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Health sector reforms: Would it do any good?

Health sector reform has remained the latest buzz in the insurance sector. Its said that this reform would bring both the healthcare and health insurance costs within the reach of average Americans.

The cost of healthcare, which has grown in leaps and bounds over the years, has forced many to go without required healthcare. The health insurance costs too teamed-up with it to become a luxury item for many.

However, so far one used to enjoy health coverage through their employers, where both the employee and the employer have shared the cost of medical coverage. But at the given economic state many companies have stopped offering health insurance. Also, unemployment has forced many to drop their coverage as well.

The data has revealed that over the last decade the cost of health care has surpassed the growth of income leaving around 10 million Americans without health care benefits.

The proposed reforms in the health sector

The proposed reform in the health insurance sector would ensure that the insurer covers the patient’s choice of physician.  The current plans restrict the insured’s choice of doctors as they are forced to opt for one from the network. And many-a-times their present physicians aren’t included in the list. Some health plans also uses extensive referral system delaying the medical benefit to the policy holder.

Under the reformed system one would also be able to stay on his current medical insurance while reducing its costs further.

Initially the cost of coverage used to increase for the insured if he had choosen the COBRA continuation benefits while switching jobs. The COBRA (Consolidated Omnibus Budget Reconciliation Act), while allows the insured to stay covered on his available group health plan, also increases the cost of coverage by 100% making the health coverage unaffordable. On the new plan the government has decided to share the pocket pinch of COBRA with the enrollees as well.

It has also been proposed in the plan to reduce the administrative fees by constructing a central office to handle all the paperwork related to coverage. The administrative costs used to add to the healthcare costs since the doctors offices’ have to fill-out the paperwork of various types of health policies.

The health sector reform proposal is expected to meet the demands of expanding the healthcare facilities even to the low income group people, bringing the cost of medical benefits within the reach of all Americans.

Life settlement: How seniors can get rid of unwanted life insurance

Life settlement has emerged as a solution for those who are stuck with life insurance plans no-longer required by them. Mostly, it’s a situation with the seniors, who have no dependent children to pass on their assets, rather, they can use this money for treatment or vacation . Life settlement would allow them to get rid of those life insurance policies, which are no longer required, still utilizing it properly .

How life settlement works
In the deal of life settlement you’d sell the policy to an interested third-party investor (mostly big financing houses looking for profit with minimum risk undertaking) at an agreed upon value, which is normally higher than the surrender value of the plan but lower than the death benefit. When you’d enjoy your money from the deal, the buyer of the plan would become the new beneficiary.

Why life settlement is better than cash surrender

Life settlement normally scores over the cash surrender value since it fetches higher return for the insured. While cash surrender would bring around 30% to 40% on the policy value, depending on the age of the plan and the insurer may further deduct some penalty for early termination of the policy, life settlement would get you around 70% to 80% of the death value.

The flipside of life insurance settlement

The life settlement market is growing rapidly as the field for predatory activities of phony settlement companies and con artists, preying on the vulnerable seniors, who are often unaware of their rights. Hence, it is important to check the authenticity of the settlement company before signing the settlement papers. Make sure that you have understood the terms written on the contract paper before putting your initials on them.

It’s also important to evaluate your eligibility for life settlement. Like any other financial options the idea of settlement may or may not suit you. Therefore, if you are over 65 years of age with recognizable decline in health condition, which has also contributed towards a significant rise in your life insurance premium, life settlement could be your option. Further, if you have children or dependant spouse whom you’d like to offer the death benefits, you mustn’t consider life settlement.

The biggest loser in any life settlement process is the beneficiary of the insured, who otherwise would have gained in lumpsum, that too tax free, at the event of the insured’s death. However, If you like to pass on your asset to someone you love, life settlement might not be your right option.

Initially life settlement was popular amongst the rich, but gradually it has also gained prominence among the average income section. However, while contemplating over the issue of settlement, keep the pros and cons of it in mind as well.

Importance of insurance

We buy insurance often as a habit, without sparing much thought on its requirement. Some may even think that paying for an insurance policy is also like wasting resources, which otherwise can be put into other effective investing means to generate returns. But the insurance keeps you covered from the unforeseen and the contingent financial losses.

Insurance for a better future

Well, it may sound dumb to some to keep on paying for something that might not even occur in the future, but to many others it ensures a peaceful life.

Life insurance is useful for people, who have dependent family members, or are required to plan for their children’s future. Life insurance helps them to build a substantial amount, which is payable to the beneficiary of the policy at the event of unfortunate and untimely death of the policy holder.

There are life policies, which are specially designed to help the family to repay the mortgage and other loans after the policy-holder’s death.

Insurance promotes saving

Although, it may not be the actual purpose of keeping insurance, but insurance promotes saving. It inculcates the habit of forced saving into the society by charging regular premium. There are also policies that may help you in earning return form different equities by investing the fund on your behalf.

The overall significance of insurance on economy

Being one of the major sectors of business, the insurance industry creates a great impact on the county’s economy. The insurance industry helps the businesses run smoothly by covering several risks. The insurance industry has also remained a great source of fund for the businesses because of the availability of surplus money in the form of collected premium.

Life insurance options for seniors

As we grow old our options with life insurance become scarce. Many insurers still avoid insuring individuals over sixty years of age. Further, even if you find an insurer who would offer you a policy the premium charged on that would be outrageous. So, are you uninsurable?

Certainly not, though the options are limited you can still find life policy that would offer  required coverage. Currently, many insurers are setting separate underwriting guidelines for the seniors to qualify for life insurance.

However, even when the seniors may qualify for the traditional life insurance, the cost of coverage would still remain their concern. Therefore, we need to identify the alternatives available to them, which could allow them to remain covered at reasonable expense.

Funeral/final expense plans

Final expense policies are typically designed to cover the burial expenses. Normally, issued for limited face value. The final expense policy would accumulate cash-value which the policy holder can leave behind for his/her heirs.

• The premium rate would remain constant for the period of the plan.
• It would accumulate cash-value, which you can leave behind for your heirs.
• The coverage offered by the plan is permanent.

Guaranteed issue life insurance

Anyone can qualify for the guaranteed issue life insurance since it requires no medical underwriting. However, these plans offer lower death benefits than the traditional life insurance plans. But the premium that the insured is required to pay is high. Moreover, some guaranteed plans might have the clause that would restrict the benefit pay-out if the insured dies within 24 or 36 months from the commencement of the coverage.

Premium financing

In premium financing large financial institutions finances the plan taken by the senior. The financier expects to get higher return on these policies than the traditional investment vehicles.

Premium financing requires no out-of-pocket (or nominal) expense from the policy holder. If the insured dies within the tenure of the plan, the investor then would get the premium paid by him refunded along with interests, when the beneficiary of the policy would receive the tax-free death benefit.

Life settlement

Life settlement is an option that would allow the seniors to get rid of their unwanted life policies. Life settlement involves selling the policy to a third-party, where the third-party would become responsible for paying the future premiums.

In the agreement of life settlement the seller receives immediate cash while the buyer becomes the beneficiary of the plan.