I used to have insurance with a local agency until a friend of mine said to check online. Ive seen a lot of commercials saying that I could shop online and compare insurance rates, and that a few companies could help me get the best rate. I didnt really think it was legit.
I was surprised that, in fact, not going through a local insurance agency and comparing rates online actually does save you a significant amount on your policy.
There are a few factors that your insurance rates are going to depend on, and even if you do get a better rate online, the price may still be higher for you than other people. For example, if you have a sports car, you will pay a premium for that.
Also, if you get full coverage you will pay more than other people do, even though you will generally pay less for full coverage online than you will locally. If you have a vehicle on financing, many financiers will require that you have full coverage.
Your driving record affects your insurance rates as well. If you have had accidents or speeding tickets, for instance, your rates are going to be higher. But again, you can save a bundle by getting your insurance online even if you do have an imperfect driving record.
At the end of the day, you can only get your rates so low, again, just depending on these different criteria. But you can definitely pay substantially less by shopping online with a company that gets you good rates than you would with a local agency (or even with some of the conventional big name national companies).
Monday, June 8, 2009
Wednesday, March 25, 2009
Home Insurance Basics
Whether you are a first-time home buyer or a veteran of many years of mortgage payments and house upkeep, chances are your home is your single most expensive budget item and your most valuable investment. But few homeowners ever think twice about the homeowners insurance that protects their investment, let alone take the time to read their policy. Knowing what is covered and what's not can make all the difference when disaster strikes.
The basics
Homeowners insurance evolved in the late 1950s, when the insurance industry needed a single comprehensive policy to cover a house, its contents, and liability. The standard package policy has two components: property insurance and personal liability. Although the over 900 U.S. insurance companies write many different policies, 80 percent of them are based on a form called HO-3, which provides coverage on the house and other structures for all risks except those excluded by the policy—most commonly floods and earthquakes. HO-2, a cheaper policy, and HO-1, a bare-bones option, cover only those risks that are specifically included. HO-4 is a policy designed for renters while HO-6 covers condominium owners.
What's Covered
Standard homeowners insurance (form HO-3) customarily covers damage to both structures and personal property caused by fire or lightning; windstorm (including hurricanes and tornadoes) or hail; explosions; riot or civil commotion; aircraft; vehicles; smoke; theft or vandalism (sometimes called malicious mischief); falling objects; weight of ice, snow or sleet; and freezing of plumbing, heating, air conditioning or other household systems. It also covers personal liability: if you, your family or your property injures someone. In fact, your coverage is likely to be more comprehensive than the above list. Many homeowners policies cover damage by "just about everything," unless the coverage is specifically excluded. In these cases, it is even more important to understand what is not covered.
What's Not Covered
Although floods and earthquakes are widespread in the U.S., the damage they cause is not covered by the standard HO-3 policy. Almost 90 percent of the U.S. population lives in earthquake-prone areas; since 1900 earthquakes have occurred in 39 states and caused damage in all 50. If your home is located in a flood-prone area, you are 26 times more likely to suffer a flood loss than a loss from fire. Of course, the cost of flood and earthquake coverage reflects the high risk involved. If you live along a shoreline, you can expect to pay a higher premium for flood coverage than someone living in the mountains.
Other exclusions can include neglect, intentional loss, earth movement, general power failure and even damage caused by war. A costly exclusion is the ordinance or law exclusion, which refers to changes in building codes that can drive up the cost of rebuilding or repairing. Thus, if you discover when replacing damaged property that current law requires a higher grade of electrical wiring, the difference in cost between the old wiring and the new wiring is your responsibility.
Loss and Recovery
The value of the real property—your home, garage, shed and other structures—is generally based on the value of your house. Homeowners insurance also covers your personal property, including the contents of your home and any personal belongings you or members of your household use, own, wear or carry—basically everything and the kitchen sink. This coverage is also based on your house's coverage, and there are limits on the losses that can be claimed for certain items, such as cash, furs or jewelry—limits that can be increased with supplemental premiums. You can also pay an additional premium to cover living expenses if your home is not habitable for a period of time.
Most insurance companies now offer guaranteed replacement cost coverage —the coverage that helped the Silva family rebuild their home after the fire. Replacement cost coverage pays to repair or replace damaged homes without a deduction for depreciation or a dollar limit. If an old TV set damaged in a fire costs $500 today, replacement coverage will pay the full cost. Because the Silvas had guaranteed replacement cost coverage, the insurance company paid out the full cost of rebuilding their home and replacing their possessions. Without it, they would have only received the actual cash value—the replacement cost minus depreciation. In the case of the old TV, if its value has depreciated 50 percent, actual cash value coverage would pay only half of the replacement cost, $250. Unless a homeowners policy specifies that property is covered for its replacement value, the coverage is for actual cash value. An upgrade from actual cash value to replacement coverage typically raises your premium 10 to 15 percent.
If you were to suddenly lose your home due to fire or a tornado or have the contents damaged or stolen, you probably could not afford to replace everything all at once. By becoming familiar with your homeowners insurance policy, you will be sure to have the coverage you need when you need it.
The basics
Homeowners insurance evolved in the late 1950s, when the insurance industry needed a single comprehensive policy to cover a house, its contents, and liability. The standard package policy has two components: property insurance and personal liability. Although the over 900 U.S. insurance companies write many different policies, 80 percent of them are based on a form called HO-3, which provides coverage on the house and other structures for all risks except those excluded by the policy—most commonly floods and earthquakes. HO-2, a cheaper policy, and HO-1, a bare-bones option, cover only those risks that are specifically included. HO-4 is a policy designed for renters while HO-6 covers condominium owners.
What's Covered
Standard homeowners insurance (form HO-3) customarily covers damage to both structures and personal property caused by fire or lightning; windstorm (including hurricanes and tornadoes) or hail; explosions; riot or civil commotion; aircraft; vehicles; smoke; theft or vandalism (sometimes called malicious mischief); falling objects; weight of ice, snow or sleet; and freezing of plumbing, heating, air conditioning or other household systems. It also covers personal liability: if you, your family or your property injures someone. In fact, your coverage is likely to be more comprehensive than the above list. Many homeowners policies cover damage by "just about everything," unless the coverage is specifically excluded. In these cases, it is even more important to understand what is not covered.
What's Not Covered
Although floods and earthquakes are widespread in the U.S., the damage they cause is not covered by the standard HO-3 policy. Almost 90 percent of the U.S. population lives in earthquake-prone areas; since 1900 earthquakes have occurred in 39 states and caused damage in all 50. If your home is located in a flood-prone area, you are 26 times more likely to suffer a flood loss than a loss from fire. Of course, the cost of flood and earthquake coverage reflects the high risk involved. If you live along a shoreline, you can expect to pay a higher premium for flood coverage than someone living in the mountains.
Other exclusions can include neglect, intentional loss, earth movement, general power failure and even damage caused by war. A costly exclusion is the ordinance or law exclusion, which refers to changes in building codes that can drive up the cost of rebuilding or repairing. Thus, if you discover when replacing damaged property that current law requires a higher grade of electrical wiring, the difference in cost between the old wiring and the new wiring is your responsibility.
Loss and Recovery
The value of the real property—your home, garage, shed and other structures—is generally based on the value of your house. Homeowners insurance also covers your personal property, including the contents of your home and any personal belongings you or members of your household use, own, wear or carry—basically everything and the kitchen sink. This coverage is also based on your house's coverage, and there are limits on the losses that can be claimed for certain items, such as cash, furs or jewelry—limits that can be increased with supplemental premiums. You can also pay an additional premium to cover living expenses if your home is not habitable for a period of time.
Most insurance companies now offer guaranteed replacement cost coverage —the coverage that helped the Silva family rebuild their home after the fire. Replacement cost coverage pays to repair or replace damaged homes without a deduction for depreciation or a dollar limit. If an old TV set damaged in a fire costs $500 today, replacement coverage will pay the full cost. Because the Silvas had guaranteed replacement cost coverage, the insurance company paid out the full cost of rebuilding their home and replacing their possessions. Without it, they would have only received the actual cash value—the replacement cost minus depreciation. In the case of the old TV, if its value has depreciated 50 percent, actual cash value coverage would pay only half of the replacement cost, $250. Unless a homeowners policy specifies that property is covered for its replacement value, the coverage is for actual cash value. An upgrade from actual cash value to replacement coverage typically raises your premium 10 to 15 percent.
If you were to suddenly lose your home due to fire or a tornado or have the contents damaged or stolen, you probably could not afford to replace everything all at once. By becoming familiar with your homeowners insurance policy, you will be sure to have the coverage you need when you need it.
Insurance 101
What is the purpose of health insurance?
Health insurance protects you from the high cost of medical care by providing coverage for specific health care services. Although you generally pay a monthly premium and either co-payments or co-insurance, the cost for insurance is far less than medical care would be if paid fully out-of-pocket.
What are the major types of health insurance policies?
There are three umbrella types of health insurance - consumer-directed, fee for service (often known as "traditional" or "indemnity" plans) and managed care. These types of plans cover medical, surgical and hospital expenses and depending on the plan, may cover prescription drugs, dental and behavioral/mental health coverage.
Fee for service plans mean the doctor or other health care professional will be paid a fee for each health care service provided to the patient. Patients can see the doctor of their choice and the claim is filed by either the health care professional or the patient.
Managed care plans provide coverage for comprehensive health services to their members and offer financial incentives in the form of lower out-of-pocket costs to patients who use doctors participating in a network. More than half of all Americans have some kind of managed care plan - the three types include health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans.
What is an HMO?
An HMO is a type of managed care health insurance plan that allows you to receive care through a network of participating doctors and hospitals. Generally, you select a primary care physician who coordinates your care and refers you to specialists when needed. Out-of-network care is generally not covered under an HMO plan, unless the member requires care that is not available in the existing network.
What is a PPO?
A PPO is a type of managed care health insurance plan that combines features of a fee-for-service plan and an HMO. In a PPO, members who seek care within the network of participating doctors and hospitals pay lower out-of-pocket costs. Members can also seek care from nonparticipating doctors and hospitals, but pay a higher portion of the cost of care.
What is a consumer-directed health insurance plan?
Also referred to as "consumer-driven," or "consumer choice," this type of health plan gives members more choice and flexibility in making health benefits decisions and more control over their health benefits dollars. These plans often include a health fund or account for covered medical expenses. Depending on the type of fund or account, unused dollars may be rolled over annually to cover medical expenses in subsequent years for the duration of the members' enrollment in the plan. There are several types of consumer-directed plans, including Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs) and Flexible Spending Accounts (FSAs).
What is a health insurance premium?
A premium is the fee you and/or your employer pay to your insurance company to purchase a health insurance plan. This can be paid on a monthly, quarterly or annual basis.
How does a health insurance deductible work?
A deductible is the amount that you must pay for covered services in a specified time period in accordance with your plan before the plan will pay benefits. A member of a high-deductible health plan, for example, might be required to pay for the first $1,000 of medical care prior to receiving coverage under the terms of his/her benefits plan.
What is a co-payment?
A co-payment is the specified dollar amount or percentage required to be paid by you or on your behalf in connection with benefits. For example, most HMO plans have co-payments in place for certain services such as doctor's visits, prescription drugs, hospital stays, etc.
What are out-of-pocket costs?
Out-of-pocket costs include premiums, co-payments, deductibles, co-insurance or other fees that you are required to pay outside of your health benefits plan.
How do I pick a health insurance plan?
If you have a choice of plans through your employer or you are purchasing your own coverage, it's important to understand your choices and pick the plan that is right for you and your family. There are several questions to ask yourself when reviewing health insurance plan options:
How affordable is the cost of care?
How much are monthly premiums?
How much are the deductibles?
Are the co-payments or co-insurance flat fees or percentages of service fees?
What out-of-pocket expenses have to be paid before the plan begins reimbursement?
How does the reimbursement process work?
What is the cost of out-of-network care?
Does the plan cover the services that I may use? For example:
Doctors, hospitals, laboratories and other health care professionals in the network
Out-of-network care
Treatments for pre-existing medical conditions or chronic conditions
Prescription drugs
What is the quality of the health insurance plan? Research factors of the plan such as:
Ratings of the plan by independent government and non-government organizations
Accreditation from groups like the National Committee for Quality Assurance (NCQA) or the Joint Commission on Accreditation of Healthcare Organizations (JCAHO)
Patient complaints
Member drop-out rates for the plan
Other patient experiences with the plan
Doctor experiences with the plan
What if my employer doesn't offer health insurance?
Employer-subsidized group coverage is generally less expensive than anything you can get on your own. But, if your employer doesn't offer health insurance, or if you are unemployed, you should consider purchasing an individual health insurance policy.
Health insurance protects you from the high cost of medical care by providing coverage for specific health care services. Although you generally pay a monthly premium and either co-payments or co-insurance, the cost for insurance is far less than medical care would be if paid fully out-of-pocket.
What are the major types of health insurance policies?
There are three umbrella types of health insurance - consumer-directed, fee for service (often known as "traditional" or "indemnity" plans) and managed care. These types of plans cover medical, surgical and hospital expenses and depending on the plan, may cover prescription drugs, dental and behavioral/mental health coverage.
Fee for service plans mean the doctor or other health care professional will be paid a fee for each health care service provided to the patient. Patients can see the doctor of their choice and the claim is filed by either the health care professional or the patient.
Managed care plans provide coverage for comprehensive health services to their members and offer financial incentives in the form of lower out-of-pocket costs to patients who use doctors participating in a network. More than half of all Americans have some kind of managed care plan - the three types include health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans.
What is an HMO?
An HMO is a type of managed care health insurance plan that allows you to receive care through a network of participating doctors and hospitals. Generally, you select a primary care physician who coordinates your care and refers you to specialists when needed. Out-of-network care is generally not covered under an HMO plan, unless the member requires care that is not available in the existing network.
What is a PPO?
A PPO is a type of managed care health insurance plan that combines features of a fee-for-service plan and an HMO. In a PPO, members who seek care within the network of participating doctors and hospitals pay lower out-of-pocket costs. Members can also seek care from nonparticipating doctors and hospitals, but pay a higher portion of the cost of care.
What is a consumer-directed health insurance plan?
Also referred to as "consumer-driven," or "consumer choice," this type of health plan gives members more choice and flexibility in making health benefits decisions and more control over their health benefits dollars. These plans often include a health fund or account for covered medical expenses. Depending on the type of fund or account, unused dollars may be rolled over annually to cover medical expenses in subsequent years for the duration of the members' enrollment in the plan. There are several types of consumer-directed plans, including Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs) and Flexible Spending Accounts (FSAs).
What is a health insurance premium?
A premium is the fee you and/or your employer pay to your insurance company to purchase a health insurance plan. This can be paid on a monthly, quarterly or annual basis.
How does a health insurance deductible work?
A deductible is the amount that you must pay for covered services in a specified time period in accordance with your plan before the plan will pay benefits. A member of a high-deductible health plan, for example, might be required to pay for the first $1,000 of medical care prior to receiving coverage under the terms of his/her benefits plan.
What is a co-payment?
A co-payment is the specified dollar amount or percentage required to be paid by you or on your behalf in connection with benefits. For example, most HMO plans have co-payments in place for certain services such as doctor's visits, prescription drugs, hospital stays, etc.
What are out-of-pocket costs?
Out-of-pocket costs include premiums, co-payments, deductibles, co-insurance or other fees that you are required to pay outside of your health benefits plan.
How do I pick a health insurance plan?
If you have a choice of plans through your employer or you are purchasing your own coverage, it's important to understand your choices and pick the plan that is right for you and your family. There are several questions to ask yourself when reviewing health insurance plan options:
How affordable is the cost of care?
How much are monthly premiums?
How much are the deductibles?
Are the co-payments or co-insurance flat fees or percentages of service fees?
What out-of-pocket expenses have to be paid before the plan begins reimbursement?
How does the reimbursement process work?
What is the cost of out-of-network care?
Does the plan cover the services that I may use? For example:
Doctors, hospitals, laboratories and other health care professionals in the network
Out-of-network care
Treatments for pre-existing medical conditions or chronic conditions
Prescription drugs
What is the quality of the health insurance plan? Research factors of the plan such as:
Ratings of the plan by independent government and non-government organizations
Accreditation from groups like the National Committee for Quality Assurance (NCQA) or the Joint Commission on Accreditation of Healthcare Organizations (JCAHO)
Patient complaints
Member drop-out rates for the plan
Other patient experiences with the plan
Doctor experiences with the plan
What if my employer doesn't offer health insurance?
Employer-subsidized group coverage is generally less expensive than anything you can get on your own. But, if your employer doesn't offer health insurance, or if you are unemployed, you should consider purchasing an individual health insurance policy.
The Basics of a Supplemental Health Insurance Plan
How Does a Supplemental Health Insurance Plan like Aflac Work?
Supplemental insurance, such as what Aflac offers, pays a cash benefit to the insured. The amount of cash and how it is paid out depends on the supplemental health insurance plan or policy. Some popular supplemental health insurance policies are specific disease insurance such as for cancer, accidental death and dismemberment insurance or accident health insurance, and hospital indemnity insurance.
Determine Your Need for Supplemental Health Insurance
Since you already have health insurance do you need any of these supplemental health insurance plans offered by Aflac and other insurance companies? Well, that depends on your risk factors and how much insurance you want to carry or can afford to carry and how much savings you have put back.
First, Obtain a Good Health Insurance Policy
Of course, the first thing you want to have is a good health insurance policy. Health insurance policies are all different therefore, what and how much they will pay is different too. Supplemental health insurance comes in to help you pay for what your health insurance does not pay or other expenses you cannot pay if something should happen where you temporarily or permanently cannot make an income to pay your bills.
What to Consider when Choosing Supplemental Health Insurance
Only you can decide if a supplemental health insurance plan is right for you. Some things to consider when deciding if you need a supplemental health insurance plan are your health risk factors, your savings, and how much insurance you can afford. Of course no one can predict what their health will be in the future, but if you have always been in good health and take good care of yourself then you would be less likely to use a supplemental health insurance policy than someone who is often in bad health. Also, your savings should play an important role in your decision to purchase a supplemental health insurance policy. If you were in the hospital for a few weeks or more, would you have enough to cover your other expenses that your insurance would not? And, when deciding on purchasing a policy, you need to take into consideration if you can afford it or not. Supplemental health insurance policies are not often used so it is not worth it to you to purchase a policy that you probably will not use if it would be a financial burden.
Let's now take a closer look at the three most common supplemental health insurance policies:
1. Disease Specific Insurance: This type of supplemental health insurance provides a cash benefit paid directly to you if you require treatment for a specific disease such as cancer. Usually the benefit is paid per day or per procedure. There is a usually a minimum daily benefit and a policy maximum. The cash can be spent in any way you would choose and getting your benefit would have nothing to do with how much your insurance paid for your medical costs.
2. Accident Health Insurance or Accidental Death and Dismemberment Supplemental Insurance: This type of supplemental insurance typically would reimburse you for medical costs resulting from accidents. Benefits are paid if you die (to your beneficiaries) or are disabled due to a specific accident outlined in the policy. Premiums are usually low and no medical exam is required. Accidents can include car accidents and accidents in the home or at your job. Also, if you loose limbs, fingers, toes, or your vision due to a covered accident, you may be able to collect a percentage of the death benefit.
3. Hospital Indemnity Insurance: This type of supplemental health insurance provides a daily, weekly, or monthly cash benefit if you are confined to a hospital stay. Usually there is a minimum hospital stay before benefits are paid. The cash benefit is paid in addition to any other insurance you may have. Benefits are usually reduced if you are confined to a mental hospital and often you can find plans through an employer that require no health exam.
Supplemental insurance, such as what Aflac offers, pays a cash benefit to the insured. The amount of cash and how it is paid out depends on the supplemental health insurance plan or policy. Some popular supplemental health insurance policies are specific disease insurance such as for cancer, accidental death and dismemberment insurance or accident health insurance, and hospital indemnity insurance.
Determine Your Need for Supplemental Health Insurance
Since you already have health insurance do you need any of these supplemental health insurance plans offered by Aflac and other insurance companies? Well, that depends on your risk factors and how much insurance you want to carry or can afford to carry and how much savings you have put back.
First, Obtain a Good Health Insurance Policy
Of course, the first thing you want to have is a good health insurance policy. Health insurance policies are all different therefore, what and how much they will pay is different too. Supplemental health insurance comes in to help you pay for what your health insurance does not pay or other expenses you cannot pay if something should happen where you temporarily or permanently cannot make an income to pay your bills.
What to Consider when Choosing Supplemental Health Insurance
Only you can decide if a supplemental health insurance plan is right for you. Some things to consider when deciding if you need a supplemental health insurance plan are your health risk factors, your savings, and how much insurance you can afford. Of course no one can predict what their health will be in the future, but if you have always been in good health and take good care of yourself then you would be less likely to use a supplemental health insurance policy than someone who is often in bad health. Also, your savings should play an important role in your decision to purchase a supplemental health insurance policy. If you were in the hospital for a few weeks or more, would you have enough to cover your other expenses that your insurance would not? And, when deciding on purchasing a policy, you need to take into consideration if you can afford it or not. Supplemental health insurance policies are not often used so it is not worth it to you to purchase a policy that you probably will not use if it would be a financial burden.
Let's now take a closer look at the three most common supplemental health insurance policies:
1. Disease Specific Insurance: This type of supplemental health insurance provides a cash benefit paid directly to you if you require treatment for a specific disease such as cancer. Usually the benefit is paid per day or per procedure. There is a usually a minimum daily benefit and a policy maximum. The cash can be spent in any way you would choose and getting your benefit would have nothing to do with how much your insurance paid for your medical costs.
2. Accident Health Insurance or Accidental Death and Dismemberment Supplemental Insurance: This type of supplemental insurance typically would reimburse you for medical costs resulting from accidents. Benefits are paid if you die (to your beneficiaries) or are disabled due to a specific accident outlined in the policy. Premiums are usually low and no medical exam is required. Accidents can include car accidents and accidents in the home or at your job. Also, if you loose limbs, fingers, toes, or your vision due to a covered accident, you may be able to collect a percentage of the death benefit.
3. Hospital Indemnity Insurance: This type of supplemental health insurance provides a daily, weekly, or monthly cash benefit if you are confined to a hospital stay. Usually there is a minimum hospital stay before benefits are paid. The cash benefit is paid in addition to any other insurance you may have. Benefits are usually reduced if you are confined to a mental hospital and often you can find plans through an employer that require no health exam.
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