Sunday, November 30, 2008

Why Americans Spend So Much on Healthcare

The United States spends far more per person on healthcare than any other country—about twice as much as other developed nations. Yet people in the United States don’t appear to be getting their money’s worth.

The United States lags far behind other developed countries on almost every important medical statistic—life expectancy, infant mortality, cancer, diabetes, heart disease, and so forth.
So, what is the problem with American healthcare?

Is it our inefficient medical bureaucracy, where 2 to 3 million Americans are employed by medical providers and insurance carriers—not to deliver healthcare, but merely to pass the buck for that care to someone else?

Is it the cost of medical malpractice insurance, which adds more than $27 billion a year to the cost of providing healthcare—enough to pay annually a high-deductible insurance premium for more than half of the 45 million Americans without health insurance?

Is it our employer-based system, whereby the ultimate providers of healthcare for most people (employers) have little incentive to spend even $1 today on wellness and preventive care in order to save $100 tomorrow—because the odds are that the employee will be long gone or receiving Medicare by the time serious diseases like cancer and heart disease develop?

The partial answer is yes to all of these questions, but the main reason Americans spend two times what they should on healthcare is not because of something wrong with American healthcare.

Today, more than 61 percent of Americans are overweight or medically obese—a figure that has doubled since the 1980s. Being overweight is just one of the symptoms of having a terrible diet—most Americans are also deficient in the basic vitamins and minerals necessary to keep their minds sharp and avoid major diseases like cancer.

If you are overweight or obese, please get immediate help in changing your lifestyle. Already, 59 million Americans have diabetes or prediabetes, mostly due to being overweight—if you are one of them, you have a 65 percent chance of dying from heart disease or stroke. Moreover, before
you die, if you are obese, you will likely consume much of your estate in medical expenses and will needlessly and selfishly be torturing those you love the most.

Saturday, November 29, 2008

Ways to Reduce Your Pharmacy Bill

There are plenty of ways you can reduce your pharmacy bill. The Cost Containment Research Institute ( has compiled a list of 17. Here are a few ideas for you to consider:
  • Shop around by phone. Make a list of your medications, including strength and number taken daily, and call at least six pharmacies to compare prices, keeping in mind whether the pharmacies are on your plan.
  • Use a pill splitter (but do your research first). Many drugs are cheaper if you buy them in larger doses, then cut them in half. Ask your pharmacist or doctor first, though, since many drugs cannot be split without reducing their effectiveness. Most pharmacists say you should split only pills that are scored (i.e., those with a predesigned breakoff line). However, Toby Rogers from Rxaminer says, “We split a lot of pills that aren’t scored; you should be able to split pills that aren’t a ‘long acting’ type or encapsulated.”
  • Save by buying a 90- versus a 30-day supply. Most pharmacies offer higher savings if you buy a larger supply. In addition, people with insurance prescription coverage may save even more by getting a larger-day supply.
  • Over-the-counter drugs may be as effective as the prescription drugs. Most prescription cold medications average $20 to $60 for a onemonth supply and contain the same decongestant that is available over the counter for less than $2. Some doctors still prescribe 20-milligram Pepcid to their patients, which can cost $60 for a onemonth supply. Pepcid AC comes over the counter in 10-milligram strength; taking double the dose costs approximately $23.
  • Stop using drugs you no longer need. You should review all your prescriptions with your doctor at each visit. You may be taking drugs you no longer need. Also, report any side effects and ask questions about possible drug interactions. Don’t hesitate to ask your pharmacist questions; it’s free and can often save you money.
  • Take only those drugs you really need. When your doctor prescribes medication for you, make sure you understand exactly what it’s meant to do and for how long. If you are prescribed two drugs for the same symptom, ask whether you really need both; if you develop new symptoms ask your doctor if the prescribed medicine could be causing it.
  • You may qualify for a free drug program. There are over 1,100 drugs that are made by 100 manufacturers that have free drug programs. Most major drug companies provide free medications but rarely, if ever, publicize their programs. An estimated $2 billion worth of free medication is given away annually. You can get a complete list of drugs and manufacturers’ programs at
  • Veterans have their own drug benefits. Recent laws grant veterans medical benefits for certain illnesses, like diabetes and hypertension, provided the veteran is subject to qualifying conditions such as Agent Orange exposure. Check with the Veteran’s Administration to see whether you qualify for benefits.
  • Buy home test kits. Kits for determining ovulation, pregnancy, and colorectal cancer can be purchased as home tests at half the price of similar kits from your doctor’s office.
  • Look for special deals by local governments. You can save on prescription drugs through special deals offered by state and local governments and even religious organizations. The states of Illinois, Kansas, Missouri, Vermont, and Wisconsin have initiated a web site where residents can buy 100 commonly used drugs from Canada, Britain, and Ireland at a discount of anywhere from 25 to 50 percent. The address for the site is

Friday, November 28, 2008

Tips for Shopping Overseas Pharmacies in US is one of the best web sites for checking out prices from quality pharmacies overseas, as well as the quality of an individual pharmacy itself. Tod Cooperman, M.D., who founded, has the following tips for shopping overseas for
prescription drugs:
  1. Shop from Canada. As long as the pharmacy is licensed in Canada, there should be no concerns about the quality of the drugs. They are as good as what you would purchase from a U.S. pharmacy, and in fact many are manufactured here.
  2. Look beyond Canada. High-quality prescription drugs are also available from Australia, the EU countries, Israel, and New Zealand. These countries have drug regulations equal to or better than those in the United States.
  3. Use to monitor the quality of foreign pharmacies. The site is free to explore and paid memberships are available for more in-depth information. The web site does not accept funding from pharmaceutical companies, but pharmacies do pay to be rated voluntarily. does not receive any money on sales.
  4. Be secure. Read the fine print on any web site before you enter your confidential information—the general rules for privacy in the United States do not apply to overseas pharmacies.
  5. Avoid buying drugs advertised in spam e-mails and pop-up ads. Cooperman says these companies are impossible to trace.
  6. Don’t expect to save on generic drugs from other countries. Generic drugs are actually cheaper in the United States than in Canada, since Canada sets its prices on generics from a two-competitor system, whereas the United States has a free-market system with as many as 12 companies selling generics.
  7. Watch for counterfeit drugs. If you’re dealing with a reputable pharmacy, counterfeits should not be a problem. However, examine your pills when they first arrive to see whether they look different from those you normally get. If they crumble or if the consistency seems different, take it as a warning.
  8. Remember to calculate shipping costs. To save on shipping, buy larger quantities, such as a 90- versus a 30-day supply, if you expect to be on the drug for at least that long

Thursday, November 27, 2008

How You Can Finance Your Long-Term Care

There are four basic ways to finance your long-term care:
  1. Family support and caregiving. This is the way long-term care has been provided for generations. While all of us like the idea of taking care of our parents as they age or being taken care of by our children, this is simply not a viable option for most Americans today
    who have jobs and/or children of their own.
  2. Personal savings. This is not a viable option for most people because they do not have millions of dollars available, nor do they know how much long-term care they will need. It is also selfish if your estate will be needed to support your spouse or children after you are gone.
  3. Home equity options. This is an increasingly popular method, particularly with the advent of reverse mortgages, but it has the same limitations as personal savings. In addition, most people would prefer to live out their later years in a place other than a full-size home (e.g., in a retirement community).
  4. Private long-term-care insurance. This is my favorite choice for financing long-term care. Insurance is the ideal method to finance unknown risks that can be predicted in the aggregate using actuarial information.

Wednesday, November 26, 2008

Some Factors to Consider when Purchasing a Disability Insurance

Here are some factors to consider when purchasing a disability insurance policy, either through your employer or by yourself.
  • “Own occupation” or “any occupation” What is the definition of disability in your policy? Does it mean being able to work in the occupation in which you were engaged when you became disabled, or in any occupation? For example, if you are a surgeon who injures your
    hand and can no longer work as a surgeon, perhaps you could work as a teacher. The tighter the definition of disability, the higher the monthly premium.
  • Guaranteed renewable and noncancelable. Look specifically for these two clauses in any individual policy, and don’t expect any guarantees past your plan year from an employer-sponsored group policy.
  • Tax-deductible premium or tax-free benefits. In general, if your premium is paid by your employer or yourself (with an FSA, discussed later in the chapter) with pretax dollars, disability benefits are taxed as income when you receive them. If your premium is paid with after-tax dollars, benefits are not taxed when you receive them. The conventional advice in the insurance industry is to pay your premium yourself or with an after-tax payroll deduction so disability benefits are not taxable income when you receive them, as that is when you will need the extra income the most.
  • Elimination period. This is the amount of time you must be disabled before benefits begin, typically 90 to 180 days, which is often covered by a short-term-disability policy. Some states have mandated state short-term-disability coverage, so check before you buy any—residents of California, Hawaii, New Jersey, New York, and Rhode Island are guaranteed their full after-tax salary (up to a reasonable maximum) for 6 weeks if they become disabled, then 50 to 60 percent for 20 more weeks.
  • Supplemental or overlapping coverage. Some policies guarantee you a fixed benefit, say $5,000 a month, reduced by any benefits you received from government entities like Social Security. This is usually a good option to lower your current premium, since it shifts the risk of ever obtaining government benefits onto your private disability carrier. Do not depend on Social Security or any governmentmandated disability benefits when you calculate your disability requirements.
  • Premium waiver, partial disability, and so on. Premium waiver specifies that your premiums will be automatically paid when you are receiving benefits. Partial disability specifies your benefits in case of only partial disability. These and other terms should be reviewed with your benefits administrator or an insurance agent licensed to sell disability

Tuesday, November 25, 2008

8 Things to Look for an Agent of Individual Health Insurance

Here are eight things to look for when picking an agent or agency to represent you or your employees in purchasing an individual/family health insurance policy:
  1. Shopping. If you like to shop online, the agent should have an online web site where you enter your family information to get instant online price quotes on different policies offered by different carriers. This allows you to shop at your leisure until you are ready to make a decision. A good online insurance web site will not ask for your name or contact information until you have seen quotes and are ready to choose a policy.
  2. Appointments. Agents you contact should be appointed to sell health insurance from several or most of the major health insurance carriers in your state—and they or someone at their agency should have a professional relationship with the underwriters at each carrier.
  3. Knowledge. The agent should know and be able to clearly explain all of the information contained in this chapter.
  4. Selecting a carrier. Should you or a family member have or have had a health issue, the agent should know which carriers in your state may have a bias against certain preexisting conditions. Once a carrier is selected, the agent should be able to contact the carrier without mentioning your name and ask the underwriters whether your medical issue raises any red flags.
  5. Access. You should be able to speak to the agent or a licensed associate on the telephone or via e-mail at your convenience, or to visit that individual in person. Your health information is personal and confidential, and you should feel secure when sharing it with
  6. Monitoring. The agent or agency should have a process in place to monitor your application once submitted and, after consulting with you, be able to withdraw your application or amend it before it gets formally rejected, uprated, or approved with an exclusionary rider.
  7. Negotiation. The agent should have a personal style and communication ability that makes you feel comfortable—as he or she will be the one representing you to the underwriter if you have an issue with your application.
  8. Volume. The agent or agency should be a significant producer of policies for the carrier selected. This will enable that person to better negotiate on your behalf during the underwriting process and to help you solve issues with the carrier at a future date.

Monday, November 24, 2008

How Underwriters Verify the Information on Your Application

Underwriters have several tools at their disposal to confirm information provided by prospective applicants.

The Medical Information Bureau

Insurance underwriters often check the information you put on your application against your Medical Information Bureau (MIB) report. Your MIB report is to your medical history what your credit report is to your financial history or what a Dun & Bradstreet rating is to the creditworthiness of your business. MIB, a central database on the health history of tens of millions of Americans, is shared by approximately 600 life and health insurance companies.

When you apply for individually underwritten life or health insurance, or when you participate in a group insurance plan in which an insurance carrier underwrites the health of your group, you typically give the underwriter permission to send your health information to the MIB. MIB keeps information on file for seven years.

MIB is not subject to HIPAA privacy regulations, but MIB is a consumer reporting agency subject to the Fair Credit Reporting Act. As with a credit report, if you are denied insurance based on an MIB report, you are entitled to a free report and the opportunity to have any erroneous information corrected.

Telephone Verification Calls

Most carriers do telephone verifications of the information on your application. After you apply, you should expect to receive a telephone call from the insurance company to verify at least a few questions on your application. A verification call is always recorded and is typically with a juniorlevel employee rather than with a senior underwriter with whom you can discuss your health issues.

Requests for More Information

If you have checked yes to any of the hundred or so checklist questions on specific diseases or treatments, the underwriter may request a specific medical report from one or more of your medical providers. This is usually done without your knowledge since your signature on the application gives the underwriter permission to obtain this information and gives the medical provider permission to share it. It also typically gives the underwriter permission to share such information with the MIB.

About 5 percent of the time, the underwriter is not comfortable with the paper trail of your medical history or wants a professional to examine you for a specific issue and requests an Attending Physicians Statement (APS). In such a case, you are directed to see a local physician for a medical exam, or a doctor who has seen you recently is requested to send his or her medical notes to the carrier.

Sunday, November 23, 2008

What Health Insurance Companies Look For in Your Application

Health insurance companies make their money over the long run by rejecting applicants who are likely to have large medical expenses that will cost more than those people will ever pay in premiums. Conversely, insurance companies want to accept applications from people whose medical expenses are likely to be average or below average. Think about health insurance from the perspective of a carrier—unlike your employer, a health insurance carrier is a privately owned company with whom you have no relationship. When you apply for an individual/family policy you are asking a third party to take an amazing risk on your continued good health.

If a carrier accepts you for, say, a policy costing $300 a month, it will probably receive about $9,000 in premiums from you over the 30-month average life of an individual/family policy—and pay out about $2,500 in claims for a healthy family during this same 30-month period ($1,000 a year). The carrier will also have to pay a commission of typically 6 to 20 percent on the first-year premium if you were represented by a health insurance agent. The gross profit per policy in this case is about $6,100 ($9,000 premium – $2,500 claims – $400 commission = $6,100).

If you or a member of your family develops a problem with your health, you are probably going to keep your policy for a lot longer than 30 months—since you won’t be able to get a job while you are ill or get cheaper health insurance anywhere else while you have a preexisting condition. Your treatment might cost $10,000, $50,000 or even $100,000 for each year you keep the policy until you hit the lifetime maximum of $1 to $5 million. Insurance companies will go bankrupt if they accept too many people with preexisting conditions who are likely to cost the company far more than they pay in premiums.

It is also very important that your application be complete and accurate before it goes to the underwriter for review. In this example, the carrier makes a gross profit of $6,100 if your family stays healthy; conversely, it potentially loses from $1 million to $5 million when it insures someone whose health deteriorates or who has an accident. The carrier has to sell 820 policies to healthy families to cover the cost of one family who hits a lifetime max of $5 million (820 × $6,100 = $5 million). The general rule of thumb when it comes to underwriting health insurance applications is “when in doubt throw it out”—meaning the underwriter will not consider an application with incomplete or confusing information.

Saturday, November 22, 2008

Comparing Different Health Insurance Policies

The most useful comparisons entail first estimating your future healthcare needs and then reviewing the major features of each policy item by item.

Estimating Your Future Healthcare Spending

To compare different health insurance policies, you have to first make assumptions about your future healthcare needs. If you haven’t had a major illness recently, the best way to do this is to look at what you spent on medical care last year. After you have prepared this list, think carefully about the health of each family member and estimate what you might spend next year.

You should be able to come up with your exact out-of-pocket expenses for healthcare last year (including your health insurance premium) and an estimate of next year’s spending (assuming you keep your current health insurance).

Comparing Policy Features

Once you have estimated what you may spend next year, you need to collect the following basic information for each policy you are considering. All of this information should be readily available in any brochure or web site describing an individual/family policy. Once you have the information, make up your own worksheet similar to the one shown here.
TIP: There is no way to financially compute the lifetime max amount you will need, since very few people ever come close to using this much money in healthcare. Ultimately, buying insurance (protection) is more about purchasing peace of mind than about securing a financial return; only you can value the peace of mind you get from having a given lifetime max on your health insurance. In general, if you don’t expect to keep the policy for a long time because you are over age 60 and approaching Medicare eligibility, a lifetime max of at least $1 million should be sufficient.

Friday, November 21, 2008

What to Look for in a Health Insurance Policy

Once you have selected some policies to analyze, look at these six major financial items in each policy:
  1. Doctor Visit Co-pay or Discount. The doctor visit co-pay is the amount that you pay each time you visit the doctor. In a traditional low-deductible plan, this ranges from $10 to $30 per visit per patient. Most higher-deductible plans do not offer any doctor co-pay, but do offer substantial network discounts off the $100 or more standard doctor visit fee. When considering a plan without a doctor visit co-pay, you should phone your physician first to ask how much you will pay per doctor visit (typically 30 to 50 percent off a typical $100 fee per doctor visit).
  2. Prescription Co-pay or Discount. This is the amount you will pay per prescription filled. Most healthcare plans offering pharmacy coverage break their coverage into three tiers: generic, formulary brand, and nonformulary. A typical plan for a 30-day prescription might charge a $10 co-pay for a generic drug, a $20 co-pay for a formulary-brand drug that is on a list (the “formulary”) maintained by the carrier, and a discount from full retail for a drug that is neither generic or on the formulary list. There is no standard pharmacy coverage, so the only way to know what you will pay is to ask your carrier or look up your prescription on its web site.
  3. Annual Deductible. This is the annual amount of your medical expenses that you must pay before your health insurance company begins paying providers or reimbursing you for claims. Traditional healthcare plans have deductibles of up to $1,500 as well as co-pays for doctor visits and prescriptions. Highdeductible plans have deductibles from $1,000 to $10,000—but much lower premiums.
  4. Out-of-Pocket Annual Maximum. Coinsurance is the amount, typically about 20 to 30 percent, that most insurance carriers expect you to pay on your annual medical expenses after you have met your deductible. Fortunately, most coinsurance clauses have an upper limit of about $10,000. Your maximum coinsurance obligation, plus your annual deductible is called your OOP max—referring to the maximum out-of-pocket annual expense you could incur under the policy. Some newer high-deductible plans, including many HSA plans, do not charge you coinsurance; they pay 100 percent of your medical
    expenses once you have met the deductible
  5. Lifetime Maximum Coverage. This is the maximum amount of benefits that could be paid out over the life of the policy. Some states require individual/family policies to have a certain lifetime maximum—California requires all individual/family policies to have a lifetime maximum coverage of at least $5 million per person. You may not think today there is a big difference between a $1 million and a $5 million lifetime maximum, but you might think differently if you needed an organ transplant, which typically requires decades of expensive follow-up treatment.
  6. Premium. This is the monthly amount you will pay for the policy and the options you have chosen. It is often paid quarterly, in advance, or monthly, with required automatic drafts from your checking account.

Thursday, November 20, 2008

The Two Major Components of Health Insurance

Health insurance is different from all other types of insurance. When you buy life insurance, automobile insurance, or homeowner’s property and casualty insurance, you do not expect to have a claim in the near future.

You purchase these types of insurance for financial protection against the occurrence of an unlikely event that you wish to avoid—like a death, an auto theft, or a fire. If such an event occurs, you generally receive money that you are free to spend any way you wish.

In contrast, with health insurance, you expect to have claims in the near future and you almost never receive money when you have one. Instead, your insurance carrier directly pays the medical providers that have taken care of you—typically paying them either a flat monthly fee or a small fraction of what they would charge you directly if you didn’t have health insurance.

This is because what we call “health insurance” in the United States consists of two separate but related components:
  1. Access to a network of physicians, hospitals, and other medical providers who provide services at greatly discounted rates
  2. Financial protection against the medical expenses of an accident or illness.

Here’s the first question you need to ask when choosing a health insurance policy: “How good is the network of doctors included in the plan?” Your policy won’t do you much good if you don’t like the physicians it covers, or if it works only at a hospital many miles from where you live.

Once you have located a few policies that offer access to the medical providers you desire, you need to analyze the financial protection offered by each policy—the monthly premium and how much you will pay out of pocket under different potential scenarios, from a routine physical exam to a catastrophic illness.

Wednesday, November 19, 2008

Why Haven’t I Heard of Individual/Family Health Insurance?

There are many reasons that most people haven’t heard of individual/ family health insurance policies:
  • Simple inertia precludes action. The majority of people living in the United States today have always received free or low-cost employersponsored group health insurance as a job benefit. Most people are unaware that better options exist because they have never had to go looking for them.
  • Families used to be covered by employers. Until recently, most employers providing employee health insurance included free or heavily subsidized coverage for the employee’s spouse and children. Today most private employers charge employees 50 to 100 percent
    of the cost for insuring their spouse and children. Many employees aren’t aware they are paying from half to all of the cost and not just a co-payment.
  • Employers won’t tell you. If you are currently paying your employer for the cost of insuring your healthy spouse or children, your employer doesn’t want you to know about much less expensive individual or family health insurance. The $4,000 or more you pay in annual premiums for your family goes to support other, less healthy group members. Your employer’s group health insurance premium would increase dramatically if healthy people were to leave the group.
  • People think individual or family policies cost more. The average cost of an individual/family health insurance policy used to be higher than the cost of an employer-sponsored policy, but today it is less than half the pro rata cost of a group policy in most states.
  • U.S. income tax laws did not encourage it. Until recently, people wanting to purchase their own individual or family health insurance had to earn almost $2 of pretax income to have $1 left over to pay their health insurance premium. As explained in Chapters 11 and 13, this is no longer the case now that employers are allowed to reimburse employees tax-free for health insurance premiums on individual and family policies. In addition, health insurance premiums only recently became 100 percent tax-deductible for self-employed people.
  • Insurance carriers don’t advertise. Advertising the availability of individual policies attracts mostly applications from unhealthy and/or unemployed people who typically do not qualify for, or cannot afford, individual health insurance. These applications are expensive to process and can cause regulatory problems for the carriers when most of them are rejected. Instead, carriers rely on a select group of agents who are trained to send in applications only from healthy applicants who can afford the premium.

Tuesday, November 18, 2008

Obtaining Individual/Family Health Insurance

Individual and family policies may be purchased directly from an insurance carrier or through an insurance agent licensed to do business in your state and appointed by insurance companies to represent them. A good place to start is an online search engine like or, which provide quotes for thousands of policies from many different carriers.

TIP: Be careful when you shop online for health insurance, and watch the fine print. Most web sites offering “online quotes” request personal contact information and then don’t deliver any online quotes—they sell your information to third parties along with your express permission to phone you. A good online insurance web site will not ask for your name or contact information until you have seen quotes and are ready to choose a policy.
Insurance companies are legally required to charge the same premium whether you purchase your policy directly from the carrier or through a licensed health insurance agent. You should always get quotes from several carriers before choosing a policy, and choose an agent appointed by several of the major carriers in your state, particularly if a member of your family has a health issue.

As we know, employers offering employee health benefits and their insurance companies must blindly accept every applicant regardless of their health—which is why employer-sponsored group policies are so expensive. In contrast, in almost all states, individual/family insurance
carriers may choose the individuals whom they accept after analyzing the health risks of each family member applying for coverage. This process is called underwriting. The underwriter for an insurance company examines the healthcare experience, age, current health, family history, and lifestyle for each member of your family. The underwriter then makes three decisions
regarding your application:
  1. Acceptance. The underwriter may accept your entire family, or accept only certain members of your family, based on their assessment of the health risk of each individual.
  2. Uprating. If the underwriter decides that a member of your family poses a moderate health risk, the underwriter may accept your application with a typical 15 to 200 percent rate increase over the normal monthly premium for a healthy individual in your age group.
  3. Exclusions. The underwriter may accept your application with exclusions for “preexisting conditions” for one or more family members. For example, if you have a child with moderate diabetes, certain carriers will accept your child excluding all claims related to, or resulting from, diabetes. Such preexisting conditions may be excluded for a certain period of time or for as long as you keep renewing the policy.

Monday, November 17, 2008

What Is Individual/Family Health Insurance?

An individual or family health insurance policy is a policy purchased from an insurance company or government entity covering a single individual or selected family members.

The terms individual policy, family policy, individual and family policy, individual/family policy, and individual or family policy all mean the same thing—a policy purchased by a consumer directly from an insurance carrier (similarly to auto insurance) covering an individual or a family. (The terms policy, plan, company, and carrier are also used interchangeably and mean the same thing.)

There are two main differences between employer-sponsored “group policies” and individual or family policies:
  1. Employers and their group-policy insurance carriers are legally required to accept all applicants regardless of their health. In contrast, insurance carriers offering individual
    policies can reject applicants with preexisting medical problems, and therefore can typically offer far lower rates to healthy applicants (except in five states).
  2. The premium paid by employers for their group policies is typically increased every year based on the previous year’s healthcare costs of the employee group. In contrast, the premium you pay for an individual or a family policy cannot be raised each year, nor can the policy be canceled based on your health or your prior year healthcare costs.

When you purchase an individual health insurance policy, you become a member of an insurance “group.” But it’s not the relatively small group limited to the employees of one company—it’s the large group of people in your state who purchased a similar policy from the carrier in a given time frame.

Monthly premiums paid for individual policies typically increase annually with the level of inflation or overall medical costs. The insurance carrier is allowed to ask the state insurance regulator for a rate increase based on the actual prior year’s health costs for everyone in your group.

However, unlike with employer group policies, these groups of individuals are so large that even the catastrophic illness of hundreds of members would not result in a significant increase in your monthly premium. In contrast, in a small company, if one of the employees gets an extremely expensive illness like diabetes or cancer, the following year the carrier could double the cost that employer is paying for health insurance.

Many companies are forced to pass increased costs on to employees or drop health insurance coverage because of catastrophic employee illnesses. Huge, sudden increases in health insurance costs can’t happen with individual/family health insurance because your “group” is so much larger.

Unlike employer-sponsored health insurance, individual and family health insurance is real “insurance” because it “guarantees protection or safety.” As long as you pay the premium, your policy cannot be canceled nor the premiums increased just because you lose your job, change jobs, or have a catastrophic illness in your family.
As with employer-sponsored health insurance, individual or family health insurance also includes access to a network of medical providers who charge 15 to 90 percent less to those in the network than to those outside the network, or to those who have no health insurance.

Sunday, November 16, 2008

Problems When a Dog Goes on a Commercial Flight

Put simply, a lot of things can go wrong when a dog goes on a commercial flight. Most problems occur on the ground, not during a flight. Here are some of the more common problems you should be aware of before you ship a dog.
  • The dog escapes from a cage. This can lead to tragic results, as it did in 1988 for a small dog named Loekie. Loekie, on a TWA flight from Dallas to Los Angeles, got out of his cage during a stopover in St. Louis. The dog was killed by a car on an airport road.
  • The cage gets tipped or crushed during transport. Sturdy travel kennels alleviate this problem to some degree, but mishandling—for example, putting a pet carrier on a regular baggage carousel—can toss an animal around.
  • The plane is delayed on the ground, with the dog in it. During flight, the cargo area in which pets travel is pressurized, and the temperature is controlled. But on the ground, no fresh air gets in, and the temperature can fluctuate dramatically in a short time. If you’ve ever sat in a hot, stuffy plane during the summer, waiting to take off or pull up to a gate, you can imagine how an animal feels in the even hotter baggage compartment.
  • Baggage handlers remove the dog from the plane during a stopover and then forget to load it on again. Animals are shipped in a compartment near the door of the plane where baggage is loaded. Unknown to the owner sitting on the plane, they may be removed during a stopover (so that other baggage can be unloaded more easily) and inadvertently not re-loaded.
  • The dog is shipped to the wrong place. Just like a suitcase, a dog can end up in the wrong place. Because few airports are equipped to handle animals well, a dog flown to the wrong destination can have a bad or even life-threatening experience waiting for another flight or for you to show up and claim it.
  • The dog is left in the heat, cold, or rain. An animal left outside at an airport may be subject to extreme heat or cold. An English bulldog died of apparent heat stroke in 1984 during transport; the dead dog was sent out on a conveyer belt with other baggage, where it was found by the owner.1 Many airlines no longer accept pets during the summer, and federal regulations prohibit shipping animals if they will be exposed to temperatures below 45 degrees or above 85 degrees for more than four hours.
  • The dog is left unattended, without food or water, in a “lost luggage” storage area. Because most airlines don’t have special places for live animals, animals can sometimes end up abandoned with misplaced baggage. Usually, employees care for the dog as best they can. But if a dog is scared and snappish, as it may well be, it may get little care. Employees may not even know a pet is there.

Even if you plan carefully and everything goes as planned, air travel is frightening and stressful for a dog. And you often can’t cope with problems as they come up, because you and your dog are separated during the critical times.

History of Insurance in India (The Insurance Act of 1938)

In 1937, the government of India set up a consultative committee. Sushil C. Sen, a well-known solicitor in Calcutta, was appointed the chair of the committee. He consulted a wide range of interested parties, including leaders within the insurance industry. It was debated in the legislative assembly, and, finally, in 1938, the Insurance Act was passed. This was the first comprehensive piece of legislation in India, covering both life and general insurers.

It covered deposits, supervision of insurers, investments, commissions of agents, and directors appointed by the policyholders, among other topics. This piece of legislation lost significance after life insurance was nationalized in 1956, and general insurance was nationalized in 1972. With the privatization in the late twentieth century, the Insurance Act of 1938 returned as the backbone of current legislation of insurers.

To implement the 1938 Act, an insurance department was established in the Ministry of Commerce by the government of India; later it was transferred to the Ministry of Finance. One curious element of the Act's classification of lines of insurance business was its inclusion of automobile insurance in the "miscellaneous" category. Later in the century, automobiles became the largest single item of general insurance. However, it continued to be included in the miscellaneous category, making it difficult to delineate the effects of losses due to pricing that drove this sector. For example, the Tariff Advisory Committee effectively fixed prices for a number of general insurance lines of business. Most premiums were below what would have been actuarially fair (especially for auto), but reporting auto insurance under the miscellaneous category masked this underpricing.

When the market was opened again to private participation in 1999, the earUer Insurance Act of 1938 was reinstated as the backbone of the current legislation of insurers, as the Insurance Regulatory and Development Authority Act of 1999 was superimposed on the 1938 Insurance Act. This revival of the earlier legislation has created a messy problem in that the Insurance Act of 1938 explicitly forbade insurers to participate in other financial services activities such as banking.

By 1956, there were 154 Indian life insurers. There were 16 non-Indian insurers, and 75 provident societies were issuing life insurance policies. Most of these policies were centered in the big cities of Bombay, Calcutta, Delhi, and Madras.

Saturday, November 15, 2008

History of Insurance in India (Colonial Era)

Life insurance in the modem form was first set up in India through a British company called the Oriental Life Insurance Company in 1818, followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829. All of these companies operated in India but did not insure the lives of Indians. They insured the lives of Europeans living in India.

Some of the companies that started later did provide insurance for Indians, but they were treated as "substandard." Substandard in insurance parlance refers to life insurance for people with physical disability. In this case, the common adjustment made was a "rating-up" of five to seven years to the normal life expectancy of a British person in India. This meant, treating q(x), the (conditional) probability of dying between x and x + 1, for an x-year-old Indian male as if it was q(x + 5) or q(x + 7) of a British male. Therefore, Indians had to pay an ad hoc extra premium of 20 percent or more. This was a common practice of European companies that were
operating in Asia or Latin America.

The first company to sell policies to Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871. The first general insurance company, Triton Insurance Company Ltd., was established in 1850. It was owned and operated by the British. The first indigenous general insurance company was the Indian Mercantile Insurance Company Limited, established in Bombay in 1907. At the time, insurance business was conducted in India without any specific regulation. Insurers were subject to the Indian Companies Act of 1866, but the insurance industry was otherwise unregulated.

After the start of the "Be Indian Buy Indian" movement (called the Swadeshi movement) in 1905, indigenous enterprises sprang up in many industries. Not surprisingly, the movement also touched the insurance industry, leading to the formation of dozens of life insurers along with provident ftind companies (pension ftinds).

In 1912, two sets of legislation were passed: the Indian Life Assurance Companies Act and the Provident Insurance Societies Act. There are several striking features of these legislations. First, they were the first legislations in India that particularly targeted the insurance sector. Second, they did not apply to general insurance, because the government did not feel the necessity to regulate general insurance. Third, they restricted activities of Indian insurers but not foreign insurers, even though the legislation was modeled after the British Act of 1909.

Comprehensive insurance legislation covering both life and non-life business did not materialize for the next 26 years. During the first phase of these years, Great Britain entered World War I—an event that disrupted all legislative initiatives. Later, Indians demanded freedom from the British. As a concession, India was granted "home rule" through the Government of India Act of 1935, which provided for legislative assemblies for provincial governments as well as for the central government. But supreme authority of promulgated laws remained with the British

The only significant legislative change before the Insurance Act of 1938 was Act XX of 1928. It enabled the government of India to collect information about (1) Indian insurers operating in India, (2) foreign insurers operating in India, and (3) Indian insurers operating in foreign countries. The last two elements were missing from the 1912 Insurance Act. Information thus collected allows us to compare the average face value of Indian insurers to their foreign counterparts. In 1928, the average policy value of an Indian company was U.S. $619 compared to $1,150 for foreign companies (Indian Insurance Commissioner's Report, 1929, p. 23).

Foreign insurers were doing well during that period. In 1938, the average size of the policy sold by Indian companies had fallen to U.S. $532 (compared to $619 in 1928), and that of foreign companies had risen somewhat to $1,188 (in 1928, the average size was $1,150).

Saturday, November 8, 2008

Health Insurance for Dogs

Health insurance for dogs and cats was virtually unheard of a few years ago, but it’s looking better and better to pet owners who have paid big veterinary bills. The average dog owner spends almost $800 a year on veterinary care, according to the American Pet Products Manufacturers Association. Surgery or other procedures can cost thousands. Veterinary
Pet Insurance, the largest provider of pet policies, reports that it has more than 400,000 policies now in effect.

One reason for getting insurance is that it reduces the chances that you’ll have to put a dollar value on the life of your pet. That unhappy task can arise if you are forced to choose between paying for the sophisticated and extremely expensive procedures now available (laser treatment, CAT scans, chemotherapy) or destroying a dog that might be saved.

The amount of the premium depends on the coverage you choose, where you live, and the dog’s age. You’ll spend from $2,000 to $6,000 on insurance over a dog’s lifetime, on average. Certain costs are generally not covered: congenital or hereditary defects, elective procedures, vaccination, food, grooming, behavioral problems, parasites, orthodontics, routine teeth cleaning, and conditions present before the policy effective date. Before you sign up, read the actual policy carefully and be sure you understand all the fine print.

You may also want to check out the veterinary equivalent of a health maintenance organization. For a monthly fee, your pet’s veterinary needs will be taken care of.

Friday, November 7, 2008

Why Singles Need Term Life Insurance?

Should singles consider getting term life insurance quotes? Contrary to what many believe, it makes sense for all adults, regardless of marital status, to have life insurance.

And since life insurance premiums increase with age, getting a term life insurance quote while you're young, single and healthy makes good financial sense. If you're single and think you don't need life insurance, consider the following reasons why it might make sense for you.

Do you have dependents?

Being single does not necessarily mean you have no dependents. You may have children from a previous marriage or you might have parents or grandparents who depend on you for financial support. In either case, these people will be impacted should you die prematurely. They'll lose you as well as a source of income.

A life insurance policy naming your children, parents and/or your grandparents as beneficiaries will ensure you're able to help out financially even after you're gone. Get a term life insurance quote and you'll see that the price you'll pay is worth the peace of mind you'll get in return.

Do you have loan obligations?

Life insurance is something you should definitely consider if you have a loan that is in your name and that of a cosigner. A cosigner doesn't have to be a spouse. It can be a friend, relative, co-worker, even a roommate. If you die unexpectedly and your name is listed on a loan, your cosigner becomes 100% responsible for repaying that loan.

You might want to consider getting a term life insurance quote for at least the amount that will cover your loan obligation and make the cosigner your beneficiary. Even if a loan is in your name solely, creditors can go after your assets later on in an attempt to settle your loan obligation.

Do certain medical conditions run in your family?

Here's something that often comes as a surprise to many single people. Your family history may make it difficult for you to obtain a reasonable term life insurance quote later on when you really do need life insurance. Certain medical conditions are genetic and even if you do not have any symptoms now, they may appear years from now.

While you're young and your health is good is the time to take advantage of the relative ease you'll have in obtaining life insurance. If you wait until symptoms develop, you may find you're uninsurable. When you're getting your term life insurance quote, ask about a guaranteed insurability rider. This rider will enable you to purchase additional life insurance without having to prove you are insurable.

Do you want a proper burial?

There is one more good reason why single people should get a term life insurance quote. If you died suddenly, someone would be responsible for the expenses involved in your funeral and burial. A nominal life insurance policy could relieve others of this type of financial burden.

Thursday, November 6, 2008

Hints to Assist You Get Life Insurance Quote Online

Like most other industries, life insurance companies have created a major presence online. You can now do most of the "ground work" online when you are looking for life insurance quotes.

The first thing you need to do is to decide what type of life insurance you are looking for. Then you need to seek no-obligation quotes from several companies that offer what you are looking for. The premiums will often vary significantly from one company to another, so little research can end up saving you a lot of money,

Here are a few helpful hints to assist you with your online research:

- Make sure that you get the right information about various life insurance categories. For example, whether it is temporary or permanent, either short term or long term, and is clear about it. Do they have comparable features and rates which will help you determine the right life insurance that is compatible with your needs.

- Are they helpful in guiding you towards finding what you need? This is when you need to assesss their customer ervice standards. Are they industry accredited? How long have they been in business?

- They should provide "plain language" explanations of their products to assist your decision, and not hide the details in a long and confusing document full of fine print.

- All reputable companies have permanently available internet information services, toll free numbers to call, and preferably sign up services available online as well. The best ones even have goog old fashion humans to speak to when you call!

- They should ensure that all the information you have given are safely protected. Using it only for providing your quote and should never be shared to a third party.

Life insurance can be a confusing subject for most people, so here are a few tips to help ensure that you end up with the policy that fits in with you particular circumstances.

- You should have a thorough review of your life insurance policy regularly, especially if you have sudden changes in ersonal conditions, health and your financial matters.

- Joint policies can be tricky, and need special attention. What happens in the event of a claim? Is the joint policy holder left uninsured, and liable to steep premium increases? Often it's better to keep policies seperate in order to avoid these possibilities.

- Check into the usefulness of a critical illness policy as well. It is usually much cheaper to combine critical illness with your life policy, than adding it on later. Illness can often be more financially debilitating than a death.

- Be aware of the tax relief incentives, but don't let the tax benefits blind you to the reason for actually having a life policy. First and foremost the policy is to protect your family in a time of need, and any tax benefits should be treated purely as a secondary bonus.

- Always ensure that you policy is worded so that the benefits go directly to the beneficiaries and not to your estate. The tax benefits are significant, no to mention avoiding the delays that could occur. Your insurance company should either write this into the policy or have the necessary documentation for you to do so.

- It is highly recommended that you talk to an independent adviser, to ensure you get the peace of mind from knowing that you are purchasing the right policy at the right price to adequately protection for your family.

These are some of the things you should know if you are applying for insurance online. Always remember that not all insurance companies online are legitimate, and to be very wary of any offer that looks too good to be true. Some simple research will soon tell you whether you are dealing with a reputable company or not. If you are still in doubt, take your business elsewhere.

Cheap Life Insurance for Children

Cheap life insurance is practically guaranteed if the insured is a child. Yes, as terrible as it may sound, even a child can get a policy in his or her name. Many people are taken aback by the thought of purchasing life insurance for their children or their grandchildren.

After all, life insurance benefits are not paid out until a person dies, and no one likes to consider the very real truth that children can die too. Death is not something that is reserved for the elderly. Life insurance for a child is cheap, and if you are purchasing it for yourself, you should expect that your insurance agent will at least mention this opportunity.

No one likes to think about it

Unfortunately, children are not immune to death. It can happen to any child, at any time. It can happen in an automobile accident or while walking to the bus. It can happen tragically, at the hands of another. It can happen as a result of a previously undetected condition such as leukemia.

While your life insurance agent won't dwell on the ways your child might die, the agent will certainly remind you that such an occurrence will result in unexpected funeral and burial expenses. Your agent will continue by reminding you that these costs will be considerable, and possibly even more so because the occasion is for a child.

Expect the agent to proceed with extreme caution because parents just don't like to think about the possibility that their children might die before they reach adulthood. The agent will subtly mention how cheap life insurance is for a child and how this insurance can be easily bundled in with your other policies.

Your agent may offer other reasons why you should consider purchasing cheap life insurance for your children. One high-pressure method is to suggest that purchasing a policy right now is an opportunity that may not happen again or that won't be available again for a number of years. This sometimes pressures parents into purchasing before the agent walks out their door. Don't allow this to happen because it's just not true.

Here's something to consider

There is one good reason why it makes sense to purchase cheap life insurance for your child now. Doing so can protect your child in the event he or she develops an illness later on in life which an insurance company might consider uninsurable or that may be insurable but will be so at a high price.

While such a situation is impossible to predict, purchasing cheap life insurance for your child now guarantees that your child will have the protection that life insurance offers. When your child reaches adulthood, he or she should be able to renew a policy at the rates given originally.

If you decide it makes sense to purchase cheap life insurance for your child, be sure you understand the rights the insurance company guarantees your child when he or she turns 18 years of age.

Wednesday, November 5, 2008

How To Select The Right Type Of Life Insurance

Life insurance is a means for providing financial protection for your family in the event of your death. A life insurance contract is relatively straightforward; you agree to pay a premium at regular intervals, and the insurance company agrees to pay a certain sum of money to your beneficiary upon your death.

There are three parties to a life insurance contract. First, there is the insured. This is the person whose life is being insured under the policy. Next, there is the insurer. The insurer is the insurance company who underwrites the risk. And third, there is the owner. The owner and insured are not necessarily one and the same. Someone can buy a life insurance policy to insure the life of someone else, such as their spouse.

The person who buys the policy is the owner, and the person whose life the policy is based on is the insured. When the owner and the insured are different people, premium payments are the responsibility of the owner.

Every life insurance contract also has a beneficiary. This is the person who receives the proceeds from the policy in the event of the death of the insured, and is assigned by the owner. There are two types. An irrevocable beneficiary can not be changed unless the beneficiary gives his or her permission; if it is revocable, the owner can change it at any time.

The policy is subject to certain terms and conditions. There are usually certain exclusions that apply, depending on the person being insured. But with almost every policy, death as the result of suicide during the first two years of the policy term is excluded from coverage.

Also, during the first two years of the policy, often referred to as the contestable period, the insurance company retains the right to not immediately pay out, even if the death is caused by a condition that is covered in the policy. The company can order an investigation into the death of the insured, to make sure that the death was not deliberate or the result of homicide.

The amount paid to the beneficiary is called the face amount. The maturity date is reached upon either the date when the insured deceases or reaches a certain age. Life insurance is most often used to provide income protection to the spouse of the deceased.

Regardless of the reason for buying the insurance, the owner (if not the same person as the insured), must have an insurable interest. In other words, the owner of the contract must have a reason for wanting to insure the life of that person, otherwise the contract is void.

When the person covered by the policy dies, the insurance company requires proof of death before paying the claim. A notarized death certificate is the most commonly accepted form of proof. The benefit is paid out either as a lump sum or as an annuity that is paid out over time.

Any annuity can be a good way to receive the benefits. It is possible for the beneficiary to set up a lifetime annuity, which would guarantee that person a certain amount of monthly income for the rest of his or her life.

There are two basic types of life insurance, temporary and permanent. Temporary insurance is known as term life. An example of a term policy would be a 20-year term life, which means that the policy will pay a death benefit if the person dies within the next twenty years.

Permanent insurance includes whole life and universal life. Whole life provides for a payout no matter when the person dies, but premiums have to continue to be paid, usually right up until the insured reaches the age of 100. Universal policies are somewhat similar, but they allow for greater premium flexibility. Universal insurance is somewhat complicated; you should talk to an agent before buying it.

How to Choosing The Best Life Insurance Company

As you age, you may start thinking about your financial future and about life insurance and the life insurance company you will need. This type of insurance will protect your family from having to pay expenses including funeral and burial costs, outstanding bills you may have, and medical bills that may have accrued if you are sick and had to stay in the hospital.

These costs can be high depending on your financial situation and could be a huge burden on your family. Finding the best life insurance company so you can buy a policy that will put your mind at ease and will allow you to live the rest of your life without having to worry about the future.

Life insurance policies come in many different forms and are available from different companies. You will be able to find out more information about a life insurance company by researching them online and by calling a representative from the company. You should ask important questions about premiums, coverage, and how to qualify for a policy. Depending on your age, you may have to pass a medical exam in order to take out a policy. The amount of your premium will also depend on the amount of coverage you will need. Some policies will only pay for medical bills and funeral expenses, while other bills will pay for much more.

When looking for a policy, you should also ask how long the policy will be in effect. After a certain age, the policy will no longer cover as much as it once did. If your employer offers life insurance, you should take it. This will cost less each month and you may be able to take the policy with you when you retire. The benefits may not be as extensive as if you went through a private insurer, but you will be able to help your family pay for certain costs in the event of your death. If you travel often for business, then you should consider getting the best life insurance.

Applying for a policy will not take too much of your time and the policy will go into affect after you sign the paperwork. As long as you maintain the policy by making monthly payments, you will be covered in case of an accident or illness. While no one wants to think about their own death, it is important to consider the lives of others you will leave behind.

If you have children or if you have other relatives that will be responsible for your bills after your death, you should be able to pay for most of it through a life insurance policy. The best life insurance company you choose will be able to explain pay outs and other information when you sign the paperwork.

Tuesday, November 4, 2008

How to Reduce Your Car Insurance Premium?

1. Shop, shop and shop again – the main thing people forget to do is to shop around. The one thing to do if you do nothing else is to call a few insurance companies and get a few car insurance quotes. Surprisingly to some, the quotes can change by hundreds of pounds.

2. Take out more than one insurance policy – a lot of insurance companies now provide insurances for a variety of covers. Not only car insurance, but home insurance, contents insurance, life insurance, pet insurance – every type of insurance you can think of can generally be bought in the same place. Whilst it may not seem the cheapest quote around for each individual quote, buying them together can provide you with a significant discount.

3. Increase your excess – for younger drivers, this is often their first port of call when reducing their insurance premium. It’s often difficult enough to actually get car insurance when you’ve just passed your test, never mind getting a reduced premium. So the answer? Increase your own personal excess. All insurance companies ask for a set excess. However, most will also ask if you would like to contribute a voluntary excess also. This voluntary excess being what you would pay in the event of an accident on top of the standard excess. Of course, it works out more expensive should you have an accident, but if you don’t claim on your insurance, then you could save yourself a packet.

4. Don’t get into trouble – criminal convictions, whether they are vehicle related or not, will increase your car insurance premiums. And the bad news is they stay on your record for five years. So for example, you hit a bad patch when you were 18 and committed burglary, stealing a television from your next door neighbours. They pressed charges and you did a few hours community service. It hit you and you never did anything criminal again. However, you’re still going to be feeling the repercussions on your car insurance when you’re well into your 20’s.

5. Be a safe driver – the most sensible but most overlooked thing to do is simply be a safe driver. Driving within the speed limits, with a full MOT and tax will ensure you don’t attract any unwanted attention and receive a fine and points on your license. The more points you receive on your license – and remember, you can receive 3 points and a £60 fine even if you’re driving at 34mph in a 30mph zone – the higher your insurance premiums will be. And don’t forget, 12 points on your license and you need to take your theory and practical tests again (this is reduced to 6 points in your first 2 years of driving).

There are several different measures you can take to reduce your car insurance premiums. The above are the top five, but there are many more to choose from – just remember, be a safe driver and think before you buy and you should be on the right road to lower car insurance premiums.

Life Insurance vs Life Assurance

Anyone reading about insurance can be forgiven for thinking that the terms ‘life insurance’ and ‘life assurance’ are interchangeable, but are there any differences between the two terms and if not, why are there two different words for the same thing?

Put simply “insurance” is provided against an event that might happen whereas “assurance” applies to an event that will happen. So, insurance is a policy taken out against a risk, whereas assurance is one that is taken out against a definite event. The confusion about the seemingly interchangeable use of the two phrases occurs mainly because companies in North America refer to both assurance and insurance simply as insurance, and that habit has crossed the Atlantic.

For example, Whole of Life ‘assurance’ policies are taken out by people based on the fact that death is certain. They pay premiums to maintain the policy safe in the knowledge that their estate or dependents will receive an assured sum upon their death, whenever this happens. As it is certain (or assured) that the policy will have to pay out at some point, because it provides cover for the whole of someone’s life, it is known as life assurance. However, a life ‘insurance’ policy will only pay out providing all premiums have been maintained and that death occurs within a specified number of years, known as the policy term. As it is quite possible that the insured will not die during the policy term, this is known as life insurance

Another example of ‘insurance’ as opposed to ‘assurance’ is critical illness cover. Because the insured is obtaining cover against the possibility of contracting and being diagnosed with a critical illness, it is classed as ‘insurance’. Hopefully, when taking out such insurance it will not be required, but should such a situation arise then the insured will be paid a lump sum to help them provide for themselves and their family throughout their illness. Of course it is quite possible that the insured will not suffer a critical illness, and therefore this is known as insurance – something that might happen, as opposed to something that will.

There are many types of life insurance and life assurance policies available in the UK, and depending upon the term required and the age of the insured person some will be better to take out than others. Not everyone is in the same position nor requires the same type of cover and because life insurance and life assurance can be quite complicated anyone thinking of taking out a policy should consider seeking professional advice.

Monday, November 3, 2008

Term Life Insurance Quote Online

Life insurance is important because it saves your family from total loss when your time to live is up. This is true if your family is totally depending on your income. This is even truer if your children are still young. You never know when life will take its toll. With life insurance, at least you have reserved a fund that will sustain your dependents when you are not able to do so anymore. Besides, while you are still earning, it is best to set aside some amount for cases that are certain to come even though the time is not that certain. That’s when you need to get term life insurance.

Comparing Term Life and Whole Life Insurance

Term life insurance is so far the most popular and the cheapest life insurance in the market. It only has life coverage, contrary to the whole life insurance which has cash value. In Whole life insurance, you pay for the life insurance coverage plus a saving feature where your premium accumulates to a certain level which you can use in the future for whatever purpose. Term life insurance on the other hand, is about life insurance coverage only. You are protected within a certain term. When you do not die after the term ends, you gain nothing. However, if you do die within the term and the life insurance is in force, your beneficiaries will receive the face amount or the value of the life insurance. Term life insurance is generally cheap because it does not have a saving feature unlike that of whole life insurance.

Searching for Cheap Term Life Insurance

Some people find it more practical to buy term life insurance because it only requires paying the premium for a specific term. It is also a lot cheaper than whole life insurance. However, it is even cheaper if you get life quotes from where you can compare different term life insurance prices in your area. Anyway, it is not hard to get term life insurance quote because you can simply get it from online quotes company such as Best Insurance Quote Services.

With life quotes, you can choose among life insurance providers which of them offer cheap term life insurance. The term life insurance quote will give you idea how much to pay in premiums. Likewise, it will give you picture of how long you will be paying such premium and how long you should keep the insurance in force.

How to Get Life Quotes

Obtaining life quotes are easy. You just have to fill up the online form from Best Insurance Quotes Services. The form will be the guide of the online company to determine what term life insurance quote is best suited for you. This is important because the term life insurance quote is determined by your age and health. Once you have filled in relevant data, you will be lead to a buyer’s guide so that you would understand what you will be looking into when the life quotes are made available online. The guide will serve as information for you because this is good as No Visit Life Quotes. Meaning, there is no appointment or agent intervening for more details. It will be up to you to learn all about the term life insurance quote that you get online.

What are Some of the Advantages of Whole Life Insurance?

Although there is a big push towards buying Term Life recebtly, Whole Life insurance does still have a few advantages that you should consider before you jump on the "Term bandwagon". What are some of the advantages of whole life insurance, you ask? Let's take a quick look at a few of these.
  1. Whole Life insurance is "permanent" insurance coverage that is designed to provide protectionfor you for as long as you live, up until the age of 100. This is unlike most Term Life policies which are only designed to provide coverage for a specific period of time, such as a "10 Year Term" or "20 Year Term" policy.
  2. It provides a cash value that you can borrow against later in life. Many states require that the cash value exists within a short period of time, such as three years from the time you purchase the policy.
  3. There are many critics of Whole Life insurance because you are paying more than you would for Term Life and part of the premiums are being placed into a savings account. However, if you look at the two good reasons above you may change your opinion. Think about this for a moment. Do you already have a savings account? If so, are you putting money into it on a regular basis? Do you consider your savings account to be an asset that you can use anytime in the near future if needed?
These are all things that you should consider before turning your back on a Whole Life insurance policy. Many Americans find it almost impossible to save and when they do, they usually end up dipping into it before it can accumulate into anything substantial. This is one of the big advantages of Whole Life insurance. You pay into it just like any other bill and later in life you'll actually have something to show for it.

Summary - These are just a few of the advantages of Whole Life insurance. For many people they're not adavantages at all because they have no trouble saving money and would rather buy Term Life instead and invest their money elsewhere. However, for those peopleple that want something more permanent and would like something that they know they can rely on in their future, the advantages of Whole Life insurance cannot be ignored.

Sunday, November 2, 2008

What is Universal Life Insurance?

Another common form of life insurance is universal life. With this kind of policy:
  • You may pay premiums at any time, of virtually any amount, subject to minimums.
  • The amount of cash value the policy builds is based both on the premiums paid and on the interest earned.
  • The insurance company subtracts money from the fund each month to cover the cost of the insurance and expenses.
  • They offer standard rates that can be substantially cheaper—as much as 30 percent or more—than standard rates charged by insurance companies for comparable term coverage.
Some universal life policies feature progressive underwriting (which means it’s easier to get coverage). These policies usually are structured so that if you pay the minimum annual premiums, coverage won’t lapse for 15 or 20 years.

Another form of this insurance is variable universal life. It provides death benefits and cash values that vary according to the investment returns of stock and bond funds managed by the life insurance company. The premiums that you have to pay can also change a lot.

Target premiums are fixed in the first year—but policyholders, because of the flexible nature of the products, are not contractually entitled to those fixed payments afterward. The cost of variable universal life is too uncertain for some people because of the open-ended method of premium payment.

Question You Should Ask About Your Child Life Insurance

Getting child life insurance quotes on the net can be convenient, but are you sure that you are seeing the big picture?

Is child life insurance really worth the premiums? Many question the importance of child life insurance. After all, if anyone needs to get insured, shouldn't it be the working parents? While this is indeed a valid argument, there are advantages to getting child life insurance.

It's not so much the benefits as it is about future eligibility. Child life insurance is especially important if your family has a history of medical illness. You see, if you get child life insurance, your child can automatically get any type of life insurance later on.

Most types of child life insurance are actually term life insurance. Child life insurance often does not build cash value and has small premiums. In order to be competitive, some life insurance agencies are providing child life insurance some features similar to whole life insurance. However, child life insurance ends when your child matures, so the cash value benefits are very minimal.

As a general rule, parents should first get themselves insurance, before their children. Because the main purpose of child life insurance is future eligibility, parents will do well to just get the cheapest child life insurance package.

Beyond everything else, they must make sure that the child life insurance will allow their children to have immediate access to life insurance later on.

Saturday, November 1, 2008

What is Whole Life Insurance?

A whole life policy, sometimes called straight life or permanent life, is protection that can be kept as long as you live. It enables you to pay the same premium over the years—averaging the cost of the policy over your lifetime. Some characteristics of a whole life policy include the following:
  • Whole life insurance builds a cash value—a sum that grows over the years, tax-deferred.
  • If you cancel the policy, you receive a lump sum equal to this amount (and you pay taxes on it if the cash value plus any dividends exceeds the sum of the premiums you paid).
  • If you need to stop paying premiums due to a temporary financial crisis, you can use the cash value in the policy to pay those premiums for a period of time.
  • You also can withdraw part of the cash value in the form of a policy loan. (If you die before repaying it, the loan and any interest due is repaid from the death benefit amount.)
  • The face amount in a whole life policy is constant, and this amount is paid if you die at any time while the policy is in effect.
  • The policy is designed to mature when you reach 100. If you live to be 100, you won’t have to pay any more premiums, and the policy’s cash value will be equal to the face amount. So, the insurance company usually will pay you the face amount—even though you’re still alive.
Most people do not plan on paying premiums until age 100. More commonly, whole life insurance is used as a form of level protection during the income-producing years. At retirement, many people then start to use the accumulated cash value to supplement their retirement income.

Whole life plays an important role in financial planning for many families. In addition to the death benefit or eventual return of cash value, a whole life policy has some other significant features. For example, it may pay dividends. Whether or not it does is the primary difference between:
  • a participating (par) policy, issued by a mutual life insurance company, is one in which the policyholders receive dividends (if a dividend is declared); and
  • a nonparticipating (non-par) policy, issued by a stock life insurance company.
Many people use the dividends in a participating policy to buy additional amounts of insurance, instead of taking the cash. This is really no different than taking a few extra dollars out of your pocket and making a separate purchase. Still, dividends are often a successful sales tool because some people like the idea of getting something extra back—even though they’ve paid more initially.

Another significant feature of the whole life policy is that it guarantees the interest rate on any loans you take out against the cash value of the policy. (You also can get a bank loan using the cash value of the policy as collateral, but the guaranteed interest rate in the policy may be much lower than that available from a bank.)

Why We Need Life Insurance?

Life insurance plays an important role in securing the finances of many families. In the purest sense, life insurance is something that protects against the risk of you dying too soon. It pays a death benefit to someone when you die. Your premature death would expose your family or business to certain financial risks, such as:
  • burial expenses;
  • paying off debts;
  • loss of family income;
  • loss of business profits;
  • paying estate taxes; and
  • a lack of or a limited college fund for your children.
If you don’t have dependents, you probably don’t need life insurance. But if you have a spouse, children or elderly parents who rely on your income, you’ll want life insurance to pay expenses for them in the event of your premature death. You also may even want to consider insuring the life of your spouse if he or she is not earning money—particularly if he or she cares for your children. (If your spouse were to die unexpectedly, not only would you have funeral expenses, but you’d have to start paying for child care).

Life insurance guarantees a specific sum of money will be available at exactly the time it is needed. Savings accounts, mutual funds, stocks, bonds and other investments do not offer such protection—and, in fact, they can be tied up in probate at the time of your death. Life insurance, however, will be available immediately—and it creates, in essence, an estate that did not previously exist.

With life insurance, you get what you pay for. You pay the policy’s face amount—the amount the life insurance company will pay when you die.

Since this amount is payable upon the death of the insured, the element of risk to the insurance company is much different than it is for an automobile or homeowners policy.

When an insurance company issues an auto policy, for example, it hopes you will be a safe driver, never have an accident and never file a claim. When an insurance company issues a life policy, it knows it will be called upon to pay a claim someday—because everyone dies. The only unknown is whether the claim will be made in one year or in 50.

This is why, not surprisingly, life insurance costs vary based on your age, health and the amount of insurance you buy.

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