into effect immediately because they will be challenged in court.  This means that the best option is still going to be the repeal of Obamacare and a replacement that takes into account market forces and freedom of choice for consumers.

Rethink pregnancy cover in private health insurance – even if you want to start a family

Rethink pregnancy cover in private health insurance – even if you want to start a family

One of the many cons to convince young people to take private health insurance is to exploit their natural anxiety around pregnancy and childbirth.
If young people weren't fooled by the ads exhorting them to take out insurance before their 30th birthday, a topic I've written on previously, they'll often decide it's necessary when they're planning to start a family.

Pregnancy cover can add a significant cost to the average private health insurance policy.Pregnancy cover can add a significant cost to the average private health insurance policy. 
I'd like to challenge that. Pregnancy cover adds hugely to the cost of a health insurance policy and leaves people thousands of dollars out of pocket for the delivery – for care that is probably just as good in the public system.
Comparison site Canstar crunched the numbers for me to show how much pregnancy cover adds to cost of the average policy. As the table shows, using NSW figures as a reference, the dominant type of cover is a comprehensive plan that covers cardiac, hip/knee replacement and pregnancy/obstetrics, for an average $157 a month for a single. There are 70 policies like this, but the likelihood of you claiming on all three treatments is remote.
If you drop all three, you can save an whopping $76 a month by buying one of the 37 basic hospital policies. However, basic is the operative word here.
Bear in mind that it's not as simple as dropping particular treatments – you may be dropping other coverage as a result, because of the way the policies are designed with cross-subsidies between treatments. Private health insurance is not a la carte because it wouldn't be profitable if people could choose to insure only what they'll probably claim. It's more like a pay TV package where you might have to pay for movies in order to get sport.
The middle ground for a young person who wants quality cover is to drop pregnancy cover and hip/knee replacements but retain cardio – there are 28 policies like this and it's an average saving of $50 a month compared with full cover. That's $600 a year.
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Remember you generally need to have insurance with pregnancy cover for 12 months before you conceive – and that doesn't always happen on cue; you may be paying for it for several years beforehand, as well as the year of the pregnancy itself. You'll also need to budget for the out-of-pocket expenses of your hospital stay.
So what would you forgo by not having pregnancy cover?
Australia is not the United States and private health insurance is not a necessity. Health economists say private health insurance is worthwhile for people over the age of 60, and those who have chronic health problems. It's also worthwhile for high-income earners who would otherwise be paying extra tax in the form of Medicare Levy Surcharge – but you don't need pregnancy cover in your policy to satisfy the Tax Office.
One of the biggest reasons to get private cover is the lower waiting times for elective surgery. That doesn't apply to pregnancy and childbirth – no one is going to tell an expectant mother that they'll deliver her baby in two years' time because of a waiting list.
What private health insurance does offer pregnant mothers is access to the obstetrician of their choice rather than the doctor on duty, greater convenience with appointment times, and a private room.
For some people that's worthwhile. If you want those added extras and can afford it, fine.
Many first-time mothers find it reassuring to have that certainty and continuity of care at what can be a nerve-racking time.
It's a personal decision but it's worth talking to other mothers about their experiences. I had a friend who had her first baby in the private system and realised she'd paid about $5000, on top of her premiums, essentially for a fancier room. She cancelled her insurance and happily gave birth to her second and third babies in the public system.
My own experience is relevant too. I was living in San Francisco when I fell pregnant with twins in 2010. Naturally I had private health insurance because that's what you do in the US, unless you really, really can't.
Then we decided to return to Australia and flew home when I was seven months pregnant. By this stage I didn't have a choice but to use the public health system.
Before the birth, the main difference was that I wasn't seen immediately for my routine scans but had to sit in the waiting room for 45 minutes to an hour waiting for the public clinic. I could have chosen to see an obstetrician for my check-ups instead and Medicare would have subsidised the cost - this is an option whether you're going public or private for the birth itself and private health insurance generally wouldn't cover this cost anyway.
Later things became complicated. At 37 weeks the doctors decided, for a few reasons, they needed to book me in for a c-section. Soon after the birth my baby boy was diagnosed with a diaphragmatic hernia and was transferred to a major children's hospital to await surgery. My newborn daughter and I were transferred the next day to the public hospital adjoining the kids' hospital so we'd be nearby.
It was a traumatic time but the quality of care that my family and I received across all three hospitals was nothing short of excellent. Oh and they gave me a private room.
I didn't know it at the time, but the surgeon and the paediatrician who cared for my son both have great reputations and work in both public and private practice. I saw them privately for check-ups after we were discharged from hospital.
The public health system has many faults but it's good at dealing with issues that require urgent attention. My family is complete but if there were ever a next time, I'd be more than happy to go public again.
That's all well and good but what if you still want pregnancy cover? The table suggests that family starters who want the pregnancy cover can save a modest $14 a month by dropping the hip/knee replacement, but there are only seven policies that offer that.
Probably the biggest savings tip is that couples who want pregnancy cover are likely better off with two single policies – one with pregnancy cover and one without – rather than a couple policy, which is usually double the cost of a single one. Even the most involved father in the world doesn't need to be insured for pregnancy and childbirth.
Caitlin Fitzsimmons is the Money editor. She writes regular columns about money, work and life. You can find her on Facebook or Twitter.

Chris Stapleton’s bold but simple plan: to put music first

Chris Stapleton’s bold but simple plan: to put music first

NASHVILLE, Tenn. — These last few years, Chris Stapleton is often surprised by early-morning texts of congratulations from his friends. Take, for instance, last week, when the Grammy Award nominations were announced.
“That’s how I usually find out. People go ‘Congratulations’ and I go ‘What for?’” Stapleton said. He eventually discovered that he was nominated for three awards, including best country album, best country song and best country solo performance. “That’s usually what happens to me because I usually don’t know what’s going on.”
Since his sensational debut solo album, “Traveller,” was released in 2015, he’s won two Grammy Awards and scores of Country Music Association and Academy of Country Music Awards. The album continued to dominate the country album sales chart this year and has been certified double platinum.
He released two new albums this year — the Grammy-nominated “From A Room: Volume 1,” which came out in May, and “From A Room: Volume 2,” which came out Dec. 1.
His success lies in his bold simplicity: His recordings are cut live in the studio with his band; his wife, Morgane, sings harmony; and his producer is Dave Cobb. Stapleton isn’t verbose and neither are his lyrics, so it’s no surprise that everyone from Adele to Luke Bryan has recorded his songs. “Either Way,” which is nominated for best country solo performance, is literally his voice and a guitar.
“I think simple is harder to do than making overly complicated things,” Stapleton said. “Much in the way that I think lyrically in songwriting less words can mean more, the same can be true of music. If you can, for lack of a better term, sell a song without putting in extraneous instrumentation ... then that’s what serves the song the best.”
His touring is an extension of the idea of putting the music first. On his arena tour this year, he plays on a stage shaped like a half-circle band shell with lights. “While it looks like some science fiction piece, it’s a giant diffuser that controls frequency and stage volume,” Stapleton explains.
He doesn’t use in-ear monitors, those ear buds that allow artists to hear the music, preferring monitors placed on the stage; the stage allows him to better project his music to the seats in the back of the arena.
“I am not trying to make the biggest, most elaborate, pyrotechnic show,” Stapleton said. “I am trying to make the show that sounds the best, or best represents what we do onstage. It’s all from a sound perspective for me and then the visual has to fall in line.”
Singer-songwriter Kendall Marvel met Stapleton 15 years ago, back when the Kentucky-bred Stapleton was a clean-shaven new songwriter with a short, flattop haircut. They have written some 60 songs together, including songs cut by Blake Shelton, Lee Ann Womack and Josh Turner.
Marvel, who co-wrote “Either Way” as well as two other songs on Stapleton’s “From A Room: Volume 2,” said the husband-and-wife harmony is key to their music. Morgane Stapleton, who is also a songwriter, adds just the right touch of sweetness and softness to his volume and range.
“When you take her out of the equation, he would not be Chris Stapleton,” Marvel said. “She is to him and his guitar playing what harmonica player Mickey Raphael is to Willie Nelson.”
Stapleton gives a lot of credit to his wife for knowing all the songs in his catalog and picking songs that fans can connect to, like “Broken Halos,” another Grammy-nominated song.
That song, which talks about not always understanding why loss happens, has become a tender, comforting moment for many fans, especially after the mass shooting at a country music festival in Las Vegas earlier this year. Stapleton said he wants his fans to attach meaning to his songs that he didn’t always intend when he wrote them.
“I want them to have ownership in it because they do,” Stapleton said. “The songs don’t really mean as much without them and without people listening to them and investing in them.”