Israeli Life Insurance Market Disrupted? Two US Carriers Offer Cheaper Policies To Israelis
October 3, 2021
For decades, Israelis have had to tolerate exorbitantly expensive life insurance policies offered by local insurance companies. Most such policies increase in price significantly as the policy holder ages, making it burdensome for Israelis to maintain large enough policies.
For example, if a 40-year-old Israeli in good health purchases a 3,200,000 NIS insurance policy at age 40, and keeps the policy for 30 years, he or she can expect to pay a total of 804,000 NIS in premiums over the course of the policy. In contrast, a 40-year-old American in good health would only pay 126,000 NIS over the same period.
What this means is that Israeli life insurance policies can cost six times more than the equivalent American life insurance policies.
Most Israelis are shocked to learn of the discrepancy in prices. The pain of this discovery is compounded by the high prices Israelis pay for many other products.
Recently, an entrepreneurial independent insurance agent, Jonathan Spetner, got two well-respected US insurance carriers to start offering their best products at their best rates to Israelis, and one of them has waived the requirement for the insured individual to ever leave Israel.
This means that Israelis can save an average of 22,600 NIS per year over the lifetime of a policy, simply by switching to a US insurance carrier.
Now, there are some limitations. “There has to be a “connection” of some sort between the applicant and the USA,” explains Jonathan Spetner. “That can mean owning a property or business there, or having family there. We find that most Israelis do have a connection that will satisfy the insurance carrier. For example, owning shares in US stocks is considered a connection. Even if you think you don’t have a connection to the US, usually we can find it.”
Jonathan Spetner was raised in the US, and made Aliyah in 1978 and served in the IDF. He later moved back to the US but frequently visits family in Israel.
“My grandparents started their insurance agency in 1935. I know it would make them proud to see that the business they started and entrusted to me is now able to help so many Israelis get the life insurance their family deserves,” reflects Spetner.
In the US, life insurance is considered so affordable that it is often used as a benefit to give employees. “Employees really feel you care about them when you provide life insurance to protect their families. It’s great for keeping them loyal to your company,” says Spetner.
US businesses have a variety of uses for life insurance. Jonathan explains: “If you have a key employee that your business relies upon, and suddenly he or she passes away, your company will go through a lot of turbulence. Having a life insurance policy on that employee can help your business through the crisis.”
Another corporate use of life insurance is to grant important employees a second source of retirement funds, by making use of permanent life insurance policies that have a cash value. Such policies are unavailable in Israel, but are commonplace in the US.
Lastly, business partners sometimes take out life insurance policies on their partners. That way, if one partner passes away, the other partner can buy out the rest of the business from the estate of the deceased. This prevents difficult situations. As Jonathan’s father, Ken Spetner, used to ask clients: “How would you like to be in business with your late partner’s widow’s second husband’s attorney?”
US insurance carriers have life insurance products that simply aren’t available in Israel. Spetner explains: “In the US there is something called “permanent life insurance.” What that means is you have an insurance policy that can last for your entire life, and it doesn’t have to be expensive to maintain. In Israel, there is no such thing as a permanent life insurance policy.”
Today’s investment environment makes it difficult to be certain that you’ll leave enough money to your heirs. Low interest rates make safe investments such as bonds unprofitable, and volatility in the stock market makes equities unreliable. At the same time, people’s standards of living keep rising, which makes it more difficult to leave behind a sizable estate. These trends make life insurance all the more appealing.
So, what can you do if you want to find out how much you can save with a US policy, or apply for one?
“It’s easy,” says Jonathan Spetner, “Just fill out the form below to get in touch.”