The following is a general summary of the insurance coverages that you should consider. It is interpretive only and is not intended to replace or supersede any of the terms and/or conditions of the policies comprising the insurance program. In case of specific interpretation of coverages, you need to refer to the actual policies. Please contact us for a copy of the policy.
Choosing a type of life insurance is surprisingly simple because you only have two real choices to make.
- Term Life Insurance
Term Life provides you with protection for a given period of time. The term is chosen by the policyholder and is stated in years. For example; 1 year term, 5 year term, 20 year term, etc. Policies are available with level premiums throughout the policy term. Coverage will end when you stop paying the premium. The idea here is that in the event of your untimely death, the policy will provide funds for a loved one to continue their present lifestyle, to pay estate taxes or for business purposes.
- Permanent Life Insurance
Permanent Life is like buying a house. Once you own it, there is a lot more you can do with it. The key difference between Permanent Life and other forms of life insurance is that you have the chance to build up a cash account on a tax deferred basis over time. The cash account can be used to pay future premiums, borrowed against in the form of a loan or taken in its entirety if you surrender the policy.
Whole Life, Variable Life or Universal Life are different types of Permanent Life Insurance.
While we know that everyone dies, we forget that at most ages you are more likely to become disabled. A major illness or disability could lead to very serious economic consequences. Disability insurance will pay you a monthly benefit for a certain period of time (2 years or 5 years or up to a certain age) if you become disabled due to a covered accident or sickness. These policies have a waiting period (an amount of time like 30, 60, 90 or 180 days) that must pass following the start of a disability before benefits will be paid. A good way to lower your cost for this coverage is to choose the longest waiting period before benefits are paid. When purchasing disability coverage, try to buy a policy that contains an 'own occupation' rider so that the benefits can be paid if you become disabled and can't perform any duties of your occupation for which you are qualified by training or experience.
If you get sick or have an accident health insurance will pay your hospital, laboratory, physician and prescription costs. Insurance companies in the health insurance business customarily pay the "reasonable and customary" costs associated with your accident or sickness. The charge above the reasonable and customary charge becomes your responsibility.
These policies have deductibles and co-payments meaning that in addition to your monthly premium, you will have to pay something out of your pocket should you need these benefits. Fortunately most policies have an out of pocket maximum that limits your responsibility in the event of a disaster to you or your family.
Given the high cost of health care, you need to consider not only the traditional indemnity policies but Health Maintenance Organizations, Point of Service, Preferred Provider Organizations or some managed care form of coverage.