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Life and Health


By Life and Health

As you reach different stages in life, your Life insurance needs change. Getting married and having children are just two examples of the kind of life-altering events that necessitate increasing your coverage.

One place people often turn to when they need more Life insurance is their employer. You might already be covered under an employer-paid Life insurance policy. Many companies offer a minimal amount of Life insurance coverage as part of their general benefits package.

Don’t be lulled into believing that this is enough coverage. Typically these policies only provide coverage that is one or two times your base salary. According to The Life and Health Insurance Foundation for Education (LIFE), “most people need somewhere in the range of five to fifteen times their net income and sometimes even more.”

If your employer offers a buy-up Life insurance option, you could always obtain additional coverage to supplement the employer-paid policy. There are two definite advantages to this approach:

  • There usually are minimal health qualifications to be approved for the group coverage.
  • The premiums are automatically deducted from your wages, which decreases the chance of missing a payment.

However, there are some other factors to consider before you buy coverage through your employer:

  • The type of insurance offered under the plan. Most employers provide Term insurance, which pays a death benefit only if you die during the life or “term” of the policy. Unlike Permanent insurance, the premiums you pay for Term insurance don’t earn interest, and the policy doesn’t build cash value.
  • The method used to calculate premiums. You need to determine whether your employer’s plan charges all employees the same premium, or whether premiums are calculated by age group, a practice commonly referred to as “age-grading.”
  • The status of your health. Employees with health problems who obtain coverage privately will likely pay more than they would if they purchased coverage under their group plan. However, healthy employees are likely better off finding insurance outside their group plan.
  • The inability to take your Life insurance with you when you change jobs. When you leave you employer, you leave your group coverage behind too. This is a serious consideration if you’re older because there is the possibility that your health could deteriorate in the future, which would make it more difficult and unaffordable to purchase coverage on your own. This lack of portability makes it a good idea to own some insurance outside your employer’s plan.


By Life and Health

Much has changed with the disability income protection market during the past decade. There used to be dozens of carriers offering disability income, but as a result of consolidation, there are fewer than 10 companies offering competitive disability products today.

Because of liberal underwriting and policy declarations, insurers have been bombarded with claims. Much of these claims have occurred as a result of mental/nervous conditions, which remain hard to justify. Furthermore, true “Own Occupation” policies are few and far between now.

Even so, there are still several variations of disability definitions available to insureds today. Applicants can generally choose between an “Any Occupation,” “Own Occupation,” “Loss of Income,” or some hybrid of all these. Currently, a typical policy for most applicants has a “dual” definition. The first two to five years of disability are defined under the more liberal “Own Occupation.” After this initial period, if the person is still disabled, then the more restrictive language of “Any Occupation” is employed to determine benefits.

The most liberal definition, which of course costs more, defines disability as the inability to perform any and every duty of the person’s own occupation. This definition is generally used for professional people.

To illustrate the point, let us use the example of an orthopedic surgeon. This person has undergone many years of training and is at the top of his/her profession and income. Let us also suppose that while playing golf, the surgeon has an accident and breaks several fingers on his right hand. He requires surgery and long-term therapy in order to return mobility to his hand. However, he is unable to perform surgery again because he has lost dexterity in his right hand. With an “Own Occupation” definition this physician could teach school and still receive full disability benefits. Under any other policy definition, he may only be eligible for limited benefits for a short duration if he returns to a new occupation.

Another example would be that of a manufacturer’s representative. This person’s daily duties generally do not constitute the need for an “Own Occ” policy. There is not any one duty that truly defines this person’s occupation. A “Loss of Income” or “Any Occ” policy would probably provide adequate coverage for this person.

Let’s now consider the independent business owner the runs a small bookstore. She has three other employees that help her run the business. While she is definitely a jack-of-all-trades, neither an “Own Occ” nor “Loss of Income” policy would be appropriate for her in most cases. The first is obvious, but what if this business owner became disabled for six months and her store never truly suffered. She never realized a loss of income. In this case, a “Loss of Income” policy might never pay benefits.

Consequently, great care must be exercised in selecting the most appropriate occupational definition for the insured. And, while it is certainly true that the more restrictive definition is much less expensive, the potential benefits payable are also substantially reduced or entirely eliminated! So be cautious.


By Life and Health

It’s no secret that our nation’s health care costs are skyrocketing to unprecedented heights. Consider that U.S. health care expenditures surpassed $2 trillion in 2006. Luckily, health savings accounts (HSAs) are providing relief for some citizens.

Created under the Medicare Modernization Act of 2003, these increasingly popular savings plans allow consumers to use tax-free savings to cover medical costs while giving them more control over their health care needs. Consumers with HSAs can choose their own doctors and even shop around for the best deal on medical services — all while earning some much-needed tax breaks.

Although HSAs are packed full of advantages, these accounts might not be the best option for everyone. Before settling on an HSA, you should determine whether one of these accounts fits your budget and lifestyle. Here are a few more details that may help you decide if an HSA is right for you.


Many consumers don’t realize that HSAs must be accompanied by a qualifying high-deductible health policy (HDHP). An HDHP typically requires a deductible of $1,100 annually for a self-only plan and $2,200 annually for a family plan. Fortunately, higher deductibles usually translate into lower premiums. However, because of the higher out-of-pocket costs, these plans may not be the best option for families with frequent health issues or for those on a tight budget.


Many employees are attracted to HSAs because they are “portable.” In other words, you can keep the accounts no matter where you work or even if you don’t work at all.

Additionally, unlike Flexible Spending Accounts that have a “use it or lose it” rule, the dollars in an HSA roll over from one year to the next. This gives consumers the opportunity to accumulate a great deal of money in an HSA over time. Account holders can then tap into these large accounts during their retirement years when they might need it most.


With an HSA, you can withdraw your money any time to pay for qualified medical expenses without owing taxes or penalty fees. You can use these dollars to fund a wide variety of medical services, including services not covered by your HDHP, including:

  • Dental care
  • Over-the-counter medication
  • Doctor services
  • Hospital services
  • Lab expenses
  • Physical therapy
  • X-rays
  • Nursing home expenses and insurance premiums
  • Psychotherapy
  • Artificial limbs
  • Vision services, including glasses and contacts
  • Chiropractic services


Employers can make tax-free contributions to an HSA, and the account owner’s contributions are tax deductible. For 2008, you can contribute a maximum of $2,900 to an HSA for yourself or $5,800 if you are covering your family. If you are turning 55 by the end of the tax year, you can contribute an additional $900 this year. However, you are not eligible to contribute to an HSA if you are covered by Medicare.

Since first becoming available in 2004, HSAs have continued to grow in popularity with U.S. consumers. These accounts are attractive to both employers and individuals because of the many benefits they offer. Employers enjoy cost savings through the high-deductible plans connected with HSAs, and employees can keep their HSA whether they change jobs or stop working altogether.

As with any financial savings plan, you should look more closely at HSAs before opening up an account. To determine if an HSA is your best choice, you might want to talk with one of our financial professionals.