Insider's Guide To Life Health and Disability

Consumers generally think they benefit when they buy insurance direct but is it true?

To find out, we’ve asked people what matters to them when buying insurance, and in turn our panel used those criteria to evaluate the differences between buying insurance via a broker and buying direct online.

Why do consumers hate the middle man?

Primarily, customers perceive any middle man as an unnecessary third party, and conventional wisdom dictates that this means additional cost and possibly mistakes. Advertising by insurers, for example Norwich Union Direct (now Aviva), to ‘go direct’ has compounded this feeling.

What is important to consumers?
In order of importance, these are the things people said matter to them:

Cost.
Ease.
Speed.
Peace of mind that everything is covered.
Security of personal data.
So let’s now analyze these items and let our panel judge how each performs when insurance is bought directly or when via a broker.

1. Cost
Contrary to popular consumer belief we found that broker pricing was actually better than direct insurance pricing.

The reason for this seems to be principally due to insurers providing different rates to brokers, in order that premiums are lower. Why would insurers provide special broker pricing? Simple: because the risk is lower for the insurer. Brokers are professionally trained to choose the right policy for their customers, and not to under insure, therefore avoiding unnecessary claims while maintaining the correct premium income.

‘Cutting out the middle man’ it seems, does not save money this time. On the contrary!

2. Ease
Many of the consumers in our test case were surprised here. At least half began our test with the impression that buying policies directly would be the easiest option for them. After trying both, almost all had changed their mind.

Whilst the online experience usually proved more pleasant than the phone, most brokers offered an online service, and were far, far more pro-active after they received the initial quote request from the consumer, often answering queries by personal email or call and helping to reassure customers with a human service. Furthermore, most direct services completely fell down when queries or changes were required that were less common, particularly later in the policy life cycle. Brokers really shone through here.

3. Speed
The results here were quite evenly balanced. In the case of the time taken to generate initial quotation figures, direct services (online) were consistently very quick, while some brokers answered quote requests by personal follow up.

The difference however was somewhat reversed when it came to mid term changes, documentation requests and one off queries. The direct services often fell back to large call centres whose staff had little or no real insurance knowledge. In this areas brokers were more efficient, making suggestions our consumers found highly useful, saving them lots of time.

On balance, the speed at which quotes were produced by the direct services was not significant to our consumers when compared to the speed and efficiency with which brokers generally managed their policies throughout the policy life cycle.

“As long as my broker doesn’t take too long to come back to me, I don’t care. It’s his problem while the clock is ticking, not mine.”

4. Peace of mind that everything is covered
We saw few surprises here. Brokers were largely far more efficient at cross checking policies than consumers, and also very good at educating their customers, explaining what types of cover were available and answering queries.

Direct processes were better than in the past but put too much focus on the consumer to do this work himself/herself to be able to compete with the level of service provided by brokers.

The really good Direct services centred around only covering the low risk policies, and leaving any consumer with non-standard requirements high and dry.

5. Security of personal data
This was a difficult one to test, and fell largely to our technical team. We did however take into account how consumers felt about their data security after using the various services.

In the case of Internet based services, the direct services tended to follow security guidelines marginally better than broker services, mainly due to the size of the organisations involved and lack of good software on the part of some brokers.

On the phone however, we saw a different story. Brokers, being far better equipped to deal with specific insurance questions and used to a human discussion, gave people a stronger feeling that they were in safe hands. The process of securing personal data was much the same as with direct, but the trust conveyed by brokers was better.

Summary of Results
So who won? Broker or Direct?

Cost. [Broker]
Ease. [Broker!]
Speed. [Broker, though people admitted they were heavily biased due to point 2.]
Peace of mind that everything is covered. [Broker]
Security of personal data. [Broker]
Conclusion
We set out in this article to test the general perception by consumers that ‘going direct is better’, for the benefit of consumers and brokers on the whole.

Whilst we didn’t test every website and every class of insurance, the results with our test users were conclusive.

Whilst conventional wisdom dictates that the middle man offers little to the discussion and always has his price, in the complex world of insurance, perhaps things are not so simple, and after doing some research at RiskHeads we are now more certain than ever that the Insurance Broker’s day is far from over.

Our recommendation to all would be to trust your broker, let him shop for you, and you will likely reap dividend, whilst living an easy life!

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Insurance Terminology In Plain English by Mark Squires

Policy Year: An individual health insurance policy will run for 12 months from the effective date of the policy. For instance if the effective date of the policy is March 1, 2010 the policy will be in effect, (as long as premiums are paid) until February 28, 2011. All Deductible and OOP Maximum figures are based on the Policy Year, not the calendar year.

Premium: This is the amount of money you will pay to the insurance company in exchange for them taking the majority of the financial risk in the event of a major heath care related expense. Premiums may be paid monthly by automatic bank draft. Premiums may also be paid quarterly, semi annually and annually. Most individual health insurance policies provide a 12 month rate guarantee. Some Health Insurance companies offer rate guarantees up to 36 months in exchange for a nominal additional premium amount.

Deductible: This is the initial dollar amount you must pay before your insurance company begins to pay for health care services. You get to choose what deductible you want to work with when you apply for health coverage. Deductible and premium are inversely linked. That is: the higher the deductible the lower the premium. Your deductible should be high enough for you to afford the premiums but low enough for you to be able to pay in the event of a health crisis. (Outpatient prescription drugs and over the counter medication expenses generally do not apply to the annual deductible)

If you recently left a group health plan you may find that the deductibles you are used to, if available in an individual policy, are very expensive. Many folks are used to a $250 deductible and they are shocked when they discover the real cost of such a plan. Don’t get discouraged. When you consider that a vast majority major health care expenses are related to either an accident or sudden onset of a critical illness, (such as heart attack stroke, or life threatening cancer), you will find that it is very economical to add coverage for such events.

Also make sure you know if the policy has a family deductible or an individual deductible with a cap. Generally a cap will be 3 times the individual deductible. As an example let’s say you are considering a $2500 individual deductible the maximum deductible for the family would be $7500. So if you have a family of 5 and have some health care expenses but no one person meets their individual deductible your exposure is still limited to $7500 in this example.

Whereas a Family Deductible works sort of the same way if one family member has a major health care episode, (such as a ruptured appendix) once the total health care expenses reach the family deductible you move into the coinsurance phase of the policy. A typical Family Deductible might be $4200

Coinsurance: In most cased a health insurance policy will have a co-insurance percentage following the deductible. During the coinsurance phase of your coverage you and the insurance company will share the cost of health care expenses. This can be customized in most cases with the insurance company paying as much as 90% and you paying as low as 10%. You get to choose this percentage when you apply for the policy. Coinsurance and premium are directly linked. That is the higher the coinsurance percentage the higher the premium.

On your quote it will look something like this: Coinsurance 80/20 $4000

This means that after you have reached your deductible you and the insurance company will split the cost of health care. The company will pay 80% and you will pay 20% until

The $4000 figure leads us to the most important part of the money equation of your health coverage plan: The OOP maximum.

OOP Maximum: OOP stands for “Out of Pocket”. This is the maximum dollar amount you will spend during the coinsurance phase of your health care plan. Here is where most Health Plan shoppers make a BIG MISTAKE. Most Health Plan shoppers focus so intently on the Coinsurance percentage that they miss the more important OOP maximum. Maximum financial risk is far more important than the percentage of coinsurance.

In the example above (Conisurance 80/20 $4000) the $4000 is the maximum amount you will pay during the policy year after your deductible is met.

By now things are about as clear as mud. So let’s try to focus it in a little bit.

All of this leads to your health care Annual Financial Exposure: Once you make a decision on your deductible and coinsurance you need to calculate your Annual Financial Exposure for healthcare expenses. This is done by adding your deductible and OOP Maximum.

So in our example from above we would have a family deductible of $4200 and a coinsurance choice of 80/20 $4000.

Now add the deductible of $4200 to the OOP Maximum of $4000 and you have your family’s Annual Financial Exposure to health care expenses (does not include premium). In this example you know that in the worst case scenario the most you will have to pay for health care expenses (not including premium) is:

Deductible: $4200
OOP Maximum: $4000
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Annual Financial Exposure: $8200

This may seem like a large figure but remember that health insurance is a risk management tool, not a risk reduction tool. You can be confident that you will not have to spend more than the combined amount of your deductible and OOP Maximum during the policy year.

As a final word on Annual Financial Exposure it is often much more economical to consider a 50/50 coinsurance with a lower OOP Maximum. In virtually every case I have quoted purchasing a 50/50 $2000 versus a 80/20 $4000 saves almost 20% in premium.

Again I have seen time and time again where a health plan buyer will focus so intently on the percentage versus the dollars that they end up paying more in premium than they really need to. There was a line in a movie a few years back and it went: “SHOW ME THE MONEY!”.

Office Visit Co-pay: Some policies offer an add on benefit of a Doctor’s Office Visit Co-pay. If your policy has this option you will pay a limited fee when you go to your doctor. Most policies with this feature limit you office visit co-pay fee to about $35.

While this may sound like a great deal you should stop and take a long look at the actual expense of such a benefit. Generally speaking this is the single most expensive add on available to any policy. And it never ends. Even if you have surpassed your deductible and OOP Maximum you still must pay the Office Visit Co-pay whenever you visit your doctor’s office.

If you have a large family with 2 or more children who bring home every sniffle from school you may want to consider adding this benefit. If you are a 20-30 something single person who never goes to the doctor you will find that this is a very expensive benefit.

In the case that you do not have an office visit co-pay benefit you will pay nothing when you see your doctor. The claim will be submitted to the company and will undergo “re-pricing” based on the network contract and a few days later you will receive an Explanation of Benefits from the insurance company and a bill from your doctor.
These two documents should match and you then pay the doctor’s bill. The network re-pricing will reduce the actual bill and save money for you.

Special thanks to Mark Squires for sharing this article. Mark may be reached at: (816-841-9141) or emailto:squires.m@squiresfirst.com

Duaine Owings
President
Plan To Win Insurance Agency
800-559-8777

Life Insurance Consumer Tips

by Duaine Owings, President Plan To Win Agency

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Peace of Mind

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Life insurance is purchased for many reasons, including tax-advantaged wealth accumulation; indemnifying mortgages and other debts; securing retirement; and guaranteeing your investments against market downturns.

In this issue, we focus on the “Number One” reason for buying life insurance. Namely, people want to provide for their loved ones. Life insurance brings peace of mind.

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An illustration

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The following poignantly illustrates the need to provide for one’s family.

Actress Molly Shannon, this year’s national spokesperson for Life Insurance Awareness Month, was four years old when her 33-year-
old mother and younger sister were killed in a car accident.

While her father survived the crash he was unable to work for several years because of the serious injuries he sustained.

Because her mother did not own any life insurance coverage, Shannon said the resulting financial strain on their family changed their lives dramatically.

“In an instant, my dad became a single parent and the onl breadwinner for our family. Even at a young age, I was well aware of the financial and emotional stress he was under,” she said
during her public appearances for the campaign conducted annually by the Life and Health Insurance Foundation for Education

(LIFE Foundation).

~ Life and Health Insurance Foundation for Education

Everyone knows a family that has suffered such a catastrophe. We all have seen the great difficulties facing the survivors, especially when money is lacking. We all know that advance planning is critical.

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Why don’t people plan?

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As simple as it sounds, one common reason is an aversion to math. If your eyes roll at the thought of calculating your insurance needs, then do yourself a favor and ask a financial advisor for help. This obstacle is easily overcome.

On the other hand, basic human psychology is a more difficult issue.

The key reason why people don’t plan is fear and discomfort with facing the prospect of family tragedy. Who wants to discuss their own demise and the potentially tragic consequences for their family? Yet, once this emotional hurdle is crossed, the life insurance purchase gets much easier.

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Dealing with your emotions

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Please understand that emotions are – by their very nature – not rational. Feel them, and deal with them, instead of suppressing them and procrastinating on your life insurance purchase.

Here are some tips that may help you.

(1) Watch the movie, “It’s a Wonderful Life,” starring Jimmy Stewart and Donna Reed. It very effectively portrays a man who had to envision his family’s life without him, and it served as a true wake-up call.

(2) Think about the important of your own peace of mind. Take a private moment (I call it “The Midnight Hour”) when you have your head on the pillow and are alone with your thoughts. And let yourself appreciate how much better you would feel if you did not have to worry about your family. Let yourself face the fact that your own fate is ultimately out of your control, but that you can control the impact of your demise on others.

(3) Get prequalified, to ease your mind regarding the cost. Prequalification is free, and it lets you know how much a policy would cost, without having to commit to the purchase. You may be pleasantly surprised at how affordable life insurance can be!

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Have a question?

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As always, our toll-free line, (800) 559–8777, is open at your convenience. Please do not hesitate to call me with any questions or concerns.

With best wishes for health and success,

Duaine Owings

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About Duaine

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Duaine Owings, is an independent life insurance broker and a recognized expert in field underwriting for people considered high risk.

Consumers and consumer advocates are warmly invited to email or call Duaine for experienced and patient guidance. Duaine currently serves as a preferred life insurance provider for many professional advisors and their clients, including attorneys, accountants, financial planners, and business loan officers.

Duaine Owings

905 NW Heatherwood Dr

Blue Springs, Mo 64015-7260

1 (800) 559-8777 Phone (Toll-Free)

1 (816) 224-9466 Phone (Local Mo)

1 (816) 224-9435 Fax

duaine@bigplanet.com

Licensed in: California, Florida, Iowa, Kansas, Missouri, North and South Carolina, Ohio, Pennsylvania, Tennesse and Texas.

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Legal Notices

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This newsletter is presented for educational purposes only. It is not to be considered professional financial, legal, or medical advice. Be sure to consult with your professional advisor when purchasing life

Critical illness insurance helps you to survive financially while physically recovering from a serious illness!

While health care insurance will cover a portion of the direct costsassociated with a critical illness, these plans typically require payment of deductibles, coinsurance and/or co-pays, which can range from $2,000 to $10,000 or more in out-of-pocket costs to you before the plan provides 100% coverage.

If you elect out-of-network care from a specialist or nationally-recognized hospital, you may face significant additional expense, plus the cost of travel and lodging.

In addition, indirect expenses associated with recuperating from a critical illness, such as modifications to a home or vehicle, child care expenses and convalescent care, may not be covered.

It is important for you to know what your health care plan will and will not cover before a critical illness strikes.

A single critical illness could consume the assets you’ve worked a lifetime to accumulate.

Ask yourself…if you suffered a critical illness and were out of commission for three to six months, would you be able to survive financially? If the answer is no, there is a potential remedy,

A Potential Solution Using Critical Illness Insurance:

Critical illness insurance is a source of funds you can use to help cover the indirect costs that arise when a serious illness strikes. By providing money when you need it most, upon diagnosis of a serious illness (as defined in the policy), critical illness insurance can help.

Critical illness insurance pays you a lump sum of money upon diagnosis of a covered condition. This money is yours to use for any purpose, with no restrictions. For example, critical illness insurance proceeds can be used to pay:

Mortgage or rent payments, as well as any other bills you may have; Health insurance deductibles, coinsurance and/or co-payments;

The costs of receiving out-of-network medical treatment, including possible travel and lodging expenses;  Treatments not covered by traditional health insurance;  Child care expenses during treatment or hospitalization;  Modifications to your home or vehicle;  and/or Shorter-term home health care.

Since the premiums paid for critical illness insurance are not tax deductible, the benefits are considered as income and are received 100% free of income tax.

How Critical Illness Insurance Works:

In evaluating a critical illness insurance policy, you need answers to these questions:

What Is Covered?

Critical illness insurance pays benefits upon the diagnosis of specified illnesses. A basic policy should cover at least heart attack, stroke and life-threatening cancer.

 A more comprehensive policy should also include other serious conditions, such as renal failure, multiple sclerosis, coronary artery disease, advanced Alzheimer’s Disease and major organ transplant.

What Is the Benefit Amount?

The benefit amount is selected at the time the policy is purchased and, generally speaking, can range from $10,000 to $100,000 or more.

 The benefit amount is paid in a lump sum upon diagnosis of a critical illness covered by the policy. Since the premium paid increases as the benefit amount increases, it is important to evaluate your other sources of funds available in the event of a serious illness in order to more accurately determine the critical illness insurance benefit amount that is right for you.

When Is the Benefit Paid?

The critical illness insurance benefit is paid to you in a lump sum upon diagnosis of a critical illness covered by the policy. Some critical illness insurance policies pay a partial benefit, such as 25% of the maximum benefit, on the occurrence of certain specified treatments, such as coronary angioplasty or coronary artery bypass surgery.

The policy usually terminates upon payment of 100% of the benefit.

Does the Policy Have an Elimination or Qualification Period?

Some policies require that for benefits to be payable, the policy must be in effect for a stated period of time, such as 90 days, before diagnosis of a covered critical illness is made.

Critical Illness Insurance Checklist:

In purchasing critical illness insurance, it is important to select coverage that matches your needs and preferences. As you evaluate various policy features and benefits, however, keep in mind that the choices you make can affect the premiums you pay and the benefits you are entitled to receive.

Covered Illnesses

What serious illnesses are covered by the policy?

Benefit Amount

 What is the lump sum amount payable upon diagnosis of a covered critical illness? Is the benefit amount payable in a single lump sum, or in specified percentages or amounts? If the benefit is payable in specified percentages or amounts, does the premium decrease accordingly?

 Elimination Period

 Is the benefit payable immediately after diagnosis of a covered critical illness? If not, how long must the policy be in effect before benefits become available?

 Guaranteed Renewable

 Can you renew the coverage for life, so long as you pay the premiums when due?

 Premium Increases

 Under what circumstances can the insurance company increase the premiums?

 Death Benefit

Does the policy provide any kind of death benefit if you die without receiving any benefits?

Optional Coverages

Are there any optional coverages available, such as inflation protection or an accidental death benefit? Since optional coverages generally require payment of an additional premium, carefully evaluate the value of any optional coverages to you and your personal situation.

For more information call out office at: 800-559-8777 or email us at: mailto:uslifeplans.com

Duaine Owings-Health-Life-Disabilty Expert

Life Insurance Consumer Tips
by Duaine Owings

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The underwriting marathon
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Does it seem like your life insurance application is taking forever to underwrite? Have weeks gone by? Have months gone by? Is this normal? What’s going on?!

The fact of the matter is that life insurance applications can take a long time to underwrite. This is especially true for people with a history of serious illness.

But you can take a number of proactive measures to expedite your application. Indeed, critical aspects of the approval process are in your own hands.

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How to go the distance
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First of all, right at the outset, choose a broker who is known for providing his clients with regular progress updates. You will feel more involved in the process and time will seem to move more quickly, if you are kept in the loop.

Second, make the time to disclose all information requested. Make the effort to complete this task, thoroughly and accurately. And you will be rewarded with a smoother experience during underwriting, where even a small inconsistency between your application, phone interview, and medical exam, could create a delay.

Third, provide your personal assistance in the retrieval of medical records as needed. While physician offices are paid substantial sums for copies of their patients’ records, they sometimes tarry in fulfilling these requests.  A phone call from you, as the patient, can result in prompt service.

Consumers have much more power than they sometimes realize. An “educated consumer” is not a trite slogan. Your smart choices can make all the difference.

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Have a question?
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As always, our toll-free line, (866) 559-8777, is open at your convenience. Please do not hesitate to call me with any questions or concerns.

With best wishes for health and success,

Duaine Owings