What kinds of insurance does one need?
Automobile – this one is obvious since most people know that if they drive a car or motorcycle they need and want coverage.
Homeowners or Renters Insurance – If a person owns a home or condominium they should purchase insurance to protect their property. Even if a person rents they should also purchase protection for their belongings.
Health Insurance – Most people get this type of coverage through their place of employment, either through their spouse or by themselves. If this coverage is not offered, we can help you secure the proper coverage for you and your dependents.
Life Insurance – This type of coverage is extremely important if you have a spouse and or dependents depending on your income. We can help you find the right amount and type of coverage for your situation.
Types of Life Insurance and Brief Description:
Term Life Insurance – Is usually for a designated time period of 10, 20, or 30 years. One can purchase either annual renewable term in which the premium stays level for one year, or one can purchase a level term product such as 10, 20, 30 years etc., in which the premium or cost stays level for that time period. After the time period is up you can requalify for another term period at your attained age and your current health status. The most common term product is the 20 year level term product.
Whole Life Insurance – has guaranteed premiums and death benefits, and a minimum interest rate which will be credited to the funds accumulated in the policy. On some whole life policies higher interest rates may be credited to those funds depending on the future performance of the company’s investments.
Pros: Whole life insurance has a savings element (cash value) which is tax-deferred. You can borrow from it or cash in the policy during your lifetime. It has a fixed premium which can’t increase during your lifetime (as long as you pay the planned amount) and premium is invested for you long-term.
Cons: Whole life insurance does not allow you to invest in separate accounts, i.e. money market, stock, and bonds funds. Whole life does not allow you to split your money among different accounts or to move your money between accounts and allows no premium flexibility nor face amount flexibility.
Universal Life – differs from whole life insurance in that it allows the policy owner to vary, with limitations, the amount and timing of premium payments and death benefit. Cash values are accumulated by crediting premium payments and interest values are accumulated by crediting premium payments and interest to a fund from which deductions are made for expenses and cost of insurance. The rates at which the interest is credited are declared by the company or may be specified in the contract. Like term insurance, universal life insurance policies usually have two sets of premiums – guaranteed maximum premiums, and “current premiums”, which may be lower, but which can be changed by the company, up to the maximum. They also include a minimum interest guarantee. Because of its flexibility, a universal life policy can also be structured to operate like term insurance.
Variable Life – differs from whole life insurance and universal life insurance in that policy owners direct the distribution of their premium payments among several different accounts rather than that of the company. Typical account choices are: common stock, bond, mortgage, money-market accounts. With this type of policy, the death benefit and cash value benefits vary in relation to the value of the investments underlying the policy. If the value of the accounts increases, so will the benefits; if the value of the account decreases, so will the benefits, subject to a minimum guarantee. Variable life insurance is more risky to the policy owner than the other forms of cash value insurance, but there is a possibility of greater returns. Some variable policies offer a guaranteed interest account. Generally, there are no guarantees in variable life policies.
However, if guaranteed interest is your goal it makes little sense to pay the typically higher fees associated with a variable product for something readily available in a whole life or universal life.
Variable Universal Life – combines the flexibility of universal life insurance with the investment account features of variable life insurance.
Disability – If you work for a living, your lifestyle depends on your ability to earn an income. Which means your standard of living could be seriously threatened if you could not work.
Liability Insurance – This is one type of coverage that is usually overlooked. This protects you in case you injure someone or someone is injured on your property. This type of coverage is usually purchased with your auto or home insurance.
Medicare Supplement – A Medicare Supplement (Medigap) Insurance policy fills gaps in Original Medicare Plan coverage and must follow federal and state laws. These laws protect you. According to a U.S. Department of Health and Human Services report (2000), all Medicare Supplement policies must be clearly marked “Medicare Supplement Insurance”. The authors of the report go on to say that “…if you are in a Medicare managed care plan, or if you care covered by Medicaid, you do not need a Medicare Supplement policy.
Medicare supplement policies that were sold after July 30, 1992 (start date varies in some states) were standardized. All Medicare supplement policies must be offered according to ten standardized benefit packages. Administrators within each state can determine which plans may be offered in their state. Policies must be identified as Plan A – Plan J. Any company offering Medicare supplement insurance must offer at least Plan A and may offer specific plans if it chooses, based on each state’s regulations.
Open Enrollment Period
Insurers may not deny a policy or charge higher rates during the 6-month period when a beneficiary first enrolls in Part B of Medicare, regardless of health status. Individuals must be at least 65 years old to take advantage of this benefit. A company must give credit to any credible coverage as long as there has not been a gap in coverage of longer than 63 days waiting period for preexisting medical conditions. Disabled individuals on Medicare may use the open enrollment during the 6-month period after they turn 65.
Reference Web Sites:
Center for Medicare and Medicaid Services. www.cms.gov
Medicare Web Site. www.medicare.gov
Long-Term Care Insurance – Long-term care, otherwise known as LTC, refers to the day-in, day-out assistance needed when an individual has a serious illness or disability that lasts for a period of time and they are not able to take care of themself. Long-term care is also for persons needing assistance with the ordinary activities of daily living because of functional impairments, or for persons needing assistance or supervision because of cognitive impairments. Most of us have had a friend or relative who required long-term care because of an accident or an illness. Perhaps you’ve known a young person paralyzed by an accident or an elderly person with Alzheimer’s Disease or some other degenerative condition of aging.
Workers Compensation – This type of coverage is provided for you at your place of employment. But, what if you have a housekeeper? If they become injured on your property they can ask for damages and lost of earnings from you. If you don’t pay them, the only other choice they have is to contact an attorney. You see the ads all the time on the radio and television.