Insurance FAQs

Why do I need to buy insurance?

  • Protects your assets against a death, disability or medical claim.
  • Pay yourself an income even if you are sick and cannot work.
  • Provide income for loved ones after your death to cover final expenses, pay off debt, and provide a monthly income for life.
  • Provides the ability to have care delivered in your home if you are unable to do the basic activities of daily living - bathing, dressing, feeding, etc..
  • Covers the gaps that Medicare doesn't pay when you are retired and on a fixed income.
  • Allows you to remain financially solvent when you're ill and can't work.

What factors affect the insurance premiums I pay?

  • Age, smoking status, overall health can all be factors in pricing insurance.
  • Your zip code - some insurance is based on the costs associated with that region. 
  • The benefits or the plan you purchase - richer benefits come with a higher premium.  (Examples: You can save money with a High Deductible Health Plan or purchase a 5 yr benefit for disability (and not 'to age 65').
  • Whether buying insurance by yourself or with a spouse; some carriers offer household discounts for 2 policies purchased together.  Others (like life insurance or some long term care policies) can insure 2 people on one policy.
  • Overhead expenses including rent, utilities, employee salaries and benefits, office supplies, equipment, and furniture can factor into how much coverage you can purchase on an Disability Overhead Expense policy.
  • ACA policies - both individual and small group - are GUARANTEED to be issued; you cannot be declined.  However, non-ACA policies such as a Short Term Medical plan can ask medical questions - such as "have you had cancer in the last 5 year?" or "Are you now pregnant?"  and decline you for coverage.
  • Life insurance plans can consider height/weight, medications, and other risk factors such as family history in determining your premium.

Health Insurance

How does where I live affect my premium?

Both Individual and Small Group ACA plans are based on regions; insurance carriers file their rates with the IL Department of Insurance by County.  The rates are referred to as "Community Rates" and can vary based on the cost of care for that county.  For example the costs for medical care in central IL might be different than the North Shore Suburbs or Downtown. 

Does the age of my children affect my rates?

Yes. For an individual ACA (Affordable Care Act) plan rates are typically by age and number of dependents.  Some insurance carriers will have the same premium for each child under a certain age (say age 15, for example), but higher rates for older teenagers and young adults. 

The ACA law does state that a the maximum charge for dependents cannot exceed 3 children under the age of 18.  If someone is older, the insurance companies can charge for additional dependents age 18-26.

Also under the law, parents can cover children to age 26, even if they do not reside in their home, live in another state, and are married. 

Rules for Small Group health plans are very similar, but some carriers offer the Employer the option to have "Composite rates", meaning there is a flat price for a family whether there is one child or ten covered.

How do I keep my insurance company from canceling my policy?

Always pay the premium on time!  The law does require the insurance carriers to have a GRACE PERIOD to send in payments; this is 30 days after the due date. 

If you have fallen behind on payments and are in jeopardy of losing coverage, pick up the phone and call the insurance carrier.  Many will offer options such as making a payment over the phone or sending a check to an overnight lockbox to prevent your policy from lapsing.

What happens when I am traveling to other states on vacation?  Am I covered?

Generally speaking, most all policies will cover you for any EMERGENCIES that happen outside of the service area.  So whether you have an HMO or PPO plan, you should be covered for Emergencies when traveling.

What is not deemed an emergency would be something that is not life threatening.  Breaking a leg while skiing or suffering a stroke or heart attack are clearly emergencies; however, many other areas may not be as clear cut.

It is always best to review your benefit plan or talk to your agent in the event of travel, whether in the US or abroad.  For international travel, there are policies that can be purchased for specific trips at a very reasonable price.  So be sure to ask us! 

How can I challenge my insurers if they refuse to cover a claim?

Usually, insurers that refuse to cover a claim have a strong legal reason for doing so — even if you disagree.

First, review the EOB - Explanation of Benefits - statement received to see what the reason is for the decline.  Next, contact us if you feel you're being treated unfairly. Your agent is your strongest advocate in insurance matters. 

The ACA law put into place a procedure to file an appeal with an insurance company.  Even above the appeal, a person can ask for an independent review from an outside arbitrator.  

Again, there are steps to take if you feel this should be covered; so feel free to contact our office for guidance on how to proceed.

Life Insurance

How do I decides on the type of life insurance to purchase?

This is an Excellent question but it really gets down to a few items:

1) How long do you need the coverage for?

2) How much do you need?

3) How much can you afford to pay?

Term insurance is very popular because of the low premium.  The problem is that it is temporary and ends after a 'term' ie 10 years, 15 years, 20 years, or renews at such a high premium that it becomes completely unaffordable.

Permanent insurance can offer the option to keep for a long time ...(or until you die!) but comes with a higher price tag. 

What we recommend is that you talk to a professional and come up with a plan that will suit your needs and budget.  That might be all term insurance for now, or maybe a combination of some permanent insurance and the remainder or majority to be term. 

Does a Life Insurance policy only cover me if I die?

Many policies that are written today will allow an insured to access some of the Death Benefit BEFORE they die; there usually needs to be a diagnosis of a terminal ilness and the expectation of death in a year or less.  This type of benefit rider is called an Accelerator Death Benefit rider that allows the insured or family to access a portion of the death benefit to pay ongoing medical bills associated with a terminal illness. Typically the remainder of the death benefit is paid out at death.  Check your policy or contact your agent to see if your policy has this benefit.

In addition, a permanent policy with dividends or cash value may allow you to surrender the dividends or cash up to a limit.  The policy will remain in force and premiums needs to continue to be paid. 

Another benefit that can be included is called Accidental Death and Dismemberment.  The policy can pay out a benefit for the loss of 2 limbs or the loss of eye sight.  An accidental death benefit usually doubles the indemnity amount or death benefit.  This benefit is typically found on smaller term policies, group term insurance through an employer, or final expense policies.

Can I cover dependents (spouse and children) on my life insurance policy?

The bottom line is YES!  Nearly all policies allow a rider to cover spouses, but sometimes you just want them to have their own policy.  Let's face it, sometimes divorce happens - and more often than not, divorce decree will stipulate how much life insurance each spouse must have in place with the other spouse (or a trust if set up) to be named as the beneficiary.

The other thing couples do not think about is that if the primary spouse dies, the surviving spouse is now forced to convert the term rider for their insurance to continue.  The insurance carrier may not let you keep the plan 'as is' and for the same price. The conversion is typically to a permanent policy, not a term plan.  Of course the surviving spouse can apply for a new policy, but shouldn't be forced to make that decision in the midst of burying a spouse. 

A children's term rider can be added as well, but usually this is done in increments of $10k and will cover each and every child of the insured. 

How are premiums determined?  I see ads for 'cheap term rates' all the time; is that something I can legitimately get?

Life insurance is based on a few factors: 

1) Your AGE - first and foremost, the insurance company is looking at your age and 'life expectancy'.  A 25- or 30 year old has a much longer life expectancy than a 55- or 60-year old. 

An actuary once told me that everyone will pay the same amount for a life policy from age zero to age 100; it's just that they have a lot longer to collect premiums from a new born baby than a 100 year old!  

2) Smoker/Nonsmoker -  yes, it is a well-known fact that smoking anything - cigarettes, cigars, and chewing tobacco - has an impact on your life expectancy.  Therefore insurance companies charge more to people that smoke.  Period.  So let's say you quit; how long to you have to be a "nonsmoker"?  Most carriers will give you a Nonsmoker rate after you declare you have not smoker for 12 months or more AND you will most likely have to prove it with medical records and test through your doctor.

3) Male/Female - It is another well-known fact that statistically speaking women live longer than men.  We have been tracking mortality for decades and this still holds true that women outlive men.  Just take a trip to a nursing home and you will see how many more women are alive.   (And I know there is a joke here somewhere...some will say "Yes, because the women kill them or the men can't take it any longer".  Ha ha!  That may be true!)

4) Height/Weight - ok, I think you see a theme here...another FACT:  Morbidly obese or extremely overweight individuals have a higher risk of HBP, High Cholesterol, dying of stroke, etc.  All in all, they have a lower mortality than a person of normal height/weight.  Are there exceptions?  Always!  But when buying life insurance, if you are above a certain built, you can expect to pay more.

5) Overall health - do you take medications?  What for?  Do you exercise?  Have you ever had Cancer? How recently?   

These are all typical questions asked when applying for life insurance.  In addition, most carriers want blood tests and urine samples to CHECK all your levels - cholesterol, blood pressure, liver enzymes, and check for drugs and alcohol.  They are insuring you for $100k, $250k, or maybe half a million or more...they do have the right to check your overall health, evaluate your risk and decide at what level they will insure you - standard risk, high risk (and may charge you EXTRA premiums) or no risk and decline you for coverage.

Disability Insurance

What is Disability Insurance exactly?

Disability insurance pays you an income when you are SICK or INJURED and can't work.  There are 2 types of individual disability coverage:  Short Term Disability (STD) and Long Term Disability(LTD) coverage.

STD is usually offered through your employer and can begin covering your paycheck after a waiting period of 0 to 8 days for accident and illness and can run for 3 months up to a year.

LTD begins after a waiting period of 90 days or longer, and pays you an income for a number of years depending on the policy benefits.  Policies benefits can be 2 years, 5 years or to normal retirement age (65 or 67).

Policies pay a monthly benefit that is around 60-70% of your Gross income.  It is designed to be close to your take-home pay after taxes.  The benefit will not be taxable AS LONG AS you did NOT DEDUCT the premiums for the policy. If your employer provided the LTD benefit and wrote it off as a business expense, your monthly benefit while disabled will be taxable.

There is a third type of disability coverage available to self-employed business owners; this coverage is call Business Overhead Expense or BOE and reimburses the business owner for overhead expenses such as rent, payroll, utilities, while the owner is disabled and can't work.   Chiropractors, dentists, and Dr.'s, are all good candidates for BOE coverage, especially when the revenues for the office will decline if they cannot work full time.

How expensive is Disability insurance?  What is the estimated cost?

A Long Term Disability policy usually runs 2-5% of a person's gross salary.  Take for example someone making $60,000/year.  They can expect to pay from $100-250/month or $1200-$3000/year for a disability policy.

Is it worth it? 

Answer this question:  Which job would you rather have?

Job A pays you $100,000 as long as you are at work full time; if you are unable to work for any reason - sickness or injury, you get $0.

Job B pays you $96,000/year as long as you work full time.  If you are unable to work you will receive $60,000 to age 65 if as long as you are unable to work due to a disability. 

The chances of having a long term disability lasting 90 days or longer in your working lifetime is a 1 in 3 chance at age 50.  (It's higher at age 30 - 50% is the the chance, if you can believe it!)

Long Term Care Insurance

I am paying for college, paying a mortgage, and saving for retirement.  Should I even be thinking about Long Term Care insurance?

Yes. Your chance of suffering a long term care claim is very great. The problem is most people wait until all other bills are covered and they are in retirement. The problem is that at this point the premiums can be extremely expensive at older ages (why - because the chances are EXTREMELY high that you will have a claim!) and your health might be as good the older you are.

Couples over the age of 65 have a whopping 75% chance of having a need for long term care insurance.  The risk is there and it is real.   So what are your options:

1) Self-insure:  The national average cost for a home health care worker is $51,480/year according to a June 2019 survey by Genworth.  59% of claims last over a year, and the average length of time of a claim that is over one year lasts for 4.3years. 

2) Spend down assets and qualify for Medicaid.   This is what the vast majority of people end up doing.   Unfortunately, Medicare does not cover any Long Term Care in the home or at a facility/nursing home.  If there is a husband/wife who need to apply, the state usually allows the 'healthy spouse' to keep so much income and assets plus the value of their home. The number is something like $24k/year.  The rest of the income goes to the state.

3) Buy a Long Term Care policy and TRANSFER THE RISK to the insurance company.   The risk is there; whether you decide to insure against it is up to you.  While insuring the entire cost might be out of your budget, something is better than nothing. Talk to your agent about buying a small policy to cover some of the costs, even if not the entire cost.

When is the ideal time to buy?

Most people don't begin to think about this until they are at least age 50 or higher.  But after age 65, these policies can be pretty pricey. 

So ideally if you can do this in your 50s AND, this is a big AND - when you are still in good health!  

Just like buying a life insurance policy or disability policy, insurance companies will evaluate your health when buying a Long Term Care policy.  It is not uncommon for them to not only have a medical exam and write to your Dr.'s for records, but they will often conduct a COGNITIVE test, making sure that you don't suffer early signs of dementia or Alzheimer's, one of the biggest reasons for people to have a long term care claim.

I heard I can just put a Long Term Care rider on my life insurance or other policy. Is that true?

Some newer life insurance policies allow for a Long Term Care Rider on the policy.   If you have an older policy, you may want to call your insurance company and see if there is an options for LTC.

When buying a new life insurance policy with some type of LTC benefit, the insurance company may have a separate rider (with an additional premium for that rider) and may limit what the policy covers in terms of LTC coverage.  Other plans may allow you to access some of the death benefit to pay for LTC claims; this may have an inpact on the death benefit when you die.  So read through any proposals carefully and ask questions. 

Often times adding a true long time rider on a life policy can be more money than just buying LTC outright.  The obvious question to ask is if there is a need for additional life insurance.  If not, just buy LTC insurance and be done with it.  it will probably offer richer benefits and more comprehensive coverage in the long run. 

Travel Insurance

I'm heading to Europe for a "trip of a lifetime".  Do I need Travel medical insurance on top of the "trip insurance" that the travel agency sold me?

Most travel insurance might reimburse you for your trip in the event you must cancel.  Some may include some benefit if you get sick, but find out if there is any medical coverage and how much you get.  Often times the insurance only covers you for CANCELLING the trip.

Buying a separate Travel policy for Medical Coverage can be extremely affordable.  The coverage is based on your age, where you are traveling and the dates of travel (how long you will be gone.)  This insurance can be very comprehensive, and you can choose the amount of coverage you think you might need.

Curious on the cost? 

Contact us!  Give us your birth date, dates of your trip and the destination. We can email you a quote with all the options.