Understanding Health Insurance Terms

• Deductible: The deductible refers to the amount of money that the insured would need to pay before any benefits from the health insurance policy can be used.
• Co-insurance: This is the amount that would need to be paid by the insured before the insurance pays and in addition to the deductible.
• Co-payments: This is another term used for, or in place of, coinsurance.
• Out-of-Pocket: This is the cost one would pay out of their own pocket. An out of pocket expense can refer to how much the co-payment, coinsurance, or deductible is.
• Lifetime Maximum: This is the most amount of money the health insurance policy will pay for the entire life.
• Exclusions: The exclusions are the things that the insurance policy will not cover.
• Pre-existing Conditions: This is something someone had before obtaining the insurance policy.
• Waiting Period: This is the time one would have to wait until certain health insurance coverages are available.
• Coordination of Benefits: If the insured has available two or more sources that would cover payment for certain conditions, such being under a spouse's insurance plan along with their own, the insurance company would not pay double benefits.
• Grace Period: This is the amount of time one has to pay their health insurance premium after the original due date and before insurance coverage would be canceled.

The Rich Really Need Life Insurance

Vorlon Whispers:

It turns out that rich people need life insurance more than you and I.

I was chatting with my insurance agent this afternoon and he told me about a client that is worth probably $80 million. This person is taking out a life insurance policy worth probably $40 million.

One might wonder why someone with that kind of net worth would take out a life insurance policy worth that much money. This individual is taking the policy out to pay inheritance taxes. Life insurance proceeds to heirs are not taxed.

By taking out this insurance policy, this fellow gives his heirs the money to pay their inheritance taxes. That way they can keep the other assets that will be bequeathed to them.

Life Insurance

Insurance, by nature, is designed to provide financial security in the event of some mishap or unexpected event that leads to unexpected losses or expense. Naturally, incidents like car accidents, house fires, vet bills – they all lead to great financial loss which ultimately can break the bank for many families living on the edge of their means with a finely balance budget.

But what about death? Aside from the funeral expenses of the deceased, insurance can also cover the loss of earnings which would otherwise contribute to the family funding. Suppose the main household earner dies prematurely. This could leave the family in need of childcare expenses whilst the surviving parent is required to work double the number of hours in order to make ends meet. Especially during such a difficult time as bereavement, financial worries can cause undue stress and suffering, and can have a drastic impact on the family situation.

That's where life insurance comes in. Paying into a life insurance policy will mean that should you die suddenly and unexpectedly, your family will have the financial means to cope with their loss, whilst being able to maintain their current financial commitments until they can plan for the future. The benefit of a life insurance policy is peace of mind, the knowledge that your loved ones will be cared for after your death is something which many find reassuring, particularly in households where there is one major breadwinner. Additionally, life insurance policies can be designed to cover the immediate expenses of death, like funeral expenses which can often run into the thousands. By providing a lump sum payment on death, a life insurance policy can ensure your friends and family aren't overly financially burdened on top of the emotional burden of losing a loved one.

Life insurance can often be a tricky area to deal with, and many people find the motivations behind it somewhat morbid. They can often find the concept hard to grasp, and beyond funeral expenses the financial loss of a loved one can be difficult to quantify. However, particularly where there are a number of financial dependents in the household, it can be a great idea to ensure adequate coverage after death, so you can know that whatever happens, your family will be able to financially cope without your earning capacity, and your household won't crumble without your financial input.