Temporary coverage (10, 15, 20 or 30 years)
- Term … level, increasing, decreasing, convertible
- Term … level with Return of Premium
Permanent (Lifetime) coverage
- Universal
- Whole
- Variable
- Variable Universal
- Last Survivor
- Raise the deductible
- Raise the coinsurance percentage / amount
- Eliminate prescription drug coverage
- Change plan to an HSA (Health Savings Account)
- Reapply if policyholder has stopped smoking for more than 12 months
- Reapply if policyholder has lost weight and kept it off for 12 months
One way to save money when it comes to Major Medical Health Insurance is to get coverage with a high deductible and then buy Supplemental Health Insurance to help pay the deductible and coinsurance.
Supplemental Health Insurance is relatively inexpensive and pays the following:
- A fixed amount for being admitted to a hospital
- A fixed amount for every day in a hospital … pays more if in intensive care
- Surgical benefits
- A fixed amount for outpatient surgery done in an outpatient facility
- Much, much more
Offering Supplemental Benefits to employees will make employees happy and help with retention.
Supplemental Benefits consist of the following plans: Hospital/Outpatient Facility, Accident, Cancer, Critical Illness, Disability, Life Insurance.
Premiums are typically 100% paid for by employees. Employers sometimes pay a portion or all of the premium.
The portion of the premium that is paid by the employee can be on a pre-tax basis using a Section 125 Plan … the employee and employer will save on FICA tax AND the employee will also save on income tax.
Morbidity: Probability of becoming disabled
Mortality: Probability of dying
For a 35 year old, the probability of a white-collar employee having a disability lasting more than 90 days before the age of 65 vs. dying, is as follows:
- Male: More than 2x
- Female: More than 3x
Things to consider are the following:
- How many years the people who are dependent on your income would need you to provide for them
- How much you can afford … the longer you keep the insurance the more expensive it is
- To replace lost income
- To pay off mortgage debt
- Funeral expenses
- To provide for a spouse and/or children
- Estate tax reasons
There is no one company that is good at everything. Things to look for are:
- Above average consumer satisfaction (e.g., J.D. Power surveys)
- Competive premium AND renewal premiums
- Above average customer service
- Timely paying of claims
