Category Archives: Insurance

04/23/12

Group Benefits

It’s open enrollment time for us, and I love this time of year! (DORK!) Getting to organize the upcoming benefit year for our family brings me peace of mind and security. 

 

I recently did our family’s open enrollment online, choosing health care and dental options, long-term disability and life insurance, and for the first time for us—both a Flexible Spending Account for Medical and Flexible Spending Account for Dependent Care (ie, Max’s preschool).  All of this will help reduce our monthly after-tax pay, which means less money each year to old Uncle Sam.  That makes me happy :)

 

Here is some information I wrote recently for my Money Matters column in Kentucky Living magazine.  Hope it helps others going through open enrollment.  Can you feel the excitement in the air!?

 

Group Benefits

As an incentive to employees, most employers offer group benefits to eligible employees.  Commonplace are benefits such as health, dental and vision, life, disability, and long term care insurance, retirement plans, stock options, health savings accounts, and flexible spending accounts.  Here are some things to consider regarding your groups’ benefits:

 

Do your own research:

These decisions will have a great impact on your family’s everyday life (such as health insurance) and your family’s future (such as retirement).  Therefore, it’s prudent to devote time, effort, and research before you enroll in any benefit.  Ask your employer questions.   Read over the pamphlets, discuss with your financial or tax advisor, and do some research online.  Consider attending open enrollement info sessions if offered by the provider, free of charge.  Visit the provider’s website for details of benefits, financial calculators, FAQs, and other tools to navigate the process.

 

Review other options:

Many times, purchasing  insurance through a group policy can be cost effective and especially helpful to those with pre-existing conditions.  However, don’t just assume this to be the case.  Compare what is offered with your group to individual life, disability, or long term care insurance you could obtain outside the company.  Even if it’s not cheaper, it may provide more flexibility, options, and continuity than your group benefits.

 

Follow up:

Be your own advocate. Monitor your benefits throughout the year, rather than only during open enrollment.  Major life changes such as a birth of a child, divorce, or marriage, usually mean the employee may make changes to benefits mid-year.  Write down notes during the current benefit year of changes you’d like to make come next open enrollment.

10/18/11

Basics on Long-Term Care Insurance

Your basic questions about Long Term Care Insurance answered.

 

What is long-term care insurance?


Though a somewhat new concept, long-term care insurance is just like any other insurance policy. The insured makes premium payments to an insurance company in return for the company’s promise to pay for specific coverage—in this case, nursing home costs.

 

Who needs it?


According to Dan Sheets, owner of Kentucky Insurance World, the person who needs LTC insurance is “the individual who wishes to preserve whatever savings they have accumulated for retirement.” With nursing home costs skyrocketing, the danger is that baby boomers will have to exhaust their savings to pay for health care costs. “There is no magic dollar amount of how much you need,” Sheets says, “but a policy that protects and pays for at least two to three years should be minimum.”

 

What should I look for in a policy?
There is more to look for in a policy than just the cost of premiums. “The two most important things to look for are the commitment the company has in the long-term care industry, and the purchasing of an inflation rider,” Sheets says. The inflation rider allows the policy benefits to grow and keep pace with rising health care costs.

 

10/14/11

How much Life Insurance do I need?

Choosing a type and amount of life insurance can be an emotional and difficult decision to make.  While there is a plethora of available insurance agents to assist you in the process, many are weary of relying on their advice for fear of being “sold” a product they don’t really need.
 

 

Most insurance agents can assist you in determining how much life insurance coverage is appropriate for your situation.  However, ultimately the decision of how much coverage to buy is entirely up to the consumer.

 

Here are some things to consider when deciding how much life insurance coverage is appropriate for you.
 

Purpose of the Insurance:
What is the purpose of insurance?  If you do not have any dependents, the purpose of the insurance might be to pay for final expenses or a funeral.  Or the purpose of the insurance might be in the form of a gift for the next generation.  
These are different needs than if you have dependents which will rely on the life insurance as a means of living. If this is the case, it is a little more difficult to determine the precise amount that is appropriate. If it is for dependents, such as a spouse or children, consider the following points.
 

Income and Expenses:
What other income, besides proceeds from the life insurance policy, will your family rely on? This might include social security benefits, a spouses’ income, or income from other investments.  Identify if there will be any other source of income available.
For expenses, consider which expenses might decrease if one spouse passes away. For example, there may be no need for a second vehicle.  With an elimination of a salary, taxes might decrease drastically.
Other expenses might increase such as day care or health insurance (if it was previously provided through the deceased worker.)  Work with the budget you have now and try to create a future needs budget as if only one spouse is alive.
 

Immediate and Future goal coverage:
Next, decide what immediate needs you want the insurance to cover.  This can include probate expenses, funeral expenses, paying off a mortgage or other debt.  For future goals, consider if you want proceeds of the life insurance to help fund your spouses’ retirement and/or children’s education. 
 

Other things to consider:

 
Other things to consider are the cost of the insurance.  If you purchase a term policy and you’re a healthy individual, you may notice only a small increase in premium for a large increase in coverage. 
Also consider your distance or proximity to retirement as well as your current assets already accumulated for this goal. If the breadwinner dies prematurely, consider whether the other spouse will need time or additional training to re-enter the workforce. 
 

Lastly, remember you are purchasing life insurance coverage in today’s dollars.  For example, a policy with $1,000,000 coverage today and an inflation rate of 3% means that in 20 years, that same amount has purchasing power of only $553,675.

10/14/11

Individual Health Insurance


If you are unemployed, self employed, a student, or simply not covered by a group health insurance plan, you might consider obtaining an individual health insurance policy.

Usually these plans are more expensive. However, unlike a group health insurance plan, you are not limited to a certain insurance company or program. In this sense, an individual health insurance plan can be custom fit for your particular situation. This gives you the benefit of comparing insurance rates until you find the best coverage.
For example, for a young adult woman in her child bearing years, maternity coverage will greatly increase the premium you pay for your insurance. In a group insurance policy, you might not have an option to dis-include this provision.

 

The downside of an individual health insurance policy can be the costs and obtaining coverage. The underwriting process (which includes medical history and other important personal factors) is much more stringent for an individual than for a group policy. If you are un-insurable due to certain pre-existing conditions, you might find it impossible to obtain an individual policy, or you might find it extremely expensive.
If you must get an individual health insurance policy, I recommend you shop various companies to compare insurance rates. To find health insurance quotes, you can talk with a local agent or shop online.
Places to go to look for cheap health insurance online include EHealthinsurance, Anthem,and Humana.

You will have to fill out basic information and also complete medical exams. The premium for your policy will most likely be just an estimated cost until you complete the necessary medical requirements.
 

If you are self employed, but you have a spouse who is eligible for group health insurance, you might first consider whether it is cheaper (and or better coverage) to join in on their plan, rather than purchase individual coverage. Most companies allow benefits to be extended to the employee’s spouse, children, and other dependents.
 

You might also consider combining a high deductible health insurance plan with a Health Savings Account.