Category: Health Insurance

Yes, Chances are that you probably do want more life insurance than what you currently have available through your employer.

Group Life Insurance

Group life insurance is life insurance that is made available to you through your membership in a group. The most common type of group is an employer group, although some professional organizations also provide group life insurance as well.

Group life insurance is often less expensive than term or whole life insurance since the costs and risks of that insurance are spread across all of the people in that group.

Group life insurance has several pros and cons:

Pros:

• Less expensive than term or whole life insurance
• Often does not require a medical examination, so it can be one of the easiest forms of insurance to get

Cons:

• Life insurance is usually for a limited period of time. If your life insurance is provided by your employer, you usually lose that insurance if you leave your employer for any reason.
• Usually limited to 1x or 2x your salary. In many cases you will need more life insurance than is available through your employer.

In most cases, individuals will purchase life insurance to supplement that which they get through their group provider. To determine if you need more life insurance coverage, read our Q&A for How much life insurance do I need?

Continue reading our FAQ to learn about selecting a life insurance company.

How do I choose a Life Insurance Company?

A: Choosing a life insurance company can be very difficult, particularly since they all offer the ‘lowest premiums’. There are some shady providers of life insurance and it can be very difficult to be certain that you are purchasing from a reputable establishment.

Fortunately there are a number of ways to evaluate a life insurance company. The most common things that you should look for are:

• Strong financial condition. You want to make sure that your life insurance company will be in business for as long as you have coverage.

• Long business history. Insurance companies that have been in business a long time have had to prove that they are financially viable and not based purely on scams.

• A company that your friends, family and neighbors are satisfied with. Ask around to learn about the good and bad experiences that people have had with their insurance companies. You’ll often learn of a few companies to avoid.

As always, make certain that the people you are doing business with are customer service oriented. If they don’t answer your questions about the policy, or are unclear on anything you probably don’t want to be doing business with them.

We do not have any relationship with the life insurance companies that we review, so you can trust that our comments are unbiased.

This can be a daunting question to answer, although most life insurance companies will help you assess your financial needs. Life insurance is intended to provide for your loved ones in case you pass away. To determine how much life insurance you should purchase, you need to determine how much financial support you expect to give your loved ones over the course of your life. Some common things to consider are:

• Recurring Monthly Expenses
• Medical insurance (if your family is on your work plan and they would need to find new medical insurance)
• College tuition for your children
• Support for your parents as they get older
• Mortgage, car and other loans or debt
• Funeral expenses for yourself

You’ll notice that many of the items on the list above occur at different points in your life. Since your financial condition changes over time, so will your need for life insurance. For example, if your children have already graduated from college and their loans are paid off, you no longer need to maintain life insurance to cover that cost so you can reduce the amount of life insurance that you currently have.

Calculating the amount of insurance you need for fixed, one-time amounts (mortgage, debts, funeral expenses, etc) is easy: you just add up all of those amounts, and make sure that your insurance covers those amounts.

However, calculating the amount of life insurance you need to cover any recurring expenses can be quite challenging. You need to evaluate factors such as the expected inflation rate, your survivor’s expected return on the life insurance benefit, and how long they will need financial support for (will social security be available, will your your survivors work, etc.)

A very general rule of thumb would be to obtain $150,000 of life insurance for every $1,000 of monthly expenses. Another rule of thumb that many experts use is that you should have 7x your annual income in life insurance. You should certainly meet with a financial advisor and/or use one of the financial calculators available on the web sites of most life insurance companies to examine your situation specifically.

What is the difference between Term and Whole Life Insurance?

By far, the two most common types of life insurance sold are Term and Whole life insurance. The primary difference is that a term life insurance policy covers you for a fixed period of time, usually 10 to 30 years. A whole life insurance policy covers you for your entire life, and is more expensive. There are other variants of life insurance available, and we touch on those briefly below.

Term Life Insurance

Term Life Insurance covers you for a particular period of time, usually 10 to 30 years. If you die after your policy has expired, you receive no benefit. Term life insurance is much less expensive than whole life insurance. The premium that you pay is determined largely by your age, the length of your policy and of course your health. The younger you are and the shorter the coverage you purchase, the lower you will pay for that insurance.

You will pay more if you purchase a longer policy, but you will also be locking in the monthly cost of that life insurance policy for the length of that term. So, if you purchase a 30 year policy, and in year 15 you have a heart attack, your premiums will not rise a cent for the remainder of the policy.

However, you are not locking yourself into the policy. With most policies you can cancel the policy at any time for any reason (for example you found a better rate at aonther life insurance company).

Whole Life (Permanent) Insurance

Whole life insurance is an insurance policy that covers you for your entire life. Since the life insurance company will have to pay the policy at some point, the premiums are much higher than term life insurance. However, the premiums you pay never increase for your entire life.

The other major difference between whole life and term life insurance policies is that whole life insurance policies develop a cash value as you contribute to the policy. You can take advantage of this cash value by taking low cost loans against the value, or by using that value to pay your premiums.

If you cancel your policy, you will receive some proportion of the cash value of that policy in return.

Other forms of life insurance:

• Universal Life Insurance – A flexible form of whole life insurance that allows the premiums and death benefit to vary as you needs vary.
• Annual Renewable Term Life Insurance – A type of term insurance offering basic temporary coverage at an economical price. The premium may increase annually as the insured person gets older
• Variable Life Insurance – one of the riskiest forms of whole life insurance, but it can also give the best return for your money. Essentially, the life insurance company will invest your insurance premiums for you. If the investments do well, the death benefit and cash value of the policy go up. If they do poorly, they go down. It’s a little like putting your savings into the stock market.
• Survivors Life Insurance – A type of whole life insurance that covers two people. Also known as “second-to-die” or “dual life” insurance, usually used as an estate planning tool that pays its death benefit upon the death of the second insured person. The death benefit is generally used to pay estate taxes or other large estate-related costs.

The holiday season is a time of celebration, a chance to bid farewell to the year that was and welcome the year that will be. Everyone knows Christmas is all about overindulgence a time to relax and party with friends and family; whereas New Years is the time to consider the plan of actions for the next 12 months, it is the perfect time for resolutions to be made for the Next year.

The most popular resolutions that make the list every year relate to wealth and health and well-being: To manage money better and to become healthier in the New Year is important to most people. Naturally, it comes back to Health Insurance. Whether you make the decision to take more control of your money or be eat or live healthier, these lifestyle changes can be reflected in your health insurance policy.

Thinking forward for 2010 you should review your health insurance options, it’s an opportunity to make the changes you’ve considering. Here are a few simple items to help you approach Private Health Insurance in 2010, thinking about how you invest your money and your dedication to your health and your family’s health.

IDENTIFY WHAT YOU NEED

There are so many products related to health insurance in the market. It you is your task to identify which one is viable for you.

• What is my current cover, is it still relevant?
• Do I want hospital cover, extras cover or both?
• What are the inclusions that I have?
• Do I want basic, medium or full cover?
• What is the affordable upfront as a premium?
• Can I manage to pay co-payments if I go for lower premium?SEEK ADVICE

SEEK ADVICE

Take advice from friends and family having similar circumstances. They can highlight the points which you may be overlooking. Look back and analyze whether you are managing your expenses or do you have to cut your expenses. Balance this personal experience with expert advice. Seek information from your doctor about your medical history and possible risk factors that can affect your health in the future. Your doctor can give you important advice as he knows you exact medical condition.

IDENTIFY OPTIONS TO MATCH YOUR NEEDS

Health insurance products are designed with a wide population in mind. More often than not these packages may offer a full range of inclusions which may not be appropriate for you. Remember, more inclusions may mean higher premiums so you may be paying what you don’t need. So take a closer look and identify those that are relevant to you matching your individual needs.

RESEARCH

Each health fund has its own unique suite of programs, rewards and discounts, identify a suite that reflects your lifestyle but also meets your budgetary requirement.

This brings us to the next topic, the benefits of health insurance and why it’s worth thinking about (especially when you feel sick as a dog)

Let’s begin with the basics, when considering private health insurance, you automatically think of three types: Hospital, Ambulance and Extras.

Hospital Coverage may include accommodation, theatre fees, intensive care, drugs, dressings, and other consumables, pharmaceuticals and medical services.

Ambulance Coverage may include transport costs (road, air or sea) and any paramedic treatment.

Extras may include cost for dental, physiotherapy, occupational therapy, speech therapy and acupuncture.

Although distinct, these types often overlap. You’ll find that most health insurers offer combined policies that cover health services across the board. The key is to find the combination that works for you; alternatively you may wish to be more selective in your approach, purchasing extras only. It really depends on your lifestyle, who you want to cover (singles, couples, family etc), your age, and other variables

With more details soon to come (i.e. scenarios that might be relevant to you), the purpose of this post is to simply highlight the fact that purchasing health insurance is a way of ensuring peace of mind. Even if you live a healthy lifestyle, have no history of serious illness or have no family to worry about, health insurance is a security that is necessary in this day and age. In most instances, basic coverage will provide you with the following benefits:

• Choice of doctor
• Choice of hospital
• Control over waiting times, when and where you’ll be treated
• Helps with cost of services not provided by Medicare

Now that you’ve got the basics of health insurance, we’ll follow up with more tips, scenarios and facts to help you along the way. Happy Hunting.