Insurance Solutions

Group benefits are an important part of the total income package offered by employers. Health, disability and life insurance benefits can be the deciding factor for choosing one job over another. Group benefits can be particularly important to those of us with pre-existing conditions. The ability to offer an employee the ability to qualify for quality insurance, that would otherwise be inaccessible, is a tremendous benefit that builds loyalty and employee retention.

If you are lucky enough to be healthy, you should consider supplementing your group insurance with an individual policy. Losing a job, employers discontinuing group coverage and the desire to start a new business are situations that have become more prevalent in our new economy. Unfortunately, each of these scenarios can leave you exposed to a tremendous amount of risk if you do not have individual coverage.

An individual health, disability and life insurance policy is portable which means it stays with you even if you are in transition or if your employer can no longer afford to offer group benefits. Individual coverage can be customized to meet your specific needs and may even be less expensive than the coverage offered through your employer. Purchasing individual coverage can protect you from the risk of finding yourself uninsurable without any coverage.

The issue of insurance is delicate and personal. You may decide to take full advantage of your employer coverage, purchase individual coverage or both. Either way, it is very important to make sure you fully understand your insurance options and the impact of an unexpected transition in employment.

Financial planners are infamous for using strong sales tactics regarding insurance products.  Most of them make a nice living on the commissions that come from these sales.  The commission throws up the red flag that there is a conflict of interest.  Sometimes there may be cause for concern.  However, insurance is a necessary evil to protect against loss.  My company does not sell any products or accept referral fees or kickbacks.  It is important to make that distinction as I am about to write about the need for insurance without an agenda.

Property and casualty (P&C) insurance is rarely discussed.  Most clients have coverage, which is a step in the right direction.  Unfortunately, it is usually the cookie cutter policy rather than a customized insurance plan specific to the client’s risk exposure.  In the case of P&C insurance, the relationship most clients have with their agent is practically non-existent.  Interaction usually occurs only if there is a claim.  Otherwise, the client receives the bill, reviews the premium from the previous year, writes the check and continues with the same coverage for the next year.

Finding an agent who represents multiple companies is important.  One company might be more willing to give a break on a certain risk exposure than another.  Having a choice can lower your premium.  Please note the distinction between finding an agent to discuss your choice of insurance companies rather than just comparing price quotes.

It is also important to be aware that even the maximum limits on the traditional coverage might not be adequate.  An umbrella policy can be used to supplement traditional coverage.  Unfortunately, umbrella policies are becoming necessary in our litigious society.

According to Mike Gautreaux, a partner at AI Insurance Group, the most important thing a client can do to be adequately covered is to review their coverage annually.  It is important to have a meaningful dialogue with your insurance agent to be sure all changes to the client’s risk exposure are considered.

Not only do I encourage my clients to follow this advice, I too have benefited from these types of meetings.  Recently, I saved hundreds of dollars a year on my homeowner’s just because fire hydrants have been installed near my home.  If I did not have a good working relationship with my agent, it is unlikely that I would have realized this savings.

The recurring theme of my advice is to work with a professional who comes highly recommended, who has proper credentials and with whom you feel comfortable.  It is likely that you already have coverage and an agent, but it never hurts to get a second opinion.

For those who have lost their jobs and have no health insurance, they may turn to the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA gives employees who have lost their jobs the opportunity to continue to receive heath insurance for their families for a temporary amount of time under certain conditions.

COBRA applies to companies with 20 or more employees, but does not apply if your company goes out of business or stops offering health insurance benefits. Generally, families are responsible for 35% of the premium with the remaining 65% being the responsibility of the previous employer.

Additionally, college graduates may turn to COBRA to provide health insurance temporarily after being dropped from their parents health insurance. 

For more information please see:
http://www.dol.gov/ebsa/COBRA.html
http://kiplinger.com/columns/ask/archive/2009/q0223.htm

Getting Smart About Annuities
by Anne Tergesen and Leslie Scism