Frequently
Asked Questions
(Click
on item in list below to scroll to location on page)
· General
FAQ’s
· Group Health Insurance
FAQ’s
· Voluntary (Worksite)
Benefits FAQ’s
· Group Dental Plan
FAQ’s
· Mini Med Health
Plan FAQ’s
· Medical Gap Plan
FAQ’s
· Chamber &
Association Plan FAQ’s
· Individual Life Insurance
FAQ’s
· Group Life
Insurance FAQ’s
· Individual
Disability Insurance FAQ’s
· Group Disability Insurance
FAQ’s
· Individual Long
Term Care Insurance FAQ’s
· Group Long Term
Care FAQ’s
· Dental Discount
Plan FAQ’s
· Vision Discount
Plan FAQ’s
General FAQ’s
Why Should I Use SBHIN as a Benefits or
Insurance Broker?
As your employee benefits broker, we represent you, the
client, not the benefit providers
How can SBHIN help you?
§ We assess
your needs
§ We provide
you with product/provider information
§ We quote
appropriate plans
§ We assist
with employee enrollment
§ We manage
the provider relationship
§ We repeat
this cycle at time of renewal
Does
working with SBHIN cost me anything?
All the services offered by SBHIN are provided at no extra
cost to you. If you buy a health insurance plan through us, you'll pay the
regular monthly premium to the insurance company you chose, but you'll pay
nothing to us. Our fees are paid by the insurance companies in the form of
commissions, which are built into the premium amount.
Do you offer the
best prices?
Health insurance premiums are filed with and regulated by
your state's Department of Insurance. Whether you buy from us or directly from
the health insurance company, you'll pay the same monthly premium for the same
plan. We provide a higher level of personalized service at no extra cost to
you. This means that you can enjoy the advantages and convenience of shopping
and purchasing your health insurance plan through us and rest assured that you're
getting the best available price
Do you save money going direct to the
providers?
No. More than ninety (90%) percent of all benefit plans are sold through
brokers. Providers do not compete with brokers by offering lower pricing on
direct sales. A benefits broker is essentially a free resource for your
company.
Can you change brokers at anytime?
Yes. If your broker is not meeting your expectations, you may select a new
broker at anytime and redirect commissions to your new broker with a simple
letter. If you need a broker or are dissatisfied with your existing broker,
please call us today
Group Health Insurance FAQ’s
What is the basic difference between
individual and group health insurance coverage?
An individual policy is purchased by you directly with the
insurance company. With a group health insurance policy, the group is the
master insured and the insurance company contracts with the group. Insurance
certificates, issued to a participating member, act as your policy. Often group
health insurance costs less than would have been charged had the insurance
company sold individual policies to each member separately. In addition, group
health insurance often contains special coverages that are not available or are
very expensive on an individual basis. The purchasing power of the group makes
this economically feasible.
What
are the benefits of providing group health insurance to my employees?
It's no secret that employees value
health insurance benefits. Surveys have shown that workers value health
insurance coverage second only to monetary compensation. By offering group
health insurance benefits to your employees, you may find it easier to hire and
retain the best workers for your company.
Additionally, there are various tax incentives available to
you and your employees when you participate in a group health insurance plan.
For example, businesses can generally deduct 100% of the premiums they pay on
qualifying group health plans and, by offering group health insurance as part
of a total compensation package; you may be able to reduce payroll taxes. Plus,
your employees can pay their portion of the monthly insurance premium with
pre-tax dollars. Make sure that you take these incentives into consideration
when determining the affordability of a health insurance plan for you and your
employees.
What types of group health insurance plans are available?
The three most commonly available
health plans are the following.
1. HMO (Health Maintenance Organization)
In an HMO, you must select a primary care physician (PCP)
who coordinates your care with other physicians within an HMO network. Your PCP
must refer you to a specialist. From a financial perspective, the covered
employee need only pay the small co-payments listed for services and prescription
drugs. There are no deductibles or co-insurance.
2. POS (Point of Service)
A Point of Service (POS) plan is essentially an HMO with one added benefit. A
POS allows you to "self-refer" to another physician or specialist
without the approval of a Primary Care Physician. When you do so, however, a
deductible and co-insurance apply. An individual who self refers must first pay
the deductible amount and then pay co-insurance (typically 20%) for any charges
above the deductible. An "out-of-pocket maximum" places a cap on a
covered employee's financial exposure when they seek care without a referral.
3. PPO (Preferred Provider Organization)
A Preferred Provider Organization plan presents an employee with a different
choice and more freedom. The distinguishing characteristic of a PPO is that an
employee does not need to name a Primary Care Physician. If they seek care from
a "Preferred Provider", the employee pays only small co-payments
(like an HMO). If an employee seeks care from an out-of -network provider, the
deductibles and co-insurance apply.
How are Health
Insurance prices determined?
Monthly premiums for health
insurance are typically determined for each group based upon employee
characteristics such as: age, industry classification, location and coverage
type (Individual or Family). Monthly premiums for Individual coverage may range
from $160 to $300 per month while Family coverage can range from $500 to $1,000
per month. The cost of a health plan will usually be higher as you move from an
HMO to a POS to a PPO plan
What Kind of Employer Premium Contributions are Required?
Each provider is slightly
different, but most insurance carriers require the employer to contribute at
least 50% to the monthly health insurance premium
How is Eligibility
for Employees Determined?
An "Eligible Employee" is
typically defined as a full-time employee regularly working 30 or more hours
per week (including owners) and paid in accordance with state and federal wage
requirements. For the purpose of meeting minimum participation requirements, an
employee may be waived from the number of eligible employees if he/she is
covered by a spouse, a parent, or Medicare.
What are Employee
Participation Requirements?
Insurance providers will require a
minimum level of participation by eligible employees in a group health
insurance plan. You may exclude allowed waivers from your total number of
"eligible employees". Of the remaining "net eligible
employees", usually 75% must elect coverage under the plan. (Employer
contribution to premium is usually adjusted to ensure sufficient
participation.)
Voluntary (worksite) Benefits FAQ’s
What are Voluntary Benefits?
(Also know as “Supplemental Benefits” or
“Worksite Benefits”.) Voluntary benefits allow employers to expand
their benefit offerings at no additional cost. These payroll deducted plans are
rapidly gaining in popularity and many more employers are making them available
to their employees.
Voluntary plans reduce the pressure for more company-paid
benefits while providing more benefit choices to employees. Policies are paid for
through payroll deduction and are owned by the employees. The benefits are
portable – meaning the employee can continue coverage at the same
discounted payroll rates even after leaving the company. Plans can provide
family coverage as well.
Why is there a need for Voluntary
benefits?
Today’s system is flawed. The Core Benefit plans in
place today are not set up to properly protect employees against a critical
health event. If they become sick or injured and are out for an extended period
of time their income gets stripped and expenses increase. Even with medical
insurance, there are substantial out-of-pocket costs. Voluntary benefits
fill gaps and pay substantial amounts of cash directly to employees and their
covered family members.
Who Benefits the most from these plans?
Voluntary Benefits are a win-win for both the employers and
employees. Employees benefit from the convenience of payroll deduction,
discounted payroll rates, and the ability to expand benefit coverage customized
to their specific needs. Most plans can be paid for on a pre-tax basis. When
offered under a Section 125 Cafeteria Plan, there are tax savings for both the
employer and employees.
What’s in it for employees?
Voluntary benefits are a powerful complement to every
company’s benefit package. Surveys show that when employees can pick and
choose their own benefits, employees are happier and retention is enhanced.
Specifically, they appreciate the convenience, lower-cost, simplified underwriting,
and payroll deduction offered by voluntary products. They also feel employers
who supplement benefits packages with voluntary benefits are providing a valued
service to employees.
What’s in it for employers?
The very nature of voluntary benefits speaks to the
customization you’re looking for and employees are demanding.
§ Save money: employees typically bear all or most of the
cost of voluntary benefits.
§ Attract new workers to join the company.
§ Retain talent: 84 percent of employers surveyed believe
that offering voluntary benefits increases loyalty and retention.
§ Strengthen your partnership with your
employees and increase loyalty.
§ Help employees protect and plan for their future
financial security for themselves and their families.
What types of voluntary coverage are
available?
Short term Disability
Our Personal Short-Term Disability insurance may help
provide you with a source of income if you become disabled due to a sickness or
off-the-job injury. It provides monthly benefits for periods of 3 months, 6
months, 12 months, or 24 months. When you own Personal Short-Term Disability
insurance, your policy stays with you regardless of job change
ACCIDENT INDEMNITY
Our Accident Indemnity Plan helps
cover the expenses associated with an accidental injury. It pays you directly,
regardless of any other insurance you may have. Benefits include:
§ Accident Emergency Treatment
§ Accident Follow up Treatment
§ Accident Initial Hospitalization
§ Accident Hospital Confinement
§ Accidental
Death and -Dismemberment
§ Many
others
LIFE INSURANCE
Term life insurance, whole life insurance, and a
combination of both to provide the level of coverage you need. You can apply
for up to $200,000 ($100,000 for applicants over age 50) total coverage. In
addition, the health questions on your application for coverage do not require
a medical exam or blood test. Your premiums will be automatically deducted from
your paycheck. Coverage automatically includes a Waiver of Premium Benefit in
case of total disability and an Accelerated Death Benefit.
Cancer/Specified-Disease
When a covered individual is diagnosed
with cancer, this plan provides benefits for hospital confinement, radiation
and chemotherapy, and surgery, among others. In addition, it will pay a
First-Occurrence Benefit when a covered individual is first diagnosed as having
internal cancer. Benefits include:
§ Hospital
Confinement
§ Radiation
and Chemotherapy
§ Cancer
Screening & Wellness
§ National
Cancer Institute (NCI) Evaluation/Consultation
§ Many
others
Critical illness - Specified Health
Event
This plan pays a benefit when a
covered individual is first diagnosed as having a covered life-threatening
health event. We pay a First-Occurrence Benefit as well as hospital confinement and continuing care benefits
for
§
Heart attack and coronary artery
bypass surgery
§ Stroke
§ Major
human organ transplant
§ Coma
§ Many
others
Hospital Confinement Indemnity
Pays a benefit when a covered person is
charged for required hospital confinement of 14 or more hours for a covered
sickness or injury. Benefits are determined by state, but may include, among
others:
§ Hospital
Confinement
§ Hospital
Short Stay
§ Surgical
§ Wellness
§ Separate
Heart Attack, Stroke, Coma and Paralysis
Dental
Our Dental Plan provides basic,
preventive, and major dental benefits to covered individuals. Eligible
treatments are listed in the policy by American Dental Association (ADA) code.
The Dental Wellness Benefit is payable once per visit, regardless of the number
of treatments received. For benefits to be payable, 150 days or more must
separate dental wellness visits. This benefit is payable twice per policy year,
per covered person. A dentist or dental hygienist must perform the treatment.
There is no waiting period for this benefit.
VISION
Coverage is provided for eye diseases and injuries in
addition to eye exams and materials benefits. Coverage includes:
§ No
provider network restrictions
§ Eye
Examination Benefit
§ Vision
Correction Benefit
§ Eye
Surgery Benefit
§ Specific
Eye Disease/Disorder Benefit
§ Permanent
Visual Impairment Benefit
Group Dental Plans FAQ’s
Is dental Coverage Really Important to
employees?
Yes, surveys have shown that Dental Insurance is one of the
most highly valued employee benefits, second only to health insurance
What types of group Dental Plans are available?
The three most commonly available
Dental plans are the following:
1. Dental Indemnity Plan
Under an indemnity plan, the covered employee may seek care
from the dentist of their choice. (There is a risk of balance billing, however,
if an employee seeks care from a dentist not contracted with the selected
dental provider.) The annual maximum for dental plans is usually $1,000 - $1600.
Most dental plans pay 100% for Preventative/Diagnostic services and there are
no deductibles. For Basic and Major Restorative Care, a covered member would be
expected to first pay an annual deductible (typically $50 for an individual and
$150 for a family). After the deductible is met, the dental insurance plan
would cover 80% of the cost for Basic services and 50% for Major and
Orthodontic services. (A separate annual maximum is established for Orthodontic
care.)
2.
DMO (Dental
Maintenance Organization)
Similar to a health plan HMO, a DMO is a smaller network of
contracted dentists. Monthly premiums are typically lower given the more
limited choice of dentists. Unlike the "percentage" plan above, DMO's
have no deductibles but rather specify a detailed schedule of employee co-pay
amounts for each type of dental service. The list of co-pay amounts is often
equivalent or better than the 100%/80%/50% levels of coverage under an
indemnity plan.
3.
PPO
(Preferred Provider Organization)
Coverage under a dental PPO is similar to that of an
Indemnity plan except that the deductibles and co-insurance (percentages) are
lower for the employee if they seek care from a "Preferred Provider
Are Employer Premium Contributions are Required on Group Dental Plans?
Each provider is slightly different, but most insurance
carriers require the employer to contribute at least 50% to the monthly dental
insurance premium.
How is Eligibility
for Employees Determined?
An
"Eligible Employee" is typically defined as a full-time employee
regularly working 20 or more hours per week (including owners) and paid in
accordance with state and federal wage requirements. For the purpose of meeting
minimum participation requirements, an employee may be waived from the number
of eligible employees if he/she is covered by a spouse, a parent, or Medicare
What are Employee
Participation Requirements?
Insurance providers will require a
minimum level of participation by eligible employees in a group dental
insurance plan. You may exclude allowed waivers from your total number of
"eligible employees". Of the remaining "net eligible employees",
usually 80% must elect coverage under the plan. (Employer contribution to
premium is usually adjusted to ensure sufficient participation
Mini Med Health Plan FAQ’s
What are Mini Med Health Plans?
We're all familiar with the Health Savings Accounts that
have been all over the news lately as the government pushes to expand on
consumer-driven health care. But there is another option for those that are
interested. It’s called limited health benefits or a mini-health plan.
These lower cost plans can provide an opportunity for employers, especially
small to medium sized business owners to offer health insurance plans
to their workers.
These plans provide coverage to full-time, part-time,
entry-level and seasonal employees and any other employee who cannot afford or are
not eligible for the employer's traditional major medical plan. It also
provides coverage for employees of companies that are unable to provide major
medical coverage but want to provide some health insurance coverage and
security for their employees.
Why should you consider offering a Limited-Benefit
plan?
Because all of your employees deserve some kind of health coverage.
On average these plans cost about 1/3 of the price of
traditional health insurance putting it within reach of many more employers and
employees
How do Mini Med Plans work?
Mini Med Plans work very much like regular health insurance
with some additional options and flexibility to accommodate part time, entry
level, hourly and seasonal employees. As Mini Med Plans are limited benefit
healthcare plans be careful to check what the specific coverage and limitations
are.
What do these plans Typically Cover?
Plan Coverage may include:
· Physician's
office visits
· In-hospital
stays
· Surgical
procedures and anesthesia
· Prescriptions
- drug discount card
· Physical
exams and diagnostic tests
· Diagnostic
x-ray and outpatient lab tests
· Critical
illness expenses
What kinds of companies use these plans
the most?
Companies with a higher concentration of lower wage and
part time employees that are not eligible for the employer's traditional major
medical plan or those that cannot afford to pay the higher premiums of traditional
medical coverage. These lower cost plans can provide an opportunity for
employers, especially small to medium sized business owners to offer health insurance plans
to their workers.
How much do Mini Med Plans cost compared
to full health insurance?
On average these plans cost anywhere from 25% to 50% of
the price of traditional health insurance putting it within reach of more
employers and employees These plans generally cost around $80 per month for an individual
vs. $250 to $300 per month for traditional coverage.
Why do employers offer Mini Med plans?
Some health insurance
is better than no health insurance at all. Providing health care for your
part-time and hourly employees will improve your company image, increase
morale, and boost your recruiting efforts. This is especially true for business
owners who have had to cut back on the amount they can pay for employee health
insurance or drop the benefit altogether. The ability to offer some sort of
health plan increases their ability to retain employees that might seek work
elsewhere looking for health benefits. These plans provide limited medical
benefit coverage to full-time, part-time, entry-level employees and any other
employee who cannot afford or is not eligible for a traditional major medical
plan.
What are the main drawbacks to Mini Med
Health Plans?
The obvious downside to mini-medical plans is the enormous out-of-pocket
expense that could be racked up if the member is involved in an accident or
develops a disease that needs routine treatment and hospital stays. These are
the main reasons many people carry health insurance,
to prevent spending a significant amount of money on health care and possibly
going into debt.
Medical Gap Plan FAQ’s
What is a Medical Gap Plan?
Many companies can no longer afford the 12% to 30% and
higher rate increases for group health insurance each year. Employers are
forced to pass on to the employees these increased costs in the form of raising
deductibles and coinsurance, increasing employee contributions, and reducing or
eliminating benefits. Changing or eliminating benefits and increasing costs can
cause dissatisfaction with employees, lower morale, and lower employee
retention. Employers today are using Medical Gap Plans to reduce group health
insurance costs. Medical Gap Plans can not only save employers money, but in
some cases save employees money by allowing employers to keep the same benefits
instead of lessening benefits, and employees have less out of pocket.
A Medical Gap Plan works directly with your group health insurance or Major
Medical Plan. A Gap Plan will reimburse employees directly for Copays,
Deductibles and Coinsurance depending upon the plan design chosen by the
employer. The Gap Plan can work for both inpatient and outpatient care,
including Doctors Office Visits, Diagnostic Testing, Surgery, Emergency Room
visits, and Inpatient Hospitalization. If an employer can no longer afford
their current plan design and would like to move to a higher deductible plan
this sudden change can be difficult for employees. By implementing a Medical
Gap Plan this can take the shock of larger deductibles, copays and coinsurance
from employees. Medical Gap Plans can also be offered on a voluntary payroll
deducted basis, where employers do not pay for the plans, and employees pay for
them through payroll deductions.
Medical Gap Plans are important because reducing or
eliminating benefits, raising deductibles and coinsurance, and shifting costs
to employees reduces employee morale and affects job satisfaction.
What are the advantages of Medical Gap
Plans for Employers?
- Easy to understand and explain
to your employees
- Quick to enroll
- Lowers the cost of your group
health insurance plan by allowing you to choose a higher deductible with
lower premium.
- Allows Employers to make a
smooth transition from a low deductible plan to a high deductible plan
- Allows some employers to still
offer group health insurance.
What are the advantages of Medical Gap
Plans for Employees?
- Offers employees an affordable
alternative to higher cost copays, deductibles and coinsurance.
- Puts Employees in position of
cost management
- Easy to understand
- Guarantee issue for all
employees – no health questions asked.
Chamber & Association Plan FAQ’s
Can I save Money on Health Insurance by
Joining a Chamber of Commerce?
Yes. Your small business can qualify for the most competitive
group health benefit rates by being becoming a member of a Chamber of Commerce
or Association. Self Employed Individuals and Family Businesses with as few as
one employee can qualify for lower group rates. Associations, Chambers of
commerce and professional organizations have long recognized the power of an
effective member insurance program to help drive membership. SBHIN markets a full range of benefits and
insurance programs to groups of all sizes. Find out how you can qualify for the
most competitive group health insurance and benefit rates as a member of a
Chamber of Commerce or Association.
Group/Individual Life Insurance FAQ’s
Individual Life Insurance
Do I need life insurance?
You need life insurance if some person would experience a
significant financial loss in the event of your death. A common example of this
is the family breadwinner whose income totally or partially supports a family.
The death of that person would result in loss of income and financial harm for
the remaining family members. Other reasons are to put your kids through
school, pay the car note, mortgage, or other debts you have left behind, and
pay funeral expenses. Business partners are another important example. The
death of one partner might obligate the other partners to buy out the heirs: the
life policy can be the source of funds.
Wouldn’t my group insurance from
work or social security or mutual fund assets pay these needs?
Maybe, but usually not. The needs are often greater than
the available funds. To determine if your other “insurance” would
be adequate, you should get a more extensive examination of your needs and
currently existing sources of funds.
What is term life insurance?
Term life insurance is insurance that lasts for a specific
time, such as 5, 10, 15, 20 or 30-year terms. The policy pays a death benefit
in the event the insured dies during the specified period. Since term insurance
is for a limited period and accumulates no cash value, the rates tend to be low
for a given amount of insurance.
What is cash value life insurance?
In addition to providing a death benefit, cash value life
insurance also accumulates a fund that can be used to pay future premiums or
serve as a form of savings.
How does cash value differ from term?
In addition to providing a death benefit, cash value life insurance
also accumulates a fund that can be used to pay future premiums or serve as a
form of savings.
What is whole life insurance?
It is a popular type of cash value insurance that builds up
cash value and continues coverage until age 90 or 100. Whole life insurance
provides death protection, as its name suggests, for the whole of life.
Typically the policyowner would pay the same premium for as long as the insured
should live. Premiums can be several times higher than premiums you would pay
initially for the same amount of term life insurance, but they are smaller than
the premiums you would eventually pay if you were to keep renewing the term
life insurance policy until the insured's later years. The value of permanent
life insurance is that protection is ongoing – you never need to worry
about the term of your policy ending or make decisions about what to do next,
so your family’s security is always maintained. Although you pay a higher
premium initially for whole life than for term life insurance, whole life
policies develop cash values which may be available to the policyowner.
Additionally, the policy's cash value can be used as collateral for a loan. If
the policyowner borrows from the policy, interest is charged at the rate
specified in the policy. Any money owed on a policy loan is deducted from the
benefits upon the insured's death or from the cash value if the policyowner
surrenders the policy for cash.
What are the traditional types of whole
life policies?
In addition to regular whole life which is typically
designed to continue until age 90 or 100, plans are available which become
fully paid up in a certain number of years (for example, 20-year payment) or at
a certain age (for example, life paid up at 65). There are also variations on
the whole life concept that allow more than one person to be insured (joint
life, family plans) or that have different premium paying structures (single
payment life, graded premium life).
What is universal life insurance?
Introduced a couple of decades ago, it is a type of cash
value insurance that allows greater flexibility than a traditional whole life
plan. Universal Life Insurance provides coverage and builds cash value. It is a
flexible type of permanent life
insurance, allowing you to make adjustments to the amount of
your premium or death benefit at any time. A universal life insurance policy
provides lifelong coverage and accumulates tax-deferred cash value over time. Universal
Life has several unique features not found in whole life policies. Specifically,
the policyowner is provided with the flexibility to vary the timing and amount
of premiums and the face amount, depending upon present needs.
My insurance agent recommended a term
policy. What are some considerations?
You need to ask yourself some questions. What is the
purpose of the coverage? Is it to cover a temporary need such as a mortgage or
income for dependent children? Or are you trying to get the most coverage you
can get for the amount of money you have to spend? Do you expect to have much
higher income or greatly increased assets in a few years, which would render
this coverage no longer necessary? These would be reasons to consider term
insurance.
If my agent recommends a cash value
policy, what should I consider?
If you expect to have a continuing need for at least some
life insurance throughout your life, you may want to consider a cash value
policy. Alternatively, you could get a mix of cash value insurance and term
insurance. This would allow you to get basic continuing coverage (cash value)
together with low cost insurance (term) to meet high coverage needs for income
and large debts such as a mortgage. If you are likely to discontinue the policy
in a few years (more than half are dropped in less than 10 years) you should
reconsider. The expenses associated with the initial years of the policy
(marketing and underwriting and commissions) usually mean that a cash value
policy held for only a few years can be a very expensive way of getting short
term coverage.
Should I buy life insurance on my
children?
If you have extra money, and want to give them a base of
life insurance to “start them off”, it is okay. Otherwise your life
insurance dollars can be better spent for adequate coverage on the person who
brings in income to support the family.
What is the importance of age/sex/health?
Increasing age increases the cost of life insurance,
because the older you get, the greater your chances of dying. Being male costs
more, because females live longer on average. Poor health raises the rates for
life because it decreases the number of years you are likely to pay premiums
and reduces the time before the company may have to pay a claim. Health is
often the most important factor, followed by age and sex. Someone in poor
health will have to pay a very high premium, or even be uninsurable.
What is an Incontestability Provision?
Normally, contracts can be voided or canceled at any time
if they have been fraudulently enacted. Life insurance contracts are somewhat
different because of a clause in the policy called the “incontestability
provision.” Here, the company gives up its right to challenge the
contract after a specified period (usually one or two years), and agrees that
after this period, it will not deny claims even if serious misstatements were
made in obtaining the insurance. The period during which claims are contestable
provides the company a reasonable opportunity to protect itself against people
getting insurance that they would not qualify for if they gave truthful
information on their applications. It also provides the vast majority of honest
policyholders the assurance that their policies will be honored.
What are Accelerated Benefit Riders?
Recently, many life companies have developed programs to
offer accelerated benefits (also called living needs benefits) to certain
policyholders. These have been developed in response to viatical settlement
programs. Often the accelerated benefit programs offer better terms than
viatical settlements. These accelerated benefits programs are usually in the
form of riders and they provide early payments of life policy cash values. For
policyholders who have been found to be terminally ill, accelerated benefits
can be paid to nursing homes or directly to the insured.
Will I need life insurance when I retire?
In general, the need for life insurance tends to decline
with age because some of the reasons for buying it (college for children,
income for dependents) either become non-existent or are needed for fewer
years. In addition, other assets, from savings and investments, that could pay
for these expenses tend to increase. So the need for life insurance will be
small or non existent for many people after retirement. Exceptions include
those with large estates or those who have business needs for life insurance.
Circumstances like these often present special needs for life insurance that
should be analyzed on an individual basis.
Will a life insurance policy affect my
eligibility for Medicaid benefits?
Life insurance is considered to be an asset under federal
guidelines for Medicaid eligibility. Therefore, having a life insurance policy
could affect eligibility and the policy may have to be relinquished before
Medicaid is granted. However, Medicaid is administered by the states, so the
details of eligibility requirements may vary from state to state.
Group Life Insurance
What is Group Life Insurance?
Group life insurance is a form of term life that is sold to
companies to cover their employees. Since many people are covered under one
policy the cost per covered person is low and the diversity of ages and health
situations can often lead to low underwriting costs. For the covered employee,
group insurance is usually free or inexpensive, but since it is only in effect
while working at that firm, there are risks to making it your only or main
insurance. Group life insurance normally includes a provision for conversion to
an individual insurance plan when the employee leaves the covered group.
What are the basic types of group life
insurance?
The life insurance coverage provided by most group plans is
one-year term. The plan comes up for renewal each year, and both the insurance
company and the employer have the opportunity to consider whether to continue
it. For the insurance company, it is also an opportunity to revise the rates.
The employer is the policyholder and each covered individual is issued a
certificate showing his or her certificate number. Some group plans include cash
value insurance as an option. For example, some employers offer group universal
life, which the employee can purchase by salary deduction. Some companies offer
individual (non-group) insurance policies purchased at the place of employment.
A representative of the company that provides the group insurance coverage is
often available at the worksite to answer questions about the group coverage as
well as review other family coverage. Additional personal insurance to fill
gaps in insurance protection can be purchased at the employee’s option.
Other types of insurance include business-related plans such as split dollar
insurance where individual policies are purchased. Typically, the employer pays
the premiums, with the benefits to be split between the employee and the
employer.
What are some of the contrasts with
individual insurance?
Life insurance under a large group plan usually involves
little or no underwriting. If you work at the company, you are automatically
covered. Smaller group plans sometimes require some underwriting—the
smaller the group, the more underwriting they may require. Individual policies
often require you to prove insurability by supplying medical information and
perhaps submitting to a medical examination. Under group life, the company is
the policyholder, so company management determines if the insurance is to be
continued or modified. In companies with unions, the union’s labor
contract may also specify some of the terms of the coverage. If you have an
individual policy, you control the policy and you can take steps to have it
have it modified or terminated yourself. Group life coverage does not continue
if you quit your job or are terminated, though you probably have an option to
convert to a permanent individual policy within 30 days. A personal life
insurance policy is not related to your employment and so it will continue when
you change jobs.
What are the limitations of a group plan?
It is usually not portable if you leave your employer and
go to work elsewhere. In addition, the employer makes the decisions about
whether to continue the insurance, how much coverage you will have, and who the
insurer will be. Some recent benefit plans, though, do offer a degree of choice
in so called “cafeteria plans.” If your employer goes out of
business or eliminates your job, you lose not only your job, but also your
benefits.
What are the advantages of a group plan to
the employee?
The employer usually pays some or all of the cost. For a
noncontributory plan the coverage is a nontaxable benefit up to $50,000. Above
$50,000, the IRS charges tax on “imputed income.” Because
many people are getting their coverage under one policy, the per employee cost
tends to be low and the underwriting minimal. You do not have to write checks
to pay the premiums. If you contribute to the cost, it will usually be deducted
from your pay.
Individual Disability Insurance FAQ’s
What is Disability Insurance?
Disability Income Insurance is insurance coverage that
provides monthly payments, up to a specified amount and for a specific time
period after a covered illness or injury occurs. Insurance must be purchased
prior to your illness or injury. Disability Insurance provides a way to protect
your income and your standard of living.
§ Disability
Insurance protects your most valuable asset - You, and your ability to earn
income. If you become disabled, you most likely will not be able to earn enough
income to cover your continued living expenses
§ Disability
Income Insurance will provide monthly payments to help meet your daily living
expenses.
Who needs disability insurance?
Anyone who works for an income should consider disability
income insurance.
You may think the chances of becoming disabled are slim,
but statistics tell a different story. Should the unforeseen injury or illness
occur, be prepared and protected with a Disability Income Insurance Policy
§ Each year
nearly 1 in 5 people become disabled for 1 year or more before the age of 65.
§ One in
seven can expect to be disabled for five years or more.
§ Almost
half of all home foreclosures are the result of a disability. While just 3% are
due to death.
§ Nearly
half of the 1 million Americans who filed for bankruptcy protection least year
did so after being sidelined by an unexpected illness or injury.
§ Nearly 70%
of all disabled people that apply are rejected for Social Security benefits.
Do I Need Disability Insurance?
Some compelling questions individuals need to ask
themselves when considering the cost of disability insurance.
- What do you want to happen if
you become disabled?
- If you spend the extra money
to purchase disability insurance coverage and DO NOT become disabled, how
will your lifestyle be affected?
- If you do not purchase
disability insurance and DO become disabled, how will your lifestyle be
affected?
- If you had been on the horse
instead of Christopher Reeve, what would your life look like today?
What does disability insurance cover?
After an initial period called the
“elimination” or “waiting” period, disability income
insurance pays a specified percentage of your income while you are disabled.
The payments continue for the duration of the disability or until the maximum
time limit stipulated in the policy. As a rule, insurance companies will not
allow you to have disability coverage for more than about 60 percent or 70
percent of your normal taxable income.
What Features Do I Look For In A
Disability Income Insurance Policy?
§ A
favorable definition of disability as it pertains to your
"occupation" at the time of disability.
§ A
"non-cancelable" provision that guarantees a company cannot ca