Life & Health

Accident & Health Insurance

The purpose of Accident & Health Insurance is to protect the injured from economic losses sustained as a result of an accident or sickness.
Types of Health Insurance   (Click to Jump to Sections)

1. Hospital Expense Insurance

This pays for medical expense incurred in a hospital. A typical hospital policy provides 2 basic benefits:
a.      DailyHospital Benefit
b.      Misc. Expense Benefit
A) DailyHospital Benefit – this covers room & board charges.
There are 3 different methods for the payment of this benefit:
–     Indemnity Approach – the plan pays the actual cost incurred up to some maximum
–     Valued Approach – a fixed amount is paid for each day of hospitalization regardless of the actual cost incurred
–     Service Approach – service benefits rather than cash benefits are paid
B) Misc. Expense Benefit – Hospital policy also provides a lump sum benefit for misc. expenses such as x-rays, lab tests, medications & use of operating room.

2. Surgical Expense Insurance

This coverage can be added to a hospital expense policy. It provides for the payment of physician’s fees for surgical operations performed in a hospital or elsewhere.
Benefits are typically paid based on a surgical schedule which lists various procedures & the maximum amount available for each.

3. Major Medical Insurance

Designed to pay a large proportion of the covered expense of a catastrophic illness or injury.
It covers hospital expense; surgical expense; private duty nursing; physician’s fees; prescriptions; wheelchairs; iron lungs; artificial limbs & eyes and mechanical equipment used for treatment. 
Major Medical Insurance has very few exclusions:
1)      Expenses caused by war or military conflict.
2)      Elective cosmetic surgery except as a result of an accident.
3)      Dental care expect as a result of an accident.
4)      Eye and hearing exams, eyeglasses & hearing aids. 
Deductibles – major medical policies usually contain deductibles, which must be satisfied before benefits are paid. The purpose is to avoid paying small claims. These deductibles are typically written on a calendar-year purpose.
There are 2 types of deductibles:
     a)      Individual – all medical expense incurred by a covered person can be used to satisfy their own individual deductible.
     b)      Family – this means that all medical expenses incurred by a covered family member can be used to satisfy one common deductible.
Percentage Participation Clause – a.k.a. Co-Insurance
The insured and the company share covered expenses based on a given ratio to some maximum. This maximum is referred to as a stop-limit after which, the company will pay 100% of the covered expenses.
**Family Coverage – It is available under any of the medical plans. This means that the insured may elect to cover a spouse and/or dependent children up to age 19. Coverage may be extended beyond 19 but not beyond 25 if the dependent child is unmarried and a full-time student.
**Handicapped & Disabled Children– Coverage for an unmarried dependent child who is incapable or self-sustaining employment by reason of mental illness, developmental disability, mental retardation, or other physical handicap must not be terminated while the policy is enforced as long as the individual in question became so incapacitated prior to age 19.

4. Disability Income Insurance

This insurance provides periodic income payments when the insured is unable to work because of an illness or injury. The income payments are designed to restore at least a portion (60%-80%) of the work earnings lost due to the disability.
Probationary Period – This is a period of time beginning w/the first day the coverage is enforced during which benefits will not be paid for disabilities due to sickness. This period does not apply to disabilities caused by an accident. 
Waiting Period – a.k.a. Elimination Period – This is the period of time beginning w/the first day of disability during which benefits are not paid. It acts like a deductible in days.
Benefit Period – this is the period of time after the waiting period has been satisfied during which benefits are paid.
**Definition of Total Disability – In order to collect benefits, the insured must satisfy the definition of total disability in the policy:
1)    Inability of the insured to perform one or more of the important duties of their own occupation. This is referred to as the “own occupation” definition. This is the most generous definition.
2)    Inability of the insured to perform the duties of an occupation for which they are responsibly fitted by reason of education, training and experience.
3)    Inability of the insured to perform the duties of any gainful employment.
Accidental Death & Dismemberment – Another benefit available under the Disability Income Policy is the principle sum benefit. This is a lump sum amount payable if the insured dies accidentally. The following provisions apply for the payment of this benefit:
1)    Death must be purely accidental.
2)    Death must not occur w/in 90 days after the date of accident.
3)    The accident must occur prior the insured age of 70.
  •  Similar provisions apply for the payment of this benefit to the insured should they survive the accident by suffer a double dismemberment.
  • A “double dismemberment” is defined as loss of sight in both eyes or the loss of two or more limbs.
  • For a single dismemberment, which is defined as loss of sight in one eye of the loss of one limb, typically 50% of the principle sum benefit is paid to the insured.
  • This is referred to as a capital sum benefit.
Exclusions –
1)      War or military services
2)      Intentional self-inflicted injuries or attempted suicide
Business Overhead Expense Insurance – B.O.E. Insurance
This type of Disability Insurance is designed to cover the expenses of a business or profession that depends on the skills of one or two persons for the income to meet those expenses.
1)      Examples of Covered Expenses –
  • Rent
  • Utility
  • Employees’ Salary
  • Taxes
2)      Expenses Not Covered –
  • Insured’s own salary
  • The salary of anyone hired to perform the insured’s duties.
3)      Any other expense for which the insured was not regularly and customarily liable for before the disability.
  • This policy typically has a short waiting period.
Disability Buyout Ins. – This ins. is designed to fund the disability portion of a buy and sell agreement. This policy typically has a long waiting period (1 or 2 years) and the benefit is provided in a lump sum. 

5. Group Health Insurance

G.H.I. is any of the health plans written on natural groups of two or more. A natural group is a group formed for a common interest other than buying insurance.
 Mandatory Coverages – 
1) Maternity
2) Newborn Children
3) Continuation of Handicapped & Retarded Children
4) Treatment of Alcoholism & Substance Abuse
The following 3 coverages apply:
          a)      provides for 7 days detox
          b)      provides for 30 days in-patient care
          c)       provides for 60 out-patient visits for the on-going care and treatment
5) Second Surgical Opinion
6) Home-Health Care
7) Ambulatory Care in Hospital Out-Patient Facilities  
Health Maintenance Organizations (HMO) – HMO’s provide guaranteed health services to subscribers for a fixed prepaid fee. They provide an alternative to traditional health ins. by providing one-stop shopping w/reference to health-care & also provides for regular checkups as a form of preventive care. 
Social Security – Provides a death benefit of $255. 
Medicare – It is provided by the fed. gov’t under the Social Security
          -It is divided into 2 parts:
          Part A)Hospital Ins. – Mandatory
          Part B) Medical Ins. – Voluntary
Health Ins. Clause –
1)      Time limit – on certain defenses, limits to 2 year an insurers’ right to rescind or void a policy. Because of misstatement made in application however, if the misstatement were fraud, this time limit does not apply.
2)      Grace period – this is the period of time after the due of the premium where the premium can still be paid and the policy maintained in force. Under the model provision, grace period are as follows:
  • Weekly Premium – 7 daysb)      Monthly – 10 days
  • All others – 31 days
3)      Reinstatement – if the premium is not paid before the end of the grace period, coverage ceases. This provision sets forth the procedure for allowing the insured to apply for reinstatement.
4)      Notice of Claim – must be given to insurance company within 20 days of loss or as soon as possible.
5)      Claim Forms – must be supplied within 15 days.
6)      Proof of Loss – this required the insured to furnish a written proof of loss within a specified number of days, usually 90 days.
7)      Time payment of claims – claims must be paid
8)      Payment of claims – benefits must be paid to the insured if living, otherwise to the beneficiary of the estate.
9)      Physical Examination & Autopsy – this provision gives the insurer the right to have the insured examined while a claim is pending at their own expense and it also permits in the case of death the insurer to have an autopsy unless forbidden by law.
10)      Legal Actions – the insured must wait 60 days after submitting proof of loss before bringing any legal action and they are also prohibited from bringing any legal action more than 3 years after the proof is required to be furnished.
11)      Change of Beneficiary – this indicates that the insured may change the beneficiary unless they have specifically indicated in writing that they did not reserve the right to do so.
             Revocable – able to change
             Irrevocable – unable to change
12)      Notice of Right of Examination – a.k.a. Ten Day Free Look Provision – the notice of the right to exam in the policy must appear on the front page of the policy. This allows the insured to review the policy and return it for a full refund within a specified number of days, usually ten.
13)      Misstatement of Age Provision – this states that the coverage will not be void if even after 2 years the company discovers a misstatement of age. They will adjust the benefits accordingly.

Life Insurance

Permanent Life Insurance

Your permanent life insurance policy will provide a level of financial security for your family, or other beneficiaries, in the event of your death. A permanent life insurance will provide coverage for your entire life, up to age 100, for you and your family. Coverage can last for the rest of your life, and the premiums stay fixed regardless of age, health, or lifestyle changes. Over time, it may be the least expensive form of life insurance since premiums are fixed and it builds cash value.  However, there are an assortment of variable life insurance policies that can be suited exactly for you and your family’s needs.

Term Life Insurance

Term life insurance is coverage that lasts for the number of years you elect.  For example, it can be for 10 years or up 20 years. Because the coverage lasts for a shorter, fixed amount of time, term life insurance is usually less expensive than permanent life insurance. Most term life insurance policies can be converted to permanent life policies, with no additional underwriting needed when permanent life insurance protection is more appropriate.
For more information on purchasing a life insurance policy or an annuity, please contact our office.