Part 3 - Jump Menu

If term life insurance is less expensive, why buy permanent? If I need to cash in my life insurance at some point, how much       will it be worth? What is the major purpose of health insurance? What are the major types of individual health insurance policies? Do I need an individual policy if I have group insurance at work? What is a major medical health insurance policy? How does a health insurance deductible work?     Also See Part 1/Introduction - General - Health and Life; what is Life Insurance; How much life insurance should I have. Part 2 - Who receives benefits and how much; does it matter how I die; paid as lump sum or distributed; who can be beneficiary and how often can that change; different types of life insurance; must I die to collect; requalification requirements; how price is set; permanent versus term Part 4 - In a health policy - understanding and definitions for coinsurance, disability income policy, disability, PPO and HMO; how can one collect under a disability income policy and how long must I be disabled before my disability benefits begin; purpose of PPOs and HMOs; choosing any doctor or hospital

If term life insurance is less expensive, why buy permanent?

There are many reasons. As food for thought, here are three of the key considerations:

Permanent insurance will always be there. Some final expense needs are permanent, and only permanent insurance is guaranteed, assuming you pay the premiums, to be there when needed. Term insurance, by its nature, is temporary, and at some point will become nonrenewable. In fact, a good life insurance “rule of thumb” is to buy permanent insurance for permanent needs (funeral, burial, estate liquidity), and term insurance for temporary needs (mortgages, college costs). 

Permanent insurance premiums are fixed for life. While the premium may be higher at younger ages than term, it will never go up. And that can be a great comfort upon reaching older age and not having to face the possibility of your term insurance premium increasing beyond your ability to pay, possibly at the very time you need your insurance the most. 

Permanent insurance builds cash values. During those early years of your policy, when your “lifetime average” premiums are higher than the death cost, that extra money is set aside to help cover the higher death costs in later years. But in the meantime it is put to good use. In effect, it becomes a form of “savings account” inside your life policy. This “cash value”, as it grows, can be used as the basis for a loan from the insurance company, used to pay premiums if necessary, or taken as a cash settlement in the event you cancel the policy.

If I need to cash in my life insurance at some point, how much will it be worth?

If your policy is term insurance, it will have no value. Term only provides a death benefit. If your policy is permanent insurance, you will be eligible to receive the current cash values contained in the policy, whatever they may be at that point in time. As your Trusted Choice^SM Agent, we will be able to show you sample charts illustrating your policy’s anticipated values for any particular year after your policy is issued.

What is the major purpose of health insurance?

To use the “machine” analogy in our introduction, health insurance is designed to cover repairs, maintenance and any lost income while the machine is “in the shop”.

What are the major types of individual health insurance policies?

There are many variations of health insurance policies. The two most common are major medical and disability. We, your Trusted Choice^SM Agent, can share other, more specialized types of coverage.

Do I need an individual policy if I have group insurance at work?

Maybe. Many factors must be considered, such as: Do I plan to remain at my current job? Do I feel secure in my current job? What current benefits does my employer provide, and do I feel they are sufficient? Are there certain benefits that are not provided, or limited in a way I feel leaves a gap to be filled in my coverages? Are there members of my family who are not adequately covered, or are ineligible, for my group benefits?

Discuss these issues with us and we can make a recommendation as to the best choices to assure your medical coverages are adequate for your needs.

What is a major medical health insurance policy?

This is the most common form of individual or group health insurance is a major medical health policy. It provides benefits for sickness or injury, regardless of whether the care is provided at a doctor’s office, clinic or hospital. The types of sickness and injury covered are typically broad, although there are always limitations that should be discussed with us prior to purchasing the coverage. Major medical policies normally have an annual deductible and a lifetime maximum amount of benefits that will be paid.

How does a health insurance deductible work?

A deductible is the amount you must pay before the insurance company begins to pay on your bills. This is an annual amount per insured person, although typically there will be a maximum amount of deductibles you will have to pay in a given year. For example, if your “per person” deductible is $500, and you have five people in your family covered under your health insurance, the maximum “family” deductible will usually be $1,500. Once three of the people in your family have paid out a $500 deductible, no more deductibles will apply to any member of the family for the remainder of the year. This can vary, so be sure to discuss the specifics of your policy with us, your Trusted Choice^SM Agent.
 

This is part 3 to multiple sections of an
article on Life and Health Insurance.
Bookmark us for the remaining section and additional articles.

Part 2

Part 4

Date Posted to Site:   April 2005

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