With premiums that can top $20,000 a year, patients don't exactly clamor to join the state's high-risk health-insurance pool — a public insurer of last resort for patients with cancer, AIDS and other serious diseases.
Yet since the high-risk pool was created two decades ago, the first-ever mandatory check to verify that current members are eligible for the highly subsidized coverage has ended with dozens of them getting purged — including some who may simply have been too ill or too distracted to turn in their paperwork.
Since Jan. 1, a third of the 82 members of the Washington State Health Insurance Pool whose coverage was terminated have been reinstated after they belatedly provided proof of eligibility.
Until 2008, the health plan mailed annual eligibility forms but did not take action against people who did not comply. Now its administrators find themselves in an unaccustomed position of stripping coverage from some of Washington's sickest residents. Some whose coverage was canceled may not realize it until they show up at a pharmacy or a doctor's office, said Kären Larson, executive director of the high-risk pool.
It's possible, though unlikely, Larson said, that patients may be unable to fill their prescriptions or receive treatment until their information is sorted out.
Jeanne Sather, a Seattle writer and blogger who has advanced breast cancer, said she lost — then regained — her coverage because of a paperwork snafu. Sather said she twice had to send proof of her Medicare coverage but still ended up receiving a cancellation notice.
A seasoned patient's advocate, Sather fired off e-mails to both the high-risk pool and the state Insurance Commissioner's Office. She quickly got her coverage restored — but not before she worked up a fury.
"You have to remember that people like me are sick," Sather wrote in one e-mail. "So making trips to Kinko's to make copies uses up precious energy and time. I deeply resent being asked to do something like this."
By law, the high-risk pool is open only to residents of the state. It also must ensure that members who have dual coverage with Medicare tap those federal benefits first. Last year, a state audit recommended that the pool obtain proof of eligibility from all its 3,300 members.
Larson said cutting off coverage for people who may be gravely ill wasn't done lightly. The health plan until now had been more lax about confirming eligibility, she said, because it wanted to avoid needless cancellations.
"All health plans have trouble staying in touch with their members," Larson said. "People move. They get new phones and they don't tell you."
Larson said the latest termination notices came only after repeated attempts to contact members proved fruitless.
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"We bent over backward to make sure" policies weren't improperly canceled, she said. But if members didn't respond to four letters and a telephone call, "we didn't really have any choice but to terminate them."
Larson said members who submit proof of eligibility by Jan. 31 can have their coverage reinstated with no interruption in coverage. After that, members must go through a formal appeals process to be reinstated.
The high-risk pool provides coverage for people who can't buy individual insurance from Regence BlueShield, Premera Blue Cross, Group Health Cooperative and other commercial insurers. Washington permits insurers to screen out the sickest 8 percent of the applicants. In return, the insurers pay a subsidy — totaling nearly $40 million last year — to help offset the cost of operating a separate pool.
Premiums for the high-risk coverage start at $151 a month and can be as much as $1,917 a month, depending on a member's age, disability status and coverage type.
But as pricey as they might be, the premiums cover only about 30 percent of the patients' medical and prescription expenses. The cost of subsidies from commercial insurers is borne indirectly by everyone in Washington who buys an individual or group policy from them, said Pete Cutler, special assistant to the insurance commissioner.
Cutler, who sits on the high-risk pool's board, said he was surprised to hear about the volume of cancellations.
Still, he defended the verification attempts, saying that the state needs to ensure that it's "not providing subsidized coverage for those who are ineligible for it."
Tuesday, January 27, 2009
Nine Ways To Lower Your Auto Insurance Cost
Article Entitled: Nine Ways To Lower Your Auto Insurance Cost
NINE WAYS TO LOWER YOUR AUTO INSURANCE COSTS
You may not realize it, but the insurance rates you pay for your car can vary dramatically depending on the insurance company, agent or broker you choose, the coverage you request and the kind of car you drive. Listed below are a number of things you can do right now to lower your insurance costs.
1. COMPARISON SHOP.
Prices for the same coverage can vary by hundreds of dollars, so it pays to shop around. Ask your friends, check the yellow pages or call your state insurance department (phone numbers are on back page). You can also check consumer guides, insurance agents or companies. This will give you an idea of price ranges and tell you which companies or agents have the lowest prices. But don’t shop price alone.
The insurer you select should offer both fair prices and excellent service. Quality personal service may cost a bit more, but provides added conveniences, so talk to a number of insurers to get a feeling for the quality of their service. Ask them what they would do to lower your costs. Check the financial ratings of the companies too. Then, when you’ve narrowed the field to three insurers, get price quotes.
2. ASK FOR HIGHER DEDUCTIBLES.
Deductibles represent the amount of money you pay before you make a claim. By requesting higher deductibles on collision and comprehensive (fire and theft) coverage, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision cost by 15% to 30%.
3. DROP COLLISION AND/OR COMPREHENSIVE COVERAGES ON OLDER CARS.
It may not be cost-effective to have collision or comprehensive coverage on cars worth less than $1000 because any claim you make would not substantially exceed annual cost and deductible amounts. Auto dealers and banks can tell you the worth of cars.
4. ELIMINATE DUPLICATE MEDICAL COVERAGES.
If you have adequate health insurance, you may be paying for duplicate medical coverage in your auto policy. In some states, eliminating this coverage could lower your personal injury protection (PIP) cost by up to 40%.
5. BUY A 'LOW PROFILE' CAR.
Before you buy a new or used car, check into insurance costs. Cars that are expensive to repair, or that are favorite targets for thieves, have much higher insurance costs. Write to the Insurance Institute for Highway Safety, 1005 North Glebe Road, Arlington, VA 22201 and ask for the Highway Loss Data Chart.
6. CONSIDER AREA INSURANCE COST IF YOU ARE MAKING A MOVE.
Costs tend to be lowest in rural communities and highest in center cities where there is more traffic congestion.
7. TAKE ADVANTAGE Of LOW MILEAGE DISCOUNTS.
Some companies offer discounts to motorists who drive fewer than a predetermined number of miles a year.
8. FIND OUT ABOUT AUTOMATIC SEAT BELT OR AIR BAG DISCOUNTS.
You may be able to take advantage of discounts on some coverage if you have automatic seat belts and/or air bags.
9. INQUIRE ABOUT OTHER DISCOUNTS.
Some insurers offer discounts for more than one car, no accidents in three years, drivers over 50 years of age, driver training courses, anti-theft devices, anti-lock brakes and good grades for students. See the following page for a guide to these and other discounts.
INQUIRE ABOUT DISCOUNTS FOR:
COMPANY A COMPANY B COMPANY C
$500 deductible _______ _______ _______
$1,000 deductible _______ _______ _______
More than 1 car _______ _______ _______
No Accidents in 3 Years _______ _______ _______
No Moving Violations in 3 Years _______ _______ _______
Drivers Over 50 Years of Age _______ _______ _______
Driver Training Course _______ _______ _______
Anti-Theft Device _______ _______ _______
Low Annual Mileage _______ _______ _______
Automatic Seat Belt _______ _______ _______
Air Bag _______ _______ _______
Anti-Lock Brakes _______ _______ _______
Good Grades for Students _______ _______ _______
Auto and Homeowners Coverage with the Same Company _______ _______ _______
College Students Away From Home Without a Car _______ _______ _______
OTHER DISCOUNTS:
_______________ _______ _______ _______ _______________ _______ _______ _______ _______________ _______ _______ _______ _______________ _______ _______ _______
YOU CAN REACH YOUR STATE INSURANCE DEPARTMENT AT:
AL: 205-269-3550 AK: 907-465-2515 AS: 684-633-4116 AZ: 602-255-5400 AR: 501-686-2900 CA: 800-927-4357 CO: 303-894-7499 CT: 203-297-3800 DE: 800-282-8611 DC: 202-727-8002 FL: 800-342-2762 GA: 404-656-2056 GU: 671-477-5144 HI: 800-468-4644 ID: 208-334-2250 IL: 217-782-4515 IN: 800-622-4461 IA: 515-281-5705 KS: 800-432-2484 KY: 502-564-3630 LA: 504-342-5900 ME: 207-582-8707 MD: 800-492-6116 MA: 617-727-3357 MI: 517-373-9273 MN: 800-652-9747 MS: 601-359-3569 MO: 314-751-2640 MT: 800-332-6148 NE: 402-471-2201 NV: 800-992-0900 NH: 800-852-3416 NJ: 609-292-5363 NM: 505-827-4500 NY: 212-602-0203 NC: 800-662-7777 ND: 800-247-0560 OH: 800-686-1526 OK: 405-521-2828 OR: 503-378-4271 PA: 717-787-5173 PR: 809-722-8686 RI: 401-277-2223 SC: 803-737-6117 SD: 605-773-3563 TN: 800-342-4029 TX: 512-463-6464 UT: 801-530-6400 VT: 802-828-3301 VI: 809-774-2991 VA: 800-552-7945 WA: 800-562-6900 WV: 800-642-9004 WI: 800-236-8517 WY: 307-777-7401
FOR MORE INFORMATION, CALL THE NATIONAL INSURANCE CONSUMER HELPLINE (NICH) AT 1-800-942-4242
NINE WAYS TO LOWER YOUR AUTO INSURANCE COSTS
You may not realize it, but the insurance rates you pay for your car can vary dramatically depending on the insurance company, agent or broker you choose, the coverage you request and the kind of car you drive. Listed below are a number of things you can do right now to lower your insurance costs.
1. COMPARISON SHOP.
Prices for the same coverage can vary by hundreds of dollars, so it pays to shop around. Ask your friends, check the yellow pages or call your state insurance department (phone numbers are on back page). You can also check consumer guides, insurance agents or companies. This will give you an idea of price ranges and tell you which companies or agents have the lowest prices. But don’t shop price alone.
The insurer you select should offer both fair prices and excellent service. Quality personal service may cost a bit more, but provides added conveniences, so talk to a number of insurers to get a feeling for the quality of their service. Ask them what they would do to lower your costs. Check the financial ratings of the companies too. Then, when you’ve narrowed the field to three insurers, get price quotes.
2. ASK FOR HIGHER DEDUCTIBLES.
Deductibles represent the amount of money you pay before you make a claim. By requesting higher deductibles on collision and comprehensive (fire and theft) coverage, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision cost by 15% to 30%.
3. DROP COLLISION AND/OR COMPREHENSIVE COVERAGES ON OLDER CARS.
It may not be cost-effective to have collision or comprehensive coverage on cars worth less than $1000 because any claim you make would not substantially exceed annual cost and deductible amounts. Auto dealers and banks can tell you the worth of cars.
4. ELIMINATE DUPLICATE MEDICAL COVERAGES.
If you have adequate health insurance, you may be paying for duplicate medical coverage in your auto policy. In some states, eliminating this coverage could lower your personal injury protection (PIP) cost by up to 40%.
5. BUY A 'LOW PROFILE' CAR.
Before you buy a new or used car, check into insurance costs. Cars that are expensive to repair, or that are favorite targets for thieves, have much higher insurance costs. Write to the Insurance Institute for Highway Safety, 1005 North Glebe Road, Arlington, VA 22201 and ask for the Highway Loss Data Chart.
6. CONSIDER AREA INSURANCE COST IF YOU ARE MAKING A MOVE.
Costs tend to be lowest in rural communities and highest in center cities where there is more traffic congestion.
7. TAKE ADVANTAGE Of LOW MILEAGE DISCOUNTS.
Some companies offer discounts to motorists who drive fewer than a predetermined number of miles a year.
8. FIND OUT ABOUT AUTOMATIC SEAT BELT OR AIR BAG DISCOUNTS.
You may be able to take advantage of discounts on some coverage if you have automatic seat belts and/or air bags.
9. INQUIRE ABOUT OTHER DISCOUNTS.
Some insurers offer discounts for more than one car, no accidents in three years, drivers over 50 years of age, driver training courses, anti-theft devices, anti-lock brakes and good grades for students. See the following page for a guide to these and other discounts.
INQUIRE ABOUT DISCOUNTS FOR:
COMPANY A COMPANY B COMPANY C
$500 deductible _______ _______ _______
$1,000 deductible _______ _______ _______
More than 1 car _______ _______ _______
No Accidents in 3 Years _______ _______ _______
No Moving Violations in 3 Years _______ _______ _______
Drivers Over 50 Years of Age _______ _______ _______
Driver Training Course _______ _______ _______
Anti-Theft Device _______ _______ _______
Low Annual Mileage _______ _______ _______
Automatic Seat Belt _______ _______ _______
Air Bag _______ _______ _______
Anti-Lock Brakes _______ _______ _______
Good Grades for Students _______ _______ _______
Auto and Homeowners Coverage with the Same Company _______ _______ _______
College Students Away From Home Without a Car _______ _______ _______
OTHER DISCOUNTS:
_______________ _______ _______ _______ _______________ _______ _______ _______ _______________ _______ _______ _______ _______________ _______ _______ _______
YOU CAN REACH YOUR STATE INSURANCE DEPARTMENT AT:
AL: 205-269-3550 AK: 907-465-2515 AS: 684-633-4116 AZ: 602-255-5400 AR: 501-686-2900 CA: 800-927-4357 CO: 303-894-7499 CT: 203-297-3800 DE: 800-282-8611 DC: 202-727-8002 FL: 800-342-2762 GA: 404-656-2056 GU: 671-477-5144 HI: 800-468-4644 ID: 208-334-2250 IL: 217-782-4515 IN: 800-622-4461 IA: 515-281-5705 KS: 800-432-2484 KY: 502-564-3630 LA: 504-342-5900 ME: 207-582-8707 MD: 800-492-6116 MA: 617-727-3357 MI: 517-373-9273 MN: 800-652-9747 MS: 601-359-3569 MO: 314-751-2640 MT: 800-332-6148 NE: 402-471-2201 NV: 800-992-0900 NH: 800-852-3416 NJ: 609-292-5363 NM: 505-827-4500 NY: 212-602-0203 NC: 800-662-7777 ND: 800-247-0560 OH: 800-686-1526 OK: 405-521-2828 OR: 503-378-4271 PA: 717-787-5173 PR: 809-722-8686 RI: 401-277-2223 SC: 803-737-6117 SD: 605-773-3563 TN: 800-342-4029 TX: 512-463-6464 UT: 801-530-6400 VT: 802-828-3301 VI: 809-774-2991 VA: 800-552-7945 WA: 800-562-6900 WV: 800-642-9004 WI: 800-236-8517 WY: 307-777-7401
FOR MORE INFORMATION, CALL THE NATIONAL INSURANCE CONSUMER HELPLINE (NICH) AT 1-800-942-4242
$1,000,000 Worth Of Life Insurance-No Cash
Article Entitled: $1,000,000 Worth Of Life Insurance-No Cash
GET UP TO $1,000,000 WORTH OF LIFE INSURANCE WITH NO CASH
Contact: BRIDGE CAPITAL CORP., 140 MINEOLA BLVD., MINEOLA, NY 11501. This firm claims that they can place life insurance policies with nationally recognized companies - you pay NO cash, but exchange your surplus inventory or services or unregistered stock, furniture, different products, services, etc.
GET UP TO $1,000,000 WORTH OF LIFE INSURANCE WITH NO CASH
Contact: BRIDGE CAPITAL CORP., 140 MINEOLA BLVD., MINEOLA, NY 11501. This firm claims that they can place life insurance policies with nationally recognized companies - you pay NO cash, but exchange your surplus inventory or services or unregistered stock, furniture, different products, services, etc.
How To Get Free Life Insurance & Pension
Once you have formed your own non-profit organization, you merely place in your corporate charter the provision that life insurance and pension be paid by the organization of which you are a member. The organization, if set up properly, would obtain its money through donations and grants which you should actively seek. Thus, your life insurance and pension costs nothing.
Know About Buying Life Insurance
Know About Buying Life Insurance
Article Entitled: Know About Buying Life Insurance
What You Should Know About Buying Life Insurance
LIFE INSURANCE: THE FOUNDATION OF FINANCIAL SECURITY
BUYING LIFE INSURANCE
Buying life insurance is not like any other purchase you will make. When you pay your premiums, you’re buying the future financial security for your family that only life insurance can provide. Among its many uses, life insurance helps ensure that, when you die, your dependents will have the financial resources needed to protect their home and the income needed to run a household.
Choosing a life insurance product is an important decision, but it often can be complicated. As with any major purchase, it is important that you understand your needs and the options available to you.
That’s where this booklet comes in; read it thoroughly. It takes you through the basics, step-by- step, as you prepare for this significant purchase. Most important, it will help you know what questions to ask when you’re buying life insurance.
Life insurance also can be used to help with other financial goals, such as funding retirement or education expenses. However, it is important to remember that the main purpose of life insurance is financial protection. If your primary goals are something other than protection, you should consider what other financial products are available to meet those goals.
The information in this brochure has been compiled by the American Council of Life Insurance, a trade association of more than 600 life insurance companies. Collectively, these companies provide about 90 percent of the life insurance in force in the United States.
LEARNING THE BASICS
The best way to make an informed decision about buying life insurance is to become familiar with the basics.
Why do I need life insurance? Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided by life insurance also can help ensure that your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents won’t have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries.
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How much life insurance do I need? Before buying life insurance, you should assemble personal financial information and review your family’s needs. There are a number of factors to consider when determining how much protection you should have.
These include: any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes, funds for a readjustment period, to finance a move or to provide time for family members to find a job; and ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement. Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb is to buy life insurance that is equal to five to seven times your annual gross income.
What is term insurance? Term insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Some term insurance policies can be renewed when you reach the end of a specific period which can be from one to 20 years. The premium rates increase at each renewal date. Many policies require that evidence of insurability be furnished at renewal for you to qualify for the lowest available rates.
What is permanent insurance? Permanent insurance provides lifelong protection and is known by a variety of names, described later. As long as you pay the necessary premiums, the death benefit always will be there. These policies are designed and priced for you to keep over a long period of time. If you don’t intend to keep the policy for the long term, it could be the wrong type of insurance for you.
Most permanent policies including whole, ordinary, universal, adjustable and variable life have a feature known as 'cash value' or 'cash surrender value'. This feature, which is not found in most term insurance policies, provides you with some options:
You can cancel or 'surrender' the policy 'in total or in part' and receive the cash value as a lump sum of money. If you surrender your policy in the early years, there may be little or no cash value. If you need to stop paying premiums, you can use the cash value to continue your current insurance protection for a specific period of time or to provide a lesser amount of protection to cover you for as long as you live. Usually, you may borrow from the insurance company, using the cash value in your life insurance as collateral. Unlike loans from most financial institutions, the loan is not dependent on credit checks or other restrictions. You ultimately must repay any loan with interest or your beneficiaries will receive a reduced death benefit.
The cash values of many life insurance policies may be affected by your company’s future experience, including mortality rates, expenses and investment earnings. Keep in mind that with all
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types of permanent policies, the cash value of a policy is different from the policy face amount. Cash value is the amount available when you surrender a policy before its maturity or your death. The face amount is the money that will be paid at death or at policy maturity.
What are the types of permanent insurance? There are many different types of permanent insurance. The major ones are described below:
Whole Life or Ordinary Life This is the most common type of permanent insurance. The premiums for a whole life policy must be paid periodically in the amount indicated in the policy. These premium amounts generally remain constant over the life of the policy.
Universal Life or Adjustable Life This variation of permanent insurance allows you, after your initial payment, to pay premiums at any time, in virtually any amount, subject to certain minimums and maximums. You also can reduce or increase the amount of the death benefit more easily than under a traditional whole life policy. (To increase your death benefit, you usually will be required to furnish the insurance company with satisfactory evidence of your continued good health.)
Variable Life This type of permanent policy provides death benefits and cash values that vary with the performance of an underlying portfolio of investments. You can choose to allocate your premiums among a variety of investments which offer varying degrees of risk and reward stocks, bonds, combinations of both, or accounts that provide for guarantees of interest and principal. You will receive a prospectus in conjunction with the sale of a variable product.
The cash value of a variable life policy is not guaranteed, and the policyholder bears that risk. However, by choosing among the available fund options, the policyholder can create an asset allocation that meets his or her objectives and risk tolerance. Good investment performance will lead to higher cash values and death benefits. On the other hand, poor investment performance will lead to reduced cash values and death benefits.
Some policies guarantee that death benefits cannot fall below a minimum level. There are both universal life and whole life versions of variable life.
What are the advantages and disadvantages of term and permanent insurance?
Term Insurance
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Advantages Initially, premiums are generally lower than those for permanent insurance, allowing you to buy higher levels of coverage at a younger age when the need for protection often is greatest. It’s good for covering specific needs that will disappear in time, such as mortgages or car loans.
Disadvantages Premiums increase as you grow older. Coverage may terminate at the end of the term or may become too expensive to continue. Generally, the policy doesn’t offer cash value or paid-up insurance.
Permanent Insurance
Advantages As long as the necessary premiums are paid, protection is guaranteed for your entire life. Premium costs can be fixed or flexible to meet personal financial needs. Policy accumulates a cash value that you can borrow against. (Loans must be paid back with interest or your beneficiaries will receive a reduced death benefit.) You can borrow against the policy’s cash value to pay premiums or use the cash value to provide paid-up insurance. The policy’s cash value can be surrendered’ in total or in part ’ for cash or converted into an annuity. (An annuity is an insurance product that provides an income for a person’s life-time or for a specific period of time.)l A provision or 'rider' can be added to a policy that gives you the option to purchase additional insurance without taking a medical exam or having to furnish evidence of insurability. (For more information on riders, see page 19.)
Disadvantages Required premium levels may make it hard to buy enough protection. It may be more costly than term insurance if you don’t keep it long enough.
GETTING STARTED
After you have thought about your financial needs and have become familiar with the basic types of life insurance, you will need to choose a company and agent.
How do I choose a company? More than 2,000 companies in the United States sell life insurance. While some consumers prefer to buy policies directly from a company, most people buy life insurance through agents or brokers. Much of the information provided here will be helpful whichever way you decide to buy life insurance.
Before purchasing a policy, check the company’s financial condition. You can do this by asking the agent or requesting information from your state’s insurance department. A number of insurance rating services rate the financial strength of
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companies. These ratings can be found in large public or business libraries, or can be obtained directly from the rating service. There may be a fee for that information.
Also check with the state insurance department to be sure the company is licensed in your state.
How do I choose an agent? Collect the names of several agents through recommendations from friends, family and other sources. The following are some questions you may want to ask a potential agent:
Is the agent licensed in your state? All states require that agents be licensed to sell life insurance. In addition, agents who sell variable products must be registered with the National Association of Securities Dealers and have additional state licenses.
What company or companies does the agent represent? Does the agent have any professional designations? Professional designations include Chartered Life Underwriter (CLU) and Life Underwriting Training Council Fellow (LUTCF). Agents who also are financial planners may have designations, such as Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP) or Member of The Registry of Financial Planning Practitioners.
Is he or she a member of a professional association? The major association for agents is The National Association of Life Underwriters (NALU). Through NALU’s local associations, agents can attend educational seminars and can stay on top of trends in the business. Similar training and services are provided to financial planners through the American Society of CLU & ChFC, the Institute of Certified Financial Planners (ICFP), and the International Association for Financial Planning (IAFP).
What can I expect an agent to do for me? An agent should be willing and able to explain various policies and other insurance-related matters. Let your agent know what you expect from him or her. You should feel satisfied that the agent is listening to you and looking for ways to get you the right type and amount of insurance at an affordable price. If you are not comfortable with the agent, or you aren’t convinced he or she is providing the service you want, find another agent.
THE AGENT VISIT
Now that you have reviewed the basics of life insurance and thought about your personal financial needs, you can shop for a life insurance policy with more confidence and knowledge.
What can I expect during an agent visit? The agent you have selected will meet with you to discuss your life insurance needs. He or she will ask questions about family income and your net worth. Using the information you
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already have assembled about your financial situation, you should be prepared to discuss your insurance options.
Will the agent ask questions about my health? In this initial meeting, be prepared to answer questions about your health (for example, age, medical condition, medical history, family history, personal habits). It is important that you answer these questions carefully and truthfully; this information helps a company charge a fair premium for your coverage. For instance, you may pay a lower premium if you don’t smoke. On the other hand, if you have a chronic illness, you may be charged a higher premium.
Also, in the event of a claim, accurate and truthful answers enable your beneficiary to receive prompt payment. Inaccurate or untruthful answers, however, may cause delay or even denial of a claim.
When you apply for life insurance, you may be asked to have a medical exam. Often, a licensed medical professional will make a personal visit.
YOUR AGENT’S RECOMMENDATION
Once you have discussed your financial needs and objectives with your agent, he or she will recommend the type of life insurance policy that will best suit your purposes. Often, the agent will provide a 'policy illustration' that will show how your policy will work. (See page 16.)
Carefully study your agent’s recommendation and ask for a point-by-point explanation if there are items you don’t understand. Because your policy is a legal document, it’s important that you know what it provides.
Here are some other questions you should ask:
Does this policy truly meet my needs?
If your agent recommends a term policy, consider the following: How long can I keep this policy? If you want the option to renew the policy for a specific number of years or until a certain age, ask your agent about the terms of renewal of the contract. When will my premiums increase? Annually? Or after a longer period of time, such as five or 10 years? Can I convert to a permanent policy? Some policies allow you to convert the policy to permanent insurance without a medical exam, regardless of your physical condition at the time of the conversion. These policies are known as 'convertible term.'
If your agent recommends a permanent policy, consider the
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following: Are the premiums within my budget? Be sure you want to spend the money for this type of long-term coverage. Can I commit to these premiums over the long term? Make sure you know the amount you would receive if you surrender your policy. Keep in mind that permanent insurance is designed to provide protection for your entire life. If you don’t plan to keep the product for many years, consider another type of policy. Cashing in a permanent policy after only a couple of years can be a costly way to get insurance protection for a short term.
What does my policy illustration show? An illustration shows policy premiums, death benefits, cash values and information about other items that can affect your cost of obtaining insurance. Some of the items listed in the illustration are used by the insurance company to reduce your costs if its future financial results are favorable. Your policy may provide for dividends to be paid to you as either cash or paid-up insurance. Or it could provide for interest credits that could increase your cash value and death benefit or reduce your premium. These items are not guaranteed. Your costs or benefits could be higher or lower than those illustrated, because they depend on the future financial results of the insurance company. With variable life, your values will depend on the results of the underlying portfolio of investments.
Ask your agent for an explanation of the illustration; some figures are guaranteed and some are not. Remember that the insurance company will honor the guaranteed figures regardless of its future financial experience.
If your policy is a variable life policy, be sure that the interest rate assumed is reasonable for the underlying investment accounts to which you choose to allocate your premiums. For example, some investment advisors suggest that a higher interest rate assumption may be warranted if you plan to allocate your premium to a stock account, while a lower rate should be assumed for more conservative alternatives.
It is important to keep in mind that an illustration is not a legal document. Legal obligations are spelled out in the policy itself.
Here are additional questions to ask about the policy illustration:
Is the illustration up to date? Is it based on current experience? Is the classification shown in the illustration appropriate for me (i.e., smoker/non-smoker, male/female)? When are premiums due annually, monthly or otherwise? Which figures are guaranteed and which are not? Will I be notified if the non-guaranteed amounts change? Does the policy have a guaranteed death benefit, or could the death benefit change depending on interest rates or other factors? Does the policy pay dividends
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or provide for interest credits? Are those figures incorporated into the illustration? Will my premiums always be the same? Is it possible that the premium will increase significantly if future interest rates are lower than the illustration assumes? If the illustration shows that, after a certain period of time, I will not have to make premium payments, is there a chance I could have to begin making payments again in the future? Is the premium level illustrated sufficient to guarantee protection for my entire life?
What happens if I fail to make the required premium payments? If you miss a premium payment, you typically have a 30- or 31-day grace period during which you can pay the premium with no interest charged. After that, the company can with your authorization draw from a permanent policy’s cash value to keep that policy in force. In some flexible premium policies, premiums may be reduced or skipped as long as sufficient cash values remain in the policy. However, this will result in lower cash values.
What happens if I become disabled and can’t pay the premiums on my policy? Provisions or riders that provide additional benefits can be added to a policy. One such rider is a waiver of premium for disability. With this rider, if you become totally disabled for a specified period of time, you do not have to pay premiums for the duration of the disability.
Are other riders available? Another rider, called an 'accidental death benefit', provides for an additional benefit in case of death as a result of an accident.
A relatively new rider offered by some companies provides 'accelerated benefits,' also known as 'living benefits.' This rider allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care or confinement to a nursing home.
Ask your agent for information about these and other policy riders.
When will the policy be in effect? If you decide to purchase the policy, find out when the insurance becomes effective. This could be different from the date the company issues the policy.
Is a 'Buyer’s Guide' available? Most state insurance departments require companies to provide consumers with a buyer’s guide to help them understand life insurance terms, benefits and costs. Ask your agent for a copy.
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FINAL TIPS
Here are a few tips to keep in mind about your life insurance purchase: Take your time. On the other hand, don’t put off an important decision that would protect your family. Make sure you fully understand any policy you are considering and that you are comfortable with the company, agent and product. Don’t rush into a decision just because you are feeling pressured. When you purchase a policy, make your check payable to the insurance company, not to the agent. Be sure you are given a receipt. After you have purchased an insurance policy, keep in mind that you may have a 'free-look' period usually 10 days after you receive the policy during which you can change your mind. During that period, read your policy carefully. If you decide not to keep the policy, the company will cancel the policy and give you an appropriate refund. Ask your agent. Review the copy of your application contained in your policy. Promptly notify your agent or company of any errors or missing information. If an agent or company contacts you and wants you to cancel your current policy to buy a new one, contact your original agent or company before making any decisions. Surrendering your policy to buy another could be very costly to you.
If you have a complaint about your insurance agent or company, contact the customer service division of your insurance company.
If you still are dissatisfied, contact your state insurance department. Most departments have a consumer affairs division that can offer help. Review your policy periodically or when your situation changes to be sure your coverage is adequate.
OTHER RESOURCES Where else can I get information about insurance? Your personal insurance agent and company are good sources of general information about insurance. Contact the National Insurance Consumer Helpline (NICH) at 1-800-942-4242. NICH is a toll-free consumer information telephone service sponsored by insurance industry trade associations. Look in your local library for magazines or books on insurance or personal finance. The consumer affairs division of your state insurance department can provide useful information. Some departments have toll-free numbers to respond to consumer questions.
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Article Entitled: Know About Buying Life Insurance
What You Should Know About Buying Life Insurance
LIFE INSURANCE: THE FOUNDATION OF FINANCIAL SECURITY
BUYING LIFE INSURANCE
Buying life insurance is not like any other purchase you will make. When you pay your premiums, you’re buying the future financial security for your family that only life insurance can provide. Among its many uses, life insurance helps ensure that, when you die, your dependents will have the financial resources needed to protect their home and the income needed to run a household.
Choosing a life insurance product is an important decision, but it often can be complicated. As with any major purchase, it is important that you understand your needs and the options available to you.
That’s where this booklet comes in; read it thoroughly. It takes you through the basics, step-by- step, as you prepare for this significant purchase. Most important, it will help you know what questions to ask when you’re buying life insurance.
Life insurance also can be used to help with other financial goals, such as funding retirement or education expenses. However, it is important to remember that the main purpose of life insurance is financial protection. If your primary goals are something other than protection, you should consider what other financial products are available to meet those goals.
The information in this brochure has been compiled by the American Council of Life Insurance, a trade association of more than 600 life insurance companies. Collectively, these companies provide about 90 percent of the life insurance in force in the United States.
LEARNING THE BASICS
The best way to make an informed decision about buying life insurance is to become familiar with the basics.
Why do I need life insurance? Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided by life insurance also can help ensure that your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents won’t have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries.
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How much life insurance do I need? Before buying life insurance, you should assemble personal financial information and review your family’s needs. There are a number of factors to consider when determining how much protection you should have.
These include: any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes, funds for a readjustment period, to finance a move or to provide time for family members to find a job; and ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement. Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb is to buy life insurance that is equal to five to seven times your annual gross income.
What is term insurance? Term insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Some term insurance policies can be renewed when you reach the end of a specific period which can be from one to 20 years. The premium rates increase at each renewal date. Many policies require that evidence of insurability be furnished at renewal for you to qualify for the lowest available rates.
What is permanent insurance? Permanent insurance provides lifelong protection and is known by a variety of names, described later. As long as you pay the necessary premiums, the death benefit always will be there. These policies are designed and priced for you to keep over a long period of time. If you don’t intend to keep the policy for the long term, it could be the wrong type of insurance for you.
Most permanent policies including whole, ordinary, universal, adjustable and variable life have a feature known as 'cash value' or 'cash surrender value'. This feature, which is not found in most term insurance policies, provides you with some options:
You can cancel or 'surrender' the policy 'in total or in part' and receive the cash value as a lump sum of money. If you surrender your policy in the early years, there may be little or no cash value. If you need to stop paying premiums, you can use the cash value to continue your current insurance protection for a specific period of time or to provide a lesser amount of protection to cover you for as long as you live. Usually, you may borrow from the insurance company, using the cash value in your life insurance as collateral. Unlike loans from most financial institutions, the loan is not dependent on credit checks or other restrictions. You ultimately must repay any loan with interest or your beneficiaries will receive a reduced death benefit.
The cash values of many life insurance policies may be affected by your company’s future experience, including mortality rates, expenses and investment earnings. Keep in mind that with all
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types of permanent policies, the cash value of a policy is different from the policy face amount. Cash value is the amount available when you surrender a policy before its maturity or your death. The face amount is the money that will be paid at death or at policy maturity.
What are the types of permanent insurance? There are many different types of permanent insurance. The major ones are described below:
Whole Life or Ordinary Life This is the most common type of permanent insurance. The premiums for a whole life policy must be paid periodically in the amount indicated in the policy. These premium amounts generally remain constant over the life of the policy.
Universal Life or Adjustable Life This variation of permanent insurance allows you, after your initial payment, to pay premiums at any time, in virtually any amount, subject to certain minimums and maximums. You also can reduce or increase the amount of the death benefit more easily than under a traditional whole life policy. (To increase your death benefit, you usually will be required to furnish the insurance company with satisfactory evidence of your continued good health.)
Variable Life This type of permanent policy provides death benefits and cash values that vary with the performance of an underlying portfolio of investments. You can choose to allocate your premiums among a variety of investments which offer varying degrees of risk and reward stocks, bonds, combinations of both, or accounts that provide for guarantees of interest and principal. You will receive a prospectus in conjunction with the sale of a variable product.
The cash value of a variable life policy is not guaranteed, and the policyholder bears that risk. However, by choosing among the available fund options, the policyholder can create an asset allocation that meets his or her objectives and risk tolerance. Good investment performance will lead to higher cash values and death benefits. On the other hand, poor investment performance will lead to reduced cash values and death benefits.
Some policies guarantee that death benefits cannot fall below a minimum level. There are both universal life and whole life versions of variable life.
What are the advantages and disadvantages of term and permanent insurance?
Term Insurance
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Advantages Initially, premiums are generally lower than those for permanent insurance, allowing you to buy higher levels of coverage at a younger age when the need for protection often is greatest. It’s good for covering specific needs that will disappear in time, such as mortgages or car loans.
Disadvantages Premiums increase as you grow older. Coverage may terminate at the end of the term or may become too expensive to continue. Generally, the policy doesn’t offer cash value or paid-up insurance.
Permanent Insurance
Advantages As long as the necessary premiums are paid, protection is guaranteed for your entire life. Premium costs can be fixed or flexible to meet personal financial needs. Policy accumulates a cash value that you can borrow against. (Loans must be paid back with interest or your beneficiaries will receive a reduced death benefit.) You can borrow against the policy’s cash value to pay premiums or use the cash value to provide paid-up insurance. The policy’s cash value can be surrendered’ in total or in part ’ for cash or converted into an annuity. (An annuity is an insurance product that provides an income for a person’s life-time or for a specific period of time.)l A provision or 'rider' can be added to a policy that gives you the option to purchase additional insurance without taking a medical exam or having to furnish evidence of insurability. (For more information on riders, see page 19.)
Disadvantages Required premium levels may make it hard to buy enough protection. It may be more costly than term insurance if you don’t keep it long enough.
GETTING STARTED
After you have thought about your financial needs and have become familiar with the basic types of life insurance, you will need to choose a company and agent.
How do I choose a company? More than 2,000 companies in the United States sell life insurance. While some consumers prefer to buy policies directly from a company, most people buy life insurance through agents or brokers. Much of the information provided here will be helpful whichever way you decide to buy life insurance.
Before purchasing a policy, check the company’s financial condition. You can do this by asking the agent or requesting information from your state’s insurance department. A number of insurance rating services rate the financial strength of
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companies. These ratings can be found in large public or business libraries, or can be obtained directly from the rating service. There may be a fee for that information.
Also check with the state insurance department to be sure the company is licensed in your state.
How do I choose an agent? Collect the names of several agents through recommendations from friends, family and other sources. The following are some questions you may want to ask a potential agent:
Is the agent licensed in your state? All states require that agents be licensed to sell life insurance. In addition, agents who sell variable products must be registered with the National Association of Securities Dealers and have additional state licenses.
What company or companies does the agent represent? Does the agent have any professional designations? Professional designations include Chartered Life Underwriter (CLU) and Life Underwriting Training Council Fellow (LUTCF). Agents who also are financial planners may have designations, such as Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP) or Member of The Registry of Financial Planning Practitioners.
Is he or she a member of a professional association? The major association for agents is The National Association of Life Underwriters (NALU). Through NALU’s local associations, agents can attend educational seminars and can stay on top of trends in the business. Similar training and services are provided to financial planners through the American Society of CLU & ChFC, the Institute of Certified Financial Planners (ICFP), and the International Association for Financial Planning (IAFP).
What can I expect an agent to do for me? An agent should be willing and able to explain various policies and other insurance-related matters. Let your agent know what you expect from him or her. You should feel satisfied that the agent is listening to you and looking for ways to get you the right type and amount of insurance at an affordable price. If you are not comfortable with the agent, or you aren’t convinced he or she is providing the service you want, find another agent.
THE AGENT VISIT
Now that you have reviewed the basics of life insurance and thought about your personal financial needs, you can shop for a life insurance policy with more confidence and knowledge.
What can I expect during an agent visit? The agent you have selected will meet with you to discuss your life insurance needs. He or she will ask questions about family income and your net worth. Using the information you
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already have assembled about your financial situation, you should be prepared to discuss your insurance options.
Will the agent ask questions about my health? In this initial meeting, be prepared to answer questions about your health (for example, age, medical condition, medical history, family history, personal habits). It is important that you answer these questions carefully and truthfully; this information helps a company charge a fair premium for your coverage. For instance, you may pay a lower premium if you don’t smoke. On the other hand, if you have a chronic illness, you may be charged a higher premium.
Also, in the event of a claim, accurate and truthful answers enable your beneficiary to receive prompt payment. Inaccurate or untruthful answers, however, may cause delay or even denial of a claim.
When you apply for life insurance, you may be asked to have a medical exam. Often, a licensed medical professional will make a personal visit.
YOUR AGENT’S RECOMMENDATION
Once you have discussed your financial needs and objectives with your agent, he or she will recommend the type of life insurance policy that will best suit your purposes. Often, the agent will provide a 'policy illustration' that will show how your policy will work. (See page 16.)
Carefully study your agent’s recommendation and ask for a point-by-point explanation if there are items you don’t understand. Because your policy is a legal document, it’s important that you know what it provides.
Here are some other questions you should ask:
Does this policy truly meet my needs?
If your agent recommends a term policy, consider the following: How long can I keep this policy? If you want the option to renew the policy for a specific number of years or until a certain age, ask your agent about the terms of renewal of the contract. When will my premiums increase? Annually? Or after a longer period of time, such as five or 10 years? Can I convert to a permanent policy? Some policies allow you to convert the policy to permanent insurance without a medical exam, regardless of your physical condition at the time of the conversion. These policies are known as 'convertible term.'
If your agent recommends a permanent policy, consider the
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following: Are the premiums within my budget? Be sure you want to spend the money for this type of long-term coverage. Can I commit to these premiums over the long term? Make sure you know the amount you would receive if you surrender your policy. Keep in mind that permanent insurance is designed to provide protection for your entire life. If you don’t plan to keep the product for many years, consider another type of policy. Cashing in a permanent policy after only a couple of years can be a costly way to get insurance protection for a short term.
What does my policy illustration show? An illustration shows policy premiums, death benefits, cash values and information about other items that can affect your cost of obtaining insurance. Some of the items listed in the illustration are used by the insurance company to reduce your costs if its future financial results are favorable. Your policy may provide for dividends to be paid to you as either cash or paid-up insurance. Or it could provide for interest credits that could increase your cash value and death benefit or reduce your premium. These items are not guaranteed. Your costs or benefits could be higher or lower than those illustrated, because they depend on the future financial results of the insurance company. With variable life, your values will depend on the results of the underlying portfolio of investments.
Ask your agent for an explanation of the illustration; some figures are guaranteed and some are not. Remember that the insurance company will honor the guaranteed figures regardless of its future financial experience.
If your policy is a variable life policy, be sure that the interest rate assumed is reasonable for the underlying investment accounts to which you choose to allocate your premiums. For example, some investment advisors suggest that a higher interest rate assumption may be warranted if you plan to allocate your premium to a stock account, while a lower rate should be assumed for more conservative alternatives.
It is important to keep in mind that an illustration is not a legal document. Legal obligations are spelled out in the policy itself.
Here are additional questions to ask about the policy illustration:
Is the illustration up to date? Is it based on current experience? Is the classification shown in the illustration appropriate for me (i.e., smoker/non-smoker, male/female)? When are premiums due annually, monthly or otherwise? Which figures are guaranteed and which are not? Will I be notified if the non-guaranteed amounts change? Does the policy have a guaranteed death benefit, or could the death benefit change depending on interest rates or other factors? Does the policy pay dividends
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or provide for interest credits? Are those figures incorporated into the illustration? Will my premiums always be the same? Is it possible that the premium will increase significantly if future interest rates are lower than the illustration assumes? If the illustration shows that, after a certain period of time, I will not have to make premium payments, is there a chance I could have to begin making payments again in the future? Is the premium level illustrated sufficient to guarantee protection for my entire life?
What happens if I fail to make the required premium payments? If you miss a premium payment, you typically have a 30- or 31-day grace period during which you can pay the premium with no interest charged. After that, the company can with your authorization draw from a permanent policy’s cash value to keep that policy in force. In some flexible premium policies, premiums may be reduced or skipped as long as sufficient cash values remain in the policy. However, this will result in lower cash values.
What happens if I become disabled and can’t pay the premiums on my policy? Provisions or riders that provide additional benefits can be added to a policy. One such rider is a waiver of premium for disability. With this rider, if you become totally disabled for a specified period of time, you do not have to pay premiums for the duration of the disability.
Are other riders available? Another rider, called an 'accidental death benefit', provides for an additional benefit in case of death as a result of an accident.
A relatively new rider offered by some companies provides 'accelerated benefits,' also known as 'living benefits.' This rider allows you, under certain circumstances, to receive the proceeds of your life insurance policy before you die. Such circumstances include terminal or catastrophic illness, the need for long-term care or confinement to a nursing home.
Ask your agent for information about these and other policy riders.
When will the policy be in effect? If you decide to purchase the policy, find out when the insurance becomes effective. This could be different from the date the company issues the policy.
Is a 'Buyer’s Guide' available? Most state insurance departments require companies to provide consumers with a buyer’s guide to help them understand life insurance terms, benefits and costs. Ask your agent for a copy.
Page 8
FINAL TIPS
Here are a few tips to keep in mind about your life insurance purchase: Take your time. On the other hand, don’t put off an important decision that would protect your family. Make sure you fully understand any policy you are considering and that you are comfortable with the company, agent and product. Don’t rush into a decision just because you are feeling pressured. When you purchase a policy, make your check payable to the insurance company, not to the agent. Be sure you are given a receipt. After you have purchased an insurance policy, keep in mind that you may have a 'free-look' period usually 10 days after you receive the policy during which you can change your mind. During that period, read your policy carefully. If you decide not to keep the policy, the company will cancel the policy and give you an appropriate refund. Ask your agent. Review the copy of your application contained in your policy. Promptly notify your agent or company of any errors or missing information. If an agent or company contacts you and wants you to cancel your current policy to buy a new one, contact your original agent or company before making any decisions. Surrendering your policy to buy another could be very costly to you.
If you have a complaint about your insurance agent or company, contact the customer service division of your insurance company.
If you still are dissatisfied, contact your state insurance department. Most departments have a consumer affairs division that can offer help. Review your policy periodically or when your situation changes to be sure your coverage is adequate.
OTHER RESOURCES Where else can I get information about insurance? Your personal insurance agent and company are good sources of general information about insurance. Contact the National Insurance Consumer Helpline (NICH) at 1-800-942-4242. NICH is a toll-free consumer information telephone service sponsored by insurance industry trade associations. Look in your local library for magazines or books on insurance or personal finance. The consumer affairs division of your state insurance department can provide useful information. Some departments have toll-free numbers to respond to consumer questions.
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