Money and Personal Finance

Comparing Term Vs Life Insurance is comparing temporary coverage to permanent coverage. Term life insurance is only temporary and Whole life insurance carries with you the rest of your life. So what other differences are there between the two in this common debate?

Whole life insurance builds cash value and Term life insurance does not. The cash value of a Whole life policy begins building in the third policy year and continues to grow with interest for as long as the policy is in force. You have the option to surrender the policy to the insurer and receive the cash value of the policy to do with as you please. You can also leave the policy in force and use the cash value to secure a loan.

Term coverage is only designed to be temporary coverage to provide a death benefit should you die during the period of time that the policy is in force.

Typically, term policies are sold as and “ART”, or “Annual Renewable Term” policy. Other common periods are 3, 5, 10, 20 and 30 year term policies. When the policy renews, the premiums increase based upon attained age. The main benefit of a term policy is that you can get more insurance for less money.

Some people opt for a small Whole life policy to provide permanent protection, while simultaneously using a Term policy to provide additional death benefits for a specified period of time.

Different companies charge different premiums for the same exact coverage. One insurer may charge only .00 per month for a ,000,000.00 term policy, while another charges 0.00 per month. Only by comparing policies and companies carefully will you know you’re getting the best quote.

Although California auto insurance policies will not offer a continuous coverage discount when changing insurance companies many companies will offer their clients a loyalty discount. These discounts will vary from five to ten percent between companies. Many times that consumer will be eligible for the loyalty discount if they maintain the same insurance policy for at least 12 months.

In California all auto insurance rates are reviewed and approved by the department of insurance. Insurance companies are required to comply with the guidelines and rates that are approved by the California DOI. There can be no variations or exceptions to the rates that are approved. This is meant to help ensure that the carriers maintain profitability and are not pricing their policies to a point that could harm the financial strength of the companies or charge higher premiums than what would be appropriate.

With these rates being set consumers should understand that when they are shopping auto insurance policies between carriers it may be a good idea to make the change even with as low as a 10 percent saving on the policy.

Since the new insurance company is not able to immediately provide a discount for continuous coverage the rates being quoted for the initial policy term are quoted without any type of loyalty discount.

With this being said, a consumer that changes insurance companies and is expecting an initial savings of 10 percent could easily see a 15 to 20 percent savings after the policy matures and they receive the loyalty discount from their new insurance company. Consumers should keep this in mind and think of the long term saving of changing insurance carriers rather than exclusively focusing on the saving during the initial policy term.

When it comes to insuring ones health there’s no denying the fact that this form of insurance is a must for everyone even though it’s not legally required and is purely optional. It’s hard to imagine the current healthcare system without insurance because otherwise people couldn’t afford most medical services and doctors wouldn’t get their high salaries, which are among the highest all over the world. Thanks to insurance both customers and service providers are pleased, and everyone’s getting the thing they want. Among many types of insurance available managed care plans are the most widespread, so let’s take a closer look at some of the most common forms of insurance offered by insurers:

Health Maintenance Organizations (HMO)

This is the most common form of managed care plans as it provides the lowest price and a wide range of services included. It’s main drawback is the lack of flexibility in what concerns the places you get care from. Under HMOs you are limited to a network of facilities and specialists you may get care from and covered to the full extent. If you choose to get your services from someone outside the network your costs won’t be covered at all. Moreover, you are required to choose a primary care physician who will refer you to all the required specialists, so there’s more paperwork involved with this type of plans. Yet, you usually pay lower premiums for that so it’s really worth the effort.

Preferred Provider Organizations (PPO)

Preferred Provider Organizations offer more flexibility but for a higher price if compared to HMO plans. You are still limited to a network of providers to get care from, however if you choose to go out of network there will still be some part of your bill covered only to a lesser extent compared to in-network services. And you aren’t obliged to choose a primary care physician so there’s not so many office visits to do under this type of managed care plans. If you have the additional money and want more flexibility with your health insurance this plan type will definitely appeal to you.

Point Of Service (POS)

Point Of Service plans are often referred to as a mix of HMO and PPO plans as they provide the benefits of both these forms of health insurance. You gain the flexibility of PPO in what concerns the places you get services at, yet you still have to choose a primary care physician and have a network of providers to work with. One of the greatest benefits is that you may choose your family doctor as a primary care physician even if he or she doesn’t make part of the insurer specified network, which is definitely appealing to those who have long term relations with their family doctors. PPO plans may vary in price so it’s really recommended to shop around if you want to get the best rate possible.

As you see, managed care plans come in different forms with the sole purpose of giving you exactly what you need. So it’s really important to assess your individual health insurance needs before choosing the plan type to address them adequately.

There are many sides of having your health insured and it’s certainly a good thing because it allows to tailor a plan to your exact needs and make it as adequate as possible. But as with all things there are also negative aspects of this diversity that can lead you to misunderstanding and unnecessary spending if you aren’t aware of them. And these days additional spending could seriously harm an average family budget. If you’re trying to optimize your costs knowing about some common insurance traps is necessary in order to keep your costs as low as possible. So if you don’t want to become a victim of misunderstandings that will cost you money keep in mind the following health coverage traps when getting medical care:

Avoid going out of network

The vast majority of insurance plans you’ll find on the market are managed care plans. Whether group or individual these plans offer good premiums in exchange for certain limitations. One of such limitations is the place you can get medical care from. Each insurance provider has a network of medical facilities and specialists you can get your services from and have your bills covered. But once you choose to visit a doctor who doesn’t make a part of the network you will end up paying the entire bill out of own pocket, which is certainly not very convenient assuming the current medical prices. So the first advice would be sticking only to in-network specialists and facilities if you want all your services to be covered properly. Otherwise it really doesn’t make any sense having health insurance since you will end up paying for the larger portion of your medical bills.

Keep an eye for co-payments and deductibles

Co-payments, co-insurance and deductibles refer to virtually the same aspect of any health insurance plan. These are the payments that the customer has to make out of own pocket for getting the service he needs before the coverage starts to apply. These can be doctor visit fees or any other additional costs that you will typically find in a medical facility. Now, you have to be very careful with these payments since they can make up a good sum of money by the end of the year comparable to your premium. Usually they are higher in plans with lower premiums, however it’s not a necessary condition. So it’s highly recommended to check the co-payments and deductibles when assessing a health plan besides the usual premium comparison, since it adds up to the final cost of the policy in the long run.

Don’t get the first plan offered

One of the most common mistakes an inexperienced customer makes is that he or she buys the very first health insurance plan offered. The probability that this plan will be both affordable and adequate to your needs is very low, so don’t risk this way since it’s your money you are going to spend. Instead, take your time to consider all your options, shop around online, determine which plan type best appeals to your needs, compare quotes from different providers and only after doing some research buy the plan that appeals to you the most. You can save really good this way so don’t rush with your decisions if you have some time to compare different offers.

Although equity indexed annuities have been around for a number of years, equity indexed universal life (EIUL) insurance is a relative newcomer to the life insurance marketplace. EIUL is a spin on universal life (UL) insurance, a popular policy type because you can increase or decrease your death benefit as your needs change and your premiums can be adjusted accordingly. UL policies also build a cash value against which you could borrow or even use to pay your premiums.

The equity indexed concept is relatively simple: the amount of interest credited to your policy’s cash value is tied to the performance of a particular index (the S&P 500 is one of the most popular), so that in years where the index performs well your interest crediting rate will rise, and in years where the index performs poorly, your interest crediting rate will fall.

Most policies guarantee that your interest crediting rate will never fall below zero so that you won’t lose money (you just won’t make it). They also have a cap as to how high a crediting rate they will pass on to you. This range of possible rates is often described as offering “upside potential with downside protection.”

How It Works

Typically, the big choice facing life insurance buyers is whether to go with a “safe” universal life policy that offers a minimum guaranteed rate but limited potential for cash accumulation or to go with a more “risky” variable life policy that offers greater potential for earnings but no protection against losses in the market.

EIUL insurance is an attempt to fill the gap between these two approaches. EIUL is universal life insurance in which the cash value is linked to a certain index. If the index is higher at the end of the year, your cash value may go up. If the index stays flat or goes down, your cash value earns the minimum guaranteed interest rate (say, 2 percent). You should note, however, that when your index goes up it doesn’t mean that your cash value increase will reflect the full index increase, due to fees, and dividends and capital gains aren’t included in the cash value’s calculation.

But are these new products the best of both worlds? Let’s take a look at both sides of the coin.

The Pros and Cons

One advantage of EIUL is the potential for higher interest crediting rates than a traditional universal policy. Another advantage is that it offers greater protection from market downturns than a variable life insurance policy.

Stephan Mitchell, product & competition analyst for Pacific Life Insurance Co., based in Newport Beach, Calif., points out that while these products are not a cure-all, they can offer “an attractive middle ground for buyers who saw the market downturn of 2001-2002 and are looking for some guarantees.” These products can offer some peace of mind to buyers looking for a mix of guarantees and some potential for cash accumulation.

However, there can be disadvantages to having an equity indexed product. The chief disadvantage of an equity indexed product is that it comes equipped with slightly higher risk than a traditional universal policy. Also, the cap rate