Disability Insurance Explained

You have read the information about the need for disability insurances, and have checked out your company benefits to find that you DO NOT have short term disability (STD) or long term disability (LTD) plan coverage. If this is your situation, read the following. The time to do so is BEFORE you need to use that insurance!

The rest of you have checked out your company benefits and find that you DO have STD and LTD plans. Now you want to learn more about Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).

(Note: a denial on behalf of an insurance company for LTD does not necessarily have an impact on your ability to successfully apply and be accepted for SSDI coverage.)

Social Security Disability Insurance

If you qualify for Social Security (i.e., if you have acquired at least 40 quarters of Social Security contributions) and are suffering from a disability, you may be able to receive monetary benefits from the Social Security Administration. Also, in some situations these disability benefits may be awarded to you and your dependents.

Social Security Disability Benefits or SSDI are paid to individuals who have worked in the recent years. Usually you have to work 5 out of the last 10 years. For individuals under 31 years old, the requirements are a little different since they have not been in the work force as long.
Under the federal Social Security Disability Act, “disability” means the “inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months or result in death.”

The Workbook described at www.disabilitykey.com contains a step-by-step “How To” guide to assist you in documenting your illness/injury symptoms and their impact on your every day normal living activities.

Supplemental Security Income (SSI)

The Supplemental Security Income program is funded by the general revenues of the Federal Treasury and is intended to provide a minimum level of income to persons who are aged, disabled, or blind and demonstrate economic need. The SSI program is meant to supplement any income an individual might already have to ensure a certain level of income to meet basic living expenses. The dollar amount received in SSI on a monthly basis varies from person to person and is computed each month, taking into account an individual’s current financial situation.
For an individual to be eligible for SSI they must be disabled, or blind, or aged and have little or no income and resources. A person must fit into one of the following categories: Disabled, Blind (20/200 or less in your better eye with glasses or a filed of vision less than 20 degrees), or Aged (refers to be 65 years of age or older).

To be eligible for SSI a person must meet an income as well as resource test. SSI resource limits are set by statue and a person’s countable or real personal property, including cash, must not exceed the specified amount to qualify. The current resource limit is $ 2,000 for an individual and $3,000 for a couple. Income includes earned income (which refers to monthly gross earnings), and unearned income such as Social Security Disability Insurance (SSDI) or any other type of benefit or monetary support a person receives. A standardized formula, which takes into account earned and unearned income is used by SSA to compute the dollar amount of SSI cash benefit that a person qualifies for. This formula is applied during the initial eligibility determination and an individual must qualify for some dollar amount of SSI to meet the income test.

The specifics of qualifying for SSI are quite complicated.
The next time, we will talk about COBRA (and no, it is NOT a snake) OBRA, and their relationship to Medicare and/or another health insurance plan.

These are all of the traditional disability insurances. Now we will discuss what they are, and why you should care!

STD is an insurance that you are usually provided by your Employer. It is an Insurance plan that pays out a certain amount of money for a short period of time (normally, no longer than 6 months). There is usually a week of what is called “qualifying” time before the STD payment will kick in. Most folks can take sick leave, vacation time, paid time off, or some other sort of time for this qualifying time. This type of disability payment is for an illness or injury of a limited period of time. An STD payment ranges from a low amount that would equate to a state’s Unemployment payment, to a maximum of about 66% of base pay. To know about the specifics of your plan, ask the appropriate people for a copy of your STD plan’s Summary Plan Description.

LTD, or long term disability insurance payment usually results from a physical or mental illness that prevents an employee from performing the job that they occupied at the time the illness/injury occurred. To receive the disability benefits insurance payment, the plan participant must qualify, based on the particular plan requirements. There also is a qualifying period of time for LTD, just like for STD, only the average LTD qualifying period of time is usually 6 months. Again, like STD, the payment out of an LTD plan is plan-specific, and can range from a finite dollar amount to a percentage of base pay.

Key issues to research in your LTD disability insurance plan include, but are not limited to: pre-existing conditions; “own occupation” vs “any occupation” timeframes; whether or not the monthly benefit payment is taxable or tax free; etc. (Normally, the rule of thumb is that if the company pays for the LTD plan premiums, the benefit is taxable upon receipt; if the covered person pays for the plan premiums, the benefit is tax free.) Again, for specifics about your LTD plan, check out your Summary Plan Description.

Disability and Medical Insurance definitions. You have plans, and you have read about such things as: COBRA, OBRA, Own Occupation, Any Occupation, etc., and you REALLY want a simple definition. Well, we have them for you.

To see a Timeline that makes graphic sense about all of these definitions, please see www.disabilitykey.com. To ask a question, add onto one of these blogs.

DEFINITIONS

1. ACTIVE: Active medical insurance coverage means that you and/or your family are covered by a medical insurance plan. Usually, these plans are “group” plans carried by your, or your spouse’s employer (in which case, you are the “covered dependent”).

2. COBRA: COBRA is an acronym for “Consolidated Omnibus Budget Reconciliation Act”. It refers to an active medical coverage person’s ability to continue coverage as an inactive participant for 18 and, sometimes 36 months, when a “triggering event” occurs. Loss of active coverage status is a triggering event. A triggering event includes, but is not limited, to the following: loss of active coverage because the primary covered person lost his/her job (for any reason); divorce; a covered child’s age exceeds that covered in the Plan. The cost of COBRA coverage is at least 100% of the Employer’s cost, and can be 102% or 105%.

3. OBRA: OBRA rules allow a “qualified” disabled person to extend COBRA for an additional 11 months based on disability. There are key conditions; 1) the person must be SSDI qualified; 2) the person must request OBRA within the first 60 (sometimes 30) days of having received the SSDI determination letter; and, 3) the Plan Administrator may charge 150% of the COBRA price for coverage.

4. Medicare: When a person becomes SSDI-qualified, s/he is eligible for Medicare 24 months from the date of the first month of SSDI payment. As there is a 5-month waiting time from SSDI-qualification until the first month of payment (and this occurs the second Wednesday of the months AFTER the 5th month), the actual waiting time is 29 months.

5. HIPAA: HIPAA is an acronym for Health Insurance Portability and Accountability Act of 1996. It is a way for people who either do not choose COBRA, or who need to trigger additional health insurance before Medicare, to obtain some coverage.

6. 30-180 day Elimination Period for LTD: In most cases, a company’s LTD (long term disability) plan has an elimination period of time equal to the length of the company’s STD (short term disability) coverage. During this time, the employee is expected to obtain income any way s/he can.

7. Own Occupation: To be found “disabled from your own occupation” means that you have been determined to be unable to perform the “work” that you had successfully performed prior to evidence that your illness/injury symptoms impaired your satisfactory performance of the essential duties of your job. The key here, is that the evidence must prove that your inability to successfully perform your “own occupation” must ONLY be attributed to impairment caused by the symptoms from your proven, documented, disabling illness/injury.

8. Any Occupation: To be found “disabled from any occupation” means that, in spite of your age, level of education, and previous job history, the symptoms of your proven, documented disabling illness/injury impair you from performing work of any occupation. The reason, for LTD insurance purposes, that this impairment from performing work of any occupation is periodically reviewed, is that there are times when a person’s physical capabilities can improve. Disability pay only continues as long as there is proven evidence that the symptoms impair “work”. Often the “periodic review” occurs annually.

About Disabilitykey.com & Carolyn Magura:
Disabilitykey.com is a website designed to assist each person in his/her own unique quest to navigate through the difficult and often conflicting and misleading information about coping with disabilities.

Carolyn Magura, noted disability / ADA expert, has written an e-Book documenting the process that allowed her to:

a) continue to work and receive her “full salary” while on Long Term Disability; and

b) become the first person in her State to qualify for Social Security Disability the FIRST TIME, in UNDER 30 DAYS.

Click here to receive Carolyn’s easy-to-read, easy-to-follow direct guide through this difficult, trying process. If you are disabled, don’t let this disabiling process disable you. Read Carolyns Disability Key Blog.

[tags]health, pain, disability, medicine, insurance[/tags]

Getting the Most Out of Your IRO (Independent Review Organization)

Working with an Independent Review Organization (IRO) is a bit like working with your physician. How do you know you’re going to get the treatment to fix your ailment? Is the treatment covered by my insurance? How long do I have to wait for treatment? Have I given the doctor all of the information he or she needs to make the right care decision?

When requesting an independent medical review, careful consideration needs to be given to focusing on the specific issue(s) you’re trying to resolve. Understanding what questions to ask in the first place will help keep costs at a minimum by ensuring your IRO is reviewing the proper records and facts and correctly delivering decisions on the issues at hand - the first time.

It’s easy to confuse the issue of medical necessity of a procedure with the issue of whether or not a patient qualifies for that procedure according to your plan language. For example, say Mary Smith’s doctor has referred her to a chiropractor for back pain treatment but the plan language on her policy does not cover chiropractic services - no exceptions. Regardless of medical necessity or the doctor’s referral, the treatment would and should be denied. The IRO reviewer must be informed as to which issue you are trying to address up front.

Experimental and investigation treatments also pose a problem. Given constantly evolving technology, drugs and treatment protocols, it’s often difficult to keep up with what’s been approved as scientifically accepted treatment by the medical community and what’s still considered experimental procedure. Knowing that the plan exclusions always take precedence over inclusions can save a lot of time in the review process. The plan language definition of experimental/investigational is central to the decision.

Following are some tips designed to make it easier for you to work with your IRO and ensure meaningful outcomes for both the patients and your business every time:

Make sure you isolate the specific issue you are trying to address before you develop your questions, such as standard of care, medical necessity, experimental/investigational and/or plan language interpretation.
Develop a list of questions that must be answered with a definitive and substantiated reason.

Make sure you include all relevant chart documents and plan language that are needed to provide a definitive response.

If you have exhausted your efforts to get the records you need for a review, a “no” response from your IRO may be just the stimulus needed to prompt the record holder to release the full documents.

Understand that it’s your IRO’s responsibility to call with questions or clarifications on independent medical review requests before they begin. Make sure your IRO understands who to call and the best time of day that person can be reached.

About AllMed Healthcare Management

Founded in 1995, AllMed is a URAC-accredited Independent Review Organization (IRO) serving insurance payers, providers, TPAs and claims managers nationwide. Reviews are conducted by board-certified physicians in active practice. AllMed’s growing customer base for its independent medical review and hospital peer review services includes premier organizations, such as Educator’s Mutual Life, IMS Managed Care, Tenet Healthcare Corporation, HealthGuard, several Blue Cross Blue Shield organizations, TriWest Healthcare Alliance, Allianz and many other leading healthcare payers. Read the AllMed Medical News Blog and the Independent Review Organization Blog.

[tags]medicine, surgery, medical, insurance, health[/tags]

Where the Money Goes

As a business owner, you’ve come to expect big increases in your employee health insurance premiums of late. Employer-sponsored health insurance premiums increased an average of 11.2 percent in 2004, and this was the fourth consecutive year of double-digit growth, according to the recent Annual Employer
Health Benefits Survey released by the Kaiser Family Foundation.
That’s about five times the rate of inflation nationally, and probably significantly higher than the price increases your company has imposed on its products and services in the same time frame.

The reasons for these increases are not mysterious. The largest share of the ongoing increases track to increased utilization of advanced medical technologies new diagnostic and preventive screenings, and other high-tech therapies and medical hardware the majority of which are delivered at hospital on an inpatient or outpatient basis.

Prescription drugs also continue to play a major role in the rising cost of health care, owing to the higher prices of new formulations, the wider application of combination therapies and greater consumer demand for, and need of, medications in all areas of prevention and treatment. About the only area that has seen relative stability is physician costs.

Such increases, when they are part of the costs of running your business, are naturally cause for concern. It only makes sense that employers who want to continue offering their employees access to quality health care become more knowledgeable about how well their money is being spent by the health care carrier they choose.

For example, did you know that virtually all carriers in Florida spend roughly the same percentage of your premium dollars
on medical claims which works out to a medical loss ratio of 76 percent to 80 percent? They also spend about the same percentage, 10 percent to 12 percent, on administering your plan (processing claims, providing customer service functions,
covering fixed costs).

And most of the carriers factor in a 2 percent profit margin. The balance of your premium dollars go to the commissions,
which carriers pay to the independent health insurance brokers who act as consultants.

Brokers are, of course, a critical element in matching clients with carriers. Most small business employers don’t have the
time or staff to determine the best package of benefits for their group, shop the market for bids and compare product offerings carefully.

They depend on their broker to explore the different options, give them objective recommendations on the best choices and complete their applications. And brokers’ services may often continue after enrollment.

It’s extremely valuable for employers to better understand where their premium dollars go. Don’t hesitate to ask questions to fully recognize why one health plan may be preferred over another.

Employers can exercise some control over their costs by finding a health benefits company that provides the best value for their company’s premium dollars. The way in which you shop a health plan can impact the price.

It’s the same as if your travel agent had a great deal for you air, car, hotel and meals included. You tell your agent to book
it. Coincidently, your neighbors just booked that same trip for $1,000 less through their travel agent.

One agent shopped for the best price, the other agent arranged the trip through his or her vendor of choice. Whether it’s a family vacation, buying a car or choosing a health benefits plan, how you shop can impact your cost.

So why are health care premiums different?
Take a closer look.

Peter Joseph is senior vice president for commercial sales for VISTA, a health benefits company headquartered in South Florida with more than 330,000 members. VISTA, through its affiliated companies, Vista Healthpla Inc., Vista Healthplan of South Florida Inc. and Vista Insurance Plan Inc. offers a choice of health benefit plans, including health maintenance organization (HMO), preferred provider organization (PPO) and point-of-service (POS). Reach Joseph at 954-858-3000 or through VISTA’s website, http://www.vistahealthplan.com.

[tags]Health insurance premiums[/tags]

8 Easy Tips for Cheaper Home Insurance

No one likes paying for home insurance, but it’s a necessary evil for most of us. This doesn’t mean you have to pay through the nose for it though - try these 8 easy tips for cheaper home insurance and see how much you could reduce your premiums by.

- Shop Around

By comparing prices from several insurance companies, you’ll probably be able to reduce your premiums by a substantial amount. This may seem obvious, but research has shown that a surprisingly large proportion of people either just renew their current policy, or get only one or two quotes. Many insurance web sites will automatically compare dozens of policies for you, making this one of the easiest ways to reduce your insurance bill.

- Buy online

If you buy your policy online you can often get a discount of up to 20% on normal prices, because there are less administration costs involved and the savings can be passed on to you.

- Combine your buildings and contents policies

Many insurers will give you a discount if you take out both types of home insurance with them, and this usually works out cheaper than getting the two kinds of policies from different companies.

- Pay upfront

Although most insurers let you pay your premium in monthly instalments, many will charge interest for this. If you can afford to pay a full year’s premium in advance, then this will work out cheaper in the long run.

- Don’t claim for small amounts

Making many small claims can increase your insurance costs, as your insurer may see you as a greater risk and increase your premiums. You will also lose any no claims discount your policy has. Of course, you’re entitled to claim for anything your policy covers, but ask yourself if making a small claim is really worth the hassle and possible future costs.

- Voluntary excess

This is related to the last point. Insurance policies feature something known as ‘excess’, which basically means that the policy won’t pay out on claims below a certain value. On some policies, if you choose to raise your excess to a higher level, then your premiums will be lower.

- Increase your home security

Beefing up your home security with better door locks, window locks, outdoor lighting, and alarm systems can all result in lower premiums. Ask your insurer what you could do to get extra discounts.

- Reduce your cover

Many policies feature benefits that you might not need, such as cover for personal possessions while travelling, or ‘free’ legal advice. Look through your policy and see what parts of it you really need - by cutting your cover down to size you may be able to reduce your premium.

Nicholas Hunt is a financial writer for OneStop Finance. You can find a more detailed version of this article at Getting Cheaper Home Insurance, along with more information on home insurance providers.

[tags]home insurance,cheaper insurance,lower premiums[/tags]

Doctors Appointments-The Patients Responsibility

What is the patients role in a doctors office? Did you ever schedule your appointment and wonder why the doctor is running behind schedule?

There are many reasons why the doctor is running behind schedule see them listed below:

(1) The receptionist over scheduled appointments.

(2) The doctor became involved in a long telephone call with an other doctor or patient.

(3) The patient the doctor was seeing had a more complex issue and required more time.

(4) The doctor had an emergency case that needed to be squeezed in before the scheduled patient.

(5) The doctor got held up at the hospital for various reasons.

This is just a short list there are many more.

The patients role in keeping the office running on schedule is very important.

See The Reasons Listed Below:

(1) Always have your medical insurance card ready to be copied when arriving at the front desk to check in.

(2) Always bring your medical records with you, if required.

(3) Always bring your x-ray films with you, if required.

(4) Always tell the receptionist if your medical insurance has changed or if you have moved.

(5) Give the receptionist a copy of your referral or authorization paper. Without the paper or oral authorization numbers you might not be seen.

(6) Write down your questions you want to discuss with the doctor. Your time with the doctor is short and you might not think of everything.

(7) If you are a new patient always arrive about twenty minutes early to fill out the paperwork.

Do not be afraid to make a suggestion about the treatment of your problem. All the doctor can say is no, “I want to try something different.”

Many people are afraid to make suggestions to the doctor about their own care. But who better to make the suggestion, you are the patient and nobody knows their problems better than you.

If you talk to the doctor about your suggestion at the time of the visit, it will relieve your mind. If you are not satisfied with the doctors opinion about your care, you can always get another opinion providing your medical insurance will allow it.

There are people who are to timid to make a suggestion to the doctor about their care when they have the doctors attention.
This causes unnecessary telephone calls back to the doctors office when the patient arrives home.

This is why writing down your questions, including your suggestion on your medical care and handing it to the doctor to read might help eliminate the situation.

You can also fax a letter to the doctor with your concerns about your medical care. This letter will be paper clipped to your chart for the doctor to read. This is a great way for the patients children or care giver to keep your doctor aware of your condition.

All the ideas discussed in this article is a reason why the doctors office does not run on time.

As a patient, the doctors office is not allowed to give out any information to another person except a spouse. This is called patient confidentially. If you need a family member or friend
help you with your medical bills or intervene on your medical care, you must have a letter signed by the patient on file in the doctors office.

If you do not have an medical insurance read my article listed below:

When I Don’t Have Medical Insurance! What DO I Do?

If you have Medical Insurance and still have bills, read my article listed below:

Horrifying Medical Bills! When You Have Medical Insurance! Fight Back.

If you want to know why medical costs are sky high, read my article listed below:

Get The Money.

Everybody is entitled to have affordable Medical Insurance. If there is a problem with the system. Change it.

Please let me hear from you about this article or any other article I have written. Just post a comment.

Copyright 2006 Linda Meckler

Linda has worked in many doctors office and has seen first hand what holds up the doctors schedule. Now she has published her first book “Ghost Kids Trilogy,” a childrens adventure book for ages 8-14 to adult. It is 3 books in 1 book. Love, Family Values, and Charity burst off the pages. (Book 1)Ghost Kids: Two children and two Ghost Kids team up to send the Ghost Kids back to their parents. (Book 2) Blue Vase Mystery: Uncle Charlie the villain of the book lives in a magical blue vase. He wants out of the vase in exchange he will tell the children where Pirates’ Treasure is hidden. (Book 3) Pirates’ Treasure-the hunt. Go on a treasure hunt with the children. Check out my website http://member.cox.net/ghostkids. My email lmecky@tns.net.
Order my book at http://www.amazon.com or http://www.buybooksontheweb.com. With an order of 5 books =40% discount. An order of 20 or more free shipping and handling. ISBN 0-7414-2273-5.

[tags]doctors office, medical insurance, medical bills, schedule, appointment, confidentially[/tags]

Cheap Insurance

Insurance is a form of contract whereby periodic payments (also known as insurance premiums) are made to an insurance company, in order to provide an individual or business compensation in the event of property loss or damage.

The main purpose of insurance is to protect yourself or your family against the financial impact of a tragedy. In general, it is contract in which one party agrees to pay for another party’s financial loss resulting from a specified event. Insurance mainly consist of three things - insurer, insured and policy. An entity seeking to transfer risk (an individual, corporation, or association of any type) becomes the ‘insured’ party once risk is assumed by an ‘insurer’, the insuring party, by means of a contract, defined as an insurance ‘policy’.

There are two main ways to buy insurance. The first one is directly through an agent and the second one is to do it yourself. The main advantage of buying insurance from other is that an honest and competent insurer will decide according to the situation and make suggestions. The advantage of going on your own is that less money is needed for it. While buying any type of insurance, a person will save money by paying annually or semi-annually. Sometimes buying several types of insurance from the same company will save money.

There are different types of insurance available in the market. Life insurance is a form of insurance that pays monetary proceeds upon the death of the insured covered in the policy. There are main two types of life insurance that are term insurance and permanent insurance.

The medical insurance policy is a non-life insurance policy, which covers the expenses incurred by an individual in case of an injury or hospitalization. Individuals have to pay a minimal premium for buying medical insurance. Its main types are indemnity plan, preferred provider organization and health maintenance organization.

Homeowner insurance policy covers property and contents. There are two kinds of Homeowners Insurance policies and these policies can be divided into two categories named-Peril Insurance and all-risk insurance.

Auto insurance is the insurance against loss due to theft or traffic accidents. It can be purchased for cars, trucks and other vehicles. Its primary use is to provide protection against losses incurred as a result of car. Its main types are general liability, no-fault insurance, uninsured auto coverage and medical payments.

Car insurance is the insurance against loss due to theft or traffic accidents. Its main types are fully comprehensive auto insurance, third party insurance, fire and theft insurance, third party insurance, specialized car insurance.

Term life insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. Term life insurance comes in two basic varieties term life policies and cash value policies.

There are numerous insurance providers that designs and markets insurance services for individuals, families, groups and businesses worldwide. Now, there are also online insurance facilities that help a person to select insurance just by clicking. After fulfilling the basic requirements of the insurance company, person is eligible for it.

The author presents the website on cheap insurance. It covers meaning, types of insurance, ways to buy insurance and parties involved in insurance. You can visit his site for insurance guide

[tags]insurance,insurance quotes,insurance agent,online insurance,cheap insurance[/tags]

Buy Term Life Insurance Online Some Tips to Make You Smart

The cyber world has really helped the consumer when it comes to purchasing term life insurance. Buying term life insurance online has many advantages. Term life insurance is the simplest form of life insurance. There is no cash value to deal with and so comparison shopping becomes less complicated. Term life insurance is purchased with fixed or guaranteed premiums over a certain period of time. Online shopping has therefore been reduced to matching rates and time periods with the various companies. You can clearly identify term life insurance and therefore you can truly compare apples to apples. You must first identify the type of term policy that you want to compare.

Here are the Big Three

1. Decreasing Term - this term life insurance policy has a specific time period. It is usually anywhere from 10, 15, 20, 25 and 30 years in length of time. The face amount decreases over that period of time.

2. Annual Renewable Term - This policy has a level death benefit with an annual increase in rates. This is about as temporary as you can get when it comes to purchasing term life.

3. Level Term - This policy has a level death benefit and a fixed rate over a specific period of time.

The online shopping for term insurance can be reduced to these three types of term policies. The homeowner who has a $200,000 mortgage over a 30 year period needs to shop online for a $200,000 thirty year decreasing term policy. It’s that simple. The only variations may come when you add endorsed benefits. You may want to consider adding the waiver of premium benefit to your term life quote. This benefit will waive your life insurance premium in the event that you become disabled. It’s a great benefit. Make sure that you include that benefit with all of your online quotes.

Our recommended quote sites Life Insurance Quote, Car Insurance Quote, Home Insurance Quote

[tags]term,life,insurance,online[/tags]

In Praise Of Whole Life Insurance

Whole life insurance even though it is not the least expensive life insurance policy you can buy can still fulfill the needs of some. Why some people have such an aversion to this policy I will never understand. Term insurance is also good insurance and can fit into more situations than whole life because of the low cost. More people can afford it. Both types of life insurance serve the same purposes, however, when you buy whole life insurance you get some additional benefits that term life insurance does not provide. Let us take a look at the whole life insurance policy and it’s benefits.

Level Premium

Whole life insurance has a fixed level premium which never increases for as long as you own the policy. When you pay a whole life premium a portion goes to pay for the death benefit and a portion is applied to cash values. In the initial years a portion of the premium is also applied to administrative costs.

Death Benefit

Like any other life insurance policy the whole life insurance policy has a guaranteed death benefit which can be paid either in one lump sum or in the form of a monthly income. This death benefit is usually paid free of federal income taxes. There are several income options including a life income, an income for a fixed predetermined period and an income for a fixed amount. The insurance can also keep the principal and just pay the interest. The principal is paid upon demand.

Cash Values

The whole life insurance policy contains a guaranteed cash value which accumulates tax deferred. If you are ever in need of cash you may borrow from your cash value. You don’t need to tell the insurance company why you want the money and you pay back the money at your convenience.

Dividends

Cash values earn dividends which depend on the performance of the company. these dividends are not guaranteed. They can be taken in cash, can be left to accumulate interest, can be use to reduce premiums or they can be used to purchase paid up additions. Paid up additions on a whole life insurance policy is a fully paid up whole life policy. These paid up additions have cash values and also earn dividends.

There are many riders you can add to your whole life insurance policy. The two main riders are the waiver of premium benefit and the accidental death benefit rider also known as the double indemnity rider.

Waiver Of Premium.

If the insured should become disabled, any time after six months of disability the life insurance company will step in and pay the premiums even if the disability lasts for the lifetime of the insured.

Accidental Death Benefit

If the insured person should die in an accident, for example an automobile accident, the life insurance company will pay twice the death benefit. If you have a policy for $100,000, and you have the accidental death benefit rider, the insurance company will pay $200,000 to your beneficiary.

The above benefits may be worth the extra premium you would pay for a whole life insurance policy.

For more than 40 years Donald has been known for his extensive knowledge of the life insurance business. He has represented some of the largest and best life insurance companies in the United States as well as Canada. His advice is invaluable.

Donald’s website is: http://www.lifeinsurancehub.net

[tags]whole life insurance, guaranteed death benefit, cash values, dividends, waiver of premium[/tags]

Earthquake Insurance in California

As the water began to drain from New Orleans in 2005, we learned that most of the homeowners in New Orleans did not have flood insurance, since they were supposedly in “low risk” areas. The over 60% of homeowners will need to depend upon their own savings, and limited federal assistance, to rebuild New Orleans - at an uncalculated cost for homeowners and taxpayers.

Could that level of disaster, especially that level of uninsured disaster, happen in California? Less than 15% of California homeowners currently carry earthquake insurance, due to its high cost, the “can’t happen to me or my house” factor, and mortgage providers not requiring coverage. The next big quake will result in billions of uninsured damage - but is earthquake insurance really worth the high cost?

How Did We Get Here?

The state of California requires that all homeowner’s insurance providers to at least offer earthquake insurance (albeit, at a high cost). Until 1994, it was widely available - but the high damage costs of the Northridge earthquake resulted in 97% of homeowner’s insurance providers pulling out of the state the California. In response, the California Earthquake Authority was formed by the California legislator to provide earthquake insurance.

What Is the California Earthquake Authority, and How Does It Work?

The California Earthquake Authority provides two-thirds of the earthquake policies in California, sold through their member providers, like Allstate and State Farm. A homeowner purchases the policy through their regular insurance agent, but the policy is actually a CEA policy.

The CEA currently has about $7.2 billion to pay claims, which it states is enough to pay foreseeable damages (Loma Prieta in 1989 had $6 billion in total damages). If the damage claims are more than $7.2 billion, then each claim would be paid a prorated portion of their losses - unlike a regular insurance company, which promises to pay the actual damages under the insurance policy. The state of California cannot help pay the claims out of general funds.

The policies also have a high deductible - usually 15% of the value of the dwelling. In other words, your home must be damaged more than 15% of its value before the insurance starts paying. So, this insurance is not for cracks in the driveway - it is for significant structural damage to your home. The policy also pays for limited contents (starting at $5K) and loss of use (starting at $1500).

Why Is Earthquake Insurance So Expensive?

Insurance policy premiums are calculated based on probabilities - the probability that a house like yours in a neighborhood like yours will catch fire, or a driver like you will have an accident. With data from millions of homes, these probabilities can be calculated with reasonable accuracy. But, no one can reliably predict the probability that there will be an earthquake strong enough to damage your home.

And, as you can imagine, damages from an earthquake, flood, or hurricane, are widespread, over potentially thousands of square miles - instead of one or a few dozen homes, as in a fire. As such, the insurer would have to pay either zero claims, or billions of dollars of claims - too much variance to reasonably plan for or price accurately.

Are We Really At Risk Here in San Jose?

According to the USGS, there is a 62% probability that there will be an earthquake of 6.7 or greater (like the Northridge quake) in the Bay Area in the next 30 years. In my zip code (San Jose 95126), USGS calculates a 80% chance of a 6.0 earthquake and a 20% chance of a 7.0, in the next 30 years. Whether you consider that to be a high risk depends on your risk tolerance for earthquakes - I consider that a high risk of a moderate earthquake and a somewhat low risk of a terrible earthquake, over the next 30 years.

But like any issue involving real estate - it is all local. Where your home is actually located significantly affects your risk - bedrock, reclaimed land from the bay, soil type, nearby streams, actual distance from the epicenter - all can affect potential damage.

But of course, many earthquakes occur where the USGS was not even aware of a fault line - and we never know when or where it will happen, until it happens.

Should I Obtain Earthquake Insurance?

Factors to Consider:

• Could you afford to pay for the rebuilding your home from your own savings & investments?
• Can you afford to pay the high cost of insurance, indefinitely?
• Could make payments on your current mortgage and on a new loan to rebuild?
• Can you mitigate your potential losses by bolting your roof to the walls and the walls to the foundation, for example?
• What is your tolerance for the risk of an earthquake?
• What is the risks of your current home construction (type, age, foundation)?
• What are the risks of your specific location (soil type, distance to known faults)?

Are the Costs Worth It?

Let’s assume that you have a home that would cost $250K to rebuild, you will own the home for the next 30 years, and your earthquake premiums are $1200 per year. Over the next 30 years, that would be a total of $36,000 in premiums (assuming your premiums do not increase, to simplify calculations).

Instead of purchasing insurance, you invest the premiums in a diversified mutual fund. With an 8% annual return, you would have $135,000 (pre-tax) in year 30.* But of course, you only have that total in year 30, not in year one - meaning that if the earthquake happens tomorrow, you don’t have the money.

The deductible is another big turn off for many homeowners. The insurance pays only for large structural damage, not broken dishes or cracked driveways - meaning that it is less likely you will use it. However, be aware that you will not need to come up with the cash for the deductible - you may either opt to not undertake those repair or rebuilding costs, or you can apply for an SBA loan to pay for the deductible (assuming a federal disaster area is declared).

Why Not Just Get Federal Aid, or “Walk Away” and Let the Bank Have the Property?

The federal government would probably provide access to SBA loans, if the area is declared a federal disaster area (no small business required). However, the $200K maximum SBA loan may not be enough to rebuild your home - and, it is a loan that you need to pay back (in addition to your current mortgage).

If you have refinanced your mortgage, you have a recourse mortgage - which means that not only can the bank foreclose on the property in case of non-payment, the bank can also come after your personal assets and future income in case of non-payment. So you cannot just walk away, especially if you have a good income and some personal assets. The bank may help out by deferring payments for a few months, but you still must pay back the loan.

Last Thoughts

We have earthquake insurance on our home. Our home was not yet built in the 1906 earthquake (so who knows if it would stand), it is 75+ years old and is not bolted to the foundation, and we have a refinanced mortgage. For my family, the insurance premiums are worth peace of mind in case of a major earthquake disaster. That’s exactly what insurance is for - the “you never know.”

*calculations ignore inflation

Elizabeth Potts Weinstein, JD, a licensed attorney and Registered Investment Advisor, is the founder of Potts Weinstein Financial Consulting, a financial and estate planning firm, headquartered in San Jose, California. The firm specializes in providing fee-only, hourly financial planning, estate planning, and investment advice for people from all walks of life and income brackets. For more information about Potts Weinstein Financial Consulting, or to subscribe to our monthly eZine ‘Prosper!’, please visit http://www.pottsweinstein.com

[tags]california earthquakes, earthquake insurance, homeowners insurance, potts weinstein[/tags]

How is Your Credit Part 1

Whether you are Working at Home, a salaried Professional, are Older and Wiser, or at any stage of your life, your credit can be good, or bad.

No matter what you think it is, i.e. you pay your bills on time so you think it’s really good, you should know as much as you can about it and how it can affect you.

Seventy percent of Americans have never seen their own credit report or credit score.

Do you know that you have a credit score?

It’s usually referred to as a FICO score.

Being a Mortgage Consultant, Mortgage Broker, I’ve seen many credit reports and I am often surprised by the fact that my clients either don’t really know they have a credit score, or they don’t realize how much it can hurt them if they were inattentive to the numerous factors that make up a Credit Score.

The FICO score is a summary of your credit history. In other words, it’s a financial history of your life.

That score impacts a surprising cross-section of life, in fact it impacts many things you knew about. Such as;

Lenders use it to evaluate your eligibility for mortgages.

Landlords use it to gauge the likelihood you’ll pay the rent.

Car dealers utilize it in arrange financing for you.

Credit cards are, or aren’t, given to you because of it.

Now, for some things you may not have been aware of,

Insurance companies may base your premium on it.

Potential employers often use it to assess your character and they may base there hiring decisions on it.

The FICO score reflects hundreds of parameters in one’s financial history.

Score 700-850 - smooth loan process; best interest rates

Score 550-699 -medium risk; higher interest rates

Score 300-549 -sorry, no loans or credit cards

These hundred of variables are included in the calculation of your credit score, but I only mentioned the bigger ones here.

Just paying your bills on time, as important as that is, may not rescue you from other credit pitfalls.

Bills, mortgages, your monthly rent, credit cards, long overdue or overlooked, can show up as a blotch on your credit.

A cable, or credit card bill, that didn’t make it to your new address, or you mail them your payment, but it gets lost in the mail. It may be the store, credit card company, or post offices the error,……. but it is YOUR credit that gets hurt.

The amount of unpaid credit cards, even if they’re never late. The more you owe the less credit worthy you are.

The amount of credit you already have. It’s not always the More, the Merrier.

The kinds of credit cards you have, some are good believe it or not. Visa, MC, AMEX, Discover, etc. are considered good credit; others may affect your credit negatively. Such as credit extended to you at a store, or the mall when you go out and buy appliances, etc.

Cancel and make sure you get rid of the bad credit as quickly as you can.

Unpaid medical services.

Collections. The amount may, or may not, matter.

The important thing to know is that credit scores aren’t an exact science and these are only some of the variables.

It’s often not one of these items, which spell disaster for your credit; it’s having a combination of these.

One of these things may or may not hurt too much, but having numerous problems may mean trouble for you.

It is the Credit Bureaus and the Institution extending credit to you, who decide how it affects you and your credit.

Go to How-Is-Your-Credit.info And Learn More About Your Credit And Why Your Credit Report is Important and The Credit Bureaus’ Info

[tags]credit score, FICO,lenders,landlords,insurance,credit cards,mortgages,car dealers[/tags]