Insurance FAQ

Homeowners Insurance

Do you need to purchase homeowners insurance?
The two important reasons to get homeowners insurance:

1. Mortgage lenders need you to have it as part of your home mortgage terms
2. Provides protection for the most expensive and important financial investment, in case of damage or loss

Do you need to purchase renter’s insurance?
Renter’s insurance is important to cover the risk of loss or damage to your personal property.

What risks does home insurance and renters insurance protect against?
It protects against:

Who does the home policy cover?
It covers you against loss of the house and its contents within. Also, the liability part of the policy protects you from third party injuries at the home.

Does renters insurance cover a roommate?
Protects only the renter named in the policy. Roommates are not covered under the policy.

What is the difference between home insurance and title insurance?
Home insurance and title insurance offer protection against dissimilar risks types.

Home insurance guards against loss or damage to the house, personal property items, and related structures, in addition to third party liability.

Title insurance protects homeowner interests, guaranteeing marketable and good title of the real estate property.

Is title insurance necessary?
Protects your full legal ownership real estate property rights. Title insurance will provide any necessary protection to defend your home title in the future.

What is mortgage insurance?
Mortgage insurance protects mortgage lenders against the nonpayment risk by the home buyer.

Is mortgage insurance necessary?
It is necessary to buy mortgage insurance only because your mortgage lender requires it.

Is a lower or higher home insurance deductible better?
Higher deductible will lower your regular home premium while a lower deductible is accompanied by a higher premium.

Car Insurance

What is car insurance?
Car insurance protects against financial loss in case of an accident. You pay a regular premium in return, the insurance company compensates for some losses as outlined in the policy. Car insurance is a legally binding contract between you and the insurance company.

Why is car insurance important?
Protect your car from damage or loss which can be expensive to repair or replace. Additionally, insurance pays for damages to another vehicle or property as a result of your driving.

What are the premium limits on what a car insurance company can charge for insurance?
Insurance companies have a range for premium levels that are based on various factors measured at the time of an application submission. Factors insurance companies take into account are regular miles driven and if your car is used for business, vehicle model and year, and driving history.

Can a car insurance policy be canceled for any reason?
The insurance company cannot cancel your policy unless for certain issues outlined in your insurance contract are met.

Is a policy cancelable at any time and without penalty?
It can be canceled with proper notice to the insurance company. However, financial penalties for early cancellation of policy may apply.

Is insurance mandatory, if you own a car?
States mostly require insurance.

Which government agencies regulate insurance companies?
States regulate insurance companies in the nation, not the federal government. The state insurance regulatory agencies are known as “Insurance Bureau,” “Division of Insurance,” Department of Insurance,” or “Department of Financial Services.”

Can you retain your car insurance policy, if you receive a cancellation notice for missing premium payments?
Some states may require a minimum of 10 days advance written notice before canceling. The policy can continue in force if the missing payment(s) are made up.

What should occur during a claim?
The insurance company should pay any claim that is proper under the insurance contract.

Life Insurance

What are some popular types of life insurance?
There are mainly two types of life insurance policies: term and permanent. Term insurance is temporary life insurance while permanent is for life, if premium payments are kept up-to-date.

What is term life insurance?
The most basic form of life Insurance is term life insurance, the foundation of every life insurance policy. Term life insurance is for a specified term such as a 10, 15, 20, or 30 year term, during which time you are covered. When the term ends, so does the insurance coverage. Cash value doesn’t accrue in this type of policy.

What is whole life insurance?
It is permanent insurance that builds up cash value over time. Your cash value is invested in fixed dollar investments.

What is universal life insurance?
Universal life insurance differs from whole life in that it offers you the flexibility to change, within specific limitations, the amount and timing of premium payments and the death benefit during the entire life of the policy. It includes a cash value feature which invests in fixed dollar investments.

What is variable life insurance?
Variable life insurance has a cash value feature that invests in types of mutual find securities. These policies are federally regulated as securities under securities laws.

What is the basic individual life insurance?
Life insurance is underwritten for one person, individual policy coverage.

What basic information does individual life insurance underwriting require?
The basic information on the life insurance application:

Are there any physical exams?
Yes, life insurance applications require medical exams and physical examinations. The extent of the examination depends on the level of the death benefit.

What is an Insurable interest?
A person has insurable interest in another person or something when loss or damage to it would cause the person to incur financial loss or another type of loss.

Can anyone be listed as beneficiary?
Yes, a beneficiary doesn’t need to have an insurable interest in the life of the insured.

Health Insurance

What is health insurance?
Health insurance is a promise by the insurance company to provide access to and pay for health services in return for payment of premiums.

What is fee for service or private indemnity insurance?
Also known as private indemnity insurance, it can be acquired by individuals independently, or through group insurance, such as associations or employers. Allows choice of health care providers to the insured restricted to member health care providers of the sponsoring insurer's Preferred Provider Organization.

What are HMOs or health care maintenance organizations?
A health care maintenance organization offers several health medical services to a voluntary enrolled group in return for a fixed prepaid fee.

What are employers sponsored plans?
These are health coverage plans offered by private employers through their own self-funded sponsored and administered employee benefit plans. Plans covered under Employees Retirement Income Security Act ("ERISA").

Are there any government sponsored programs?
Health coverage is provided through workman’s compensation plans in individual states, if it relates to job-related injuries. Government healthcare includes Medicaid for the disadvantaged, Medicare for the disabled or elderly, Medically Indigent Adult programs for the indigent at the county level, and CHAMPUS for military dependents.

What is a health insurance policy?
A legally binding contract between a person or group and an insurance company, promises to pay for required healthcare by the policy holder.

How to determine your health care benefits?
Individual healthcare policyholders get a copy of the plan agreement or policy containing the coverage or benefit details. If health insurance is received through an employer plan or group, the person gets a coverage handbook or summary instead of the plan agreement.

What services are covered under average health insurance?
Medical health insurance usually covers medical expenses as a result of injury, illness, accident, and disease. Also costs of hospitalization, surgery expenses, doctor visits, and follow-up visits are covered by the insurance plan.

What are some exclusions of health insurance plan?
Some exclusion in health insurance coverage are past history of suicide attempts, pre-existing conditions, substance abuse, mental illness, insurance reimbursement, prescription drugs, Workman’s Compensation, elective surgery or cosmetic procedures, dental and optical coverage, and certain preventive care procedures.

What is the difference between coinsurance and copayment?
A copayment requires you to pay a fixed dollar amount each time a medical health service is performed. While, coinsurance is not a fixed dollar cost to the policyholder but is a percentage of the cost of medical services performed with a maximum ceiling after which the insurance company covers the medical costs.

Travel Insurance

What is the purpose of travel insurance?
Travel insurance offers wide-ranging coverage, more than trip insurance. It includes insurance for trip cancellations, delays, interruptions, and related issues. May cover other travel-related expenses such as, health and medical emergencies arising during the travel.

What benefits of travel insurance?
Protect your financial travel costs due to unforeseen circumstances making it necessary to delay, interrupt, or cancel your trip, travel insurance will protect against such financial losses.

What is the purpose of trip insurance?
Trip insurance helps lessen some financial losses incurred due to your trip interruption, delay, or cancellation by unanticipated events.

What are the benefits of trip insurance?
Trip insurance covers your financial costs due to trip cancellation if you or a traveling companion(s) suffer sickness, injury, or death.

What coverage is included in travel insurance?
Some coverage items:

 
What is not covered by travel insurance?
Common non-covered items of your trip:

Is normal health insurance coverage enough for travel outside the U.S.?
It might not be. Many healthcare insurers don’t cover international medical and health costs.

Does Medicare cover international travel medical expenses?
Medicare doesn’t compensate for health and medical expenses incurred while abroad.

What are some types of supplemental health insurance coverage?
Four types available for purchase:

1. individual plans for individual trips
2. plans for unlimited travel during the year
3. travel packages bought through the tour operator
4. plan packages include trip cancellation, medical coverage, and other trip related insurance coverage.

 What is the cost of travel insurance?
Travel insurance cost varies depending on the level of coverage, usually between 5% to 12% of the total trip cost. 

Annuity

Does a beneficiary receive payments when annuitant dies?
Various provisions for annuity payments to beneficiaries depend on the type of annuity. Some provisions are lump sum payout, period certain, or payment for life of the beneficiary.

What is the accumulation phase of an annuity?
The phase of an annuity when the annuitant makes payments into the annuity to build up the investment value of the annuity.

What does annuitize mean?
When you liquidate the annuity in order to start receiving payments.

What is the immediate annuity?
Lump sum payments made into annuity and immediate disbursement from the annuity.

What is the deferred annuity?
Allows you to make payments until the annuity is annuitized and payments are made to the annuitant.

What is the variable annuity?
The rate of return of the investments on a variable annuity is not guaranteed.

What is the SPIA?
Popular Single Payment Immediate Annuity.

What is the SPDA?
Popular Single Payment Deferred Annuity.

Business Insurance

What is the purpose of business insurance?
Mitigate risk associated with any business endeavor or compensate for risk exposure for the business or its employees.

What type of business insurance does a business need?
The risk level determines the type of insurance the business needs.

How much does business insurance cost?
The risk level and specific business needs determine the cost and amount of business insurance.

What is the relation of insurance to business risks?
Insurance helps lessen the risk of doing business and allows the business to continue in the face of associated risks.

Why do you need to purchase insurance for business risks?
To protect the business from any risk eventualities that can be of financial detriment to the business.

What risks cannot be insured?
For example, you can’t insure against all eventualities such as, encroaching competitors or rising supply prices.

What are some business risks that need to be insured against?
Assess your business environment and determine the associated risks with the business enterprise. Consider the type and level of business insurance needed to lessen that risk.

What are some risks that don’t require you to buy insurance?
Some risks that don’t require insurance:

 What is liability insurance?
Safeguards against possible litigation.

Long Term Insurance

What is long term care (LTC)?
LTC is necessary when an individual cannot perform basic activities of daily living or ADLs. ADLs are eating, transferring, bathing, moving about (mobility), using the toilet, dressing (moving from a bed to a chair), and continence (bladder and bowel).

When does long-term care start?
Long-term care is defined as a need for assistance that lasts at minimum 90 days. Also, depending on the type of LTC policy held, care can begin right away or 30, 60, 90, or 120 waiting day period.

Who makes payments for non-private long term care?
Medicaid programs pay for half of all long term care costs. Generally, one-third is paid out of pocket by individual policyholders. Neither Medicare nor healthcare insurance covers long term care.

Who should purchase long term care insurance?
A person who is 40 or older should get long-term care. It is an important part of good financial planning.

Where can I purchase long term care insurance?
LTC can be obtained through an insurance broker or an insurance agent of an insurance company that offers long term care policies from several insurance companies. If long term care is offered through a group insurance policy, but it is limited in scope and is not portable.

Is it important to know nursing facilities charges and care services?
The level of long term care is a reflection of the reputation of the nursing facility; services vary from facility to another. Be aware of what the present and future costs of medical and nursing home care will be.

Is long term insurance the same as nursing home insurance?
No, long term care is not the same as nursing home care, it includes nursing care. LTC coverage is more in-depth than nursing home care.

Does Medicare provide the same coverage as long term care?
Medicare gives some skilled care in certain situations. It is meant to cover only skilled care or acute care during a short hospital stay.

Does Medicaid pay for long term care?
Yes, under very specific circumstances. Generally, Medicaid applies to persons who meet very low income thresholds with few assets.

Does long-term insurance affect Medicaid benefits?
Medicaid rules vary from state to state. Once private long term care benefits begin your state may disqualify you from receiving Medicaid.

Does health insurance provide long term care?
Health insurance coverage is different than long term care. Health insurance is not meant to cover activities of daily living, nursing home care, etc. as is long term care.