Articles Base : Insurance - Finance

vineri, 22 octombrie 2010

The New Insurance Agent of the Millennium!

By Jason Cunningham
May 5, 2009 - 3:46:04 AM

Twenty years ago, it was not uncommon for an insurance agent to sell only insurance. Today, many insurance agents are more than insurance salespeople. Therefore, do not be surprised to find an insurance agent that discusses banking, investments, and insurance with you. Times have changed!

Why the Change in Insurance Agents?

In the last twenty years, the investing habits of many American households have changed. When many employers switched from defined benefits plans to defined contribution plans in the 1980’s, employees of these companies became largely responsible for funding their retirement needs. By the end of the 1980’s, the growth of the 401(k) had exploded because many companies did not want to guarantee a retirement income for their employees. Therefore, the employees had to become investment savvy.

Fortunately, insurance companies understood why employers moved from guaranteed pensions to defined contribution plans. Many companies felt handcuffed by guaranteed pensions, for money had to be set aside to fund individual’s retirements. The defined contribution plan, such as the 401(k), eliminated much of the financial burden that a guaranteed pension caused. In many defined contribution plans, companies will match a small percentage of the employees’ contribution to a defined contribution plan. From the employers’ perspective, a 2 to 3 percent contribution match to a working employees’ retirement account is cheaper than a guaranteed pension (i.e. $3,000 to $4,500 per month at retirement).

In 1999, Congress passed the Financial Service Modernization Act. The law changed how we view the financial service industry. As a result of the Financial Service Modernization Act, banks, insurance companies, and security firms became fierce competitors for the same clients. Insurance companies such as American Express and MetLife encouraged their insurance agents to become financial planners. Why would an individual need an insurance agent and financial planner? Some insurance agents did not change their insurance practice. However, many insurance agents not only became financial planners, but also these insurance agents became investment gurus in the community. These financial planners became responsible for helping their clients to choose investment options to fund a 401(k), a 401(k) rollover, and an IRA account. At that time, I had just started working in the financial service industry. Today, it is not uncommon to find a financial planner running around with a Blackberry, even though the financial planner works for an insurance company entity. Times have changed!

Analysis

Today’s insurance agent is responsible for selling more than insurance. Many of these agents now run financial planning practices. The Financial Service Modernization Act and the growth of the 401(k) and other defined contribution plans have played a major role in the transformation of today’s insurance agent.

Understanding the Value of Long-Term Care Insurance

By Jason Cunningham
May 6, 2009 - 8:40:06 PM

In American, some people do not understand the importance of long-term care insurance. Yet, long-term care is among the highest health care cost in our country. As the human life expectancy continues to rise, we can expect more individuals to require long-term care.

The Need for Long-Term Care Insurance

Long-term care insurance is no different than other insurances. Individuals buy long-term care insurance because they might need long-term care in the future. As we grow older, our chances of needing long-term care insurance increases. The cost of long-term care can be expensive. In some areas, home health care may cost more than $100 per day, on average, for 7 hours of care. An extended stay in an intermediate or skilled nursing facility bed may cost more than $170 per day, depending on the area and on the facility. How many people can afford this cost for a few years?

Before going any further, I must define long-term care. Quite simply, long-term care is the need for constant supervision due to cognitive impairment, the need for standby or hands-on assistance with activities of daily living (i.e., bathing, dressing, toileting, ambulation (walking), eating, and transferring) due to functional decline, or the need for care due to chronic illness. You can feel confident that the above mentioned definition of long-term care is a good one. However, a long-term care insurance policy may have a looser or stricter definition of long-term care.

What Does a Long-Term Care Insurance Cover?

There are differences among long-term care insurance policies, even if the policies are issued by the same insurance company. Some long-term care insurance policies only pay benefits if the insured is in a qualified nursing home. Other long-term care insurance policies pay home health care, assisted living, respite care, and other benefits approved by the insurance company. Also, all of the above mentioned long-term insurance benefits may be combined into one policy. Therefore, an insurance agent can help you to design an individual long-term care insurance policy to meet your needs.

The Value of Long-Term Care Insurance

Long-term care insurance gives people choices. When receiving long-term care, most people want to stay in their homes, if possible. This is why home health care is so popular. Besides, if an individual goes to a nursing home, the nursing home facility will force an individual to spend down his or her assets until that person is “living in poverty,” which may qualify the person for Medicaid benefits. There are certain rules that govern the amount of assets that may be kept in the other spouse’s name, but you will need to consult a tax accountant because this amount has changed over time. In some cases, spouses are forced to live in separate nursing facilities because the facility has no more Medicaid beds or does not accept Medicaid patients. But remember, long-term care insurance is designed to help you to pay for some or for all of your long-term care expenses. Furthermore, you help your state and Medicaid save money if you purchase an adequate long-term care insurance policy, which has two or three years of benefits! Some states give individuals' tax credits for purchasing certain long-term insurance policy; your tax accountant can tell you which long-term care insurance policies qualify.

Analysis

Long-term care insurance must not be overlooked. Many individuals can avoid staying in a nursing home if they have home health care benefits under a long-term care insurance policy. Furthermore, many individuals cannot afford to spend $40,000 to $70,000 per year on long-term care. As this population ages, more people will require long term care. To keep Medicaid expenses down, some states allow individuals to claim a tax credit if they purchase a specific type of long-term care insurance policy.

Do Not Drop Your Life Insurance Because of the Economy?

By Jason Cunningham
Nov 23, 2009 - 7:53:58 PM

At present, many people are trying to save more money. However, after they reduce their grocery bills and their expensive Friday nights on the town, what else can they eliminate from their budgets? Unfortunately, some people believe it is great time to drop their individual life insurance policies.

Why Did You Buy the Life Insurance Policy?

Usually, people buy life insurance for the death benefit. These individuals want to protect their families from burial costs and the lost of future income. Additionally, depending on the face amount of the policies, spousal beneficiaries have been known to pay off their mortgages and pay for their children’s educational expenses with life insurance proceeds.

Ideally, life insurance is not bought to replace a loved one but to provide financial assistance to loved ones left behind with present, past and future liabilities. In tough economic times, people often forget the reasons why they bought the life insurance. Therefore, some individuals are inclined to lapse or cancel their life insurance policies because they need the money to pay other expenses.

Insurability Concerns and Life Insurance

No one ever plans to become uninsurable for life insurance. However, we all know that it can happen. Unknowingly, a person may have a terminal illness. In some cases, a routine visit to the doctor’s office may lead to an individual being admitted to the hospital. A cancer or renal disease diagnosis can render an individual uninsurable for many standard insurance policies.

What Should You Do about Your Life Insurance Policy?

Before you decide to surrender or lapse your life insurance policy, talk to your loved ones and your financial planner. Your financial planner may be able to find saving opportunities to help you to pay for your life insurance policy, in spite of these bad economic times. Remember, there is no guarantee that you will be insurable for a standard life insurance policy tomorrow.

Understanding the Long Term Care Waiver of Premium

By Jason Cunningham
Dec 12, 2009 - 7:45:25 AM

Depending on your long term care insurance policy, it may contain the waiver of premium provision. When a policyholder qualifies for waiver benefits, he or she is usually not required to pay premiums as long as certain policy requirements are met.

The importance of the waiver

The waiver of premium can be a selling point for individuals desiring to buy long term care insurance. Potential policyholders are often intrigued by the possibility of not paying additional premiums if they are receiving home health care or nursing home care benefits for a specific period of time. While there is generally an extra cost for the waiver of premium provision, many policyholders are glad to add this benefit to their policies.

The purpose of the Waiver Provision

Not every long term insurance policy contains the waiver of premium benefit. However, if a policy does contain the waiver provision, it is not uncommon that a policyholder must receive home health care or nursing home facility benefits for 60 or 90 days, without a break in care, in order to qualify for the waiver. Some policies may have a shorter or longer waiver period for a policyholder to receive these benefits.

Remember, it is important to understand the policy’s language. Long term care insurance companies do not arbitrarily extend the waiver of premium benefits to certain policyholders. Therefore, you must meet each of the waiver conditions set forth in your policy. For example, if the waiver of premium benefits only applies to home health care benefit recipients, then you must be receiving payable home health care for XYZ number of days in order to qualify for the waiver.

Some policies only extend waiver of premium benefits to those confined in nursing home or assisted living facilities. Again, you must always refer to your policy’s language. Various waiver provisions can differ within the same insurance company. Contact your insurance agent or your long term care insurance provider if you have any policy questions.

Conclusion

The long term care insurance waiver of premium is often an additional policy benefit. Individuals usually purchase the waiver provision because the benefit will allow policy owners to stop paying premiums for a specific amount of time if certain policy requirements are met, such as nursing home confinement of 90 consecutive days or more.