Couples leverage ‘something borrowed’ to cut wedding costs

After facing the reality of how expensive fresh flowers could be when planning her own wedding, Della Larca founded Florèal Blooms, her luxury silk flower rental business, three and half years ago from her basement in Butler, New Jersey.

Larca’s business swelled last year, and she recently moved to a larger workspace to accommodate to the growing demand for her product brought by inflation and a backlog of events rippled by the pandemic.

The price of nuptials has continued to grow, with the cost of the average wedding reaching $30,000 last year thanks to steep inflation, according to an annual study by The Knot, a wedding website.

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Sixty-one percent of couples set to marry this year said the economy has already impacted their wedding plans, and the soon-to-be-wed have become savvier as they confront higher costs. Some, for example, are leaning into the wedding proverb of “something borrowed,” and seriously considering renting over buying —especially when it comes to flowers, fine jewelry and even their bridal dresses.

To make sure they’re really snagging a deal, however, couples must take into consideration the quality of the product they’re renting and whether rental requires added labor costs.

“It’s about making sure whatever you’re renting, think about the execution, think about who’s going to have to bring it out, set it up … is that cost worth it to you?” said Jason Rhee, director of celebrations and owner of Rheefined Company, a wedding and special events planner in Los Angeles.

Couples are renting flowers, jewelry and more

Courtesy of Something Borrowed Blooms

Laken Swan and Lauren Bercier founded Something Borrowed Blooms in 2015 after dealing with high costs for their own weddings. Bercier, in particular, suffered buyer’s remorse on her wedding day — after putting down the full deposit for fresh flowers, the blooms that arrived on her wedding day weren’t exactly what she’d had in mind, said Swan.

Unfortunately, the disappointment Bercier felt isn’t uncommon. The fresh flower industry can experience supply and demand issues, Swan said, and prices often reflect the fluctuation of what’s in stock and an event’s proximity to holidays like Valentine’s Day.

Prices for artificial flowers, on the other hand, are not as volatile — and brides are starting to notice.

Florèal Blooms saw an increase in demand in January 2021, when Larca was scheduling 20 to 30 consultations a week. For 2023, the company is fully booked until the end of the year. For its part, Something Borrowed Blooms is currently shipping out enough silk flowers each month for around 1,200 weddings, pacing up to 2,000 weddings per month this fall.

It makes economic sense: While the average cost of fresh flowers can come to at least $2,500 per event, you can save as much as 70% by renting silk flowers for a fraction of the price, Swan said.

How brides can dress best for less

Fine jewels are also within the average bride’s reach more than ever before. Brides who lack the disposable income to purchase fine jewelry but would value the experience of wearing one-of-a-kind pieces on their special day may want to consider renting expensive jewelry.

Rental prices for fine diamond jewelry at New York-based jeweler Verstolo range from $275 to $695, for example, and the cost includes insurance.

The same goes for wedding dresses.

While the average price for a typical bridal gown is $1,900 before alterations — an additional but often necessary service that could cost $500 to $700 extra — brides to be could rent a designer dress for the starting price of $2,000, with tailoring costs included, said Miriam Williams, co-founder of Atlanta bridal rental company Laine London.

“This next generation of brides is thinking about experiences over possessions,” said Williams. “It’s only natural that they’re rethinking what their wedding day might look like.”

While these may sound like great deals up front, couples should be sure to vet vendors’ quality controls — how they keep the repeatedly used items in top condition — and ask whether their services require additional labor costs. Otherwise, they could end up spending far more than anticipated.

What to consider before renting

Make sure you think about the execution of whatever it is you are renting, said Rhee at Rheefined Company.

“I think it’s amazing that there [are] opportunities for you to be able to rent things that you may not necessarily be able to afford, but then that’s where you just have to think about doing a little investigation,” he said. “Think about it if there is a person attached to that, or is there a service attached to what you need.”

For instance, Florèal Blooms provides a full team that delivers, sets up and packs up the flowers on the wedding day for a flat rate that’s included in the total cost.

“Quality would be the primary risk,” said Swan at Something Borrowed Blooms. Since you are renting something that has been used before, research past customer testimonies and try to work with companies that seem to pride themselves in quality control, added Swan.

If renting out artificial flowers, consider asking the rental company about quality control practices and whether their total costs include insurance for “wear and tear.”

“If there’s maybe a [flower] that was stained [by] red wine or something else, that particular floral is removed from the arrangement and we add a new floral in its place; sometimes, we’re just freshening up greenery,” Swan noted.

The same goes for bridal gowns and maintenance. Laine London expects “normal wear and tear,” and makes sure to hand-wash and drip-dry each gown after it is returned, as well as to refrain from using harsh chemicals, in order to maintain fabric integrity.

“We’re able to really bring the dress back to perfect condition after every use,” said Williams.

Something borrowed, something … bought?

On the other hand, in some cases it may make better sense to buy rather than borrow.

“You want to buy something that you’re going to wear, and that’s not going to sit in your safe and you’ll pull it out one or two times a year,” said Lauren Grunstein, vice president of sales, public relations and marketing for Verstolo.

Deciding whether to buy or rent is a very personal decision, added Williams at Laine London. She noted that her clients have other reasons for renting, not solely for budget reasons. “They don’t want to deal with it hanging in their closet,” she said, referring to wedding gowns.

However, if you plan to get multiple uses out of a bridal item in the future and you have a budget that supports it, it makes sense to go ahead and invest in that purchase, said Swan.

“But if you’re looking at items that are quickly used or disposed of, or don’t have additional uses in the future, that’s definitely an area that you want to consider renting.”

Correction: Florèal Blooms saw an increase in demand in January 2021. An earlier version misstated the year. Rental prices for fine diamond jewelry at Verstolo range from $275 to $695, for example and the cost includes insurance. An earlier version misstated the range.

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Here’s what the Federal Reserve’s 25 basis point interest rate hike means for your money

The Federal Reserve raised the target federal funds rate for the eighth time in a row on Wednesday, in its continued effort to tame persistent inflation.

At its latest meeting, the central bank approved a more modest 0.25 percentage point increase after recent signs that inflationary pressures have started to cool.

“The easing of inflation pressures is evident, but this doesn’t mean the Federal Reserve’s job is done,” said Greg McBride, chief financial analyst at Bankrate.com. “There is still a long way to go to get to 2% inflation.”

What the federal funds rate means to you

The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves do affect the borrowing and saving rates consumers see every day.

This rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing — putting more pressure on households already under financial strain.

“Inflation has shredded household budgets and, in many cases, households have had to lean against credit cards to bridge the gap,” McBride said.

On the flip side, “with rates still rising and inflation now declining, it is the best of both worlds for savers,” he added.

How higher interest rates can affect your money

1. Your credit card rate will rise

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles.

“Credit card interest rates are already as high as they’ve been in decades,” said Matt Schulz, chief credit analyst at LendingTree. “While the Fed is taking its foot off the gas a bit when it comes to raising rates, credit card APRs almost certainly will keep climbing for at least the next few months, so it is important that cardholders continue to focus on knocking down their debt.”

Credit card annual percentage rates are now near 20%, on average, up from 16.3% a year ago, according to Bankrate. At the same time, more cardholders carry debt from month to month while paying sky-high interest charges — “that’s a bad combination,” McBride said.

At more than 19%, if you made minimum payments toward the average credit card balance — which is $5,474, according to TransUnion — it would take you almost 17 years to pay off the debt and cost you more than $7,528 in interest, Bankrate calculated.

Altogether, this rate hike will cost credit card users at least an additional $1.6 billion in interest charges in 2023, according to a separate analysis by WalletHub.

“A 0% balance transfer credit card remains one of the best weapons Americans have in the battle against credit card debt,” Schulz advised.

Otherwise, consumers should consolidate and pay off high-interest credit cards with a lower-interest personal loan, he said. “The rates on new personal loan offers have climbed recently as well, but if you have good credit, you may be able to find options that feature lower rates that what you currently have on your credit card.”

2. Mortgage rates will stay higher

Rates on 15-year and 30-year mortgages are fixed and tied to Treasury yields and the economy. As economic growth has slowed, these rates have started to come down but are still at a 10-year high, according to Jacob Channel, senior economist at LendingTree.

The average interest rate for a 30-year fixed-rate mortgage is now around 6.4% — up almost 3 full percentage points from 3.55% a year ago.

“Relatively high rates, combined with persistently high home prices, mean that buying a home is still a challenge for many,” Channel said.

This rate hike has increased the cost of new mortgages by around 10 basis points, which translates to roughly $9,360 over the lifetime of a 30-year loan, assuming the average home loan of $401,300, WalletHub found. A basis point is equal to 0.01 of a percentage point.

“We’re still a ways away from the housing market being truly affordable, even if it has recently become a bit less expensive,” Channel said.

Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year, but a HELOC adjusts right away. Already, the average rate for a HELOC is up to 7.65% from 4.11% a year ago.

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3. Auto loans will get more expensive

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans, so if you are planning to buy a car, you’ll shell out more in the months ahead.

The average interest rate on a five-year new car loan is currently 6.18%, up from 3.96% last year.

The Fed’s latest move could push up the average interest rate even higher, although consumers with higher credit scores may be able to secure better loan terms or look to some used car models for better deals.

Paying an annual percentage rate of 6% instead of 4% would cost consumers $2,672 more in interest over the course of a $40,000, 72-month car loan, according to data from Edmunds.

“The ever-increasing costs of financing remain a challenge,” said Ivan Drury, Edmunds’ director of insights.

4. Some student loans will get pricier

Federal student loan rates are also fixed, so most borrowers won’t be affected immediately. But if you are about to borrow money for college, the interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, up from 3.73% last year and any loans disbursed after July 1 will likely be even higher.

If you have a private loan, those loans may be fixed or have a variable rate tied to the Libor, prime or T-bill rates, which means that as the central bank raises rates, borrowers will likely pay more in interest, although how much more will vary by the benchmark.

Currently, average private student loan fixed rates can range from just under 4% to almost 15%, according to Bankrate. As with auto loans, they also vary widely based on your credit score.

For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the Education Department expects to happen sometime this year.

What savers should know about higher interest rates

The good news is that interest rates on savings accounts are finally higher after the recent run of rate hikes.

While the Fed has no direct influence on deposit rates, they tend to be correlated to changes in the target federal funds rate, and the savings account rates at some of the largest retail banks, which have been near rock bottom during most of the Covid pandemic, are currently up to 0.33%, on average.

Also, thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.35%, much higher than the average rate from a traditional, brick-and-mortar bank.

Rates on one-year certificates of deposit at online banks are even higher, now around 4.75%, according to DepositAccounts.com.

As the Fed continues its rate-hiking cycle, these yields will continue to rise, as well. However, you have to shop around to take advantage of them, according to Yiming Ma, an assistant finance professor at Columbia University Business School.

“If you haven’t already, it’s really important to benefit from the high interest environment by getting a higher return,” she said.

Still, because the inflation rate is now higher than all of these rates, any money in savings loses purchasing power over time. 

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Here’s what the Federal Reserve’s half-point rate hike means for you

The Federal Reserve raised its target federal funds rate by 0.5 percentage points at the end of its two-day meeting Wednesday in a continued effort to cool inflation.

Although this marks a more typical hike compared to the super-size 0.75 percentage point moves at each of the last four meetings, the central bank is far from finished, according to Greg McBride, chief financial analyst at Bankrate.com.

“The months ahead will see the Fed raising interest rates at a more customary pace,” McBride said.

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The latest move is only one part of a rate-hiking cycle, which aims to bring down inflation without tipping the economy into a recession, as some feared would have happened already.

“I thought we would be in the midst of a recession at this point, and we’re not,” said Laura Veldkamp, a professor of finance and economics at Columbia University Business School.

“Every single time since World War II the Federal Reserve has acted to reduce inflation, unemployment has shot up, and we are not seeing that this time, and that’s what stands out,” she said. “I couldn’t really imagine a better scenario.”

Still, the combination of higher rates and inflation has hit household budgets particularly hard.

What the federal funds rate means for you

The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Whether directly or indirectly, higher Fed rates influence borrowing costs for consumers and, to a lesser extent, the rates they earn on savings accounts.

For now, this leaves many Americans in a bind as inflation and higher prices cause more people to lean on credit just when interest rates rise at the fastest pace in decades.

With more economic uncertainty ahead, consumers should be taking specific steps to stabilize their finances — including paying down debt, especially costly credit card and other variable rate debt, and increasing savings, McBride advised.

Pay down high-rate debt

Since most credit cards have a variable interest rate, there’s a direct connection to the Fed’s benchmark, so short-term borrowing rates are already heading higher.

Credit card annual percentage rates are now over 19%, on average, up from 16.3% at the beginning of the year, according to Bankrate.

The cost of existing credit card debt has already increased by at least $22.9 billion due to the Fed’s rate hikes, and it will rise by an additional $3.2 billion with this latest increase, according to a recent analysis by WalletHub.

If you’re carrying a balance, “grab one of the zero-percent or low-rate balance transfer offers,” McBride advised. Cards offering 15, 18 and even 21 months with no interest on transferred balances are still widely available, he said.

“This gives you a tailwind to get the debt paid off and shields you from the effect of additional rate hikes still to come.”

Otherwise, try consolidating and paying off high-interest credit cards with a lower interest home equity loan or personal loan.

Consumers with an adjustable-rate mortgage or home equity lines of credit may also want to switch to a fixed rate. 

How to know if we are in a recession

Because longer-term 15-year and 30-year mortgage rates are fixed and tied to Treasury yields and the broader economy, those homeowners won’t be immediately impacted by a rate hike.

However, the average interest rate for a 30-year fixed-rate mortgage is around 6.33% this week — up more than 3 full percentage points from 3.11% a year ago.

“These relatively high rates, combined with persistently high home prices, mean that buying a home is still a challenge for many,” said Jacob Channel, senior economic analyst at LendingTree.

The increase in mortgage rates since the start of 2022 has the same impact on affordability as a 32% increase in home prices, according to McBride’s analysis. “If you had been approved for a $300,000 mortgage in the beginning of the year, that’s the equivalent of less than $204,500 today.”

Anyone planning to finance a new car will also shell out more in the months ahead. Even though auto loans are fixed, payments are similarly getting bigger because interest rates are rising.

The average monthly payment jumped above $700 in November compared to $657 earlier in the year, despite the average amount financed and average loan term lengths staying more or less the same, according to data from Edmunds.

“Just as the industry is starting to see inventory levels get to a better place so that shoppers can actually find the vehicles they’re looking for, interest rates have risen to the point where more consumers are facing monthly payments that they likely cannot afford,” said Ivan Drury, Edmunds’ director of insights. 

Federal student loan rates are also fixed, so most borrowers won’t be impacted immediately by a rate hike. However, if you have a private loan, those loans may be fixed or have a variable rate tied to the Libor, prime or T-bill rates — which means that as the Fed raises rates, borrowers will likely pay more in interest, although how much more will vary by the benchmark.

That makes this a particularly good time to identify the loans you have outstanding and see if refinancing makes sense.

Shop for higher savings rates

While the Fed has no direct influence on deposit rates, they tend to be correlated to changes in the target federal funds rate, and the savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.24%, on average.

Thanks, in part, to lower overhead expenses, the average online savings account rate is closer to 4%, much higher than the average rate from a traditional, brick-and-mortar bank.

“The good news is savers are seeing the best returns in 14 years, if they are shopping around,” McBride said.

Top-yielding certificates of deposit, which pay between 4% and 5%, are even better than a high-yield savings account.

And yet, because the inflation rate is now higher than all of these rates, any money in savings loses purchasing power over time. 

What’s coming next for interest rates

Consumers should prepare for even higher interest rates in the coming months.

Even though the Fed has already raised rates seven times this year, more hikes are on the horizon as the central bank slowly reins in inflation.

Recent data show that these moves are starting to take affect, including a better-than-expected consumer prices report for November. However, inflation remains well above the Fed’s 2% target.

“They will still be raising interest rates now and into 2023,” McBride said. “The ultimate stopping point is unknown, as is how long rates will stay at that eventual destination.”

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Correction: A previous version of this story misstated the extent of previous rate hikes.

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The Federal Reserve is about to hike interest rates one last time this year. Here’s how it may affect you

The Federal Reserve is expected on Wednesday to raise interest rates for the seventh time this year to combat stubborn inflation. 

The U.S. central bank will likely approve a 0.5 percentage point hike, a more typical pace compared with the super-size 75 basis point moves at each of the last four meetings.

This would push benchmark borrowing rates to a target range of 4.25% to 4.5%. Although that’s not the rate consumers pay, the Fed’s moves still affect the rates consumers see every day.

Why a smaller rate hike may be ‘pretty good news’

By raising rates, the Fed makes it costlier to take out a loan, causing people to borrow and spend less, effectively pumping the brakes on the economy and slowing down the pace of price increases. 

“For most people this is pretty good news because prices are starting to stabilize,” said Laura Veldkamp, a professor of finance and economics at Columbia University Business School. “That’s going to bring a lot of reassurance to households.”

However, “there are some households that will be hurt by this,” she added — particularly those with variable rate debt.

For example, most credit cards come with a variable rate, which means there’s a direct connection to the Fed’s benchmark rate.

But it doesn’t stop there.

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What the Fed’s rate hike means for you

Another increase in the prime rate will send financing costs even higher for many other forms of consumer debt. On the flip side, higher interest rates also mean savers will earn more money on their deposits.

“Credit card rates are at a record high and still increasing,” said Greg McBride, chief financial analyst at Bankrate.com. “Auto loan rates are at an 11-year high, home equity lines of credit are at a 15-year high, and online savings account and CD [certificate of deposit] yields haven’t been this high since 2008.”

Here’s a breakdown of how increases in the benchmark interest rate have impacted everything from mortgages and credit cards to car loans, student debt and savings:

1. Mortgages

2. Credit cards

Credit card annual percentage rates are now more than 19%, on average, up from 16.3% at the beginning of the year, according to Bankrate.

“Even those with the best credit card can expect to be offered APRs of 18% and higher,” said Matt Schulz, LendingTree’s chief credit analyst.

But “rates aren’t just going up on new cards,” he added. “The rate you’re paying on your current credit card is likely going up, too.”

Further, households are increasingly leaning on credit cards to afford basic necessities since incomes have not kept pace with inflation, making it even harder for those carrying a balance from month to month.

If the Fed announces a 50 basis point hike as expected, the cost of existing credit card debt will increase by an additional $3.2 billion in the next year alone, according to a new analysis by WalletHub.

3. Auto loans

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans. So if you are planning to buy a car, you’ll shell out more in the months ahead.

The average interest rate on a five-year new car loan is currently 6.05%, up from 3.86% at the beginning of the year, although consumers with higher credit scores may be able to secure better loan terms.

Paying an annual percentage rate of 6.05% instead of 3.86% could cost consumers roughly $5,731 more in interest over the course of a $40,000, 72-month car loan, according to data from Edmunds.

Still, it’s not the interest rate but the sticker price of the vehicle that’s primarily causing an affordability crunch, McBride said.

4. Student loans

The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, up from 3.73% last year and 2.75% in 2020-21. It won’t budge until next summer: Congress sets the rate for federal student loans each May for the upcoming academic year based on the 10-year Treasury rate. That new rate goes into effect in July.

Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers are also paying more in interest. How much more, however, will vary with the benchmark.

Currently, average private student loan fixed rates can range from 2.99% to 14.96%, and 2.99% to 14.86% for variable rates, according to Bankrate. As with auto loans, they vary widely based on your credit score.

5. Savings accounts

On the upside, the interest rates on some savings accounts are also higher after consecutive rate hikes.

While the Fed has no direct influence on deposit rates, the rates tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.24%, on average.

Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4%, much higher than the average rate from a traditional, brick-and-mortar bank, according to Bankrate.

“Interest rates can vary substantially, especially in today’s interest rate environment in which the Fed has raised its benchmark rate to its highest level in more than a decade,” said Ken Tumin, founder of DepositAccounts.com.

“Banks make money off of customers who don’t monitor their interest rates,” Tumin said.

With balances of $1,000 to $25,000, the difference between the lowest and highest annual percentage yield can result in an additional $51 to $965 in a year and $646 to $11,685 in 10 years, according to an analysis by DepositAccounts.

Still, any money earning less than the rate of inflation loses purchasing power over time. 

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‘It’s a work in progress.’ How Covid has changed the life insurance marketplace

Family and friends gather in San Felipe, Texas, for the Jan. 26, 2021, funeral of Gregory Blanks, 50, who died of Covid-19.

Callaghan O’Hare | Reuters

As Americans brace for the third winter of the Covid-19 pandemic, many are still grappling with ongoing related health and financial issues — including insurance battles over long Covid treatments and disability claims. 

But for the life insurance industry, experts say the long-term effects aren’t yet known.

“It’s a work in progress,” explained Michel Leonard, chief economist and data scientist at the Insurance Information Institute. “There’s not enough statistical data at this point.”

Faced with a staggering loss of life, insurance firms saw payouts soar during the pandemic.

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U.S. life insurers paid more than $90 billion to beneficiaries in 2020, a 15.4% increase in payments compared to 2019 — the largest year-over-year jump since the 1918 influenza epidemic, according to data from the American Council of Life Insurers.  

Payouts to beneficiaries increased by nearly 11% in 2021, jumping to over $100 billion, the organization’s latest report shows.

The demand for life insurance policies also jumped as consumers rushed to protect loved ones. 

Individual U.S life insurance application activity increased by 3.4% in 2021, following a record-breaking year-over-year growth of 3.9% in 2020, according to the MIB Life Index’s 2021 annual report.

However, the life insurance industry is still wrestling with mortality changes and how these shifts may affect the underwriting process. 

There’s still ‘uncertainty’ about mortality

Stuart Silverman, principal and consulting actuary at Milliman, an actuarial and consulting firm, said the Covid-19 pandemic has affected the life insurance industry in several ways, as outlined in a paper he co-authored in June.

Two areas of consideration are “mortality assumptions,” which are projections of death rates and the “capital requirements” needed to keep life insurance providers solvent. Both can factor into the price of policy premiums, he said.

While it’s clear mortality rates have increased since the beginning of the pandemic, experts don’t know yet how factors related to Covid like preexisting conditions, compromised mental health or delayed care may affect future assumptions, according to the paper.   

“I think there is uncertainty with how this will unfold,” said Silverman, noting there’s “ongoing debate” on many of these points.

How ‘long Covid’ affects mortality assumptions

Future mortality assumptions are murky for those who may be suffering from so-called long Covid, one of the terms used to describe lingering health problems after contracting the virus.

These conditions affect an estimated 7.7 million to 23 million Americans, according to a report released by the U.S. Department of Health and Human Services on Nov. 21.

“It’s really difficult to underwrite for something that you don’t have a clear way to diagnose and define,” said Marianne Purushotham, corporate vice president and head of Limra’s data services.

It’s going to take five to 10 years for us to fully understand what patterns we’re starting to see.

Stuart Silverman

principal and consulting actuary at Milliman

Overall, the life insurance industry is in a “major data gathering stage,” Purushotham said, collecting information on all the ways Covid may be affecting mortality, including indirect effects like opioid overdoses and suicide rates.  

She said one of the “big considerations” is whether impacts will be a long-term trend, noting that companies may not want to change pricing if mortality “settles into where it was pre-Covid.” 

“It’s going to take five to 10 years for us to fully understand what patterns we’re starting to see,” Silverman added.

Applications may include Covid questions

While updates to mortality assumptions may take time, experts say life insurance applications have been quicker to change, depending on state regulations. 

Consumer advocate Brendan Bridgeland, policy director and staff attorney at the Center for Insurance Research, has noticed Covid questions appearing on life insurance applications since the beginning of the pandemic and expects more in the future. For example, some companies ask questions about your history of testing positive for the disease and if you have a current diagnosis.

“States are still coming to grips with it,” he said. “Companies have been quick to add application questions.

“But I don’t think they’ve been perfected yet,” Bridgeland added.

“While you may not see a vaccine question on a life insurance application yet, it’s more likely two to three years from now,” Bridgeland said. “I can see that on the horizon and I think that’s going to be inevitable,” he added.

“There are very big differences between the questions asked by life insurers right now,” Bridgeland said. “Some make a lot of sense and others are very vague and slightly concerning.”

With a lack of consistency across providers, he worries there’s potential for consumers to misread a question and answer it incorrectly.

If a provider finds inaccuracies, there’s a chance they will return your premiums rather than pay the death benefit to your loved ones, Bridgeland said.

To avoid mistakes, ask for clarification from an insurance broker or the provider, he said. “Just take your time, make sure you understand the questions and answer them truthfully,” Bridgeland said.

Regulatory guidance is pending

In January 2021, the Consumer Federation of America sent a letter to the National Association of Insurance Commissioners, asking the organization to adopt a model rule for life insurance underwriters who may “delay or deny coverage” to applicants who have or have had Covid-19.

Prompted by life insurance underwriting changes in Europe, the Consumer Federation of America requested that the rules be “totally transparent” and “meet standards for reasonability” for applicants who may experience Covid-related delays or denials.

“This rule is also important for current policyholders who may be considering dropping their coverage for a period to save some money to help the family get through the economic consequences of Covid-19,” the letter said. “These policyholders need to know the possible danger of such action.” 

The CFA also sent the letter to major life insurance companies, asking for them to “voluntarily make Covid underwriting rules public and reasonable.” 

While the NAIC addressed the letter during their spring 2021 meeting, the organization did not have enough information to consider supporting a model rule, a spokesperson for the National Association of Insurance Commissioners told CNBC.  

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Buyers need a six-figure income to afford a ‘typical’ home, report finds. Here’s how to reduce the cost


It’s no secret that it’s a tough market for prospective home buyers.

In October, U.S. buyers needed to earn $107,281 to afford the median monthly mortgage payment of $2,682 for a “typical home,” Redfin reported this week. 

That’s 45.6% higher than the $73,668 yearly income needed to cover the median mortgage payment 12 months ago, the report finds.

The primary reason is rising mortgage interest rates, said Melissa Cohn, regional vice president at William Raveis Mortgage. “The bottom line is mortgage rates have more than doubled since the beginning of the year,” she said.

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Despite the sharp drop reported this week, the average interest rate for a 30-year fixed-rate mortgage of $647,200 or less was hovering below 7%, compared to under 3.50% at the beginning of January.

And while home values have softened in some markets, the average sales price is up from one year ago.

“Home prices have gone up substantially, mortgage rates have more than doubled and that’s just crushing affordability,” said Keith Gumbinger, vice president of mortgage website HSH.

Meanwhile, a higher cost of living is still cutting into Americans’ budgets, with annual inflation at 7.7% in October.

How to make your mortgage more affordable 

While the current conditions may feel bleak for buyers, experts say there are a few ways to reduce your monthly mortgage payment.

For example, a higher down payment means a smaller mortgage and lower monthly payments, Gumbinger explained. “More down in this sort of environment can definitely play a role in getting your mortgage cost under control,” he said.

Another option is an adjustable-rate mortgage, or ARM, which offers a lower initial interest rate compared to a fixed-rate mortgage. The rate later adjusts at a predetermined intervals to the market rate at that time.

An ARM may also be worth considering, as long as you understand the risks, Cohn said.

If you’re planning to stay in the home for several years, there’s a risk you won’t be able to refinance to a fixed-rate mortgage before the ARM adjusts, she said. And in a rising rate environment, it’s likely to adjust higher.

Your eligibility for a future refinance can change if your income declines or your home value drops. “That’s a greater risk, especially for a first-time homebuyer,” Cohn said.

Of course, home values and demand vary by location, which affects affordability, Gumbinger said. “Being patient and being opportunistic is a good strategy for market conditions like this,” he said.



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