Are You Insurance Poor Or Insurance Inefficient?


There are some words that are naturally provocative.  If you mention Obamacare at a local Young Republicans meeting, you are going to cause hard feelings.

As an insurance agent, there is one phrase that will set me off.  Last week someone used the phrase, “Insurance Poor” after I suggested that people who have had a parent or sibling fight against cancer should consider getting a Critical Illness supplement to the Major Medical insurance.

That is one of the phrases that set me off.  My anger is not aimed at the individual who innocently says it.  My anger is with the insurance agent who convinced them to buy something that is too expensive and does not meet all their needs.

In my 25 years of experience, I have seen very few people who were truly “Insurance Poor.”  By far, the majority of people who claim to be “Insurance Poor” are not.  They are just paying too much for the wrong type of insurance.

If you are paying too much for Major Medical insurance to pay the doctor or hospital bills that you cannot afford to pay for Disability Income insurance to protect your standard of living, you are not necessarily “Insurance Poor.”  It is more likely that you are “Insurance Inefficient.”

In yesterday’s post, “Will You Need Supplemental Insurance With Obamacare?,” I tried to explain why Obamacare still leaves several gaps that require supplemental insurance.  The politicians and press have tried to make America think that the  PPACA is the answer for all health care bills.  It is not.

I am aware that Major Medical insurance is quite expensive.  I am also aware that people are loath to pay an additional insurance premium after they have already paid such a high premium for Major Medical insurance.

In this post I want to share a couple of reasons why someone would be “Insurance Poor.”

INSURANCE AGENT

As I told my client last week, the majority of insurance agents that I have had the pleasure of meeting during my 25 year career have been good, honest people. Unfortunately, there are a few insurance agents who are either incompetent or crooked.

One of the first things that an insurance agent is supposed to do is called a “Fact Find.”  During the Fact Find the insurance agent is supposed to listen to what you want and need.  His job is to build your insurance portfolio in such a way that your insurance needs and desires are met.  Unfortunately, that does not always happen.

Whether it is right or wrong is immaterial.  The fact is that under current rules, most insurance agents are paid by the insurance companies on a commission basis.  Many of them forget that their license is issued by the state governments. They are responsible to look after both yours and the insurance company’s best interests.

Many agents forget to perform a Fact Find or ignore it.  They do not earn any money until after a sale has been made.  They forget that they are supposed to be balanced.  They go straight for the sale.

Many folk who use the phrase, “Insurance Poor” are simply saying that they trusted their insurance agent to get them the best insurance policy available.  They are now finding out that they mis-placed their trust.  Their insurance agent sold them the insurance policy that would pay him the most commission.  However, there may still be holes in your portfolio.

SELF-SERVE

As a conservative American, I have more than a few issues with elements of Obamacare.  I do not like the unprecedented shift of power from an elected congress to the appointed Secretary of Health and Human Services.  I do not like the billions of dollars that are scheduled to be spent by the federal government without a corresponding revenue raising program.

Most importantly, I do not like the idea of the federal government telling me what health insurance plan I must buy or pay a penalty tax.

One of the problems that insurance professionals have with Obamacare is the idea of web-based insurance Exchanges.

Please do not get me wrong.  I am all for making the purchasing of insurance easier.   I have no problems allowing people to purchase health insurance over the internet.

My problem is the level of education they receive.  None of the Essential Benefit plans will pay 100% of medical bills.  I am concerned that since Americans are mandated to buy a government approved “Essential Benefit” plan they will automatically get the one that costs the least.

The least expensive Essential Benefit plan will be the “Bronze” plan.  It will only cover 60% of your medical bill.  People who rush through the on-line “Exchange” enrollment and elect the least expensive plan are potentially going to find themselves in a worse situation than they would today.

Yes, enrolling in health insurance will be easier through the exchange, however, if they elect the “Bronze” plan and have $100,000 of medical bills because of a stroke, they will be liable to pay $40,000 out of their pocket, even though they have government approved health insurance.

SOLUTION

I have only found one way for you to protect yourself from a bad insurance agent or from yourself.  That is for you to know what you want before you submit an application.

Rather than making your decision based on premium, take the time to know what you are buying.   If your policy covers what you want, go ahead and pay the premium.  If, however, your Major Medical plan leaves you exposed, understand your exposure and take the appropriate steps.

 

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