Life and Health Insurance
Michael Vanlaningham
Allied American University
Personal Finance
FIN 202:
Diane Sykes
November 09, 2013 Life and Health Insurance
1. The five basic types of health insurance are HMO’S, PPO’S, EPO’S, POS and Medicare. Medicare is a federal health insurance program for people over 65 or certain disabilities. HMO plans directly employ or have contracts with selected physicians, surgeons and so on and offer there service for a fixed monthly premium. PPO insurance utilize a group of hospitals and doctors that agree to provide healthcare at rates approved by the insurer. The premiums are slightly higher than HMO premiums. EPO insurance require that you receive care from affiliated providers or pay the entire cost yourself. POS insurance plans are a hybrid of PPO and HMO insurance policies and use a combination of selected, contacted and participating providers.
2. First thing to consider in trying to reduce your health care costs would be to put down the McDonalds super size value meal triple cheeseburger, stop smoking, exercise and start taking better care of your body. You could also consider taking on a higher deductable to reduce monthly fees but if something happens you will be paying a higher deductable to receive that heart transplant you got from eating triple cheeseburgers every day. You could switch your medication to generic brands. Review billing statements for inaccuracy’s. Consider participating in a flexible spending account if your employer offers it.
3. Since this question is posed as the essay question I chose not to do it twice.
4. The four methods in determining life insurance needs are the easy methos which a typical family will need approximately 70 percent of your salary for a seven year period. The dink method which is if you do not have kids and your spouse earns as much as you do it will insure that your spouse will not be burdened by debts should you die. The non working spouse method which will cover extra costs up to $10,000 a year to replace services of a homemaker in a family with small children. The family need method which addresses special needs within the family dynamic that would not be entirely covered by the prior three methods.
5. Term life insurance is a policy protection for a specified period of time and will only pay if you die within the time specified in the policy. Decreasing or declining term pays less money to the beneficiary as time passes. Whole life policy entails that you pay a monthly premium for as long as you live and when you die the insurance company pays the policy amount that your coverage encompassed.
6. An annuity is a financial contract written by an insurance company that provides you with regular income.
7. The main private sources of health care insurance are blue cross and blue shield since there are over 800 private insurance companies listing more seems a little overdone.
8. Disability insurance provides regular cash income lost by employees as the result of an accident or illness. You can pay for disability insurance but sometimes your work may provide coverage through social security or workman compensation.
9. Two sources of government provided health care are Medicare and Medicaid.
10. The importance of health care and disability insurance in personal financial planning are the added protection from the potential for substantial costs that could be associated with having an illness, broken bones or major accident with which the costs of medical care could greatly affect your current and long term financial goals. Disability insurance will protect you in case you injuries do not allow to work.
11. Life insurance whether its term or whole life gives assurances to your dependents that in case of your death that they will receive money to offset the loss of your income for bills, mortgages or whatever they choose to do with the money.
12. Two types of life insurance companies are stock life insurance