Some people think that you should never make changes to your insurance. They say that when an insurance agent suggests making changes, he is violating a fiduciary duty and acting “unethically.”
Other insurance agents suggest that you should always buy the lowest cost plan available (that they sell) regardless of any other criteria.
The truth is probably somewhere in the middle. In this post I want to give you something to think about.
The people who say that insurance policies should never be replaced promote apathy. Their favorite saying is, “Some insurance is better than none.” They do not either understand, or care, that you may be able to get all of your insurance needs met today for what you are already paying for an older, obsolete plan.
Other insurance agents will tempt you with a lower price for something new. They think, and rightfully so, that many Americans will purchase insurance based on price alone. They count on the American who fails to see past premiums to the benefits they are getting.
Before you buy any insurance policy, you must first see how it will interact with the insurance policies that you already have.
A new plan may be less expensive but it may duplicate coverage you already have through a different plan. Many new plans, require you to fulfill a “waiting period” that you have already fulfilled with your older plan.
Perhaps the biggest complaint that I have to deal with is a “surrender charge.” Many Life and Annuity plans have “surrender charges” during the first several years. If you replace them with a “less expensive” plan, you may be required to spend more than you would save in the form of “surrender charges” from your old plan.
A replacement of an older, obsolete, plan may be a good thing. However, before you replace anything, take the time to review your older insurance plan to see what the replacement will actually cost.
LONG TERM CARE INSURANCE
When Long Term Care insurance (LTCI) first became popular in America during the 1980s, many plans were highly limited. They only offered protection for nursing home expenses. Any other benefits they offered were only incidental. They were added only to make that plan different from another insurance company’s LTCI.
Over the past few years, LTCI plans have offered a more comprehensive list of benefits. Today’s plans offer coverage for Home Care and Assisted Living Facilities as well as nursing homes.
The mother of one of my clients purchased an older LTCI plan. When the mother had a series of strokes and required care, the daughter was disappointed to learn that the policy the mother had only covered nursing home bills.
Since the mother was well enough to “age in place” (remain at home as long as she has a companion), that LTCI plan did not pay anything. The mother has had to move from Beaumont, TX to live with her daughter in Houston, TX so that she can be watched.
When the daughter needs a break, or just wants to run some errands, she is forced to pay for a Home Care Aide out of her pocket. At $19 an hour, that is a huge bill every month.
If the daughter had reviewed her mother’s policy every 7-10 years, she could have gotten a plan that paid the expenses for a Home Care Aide as well as a nursing home.
Unfortunately, neither the mother or daughter reviewed the policy after it was obtained. They felt that since they had a policy with the words, “Long Term Care” they had nothing to worry about.
Life insurance is another plan that people tend to ignore. Unfortunately, every few months I have to bite my tongue to keep from telling good people that they have allowed themselves to be conned into complacency.
One of the first questions I ask my clients when I first meet them is, “What do you want your Life insurance to do for you?”
On October 1 the National Open Enrollment begins. From October 1, 2013 until March 31, 2014 every American will be able to obtain a government approved Essential Benefit Health Insurance Plan.
If you are already enrolled in a health insurance plan, you are not required to enroll until your plan’s renewal date.
If you get your health insurance through your employer, your plan will automatically renew with one of the approved Essential Benefit Plans in 2014.
If you are responsible to get your own health insurance, many insurance companies have adjusted their renewal dates until December 31, 2014. If you have one of those plans, you will not need to enroll in one of the Obamacare plans until the Annual Enrollment Period in October, 2014.
Just keep in mind that not all insurance companies have adjusted their renewal dates. You need to review your current health insurance plan to see if yours did. If the plan you have did not adjust the renewal date of your plan, you will want to consider replacing it during the National Open Enrollment.
If you are not certain if your insurance company adjusted the renewal date of your plan until the end of 2014, call the customer service number that is on your health insurance I.D. card and ask.
If you have elected to go without health insurance, that is no longer an option. According to section 5000A of the Affordable Care Act, aka Obamacare, every American, who is not otherwise exempt, is required to purchase an approved Essential Benefit Plan by January 1, 2014.
The processes that you will use are still being developed through several governmental agencies. Right now, only partial details are known. We already know Who is required to buy the new health insurance plans and When they have to be bought. We just do not know all the details about How you will do it.
We know that unless you are enrolled in Medicare or get your health insurance at work, you will be able to get your health insurance both inside and outside of the new health insurance exchanges. We just do not know what the processes will be for citizens in all of the states.
If you live in one of the states that has developed its own health insurance exchange, there is a chance that you already know what you need to do. However, if you live in one of the 34 states that will have a Federally Facilitated Exchange, we will not get the final details about how you will obtain your mandated health insurance until later this summer.
All that you can do is review your current health insurance plans and see if you are going to need to do something during the National Open Enrollment.
The plan, now, is for The Insurance Barn to be able to help citizens in my state, TX, get the health insurance they are mandated to get either through the new health insurance exchange or out of the exchange if they do not need governmental help with the premium.