What Types of Insurance Do I Need?

July 9, 2015 by Frank West

When you find a new job and sit down to look at the benefits you may be surprised at the options that are available to you. It may seem overwhelming to consider all of the insurance that you can purchase. Do you really need all of the insurance or can you pass on some of the policies? Is it possible to be over insured? It is also important to check on your insurance to see if you qualify for better rates. Some insurance like home insurance or car insurance is a given> Learn about the other insurance options.

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1. Do I Need Health Insurance?

Health insurance is something your should have. You run the risk of financial ruin without it. Even if you are relatively healthy, if you are involved in a serious accident or suddenly develop appendicitis, you may end up owing tens of thousands of dollars in medical bills before you are done. If your employer covers you, you should take advantage of that plan, if you are self-employed you may want to consider high deductible health insurance as a money saving option. More »

2. Do I Need Life Insurance?

Life insurance is another benefit that is offered by many employers. Generally employers will offer a basic life insurance policy equal to one year’s salary at no cost to you. You may have the option of purchasing more insurance through your benefits package. If you are single and do not have children, you may be fine relying on just the insurance provided by your employer. However, if you have responsibilities towards a spouse or children you should insure yourself to help them in the event of your death.

3. Do I Need Disability Insurance?

Disability insurance will help to cover you in the event that you are no longer able to work. This insurance will help you to pay your bills and make ends meet while you are coping with an illness or injury. This is generally good insurance to have. Short-term disability will help to cover maternity leaves and fill in the waiting period before disability insurance kicks in.

4. Do I Need Dental Insurance?

Dental insurance can help to pay for your dental checkups and other work that you need done. You need to carefully look over your policy to make sure that your dental benefits are more than the premiums you are paying. If the plan will not save you money, you may want to shop around for a dentist and look for a dental discount card to save on the cost.

5. Do I Need Long Term-Care Insurance?

Long term care insurance will help to pay the cost of care if you end up needing to be in a nursing home or an assisted living facility. Since you are young and in your twenties you may opt to wait on this insurance. A good time to get this insurance is in your late thirties, after that the rates begin to rise rapidly. If you have a condition that makes you think you will need this sooner, you should get it. If you have a family history of certain conditions such as Alzheimer’s you may consider purchasing it earlier to lock in lower premiums.

6. Types of Insurance: Do I Need Cancer Insurance?

Cancer insurance may also be available to you. Unless you have a strong family history of cancer, this is one insurance that you are pretty safe not having. You should make it a priority to save money to cover the extra medical bills that may arise from this or any other serious health problem.

Definition:

Cancer insurance is a benefit that will pay you money if and when you are diagnosed with cancer. The policies vary widely, so it is important to carefully read the policy before you purchase. Some policies will be pay a designated amount once you are diagnosed with cancer. This is to help defray costs such as missed work and out of pocket expenses. Other cancer insurance is supposed to cover the amount that your insurance would not cover.

Many cancer policies are risky because they have so many exclusions and limitations. Additionally your traditional health insurance may decrease the amount it covers as a result of the cancer insurance. You should carefully examine every limitation and benefit before you sign up.

Filed Under: employee benefits, Group Health Benefits, Health Insurance Tagged With: Group Health, insurance broker

Should I Skip Insurance to Save Money?

July 8, 2015 by Frank West

When money is tight, you may be looking for easy ways to save money. One item that can be especially frustrating is your insurance bill each month. You send the money in, but then you rarely if ever use it. You may be tempted to try to go without insurance because it is something that you rarely use. However, insurance is there to protect you from the overwhelming catastrophes.

Should I Cancel Insurance Completely?

The simple answer is no. There are three basic types of insurances you need to have no matter what. You need to have health insurance, car insurance, and home or renter’s insurance. Law requires car insurance and you can choose to get just the bare minimum requirements. If you have a car loan make sure you have enough coverage to pay off the loan.

What’s a Life Insurance Premium?

If you have a mortgage, the company will require you to carry the insurance. Health insurance is also required under the Affordable Care Act, and can protect your from financial disaster. If you have any dependents you really should have life insurance, as well.

What If I Never Use It?

If you never use health insurance or make a claim on your car or home owner’s insurance, that is great. However, it does feel like you may be wasting your money. The simple fact is that you do not know when you will need the insurance. No one wakes up and plans to get an appendectomy or to get in a car accident. No one wakes up and thinks it would be great to be robbed today. These things happen everyday to all over the world, and your insurance is your protection so these events are easier to mange. Insurance makes it easier to move forward.

How Can I Save?

One of the ways you can save money is by increasing your deductible. If you rarely use your insurance, you can set aside money each month to cover your deductible.

With a high deductible health insurance policy, you will pay out of pocket until you reach your deductible. However, you will be covered when you become seriously ill, and you will better be able to manage your bills. You can also lower you car and home insurance policy premiums by increasing your deductible. You need to be sure that you can afford to pay the difference. Another way you can save is by shopping for a new policy every few years. Most insurance companies will charge new customers less for their premiums. You can also take advantage of discounts through your job and alumni association to help reduce costs.

Is There Any Insurance I Can Do Without?

There are some options that you may not need right now. One easy example is cancer insurance, which usually offers a one time lump payment when you are diagnosed with cancer. Unless you have an extremely high chance of getting cancer due to family history, you can likely skip this option. When you are in your twenties, you do not need to purchase long-term care insurance, since you will likely not need it until you are a bit older. Finally, you may not need an umbrella policy when you are in your twenties, because you do not have a large number of assets that you need to protect.

Remember that insurance is designed to protect you. The protection it offers is worth the amount that you are paying in premiums each month. It only takes one accident or unexpected event to put your finances in a tailspin. While it may seem like you are throwing money away, you will find at some point just how much your insurance gives you, including peace of mind. Take the time to review your policies each year to make sure that you have the right amount of coverage for your current needs.

Filed Under: Health Insurance, insurance, Life Insurance Tagged With: Health Insurance Self Employed, Term Life Insurance

5 Ways to Reduce Small Business Health Insurance Costs.

June 30, 2015 by Frank West

Business health insurance is a major cost of doing business, especially for small companies and mom-and-pop firms. With premiums soaring, many small business owners are asking their employees to shoulder more of the financial burden or cutting benefits entirely.

The New York-based Commonwealth Fund, an advocacy group for health care reform, says small business health insurance costs average 18 percent more than those of larger businesses. In California, health insurance costs increased 10 percent in 2006 alone, according to the California Employer Health Benefits Survey.

Those costs have proven too high for many small businesses. According to the U.S. Chamber of Commerce, more than 45 million Americans are uninsured, and approximately 60 percent of the uninsured are employed by small businesses.

In 2006, the average monthly cost for health insurance for small group plans, which are largely used by small businesses, was $311 per month, according to a survey by America’s Health Insurance Plans, a trade group representing health insurance companies. The average premium for a family of four was $814 per month, the association reported.

Small business health insurance may take a huge chunk out of your revenue, but benefits often attract better employees and help retain existing workers. Satisfied, healthy employees are more likely to help your business grow. If you’re struggling to provide health insurance, here are some tips that could reduce your small business health insurance costs.

1. Keep employees healthy. Motorola Inc., for example, has instituted a comprehensive wellness program that includes disease management for afflictions such as asthma and diabetes, as well as offering flu shots, cancer screenings, smoking-cessation sessions and a round-the-clock phone line staffed by nurses. The company found that for every dollar it invested, it saved $3.93, according to a 2003 report by the U.S. Department of Health and Human Services report, “Prevention Makes Common Cents.” Likewise, heavy machinery manufacturer Caterpillar estimates that its wellness program will save the company $700 million by 2015.

Such wellness programs don’t just keep company accountants happy. They’re also popular with workers. Pharmaceutical giant Pfizer Inc. found that 85 percent of its employees in its New York offices participated in at least one wellness program, and that 80 percent used on-site facilities such as fitness centers or physical therapy, according to the HHS report.

2. Reduce coverage. Cutting coverage or asking your employees to contribute more to the plan is a logical step to reducing small business health insurance costs. The downside of this strategy is that it will likely prove unpopular with workers.

It’s fairly common for businesses to exclude dental and vision insurance, but talk to your employees to see what they want covered. They might opt for having dental and vision insurance and a health savings account, for example.

3. Consider health savings accounts. Health savings accounts are an increasingly popular option for owners of small businesses. These tax-exempt accounts, which are used to pay for certain medical expenses, could reduce your small business health insurance costs while giving your employees tax breaks.

You must have a high-deductible health insurance plan to establish a health savings account. For example, in 2007 the minimum deduction for individuals is $1,100; for families, it is $2,200.

That means that you or your employees would have to pay $1,100 out of your own pockets for health care expenses such as doctors’ visits or prescriptions before you are reimbursed by the insurance company.

But there are benefits: In 2007, employers, workers, and their families can contribute tax-free up to $2,850 for individual health savings accounts or $5,650 for family accounts. These funds can only be used to cover health care costs, and employees can take their accounts with them if they leave. The funds generally do not expire.

Contributions and withdrawals are both tax-free, and individuals can claim tax deductions on their 1040 forms – meaning employees don’t need to itemize to get the tax break. Employer contributions are also tax-deductible for business owners but are not required. Individuals can also set up health savings accounts.

To establish or participate in a health savings account, your only comprehensive health insurance can be the high-deductible health insurance plan and they must be offered to all employees.

Health savings accounts benefit healthy employees who do not regularly see doctors. You or your employees can, however, have health insurance that specifically covers ailments, including certain diseases or illnesses, accidents, dental and vision care.

4. Join a group. Small group health insurance plans cover between two and 50 employees, although there are “group of one” insurance plans for the self-employed that offer similar benefits.

The larger your group, the lower your premiums will be. According to the America’s Health Insurance Plans 2006 survey, 80 percent of small groups polled had 10 or fewer employees in their health insurance plans, and the average monthly premiums for individuals was $330. Firms with between 26 and 50 employees paid $287 a month for single premiums.

If your business has fewer than 10 employees, you can still partner with other businesses or individuals and expand your group plan. Note that health care laws are governed by the states, so you’ll want to partner with people in your state.

5. Shop around. Health insurance is a huge business, so shopping around for different providers could reduce your small business health insurance costs. Start by searching the Internet and also ask other owners of small businesses what they pay for health insurance. Insurance agents will charge fees, but you’ll save time and they can investigate health insurance plans for you. The National Federation of Independent Businesses partnered with eHealthInsurance, a national health insurance agency that gives you several quotes online.

Filed Under: employee benefits, Group Health Insurance, Health Savings Account Tagged With: Group Health, insurance broker

When Should I Use Short Term Health Insurance?

June 29, 2015 by Frank West

You may be wondering what to do if you do not want to use your expensive COBRA coverage option, but are leery of going without health insurance while looking for a new job, waiting for insurance to start at a new job or while you are waiting for the beginning of your coverage on an independent insurance plan. Short term health insurance can provide a low cost short term option to help you fill in the gaps you have in coverage.

Short term health insurance can be very inexpensive. Rates can be as low as $40.00 a month. However the plans all operate with a high deductible that must be met before insurance begins to pay medical costs. Some plans provide full coverage once you have met the deductible other have additional coinsurance. If you are pregnant most short term health insurance will not cover you, and if your spouse is pregnant they may not cover you on an individual policy as well. Generally short term health insurance does not cover well medical visits or other routine care that would fall under an annual doctor’s visit.

Short term health insurance policies have a time limit in how long they will provide coverage you can receive coverage for one month and some policies will extend it up to three months. These policies are designed to protect you and your assets during the short lapses that you may have in your regular insurance coverage.

You may consider using the policies if you do not want to have a preexisting condition or waiting clause on your next health insurance.

Since the policies are so inexpensive it may be worth the little bit of money to get short term health insurance. Additionally many alumni organizations can provide you with a contact and possible discounts on the policies when you first graduate. This will cover you while you look for a job and wait until your health insurance policy begins at your new employer or until the next annual enrollment period for a new individual health plan.

Filed Under: Short Term Medical Coverage Tagged With: Interim medical coverage

7 things you need to know about term life insurance.

June 29, 2015 by Frank West

The two principal characteristics of term insurance are: the insured must die for any benefits to be paid and, by definition, the contract expires at the end of the term. Stated more specifically, a term life insurance policy promises to pay a death benefit to a beneficiary only if the insured dies during a specified term.

The contract makes no promise to pay anything if the insured lives beyond the specified term. Generally, no cash values are payable under a term life insurance contract. If the insured survives the specified term, the contract expires and provides no payment of any kind to the policyowner.

1) When should term life be purchased?

In general, some type of life insurance is indicated when a person needs or wants to provide an immediate estate upon his or her death. This need or desire typically stems from one or more of the following reasons:

A. Providing income for dependent family members until they become self-supporting after the head of household dies.

B. Liquidating consumer or business debts, or to create a fund, enabling the surviving family members to do the same when the head of household dies.

C. Providing large amounts of cash at death for children’s college expenses or other capital needs.

D. Providing cash for federal estate and state inheritance taxes, funeral expenses, and administration costs.

E. Providing funds for the continuation of a business through a buy-sell agreement.

F. Indemnifying a business for the loss of a key employee.

G. Helping recruit, retain, or retire one or more key employees through a salary continuation plan, and finance the company’s obligations to the dependents of a deceased key employee under that plan.

H. Funding bequests of capital to children, grandchildren, or others without the erosion often caused by probate costs, inheritance taxes, income taxes, federal estate taxes, transfer fees, or the generation-skipping tax.

I. Funding charitable bequests.

J. Preserving confidentiality of financial affairs. Life insurance proceeds payable to someone other than the deceased’s estate are not part of the probate estate and are not a matter of public record. It is not unusual for a beneficiary to be a lover, illegitimate child, faithful domestic servant, or have some other type of relationship with the insured that he or she may not want to be publicly acknowledged.

K. Assuring nearly instant access to cash for surviving dependents. Life insurance proceeds are generally paid to beneficiaries within days of the claim. There is no delay, as might be the case with other types of assets, because of the intervention of state or other governmental bodies due to settlement of tax issues, or because of claims by the decedent’s creditors.

L. Directing family assets to family members in a way that minimizes state, local, and federal taxes.

Generally, term insurance is not the most effective type of life insurance for all of these death benefit needs. However, term insurance may serve the insured’s needs in many circumstances. Because term insurance is not just one product, but rather many variations on a general theme different types of term insurance are indicated for different types of needs.

Keep in mind, term insurance, more than any other type of insurance, is pure death protection with little or no ancillary or lifetime benefits. Therefore, the two overriding considerations in the use of term insurance, regardless of the specific application, are:

Will death protection alone meet the need?
Will the coverage last as long as the need?

In short, with term — as with any other decision about the appropriate type of coverage — the product must match the problem.

Filed Under: Life Insurance Tagged With: Term Life Insurance

Ben Franklin

June 24, 2015 by Frank West

Image result for ben franklin quotes funny

Filed Under: Uncategorized

What Is an Annuity?

June 24, 2015 by Frank West

Wall Street is notorious for creating financial products that are difficult to understand. One such product is the annuity, and even experienced investors often have trouble coming up with an annuity definition that’s easy for a beginner to understand. Nevertheless, with many financial planners recommending certain types of annuities to their clients, it’s important for you to learn what an annuity is, and whether it’s suitable for your situation.

Defining annuities
The meaning of the word “annuity” comes from the Latin root for year, emphasizing the essential nature of the product as providing annual income to its owner. Historically, the term referred to annual allowances that people received from various sources, including family members or legacy bequests.

The modern definition of an annuity is broader. As the SEC describes it, an annuity is a contract with an insurance company that requires it to make payments to you, either immediately, or at a specified time in the future. You can buy the annuity either with a single payment or with a series of payments. The insurance company can satisfy its obligations either with a lump-sum payment, or through a number of options that involve a longer payout period.

Annuities come in several different types. Fixed annuities are designed to offer predictable streams of income, providing minimum rates of interest, but little opportunity for growth. Variable annuities, on the other hand, are contracts that are tied to different types of investments, including stock mutual funds and similar investment vehicles. By its nature, you can’t be certain what a variable annuity will pay you, as its returns are tied to the investments linked to the particular annuity you choose.

The pros and cons of annuities
Annuities have good points and bad points. On the favorable side, annuities are among the only financial products that can address what has become known as longevity risk, better known as outliving your money. Annuities can be structured to make set payments for your lifetime, with the insurance company taking on the risk of your living longer than your life expectancy in exchange for a potential profit if you die earlier than your life expectancy would predict.

In addition, annuities get favorable treatment under the tax code. In particular, annuities give investors tax deferral, with any rise in the value of the annuity contract not being taxed until the owner starts taking money out of the annuity.

On the other hand, annuities have some unattractive features. Costs can be higher than on other types of investments, with fees going to the insurance company to cover mortality and insurance-expense risks. You might have to pay surrender charges to cash in an annuity before a certain number of years passes, with tax penalties also potentially applying to annuity withdrawals before age 59-1/2. In addition, administrative costs can also boost overall costs.

Moreover, many annuities are structured so that after you die, your heirs receive nothing. That allows you to receive larger payments than you would otherwise be able to generate from an investment portfolio; but many are uncomfortable with the thought of potentially losing every penny of their investment if an unforeseen accident or illness led to their death shortly after buying the annuity.

Finally, annuities offer a number of guarantees and other features that can be well-suited to certain investors’ needs. For instance, guarantees of minimum income benefits or minimum withdrawal eligibility can give investors additional protection against market swings, especially for those who choose variable annuities. However, these guarantees also come with an extra cost; so when you add up all the fees associated with an annuity, the amount of money taken out of your annuity account can be sizable, and weigh on your long-term returns substantially.

Should you use annuities?
Annuities bring out strong emotional responses from their proponents and their detractors. It’s true that features tied to life expectancy are almost impossible to duplicate with any other type of financial product, making annuities especially useful for those who want to eliminate that aspect of risk in their financial planning. Yet critics point to high commissions paid to insurance salespeople as a sign that customers overpay for annuity coverage, and you’ll find many stories in which inexperienced investors were sold annuities without fully understanding their features.

If you have a need for the insurance element that annuities can provide in ensuring a lifelong stream of income, then including annuities in your overall investment portfolio can be a smart move. Yet if you don’t understand exactly how a particular annuity product works, it’s a fair bet that the annuity is more complicated than what you actually need to meet your financial-planning wishes. If you do buy an annuity, it’s critical for you to understand the exact terms governing how you’ll get paid, and any costs associated with the account.

Filed Under: Annuities Tagged With: Annuity

What is “long-term care” and do I need insurance for it?

June 24, 2015 by Frank West

Let’s play a word association game, OK? I say “long-term care,” and you say what?

If you’re like most people, you say “nursing home.” While it’s true that nursing homes are a big part of the overall long-term care picture, the topic is not that straightforward.

In general, long-term care refers to help with basic activities of daily living (ADLs, in industry parlance) such as bathing, dressing, eating, and using the toilet. This help can be provided in the home, in middle-ground settings such as assisted-living facilities, or in nursing homes.

Technically, long-term care insurance provides ongoing income to cover the costs of such assistance. Practically speaking, however, long-term care insurance is a tool for protecting the assets of retirees, most commonly you, your spouse, or a parent.

Insurance for protecting assets? What are we talking about?

Here’s the deal. If you become severely ill, disabled, or mentally impaired to the extent that you can’t take care of yourself, you’ll need some help. If you’re not hospitalized or lucky enough to be living with a capable caregiver (another reason to pick a spouse based on features that can’t be surgically enhanced), you’ll need to hire the help.

As you probably know already, this kind of help is very expensive and health insurance usually doesn’t cover it, not even Medicare. How expensive?

Well, according to the 1996 “Guide to Choosing a Nursing Home,” published by the Federal Health Care Financing Administration (HCFA), “A skilled nursing home will cost about $200 a day in many parts of the country.” This works out to $73,000 annually. On the positive side, many areas of the country are significantly cheaper, which brings the national average down to more like $50,000 annually. On the negative side, if you want a private room in the Northeastern U.S., your cost could be more than $100,000 annually, according to a recent survey by Kiplinger’s.

If you’re still working, you’ll have two ways to pay for these costs: income and savings. You hope that income from private long-term disability insurance and/or Social Security disability payments will be enough to cover the cost. If not, you’ll begin to spend down your savings. When they’re gone, you’ll have to turn to Medicaid, which is public healthcare assistance for the needy.

If you’re retired, the same basic scenario applies. You hope that monthly retirement income from Social Security, pensions, annuities, etc., will cover the cost of long-term care. If not, you’ll begin to spend down your savings. When they’re gone, you’ll turn to Medicare.

Here’s where it gets complicated. Let’s look at two extremes.

If you have amassed sufficient wealth, you will be able to pay long-term care costs from the nest egg and earnings on the nest egg. This is, of course, the ideal plan and the one that all Fools are working toward.

On the other end of the spectrum, if you have little or no nest egg and are just getting by month to month, there isn’t much point in paying for long-term care insurance. This form of insurance is relatively new and untested, and premiums are very expensive. They will dig deeply into your ability to build that nest egg.

But what if you need long-term care? Medicaid will be available, and while you hear a lot of horror stories about “being on Medicaid,” the truth is that many decent facilities accept Medicaid patients. Of course no one wants to limit future options, but, in many cases, the insurance cost to avoid Medicaid is prohibitive.

So, what’s left between no nest egg and a giant nest egg? In general, people 55 and older with significant retirement assets, who want to be sure that a future disability or illness doesn’t wipe out their spouse or leave nothing for their heirs. For these people, long-term care insurance can be a good way to protect a chunk of their assets from spend-down to Medicaid. If you fit this bill, read on. Otherwise, get back to building that nest egg!

Filed Under: long term care insurance Tagged With: In home health care, long term care, nursing care

Disability Insurance: The Overlooked Employee Benefit.

June 8, 2015 by Frank West

Disability Insurance: The Overlooked Employee Benefit

Does your pay stub include the cryptic three-letter code LTD with a tiny dollar amount that’s deducted each pay period? It stands for long-term disability insurance, and it pays to have it to provide for your family when you can’t work because of an injury or an illness like cancer. But many employees go without it. In fact, despite the fact that more employers are offering long-term disability insurance as an employee benefit, the number of employees insured is dropping.

That’s the troubling trend that the Council For Disability Awareness, a group representing 19 member insurance companies, found in its latest annual review of claims data for 2013. More than 213,000 employers offer long-term disability insurance through those companies, a slight increase for the second year in a row, after declines from 2009 to 2011. Yet the number of insured employees declined roughly 1.5% to 32.1 million last year (in 2009, 34 million employees had coverage).

There are a couple of reasons for the changing disability landscape, according to Barry Lundquist, president of the Council. One factor is that employers are focused on compliance with the new Affordable Care Act’s health insurance provisions—so employers and agents/brokers are saying they’ll deal with other benefits like disability insurance later.

Another factor is that when employers are adding disability insurance as a benefit today, it’s more likely that they add it as a voluntary benefit. That means the employee pays the full cost. Historically, the employer has paid the full cost, or at least for coverage up to a certain level. With employer-paid plans, employees are automatically enrolled. Sometimes you have the decision whether to make salary deferrals to increase your coverage. But with voluntary plans, enrollment hovers around 40%, Lundquist says.

Filed Under: Disability Income Insurance, employee benefits Tagged With: Disability Income Protection, employee benefits, Paycheck Protection.

1) When should term life be purchased?

Disability Insurance: The Overlooked Employee Benefit

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