How it differs from term life insurance

A whole life insurance policy covers the policyholder for his/her entire life. There is no expiry date and the death benefits are received by the beneficiary only in the event of death of the policyholder. In case of term life insurance, the beneficiary is eligible to get the death benefits for a specific period. You may or may not renew the term life insurance policy after the term expires.

When to purchase a whole life insurance

Whole life insurance is a good choice when you want to get the coverage for your entire life. In addition to this, you may also opt for this insurance if you want to build up a cash value of your policy.

Benefits offered by whole life insurance

A whole life insurance policy offers a number of benefits that are listed below.

• Interest accumulated on this life insurance policy is tax deferred until you withdraw from it.
• You can take out a loan from a whole life insurance policy.
• The premiums remain fixed throughout the policy term.
• You can use the cash value of your policy to pay the premiums.
• The beneficiary receives death benefits regardless of when the insured dies.

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Except when we apply the same approach to health insurance, some people get upset. Perhaps it’s appropriate to be writing this at Halloween but the same actuaries have been counting the number of people who die from various diseases. For the purposes of this article, one of the main areas of interest has been the question of obesity. There are detailed numbers available across the country showing that people who have a high Body Mass Index (BMI) are more likely than thin people to die of heart disease. The medical evidence proves what are called “comorbidities”, i.e. the presence of two or more conditions which, more often than not, suggests a cause and effect at work, or that there’s an underlying vulnerability to both conditions. We are not so unhappy to accept a link between drug abuse and mental illness, but mention a possible link between body weight and disease and, suddenly, people are upset. People do not want to hear a link between their lifestyles and the probability of early death.

The reality is that adults with a BMI of 30 and above are either being turned down for health insurance or charged a higher premium. No matter how politically correct it may be to talk about obesity, insurance companies protect themselves by classifying obesity as a pre-existing condition justifying refusal or a premium loading. So welcome to baby Alex, a newcomer to Grand Junction. He’s four months old and breast-feeding. He’s a happy, bouncing baby weighing in at seventeen pounds. With a length of 25 inches, this puts him in the 99th percentile for the Centers for Disease Control and Prevention’s height and weight charts for babies of the same age. So the health insurance company refused coverage. Their cut-off point is the 95 percentile. When you think about it, this is a dramatic piece of news. It seems you are never too young to be overweight. This is not something to be dealt with through an increase in health insurance rates. This is a blank refusal of coverage. At four months, the actuaries have already decided this baby is too big a risk to insure. The parents are naturally upset. Even though their pediatrician has no health concerns, they are talking about putting the baby on the Atkins diet. They may joke but this may be a real sign of change in the health insurance industry. There is no sentimentality here. After all, the numbers don’t lie, except the insurers changed their mind when the publicity hit. Alex is now insured. Some good news to end on.

There are two quite different problems coming together at the same time. One comes from the general downturn in the economy. The other is connected with the system of regulation for the insurance industry. On paper, the companies have an easy ride. They collect in the premiums, receive the claims, pay out on the claims and keep the balance as profit. Except the worst recession in decades caught them off guard. It all comes down to what insurers should do with the money they have collected in. Their answer was to invest most of it in the stock market. That way, they earned dividends and got capital growth until it was needed to pay out on the claims. But some invested in these new securitized bonds based on mortgages and other loans. So, when both the property and the capital markets were hit, insurers found themselves with big losses. Under normal circumstances, this would not have been a problem, but the insurance industry has to play by different rules. They are regulated by the insurance departments and commissioners for each state. To protect all you people who buy policies, the key rule is that the companies must have enough capital in reserve to pay out on the claims you make. When the stock and bond markets collapsed, many companies either broke the rule or were too close for comfort. So companies have been moving cash around between states to keep themselves legal and putting up the premiums to collect more.

It’s ironic that a rule designed to protect consumers should be pushing up the premiums so fast. Who would have thought the auto insurance industry would lose so much of the money they had invested. After all, they employ all these clever people called actuaries to measure the risks for writing policies. You would think they would have seen the risks of some of the investments they were making. Yet, like most of the other investment managers, the insurers were taken by surprise. The result is that, overnight, many were close to not having enough money to pay out on your policies. That was and remains a serious problem. That’s why the auto insurance industry is asking you all for more money.

And it’s hard to tell that the most risky drivers – men younger than 25 years old – are contributing to these statistics. These are actually men of all age groups.

As an insurance agent from Ohio, Brad Vermillion has stated: “Men are more aggressive in their very nature and pursue a riskier attitude when driving a car. You see a man not wearing a seat belt, speeding and driving under influence far more often than a woman. The amount of miles driven throughout the lifetime is also quite higher with men than with women, which of course means a greater risk of being involved in a traffic accident and filing an insurance claim. The less you drive the safer you are.”

A righteous question rises consequently, whether do insurance companies take into account the statistics provided by the NHTSA and other organizations? “Insurers know about such statistics very well and they are reflected in their pricing guidelines,” stated Vermillion. “A man will always pay a higher auto insurance premium than a woman, even if he lives in a safe area and has a perfect driving and credit record.”

But the overall trend has started to shift in recent years, making the gap between men and women smaller in what concerns auto insurance premiums. “The last couple of years have shown more and more women driving at longer distances and for more extended periods of time. This results from a wider access to cars among women and more intense and active lifestyle attitudes, forcing women to move around a lot more than in previous years,” states Dave Roush, CEO of Insurance.com. “Women spend more time behind the wheel and raise the stress levels, which inevitably results in more aggressive attitude from women on the road. This trend is only starting to take shape and it’s a matter of time to judge whether it will minimize the gap between men and women in what concerns auto insurance rates. But for now men are well ahead in this competition.”

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In recent years, the majority of children have been covered by health plans paid for by their parents’ employers. Unfortunately, the cost of family plans has been rising more steeply than for individual coverage. With employee contributions rising faster than inflation, many parents have been forced to drop out of group cover. This has left Medicaid with the increasing task of providing cover for low-income families. Where parents earn more than the maximum allowed for Medicaid eligibility, SCHIP targets families who cannot afford private coverage. Unfortunately, two factors have combined to increase the number of uninsured children.

As the recession hit in 2008, unemployment rose and the amount of tax collected fell. This meant the individual US states responsible for supporting SCHIP began to run severe budget deficits. Since the idea of tax increases is politically impossible, this has forced states to cut back on all discretionary spending. Consequently, many have redefined the level at which they intervene to provide health coverage for children. As if this was not bad enough, there has been a reduction in the publicity given to the SCHIP plans. Parents are no longer prompted to apply for coverage even when their income would make their children eligible for support. Put the two together and the Congressional Budget Office confirms the number of uninsured children has been rising steadily.

This is a difficult time for healthcare in the US. Almost everyone agrees the current system should be reformed, but there’s no real sign of agreement between the political parties on what should be done. While Washington struggles to enact legislation, more children should be brought within the existing schemes – SCHIP was reauthorized for a further 10 year term in 2007 with bipartisan support. Almost all the children currently uninsured would be eligible under either or both Medicaid or SCHIP. All it needs is a properly run advertizing campaign to alert families to their entitlements and the political will to make funds available. So long as private health insurance policies remain unaffordable for the majority of families and employer-provided group plans are imposing sharply increased premiums, the number of uninsured children will rise steadily. This trend will accelerate as unemployment rises during the recession. It’s a national scandal that the health of children is being put at risk by denying adequate health insurance coverage. If no co-ordinated federal plan is put in place, families should protect themselves by applying to both Medicaid and their local SCHIP for help. It’s important to remember that the Congressional Budget Office confirms almost all the children currently uninsured would be entitled to access Medicaid or SCHIP. This is your right and it protects the future of the country. Everyone loses if children die or suffer inadequate health care because health insurance is denied.

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What would if you become disabled? What’s then?

What would happen if you undergone an injury or disease and couldn’t function for days, months, or even for years? If you’re alone, you can have no other ways of financial support. If you’re married, you might be capable to count on your spouse’s income, but you perhaps also have many fiscal obligations, like supporting your kids and returning your mortgage loan. Could your spouse truly support you and the whole family? Also, remember that you don’t need to be working in a dangerous occupation to be in need of cheap health insurance; accidents befall not only on the workplace but at home as well, and disease can strike anybody. For these causes, everyone who operates and gains a living has to consider getting disability insurance.

But isn’t disability insurance through the government or a boss enough?

You may consider that you are sufficiently insured from disability because you have health insurance through your boss or through government programs like Social Security and employees’ compensation. Anyway, only fifty percent of employers cover short-dated disablement and just forty percent cover long-dated disablement. Government programs can pay you advantages, but only if you meet a direct definition of disablement. Here’s an idea of the advantages you can already possess, as well as their restrictions:

• Social Security

  Though you shouldn’t review the disability advantages you might be acceptable to get from Social Security, you don’t have to count on them either. Social Security rejects more than fifty percent of the claims applied, in part because of its direct definition of disablement. Even if you are deemed acceptable for advantages, you still won’t start getting them till at least half a year after you become disabled for Social Security sets a wait state. Also, your advantage can replace just a portion of your pre-disablement profit.

• Employees’ compensation

  If you’re damaged at your job or get ill from job-associated reasons, you can get some disability advantages from employees’ compensation insurance, which is by the way fairly cheap medical insurance. How much you get depends on the state of your abide. Nevertheless, when you survey your disablement insurance necessities, remember that employees’ compensation only returns advantages if your disability is job-related, so it proffers only restricted disability maintenance. Certain states also cover just the illnesses or disabilities enclosed in that state’s employees’ compensation laws.

• Retirement plans

  Certain government and personal retirement plans pay disability advantages. Frequently these plans pay advantages found on complete, constant disability, or lower your pension benefit in correlation to what you have already got for a disablement. Also, remember that these advantages are normally federated with Social Security or employees’ compensation, so your advantage can be less than you anticipate if you as well obtain disability profit from these government origins.

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COBRA is available to the majority of those who lose their employer-provided insurance, whether by termination, lay-off or voluntary termination. It can also apply when people lose hours and no longer qualify under a health plan, go through divorce or lose cover through the death of a spouse or parent. The umbrella of protection lasts for up to eighteen months in the ordinary case. Where a family member is disabled, the protection can extend to twenty-nine months. If the conditions are met, ex-employees are allowed to buy health coverage at group rates. This is more than the cost of the plan run by their employers (plus a 2% administration fee), but less than the cost of private coverage. The coverage runs from the date the employment terminates. If there’s a delay in putting the COBRA policy in place, the premiums have still to be paid as from the date employment terminated. This can sometimes be quite a large lump sum to find. The COBRA policy ends when the ex-employee or family member gets another health plan, no payments are made on the COBRA policy, or the period of protection ends. The advantage? While it’s in force, the insured and family get the same basic entitlements as under the employer’s plan.

The COBRA scheme has been working well in providing a subsidized breathing space during which people may find new employment with a health plan or with a rate of pay that can support private health cover. Unfortunately, with unemployment rising towards 10%, it’s growing increasingly difficult for people to find new employment. Thus, as savings run out, families are dropping out of the group COBRA coverage and into uninsured status. It’s a sad fact of life that if a family cannot afford a COBRA premium, it cannot afford a private health insurance policy. The best place to shop around for replacement cover is online. Term health insurance can be an economic way to fill the gap until full coverage can be restored. Hopefully, the economy will pick up and more jobs will come. As the economy revives, more will be able to find affordable health insurance online.

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So looking around the newspapers recently, there have been a number of editorials and articles attacking the loans offered to the low paid. If you think this was meant in defense of the low paid, think again. The general tone was to judge the disadvantaged members of society as feckless and inept. Apparently, it’s their fault they fall prey to the short-term loan industry charging extortionate rates of interest. If they were only more responsible and managed their resources better, they would be able to avoid falling into debt.

Well, these newspapers are edited by people who are well-paid and never have a financial emergency. Although the story always used to be that everyone was only ever one pay check from losing their homes, all this is forgotten when it comes to the unlucky and the low paid. Now, no-one responsible ever gets into trouble. All the best people are prudent and wise in the management of their affairs. This is the new myth. It’s a myth because it ignores the fact that the unlucky and the low paid are denied access to the usual banking system. Instead of banks and the conventional finance companies being prepared to hold out a helping hand to those in trouble, they turn away everyone with a low credit score. There are loans and overdrafts available but they are reserved for the people who, for the most part, already have enough. That’s why the low paid are driven into the arms of the payday loan companies. If they were treated with some respect, as being just as capable of repaying a loan as anyone else, there would be no need for them to be sucked dry by the high interest rates charged for payday loans.

This is an opinion piece. It’s quite angry because too many people are denied respect and laid open to exploitation by others. Society should not wash its hands of these people. It’s not socialism to care about what happens to people when they are victimized. In this world, it’s there but for the grace of God that we all go. It only takes one real emergency and our own financial security is gone. Our one pay check is not enough and we find ourselves knocking on the door of a payday loan company.

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1. Choose the right payout amount

Quite often, insurance companies offer lower premiums for larger multiples within the policy. For example, you may be charged with $260 per year for $250,000 in coverage while having $10,000 less in the multiple will actually cost you $275 per year. So before you consider taking the policy, learn what the rates are for every $1000 in coverage, and compare these correlations across different providers. Sometimes the difference is quite big to let the chance go by.

2. Work with a social-conscious insurance provider

Usually, insurance companies tend to offer higher rates for people with complicated and severe health conditions such as heart disease, diabetes or cancer. But there are companies that actually offer discounts to people with such conditions and tend to analyze each case separately, being more social-oriented in their business. So if you have a serious health condition you might want to check out a company like that.

3. Kick bad habits

It’s a well-known fact that when you stop smoking and start exercising (and improving your lifestyle to a healthier extent) the cost of insuring your life will be lower. Only that most people don’t realize how much lower it can be until they actually stop smoking! Sometimes smokers are charged double the rate that non-smokers of the same age and health group pay each year. Losing weight and engaging in special exercise programs will also lead to significant discounts. But don’t think about lying to the insurance company about your habits. If you end up developing a disease related to a bad habit you’ve claimed you don’t have, your policy will be voided and you will get nothing in the end.

4. You don’t need riders

Riders provide coverage in case of events not specified by the standard insurance policy. Or, as it always happens in reality, events that are very unlikely to happen. And paying additional money just to have this additional coverage will unreasonably increase your final insurance rates. Think about it and see if you really need this additional coverage.

5. Learn if there are any hidden fees

You will probably be offered with different payment options such as monthly installments to make your payment process more “convenient”. But in the end you will end up paying more than you would with a single payment as there are additional fees for using such services. So before you decide on a payment option, calculate what would be the less costly for you rather than convenient.

6. Do some comparison shopping

When speaking about life insurance the rule of shopping around applies just as in case of any other product. Learn what all the companies providing life insurance in your area have to offer, see which one provides the most benefits for the lowest price and choose the one you like. You can compare life insurance offers online too.

1. If a crime has been involved, notify the police immediately and cooperate with the investigation. Your insurance company will want full details of the investigation so keep good notes of the names and contact information for the officers who deal with it. Notifying the police also reduces the risk in the eyes of the insurer that you are making a fraudulent claim. Liaise with the police to get copies of any witness statements, police reports, fire department reports, and so on. Alternatively, be able to pass all the police or fire department contact details over to the insurer.

2. Never delay notifying the insurance company or your local agent that you have suffered a loss. There are a whole series of processes that have to be set in motion to handle the claim. If the loss is minor, your local agent will usually deal with it directly. Anything more serious will go through the claims office. At the earliest possible opportunity, confirm who will liaise with you and how you contact that person.

3. Depending on the circumstances, it’s possible that emergency repairs are necessary. Most insurance companies operate a list of contractors approved to make these repairs. Many contractors can bill the insurers directly. If emergency repairs are necessary, get the necessary paperwork to authorize the work from the insurer at the earliest opportunity.

4. Document every aspect of the damage to your property or the contents. That means taking photographs or a video, and keeping a diary of all the events so you can write up a full report for the agent or claims adjuster. The key issues are the value of property damaged or lost, and the cost of repairs. Hopefully, you have kept the receipts for all the bigger ticket items to set a baseline value.

5. Deal with the home insurance company in writing as much as possible, keeping copies of letters and e-mails. If you speak to people by telephone, keep records of the date, time, the person you spoke with and a summary of what was said. This will help you if there is a dispute later on in the claims process.

6. Ensure you are present when the agent or claims adjuster comes to inspect your property and point out all the damage. Again, keep notes of what is said.

7. The home insurance company will make an offer of settlement. Take advice on whether the amount offered is fair. If building work is involved, talk to the building contractor. If you think the insurer is trying to take advantage of you in some way, discuss the issue with the insurance department or commissioner for your state.