Insurance World

For the first time in more than 25 years, Congress has raised the limit on federal deposit insurance coverage, which protects against loss if a banking institution fails. However, the higher insurance limit only applies to certain kinds of retirement accounts that people may have at banks and savings associations insured by the Federal Deposit Insurance Corporation (FDIC) and at credit unions insured by the National Credit Union Administration (NCUA).

The FDIC wants bank customers to know what’s new and what hasn’t changed.

1. Certain retirement accounts at federally insured banks and savings associations soon will be insured up to $250,000, up from $100,000 previously. The higher insurance coverage applies primarily to traditional and Roth IRAs (Individual Retirement Accounts). Also included are self-directed Keogh accounts, “457 Plan” accounts for state government employees, and employer-sponsored “defined contribution plan” accounts that are self-directed, which are primarily 401(k) accounts. In general, self-directed means the consumer chooses how and where the money is deposited.

Under the FDIC’s new rules, which take effect on April 1, 2006, all deposits at a single banking institution that are held in this broad category of retirement accounts are added together and the total is insured up to $250,000, separately from any other deposit accounts you may have at the same institution.

With FDIC coverage for retirement accounts raised to $250,000, more Americans who rely on banking institutions for safety and easy access will know that more of their money for retirement will be completely protected if their financial institution were to fail. There’s also the added convenience for people who, previously, might have gone to more than one institution to get full coverage of retirement deposits of more than $100,000.

2. Other deposit accounts are still insured up to at least $100,000. However, as before, there are ways to qualify for more than the basic coverage at one insured institution.

For example, four distinct categories of accounts-checking and savings accounts in your name alone that are not retirement accounts; checking and savings accounts held jointly with other people; business accounts; and employer-sponsored pension or profit-sharing plans-each qualify for separate insurance coverage of $100,000 (as much as $400,000 combined).

In addition, trust accounts may qualify for separate insurance coverage of $100,000 per beneficiary (not per depositor) if certain conditions are met. And remember, under the new rules, your self-directed retirement accounts at the same institution are insured by the FDIC to $250,000 separately from any other accounts you may have there. This can be confusing, so to learn more about how to qualify for additional insurance coverage contact the FDIC as listed below.

3. The insurance limits could rise in the future, but not until 2011, if at all. The new law establishes a method for authorizing an increase in the insurance limits on all deposit accounts (including retirement accounts) every five years starting in 2011 and based, in part, on inflation. Otherwise, your accounts will continue to be insured just as described.

Is there such a thing as low cost family health insurance? If you listen to the news and read all the newspapers then I am sure that you are already convinced that health insurance is no longer affordable. There has been an upward trend in the cost of health insurance. The cost for doctor and hospital services is always on the increase and so the cost of health insurance will rise accordingly. This should not surprise any of us who understand basic economics.

Insurers understand this problem and are making every effort to find creative methods to lower health insurance premiums. The health insurance shopper has to take a different approach. There are many ways to fine-tune a health insurance plan without losing the desired benefits. The smart shopper will look into the new approach to purchasing health insurance and reap the benefits.

Self-Insuring

There are advantages to the consumer who can grasp the concept of self-insuring. Self-insuring allows you to lower your health insurance premium by taking responsibility for the deductible amount. Deductibles are examples of self-insurance. Health insurance deductibles can range from $500 to $5000 with some major medical plans. The amount of the deductible should be determined by your ability to self-insure for the deductible amount.

Health Savings Accounts

This kind of savings account is like having a medical IRA. You can set aside money in a savings account for future medical expenses. The health savings account is a great way to fund the higher deductible. The tax-deductible feature of the Health Savings Account makes it very attractive.

The average consumer spends way too much time choosing between PPO (The Preferred Provider Organization Plan) verses the HMO (The Health Maintenance Organization Plan). The real cost savings issues are found when we concentrate on the plan design. That includes the deductible options, vision care, dental care, and prescription drug options.