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Term vs. Whole Life Insurance

When buying life insurance, perhaps the most common question people ask is, “Should I get term or whole life?”  The answer to that question depends on who is asking it.  Term life insurance provides coverage for a particular period of time while whole life insurance coverage provides a lifetime of protection.  So how do you know which type of coverage is right for you and your family?

Term Life Insurance

Term life insurance is an affordable option that allows people to purchase a policy that will provide coverage for a specific amount of time.  While premiums are generally low in the beginning, they increase as a policyholder ages.  The policy offers a guaranteed death benefit but does not have any cash value.  If an individual is looking just for a death benefit, term life is the way to go.

Another advantage of term life insurance is that in most cases a medical exam is not required.  This is important because individuals who are older than 50 but still employed can get a term policy with a critical illness protection component.  In such cases, a policyholder would be able eligible for a lump sum payment if he or she is diagnosed with a critical illness.  The life benefit becomes effective again after the policyholder returns to work full-time and a certain amount of time as specified in the policy has passed.

If you are deciding whether to purchase term versus whole life insurance, keep in mind that before the age of 50 a term life policy is relatively inexpensive.  After you turn 65, it is unlikely you will be able to purchase such a policy.

Whole Life Insurance

Just like its name implies, whole life insurance provides coverage for a lifetime.  It also accumulates cash value that an individual can borrow against in the future.  Whole life insurance premiums are initially higher than term life premiums; however, these premiums do not increase with age.  Individuals who purchase whole life insurance prefer the security of knowing their coverage lasts a lifetime.

Many people with high incomes max out their tax-deferred investments and need another investment vehicle.  A variable or variable universal policy provides them with such an investment vehicle.  Finally, whole life insurance is a good option if upon your death your family is facing estate tax liabilities.  Whole life insurance allows the transfer of this risk.

As is true in all insurance matters, talking to an agent who specializes in term insurance and whole insurance policies is the best thing to do.  With the help of your agent, you can be sure that you and your family are taken care of in the best possible manner – no matter what the future holds.

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How Your Weight Can Affect Insurance Rates

Health care costs continue to outpace inflation as more and more people seek ways to keep their insurance costs down.  Many people talk about preventative care as a way to keep their health care costs in check.  One of the most important factors that is taken into consideration when you go to buy life and health insurance is the overall state of your health.  Therefore, it is no surprise that overweight people pay more in premiums than those who are not overweight.

Obesity in the United States has become an epidemic and insurance is one of the industries that is feeling the effects of this epidemic.  When insurance companies have to pay more in medical costs for overweight individuals, everyone’s premiums go up.  Those individuals who are considered obese usually see their own health insurance premiums being raised above and beyond the increases of the general population.  One online survey found that individual insurance policyholders pay approximately 25 percent more in monthly premiums than those who are considered to be a healthy weight.  While some people consider this unfair, the fact is that the Centers for Disease Control and Prevention found that people with a body mass index (BMI) of 30 or above had an 18 percent higher death risk and that risk continues to rise along with your BMI.

When it comes to life insurance, being overweight is one of the most common reasons a person is declined.  While being a few pounds overweight won’t be a problem, being obese certainly will be a problem.  According to life insurance expectancy charts, the percent you are overweight is directly proportional to your chance of dying at any particular time because of weight-related heart problems, diabetes, high blood pressure, etc. 

If you are planning to lose weight in order to save on life insurance rates, there are a few things you may want to keep mind.  First, while losing weight can definitely get you a better rate, you need to have kept that weight off for a while.  If you have lost 10 or more pounds in the last year, your insurance company may average your current weight with your previous weight since people typically gain weight back.  Also, make sure that even if you are overweight, you highlight positive family history like the lack of cardiovascular disease, diabetes, or high cholesterol.  Insurers take more than just your height and weight into consideration when writing a policy.

Like all matters having to do with life insurance, there are exceptions to every rule.  The key is to find an insurance agent who will work hard to find the best rates for your particular situation.

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Do You Really Need Life Insurance?

One of the most common questions an insurance agent is asked is, “Do I need life insurance?”  The most common answer to that question is, “It depends.”  There are many things to consider before deciding what is right for you and your family.

Do you have children?  Many families depend on two incomes to make ends meet.  If one parent dies, it is imperative that a life insurance policy is in place to protect the financial future of the family.  Even if one spouse does not work outside the home, they contribute a great deal to the family’s lifestyle.  Single parents have the entire burden of their family’s financial security on their shoulders.  If a single parent dies, there may be no one else to provide for the children. 

Do you have dependents other than children?  Are you taking care of aging parents or a special-needs sibling?  If you do, think about what would happen to them if you weren’t around.  If they live with you would they be able to stay in your home should you die?  What if your home is not paid for?  It is important that you consider what you mean to your loved ones in terms of their financial stability.

What will happen as I get older?  Many retirees have life insurance so that if they die before their spouse does, their spouse will have money to cover medical expenses that may come up later in life.  Many retirees also want to know that their funeral and burial expenses will be covered.  Tough economic times as of late have put more of an emphasis on life insurance for retirees.  Some people have had their 401(k) accounts cut almost in half.  A life insurance policy would help supplement your spouse’s retirement income in such a case.

Do you own a family business?  Business owners sometimes buy life insurance to protect their business.  Many smaller, family-owned businesses depend on one person to keep that business running.  If that person is you, a life insurance policy can protect your company and allow it to keep its doors open until things are back in order.

Are young, single, and healthy?  While life insurance probably isn’t even on your radar, maybe it should be.  The best rates are available to you at this point in your life so if you plan on purchasing it down the road, it might be worth it to do it sooner rather than later.

The best way to figure out if you need life insurance is to think through your particular situation and then talk to a good life insurance agent.  You and your loved ones will be glad you did.

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Is a Medicare Supplement Plan Right for You?

Medicare supplements are growing in popularity these days.  But what exactly is a Medicare supplement and is it right for you?  Sold by private insurance companies, a Medicare supplement plan (often referred to as Medigap) can help an individual with health care costs not covered by Medicare.  These plans can be a tremendous help to individuals on a fixed income.  It is also reassuring to know that most standard Medigap policies are renewable even if you have health issues.  As long as you continue to pay the premium, you’ll be covered.

It is important to know exactly what you are getting into before you purchase a Medicare supplement plan, however, because there are some rules and guidelines that must be followed:

  • In order to use a Medicare supplement plan, you must have Medicare Part A and Part B.
  • You must buy a separate plan for each individual.  In other words, spouses cannot be covered under the same policy. 
  • Medicare supplement plans can no longer be purchased with prescription drug coverage. 
  • You cannot buy a Medicare supplement plan if you have a Medical Savings Account Plan. 
  • A Medicare supplement plan doesn’t usually cover things like long-term care, private nursing services, vision, dental, glasses, or hearing aids.

Also, it is important to note to that a Medigap policy is different from a Medicare Advantage plan in that a Medicare Advantage Plan is one designed to get Medicare benefits.  It does not supplement your original Medicare benefits which are what a Medigap policy does.

Not everyone needs Medicare supplement insurance.  If you still work, or can carry your employer’s medical coverage into retirement, you probably don’t need supplemental insurance.  Also, if you are financially secure you can pay many healthcare expenses out of your own pocket.

If you do decide that a Medicare supplement plan is in your best interest, there are some things to keep in mind before you settle on a policy.  You should always compare plan costs and premiums.  While most plans are very similar, the customer service and price of plans can vary significantly.  Make sure that you are comfortable with the agent and insurance company you choose.  Make sure the plan you buy covers your doctor or hospital if you don’t want to switch.  It is also vital that you make sure the policy you are purchasing is accredited.

Finally, timing does matter!  The open enrollment period for a Medicare supplement policy is six months from the first day of the month in which you turned 65, as long as you are also signed up for – or are within six months of signing up for – Medicare Part B. During this time, you can buy any Medigap policy at the same price a healthy person pays, no matter your health status.   If you wait to buy coverage there is no guarantee you’ll be able to obtain it, and if you are able to buy it the rates may be significantly higher.

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Why Are Health Insurance Premiums Increasing?


It was a bright and shining promise: The President and Congressional allies passed the Patient Protection and Affordable Care Act (colloquially known as "ObamaCare") amidst assertions that the law would contain health insurance costs. Indeed, President Obama claimed that his health care plan would cause premiums to decline by some $2,500 per year per family by the end of his first term.

Instead, premiums rose by 9 percent in 2011, and another 4 percent in 2012.

Health insurance costs had been rising faster than inflation for years before 2010, according to the Kaiser Family Foundation. This was true for both employers paying group plan premiums and individuals buying their own individual and family coverage on the open market.

There was a brief period where health care costs moderated. But now they are beginning another seemingly inexorable march upward. Why the increases?

Part of the answer lies in a number of new federally-mandated coverages - described as "essential benefits." The law penalizes those who seek to get a no-frills catastrophic policy with a high deductible. And the new federal law mandates, for example, that all workplace insurance plans cover a variety of common health services.

The law also restricts insurance company''s ability to limit policy payouts or exclude certain newly mandated items - which naturally tends to cause premiums to increase: The more you demand your policy pay, the more it must necessarily collect in premiums.

For example:

  • Insurance companies can no longer decline coverage to minors with pre-existing conditions. This creates an incentive for parents to skimp on premiums until after a child is sick or hurt - while children with high medical expenses remain in the risk pool.
  • Lifetime benefit caps are now illegal. It used to be insurance companies would limit their losses to $2 million or $5 million or a similar amount over the lifetime of a single insured. The Affordable Care Act eliminates the cap: Insurance company loss exposure on any given individual is theoretically unlimited.
  • Insurance companies must now fully cover a variety of wellness checkups and preventative care services. A hotly-contested provision of the law requires insurers to provide access to birth control and contraception services with no deductibles or co-pays.
  • Insurers cannot charge women higher premiums than men, even though women of child-bearing age tend to incur higher health care costs. This would tend to decrease premiums for women, while increasing premiums for men to compensate.
  • Plans must allow adult children of planned members to remain in the pool well into adulthood.
  • The law also limits the ability of insurance companies to charge higher premiums on older Americans. In essence, this means that insurers must raise rates on younger and healthier people in order to subsidize coverage on older Americans. As a result, younger Americans in their 20s and 30s will likely see premiums go up.
  • Congress has added a 10 percent tax on medical devices. This increases costs to the consumer and insurance company alike. Premiums must rise to compensate.

Adverse Selection

Another big potential driver of premium increases is the phenomenon of adverse selection. In health insurance, this occurs when healthy people withdraw from the pool to save on premiums. The sick, however, are more likely to stay in. Insurers must then raise rates to compensate for the sicker risk pool, which forces more healthy people out of the pool, which forces carriers to raise rates and so on.

Congress attempted to ameliorate this by imposing a requirement that individuals stay covered - and charge them a special tax if they do not buy insurance. However, the penalties are much less than health insurance premiums, for the time being. Which means that many healthy individuals are deciding there is something they would rather do with their money - especially when their premiums are artificially high to subsidize older workers'' health insurance premiums.







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Tips for Finding the Best Health Insurance


Can you afford to go without health insurance coverage? Paying out of pocket for services, replacements and accidents is often too expensive to be an option. Health insurance is expensive, too, but it reduces your out-of-pocket expenses by thousands of dollars. Here are some tips to help you find the best health insurance coverage to fit your budget:

  • Consider how you use medical services and find the best-valued policy for your needs.
  • Be certain of the policy’s effective date and terms of coverage. You need to know when coverage is provided, if there’s a waiting period for full coverage, what the benefits include and how coinsurance or out-of-pocket payments are determined.
  • If you have savings to cover high deductibles and seldom go to the doctor, consider a policy with a lower premium, but higher deductible.
  • Find out if there are exclusions on pre-existing treatments or conditions. If there are exclusionary riders on your policy you will be responsible for any care, treatment or medicine used for that excluded condition.
  • Know exactly which services and conditions are covered.
  • Understand what the policy premium is, and if it’s paid monthly, semi-annually or annually.
  • Make sure you are clear on the difference between an HMO contract, self-funded plan, insurance policy and medical discount plan.
  • See if there are any additional fees, like copays or coinsurance.
  • Make sure the benefits and covered supplies meet your needs.
  • Never give out your bank information or write a check until you are extremely clear on the policy you’re considering.
  • Ask for all the printed items that detail the policy’s benefits and how you could use them.
  • Find out if your doctor accepts the insurance you’re considering.


When you understand your health insurance policy and all the options presented you will save you money. Ask questions, do some research and insist on full disclosure regarding the policies you’re considering. You shouldn’t accept a policy simply because it’s the first one offered. Take some time to fully understand what your needs are and determine which coverage would be best. You don’t want to skimp on health insurance coverage but you shouldn’t buy a policy filled with fluff you’ll never use.

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Health Insurance Tips for Small Business Owners


If you’re like the millions of small-business owners across the country concerned about health insurance, you’re probably a bit confused and concerned about the ever- changing laws and seemingly never ending increase in cost.  If you’re deciding whether or not to offer your employees insurance in 2014, here are a few suggestions to consider.


Take into account the nature of your business.  Small businesses made up of primarily owners, such as physician and dentist offices, architecture firms, and accounting practices, will most likely find that it still makes sense to offer their employees insurance, possibly including some sort of life insurance option.  Adversely a dry-cleaning shop or mom-and-pop restaurant that hires minimum-wage or unskilled workers may find that it makes more sense to skip group coverage.


When considering the health insurance issue for you employees, keep your employees in mind and what they might want.  Employees newly required to have health insurance under the law may want to get it from their employer. With that in mind, employers may feel encouraged to offer some sort of coverage.


When trying to decide whether to get a group policy, don''t forget that your employees might be better off buying an individual health insurance plan through a state policy, especially if they qualify for a federal subsidy.  Ask yourself, "If most employees could qualify for premium help through the individual exchange, am I doing my workers any favor by offering group coverage?"


Maybe the best advice when considering whether or not to offer you employees health insurance coverage is to wait and see how all of this ends up shaking out.  You’ve got some time, but you should at least be seriously thinking about it right now.  Don’t wait until the last minute or when it’s too late.  Do your homework and fully understand the laws and the various options for your company’s insurance needs.  After all, you need to do what’s best for both your employees and your business.  

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