Insurance World

A woman from Las Vegas thought she was buying health insurance. It looked and sounded like health insurance. The Las Vegas woman is not 65 yet, which means she can’t get Medicare. So, she went online looking for health insurance. She ended up finding something called Healthcare Advantage, and signed up after paying $100. Come to find out, this was not medical insurance at all and the sales representative never told this poor lady. She found that out when her cards arrived in the mail. In tiny writing at the bottom, it read, “not an HMO, PPO insurance or managed care company”. This was a discount plan. These plans do not have the same coverage as a full medical health insurance policy. Make sure you know what you are getting and if it fits your needs.

So what is a discount plan? The plans claims to save people money by offering discounts on physician visits, prescription drugs, dental work, eye care and other treatments for a monthly fee. Unlike normal health insurance, which is very costly and very selective about who it covers, a discount health plan accepts everyone, no matter what health conditions they may have. You will use a list of doctors that are willing to charge discounted rates to the subscriber. Discount is not the same as coverage, and so you will pay more for visits and other services that you wouldn’t with a regular medical plan. The average savings is only 25% that could be very expensive if you have to see a specialist or require surgery. These networks claim to have as many as 400,000 doctors and 50,000 hospitals available to choose from, but what if none of them are near you? You can get a savings of up to 30% on both generic and brand name drugs, which can also be costly if you have multiple prescriptions or they are costly ones. So if you have a health plan already but have a high deductible, this extra plan may help save you some money. But to use as a complete health plan, it really isn’t designed for that and will cost you more than a great HMO.

HMOs and other medical plans can offer full medical coverage at great rates. Managed care plans are the way to go for those who are limited on funds. They offer the best policies for the least amount of money. Most of these plans are available to anyone and can save you a ton of cash. You can make the plan even more affordable by asking for a deductible, which will lower your monthly expense. Most HMO’s do not have one at all but, you can request one, and most basic PPOs and POS only have a small one, usually $200 to $500 per year, which you can also asked to raised. The co-pays are also very reasonable with these types of plans. If you choose to purchase an HMO, expect to pay about $5-$10 per office visit and per prescription. With PPOs and POSs you will have a 20% co-pay with both visits and medications. The differences are how strict they are and you pay more of a co-pay to have extra flexibility. Usually a PPO or POS plan is less expensive and you have more freedom to see whom you want so the insurer makes you more responsible for payment. HMOs tend to be the least expensive and best policies for people with fixed incomes.

Make sure you know what your needs are and double-check what you are getting. If you need full medical coverage with low co-pay then a discount plan will not work for you. If you are already covered by a medical group but have a large deductible then you might benefit from the extra savings a discount plan can offer. Also, ask whether the plan is insurance that covers your treatment, or is a discount plan that still requires you to pay all medical bills yourself. Beware of slippery sales pitches. Make sure you know what’s being offered. Discount health plans may only sell you access to a large mailing list of medical providers that it purchased commercially. Don’t assume you’re getting access to a large provider network just because your discount card displays the network’s name and logo. If you plan to use a specific listed doctor, hospital, pharmacy or other provider, ask a few questions before you sign up.

The study of the human history and civilization reveals a universal desire for security, and it indicates that the need for security has been one of the most powerful motivating forces in the material and cultural growth.

Early societes relied on family and tribe cohesiveness for their security. With economic progress, however, this security source weakens. Insurance, in some form, has been a universal response to societies’ request for security.

Life insurers sell today policies that permit policyowners the felxibility of deciding the amount of the premium he or she would like to pay. Whole life policies are examples of such flexible plans because they are a function of the amount of the policyowner’s past and present premium payments.

Subject to company rules regarding minimums and maximums, the policyowner may pay whatever premium during a policy year that she or he wishes. An amount to cover the insurer’s expenses and mortality charges is subtracted from the cash value and a penalty for early policy termination, called a surrender charge, may be assessed against the policy’s cash value.

Many life insurance policies have cash values. Conceptually, all life insurance policy cash values can be derived in the same way and all evolve for the same basic reason: prefunding of future mortality charges. As a practical matter, however, policies are usually viewed in different ways.

The savings element is considered a by-product of the level premium method of payment. With universal life and some other newer forms of life insurance policies, the savings element is usually considered to be a more independent part of the policy, specifically designed to build a savings fund from which mortality and expense charges are withdrawn.

Economists and marketing personnel tend to view a level-premium whole life contract as a divisible contract providing financial protection to the policyowner’s beneficiaries, with other contract benefits available, including cash surrender and loan values. A policyowner may discontinue the insurance and surrender the policy for its cash values.

Alternatively, a policyowner may borrow from the insurer an amount up to the cash value, at a contractually stated rate of interest, using the cash value as collateral.

The distinguishing features of universal life policies are:

1- their flexibility
2- their transparency.

These policies are flexible in that they permit policyowners, within limits, to increase or decrease premium payments as they wish also to increase or decrease the policy face amount.

The transparency means that the three elements of life insurance ( mortality, interest, expenses ) are identified and disclosed to the customers.
The savings component of the life insurance policies is a direct function of the premium payments made by policyowners.