Go Insurance Rates

Pros and Cons of Life Settlements

Posted in Life Insurance

September 2nd, 2010
No Comments

Life settlements have grown in popularity in recent years. This practice of purchasing life insurance policies from senior citizen policyholders who are in need of money has resulted in a cash crop for investors. However, some critics argue that because the practice is virtually unregulated and some conflicts of interest are also at play, it could become problematic for the policyholders.

With the life insurance industry already under scrutiny, it’s possible more issues with life settlements will be brought to light. As they stand now, both policyholders and investors still argue in favor of their benefits, so let’s take a closer look at the pros and cons of life settlements.

Why Investors and Policyholders Love Life Settlements

There are a number of reasons why investors and policyholders love life settlements. Here are a couple of pros for the investors:

• Guaranteed return: One major benefit of purchasing a life settlement from a policyholder is the guaranteed return. There’s no doubt that at some point, the policyholder will die. Since the investor has purchased the life insurance policy, when the holder dies, the investor will redeem the cash.
• Double the profit: The nature of a life settlement allows the investor to purchase a $1 million policy for $500,000, for instance. This means, when the policyholder dies, the investor cashes in on double the return.

One major benefit for the policyholder is the money. For a person in need of some quick cash, a life settlement could be a quick option that could help pay down bills and take care of other immediate needs.

Problems Associated with Life Settlements

With definite benefits for each party, it may be difficult to understand why there could be any problems with life settlements. However, several have been named:

• Conflict of interest: One major issue that many critics have with life settlements is the conflict of interest. One person is looking for money while the other is looking for a person to die. With that said, the investor could undergo shady tactics to convince the policyholder to sell–or even go as far as make sure the policyholder dies in a specific time frame.
• High fees: According to the Government Accountability Office, another issue with life settlements is the possibility of excessive fees charged to the policyholder. Since there are differing fees to consider based a policyholder’s state of residence and other factors, they could be charged more than they originally anticipated.
• Unregulated: To date, 12 states and the District of Columbia are lacking insurance laws specifically geared toward regulating life settlements. As for the other 38 states, regulation varies, similar to auto insurance policies. The authority to examine brokers who negotiate settlements is often not followed through on and many policyholders could go unprotected in their transactions.
• Wall Street has caught on: Another issue with life settlements is that Wall Street caught on in recent months and has looked to profit as well. Due to the major Wall Street crash just two years ago, no one is eager to see it dive into any more risky investments.

The good news is that many federal agencies have decided to take a closer look at life settlements to make sure that no one is mistreated during the process.

Life Settlements Task Force Created

One major adjustment made in the world of life settlements is that the Securities and Exchange Commission (SEC) has created a Life Settlements Task Force. The task force is responsible for analyzing the life settlement market and regulating any gaps that could expose investors or policyholders to risks.

A big risk that the task force is aiming to regulate is the stranger-originated life insurance (STOLI) transaction where a stranger approaches a senior citizen and encourages them to purchase a policy only to have them transfer it later. This action would violate state laws and is being closely monitored.

What If I Want to Sell?

If you have decided that you would like to sell your life insurance policy, there are a number of existing companies ready to help you get started. However, before you do, make sure you learn all you can about how you can benefit from life settlements, as well as how they could hurt you.

The more you learn about this risky transaction, the better your chances will be of making the right decision for you and your family.

Hurricane Earl Threatens East Coast: Do You Have Home Insurance?

Posted in Home Insurance , Hurricane Insurance

September 1st, 2010
No Comments

Home insurance should be the order of the day for homeowners on the East Coast bracing for Hurricane Earl’s arrival. While the storm has been reduced to Category 3, it is bringing dangerous rip currents and large swells that could severely damage coastal homes in North Carolina, Virginia and more states up the coast.

Earl is On His Way

For homeowners living on Okracoke Island on North Carolina’s Outer Banks, mandatory evacuations have already been ordered. The same goes for all visitors to Hatteras Island. The storm, which lost some of its punch early on Wednesday, is still a major threat with winds near 125 mph. It is expected to hit North Carolina’s coast by Friday morning.

Some other cities that are on course with the storm include Virginia’s Parramore Island and Virginia Beach with other states along the coast like Massachusetts possibly being affected as well.

Are You Insured?

With Hurricane Earl on course to hit within a day or two, it’s important to make sure that you have secured quality home insurance as well as flood insurance to know you’re covered for wind damage, as well as any subsequent flooding that could occur.

In addition to securing the right policies, it’s good to take steps to protect your home from wind damage. Some include:

• Securing your roof: By nailing your sheathing down, you increase your chances of the roof still being there when you return to your home.
• Guarding your windows: To guard your windows, you could fit them and your glass doors with impact-resistant laminated glass, or purchase impact-resistant shutters to reduce damage from debris.
• Securing your doors: You could fit your doors with at least three hinges and install a deadbolt lock with a bolt throw of at least one inch to keep it from flying open.

Protecting your home both physically and financially from hurricanes are important steps in securing your investment and safe haven. As Hurricane Earl draws closer, review your policies, call your insurance agent for questions and take time to secure your home as quickly as possible before evacuating.

Did Hurricane Katrina Cost More Than the BP Oil Spill?

Posted in Home Insurance

August 31st, 2010
No Comments

Recently, lawmakers in the House of Representatives proposed to pull back $400 million from the Louisiana Road Home Program–a program created largely to help rebuild areas affected by Hurricane Katrina–because they felt the money wasn’t being used and could better be applied to a $26 billion House spending bill.

While the Senate was able to stop the proposal and keep the money with the program, the idea that the money could be taken away made some question the commitment to rebuilding Katrina damage. This is because some of the funds would have gone instead to cleaning up waters affected by the BP oil spill, which some think may have been a more affordable cleanup.

What is the Louisiana Road Program?

The Louisiana Road Home program was created to provide compensation to homeowners in Louisiana who were affected by Hurricane Katrina or Rita and needed help repairing the damage to their homes. It is currently the largest single housing recovery program in United States’ history.

Homeowners are eligible to receive up to $150,000 to compensate for their losses and help get them back into homes if they had little-to-no home insurance. The program also offers assistance to those who are rebuilding and relocating.

How Much is Required to Help the Katrina Victims?

The victims of Hurricane Katrina were forced to endure a lot, but those who were not holding enough homeowners insurance suffered even more. Unable to pay for the damages to their homes, many were saved by the Road Home program, which allowed them to make home insurance claims to the program itself.

As of Aug. 2009, the program had provided almost $8 billion to an estimated 125,000 homeowners. However, thousands more still need help. In fact, nearly 20,000 families were still living in temporary trailers and apartments and in need of a permanent solution in June 2009.

With the average homeowner receiving around $60,000 for assistance, which in actuality isn’t enough, the $400 million that was recently returned to the program would only help roughly 6,600 residents. In other words, to help the 20,000 families, even with minimal assistance, there would need to be over $1 billion available to help.

Maybe this is the reason that the House thought it would be best to take back the unused funds held by the program and allot them to a more suitable cause.

Does the Oil Spill Cleanup Really Cost Less?

It’s ironic the BP spill just happened to affect the same area that Hurricane Katrina did–the Gulf of Mexico–giving the area something else to clean up. In the House’s argument to add more funds to the House spending bill, it found it appropriate to retrieve the funds from the Road Home program.

However, was there a greater reason to allocate the funds toward the spill?

A recent estimate of the cost to clean up the BP oil spill was around $4 billion, which is slightly higher than Hurricane Katrina would cost to rebuild. So how exactly would the $400 million have helped with the cleanup?

In actuality, $300 million would have been allocated to the cleanup while $100 million would have been dedicated to other aspects of the House spending bill, including financing the war in Afghanistan and replenishing FEMA’s disaster relief fund.

While some of the funds would have gone to other causes, according to the House, at least the funds would have been used for something.

To counter the argument, Louisiana said it planned to use that money to create a program to help homeowners who couldn’t complete rebuilding their homes despite earlier grants, including those who had Chinese drywall issues or those who had fallen victim to fraudulent contractors.

In other words, Louisiana had plans for it too, which is why the Senate agreed to return the funds and give the very costly rebuilding process in the area another shot.

Speaking of costliness, have we determined whether Katrina ended up costing more than the BP oil spill? Well, it looks as though the overall costs of the Katrina damage was more expensive ($8 billion as of Aug. 2009), though after so many homes have already been repaired and rebuilt, the remaining costs probably wouldn’t total as much as the $4 billion needed for the oil spill.

In any case, the debated on $400 million wouldn’t be enough to help either party fully. At least happy Louisiana residents now have a greater shot at seeing some funds head their way to repair their homes. In the meantime, the Gulf oil spill cleanup has progressed enough that Louisiana fishermen reported finding all clean seafood on their first day back to work.

U.S. Households Without Life Insurance Reaches 50-Year High

Posted in Life Insurance , Term Insurance

August 30th, 2010
No Comments

New data from industry-funded research firm Limra has revealed that nearly a third of U.S. households have no life insurance coverage. According to the firm, this is the highest percentage of households going without insurance in five decades.

Millions Are Uninsured

The report found that about 35 million (about 30 percent) U.S. households are without both their own life insurance policies and a policy covered under their employer-sponsored plans. This number is up from 24 million (or 22 percent of households) in 2004.

With only slightly over two-thirds of households having coverage, the percentage is a considerable drop from the over 80 percent of households that held coverage in 1960. It is, in fact, the lowest figure seen by the firm since the same year when the firm began keeping records.

Why So Many Go Without Coverage

Limra determined the high percentage of households without life insurance coverage has a lot to do with the financial pressures resting on the shoulders of the middle class. With the recession having the hardest impact on middle class workers, many who found themselves unemployed could no longer qualify for coverage from employers or simply could not afford coverage on their own.

Of those who responded to the survey, half said that they needed more life insurance but haven’t bought it due to financial difficulties that would be made worse with the extra expense. Are you in this position?

Acquire Affordable Life Insurance

If you find yourself in the position of needing life insurance but are unable to purchase it, it’s good to consider a term life insurance policy. It allows you to pay less because you’ll be covered for a shorter amount of time. This is one of the best low cost life insurance options available for those who need quick coverage at an affordable price.

However, it’s important you don’t go with the first company that’s offering a good deal because there may be an even better one right around the corner. Instead, before committing to anything, shop around for the best deal. This way, you increase your chances of protecting your family without depleting your finances.

Private Insurance Market Pulling Back from National Flood Insurance Program

Posted in Home Insurance , State Farm

August 27th, 2010
No Comments

A number of private insurance companies are reconsidering participation in the National Flood Insurance Program (NFIP) after a Congressional stall and massive losses. The future of the NFIP has been in question for some time as Congress looks at ways to provide flood insurance to individuals in need. However, after suffering through months of ups and downs in the insurance sector, some insurers think the best solution is to pull out.

NFIP Has Been on Shaky Ground for Some Time

The National Flood Insurance Program has been going through a series of changes for some time that has left it in a semi-fragile state. Lawmakers understood that changes needed to be made because standards were proven unsatisfactory, so when the program expired, Congress simply approved a short-term extension in hopes of getting it on the right track.

Unfortunately, that short-term extension resulted in several more that often left policyholders unable to make claims on their homes after a flood because the program had expired. Now, lawmakers have taken steps to improve the program with a flood insurance overhaul, but for some insurers, it’s already too late.

Insurers Looking for a Way Out

Due to the instability of the NFIP, private insurance companies are now reconsidering their participation. In addition, many insurers simply don’t have the money they need to pay out claims. FEMA, the programs overseer, is currently seeking a $19 billion taxpayer bailout to properly reimburse insurers, but this doesn’t help current shortfalls seen by insurers.

To save its budget, State Farm Mutual Insurance Company, the nation’s largest provider of flood insurance, pulled out of the NFIP in June. The company handled over 800,000 customers and left the NFIP in a position to find them all new policies. Now, another large company, Fidelity National Property and Casualty Insurance is considering other options if the government doesn’t find effective ways to reimburse claims.

With the program already in the red, it is possible that other large companies could follow suit. Hopefully the overhaul will create the funds to keep insurers around and customers covered if their homes are flooded.

Is Medical Tourism a Safe Alternative to U.S. Healthcare Costs?

Posted in Health Insurance

August 26th, 2010
No Comments

Healthcare is a huge expense Americans struggle to deal with daily, especially for those without health insurance. In fact, the United States offers some of the most expensive healthcare in the world. Yet, as of 2007, over 45 million Americans lacked health insurance and even more were under-insured. That’s why more and more people are turning to medical tourism as a way to save money on the expenses associated with various medical needs.

In fact, medical tourism is a rapidly growing industry and it’s no wonder. Forbes.com reports those who opt for overseas care can enjoy almost no waiting time and a cost savings as high as 90 percent, depending on the procedure and the country where it’s performed.

However, this practice raises the issue of whether the saying, “Get what you pay for”, rings true. Is medical tourism really a safe alternative to the United States surgery or does cheap healthcare lead to disastrous results?

What is Medical Tourism?

Medical tourism is the practice of traveling outside the United States to have medical procedures performed in other countries for less money. The Wall Street Journal reports that this year, it’s estimated six million Americans will travel to other countries in search of affordable medical care, a huge jump from the 750,000 medical tourists of 2007.

Cost of Healthcare Overseas Versus the U.S.

As an example of how much more expensive surgery in the United States is compared with other countries, a breakdown of the costs associated with a heart bypass surgery is detailed below. The information comes from Healthbase, a U.S.-based medical tourism facilitator:

Heart Bypass International Surgery Cost

• United States: $130,000
• Thailand: $11,000
• Singapore: $18,500
• India: $10,000

The trend continues with other common surgeries as well. As explained by Reuters, a 2007 Commonwealth Fund report found “health spending was $7,290 per person in the United States…Australians spent $3,357, Canadians $3,895, Germans $3,588, the Netherlands $3,837 and Britons spent $2,992 per capita on health in 2007. New Zealand spent the least at $2,454.”

These results show Americans are spending about double on healthcare than people other countries. Plus, they are not just traveling abroad to have medically-necessary procedures performed, either. Discount cosmetic surgery is quite popular as well, sending thousands overseas for breast implants, rhinoplasties and more every year.

Risks of Overseas Surgery

Even though medical tourism can allow you to receive life-saving medical procedures at a fraction of the cost, there are numerous risks you assume by leaving the country:

Liability: Patients may not be covered by their insurance company, which can make seeking damages in the case of medical malpractice very difficult. Most hospitals have malpractice insurance, but laws can vary and it’s much easier to file a claim within your own country.

Disease: There are a host of health risks in countries like Thailand, Malaysia and Costa Rica that are rare or non-existent in the United States. Obtaining healthcare overseas could make you susceptible to infectious diseases that will delay or prevent recovery from your procedure.

Quality: Every country has qualified medical professionals and hospitals that maintain a high level of cleanliness and professionalism. Even so, there are just as many, if not more, fraudulent and under-trained practices. Choosing a doctor from across the world or through a third party makes it harder to judge whether you’ll truly receive the best care.

Medical tourism is essentially a trade-off–you must either choose savings or safety. Your decision to travel for medical purposes should be heavily determined by the immediacy of your need and your true ability to pay for the surgical operation. Medical tourism may benefit those facing a life-threatening complication who could otherwise not afford to treat it. On the other hand, an elective but equally risky operation is best performed at home, if at all.

Flu Shots to be Distributed Earlier This Year

Posted in Health Insurance

August 26th, 2010
No Comments

If you’re looking to avoid the flu bug this year, you’ll be happy to know that flu shots will likely be distributed early this year. This is also great news for those without health insurance who need time to make arrangements for free shots.

Health Officials Want More Americans to Get Flu Shots

In an effort to get more Americans to acquire their flu shots this year, the Centers for Disease Control and Prevention (CDC) is making more available this year and at an earlier time. After thousands died last year as a result of the seasonal flu bug and the H1N1 swine-flu pandemic, the federal health organization says it does not want to take any chances this year.

Who Should Get a Flu Shot?

According to the CDC, the flu vaccine is recommended for all Americans ages six months and older. Also, because strains change from year to year, everyone who received the flu or H1N1 shots last year should get shots this year because they will contain vaccinations against three strains of flu, including H1N1.

However, those who have egg allergies or other specific conditions should seek more information before getting one.

When Will They Be Available?

The CDC plans to have manufacturers produce between 160 million and 165 million doses this year to meet anticipated demand. Because the flu season starts in October and health officials want to get the shots earlier, many distributors are making them as early as Sept. 1.

The government plans to spend nearly $2 billion to help researchers and biotechnology companies not only develop new drugs, but also come up with new vaccines and build equipment that would shorten the six- to nine-month frame currently needed to create a flu vaccine. But until that happens, the CDC asks that everyone who needs a shot go out and theirs as early as soon as they can.

Visit the CDC flu site for more information about availability.

Today’s News: More Medicaid Patients Using ER, NFIP in the Red and Teen Drivers Vulnerable to Deadly Crashes

Posted in Auto Insurance , Health Insurance , Home Insurance , Medicaid

August 25th, 2010
No Comments

A new report has found that more Medicaid patients are using the ER, the National Flood Insurance Program has run into problems that have put it in the red and the NHTSA has revealed that teen drivers are more vulnerable to deadly crashes.

More Medicaid Patients Using ER

Researchers from the University of California, San Francisco, say that an increasing number Americans, especially adults on Medicaid, are using the emergency room as their “safety net” for health care; the reason being that they must treat all patients regardless of health insurance coverage or ability to pay.

According to their report, five times the number of adults with Medicaid visited the emergency department than those with private insurance in 2007, as compared to only three and a half times the number in 1999. Researchers said many of these visits could have been handled by a primary care clinic, but the patients preferred the speed of the ER (Business Week).

National Flood Insurance Program in the Red

The National Flood Insurance Program (NFIP) is in the red, and “repeat offender,” flooded homes, seems to be the culprit for the massive payouts that have left the program struggling for money.

A new report from the Houston Chronicle found that between 1977 and 1995, the NFIP paid out $806,591 for repeated storm damage to one suburban Houston home that was valued at $114,480. In the report, it was revealed that roughly 1 percent of properties typically account for between 25 and 30 percent of the claims it pays and these “repetitive loss” homes have more than doubled in the past 15 years.

Currently, NFIP owes the Department of Treasury more than $18 billion and is unlikely to be able to pay it back (Houston Chronicle).

Teen Drivers Vulnerable to Deadly Crashes

A recent report from the National Highway Traffic Safety Administration (NHTSA) revealed that teen drivers are especially vulnerable to deadly crashes.

In the report, it was revealed that mile for mile, teenagers are involved in three times as many fatal crashes as other drivers. Even more, motor vehicle accidents account for more deaths than both suicide and homicide combined. It’s for this reason that the NHTSA encourages parents to not only teach safe driving but also purchase quality auto insurance for teen drivers (NHTSA).

How the Unemployment Extension Affects Health Insurance

Posted in COBRA Insurance , Health Insurance , Medicaid

August 24th, 2010
No Comments

President Barack Obama signed an unemployment benefits extension bill into law on July 22, 2010 that would stretch out benefits for nearly 2.5 million people who had exhausted their rights to unemployment checks. This bill set out to help workers who had been unemployed for six months or more. However, the bill’s passage did not go without heated debates between Democrats and Republicans in Congress.

In fact, in order to get the bill passed, Democrats had to make some sacrifices, including dropping a $25 a week bonus and eliminating an important COBRA subsidy. With the loss of this subsidy, those out of work are now in a tougher fix than before when it comes to acquiring health insurance.

How the COBRA Subsidy Worked

In March 2009, Congress approved what was then a nine-month subsidy to help laid-off workers pay for their COBRA benefits. The subsidy resulted in a 65 percent cut in costs for the unemployed individuals who chose to take advantage of the extension of employer health insurance.

This significant reduction was designed to help the unemployed pay for their insurance while receiving unemployment benefits. It had even been extended from its standard 18-week duration to 26 weeks. Unfortunately, the COBRA subsidy was dropped on June 1, 2010.

As a result, millions of unemployed workers found they would be forced to pay for their highly-expensive COBRA benefits on their own. Not to mention, they are now responsible for an additional 2 percent administrative fee, making it even more costly.

What Can Unemployed Workers Do for Insurance?

Now that the subsidy has been dropped, millions will have to figure out new ways to acquire affordable health insurance. Under the new health care reform law, some options will soon come available to both unemployed and employed workers.

• Health insurance exchanges: Health insurance exchanges were initiated by the federal government as a part of health care reform and will work as a way to offer low-cost options to individuals and families. Similar to the idea of group health care plan offered by employers, insurers will come together to offer insurance at cheaper rates. The exchanges are not required to open in each state until 2014. However, many are getting started as early as this year.
• High-risk pools: Health insurance high-risk pools are also state-sponsored options and are geared toward individuals who have preexisting conditions and have problems acquiring insurance otherwise. Unlike health insurance exchanges, each state had to create or expand an existing high-risk pool by July 1, 2010. Most states have already started accepting new patients for their pools.
• InsureKidsNow: If you’re trying to find insurance that caters to kids, you could visit InsureKidsNow.gov to learn more about the CHIP program and other options for acquiring affordable coverage for your children.

Also, in the near future, Medicaid will be adjusting its income requirements so that people with higher incomes will qualify.

Unfortunately, the unemployment extension had a negative effect on health insurance and workers’ ability to maintain affordable COBRA insurance. However, the compromise was one of many that we’re likely to see between parties as both try to appease voters for November midterm elections.

Poll Shows Healthcare Reform Confuses Americans

Posted in Health Insurance , Low Income Health Insurance

August 23rd, 2010
No Comments

A new poll released by Thomson Reuters revealed that not only do Americans have less confidence in their ability to pay for their healthcare, they are also confused about how healthcare reform can actually help them. According to the poll, Americans’ confidence in their ability to pay for and access healthcare has dropped 5 percent, partially due to this confusion.

Consumers Having Trouble Paying for Healthcare

In the poll, also known as the Thomson Reuters Consumer Healthcare Sentiment Index, 3,000 respondents were asked if they had problems paying for their healthcare or had to postpone care in the three months prior. It also asked if they expected to have problems in the coming three months.

Respondents answered all questions in a pessimistic fashion, showing that their confidence in the healthcare system and healthcare reform is eroding.

Healthcare Reform is Confusing

Another issue that respondents seemed to have with the state of our healthcare system is the fact that the reform is confusing to them. According to the poll, it seems that most people really don’t know what has been implemented and how it will affect their ability to secure quality health insurance or otherwise pay for healthcare.

Without knowing how reform has made a difference, they have not-so-great feelings about the system, and feel less confident than before reform passed.

Affordable Healthcare Options

The good news is that until reform becomes a bit clearer and more people are able to have access to affordable health insurance there are other options to take advantage of. If you have a low income, you might consider the following:

• State and Local Health Departments: Each state and many cities have their own resources for affordable healthcare. Learn what they are in your area.
• Insure Kids Now!: If you’re trying to insure your kids you might consider this site, which offers links to free and low-cost health insurance programs around the country.
• Eldercare Locator: Another option to consider is the Eldercare Locator. This directory is a public service of the U.S. Department of Aging and provides a nationwide directory for older persons in search of local, low-income health care support.

It may take some time to sort out all of the details of healthcare reform, but in the meantime, it’s good to know options are available to those in need.