April 4, 2014 6:00 pm EST

Here Are A Few Things You Need To Know About Whole Life Insurance

life isurance blank bar chart and glases

What is whole life insurance?

A whole life insurance policy covers you for your entire life, not just for a specific period such as term insurance. Your death benefit and premium in most cases will remain the same. Whole life insurance also builds cash value, which is a return on a portion of your premiums that the insurance company invests. Your cash value is tax-deferred until you withdraw it and you can borrow against it.

Are there choices within whole life insurance?

Yes, the most common choices include traditional, interest-sensitive, and single-premium whole life insurance policies. A traditional whole life insurance policy gives you a guaranteed minimum rate of return on your cash value portion. An interest-sensitive whole life insurance policy gives a variable rate on your cash value portion, similar to an adjustable rate mortgage. With interest-sensitive whole life insurance you can have more flexibility with your life insurance policy such as increasing your death benefit without raising your premiums depending on the economy and the rate of return on your cash value portion. Single-premium is for someone who has a large sum of money and would like to purchase a policy up front. Like other whole life insurance options, single-premium whole life insurance accrues cash value and has the same tax shelter on returns.

What are the benefits of choosing a whole life insurance policy over other types of life insurance policies?

Unlike term life insurance, a portion of your premium money goes toward your cash value which in turn could pay off your entire policy only after a few years. Also, your premium will remain constant during the time you are covered unless you choose otherwise. And, unless you make a change to your whole life insurance policy, you have lifelong coverage with no future medical exams. Whole life is also a good choice because of the tax savings.

Should I purchase a whole life policy for an investment?

The rate of return on a whole life insurance policy is very low compared to other investments, even with the tax savings factored in. Most investment professionals would agree that life insurance should not be used solely as an investment tool and you should judge your policy choices on the protection and not the rate of return. But, if you are in need of life insurance, the tax benefits and cash value is an added bonus when purchasing protection for your loved ones.

February 14, 2014 10:17 pm EST

Cutting Your Health Care Costs And Strategies For Your Family

As the cost of health care increases, so does the strain on household budgets. A majority of today’s families are barely getting by, and an increasing number of households are living with no health insurance at all. In fact, more than 46 million Americans now live uninsured–and that number increases by the year.

Health insurance is designed to protect you and your family from expense in case of accidents or illness. Doctor bills; hospitalization; medical tests and treatments; rehabilitation, and maternity/pediatric care…all fall within these bounds.

So what’s a family to do if it needs health insurance protection but doesn’t have much to spend?

Getting Cheaper Health Insurance

The less likely you are to need health care, the less you’ll pay for your health insurance coverage. Therefore, finding ways to reduce your claims risk increases your chances of getting the cheap health insurance rates you deserve.

If your family needs cheap health insurance and you’re not sure how to get it, use these money-saving strategies to reduce your health insurance premiums:

    • Take care of your bodies. Get regular exercise; eat a healthy, well-balanced diet, and see your doctor for routine check-ups and health care advice. Don’t drink or smoke. If you do what’s necessary to maintain your health, you’ll reduce your health care costs in the long run–reducing, in turn, your health insurance costs.
    • Set your deductibles high. What is a deductible? It’s simply the amount you have to pay on your medical bills before your health insurance kicks in and pays the rest. According to experts, it’s not uncommon for families to save up to 25 percent on health insurance premiums with a high deductible plan. The more responsibility you take for the cost of your medical care, the less responsibility your health insurance company has to carry–and the lower your health insurance rates will be.
    • Find a group policy. Group health insurance is always less expensive. This is because the financial risk to the health insurance company is spread amongst the entire group, instead of resting solely on you. Look for group health insurance through your employer, or through community or professional organizations to which you belong.
    • Buy early.The younger you are when you purchase health insurance, the lower your premiums will be. This is because your risk of health-related issues increases as you get older. Buying health insurance early on means your family saves on monthly premiums, as well as over the life of the policy.
    • Coordinate your coverage’s. If you and your spouse both work and have health insurance available, compare plans–and choose the best parts of each. Sharing expenses between more than one insurance plan makes things cheaper for both health insurance companies–and for you.

Your family’s health insurance premiums don’t have to eat into the household budget–or your bank account. Use these strategies to get cheap health insurance protection, and you’ll be prepared for whatever comes your way.

December 12, 2013 7:32 pm EST

5 Insurance Policies That Everyone Should Have

When it comes to buying insurance, there are so many options on the market today that you might not know what’s necessary and what’s superfluous. It’s important to be covered, but you can also be too covered. Paying for too much insurance takes money away from other areas, such as your emergency fund and your retirement savings. When it comes to insurance, there are basically five types that everyone needs.

Health Insurance

This is the big one. In 2009, over 60 percent of all personal bankruptcies were related to health insurance costs.

When purchasing health insurance, consider the following:

  • Needs: Young and healthy single people require less coverage than those with young families, the elderly, or those with chronic health issues. Do you plan on using your insurance a lot? If so, you’re going to want a low deductible and copays.
  • Doctors: One of the first questions you should ask about a plan is if it allows you to keep your current physician.
  • Cost: You can obviously only afford so much, so know what you can afford. Shopping for plans with higher copays and deductibles will save you money on your premium.

Car Insurance

Not only will you want car insurance, nearly every state requires that you have it. For those with an older car, no more than the bare minimum may be required. However, if you have a newer car or a car with a high value, you will also want to insure it against theft.

The main types of car insurance are:

  • Liability: Liability coverage comes in two forms: bodily injury and property damage liability. These cover damage to others and their property. They do not cover the driver or passengers.
  • Personal Injury Protection: This type of coverage will cover medical expenses related to driver and passenger injuries.
  • Collision: Get collision insurance if you want your insurance to cover the cost of damage done to your car, whether you are at fault or not.
  • Comprehensive: Collision only covers damage done in an accident. For example, if a tree falls on your car and destroys it, you’ll need comprehensive insurance to get compensation.
  • Uninsured or Underinsured Motorist: This covers you in the event that the person who hits your car does not have enough insurance to cover the damage — or any coverage at all.

Homeowner’s or Renter’s Insurance

Renter’s insurance covers you against damage or theft of personal items in an apartment. For urbanites, the low cost of renter’s insurance can be well worth the peace of mind that it provides. Homeowner’s insurance is absolutely essential. It protects your most valuable asset against damage and theft. However, sometimes homeowner’s insurance isn’t enough to fully protect your home. Ask if you need additional insurance against flooding, earthquakes, fires and other disasters that might not be covered under standard plans.

Life Insurance

No one likes to think about it, but life insurance is an essential component of protecting your family in the event that you pass before your time. There are costs associated with dying, such as burial and mortuary fees. Further, if you are the primary breadwinner, life insurance will help your family to offset the lost income. The latter is the main reason that people get health insurance. The single and childless might not need life insurance, but everyone else should invest in a policy now.

Disability Insurance

Disability insurance is actually quite a bit like life insurance. It reimburses you for income lost during periods of time that you are not able to work. As 1/3 of all Americans are disabled at some point, having this insurance makes good financial sense for the single and married, parents and non-parents. Disability insurance can cover permanent, temporary, partial and total disability. No one knows what tomorrow might bring and disability insurance is relatively cheap — far less than the cost of not having it if something goes wrong.

October 3, 2013 1:51 pm EST

How does the Affordable Care Act affect Medicare?

A lot of questions about the Patient Protection and Affordable Care act have arisen before and after it became a law and one of them is. “How it will affect Medicare?” Here are a few things you should know:

1. You’re Protected Under Medicare

Medicare isn’t actually a part of the Health Insurance Marketplace that is being established by the new ACA law. A person with Medicare coverage would not have to go out and replace their Medicare coverage with Marketplace coverage. You would still have the same coverage under Medicare that you had before, and you don’t have to sign up for anything during the Open Enrollment period for the Marketplace that started on October 1st, 2013.

2. Preventative Services Will Cost You Less

You won’t be charged the Part B coinsurance or deductible for preventative services like colonoscopies and mammograms. You will also get a free yearly “Wellness” visit that includes a height, weight, and blood pressure check, a vision test, a body mass index calculation, and much more.

3. More Support For Your Doctor

Doctors have a lot of information thrown at them, and they have to make sure that they give you the right care. With new initiatives that support care coordination, the doctor you have can get more resources that will make sure that the treatment you receive is consistent and correct.

4. Brand-Name Drugs Will Also Cost You Less

If you’re in what the industry calls the Donut hole (Medicare Part D coverage gap limit), you will now receive a 50% discount when buying Part D brand-name prescription drugs. No need to worry about jumping through any hoops when you go in to your local pharmacy, the discount will happen automatically at the counter.

Additionally, the Donut hole is going to be closed completely by 2020.

5. The ACA Extends the Medicare Trust Fund

Due to the reductions of abuse, fraud, abuse, and Medicare costs, the Medicare Trust Fund has been extended through 2029. This extension of the Medicare Trust Fund will help with future savings on Medicare members premiums and coinsurance.

If you want to know more about Medicare, you can go here.