ANNUITY GUIDE

Annuity Guide
An annuity is a contract where the person who pays for the annuity (the annuitant) will receive a set amount every year for a certain period. Despite the name annuity, the payments may be made monthly and the cost of the annuity will depend on the likely length of time for which it will be paid.

Most annuities are bought for a lump sum, i.e. single premium, and start immediately – known therefore as immediate annuities. Regular premium annuities are also available.

Annuities are normally expressed in terms of annual amounts payable, though in practice, they can be payable monthly, quarterly, half-yearly or annually. An annuity can be paid in advance or arrears, for example, where an annuity is effected on 1st January 2003, the first annual payment is due on the same date if it is paid in advance, or on 1st January 2004 if it is paid in arrears.

All types of annuity have in common the fact that they provide certainty of income over a given period. They are not usually savings schemes and it is possible that the amounts recovered will be less than the cost of the annuity. This is particularly true for a purchased life annuity. In return for the premium (single or regular), annual payments are made for the duration of the annuitant’s life, however long or short that might be. There are also annuities where the amounts paid depend on the growth of the sum invested, which might be used to buy units.

Where an annuity is payable in arrears, it can either be with proportion or without proportion. This is because each payment is made at the end of the period to which it relates. Thus, when the annuitant dies, there will be a period since the last instalment date for which no payment has been made. Under a with proportion annuity, a proportionate payment will be made to cover this period. This is not the case for a without proportion annuity, where no payment is made.

THE VALUE OF YOUR HOME

How to determine your homeowner's coverage

Your first step in determining the right homeowners coverage is estimating the replacement cost of your home. The second step is selecting the coverage amount that best fits your needs. We recommend that you purchase an amount of coverage equal to the estimated replacement cost. But the choice is yours. Determining your home’s estimated replacement cost is important because this will ultimately determine which policy options are available to you. Since it is impossible to predict today what the exact cost will be to replace your home in the future, it’s important to have enough coverage to account for unforeseen circumstances.

Understand the difference between market value and replacement cost

“Replacement cost” is the amount needed to repair the damage or to rebuild the home to its pre-loss condition. The replacement cost of a home is NOT the market value of the home, its purchase price or the outstanding amount of any mortgage loan. It does not include the value of the land, but is the cost of rebuilding your home. New improvements or required upgrades are also not accounted for in the replacement cost.

You've worked hard to get your home. We’ll work hard to help you protect it

Before you purchase a new home, make sure that you determine the appropriate amount of coverage needed. When you have the home appraised, ask if a replacement cost estimate is available. Or consult with your local builder association or a reputable builder for an estimate.

Be aware of any architectural details or unique building materials that may affect your estimated replacement cost, such as:

• Upgraded bathrooms or kitchens (including cabinets)
• Additional rooms
• Custom molding or arched windows
• Other unique features

A contractor or appraiser can help estimate your home's replacement cost

Building contractors or professional replacement cost appraisers are a good source for obtaining an estimated replacement cost of your home. Estimates from these sources should reflect your home’s features, like those mentioned above. If you are unable to obtain a detailed estimate from these sources, your State Farm agent can help provide one for you.

Review your policy annually to make sure that your coverage meets your needs

• Have you recently remodeled or improved your home? When you upgrade or improve your home, you may increase your home’s estimated replacement cost.
• Has the rate of inflation risen since your last appraisal? Your agent provides coverage that automatically adjusts each year in an effort to compensate for increases in construction costs in your area. However, certain conditions such as severe weather can increase the demand for labor and materials, and raise costs beyond normal inflation. It is important to update your coverage amount each year to keep up with the changing economy.
• What influences the building costs in your area? Market conditions in your area may impact the amount it will cost to rebuild your home if you experience a loss. Replacement cost estimates are influenced by supply of labor, demand for labor, and cost of construction materials. Staying abreast of the current market conditions in your area, and changing your coverage amount accordingly, will help you maintain 100% estimated replacement cost coverage for your home.

Some important things to consider when determining your coverage amount: Your home’s estimated replacement cost is different than its market value (real estate cost)

• Each time you remodel or improve your home, you should adjust your coverage amount accordingly.
• If your home is made of unique building materials, make sure they are reflected in your replacement cost estimate.
• Stay abreast of the fluctuating building costs in your area and update your coverage amount accordingly. Make sure that you maintain coverage at 100% of your home's estimated replacement cost at all times.
• It is important to review your coverage annually and inform your agent of any changes you’d like to make.

BASIC COVERAGE IN HOMEOWNER'S INSURANCE

Basic Coverage included in Homeowner's insurance

The homeowner’s insurance policy is a package policy that combines more than one type of insurance coverage in a single policy. There are four types of coverages that are contained in the homeowner’s policy: dwelling and personal property, personal liability, medical payments, and additional living expenses.

Property Damage Coverage

Property damage coverage helps pay for damage to your home and personal property. Other structures such as a detached garage, a tool shed, or any other building on your property are usually covered for 10% of the amount of coverage on your house.

Personal property coverage will pay for personal property including household furniture, clothing, and other personal belongings. The amount of insurance coverage is usually 50% of the policy limit on your dwelling. The coverage is also limited by the types of loss listed in the policy. The coverage only pays the current cash value of the item destroyed, unless you purchased replacement cost coverage.

Your homeowner’s policy also provides off-premises coverage. This means that the policy covers your belongings against theft even when they are not inside your home. Your insurer will reimburse you for the cost of replacing your suitcase and its contents if it were lost or stolen while you were on vacation, but only for replacing them with items of like kind and quality.

Personal Property Floater

Your homeowner's insurance policy may provide only limited coverage for furs, jewelry, silver, and other valuables. It may be necessary to insure these valuables with a special addition to your homeowner's policy, such as a personal property floater. A personal property floater itemizes each article, gives a description of the article insured, and lists excluded perils. It often provides coverage that is broader than the coverage granted in the home insurance policy. You should discuss this with your insurance company or agent to determine the availability and cost of this additional coverage.

Your homeowner’s insurance policy does not cover your pets, your car, and any aircraft. Although your policy does not cover your pet or damage it does to your possessions, it will cover damage your pet does to others or their possessions.

Personal Liability Coverage

Homeowner’s policies provide personal liability coverage that applies to nonauto accidents on and off your property if the injury or damage is caused by you, a member of your family, or your pet. The liability coverage in your policy pays both for the cost of defending you and paying for any damages the court rules you must pay. And unlike the other coverage in your policy, liability insurance does not have a deductible that you must meet before the insurer begins to pay losses. The basic limit for liability coverage is usually $100,000 for each occurrence. You can request higher limits that are available for an additional cost.

Medical Payments Coverage

Medical payments coverage pays if someone outside your family is injured at your home regardless of fault. This includes payment for reasonable medical expenses incurred within one year from the date of loss for a person who is injured in an accident in your home. The coverage does not apply to you and members of your household. The medical payments portion of your homeowner’s policy will also pay if you are involved in the injury of another person away from your home in some limited circumstances. Medical payments coverage limits are generally $1,000 for each person. Higher limits of medical payments coverage are available at additional cost.

Additional Living Expenses

If it is necessary for you to move into a motel or apartment temporarily because of damage caused by a peril covered by your policy, your insurance company will pay reasonable and necessary additional living expenses. The typical policy will pay an amount up to 20% of the policy limit on your dwelling for these expenses. If you move in temporarily with a friend or relative and do not have any extra expenses, you will not be paid any additional living expenses by your insurance company.

WHY YOU NEED A HOMEOWNER INSURANCE

Why you need a Homeowner Insurance?

The largest single investment most consumers make is in their home. The consumer can protect his or her home, possessions, and liability with a homeowner’s insurance policy.

In addition to its availability to homeowners, similar coverage is available to those who rent homes or apartments. These policies are referred to as tenants’ or renters’ homeowner’s policies. If you are a renter, you do not need protection against damage to the building itself, but you do need protection against damage to or theft of your personal property and liability in the event someone falls or gets hurt on the part of the premises you rent.

A condominium owner may purchase a condominium homeowner’s policy to insure personal property. Some policies may also include any additions or alterations not insured by the condominium association. It is important to check with your condominium association and your agent before buying a policy to make sure you are adequately covered.

HOMEOWNERS INSURANCE

What is homeowner insurance?

Homeowners is one of the most popular forms of personal insurance on the market. The typical homeowners policy has two main sections: Section I covers your property, and Section II provides personal liability coverage (to cover you in case of lawsuits arising from things that happen on your property). Almost anyone who owns or leases property should have this type of insurance. Often, homeowners insurance is required by lenders as a requirement to obtain a mortgage.

LONG TERM HEALTH INSURANCE

The Basics of Long Term Care Insurance

The harsh realities of aging in America are coming into sharp focus. Soon, a 95-year-old baby boomer without long term care insurance may have to rely on a 90-year-old spouse or a 70-year-old son or daughter for personal care.

Consumers can't rely on Medicare, Medicare supplementary insurance, or health insurance to help them meet long term care costs. They don't cover most long term care expenses.

When to Buy a Long Term Care Policy

When buying long term care insurance, your age is a primary factor in determining its cost. The younger you are when you get the policy, the cheaper your premiums will be. Of course, you also will be paying those premiums for a longer period of time before taking any benefits.

A good time to buy long term care insurance is between ages 50 and 55, according to the American Health Care Association (AHCA), a federation of 50 state health organizations representing assisted living, nursing facility, long term care, and subacute care providers. A policy that costs you $800 annually when you're 55 will cost you nearly twice as much if you wait to buy it when you're 65.

There is an exception, however. You might want to purchase a long term care policy before age 50 if your employer sponsors an attractive long term care group plan at an affordable price.

Most insurers won't sell you long term care insurance if you're over 85 or if you have a pre-existing medical condition such as heart disease or diabetes. A reputable insurer only sells long term care policies to reasonably healthy people who are at low risk of needing their benefits in the foreseeable future. So beware of policies and premiums that sound too good to be true.

Important Policy Features

The most crucial factor when choosing a long term care policy should be its benefit triggers, the set of conditions that must exist before you begin receiving coverage. Ordinarily, you must have an acute medical condition that requires skilled nursing care before your benefits kick in. The best, and most expensive, policies allow you to start receiving benefits if you suffer from a cognitive impairment such as Alzheimer's disease, even if you can bathe and dress yourself.

Bathing is one of several activities of daily living, or ADLs, which are the most commonly used benefit triggers. Your benefits begin when you are no longer able to perform a certain number of ADLs without assistance. (Your policy will determine that number. A good LTC policy will require the inability to perform two ADLs.)

A good long term care policy also will cover all levels of care — including custodial or personal care — in a variety of settings. Those settings include:

• Adult day care: Sites that provide personal and skilled care, and recreational services.
• Assisted living facilities: Living quarters that provide individualized personal care and health services for people who need help with personal care.
• Facility care services: Licensed agencies that provide skilled nursing care, speech, physical, or occupational therapy, or help from health aides.
• Nursing facilities: Residential sites for people who need daily medical care. Many nursing home stays are for a short rehabilitative period after an acute illness or injury such as a hip fracture.

Make sure you know exactly what types of services and facilities are covered by your long term care policy. If you don't go to the right kind of facility, your insurance company can refuse to pay for your care.

You also should investigate whether your policy has a nonforfeiture benefit, which is additional long term care coverage you can buy that protects some of your policy's value if you drop your policy or let it lapse. While this benefit offers some protection for your investment, it will raise your premiums. If you are confident you will be able to pay your premiums, even if there are future rate hikes, you can lower your costs by passing up this option. See Insure.com's "Choosing among long term care insurance riders".

Waiver of premium is another important feature in a long term care policy. This provision lets you stop paying premiums during the time you are receiving benefits. Read your policy carefully to see whether there are any restrictions on this feature, such as a requirement to be in a nursing home for a period of time (60 to 90 days is standard) before your premiums are waived.

Most long term care policies sold today must be guaranteed renewable, which means the insurer guarantees you the chance to renew your policy. It doesn't mean the insurer guarantees you a fixed premium. Note: Your premium will probably increase over time. While you can't be singled out for a rate increase — no matter how many claims you file — you should know that state regulators routinely grant increases to insurance companies to cover whole classes of policies that experience a large number of expensive claims.

SHORT-TERM HEALTH INSURANCE

The Basics of Short-Term Health Insurance

Whether you're graduating from college, leaving home for the first time, or between jobs, a major change in your lifestyle often dictates a change in your health insurance coverage. For these circumstances, some health insurers offer short-term or temporary health plans (sometimes called "major medical" plans) to fill in the gaps between traditional policies.

With low premiums and high deductibles, short-term policies are designed to be more of a low-cost safety net in case of serious injury or illness than a comprehensive day-to-day health insurance plan. Benefits are limited and there are strict eligibility requirements to qualify. Additionally, temporary health insurance is just as the name implies, only a temporary solution. While some plans offer coverage for up to a year, most short-term policies offer between one month and six months of coverage.

Who needs short-term health insurance?

Despite its limitations, short-term health insurance serves an important function for certain groups of people:

• Recent college graduates are among the most likely consumers of short-term health insurance, according to insurers such as GradMed that specifically target graduating students who will lose their health insurance when they leave school. Many grads will look for jobs that will offer health insurance benefits, but until they find that job, short-term insurance can fill the gap. (For recent grads looking for more permanent coverage, many college alumni associations offer some sort of group health policy to their members.
• Short-term plans may also be attractive to individuals who are temporarily out of work. Many people who are laid off or are between jobs can continue coverage with their previous employer under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) for up to 18 months, until a new employer's plan kicks in. However, some people may find that COBRA premiums are too high for their budget. A short-term policy with lower premiums may be the solution.
  
  If your previous employer is a small business with less than 20 employees, you may not be covered under COBRA. Also, if your previous employer goes out of business, you will not be covered by COBRA because the insurance pool to which you once belonged will be dissolved. In these instances, a short-term policy may be your best option until you can find coverage elsewhere.
  
  
• Those losing dependent status under their parents' health coverage are also likely consumers of short-term coverage. If you reach age 18 and are not enrolled as a full-time student, you will most likely be dropped from your parents' health insurance policy. In this situation, you will be eligible for COBRA, but premiums can be very high. A short-term policy can keep you insured for less until you find a job that offers health insurance, or you enroll in an individual health plan.
• Finally, you might consider a short-term plan if you are temporarily without insurance for some other reason. Maybe you are out of work on strike, recently discharged from the military, or have retired early and need coverage until you qualify for Medicare.

How does it work?

One advantage to a short-term health insurance plan is that it works like an "indemnity" plan in the sense that you have no preferred care provider (PCP) or gatekeeper, and you are not confined to an HMO network of doctors. Short-term plans give you the freedom to go to any doctor or specialist you like.

The kind of treatments covered by a short-term policy are fairly comprehensive. Surgery, hospital care, emergency services, diagnostic tests, prescription drugs, follow-up office visits, and even limited mental health care are included under short-term coverage.

There are, however, several areas where short-term coverage falls short of a traditional policy:

• Preventative care, including physical exams, immunizations, and PAP tests, as well as child-wellness care, are not covered, except where required by state law.
• Like most individual health insurance policies, short-term coverage excludes pre-existing conditions. The "look-back" period for these conditions varies by state, but the most common rule for short-term policies is that providers may exclude coverage for conditions diagnosed or treated within the last five years. Because temporary policies are so short, the exclusion of pre-existing conditions will last the life of the policy.
• Maternity care is almost never covered by short-term insurance. Most plans will cover complications arising from pregnancy, but routine doctors' visits are excluded.
• Most short-term policies are nonrenewable. If you decide that you want to extend your short-term policy, your provider will make you apply for a new policy.
  
  Most insurers will let you reapply only once, and the two policies together cannot exceed the maximum length of coverage issued by your insurer. For instance, if your insurer issues short-term policies for a maximum of six months, and your first policy was for four months, your second policy will only be good for a maximum of two months.
  
  Some insurers will flatly refuse to issue you a second policy if you filed any claims under your previous short-term policy. Others might offer you another policy, but they will treat any injuries or illnesses that occurred during your previous short-term policy as pre-existing conditions and thus will not cover treatment related to such conditions.

What will it cost me?

One of the major appeals of a short-term policy is its low premiums. A typical plan can cost as little as $30 a month for a single male in his early 20s, according to quotes provided by Fortis Health (premiums vary significantly according to factors such as your age and where you live).

The flip side of paying such a low premium is the high deductible that accompanies this type of policy. While traditional policies require you to make co-payments for medical care as low as $5, short-term deductibles start at $250 and range into the thousands.

To illustrate the point, consider the single male in his early 20s who is paying only $30 a month for short-term coverage. The reason his premium is so low is that the deductible is a whopping $2,500.

Another thing to keep in mind is that with some short-term policies you must pay a deductible per injury or illness. That means that the deductible must be met each time you are treated for a new condition. With the high deductibles required by short-term providers, the money you pay out of pocket can really add up.

Even after you've met your deductible, most insurers won't pay the total remaining bill. Most plans let you choose one of two payment plans. Under the first plan, the insurer will pay 80 percent of the first $5,000 (this amount may vary among policies), and 20 percent of the costs thereafter. The second plan requires the insurer pay 50 percent of all costs after the deductible is met, up to the maximum benefit (usually $1 million or $2 million).

Many plans will also allow you to choose whether you want to pay a lump sum for a designated period of coverage or you want to pay your premiums on a monthly basis. The advantage of the monthly payment option is that it allows you to continue coverage for an unspecified number of months (but not more than a year). You will pay more for this flexibility, however.

Who's eligible?

In the end, if you still think that a short-term health insurance policy is right for you, there's a good chance that you won't qualify to get one.

Short-term policies with low premiums and high deductibles are designed to be a safety net and insurers don't want to provide safety-net policies with low premiums to people who are likely to need them.

Consequently, most insurers require that you are at least two weeks old and that your age will not advance past 65 during the life of the policy. If you have ever been denied health insurance before, you won't be eligible for short-term insurance, because a previous denial indicates you might have significant health problems.

In addition, you won't be eligible if: you are covered by another health insurance plan already, you work in a hazardous industry such as construction or aviation, or you play in collegiate or professional sports.

While no short-term health insurance provider will cover routine maternity care, some providers won't even issue a policy to a pregnant woman.

Many people may find short-term health insurance coverage appealing because of its relatively low price tag. However, it is important to remember that like any other product or service, you get what you pay for.

DENTAL BENEFITS OPTIONS

Grin and Bear it: Your Options for Dental Benefits

While kinder, gentler technology has taken some of the fear out of a visit to the dentist, access to dental benefits hasn't gotten any easier. But there is hope: Dental benefits can be affordable, even if they aren't provided through your job.

While you might not need to buy a dental plan if you rarely have dental problems, you might want to join a dental plan if you've had a rough dental history or if you know you'll need a lot of dental treatment in the near future — even if you must sit out an initial waiting period for certain benefits to kick in.

As for your children, if they qualify for the federal/state Children's Health Insurance Program (CHIP), they might be provided with dental benefits. However, CHIP plans are not required to offer dental treatment; the decision is made on a state-by-state basis.

If you work at a company with more than 500 employees, you're probably among the 175 million Americans who have a dental plan. About 89 percent of large employers offer some type of dental benefit to their workers, according to the National Association of Dental Plans (NADP), based in Dallas. But when you take both large and small employers into account, the number of employers offering dental insurance drops to 54 percent. According to the NADP, about 40 percent of the U.S. workforce still lacks dental benefits.

Dental Insurance vs. Discount Plans

Some consumers are confused by the differences between dental insurance and dental "discount" plans. Dental insurance is true insurance. You pay regular premiums for your coverage and your plan has annual spending caps. It generally covers 100 percent of the cost of preventive services after you meet your deductible.

Dental discount plans are not insurance and they work differently. These are membership-based programs. In exchange for a fee, members get discounts on a variety of dental services, such as fillings, braces, exams, and routine cleanings. Members typically receive about 30 percent off standard out-of-pocket prices. The are akin to "diner's clubs," in which you buy a book of coupons and get a percentage off of your meals at participating restaurants.

With a dental discount plan, you must go to a dentist who has agreed to participate in the plan and offer services at a discounted price — say $650 for a crown instead of the standard rate of $750.

Some typical features of these plans:

• An initial enrollment fee.
• A monthly fee to the dental-discount company.
• Discounts on cosmetic procedures that are excluded from most dental insurance plans.

Be aware that dental discounts plans are not regulated by state insurance departments. That doesn't mean these plans aren't legitimate, but you should take precautions when buying a dental discount plan, especially over the Internet, where you have to provide a variety of confidential information.

According to the NADP, these are some questions you should always ask a dental insurance or discount plan:

Are you licensed to offer this plan in this state? True dental insurers must be licensed in your state to sell dental insurance.

Are you registered with the Secretary of State? All legitimate companies operating in a state should have at least filed documents with the Secretary of State in the state where they are operating.

Are you registered with the Better Business Bureau? The BBB maintains a large database of companies, where they operate, contact information, and complaint data.

Where are you located and what is your address of operations? A bogus dental plan is likely to be hesitant to give you this information or will give you an address that is nothing more than a local post office box.

Can you mail me specifics on the plan before I sign up with the plan? Fraudulent plans are more likely to collect your "membership fee" before they will send you any information. All legitimate plans will have marketing materials that they will be more than happy to send you.

Do you have a Web site with more information? Most legitimate dental plan companies have extensive Web sites that outline their plan benefits, approximate costs, and the providers accepting the plan in your area.

Can I get a list of providers on the plan? Avoid any plan that cannot provide you with a list of dentists who accept their plan.

Can I think about it and get back to you next week? Bogus plans use high-pressure techniques to get you to join the day you call.

Is your plan endorsed by or affiliated with a legitimate national organization? According to the NADP, a recent bogus dental plan said it was endorsed by the "United Dental Association." There is no such organization.

Direct Reimbursement Plans

The most recent entrant to the dental benefits market is the direct reimbursement plan. This is a self-funded benefit plan (not insurance) in which an employer pays for dental care with its own funds, rather than paying premiums to an insurance company or having a third party process claims. You, the patient, pay the full amount directly to your dentist, then get a receipt for the services, which you show to your employer. The employer reimburses you for part or all of the dental costs, depending on your specific benefits.

Some features of a direct reimbursement plan:

• Neither you nor your employer pay monthly premiums.
• Freedom to choose any dentist.
• Employer's cost depends on the number of employees and benefit caps.
• Benefits are usually capped at $500 to $1,500 annually.

Have Your Employer Help

If you aren't happy with these dental plans, or they aren't available in your area, you have another option: Ask your employer to help out. You might think it's impossible, but many insurance companies have devised creative ways for employers to offer dental benefits without reaching into their own wallets. Most dental plans can be offered through what is known as a "voluntary group plan" by your employer. You and your colleagues who want to participate pay all the premiums or fees, not your employer. Your employer merely acts as the conduit through which the plan is offered.

Not only do you get access to a dental plan, but you get it at the lower-cost group rate.

GROUP HEALTH INSURANCE

Buying Group Health Insurance Online

Small businesses are the perfect online insurance customer: wired and Internet-savvy. But only recently have 20 million American small businesses gotten the online attention they deserve, with several new Web sites offering online quotes and applications for small-group health insurance.

Some sites act as brokers, while others put you in touch with a broker in your area. Site features run the gamut, from bare-bones quoting services offering no insurance advice, to sites that bill themselves as "benefit portals," and provide reams of small-business benefits advice.

"Our sweet spot is around the 20-person company," says Billy Dukes, marketing director at the benefits site Firstdoor.com, with a home page that states it provides "a one-stop solution for the employee benefits and human resource management needs of small businesses." "They're big enough to where they're having to deal with the issues of employee management and benefits, but small enough that they don't have one person dedicated to human resources decision-making. We try to create the knowledge and tools that can help them make a better insurance decision," Dukes says.

Making it Work For You

At health insurance sites, the small employer can obtain an aggregation of group health quotes. You can select quotes based on deductibles and other plan features before you ever contact a broker.

Buying a health plan online, however, doesn't offer a better deal on premiums, because of strict state regulations regarding premium levels. And it's hardly a miracle of one-stop shopping. While consumers can bind car insurance online within minutes, small businesses confront an online-application process that requires the same amount of work as visiting a broker in person. When buying a health plan online, you still must interact with a broker before purchasing the final product.

Obtaining a price quote, however, is fairly straightforward. Your quote is based on basic company and employee information. First, you'll need to fill out your name, the company's address, your line of business — either with a Standard Industry Classification (SIC) code, or with a descriptive keyword — and how many employees will be covered.

Next, you'll enter an employee census: name, gender, and age of each employee. (Some sites ask for specific birth dates, others for ages.) For each employee, you'll need to know whether a spouse or children will be covered under the plan.

The next step lets you outline plan requirements: Do you want maternity coverage? Dental insurance? Deductibles for hospital stays? These add-ons increase the cost, so it's best to know what you want before you apply for a quote. Also know how much of the premium you will pay, and how much will be paid by your employees.

That's it — you've applied for a preliminary rate quote. Now you'll be asked how you want to compare the plans that meet your criteria — by price, deductible, or plan features. What happens next depends on the site you visit, and whether it acts as a broker, or refers you to a broker in your area.

Sites such as eHealthInsurance and Quotesmith provide instant quotes on various health plans. If you like what you see, you can move to the application process by sending an e-mailed request to the site. From there, you'll need to go through the same application process as if you were inside the office of an offline agent, supplying health histories of employees and any covered family members, and providing wage and tax forms in order to receive your final premium rate.

Other sites, including BenefitMall and Firstdoor.com, will refer you to a broker. BenefitMall refers you to a broker in your area, while Firstdoor allows brokers to bid for your business in its online "marketplace."

"We're agnostic when it comes to whether a small business buys insurance from a carrier directly, from our marketplace, or through traditional channels," says Dukes of Firstdoor. "Our goal is to help businesses make a better buying decision. They can take our information to their broker and reaffirm what we've told them."

Too early for a report card?

The California HealthCare Foundation's (CHCF) recent report titled Health Insurance: Purchasing and Privacy Online for Individuals and Small Groups, offers a snapshot of site features and performance for three online health insurance sites: eHealthInsurance, HealthAxis, and Quotesmith. The report warns that it may be too early to draw conclusions about such a young marketplace, and raises issues of concern to consumers using the sites.

CHCF found that buying health insurance online means being faced with a limited range of product choices. "Some sites offer a full range of products (e.g., HMO, PPO) for each health plan they offer; others are more restrictive in the product choices they present," the study notes.

And so far, there's no apples-to-apples way to compare quoted health plans, or even to make clear your preferences for deductibles, co-payments, and other important plan features. Before you start the application process, make sure you know what plans and insurance companies a site can offer in your state. Pickings can be slim, depending on your location. For instance, consumers in California, the largest insurance market in the country, have many more health plan options than Alaska residents, who might have only one or two choices.

The CHCF report's most intriguing question is that of consumer privacy in online health plan applications. To obtain a quote, you must enter health data for all of your employees. That's important private data to you, and represents a potential gold mine for the site.

Fortunately, the CHCF study found that although privacy policies could be better explained at the sites in question, there is no evidence that your private information is anything but confidential.

"When you're taking your information online, where does it go? That can be made more transparent, though it's not clear that any more privacy risk exists online than through traditional channels," says Marian Mulkey, program director at CHCF.

Overall, though, online health insurance sites can be a benefit to independent-minded small businesses and individuals, Mulkey says. "For some people, it's a personal preference. Some people prefer to shop for insurance on their own time frame. Online, you can shop on your own," Mulkey says.

FINDING AFFORDABLE INSURANCE

Health Insurance on a Budget After Leaving Home

Whether you've just graduated from college or have been out of school for a couple years, you could be facing a health insurance dilemma. Chances are you were under your parents' health insurance policy while you were a full-time student. But most health plans will cut the apron strings once you reach age 22 to 25 — or even earlier if you aren't a full-time student. Or maybe you were under your college's health plan while in school and aren't eligible once you graduate.

If you don't have a job lined up right away, or if your new employer doesn't offer health benefits, you must decide which you can least afford: going with insurance or without it. Even though you might not want to spend the money on health insurance premiums, don't be tempted to go without at least some kind of health insurance to pay for hospital or doctor visits should you become sick or injured. All it takes is one car accident, an ankle broken shooting hoops, or an allergic reaction to a bee sting to saddle you with massive doctor and hospital bills for years to come if you don't have insurance.

Finding the Right Option

Even if you are on a tight budget or if you'd rather spend your money on fun stuff, you have a variety of options for health insurance that start for as little as $20 a month, from a bare-bones hospitalization plan to comprehensive HMO coverage that includes prescription medications and wellness care.

Option 1: Catastrophic Coverage

You might think that a cheap plan that covers only really severe injuries is the way to go, but a close look at such plans may scare you off.

"Catastrophic health insurance" policies, as they are known, typically come with a very high deductible (ranging anywhere from $500 to $15,000) and a high maximum benefit payment, such as $2 million. They are intended only to pay for major hospital and medical expenses, not routine visits to the doctor's office or trips to the emergency room to get stitched up. A catastrophic plan would cover things like treatment in an intensive-care unit for 10 days after an auto accident or complications from a pregnancy that land you in a hospital.

There is a niche market for such plans: People who are healthy but want to protect their assets or young people who aren't married and have no dependents. But a healthy 20-something who unexpectedly suffers a serious illness might not be able to afford them either because few 20 year-olds can afford a $5,000 deductible. You must decide what you're comfortable with paying if the worst happens.

Option 2: Short-Term Health Insurance

As its name implies, short-term health insurance lasts only one to six months. That makes it a potentially good option if you're between jobs or waiting for your employer-sponsored health plan to kick in.

Coverage is generally comparable to that of an HMO or similar plan and typically includes various hospital charges, office visits, diagnostic tests, and prescription drugs. Maternity costs are not covered, however. Unlike an HMO or PPO, though, a short-term plan is an indemnity plan, which means you have the freedom to go to any doctor; you're not confined to a network of doctors.

Most new graduates choose the $500 deductible, followed by the $250 deductible. The highest deductible is generally chosen only by older folks in an effort to offset their higher premiums.

The Downside of Short-Term Policies

But there are a few things to keep in mind.

One big consideration: At some companies, the deductible you pay is per injury or illness. That means you must meet the deductible all over again each time you are treated for a sinus infection or other illness.

Short-term policies also have certain strict eligibility requirements, although they will vary from insurer to insurer. If you have ever been denied health insurance, you won't be eligible for short-term insurance because a denial indicates you might have significant health problems. In addition, if you have a pre-existing condition (an illness or chronic condition you've had within the previous five years), it won't be covered under most short-term plans. That means if you've had leukemia, a stroke, or even allergies or asthma within the last five years, those illnesses won't be covered under your short-term policy. Pregnancy isn't covered either, although complications arising from pregnancy generally are.

In addition, you also won't be eligible if you are covered by any other plan, you work in a hazardous industry (such as construction), or you play in professional or collegiate sports, where the likelihood of injury increases.

And what happens if you bought a three-month policy only to find that the job you hoped to land — with health benefits — hasn't materialized? Don't count on automatically being able to renew your short-term policy, because it doesn't work that way. You have to go through the application process all over again and take out a new policy. If you had any illnesses or injuries during your previous policy period, those now become pre-existing and won't be eligible for coverage.

Shop around on your own or talk to an independent insurance agent to make sure you get a plan that's right for you.

Option 3: COBRA

COBRA is generally bought by people who are leaving a job and want to continue their current group health insurance, but it can also benefit young people who have relied on their parents' health plans.

Known formally as the Consolidated Omnibus Reconciliation Act, COBRA was designed to protect people who change or lose jobs and are threatened with the loss of their employee benefits plan. But it can also help young people who were previously covered under their parents' group health plan and then become ineligible for it because they reach the policy's age limit or are no longer full-time students. However, the monthly premiums are expensive: 102 percent of the full cost of the health plan (the extra 2 percent is an administrative fee).

While most people only qualify for 18 months of continued coverage under COBRA, those who were on their parents' policies can get COBRA for up to 36 months, according to the U.S. Department of Labor.

However, if you had health insurance through your college health plan, you will not be eligible for continuation under COBRA. That's because college plans for students are not considered an employee benefits plan.

Some Other Health Insurance Options:

• Alumni associations. Most college alumni associations offer various types of health insurance to graduates. Contact your university for information.
• Individual policy. Individual policies are generally much more expensive than group plans you'd buy through work, but if you have no other choice, it might be better than going without insurance altogether. You might have to pass certain health requirements to qualify. Shop around to get the best deal.
• Guaranteed issue policy. If you don't qualify for a group health plan, you might be eligible for an individual plan or, in some states, what is known as a "high-risk pool" that you are guaranteed by law to qualify for. However, you must meet certain qualifying conditions. These policies and the premiums can vary by state, and they are also more expensive than group plans. Check with your state insurance department for more information. (To find the contact information for your insurance department, select the state in which you live from the pull-down menu at the top of this page).
• Medical savings account (MSA). MSAs let people combine a high-deductible health policy (such as catastrophic coverage or short-term coverage) with a tax-sheltered savings account. The savings account pays for any routine medical expenses that aren't covered under the insurance policy, such as dental, vision, and mental health, while the insurance policy covers the large expenses as outlined in your policy, like hospitalization. Participants can contribute a certain percentage of their policy's deductible to the savings account each year. What's left in the savings account at year's end is yours to keep — and to deduct on your taxes. The catch, obviously, is that you have to put enough money into the savings account to cover your medical expenses. (You also have to be either self-employed or working for a company with fewer than 50 employees.)
• Medicaid. You must meet certain poverty-level income guidelines (or be disabled) to qualify for Medicaid. For most young people, however, this is not an attractive option.
• Local clinics. You can visit local clinics for free or low-cost medical care, but this won't protect you if you have to be hospitalized, and you might have to prove your low-income status.

LOWER YOUR COSTS

LOWER YOUR COSTS Cutting Corners: How to Lower Your Costs When you're shopping for an individual health insurance policy, it pays to do your homework. Ask yourself the following key questions: How important is it that I keep the doctor I have now? If you have a particular physician in mind, that might dictate whether a PPO or an HMO is right for you, depending on whether he or she belongs to that insurance company's network. Do I prefer certain specialists? Keep in mind that some plans limit not only your visits but also who you can see. If you want to see an acupuncturist or chiropractor, be sure to ask your insurance agent or broker about coverage for these services. Psychotherapy and other mental-health services will probably have specific guidelines and limitations as well. What are my health insurance goals? If you want a comprehensive plan — and don't want a lot of out-of-pocket expenses — an HMO provides a very cost-effective way to cover you from womb to tomb. But if you're in your 20s or 30s, have no children and some extra savings, you can save by buying a policy that covers only catastrophic illnesses. Remember, though, you'll have to pay out of your own pocket for every routine doctor's visit or laboratory test. If you can afford to pay for routine care on your own, look for comprehensive inpatient/outpatient plans with higher deductibles rather than trimmed-down hospital/surgical plans. A hospital/surgical plan might cost up to 40 percent less, but if you end up in the hospital, the last thing you need is to worry about how you're going to pay for your follow-up care once you get out of there. If you are leaning towards a more well-rounded plan, make sure you're getting what you pay for. Read the fine print. Will your plan pay for X-rays? Will it cover your doctor's visit if you have the flu? Will it cover prescription drugs? The Agency for Health Care Policy and Research offers guidelines for estimating your future health care costs and comparing several policies. Consider the annual premiums, the deductibles, co-payments, annual limits, and maximum out-of-pocket expenses. This should give you a good idea of what your yearly costs will be for each policy. Don't let a "cheap" policy fool you. Make sure you check whether the "best buy" will give you access to the kinds of services you might require. Join the Group Depending on the state in which you live, your options might be more varied — and even more confusing. In Florida, for instance, a self-employed, sole proprietor can be eligible to buy health insurance as a business — even a home-based one — if he can prove that he's been in business for at least 30 days. If you live in a state that does not offer these "group of one" insurance policies, you might still qualify for a group rate if you own a business and have at least one other partner or employee. Does your wife do some bookkeeping for your company? That's a two-person business, eligible for a group rate and a group policy. But even if you're not in business, don't consign yourself just yet to buying an individual policy if you prefer group insurance. You may be able to find a group plan through your fraternal organization, alumni association, trade association, or your chamber of commerce. All of these are potential sources of group health insurance. Finding a cost-effective individual health policy can be tricky but it's not rocket science. Talk to other people around you who are in the same circumstances. Do your homework and you'll find the health insurance policy that's right for you.

BUYING TIPS FOR INDIVIDUALS

There's strength in numbers, particularly when you're buying health insurance. As part of a group plan, you can enjoy a significant discount on premiums as well as comprehensive policies.

But if you leave that job — or start another one that doesn't offer health insurance — you may be surprised at just how expensive the same coverage is when you buy individual health insurance. ("Individual" means the insurance is not connected to a business or to the self-employed. You can purchase an "individual" policy that covers your whole family.)

In addition, there is no guarantee that an insurer will take you on. That's because unlike group plans, if you have health problems, individual plans are medically underwritten and the insurer may reject your application or attach exclusions to your policy. However, some states don't allow this practice and require that any insurer selling individual health plans must offer you a policy, no matter what medical problems you have.

However, your premiums are still likely to be substantially higher. People enrolled in individual plans pay premiums that are more in line with their expected health costs, so the premiums will be higher for those who are older or less healthy. To find out what your rights are, contact your state insurance department. You can find the contact information by selecting the state in which you live from the pull-down menu at the top of this page.

Crunching the Numbers

Pricing is probably the most bewildering aspect of individual health policies, so it's worth your while to shop around. For instance, the premiums for similar products from different insurers can vary by as much as 50 percent for the same person. What's more, the rules and regulations about individual health insurance vary from state to state, making comparison-shopping a bear for the uncertain consumer.

If you're faced with finding individual insurance, don't let the confusion tempt you to go without. Even if you're healthy, you could fall off a ladder or have a serious car accident and be financially ruined. Plus, you'll lose your pre-existing-conditions coverage in most states if you go without insurance for more than 63 days.

Finding the right balance of coverage and cost can be challenging, but it's a necessity. So take your search one step at a time. The first step is to evaluate your needs and understand your health insurance options. For some, that may mean buying COBRA coverage from their former employer.

Consider COBRA

When you leave a job, you don't necessarily need to leave your health insurance behind. Thanks to COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985), certain employers that provide a group health insurance plan must offer most employees who would lose their coverage the option to continue it for up to 18 months. The catch is that the employee will have to pay the full premium, up to 102 percent of the employer's cost. The extra 2 percent is an administrative fee.

COBRA is best seen as a safety net. You have 60 days to make a decision about whether to enroll in COBRA, and when you do, the coverage is retroactive. As soon as you know you will be losing your group coverage, start shopping for individual coverage. Go out and talk to independent agents who represent different companies. If you find a policy you like, apply for it. You should be able to find out if you are accepted within those 60 days. If you find a less expensive policy that meets your needs, buy it. If not, you can still elect COBRA.

COBRA covers all members of your family, so if you find an individual policy that works for you but won't cover your wife's pre-existing illness, go with COBRA only for her. To learn more, read Insure.com's "Know your COBRA rights".

A pre-existing condition will make finding individual health coverage more complicated — and more pricey — but that shouldn't knock you out of the race completely. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) restricts the ability of insurers to exclude pre-existing medical conditions from coverage — but only if you were previously part of a group plan and meet certain other strict requirements. Read Insure.com's "The HIPAA law: Your rights to health insurance portability".

Navigating the Individual Health Marketplace

COBRA aside, the individual health insurance market is a wild frontier. The landscape varies from state to state and the rules are constantly evolving. That's why it's imperative to comparison shop. An independent agent well-versed in individual health policies can help you sort through your options and find the policy that's right for you and your family.

Among your choices, you'll find that the individual health market offers the same plans as the group market, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), point-of-service (POS) plans, and traditional fee-for-service arrangements. Your budget, physician preferences, and health requirements will all have a hand in deciding which type of plan is best for you.

What is a Health Insurance?

It's a fact of life — you need health insurance — and the time to get it is before you have an accident, suffer a serious illness, or discover you're pregnant. Insurance doesn't cover health care for medical problems or conditions that start before the moment you have your policy. Finding adequate coverage may seem overwhelming, but knowing the basics can help make your search less stressful.

INSURANCES GUIDE

All to often we speak with insurance consumers that don't fully understand the industry or the products that are available. Consumers understand deductibles and generally co insurance percentages if they have any and the rest is somewhat of a mystery.

We fully understand that insurance can be a confusing and frustrating experience and that's exactly why we've put together this website. To educate and give you non biased information on Life, Auto, and Homeowners Insurance. Hopefully, we will shed some light on some questions you may have and give you information you didn't even know you needed.