Health Insurance Frequently Asked Questions

What are the principal types of medical expense insurance coverage?
Medical expense insurance is broadly classified into two principal types of coverage: basic plans and major medical plans. Basic plans generally consist of either hospital expense coverage, surgical expense coverage, or both. Basic hospital and surgical expense plans generally provide coverage on a first-dollar basis (i.e., no deductible) and provide 100 percent reimbursement of covered expenses, up to a relatively low maximum. Major medical plans, in contrast, apply a deductible to initial expenses, generally ranging from $100 to $500 per calendar year. After the deductible is satisfied, major medical plans typically reimburse 80 percent of eligible expenses up to a relatively high maximum, e.g., $500,000 or $1,000,000. Thus, in comparison with basic plans, major medical plans provide much broader coverage, with higher limits, but these plans require the insured to share in the cost of medical care through deductibles and coinsurance.

What are some "out-of-pocket" costs I may still incur?
An insured's "out-of-pocket" costs under major medical expense plans include the deductible, cost-sharing amounts arising from the operation of the coinsurance clause, and medical expenditures that are deemed by the plan to be in excess of "reasonable and customary" charges.

What types of expenditures are commonly excluded?
Although providing very broad coverage, major medical plans typically contain a number of exclusions. Common exclusions include medical expenditures arising from: (1) convalescent or custodial care; (2) physical examinations, unless required for the treatment of an injury or illness (it should be noted that some plans now cover this expenditure); (3) cosmetic surgery unless required to correct a condition resulting from an injury or a birth defect; (4) occupational injuries and illnesses that are otherwise covered under a Workers' Compensation law; and (5) routine dental and vision care (care required for treatment of an injury and dental and eye surgery are frequently covered, however).

What is a copayment?
Under a copayment or copay provision, the insured usually is required to pay a set or fixed dollar amount (e.g., $3, $5, or $10) each time a particular medical service is used. Copay provisions are frequently found in medical plans where a nominal copayment is applied to each office visit and to each prescription that is filled.

Auto Insurance Frequently Asked Questions

What is auto insurance?
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage. Property coverage pays for damage to or theft of your car, while liability coverage pays for your legal responsibility to others for bodily injury or property damage. Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses. Most auto policies are for six months to a year.

Can I drive legally without insurance?
NO! Almost every state requires you to have auto liability insurance. All states also have financial responsibility laws. Insurance exists to protect your assets. Trying to see how little you can get by with can be very shortsighted and dangerous. If you've financed your car, your lender may require comprehensive and collision insurance as part of the loan agreement.

What determines the price of my policy?
There are many factors that influence the price you pay for auto insurance. Your premium may be higher or lower, depending on the following:

• Your driving record.
  The better your record, the lower your premium. If you've had accidents or serious traffic violations, you will pay more than if you've had a clean driving record. You may also pay more if you haven't been insured for a number of years.
• Your age.
  In general, mature drivers have fewer accidents than less experienced drivers, particularly teenagers. So insurers generally charge more if teenagers or young people below age 25 drive your car.
• The car you drive.
  Some cars cost more to insure than others. Variables include the likelihood of theft, the cost of the car, the cost of repairs, and the overall safety record of the car.
• The amount of coverage.
  Of course, like anything else, the more coverage you have, the more you pay. However, you may qualify for discounts.

Homeowners Insurance Frequently Asked Questions

What is homeowners insurance, and who should buy it?
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). Anyone who owns or leases property should have this type of insurance.

Where and when is my personal property covered?
Coverage C, the “named perils” coverage, applies to all your personal property (except property specifically excluded) anywhere in the world. For example, suppose that while traveling, you purchased a dresser and you wanted to ship it home. Your homeowners policy would possibly provide coverage while the dresser is in transit - even though the dresser has never been in your home before.

What should I consider when buying homeowners insurance?
First and foremost, buy the amount and type of insurance you need. Remember: if your policy limit is less than 80% of the replacement cost of your home, you will face a "coinsurance penalty," which means you'll have out-of-pocket expenses to cover costs beyond your policy's deductible. Also, figure out how much personal property insurance and personal liability coverage you need. Personal property, like a home, should be insured for its replacement value. Personal liability is a bit more subjective, but limits should not be less than those on other liability insurance such as auto. Seek advice from a financial or legal professional if in doubt. Finally, think about the extras you could add to your policy.

What can I do to lower the cost of my homeowners insurance?
Contact General Insurance Services! Another way to cut costs is to look for discounts that apply to you. For example, many insurers will offer a discount when you buy both your automobile and homeowners insurance from them. Some insurers offer discounts if you have deadbolt exterior locks on all your doors, or if your home has a security system. Ask your agent or company about discounts.

Life Insurance Frequently Asked Questions

How much life insurance should you own?
It is often suggested an amount equal to 6 to 8 times your annual earnings. However, there are other things to consider when determining how much life insurance you need. Important factors include: income sources and amounts other than salary/earnings; whether or not you’re married and, if so, your spouse's earning capacity; the number of people who are financially dependent on you; the amount of death benefits payable from Social Security and from an employer-sponsored life insurance plan, whether any special life insurance needs exist. The best thing is to speak with an insurance adviser for a precise calculation of how much life insurance you need.

What about buying life insurance for a spouse or children?
Generally, that should not be done in lieu of buying appropriate amounts of life insurance on the family income provider(s). It is extremely important that you protect the earning capacity of the primary breadwinner, if possible, with the right amount of life insurance before considering life insurance on children or spouse. In a dual-income household, it is important to protect the earning capacity of both spouses. Life insurance for a non-wage earning spouse is often recommended for help in paying for household services lost if that spouse dies.

Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage loan?
Yes. Lenders don’t usually require that you buy a new mortgage protection term insurance policy. An existing policy, either term or cash-value life insurance, can be used for many purposes, including paying off an outstanding mortgage loan balance in the event of your death.

Other Frequently Asked Questions

What do I give up by not using an agent to buy insurance?
You can buy many life insurance and property-casualty insurance products without help from an agent. Typically potential policyholders will be contacted by mail, or they can call a toll-free number to apply for a product. The advantage of this type of distribution system is that expenses are usually much lower because there are no agent commissions to be paid. These savings can be passed onto the consumer through lower premiums. The main disadvantage is that the policyholder does not receive as much, or sometimes any, personal service either when buying a product or filing a claim.

Should I care which type of insurer I buy insurance from?
The company that offers you the product and service you want, the quality you desire, and the lowest cost should be the company you buy from regardless of its organizational form. Economists have long tried to identify which organizational form provides the insurance product at the lowest cost - and answers are mixed. Therefore, you might consider making your decision on other factors - such as the financial quality of a firm.