Insurance (Car, Health, and Life)

Car, Health, and Life insurance are primary foundations for an individual’s insurance plan. Life is unpredictable and oftentimes, insurance is needed to pay for the shocking amount of car repairs, medical payments, or even natural disasters. This blog covers the types of plans you can choose from and what purposes they are used for.

Cars: It is illegal to drive without Auto Insurance because it protects you from injuries, theft, and collisions.

Plan Types:

• Liability: Pays for the expenses of other people after an accident.

• Collision: Pays for the expenses of your car after an accident.

• Comprehensive: Pays for the expenses of your car after theft or a natural disaster.

• Personal Injury Protection: Pays for medical bills after an accident (Medical Payment Coverage is similar, however, PIP covers more expenses such as wages you have lost).

• Uninsured Coverage: Pays for the expenses of your car and medical bills after an accident with an uninsured motorist.

Additional Coverages:

• Gap Insurance can pay for the gap between what insurance pays for your car after it is totaled and what you still owe after a loan or lease.

• Additional Roadside Assistance can tow your car, jump-start, replace a tire, or fill up gas if you need it.

• Non-owner Car Insurance can insure you if you do not have a car and may be required if you need to reinstate a driver’s license.

Health: Health insurance is a contract between you and a health insurer who will pay a portion of your medical costs in exchange for a monthly payment (premium). Payment plans range from Bronze (you pay about 40%), Silver (30%), Gold(20%), and Platinum (10%).

Plan Types:

• Preferred Provider Association: This plan incentivizes you to use their preferred providers. You are not charged for using other providers. (An Exclusive Provider Organization is the same except it charges you more for using other providers).

• Health Maintenance Organization: This plan usually only covers providers who work or contact with the HMO. It provides integrated care and you can only use other providers in an emergency. You may have to live or work in its service area.

• Point of Service: This plan incentivizes you for using the same provider in your plan. This provider can offer you referrals to specialists if needed.

When purchasing health insurance, cost is one of the most important factors. When you get care, you may have to pay for deductibles and costs that are not covered by your insurance. Depending on where you live, what medical history you have, and whether you have a preferred provider, one plan type may be better than another.

Life: Life Insurance can be formatted as Term (Temporary) Insurance and Whole Life (Permanent) Insurance. In general, Whole Life Insurance is lifelong long protection that is more desirable, however, its premium payments are significantly higher (about 5-15 times more) than Term Insurance with the same death benefit.

Plan Types:

Term Insurance is from 1-30 years and will pay a death benefit if the policy is not expired.

• Level Term is the most popular type of Term Insurance and it proceeds with the same death benefit during the entire life of the policy.

• Decreasing Term Insurance is less popular and it proceeds with a death benefit that decreases in annual increments until the end of the policy plan.

Whole Life Insurance will pay a death benefit at any age of death. Traditional Whole Life, Universal life, and Variable Universal Life are examples of Whole Life (Permanent) Insurance.

• Traditional Whole Life proceeds with the same death benefit and premium during the entire life of the policy. Instead of the premium increasing over time, they charge a constant premium that is too high and overcharged in the beginning and slowly becomes easier to pay later based on their estimations. Universal Life and Variable Universal Life are variations of this plan.

Additional Information:

If the overcharged amount of premiums reaches a certain threshold, you are able to terminate the policy and receive the premiums as a cash value. However, you can still continue the policy and plan for future compensation.