Term Life Insurance is purchased for set durations of time such as 5, 10, 15, or 20 years, and offers only the Death protection benefit. It is generally inexpensive for the term of coverage, but very costly to renew without medical review. Whole Life Insurance is permanent coverage. The premium is geared to remain unchanged for the duration of the policy, but begins at a higher premium than Term Life. Benefits such as an increasing cash value, usable for estate and retirement planning are included, while other benefits such as an increasing death benefit are available too. Other permanent policies similar to Whole Life that are offered today are Universal Life and Variable Universal Life.
How much Life Insurance an individual should maintain varies greatly for each situation. Financial Planners often recommend an amount large enough that beneficiaries would be comfortable with an annual income generated by a 5 to 10% investment return from the policy’s face amount.
A PPO is a Preferred Provider Organization. This is an organization of Physicians and hospitals that are contracted by insurance companies at discounted rates. By selecting the option of purchasing a Major Medical Insurance Plan with a PPO, the insured is offered a lower premium. The insured may chose any provider of service, but claims reimbursement is far greater when PPO providers are accessed. An HMO is a Health Maintenance Organization, and it is a business that manages the medical options of its members. In return for this management, members are offered generally lower premiums and out of pocket deductibles, but also less freedom of choice regarding medical care. A newer plan option, the POS, Point of Service, is a type of option offered by HMO’s. It allows its members to receive claims coverage outside of the HMO at a lower level of reimbursement. Both the PPO and the HMO are available to groups and individuals, while the POS is currently only available as group coverage.
Group coverage is available to businesses, unions, and associations that have 2 or more members (one member with restrictions in Florida). Business groups are most common in Florida, and must have 2 or more full time employees to be considered. Individual coverage is available to anyone not covered in the employer sponsored group market, and it is medically underwritten.
Long Term Care Insurance:
Long Term Care policies are designed to cover claims for Skilled, Intermediate, and custodial nursing care in a Nursing Home or at home. This would include coverage for illnesses such as stroke, heart disease, and Alzheimer disease, as well as recuperation from surgery such as joint replacement.
Coverage is frequently not available for individuals under the age of 40. There is no correct time line of when to purchase Long Term Care Insurance. Many financial planners recommend that individuals begin applying for these types of plans when they are approaching retirement. Premiums are age sensitive and lower when purchased at younger ages. As a rule, prices dramatically climb after age 65.
An IRA is an Individual Retirement Account. It allows an individual to hold savings in an account that has tax-deferred growth until the money is withdrawn at retirement. Money deposited each tax year is deductible from the individuals’ earning as well. The current allowable annual deposit into these accounts is $3000. The Roth IRA allows the same current deposit as the traditional IRA, but there is no deduction from annual earnings. Where as the traditional IRA has tax consequences when money is withdrawn, the Roth IRA has none.
An Annuity is offered by an Insurance company, and is designed to provide a series of payments over a period of time. When money is deposited into an Annuity, this is called the accumulation period. Deposits into an annuity that have the potential of growth at a fixed rate offered by the insurance company, are called fixed annuities. Deposits into an annuity that have separate investment accounts (i.e. stock and bond accounts) are called variable annuities. Growth in all Annuities is tax deferred until withdrawal.
A Mutual Fund is a company that offers investors an interest in a portfolio of professionally managed investment assets. The company pools the investments of hundreds or thousands of investors (institutions and individuals) to provide diversification and professional money management to all shareholders, regardless of the amount invested. Among the most frequently cited advantages of mutual fund investing are the diversification, money management, and liquidity.
Health Insurance for Seniors:
Medicare is the health insurance component of Social Security, administered by the Centers for Medicare and Medicaid Services (CMS).
Medicare has four parts. A,B,C & D. A is for Hospitalization coverage. B is outpatient and physician coverage. C is Medicare Advantage. D is coverage for outpatient prescriptions.
Medigap policies are private insurance plans often called Medicare Supplements, designed to cover Medicare Deductibles and copayments.
Medicare Advantage, also Part C of Medicare, is the program of Medicare that authorizes private health plans to administer health coverage for individuals eligible for Medicare. Plans may be HMO’s, PPO’s, and Private Fee for Service plans (PFFS). Most incorporate the Part D Rx program.
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