Let’s get one thing straight.....there’s no way this makes exciting reading. But, one day, what you learn here and what you do about it could save your life or the life of a loved one!!! So let’s get started...........
You really ought to be thinking about private health insurance if:
you’re not covered by group health insurance ;
you’re covered by a National Health System or some other Universal Health System;
you’d like to have the option to have private care where you currently live; or
you’d like to be able to go for treatment for a specific problem to another country
What are the basic features of private health insurance ?
These policies generally offer one or two major levels of coverage:
q A comprehensive coverage, including in-hospital care and services as well as the services of doctors, lab tests, x-rays and other scans, etc. in a non-hospital setting; and
q A basic coverage which is limited to all care and services relating to a inpatient hospital stay only.
The common variables within these policies are various limits on reimbursement within the policy; a choice of deductibles; and any differences or limitations based on where the care is provided.
But beyond this, there are traps waiting for you unless you look carefully at what is offered. So how do you decide what makes a policy right or better for your specific needs? Let’s look at some of the things you should be aware of:
Applying for a Policy
Guaranteed-Issue Policies
It’s easy to get coverage with one of these policies - just answer a few easy questions and pay your premium. Then, when you submit a claim, that’s when the problems can start ! You may be asked for proof that the problem you just had treated wasn’t a pre-existing condition at the time you applied for the policy.
What’s a Pre-existing condition?
Generally it means a medical condition, which is currently being (or was previously) treated and any condition associated with it. Just for clarification:
¨ ‘Treated ’ means:
1. Doctor’s visits, tests, taking medication, or even a special diet for that condition within the past one year, two years, five years, or anytime in the past (each policy has its own time frame); and:
2. A condition which a ‘prudent person’ would have had treated, even if you didn’t - or, in some policies, even if you didn't know about it but they feel you should have!
¨ ‘Any condition associated with it’: means a medical problem that they deem to be an outgrowth or result of the original pre-existing condition. For example, a broken leg could be deemed to be the result of brittle bones caused by cancer treatments!
If the insurer decides it is a pre-existing condition, they may deny the claim. Always remember, the larger the claim the more carefully they’re going to examine it! Not what you want to go through when you have just incurred a claim for $10,000!
Fully-Underwritten Policies
These policies ask very detailed health questions on the application form and may even ask for doctors’ reports. Based on all the information they get, the insurance company may decide to:
1. accept you with no exclusions or conditions;
2. accept you with an increase the premium;3. accept you with an exclusion for a specific medical condition; or4. reject you.
It always makes good sense to disclose pre-existing conditions on your application form even if the application doesn't ask about them; then the insurance company will find it harder to deny a claim for a pre-existing condition if they didn’t exclude it when they approved your application.
Your Age
Some insurers automatically reduce benefits, charge extra premiums, or even discontinue your coverage when you reach a specific age; for example: at 60, 65, or 70, the maximum annual limit under the policy drops from $1 million to $100,000 or they may add 25% extra to the premium.
Policy exclusions to be aware of:
Ø Travel
Some policies exclude travel if it’s specifically to get medical care. Others exclude care if you travel ‘against the advice of a physician’ or ‘while you are on a waiting list for treatment’; in that case, treatment for that specific condition may not be covered while you’re travelling.
Ø Pregnancy and Childbirth
Some policies exclude pregnancy and childbirth completely while others exclude them only for the first 12 months of the policy. Even if the pregnancy and birth are covered, some policies automatically exclude the first 15 days of a newborn’s life - while others cover only the first 14 days of life. In these cases, the baby must then apply as a ‘separate person’. Because many policies exclude birth defects, and congenital and hereditary illnesses, that baby may be refused coverage. Such policies may not be appropriate if you’re in the childbearing years - take a long, hard look and ask questions before you sign up for such a policy.
Ø Chronic illnesses
Some policies specifically exclude or limit the coverage of conditions which are or become chronic after you purchase the policy. An asthma attack (acute) may be covered but not ongoing asthma problems (chronic).
Ø Limited Coverage
Some policies limit coverage for any single accident or illness to, for example, the first 12 months of treatment following the onset of that accident or illness.
Ø Organ transplants
Some policies exclude such procedures; some offer it as an additional benefit, and some include it as a part of the regular coverage.
Ø Where you are
Some policies place no limitations on where you can go for care while others limit the region of the world where they will cover you (and may charge different premiums based on the region(s) you select).
Ø Home Country
Some policies limit the time you can spend in your ‘Home Country’ or even exclude it completely. For example, travel to/in the U.S. may be limited to 30 or 60 days for U.S. citizens or anyone born there regardless of their current citizenship. This could apply even if you go for a short visit and then, because of an illness or accident, need to stay longer. The policy may be cancelled or suspended when you reach that maximum time limit, regardless of your health condition at the time.
Getting Claims Paid
Ø Pre-certification
Many policies now require you to get prior approval for a planned hospitalization, with a penalty of reduced benefits if you don’t. They may be more lenient with emergencies but still require notification as soon as possible after the emergency. Some may also limit the choice of hospitals or doctors you can use. Even if you don’t need pre-approval, informing an insurer before a hospitalization is a good idea since they can usually pay the hospital directly for your stay.
Ø Non-hospital bills
In most cases, you must pay physicians, labs, etc. yourself and then submit those bills with proof of payment.
Ø Submitting Claims
Some policies require a completed claim form - others, just the original bill. In almost all cases, you should get the bill in English or supply an English translation - it tends to smooth the path to reimbursement.
Ø Emergency Help
Almost all policies offer the services of an International Help Centre, 24 hours a day, seven days a week. The Centre can refer you to an English-speaking doctor and/or hospital and/or assist in the event of an emergency requiring medical evacuation. This is obviously more useful when you’re in a non English-speaking area, but you can use it wherever you are in the world.
Ø Medical Evacuation
This is a useful feature if you’re in a country/region with a healthcare system which is below par. But, be aware that no policy offers evacuation just because you would prefer it. If the emergency can’t be treated locally, you will be evacuated to the nearest major facility capable of providing a decent standard of care. The definition of ‘nearest’ and ‘decent’ are decided jointly by the Emergency Help Center and the insurance company.
Paying premiums
Premiums are normally payable for each person in a family, although some policies do offer a family premium. Others offer ‘free’ coverage to pre-teen dependent children if one parent is covered. Premiums may vary based on where you live or where you want to have treatment, and may increase with attained age. Payment is usually by cheque or credit card and may offer a choice of currencies for premiums and reimbursements.
Renewing Coverage
Guaranteed renewability of an insurance policy is fundamental to the selection of that policy. If there is no guarantee to renew coverage regardless of your health condition at the renewal date, beware! Cancellation of coverage is not what you need if you have developed a medical condition which would be deemed pre-existing if you have to apply for another policy.
Sunday, October 29, 2006
Life Insurance: a basic primer
Life Insurance is somewhat like writing a will - we think about it or talk about it every so often, but few of us actually do anything about it!For most people, there's no way to make this exciting reading - but it's one of the most important things you should be looking at to protect your family's way of life. So let’s get started...........What are the major uses of personal Life Insurance?
Take financial care of your survivors, once you’re no longer there to do it; and to take the burden of worrying about the financial aspects of your death off their shoulders;
Pay off any outstanding debts - a mortgage, other loans, credit card balances, etc;
Provide money in the event you are diagnosed with a dread disease or terminal illnesssome policies will advance you part or all of the death benefit so that you can fill in for lost income, get the special treatment you want, spend quality time with your family, etc;
Pay estate taxes and other settlement costs - wherever they have to be paid;
Provide educational funds for your children or grandchildren;
Supplement your retirement income - life insurance can often accumulate tax-sheltered
funds within the policy;
Charitable donations - life insurance can be used to make a donation to your favourite charity
What types of Life Insurance are there?
There are 3 basic types of personal life insurance:
Term Insurance
This can be likened to renting an apartment. It builds no equity within the policy. If you stop paying premiums, the coverage ends. And just like the rental lease on an apartment, the premiums can increase after the initial term of the policy ends. But, in the short term it offers the highest amount of coverage for the lowest cost.
Whole Life:
This is like buying a house. The upfront costs and annual premiums are usually higher than term insurance, but those premiums are generally fixed throughout the term of the policy. Most whole life policies offer a build-up of equity within the policy with significant tax advantages in that build-up
Universal Life:
This is a flexible combination of Term and Whole Life. It has many of the features and minimal premiums of a term policy, and yet offers flexibility to increase those premium payments and accumulate equity using some of the features and advantages of a whole life policy.
When should I buy life insurance?
A question for which there’s no exact answer! At a minimum, most people would like to leave enough money to provide for the cost of their funeral. Aside from that, many people feel they don't need life insurance unless and until they have surviving dependants, debts or other liabilities to be paid off, or other needs to provide funds after their death.
As one’s lifestyle changes and evolves, the need for life insurance also changes. Each lifestyle change brings a potential need for more or less life insurance, and therefore, ideally, the coverage should be reviewed at every such point of change. Most financial consultants recommend a regular and frequent review of life insurance as part of overall assets and liabilities.
How much should I buy?
Again, there may not be an exact answer! If there’s a specific amount is needed at your death - to pay off a mortgage or other debt, to donate a defined lump sum to a charity, to fund college fees, etc. - then the amount of life insurance you need may be quite easy to calculate.
If the question is how much your survivors may need to live on after your death, it becomes a harder question to answer. Some factors which affect this calculation are: the age and number of survivors; where they’ll live and the lifestyle they’ll need to support; the rest of the estate you‘ll leave them; and various other points you need to consider.
Where should I buy it?
Until recently, you could only buy life insurance in your current residence or in any other country where you had an active connection, for example: employment or a residence from which you actively conduct ‘lifestyle’ activities (such as holding a drivers license, doing banking, and making credit card purchases). That’s a legalistic way of saying that you could normally buy life insurance only where you live now or in your Home Country if you maintained a residence there, traveled there often enough to be medically-examined there, and could provide financial references and other underwriting requirements there, if necessary.
For expats of the US, Canada, and the UK, this was significant since premium rates for life insurance in those countries have dropped quite dramatically compared to the rest of the world, due in part to advances in life expectancy and the liberalization of various statutory requirements for life insurance companies.
Has that changed?
In the past few years, with the advances in communications and purchasing insurance over the web, international life insurance has become an easily-available commodity. Now an applicant, regardless of his citizenship or residence, can purchase life insurance from a variety of sources and still handle the underwriting requirements.
These international policies offer many advantages, including benefits and premiums payable in US dollars or other stable currencies; medical (and other) exams conducted where you live; payment of death benefits wherever you or your beneficiary(ies) designate; and payment of premiums by wire transfer, cheque or credit card.
So what should I be looking out for now?
These advantages are somewhat offset by the risks of buying international life insurance.
In the US, Canada, and the UK, there are regulatory authorities that exercise a supervisory role over the activities of the insurance companies within their jurisdiction. There are also rating agencies which provide ratings of insurance companies. In the international arena, there are many reputable and world-renown insurance companies and there are also many small companies operating on the fringes of the insurance world.
You need to be aware of the ownership and financial standing of any insurance company that makes a proposal to you. On the other hand, you shouldn't have to pay inflated premium rates because of an insurance company’s pedigree! There are international insurance companies which offer premiums and policies based on US policy designs, US mortality rates, and US premium tables, and which are owned and guaranteed by major US insurance companies.
So, what’s the bottom line?
In summary - life insurance is for the living, not the dead! By and large, you don't need it - your survivors do. Those who depend on you or will be left with a burden when you die are the ones who might need the life insurance on your life. And, ideally, it should be a part of an overall financial plan which takes into account all of your other assets and liabilities. Remember it’s you who has to make the final decision to buy it - while you can.
Take financial care of your survivors, once you’re no longer there to do it; and to take the burden of worrying about the financial aspects of your death off their shoulders;
Pay off any outstanding debts - a mortgage, other loans, credit card balances, etc;
Provide money in the event you are diagnosed with a dread disease or terminal illnesssome policies will advance you part or all of the death benefit so that you can fill in for lost income, get the special treatment you want, spend quality time with your family, etc;
Pay estate taxes and other settlement costs - wherever they have to be paid;
Provide educational funds for your children or grandchildren;
Supplement your retirement income - life insurance can often accumulate tax-sheltered
funds within the policy;
Charitable donations - life insurance can be used to make a donation to your favourite charity
What types of Life Insurance are there?
There are 3 basic types of personal life insurance:
Term Insurance
This can be likened to renting an apartment. It builds no equity within the policy. If you stop paying premiums, the coverage ends. And just like the rental lease on an apartment, the premiums can increase after the initial term of the policy ends. But, in the short term it offers the highest amount of coverage for the lowest cost.
Whole Life:
This is like buying a house. The upfront costs and annual premiums are usually higher than term insurance, but those premiums are generally fixed throughout the term of the policy. Most whole life policies offer a build-up of equity within the policy with significant tax advantages in that build-up
Universal Life:
This is a flexible combination of Term and Whole Life. It has many of the features and minimal premiums of a term policy, and yet offers flexibility to increase those premium payments and accumulate equity using some of the features and advantages of a whole life policy.
When should I buy life insurance?
A question for which there’s no exact answer! At a minimum, most people would like to leave enough money to provide for the cost of their funeral. Aside from that, many people feel they don't need life insurance unless and until they have surviving dependants, debts or other liabilities to be paid off, or other needs to provide funds after their death.
As one’s lifestyle changes and evolves, the need for life insurance also changes. Each lifestyle change brings a potential need for more or less life insurance, and therefore, ideally, the coverage should be reviewed at every such point of change. Most financial consultants recommend a regular and frequent review of life insurance as part of overall assets and liabilities.
How much should I buy?
Again, there may not be an exact answer! If there’s a specific amount is needed at your death - to pay off a mortgage or other debt, to donate a defined lump sum to a charity, to fund college fees, etc. - then the amount of life insurance you need may be quite easy to calculate.
If the question is how much your survivors may need to live on after your death, it becomes a harder question to answer. Some factors which affect this calculation are: the age and number of survivors; where they’ll live and the lifestyle they’ll need to support; the rest of the estate you‘ll leave them; and various other points you need to consider.
Where should I buy it?
Until recently, you could only buy life insurance in your current residence or in any other country where you had an active connection, for example: employment or a residence from which you actively conduct ‘lifestyle’ activities (such as holding a drivers license, doing banking, and making credit card purchases). That’s a legalistic way of saying that you could normally buy life insurance only where you live now or in your Home Country if you maintained a residence there, traveled there often enough to be medically-examined there, and could provide financial references and other underwriting requirements there, if necessary.
For expats of the US, Canada, and the UK, this was significant since premium rates for life insurance in those countries have dropped quite dramatically compared to the rest of the world, due in part to advances in life expectancy and the liberalization of various statutory requirements for life insurance companies.
Has that changed?
In the past few years, with the advances in communications and purchasing insurance over the web, international life insurance has become an easily-available commodity. Now an applicant, regardless of his citizenship or residence, can purchase life insurance from a variety of sources and still handle the underwriting requirements.
These international policies offer many advantages, including benefits and premiums payable in US dollars or other stable currencies; medical (and other) exams conducted where you live; payment of death benefits wherever you or your beneficiary(ies) designate; and payment of premiums by wire transfer, cheque or credit card.
So what should I be looking out for now?
These advantages are somewhat offset by the risks of buying international life insurance.
In the US, Canada, and the UK, there are regulatory authorities that exercise a supervisory role over the activities of the insurance companies within their jurisdiction. There are also rating agencies which provide ratings of insurance companies. In the international arena, there are many reputable and world-renown insurance companies and there are also many small companies operating on the fringes of the insurance world.
You need to be aware of the ownership and financial standing of any insurance company that makes a proposal to you. On the other hand, you shouldn't have to pay inflated premium rates because of an insurance company’s pedigree! There are international insurance companies which offer premiums and policies based on US policy designs, US mortality rates, and US premium tables, and which are owned and guaranteed by major US insurance companies.
So, what’s the bottom line?
In summary - life insurance is for the living, not the dead! By and large, you don't need it - your survivors do. Those who depend on you or will be left with a burden when you die are the ones who might need the life insurance on your life. And, ideally, it should be a part of an overall financial plan which takes into account all of your other assets and liabilities. Remember it’s you who has to make the final decision to buy it - while you can.
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