Personal Dividends - Money+Lifestyle » insurance

How Does a Fixed Annuity Work?

Miranda — Thu, 20 May 2010 21:18:23 +0000

Source: sxc.hu Photo: forwardcom

With the recent stock market volatility, many investors are concerned about losing their retirement income. If you rely on income from your investments, the type of crash we saw following the global financial crisis can be scary. As a result, many are considering annuities. Fixed annuities are getting special attention, since a minimum return is guaranteed, as well as the principal.

Annuities: The Basics

In most cases, insurance companies issue annuities as a contract, promising to make fixed payments to the person who purchases the annuity (the annuitant). The company accepts payment for the annuity, either in a lump sum or in installment payments over a period of years. The insurance company can invest that money to try and grow it, becoming profitable. At a certain point, agreed upon ahead of time, the issuing company begins making regular payments to the annuitant, usually during retirement.

Earnings from annuities are tax deferred. The interest earned is usually added to the annuity balance and the balance continues to grow over time. The annuitant doesn’t pay taxes on the earnings until they are withdrawn from the annuity. If you have an annuity, you receive regular, fixed payments over time after a specific date, guaranteeing you an income in retirement. This stability is one of the reasons that annuities appear so attractive. However, it is important to note that the insurance company guarantees the earnings and the principal, and an annuity is only as strong as the company that issues it.

There are two main types of annuities: Fixed and variable. While there are different hybrid annuities and products, many annuities fall into one of these categories. With a variable annuity, the rate of return varies with market conditions. A fixed annuity has a minimum return guaranteed, and can also earn extra on top of that minimum, if the insurance company feels that market conditions warrant it.

Fixed Annuity Options

Many companies issuing fixed annuities offer a minimum guaranteed rate of return, and then set a flat rate, depending on market conditions for a period of time, such as a year. There are some contracts available, however, that will lock in a higher fixed rate for a multi-year period of time. The idea of getting a fixed rate of return can be tempting, but you will also need to consider whether or not that rate will beat inflation. You may need other investment earnings to help you keep ahead of inflation.

When you purchase a fixed annuity, you can choose immediate fixed annuity, or a fixed deferred annuity. An immediate annuity is purchased, and payments begin almost immediately. It is becoming common for a retiree to withdraw a large chunk of money from his or her retirement account and use it to purchase an immediate annuity with the lump sum. That he or she is guaranteed a set monthly, quarterly or semi-annual payment that can serve as income. It is important, however, to understand the tax implications of this maneuver. Consult with a trusted tax professional before proceeding.

A deferred annuity is purchased by someone who wants to accumulate at a fixed rate before beginning to receive payments. Those who choose this option usually do not have the capital to purchase in a lump sum (although deferred annuities can be purchased with a lump sum), but want to be able to rely on the income at retirement. Many deferred fixed annuities come with installment plans, in which the annuitant pays regular premiums for a specific period of time. Then, when the time comes, it is possible to receive steady retirement income. The main downside to this arrangement is that the guaranteed fixed rate of return can be somewhat low, and you could miss out on more effectively growing your nest egg.

When choosing a fixed annuity, it is important to be aware of fees. Annuities come with fees ranging from load fees to contract and transaction fees. Make sure that you understand the terms of the annuity as well, since you might not be getting what you think you are. It helps to have an independent financial professional look over the annuity before you buy, to help you ensure that a fixed annuity is really the right move for you.

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How Does a Fixed Annuity Work?

Health Care Reform: How Will State Insurance Exchanges Work?

Miranda — Thu, 25 Mar 2010 19:44:58 +0000

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Earlier this week, the health care reform bill was passed. Rather than creating government controlled health insurance, the bill instead required everyone to purchase health insurance. Exceptions to this rule include those with financial hardship, Native Americans and those whose religious beliefs preclude it. Additionally, if you do not wish to purchase health insurance you can pay a penalty and avoid actually getting coverage.

Most currently insured people will probably still get their health insurance through their employers, and those who don’t have that access can purchase plans on state health insurance exchanges, due to be operating by 2014. Ignoring the semantic battle over whether or not these are true “exchanges”, since those seeking products and services can’t sell anything (only buy), let’s look at the basics of how these state health insurance exchanges would work:

Who Will be Able to Use Them? Are There Any Subsidies?

First of all, this is not an open market where anyone can just look for a competitive price on health insurance. Those who can go “shopping” are limited those who meet one or more of the following criteria:

Work at companies with less than 100 employees.
Work for a company that does not provide health insurance.
Self-employed.
Unemployed.
Retired, but not eligible for Medicare.
Small business.
After 2017, medium and large businesses.

If you can’t afford to purchase health insurance, under the health care reform bill you can see if you are eligible for subsidies from the government to help you pay the premiums on the insurance you purchase. A sliding scale, based on need, will be used to determine how much help you can get in terms of paying your premiums.

For those who want to buy their own insurance, for whatever reason, they can still do so even if they don’t meet the above criteria. They’ll just have to do it outside the exchange. And it is worth noting that the health care reform bill requires insurers that offer plans on exchanges to charge the same premiums on comparable plans outside the exchanges.

How Will They Operate? How Will They be Funded?

Originally, the thought was to have a national exchange. However, that plan was scuttled in favor of allowing states to manage their own exchanges (or have non-profit organizations manage for them). Federal money will be provided to help fund state exchange start-ups. States can also cooperate with each other in multi-state exchanges, creating larger pools of “customers” and offering more insurance options, since providers could compete directly with providers from other states.

However, there are rules to being listed on the exchanges. Overseers are expected to make sure that the insurers listed on their exchanges follow certain rules. Plans must be “in the interest” of buyers, say the authors of the bill. State health insurance regulators must have rubrics for determining which insurers certify to offer their products on the exchange. Additionally, there has to be a standard format for presenting the options and costs in a way that buyers allows buyers to efficiently compare their options. Presumably, this means that states will bar insurance companies that do not meet “quality standards” from selling on the exchanges.

States cannot set premiums, though. Insurance companies can set their own premiums and they can decide which plans of declining coverage (in declining levels of expense and offers encompassing “platinum,” “gold,” “silver,” and “bronze”) they will offer. However, states are authorized to demand that insurers justify rate increases and prices. If states are dissatisfied with the reasoning behind the changes, the plan offered can be taken off the exchange. Insurers will have to be more transparent about their pricing, and how they spend their revenues, especially if they want to be included on the exchanges.

The authors of this legislation hope that the health care reform bill, with state health exchanges as a key part of the transition to a new system buying health insurance, will create more competition among health insurers and plans (lowering health insurance prices), while providing more people with access to affordable health care. Do you think that this state exchange program will accomplish those goals?

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Health Care Reform: How Will State Insurance Exchanges Work?

How Long to Keep Records- A Quick Guide

Miranda — Thu, 18 Feb 2010 20:05:37 +0000

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Keeping your finances properly organized requires a lot of paperwork. At tax time, you probably pay even more attention to what you should keep, and what you can toss. You can significantly reduce your paper clutter — and save your sanity — when you understand which papers to preserve, and which you can toss. Use this handy guide to determine how long to keep records.

Papers you can throw after a year or less

Some documents can be discarded rather quickly. Surprisingly quickly in some cases.

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Credit card bills: After you have checked your credit card statements, and paid what you owe, you can shred your credit card bills. One exception is if you need the statement showing a charge that is under warranty (staple the bill to the warranty and keep in a separate warranty file). The second exception is if you are taking a deduction related to something you charged. Consult your tax checklist, and keep the bill as a way to prove that you can use the deduction. Keep the bill with your copy of your current year tax return.
Bank account statements: Once you reconcile your statements, they can be shredded. However, as with the credit card bills, you need to keep them with tax documents if you are taking a deduction.
Investment statements: Monthly and quarterly statements can be shredded when you get new statements in. Annual investment statements, though, should be kept until you sell the investments. You should also keep annual statements for tax purposes (such as retirement accounts) on hand, and in folders separated by deductible and non-deductible accounts.
Pay stubs: Keep your pay stubs for each year. Once you have reconciled them with your W-2, then you can shred them.
Receipts: Unless you’re using them for back-up information for taxes and warranties, most receipts can be instantly shredded. Enter them into a personal finance program to help you track your spending, and then get rid of the paper.
Insurance policies: As soon as you get your insurance policy renewal, you can shred your old insurance policy documents.

Documents you can get rid of after a limited time

Some documents are only needed until they have served their purposes.

Loan documents: Keep these documents someplace secure (fire safe, safe-deposit box) until the loan is paid off. When the loan is paid off, and you have the title or the deed, you can shred the loan documents.
Vehicle records: Store maintenance and repair records for as long as you have the vehicle. They may be needed for warranty information, or the next owner may want them. You should keep titles, purchase receipts and registration information in a secure place for as long as you own the boat, car, motorcycle, truck in question. After ownership is transferred, you can get rid of these documents.
Investment purchases: When you purchase an investment, you are sent a confirmation. This can help you establish a cost basis. If you get this information in an annual statement, discard the confirmation after you get the statement. Otherwise, keep the document until you sell the investment. But, then, you will need to move the document into your current year tax file as part of your records.
Savings bonds: Keep these secure until you cash them in. Treasury Direct has a handy program that will let you exchange paper bonds for electronic bonds.

Records you should keep for seven years

For the most part, only tax records need to be kept for seven years. You should keep copies of your tax returns with their supporting documents (statements, receipts, etc.). I like to put all of my tax documents and supporting papers in a manila envelope labeled with the tax year, and then safely stored. If you are suspected of fraud, you can be audited any time, and the government has six years to collect taxes or start legal proceedings if you do not report more than 25% of your gross income. And, of course, any of your tax returns in the last three years are subject to random audit.

Never get rid of these papers

There are a few papers that you should never get rid of. Obviously, you need to keep birth, marriage, divorce, military discharge, Social Security and death documents in a safe place, and keep them forever. But there are other items that you should hold on to.

Life insurance policies: Life insurance policy documents related to permanent coverage should be kept until the covered person dies and you get your payout, or until you cash in the policy. Term life policies, of course, need only be kept until the term expires, or the covered person dies.
Defined benefit plan papers: If you have a defined benefit retirement plan, keep this information safe, and keep it forever. This goes for documents from current and past employers.
Estate planning: Documents related to estate planning — wills, trusts, powers of attorney, health care proxy, etc. — for as long as they are in effect. Not only should these be kept someplace secure, but you should also have copies for your attorney and for your executor. Physicians should have copies of health care proxy documents.

If you are conscientious about organizing your papers, and if you know when you can get rid of certain documents, you will find your entire financial life much better organized.

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How Long to Keep Records- A Quick Guide

Health Care Reform Will Make Health Insurance more Accessible Online

espringer11 — Thu, 14 Jan 2010 19:14:10 +0000

Source: sxc.hu Photo: forwardcom

As the rest of America is waiting for the final passage of the health care reform bill, health insurers are coming up with ways to make their systems faster and cheaper. With cuts to insurers and 30 million new possible leads, insurers are going to have to find ways to maintain the new load and make the purchasing phase easier. In a recent article, the Chief Executive of AHIP Karen Ignagni, suggested: “Making sure [insurance companies] have the capacity for online sales and knowing how to present a product to consumers.”

Many insurance agents already use online tools to help accelerate processing consumers. It is obvious that agents who having been using these online tools will have an easy transition and a great advantage over agents who have yet to engage these online tools on their websites. Consumers also search for health insurance quotes online. As more people start to look for insurance, all of these online tools will be necessary for consumers to make decisions.

How does the online process work

By using health insurance quote engines, consumers can find cheaper prices and compare policies to make the best decision for them. Customers can opt to not have an agent contact them and can continue the process completely online on certain sites. This is great for consumers who hate hassle and yell at anyone who calls their home.

Consumers can talk to insurance agents online or purchase insurance through an agent’s site. Agents are most knowledgeable about insurance and can provide materials and the perfect policy. Agents typically work with many companies and will pick the company that best fits their client. Use agents wisely! They are there to help you, not take your money and run. Insurance agents try to build lifelong customers so keep that in mind. They have more to offer then just health insurance.

The health insurance market will have to reach new demographics in a short time period, and these new consumers are going to vary greatly in age. Younger adults who just graduated from college and older adults who could not acquire policies will all be required to obtain health insurance. The health insurance market is going to have to reach these groups in a positive way to get lifetime consumers.

How are the health insurance companies responding

Companies like GoHealthInsurance.com have been using social media as a way to reach younger audiences. Social media used to only reach younger populations but recently older populations have become involved in the craze. It is not uncommon to see Grandma’s photographs of when you were a baby on Facebook or her Tweets about the cookies she just made.

Humana has been making efforts to reach younger demographics in crumpleitup.com, an edgy Blue’s Clues version of health care information. However, more efforts by the health insurance industry are necessary to reach these groups of people.

People cannot expect agents to find them but must find the agents. Contacting an agent and researching online are the best ways to understand how the reform will affect your policy and help you find the best policy. Informed buyers are usually the happiest.

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Health Care Reform Will Make Health Insurance more Accessible Online

What is an Annuity and How does it Work?

Miranda — Thu, 07 Jan 2010 21:55:57 +0000

Source: sxc.hu Photo: forwardcom

Thanks to the recent market crash, and the subsequent losses many have seen in their retirement plans, annuities are gaining in popularity. Annuities are complex, with many subtleties and it can be difficult to figure out exactly what you are being promised. You will want to visit with a financial professional to review whether an annuity is the right decision for you. Look for someone whose income does not depend on selling annuities. We outline below some basics about what is an annuity and how it works so you have a good idea.

Let’s define annuities

An annuity is a type of investment in which you contract to put in payments for a certain amount of time, or pay one large amount of money. In return, you will receive payments at regular intervals sometime later down the road. Usually, these annuities are obtained through insurance companies. Your contribution is then invested in sub-accounts — usually consisting of stocks and bonds — that generate income for the insurance company (and sometimes for you as well, depending on how the contract is structured).

In most cases, annuities are used as retirement vehicles. There may even be penalties if you withdraw money from your annuity before you reach a certain age. Many annuities feature a regular payout that is not affected by market fluctuations. As a result, many folks are taking their retirement plans and putting them into annuities; they are worried that a market crash could wipe them out. An annuity provides stability, as long as the insurance company issuing the annuity remains viable.

There are two main kinds of annuity:

Fixed
Variable

As you might guess, the fixed annuity offers a payout that is guaranteed,. It may be a set dollar amount or a set percentage of the assets in the annuity. These types of annuities generally pay a rather low rate of return, since they are considered relatively safe.

Variable annuities, on the other hand, offer a possibility of higher returns (though they are still considered low-yielding investments). With a variable annuity, the rate of return varies, and you can boost your returns. However, it is important to be careful with these since, unlike with a fixed annuity, your principal is not guaranteed.

There are also hybrid annuities that combine aspects of fixed and variable annuities. There are some annuities that guarantee that you can withdraw a certain percentage of your initial account value while you live, while at the same time offering the potential for growth with a variable rate of return.

One option is an immediate annuity, in which you turn over a large amount of money in exchange for receiving immediate payouts that last for life. You might turn over $150,000 to $200,000, and be guaranteed $850 to $1,500 a month. The actual payments will depend on factors such as your age, and whether or not you have a spouse that would continue receiving payments after you pass. The older you are when you purchase an immediate annuity, the higher the payout.

Drawbacks to investing in annuities

As with all investments, there are drawbacks to annuities. One of the biggest drawbacks has to do with the fees. Even though your account may earn some returns, the fees generally protect the insurance company from having to increase your regular income payout. The fees associated with annuities can be large.

Annuities are also complex. Some of them are so convoluted that you may not actually be sure what is truly guaranteed. This has led to some fairly unpleasant surprises for some retirees. And, of course, you have to worry about whether or not you get your money’s worth. With a lifetime payout, you are guaranteed steady income until you die, but if you die soon after you begin receiving payments, you won’t get out what you put in (not that you’ll be around to really notice).

Favorable tax treatment – consider it part of your asset allocation strategy

One of the upsides to annuities is the fact that many of them (especially those intended for retirement purposes) are tax deferred. This means that you don’t pay taxes on the gains until you you actually start withdrawing money. Your withdrawals, though, are taxed as regular income. So it is important to carefully plan out how much to take out, and what it means for your tax bracket.

Another consideration is the estate taxes your heirs will have to pay. An annuity pays out a death benefit that is equivalent either to the current value of the annuity, or the amount that the buyer has put into it (whichever is higher). If you die during the accumulation phase, which is while you are paying money into the annuity, the heirs just get that amount. However, the annuity amount paid to your heirs will be subject to double taxation: Regular income taxes and estate taxes.

Bottom line – Should you invest in one and when?

Like so many other investments and personal finance decisions, whether an annuity works for you is subject to your individual needs and goals. You may want to put a small portion of your retirement portfolio into an immediate annuity if a steady cash flow to cover your basic necessities is desired. In most cases, working through the twists and turns may not be worth the low returns you get.

It is also important to note that annuities can be an integral part of your asset allocation strategy, tax plans and estate plans. It is best to consult with a financial advisor who is familiar with your particular situation.

Disclaimer: I am not an investment professional. This should not be construed as investment advice. All investment carries the risk of loss. Before investing, do your own research and/or consult with an investment professional.

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What is an Annuity and How does it Work?

Low Cost Auto Insurance – Vehicle Insurance Rating

Low Insurance — Fri, 18 Sep 2009 15:21:00 +0000

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More people today are finding out the benefits of shopping online for low cost auto insurance. By shopping online you can easily compare rates from several companies quickly and easily from on the Web. Although comparison shopping will save you several hundreds on your auto policy, you should not forget about the vehicle insurance rating factors that come into play. Below are a few more things you should consider if you’re in the market to purchase a new vehicle.

Insurance companies will begin by rating your vehicle by size, weight, performance, theft ratings, crash ratings, safety features. If the cost of insurance is a concern you should get quotes on a few cars you’re interested in prior to making the purchase. You’ll find a big decrease in premium when you compare an older 4 cylinder Sentra to a newer truck or SUV.

Why are SUV’s and trucks more expensive to insure?

You’ll find higher premiums on larger vehicles for a number of reasons. We Americans love our larger vehicles. They never come large enough. There’s a whole industry built to help you make your already large truck or SUV even larger. If the truck is a four wheel drive vehicle, the insurance company runs the risk of an off-road accident. If you’re involved in an accident in a larger vehicle you are at higher risk of causing serious injury or death to the other driver.

The benefit of smaller cars

You will find the rates on a smaller four-door vehicle much more affordable than you will on any truck, SUV or high performance car. Although this is true for most smaller vehicles there will always be a few smaller cars that still hold higher rates due to theft statistics. In 2007 the Honda Civic made the number 1 spot for highest theft occurrence. The Ford Taurus was noted to have the lowest theft rating. With a smaller vehicle you in most cases will cause very little damage to the other vehicle in an auto accident. I remember rear-ending a Ford Explorer one day with my Sentra. The damage was minimal on the Explorer. However, I needed a new hood.

High performance sports cars

Of course you will see some of the highest rates on high performance sports cars. Sports cars have such high rating on these vehicles, young drivers can’t even come close to owning a sports car unless they are prepared to pay the high cost premiums that come with them. Some just wait until they’re 60 or 70 before buying their dream sports car. You’ve seen them on the roads.

When planning a purchase of a new vehicle, you need to keep in mind the tips above to estimate how much the insurance will cost you. When in doubt, you can always call your insurance agent.

You can find more tips on how to save more on auto insurance here.

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Low Cost Auto Insurance – Vehicle Insurance Rating

FHA Loans Then and Now

Brandon — Fri, 17 Jul 2009 18:00:40 +0000

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The year is 1934- The War to End all Wars (WWI) is a distant memory, but the United States is fighting a new battle; The Great Depression. Most Americans have given up on the Great American Dream and are just trying to stay alive. Many Americans lived in “Hooverville” or “Shantytown”; cardboard cities set on the outskirts of towns all over America. It was under these conditions that Congress first formed the Federal Housing Administration (FHA) in 1934.

In 1934, mortgage loans were nearly impossible to get. Banks required a 50% down payment and most mortgage loans had to be repaid in 5 years. With the formation of the FHA, mortgage loans changed and the American Dream began to seem a possibility again.

The FHA did not lend money, rather it insured the mortgage loan. This meant that should a borrower default on a loan, the FHA would pay the lender for its losses. This greatly reduced the risk to the lender. In exchange for this insurance, the FHA demanded that lenders make loans more affordable and easier to obtain.

The FHA demanded that lenders require only a 3% down payment from its borrowers and to allow that down payment to come from any source. Additionally, loan repayment terms were to be extended up to 30 years. Simply changing these requirements made the American Dream once again a reality for many.

The FHA did not require tax payer revenue to support its cause. All money for default payments came from insurance fees charged the borrower over the life of the loan. The FHA was made part of the Federal Department of Housing and Urban Development in 1965.

Today the FHA continues to function as it did in its inception. With few exceptions (i.e. a 3.5% down payment) requirements remain the same. Without exception the goal of the FHA remains the same; to make America a nation of homeowners.

FHA loans were not in vogue in the mortgage boom but today they account for around a third of all mortgage applications. The economic stimulus bill is the main driver of the growth in FHA applications with some new, home buyer friendly legislation.

In May of 2009, the FHA announced that it will allow first time home buyers to use the Recovery Acts new first time home buyers tax credit for immediate assistance.

The American Recovery and Reinvestment Act of 2009 offers first time homebuyers a tax credit of up to $8,000 for purchasing a home. Ordinarily this tax credit is only available to first time home buyers after they file their tax return with the IRS. The new change announced in May will make home ownership more affordable to many.

The new rules will allow certain FHA approved agencies to monetize the tax credit prior to tax filing, allowing first time home buyers access to the full $8000.00 tax credit when purchasing their new home.

Home buyers can apply the tax credit to the down payment in addition to the required 3.5%. Increasing the down payment will lower interest rates and make home ownership more affordable for many. Additionally, the tax credit may be applied to other cost associated with purchasing a new home (i.e. closing costs). The FHA anticipates that the new tax credit will encourage the purchase of approximately 160,000 homes.

The FHA warns first time home buyers to beware of mortgage scams. Although there are plans in place to ward against misuse of the applied tax credit, the buyer should always beware. The FHA suggests that first time home buyers compare the services of several agencies approved to use the tax credit and choose the servicer that makes the most sense for them. The FHA intends to track the approved servicers to be sure the newly available funds are not misused.

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FHA Loans Then and Now

7 Tips for Saving Money on Health Insurance

Miranda — Thu, 09 Jul 2009 20:27:52 +0000

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Health insurance is one of those necessary evils in life. It isn’t mandated by law, like for auto, but any major health issue — or even three or four minor issues added together — can result in total financial devastation without some degree of coverage. Unfortunately, health insurance premiums continue to rise, making it difficult to obtain affordable coverage. Here are 7 tips that will help you reduce your health insurance costs.

Tip 1: Call your health insurance company

When you first get your premium increase notice, call your health insurance company. They have people who can help you find other plans that you are eligible for. These plans may have different coverage, and different terms, so pay close attention. I did this last month, and found a plan with a lower premium. I had to pay $10 more on my office visit co-pay, and accept a $200 deductible for prescriptions, but the savings in the premium more than offset those costs. Be careful, though. Make sure you understand the plan before you sign on. Sometimes a much lower premium masks a plan that has such a high deductible that you pay your expenses out of pocket and still have to pay the premium. In the long-term that can cost much, much more.

Tip 2: Comparison shop

Do a little recon. Check online for other plans. I found my plan from healthinsurance.org resource center. This site compares plans available in your area, and lets you see the benefits and costs, side by side. Realize that your employer’s plan may not be the best. Even if you don’t go through your employer, it is possible to find a group health insurance rate, as an individual or family. Now a days, it is easy to check for the best quotes on the internet as more and more insurance companies using the internet to court and educate customers.

Tip 3: Look for incentives

Some employers offer incentives for healthy lifestyles. For that matter, so do some insurance companies (but not many). Check with your human resources department to see whether your employer will kick in extra toward your premiums if you are certified as a non-smoker, or if you make regular use of gym facilities or have a gym membership. Find out the enrollment requirements so that you receive proper certification in time to take advantage of it.

Tip 4: Raise your deductible

Raise your deductible to get a lower premium. The more you pay out of pocket, the less insurance companies will charge you. This works especially well if your plan has a co-pay for routine office visits. This means that you do not have to worry about paying your deductible unless something major happens. Be careful if you have a 20/80 plan or a 30/70 plan. In these plans, you generally pay out of pocket until your deductible is met, then you pay a percentage (20% or 30%) of your costs after that point. In some cases, especially if you use health care services frequently, the lower premium does not make up for your increased responsibility to pay.

Tip 5: Evaluate your coverage

Check your coverage. Do you still need maternity coverage? Do you foresee an instance when you will need alternative treatments, such as acupuncture? If you have coverage that you don’t need, talk to your health insurance company about dropping it. Fewer benefits mean lower premiums. Also, consider your health. If you take reasonably good care of yourself, you may only need the most basic coverage available. Also, find out whether or not generic prescriptions are preferred on your plan. Generics can reduce your health care costs.

Tip 6: Consider your life stage

If you are young and healthy, only making visits once or twice a year for routine check-ups, it may be cheaper to use a PPO type of plan. Cost savings on the premiums can offset higher co-pays for doctor’s visits. A PPO plan also provides more flexibility in choosing providers as you are not tied to a primary care physician and you have the ability to self-refer to a specialist if needed. As you age, especially when you have children, you might consider enrolling in a HMO type plan. While HMOs have had a bad reputation in the past, there are programs now that are easier to deal with and even desirable.

Tip 7: Consider alternatives to health insurance

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You can also consider alternatives to health insurance. These can either work in place of health insurance, or work in a complementary manner with your health insurance. Drop your prescription coverage and sign up for a prescription drug plan. You can also get a high deductible insurance plan, and open a Health Savings Account to help cover expenses. This way you are covered, but you can use pre-tax dollars to pay some of your expenses. Also, HSAs can be used to cover dental and optical expenses. Check for limitations, rates and possible fees with different HSA providers. Finally, there are health care co-ops that can help you pay for costs. These co-ops are not insurance. Instead, you pay a monthly fee, and then the co-op helps you pay a portion of your health care expenses.

Before you make any decision, though, it is a good idea to compare costs, and carefully evaluate your lifestyle and your past health care history. You want to make sure that you get the proper health insurance coverage for your needs.

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7 Tips for Saving Money on Health Insurance

5 Tips to Save Money on Auto Insurance

Low Insurance — Wed, 01 Jul 2009 19:40:55 +0000

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Saving money on auto insurance is easy but you must approach it the right way. Everyone needs auto insurance and it’s an expense we must face for a lifetime. I don’t know about you, but if there is an expense worth learning more about, that expense would have to be insurance. Below I’ve provided five useful tips to help you save money on auto insurance.

Tip 1: Don’t wait until the last minute

Many people choose to start shopping for auto insurance a day before their existing policy’s renewal date. During a comparison quote process we have found that on, many cases, if you shop over a week before your renewal date you will get rated lower compared to if you shop on or just before your renewal date.

Tip 2: Always comparison shop

With the high cost of living, we are in a way forced into shopping around for the best deals on most things we buy. This is how most of us maintain financial stability. You must go about shopping for your insurance the same way. Whether you decide to get a comparison quote online or call a local independent Agent, you’re on the right track. As an Independent Agent in Arizona, I’ve found that in most cases I see about a $500 difference between the lowest premium and the highest premium after doing a comparison quote for a client.

Tip 3: Low cost insurance and financial security

It’s no longer impossible to get low cost insurance WITH the financial security. Many are quick to insure themselves with the state minimum liability requirement. Instead of insuring yourself with a policy that may not be good enough, place focus on discounts instead. There are several discounts auto insurance shoppers can take advantage of including the paperless discount, multi-car and multi-policy discount, and the paid-in-full discount.

Tip 4: Choosing your deductible

The deductible is the amount you must pay first before any claims are paid out to you by the insurance company. The higher the deductible, the lower your premium will be. You don’t want to choose too high of a deductible. Some Agents believe your deductible should be close to your weekly income. You want to have the funds available in the event you need to make a claim. If you do decide on a high deductible you may want to consider putting away some of the money you saved on a monthly basis. This way if something happens down the road you have some of the deductible available to you.

Tip 5: It’s never a bad time to shop

Insurance companies will often go through rating changes. A company that may have rated you high in the past, now may have some of the lowest rates for your specific insurance need. Some people have been with their current insurance company for years without ever giving thought to the other options available to them. Eight out of ten times, these shoppers will see the highest savings after reviewing a comparison quote online.

I believe these are five tips every auto insurance shopper must consider when searching for auto insurance coverage. Auto insurance shoppers can learn more about discounts and compare insurance quotes online.

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5 Tips to Save Money on Auto Insurance

Obama Affordable Healthcare Plan may Pinch Doctors and Patients Alike

admin — Thu, 14 May 2009 16:22:19 +0000

In his Opinion page at Wall Street Journal, Scott Gottlieb argues that the proposed health care reform to provide affordable healthcare to all (that will likely be pushed through Congress this year) will have the unfortunate effect of reducing Doctor’s incomes, reducing the quality of care and increasing patient’s wait times and frustrations with the system. In short, the US health system will start looking more like the Canadian health system.

The ‘Public Option‘ insurance program will be offered and run by the government and will be open to anyone. This will be modeled on Medicare, which finds itself in a mortal danger. Since the Public Option plan will be cheaper than most other private insurance plans, it will provide an incentive for employers and public at large to shift to the public option, ultimately making it the largest insurance plan in the country. This plan will be cheaper as it will leverage its heft to negotiate cheaper reimbursement rates with the medical services providers. He argues that the decline in incomes will force most private doctors and providers to consolidated into larger practices to cut on overhead costs, causing delays in appointments for services to the patients. Additionally he states that the incentives in the plan are misaligned, doctors will earn more for providing more services (that is if the patient keeps coming back, instead of fixing the illness).

Scott makes some very valid arguments that will need to be addressed by the Congress when they discuss the new health care proposal. Whether health care should be centraly managed or whether it should be left in private hands is a question that undoubtedly we will see many more debates in the next year or so. There are many facets to this debate. For example, we already have a problem of lack of doctors in rural communities in the US, which will be further exarcebated if less young people choose to go into medical profession if it becomes less attractive to do so. It will be interesting to watch how this debate will pan out.

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Obama Affordable Healthcare Plan may Pinch Doctors and Patients Alike