If, to figure out whether the amount of critical illness coverage you're buying now will be useful in the future,
it's time to talk about this topic of inflation.
You should know that we face currency devaluation wherever we save our money.
Marx once said, "Inflation is internal plunder, war is external plunder." He was speaking about this topic from the point of view of capitalism, from the point of view of economics.
In fact, a more common understanding, like a pool of water, it will be in the sunlight on the natural evaporation, this is actually like inflation.
Inflation is actually a "systemic risk", a necessary means for the government to regulate the economy, and it cannot be eliminated.
So, inflation, too, is an objective existence.
And how to understand the risk of the system...
Simply put: "We can't get around the topic of inflation, no matter what we do with our investments and finances."
We have a concept of nominal and real interest rates in finance.
The nominal interest rate, that's the rate of return that you get on the various investments that people make these days.
For example, if we go and do bank finance, we can get an annual expected return of 5%. Even if after maturity, you do get 5%, it is not taking inflation into account.
Suppose, the inflation rate of that year is 3%, then the real interest rate should be (5% - 3% = 2%), that 2%, is our real interest rate.
No matter what kind of investment you make, if you calculate the real rate of return, you should subtract the inflation rate, so that what you get is the real rate of return.
So how do you go about understanding inflation?
Inflation, simply understood, is a devaluation of money.
In order to stimulate the development of the economy, there is an economic principle that the sum of matter, must be balanced with the total amount of money we issue, this is a very important principle in our past economic laws.
However, in modern society, the governance of the country, the economic balance, the competition between different economies in the world, and so on, have led to the total amount of money issued and the sum of physical goods, which is a big deviation from the current situation.
Let's take a simple example:
Assuming that the current total value of goods in the whole society is 10 million yuan, and the country also issues only 10 million yuan of currency, at this time is the most perfect articulation, there will be neither inflation nor deflation, if a bottle of mineral water is now 1 yuan, you have 100 yuan in hand, you can buy 100 bottles of mineral water!
This is the first time that we've seen this.
But what if the country issued 20 million dollars of currency at this time? Because the total amount of goods in the whole society did not change, so, at this time a bottle of water becomes 2 yuan. At this time you have 100 yuan, you can only buy 50 bottles of mineral water, this is the currency devaluation. Invisible your wealth was evaporated in half ......
With the growth of the economy, inflation it has become an ineliminable social phenomenon. We can look at the data to see that inflation has always existed for us and other developed countries in the world.
When we go to study the rate of return, it must be clear that the return and risk they are proportional, this is a law. You pursue a relatively high return. We have to bear the corresponding high risk, we take a conservative approach to financial management, the level of return may not win inflation;
However, if you take an aggressive approach to financial management, many times the principal are not guaranteed.
I have always said that to break the inflation, families need to rely on scientific asset allocation, make good use of the various financial tools around, so we do not go to the protection of the function of the main insurance to spell out its returns.
Insurance is actually a kind of mandatory savings to determine the future cash flow. Perhaps, in the future, with the development of technology, more and more serious diseases will be overcome, there is no cure for the disease, depending on whether you have the money to spend,
At that time, the treatment of a serious illness may require 2 million or even higher, then at least we do not change the status quo today, need to configure a good 500,000-1 million dollars of insurance coverage for the bottom of the risk, rather than in the risk of the arrival of the time without a little preparedness.
The second thing I want to tell you is that insurance company actuaries actually take inflation into account when designing and researching insurance products.
There is a technical term called predetermined interest rate, which can be understood as the discount rate. To put it bluntly, it's how much I should pay now for that sum assured that I can get in the future.
The higher the booking rate, the higher the sum assured for the same premium. For the same amount of coverage, the higher the predetermined interest rate, the lower the premium.
That's a mouthful to say, but you just need to be clear: the higher the booking rate, the better it is for us, the policyholders.
Having said that, do you feel that there is less and less hope for insurance to beat inflation?
In fact, it's not quite true.
On the one hand, when we are designing a protection program, we can reasonably match long-term and short-term insurance to expand the leverage effect.
For example, when you buy a long-term critical illness insurance, you can pair it with a short-term medical insurance, which will give you a wider range of coverage and higher capital efficiency.
On the other hand, we need to be clear that the insurance programs we buy are not set in stone at any given time. I often tell my clients that insurance really isn't a one-time thing that provides comprehensive coverage.
What we as professional insurance consultants can do is to find out the problem behind the problem, stand in the customer's point of view, and analyze the specific situation. Learning to think differently, I also often ask myself, if I were a customer, what kind of solution would I want more.
Just like, the law of young people's home purchase now, generally from the single apartment and then to the wedding house, and then to improve the type of housing. This is all with the increase in personal income and life at different stages of the responsibility of the increasing, so the protection of our family configuration, should also be gradually upgraded and adjusted.
Specifically, I have written >>> ( how to grasp the dynamic increase in the insurance of the golden key period )
A person to eat, the whole family is not hungry single young man, and on the old and the young family breadwinner, the two matched program, the amount of coverage is obviously certainly different. When many of us want to bite the bullet and buy the highest sum assured capped by insurance, it is not realistic or economical.
These two years the circle of friends of "easy fundraising" and fundraising information flying across the board, hostage to a stream of nose-tingling tear-jerking energy.
Think about it differently, if your loved one is unfortunately terminally ill, do you want to spend your family's money on active treatment, or stop losing money in time and let fate take its course?
This is a medical, ethical dilemma.
Modern medicine is still at its wits' end with many diseases, and the so-called "state-of-the-art" treatments for "terminal illnesses" are not very effective at all, and are often just a psychological comfort.
But how much is this meager "hope in despair" worth?
Just like in the configuration of critical illness insurance, many people are very vague about how much should be configured, some people think that it is enough to have insurance, while others think that the more the better.
In fact, the configuration of the amount of critical illness insurance,
You can mainly refer to the following data to calculate:
(1) the cost of treatment of major diseases
The cost of treatment of a serious illness, according to the big data show that about between 150,000 to 500,000, which need to be self-payment of part of the account of the 13 million - 45 million.
The treatment cost of a serious illness mainly comes from social security reimbursement, unit reimbursement and out-of-pocket expenses. All unified,
And according to big data statistics, lung cancer, liver cancer and gastric cancer three major diseases, treatment costs ranked first, treatment costs 2015 statistical costs costs are as follows:
We normal people, will not be in a know that the probability of loss is very great, the probability of gain is very low project to invest money, but only willing to be generous in the face of disease.
When a loved one is seriously ill, any sensible stop-loss decision will be questioned by public opinion and condemned by the conscience; and regardless of the cost of trying to save, but the probability of incurring the patient and the family to lose the result of a lose-lose situation - people and money are empty.
The meaning of "poverty due to illness" is twofold: the high cost of medical care and the collapse of the economic pillars.
It is difficult for a middle-class, working family to bear such a double blow.
(2) Rehabilitation Costs of Major Diseases
As we all know, major diseases have a certain recovery period. For example, if we suffer from cancer, and there is no recurrence within 5 years after treatment, we can assume that the probability of our survival will be higher and higher.
The cost of recovering from an illness in those five years is typically between $200,000 and $400,000, all of which is paid for out-of-pocket.
One-third of the cost of treating a major illness is direct and two-thirds is indirect.
During the period of illness, nutritional expenses, nursing costs, living expenses, etc., social security, group insurance are not reimbursed, the patient needs to pay out of pocket, this part of the cost of the statistics is about 200,000 - 400,000 dollars.
For example, post-stroke sequelae of this "high morbidity, disability, mortality, recurrence rate, complications" of serious illnesses, in order to get careful treatment and care in general can survive for ten years, the costs during this period, including about 360,000 yuan of nursing costs (3,000 yuan per month) and about 360,000 yuan of living costs (3,000 yuan per month). living expenses ($3,000 a month).
(3) Loss of income due to serious illness
After suffering from a serious illness, in addition to the rehabilitation costs and treatment costs mentioned above, there is also an important part, is to have to consider that there is no income for 3 years - 5 years, and if, hypothetically, your annual income is 100,000 dollars, the total amount of loss is at least more than 500,000 dollars.
The data from the 2019 Taikang Life Claims Annual Report shows that the highest percentage of critical illness claims are at the age of 36-65 years old,
And we are 36-65 years old, it is the time period when we have the heaviest responsibilities in life with an old man and a young man. During this period, once the "income interruption", especially the main breadwinner's income interruption, will have a great impact on the family.
Therefore, calculating the loss of income is an essential part of the Critical Illness coverage.
The formula for calculating the amount of critical illness coverage is as follows:
In summary, the amount of critical illness coverage = treatment cost ($150,000 - $450,000) + rehabilitation cost ($200,000 - $400,000) + loss of income ($500,000 or more),
So, $1 million is just a basic amount; if the patient has to go to Japan, the United States, and other countries for medical treatment, the loss of income will be an essential part of the amount of critical illness insurance.
The journey of life is like the four seasons, spring, summer, fall and winter are always alternating. Although there is a winter, but need to stock up on supplies, waiting for the spring and summer began to come, so that our life is as beautiful as a butterfly dance.
We should focus on the present and then plan for the future. The first thing you need to do is to buy the right amount of insurance, and start with the right amount of money for your life.