Frequently Asked Questions
Below are some frequently asked questions. If you have any other questions or concerns, please feel free to contact us via the web, or come and visit us at a location near you.
What is Life Insurance?
Life insurance is a type of protection against the loss of an insured person due to death. A life insurance policy is a contract between the policy owner and the insurance carrier. The contract promises to pay a death benefit amount to the beneficiary or beneficiaries of the policy.
Why would I consider having Life Insurance?
There are many reasons why people consider having Life Insurance. One reason is to replace the income of the insured should the insured pass away. Life insurance is also considered for its role in cash accumulation or estate planning. Also, a business may utilize life insurance to provide some level of protection in the event of the untimely death of a key employee who has skills, knowledge, and abilities that are critical to the success of the business. This type of insurance may be referred to as a Key Person or Key Man Insurance.
Let’s face it, if and when a wage earner passes away not only is there an emotional loss but there may also be a financial loss as well. Survivors may be faced with unexpected expenses such as:
- Funeral Expenses
- Unpaid Healthcare Bills
- On-gong Housing Expenses
- Legal Expenses
- Education for the children
- Caring for the elderly
- And more…
The proceeds from a Life Insurance policy can help to ease some of the financial strain survivors may encounter when a loved one passes away.
What is the difference between Whole Life and Term Life Policy?
Whole Life insurance is designed to provide protection that remains for the life of the insured or until the insured reaches age of 120; whichever comes first. One aspect of a Whole Life policy that people find attractive is that it can build cash value as well as provide insurance protection. There are variations of Whole Life policies and an insurance agent can help you decide if you should consider a Whole Life policy based on your unique situation. An insurance agent can also review the other aspects of a Whole Life policy so you can make a more informed decision concerning your purchase.
Term Insurance, on the other, hand is designed to provide protection only for a specified period of time; such as 10, 15, 20, or 30 years. At the end of the term, the policy expires. There are variations of Term Policies and an insurance agent can help you decide if you should consider a term policy based on your unique situation. Just like Whole Life, there are different variations of Term Insurance.
How much Life Insurance do I need?
This is a very good question!
You will find it helpful to speak with an insurance agent who can help determine how much life insurance is appropriate for your unique situation. An agent will most likely conduct an assessment to better understand your financial goals, objectives, needs, and most pressing concerns. During this process you will probably discuss how much income replacement is appropriate and determine how the death benefit proceeds intend to be used. This type of planning helps to address some of the known and even unknown future needs of the survivors.
Your agent may look at two approaches when helping you to determine the appropriate amount of Life Insurance. First, you may discuss the amount as it relates to "needs." Briefly, this approach is used to calculate how much life insurance is required to cover the needs/expenses of the beneficiaries for an approximate amount of time. Such expenses as funeral costs, unpaid hospital bills, outstanding debt, legal fees, living expenses, emergency fund, college education, etc.,. may be used to calculate the amount of Life Insurance to be requested.
Another approach is based on Human Life Value. Calculating an appropriate amount of Life Insurance based on Human Life Value may be considered when the proposed insured is a wage owner and their untimely death results in a loss of income that impacts the lives of the survivors (example: spouse or children) who are also wage earners. A Human Life Value Approach helps to answer the question: Approximately how much income would the insured continued to have earned if there had not been an untimely death of the insured? Once determined, this figure may then be used as the basis for the death benefit amount requested on an insurance document.
Disability Income Protection
What is Disability Income Protection?
Disability income protection provides income to the insured if an illness or accident causes a disability that impacts the insured’s ability to work. Disability income is designed to replace a portion of the insured’s income and can help to cover those expenses that health insurance does not cover. Expenses such has housing, utilities, car payments, food, and automobile insurance still have to be paid even though a person is unable to work due to a disability.
What is Short Term Disability?
Short term disability may pay a percentage of your salary if you become temporarily disabled. Payments generally begin to pay within 1 to 14 days after a person is determined to be disabled and, depending on the plan, may pay for as long as 9 to 52 weeks.
What is Long Term Disability?
Long term disability also pays a percentage of your salary and will typically pick up where short term disability leaves off. This policy will pay a percentage of your salary for a specified coverage period. Typical coverage periods are one year, two years, five years, or to age 65 or 67.
Why would I consider an Individual Disability Policy?
Social Security may provide Disability Income coverage. An individual would have to qualify and meet certain requirements. An Individual Disability Policy may be an option to consider if being able to replace earned income should you become disabled is important to you.
What terms should I be aware of?
Below are just a few terms that you may come across if you are considering adding Disability Income Protection to your overall financial plan. Please speak with an insurance agent to learn more.
The policy definition of Total Disability is probably one of the most important aspects to consider when purchasing an Individual Disability policy. This definition is used to determine if a person is eligible for disability benefits.
An insured is considered disabled if unable to perform the majority of the duties of their own occupation.
An Elimination Period is the amount of time between the start of a disability and the start of benefit eligibility. An elimination period may be 30, 60, 90, 180, 365, or 720 days. A 90 day elimination period is common.
An insured is considered disabled if unable to perform the duties of any occupation.
What is Health Insurance?
Health Insurance provides coverage for some or all of the medical and surgical expenses incurred by the insured. The insured may be reimbursed directly for expenses paid or payment may be made directly to the provider of services. The insured will usually pay a premium for health insurance coverage and may also be responsible for a deductible, co-payment, and co-insurance.
A deductible is a flat dollar amount that generally must be satisfied before the Health Insurance plan begins to pay for applicable services.
A co-payment is a flat dollar amount paid by the insured for an applicable benefit or service. A co-payment may apply for an out-patient visit or for a prescription drug.
A co-insurance is usually required after the deductible amount has been met by the insured. Co-insurance is stated as a % and it is the insureds payment portion of the claim. The Health Insurance plan pays the remaining portion.
How do I obtain Health Insurance?
Health Insurance may be offered by an employer, obtained from a government program, or purchased individually from a private company. With so many recent changes has a result of Healthcare Reform it may be helpful to speak with an insurance agent to learn about the options that may be available to you based on your unique situation.
Once your needs are assessed the agent can assist in guiding you to a plan option that is appropriate for your unique situation. The agent may refer you to Healthcare.gov when appropriate as well as help you to see your options to get your coverage directly through a private company.
Remember, there is a Healthcare Mandate that most Americans have either health insurance or an exemption. If not, they may face a penalty. For more information please visit the Healthcare.gov website.
What is Medicare?
Medicare is a Health Insurance program made available by the Federal Government. People who are aged 65 or older, younger people who have certain disabilities, and people with permanent kidney failure that requires dialysis or a transplant may qualify for Medicare.
I often hear about Parts A, B, C, and D. What are these?
Medicare consists of four main parts.
Part A helps cover the cost of hospital stays as an inpatient and some skilled nursing care once a person leaves the hospital. Some other services that part A helps to cover include the cost of; a semi-private room, prescription drugs, medical supplies, and medical equipment needed as an inpatient, and physical therapy delivered through home health care.
Part B helps cover the costs of doctor visits as well as; the costs of some preventative care such as flu shots, some diagnostics screening; and more.
Together Part A and Part B make up what is commonly known as Original Medicare. Original Medicare is provided by the Federal Government.
Part C (also commonly known as Medicare Advantage) is provided by Private Insurance Companies. Part C combines Part A and B together and may provide coverage for Prescription Drugs - known as Part D. A Medicare Advantage Plan may also offer other things such as coverage for routine eye care and or wellness services like access to a local area gym.
Part D (may also be referred to as a Prescription Drug Plan) helps to cover the costs of Prescription Drugs.
What is Medicare Advantage?
Medicare Advantage plans are sold by Private Insurance Companies. These plans are also known as Part C and they combine Medicare Part A and Medicare Part B together. A Medicare Advantage plan may also provide coverage for Prescription Drugs - known as Part D. A Medicare Advantage Plan may also offer extras such as coverage for routine eye care and/or wellness services like access to a local area gym.
What is a Medicare supplement plan?
A Medicare Supplement plan (also commonly referred to as Medigap plans) helps to cover the costs that Original Medicare does not cover. Supplement plans help to fill the gaps in Original Medicare. These plans are sold be Private Insurance Companies.
There are 10 standard Medicare supplement plans and not all plans are available in every state.
An Insurance Agent can further explain how Medicare supplement plans work and if this may be an appropriate choice for your unique situation.
When can I initially enroll in Medicare?
In some cases, the first opportunity to enroll in Medicare is known as the Initial Enrollment Period. The Initial Enrollment Period is 3 months before the month you turn 65, the month you turn 65, and 3 months after the month you turn 65; providing a 7 month-Initial Enrollment Period Window.
| 65th Birthday
|If you enroll 1 to 3 months before the month
you turn 65; coverage begins on the
1st day of the month you turn 65.
| If you choose to enroll during the month you turn 65 or later;
coverage begins the first day of the month after the month in which you enroll.
If you don't enroll in Medicare Part A and/or Part B when you are first eligible; you may be subject to a penalty. You can learn more about the penalty by visiting the Medicare.gov web site and/or speaking with an Insurance Agent.