Frequently Asked Questions

YOU'VE GOT QUESTIONS.

WE'VE GOT ANSWERS.

Health Insurance:

Q: Why do I need medical insurance?

A: A routine appendectomy can run $30,000+, heart surgery $150,000 - $250,000+, Cancer surgery & chemotherapy $500,000+. If you can write a check for these without any problem then you may not need any.

Q: What is a pre-existing condition?

A: Pre-existing conditions can vary between plans from being excluded to being covered fully and sometimes somewhere in-between like being covered after a specific amount of time. The Health Insurance Portability and Accountability Act ensures coverage for pre-existing conditions if you are joining a new group plan from your employer and you were insured the previous twelve months.

Q: What is coinsurance and how does it work?

A: Coinsurance requires the insured to share in the cost of medical care. Under an 80/20 coinsurance provision, the medical expense plan pays 80 percent of eligible medical charges above any deductible. The insured is required to pay the remaining 20 percent. Other coinsurance arrangements, e.g., 70/30 or 90/10, are sometimes used. In the event of large or catastrophic medical expenses, an insured might suffer severe financial hardship due to the operation of the coinsurance clause. To compensate for this possibility, many major medical expense plans contain a coinsurance cap, or stop-loss limit. This provision places a limit on the insured's out-of-pocket costs in a given year arising from the operation of the coinsurance clause. The size of the coinsurance cap generally ranges from $2,000 to $10,000, depending on the plan, although limits as low as $1,000 or as high as $25,000 are sometimes used. Once the coinsurance cap has been reached, all eligible expenses above this amount are paid in full, up to the plan's overall limit of coverage.

Q: What is the difference between coinsurance and copayment?

A: Under a copayment or copay provision, the insured usually is required to pay a set or fixed dollar amount (e.g., $3, $5, or $10) each time a particular medical service (like a doctor visit or a lab service) is used. Copay provisions are frequently found in medical plans offered by health maintenance organizations (HMOs) or Preferred Provider Organizations (PPOs) where a nominal copayment is applied to each office visit and to each prescription that is filled.

Q: What is an HSA and how does it work?

A: An HSA (Health Savings Account)  is a tax-exempt account where funds grow to pay for medical expenses. They were created to help give control back to consumers and lower healthcare costs. 

First, you choose a High Deductible Health Plan (HDHP). Monthly premiums for HDHPs are lower than for traditional health plans. When you combine your HDHP with an HSA, you get lower premiums while building a medical savings account which can be used for many medical expenses not usually allowed by many traditional health plans. 

HSAs also have a tax favored status - meaning what you contribute is either pre-tax or tax deductible. Interest earned on the money is tax-deferred. Using the money to pay for qualified medical expenses is tax-free. Lower insurance premiums combined with using tax-free money can lead to significant savings, and you can end up with quite a large nest egg. To learn more about HSAs, click here to view the US Department of Treasury brochure, "All About HSAs":

U.S. Treasury Department: Health Savings Accounts

Life Insurance:

Q: Why do I need Life Insurance?

A:  To replace lost salary or income; Burial expenses; Family needs; Buying out a partners interest in a business; Providing for a partner; Estate needs; Charitable giving.

Q: When should I review my Life Insurance needs?

A: You are getting married; You are getting divorced; The birth of a child; The adoption of a child; Buying a new home; Starting a business; Buying an existing business; Taking out a large loan; Starting a new higher paying job; Leaving a job and losing insurance benefits; Your existing insurance premium is going to increase; You bought insurance while a tobacco user and now you have quit for more than one year; You were charged a higher premium on a policy because of health or activities and your situation has improved; You find that you have an estate tax problem; Your health has deteriorated; You or a relative can no longer make decisions for themselves; Every few years just to be safe.

Q: What is Term Life?

A: Term Life is only a death benefit. If you pay the premium, in the event of death while covered by the policy, the insurance company will pay the policy death benefit. When considering Term Insurance, you should first determine the length of time you need the coverage and then look at the total cost over those years. Term premiums may be based on annual renewable, 5, 10, 15, 20, 25, 0r 30 year level premium arrangements. For short term needs such as to cover a bank loan or business obligation, annual renewable, 5 or 10 year level premium policies are often the cheapest. For longer periods of time, 15, 20, 25, or 30 year level premium policies are often the best buy. Consumers with long term needs should be aware that if they keep a level premium term policy longer than the initial level premium guaranteed period, their premiums will increase substantially or may not renew.

Q: What is Whole Life?

A: Whole Life insurance provides a lifetime guaranteed death benefit, a guaranteed fixed premium, and guaranteed cash values. These policies may share in the excess earnings (if any) of the insurance company. These earnings may be credited to your policy cash value either as dividends or as excess interest. Dividends or excess interest may be used to add to your polcy's total death benefit, or to reduce future premiums. Your cash values can be used to pay future premiums, supplement retirement and college education, and provide emergency cash reserves. Consumers should be aware that while the cash values in a life insurance policy have many uses, they should not be considered as a pension or savings plan.