Critical illness insurance

Critical illness insurance, otherwise known as critical illness cover or a dread disease policy, is an insurance product in which the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of an insurance policy.

The policy may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation.

The policy may require the policyholder to survive a minimum number of days (the survival period) from when the illness was first diagnosed. The survival period used varies from company to company, however, 14 days is the most typical survival period used. In the Australian market, survival periods are set between 8 – 14 days.

The contract terms contain specific rules that define when a diagnosis of a critical illness is considered valid. It may state that the diagnosis need be made by a physician who specializes in that illness or condition, or it may name specific tests, e.g. EKG changes of a myocardial infarction, that confirm the diagnosis.

In some markets, however, the definition of a claim for many of the diseases and conditions have become standardized, thus all insurers would use the same claims definition. The standardization of the claims definitions may serve many purposes including increased clarity of cover for policyholders and greater comparability of policies from different life offices. For example, in the UK the Association of British Insurers (ABI) has issued a Statement of Best Practice which includes a number of standard definitions for common critical illnesses.

There are alternative forms of critical illness insurance to the lump sum cash payment model. These critical illness insurance policies directly pay health providers for the treatment costs of critical and life-threatening illnesses covered by the policyholder’s insurance policy, including the fee of specialists and procedures at a select group of high-ranking hospitals up to a certain amount per episode of treatment as set out in the policy.


Do you need flood insurance?

Many Americans don’t need to wonder if they need flood insurance — it’s required as a condition of their home loan. But unlike car insurance, flood insurance isn’t required simply because you own property. In these cases, flood insurance raises the same question as other insurance policies do: When does the premium outweigh the actual risk? Even a $650 annual premium, the amount the National Flood Insurance Program (NFIP) cites as average, seems like a lot if you never use the coverage.

Flood damage isn’t covered under most homeowners’ policies, and some can responsibly do without benefits. Here’s what to do if you choose that route—and how to save if you want protection after all.

Can you do without it?

If flood insurance isn’t required as a condition of your mortgage, you’re not obligated to carry it. However, even a minimal amount of flooding can have disastrous financial consequences. According to the NFIP, one foot of water could cause $27,150 of damage to a 1,000-square-foot home, and the average claim is more than $38,000. You can use the program’s tool to generate a personalized estimate. Moderate-to-low-risk areas still receive one-third of federal disaster assistance for floods.

That said, if you live in a low-risk zone, you might want to weigh the cost of coverage against the likelihood of having to file a claim. If your area has never sustained serious damage, and you’re thinking of dropping your plan (or not getting one in the first place), you should still set aside money for repairs.

Consider having the amount you’d pay in premiums automatically deposited each month into a high-yield checking or money market account. This will get you better returns than simply saving your cash and with little risk. Some states, such as South Carolina, also allow customers to place their emergency funds in Catastrophe Savings Accounts that are exempt from state income tax. Federal taxes still apply, and disbursements would be taxed as normal if withdrawn for purposes other than flood repairs.

Unless you’re certain you could financially weather a major flood, do not take the decision about coverage lightly. Get estimates for potential damage and consult with a financial planner or representative from your bank to see if the costs are feasible.

Where to buy it

If you’ve decided the risk is too great and you’d like to purchase flood insurance, you have several alternatives. National or state-run programs, such as the NFIP, are the best bet for many homeowners. (A list of communities participating in the NFIP is available here.) If none are available in your area, however, some private insurers do offer flood insurance. In fact, their premiums may undercut the NFIP’s, so it’s smart to gather quotes before committing to a policy.

How to save

Once you’ve decided on a flood insurance carrier, there are ways to shave a bit off your premium. Some home improvements, such as raising the elevation of your house or installing flood vents, can lower your risk of flooding and also lower your monthly insurance payment. If you go this route, make sure the costs don’t eat into whatever you’ve set aside to meet your deductible. You can also choose to have a higher deductible or less coverage. Agreeing to pay more in the event of a claim will help you manage your premiums—just be sure you can afford to come through with the cash if needed.

The bottom line

Of course, no matter how well you plan for a flood, the costs may be more than you anticipate. If you aren’t already on solid financial footing, with some money set aside for emergencies, it may be better to get covered. Flood policies in moderate-to-low-risk areas could cost less than your monthly cell phone bill, and could save you a bundle if your home sustains damage.


How much home insurance do you need?

Here is a simple way to calculate the replacement cost of your home:
Recommended Coverage Amount = (square footage of your home) x (cost of construction) where cost of construction depends on how many upgrades you’ve made on your home

$86/sq ft for a home with minimal upgrades
$112/sq ft for a home with some upgrades
$146/sq ft for a home with substantial upgrades

Here’s an example: Bill owns a 2,800 square foot home. He recently replaced the siding on his home and has granite counter tops in kitchen, but he has carpet through most of the home. We would consider Bill’s home as one with “some upgrades”. Therefore, the recommended amount of home coverage is at least: 2,800 x $112 = $313,600.

Now try calculating coverage for yourself and call David Santoro for a quote! 724-312-7601


Should I Choose Term Life or Whole Life Insurance?

Once you know you need life insurance, it is important to buy the right type of life insurance. You have two basic options to choose from term life insurance or whole life insurance. These options have several different features and they serve different purposes. It is important to fully understand each type of insurance before you make your decision.
What Is Term Life Insurance?
Term life insurance is purchased for a specific period of time usually from one to twenty years.
At the end of the term you receive no return on the money that you paid for the insurance, but if you die before the term is over, then your loved ones will receive the full amount of the policy. The rates for term insurance stay locked at the same amount and are much lower than a whole life policy. This is the most affordable life insurance option.
How Long Should the Term Be for Life Insurance?
Generally, the younger you are, the lower the amount of your life insurance premium, especially because you are less likely to be diagnosed with serious medical conditions. You can save money by signing up for a longer term because when you renew your life insurance, it is more likely to be more expensive since you are older and you may not be as healthy or you may be overweight. When you buy term life insurance, generally you are planning on reaching a point where you will no longer need life insurance.
This type of insurance should be used in conjunction with a good savings and investing program. You should also work on becoming debt free. Once you have a significant amount in the bank your family would no longer need the life insurance policy to continue with the same standard of living as they had before you passed away.
Most people have term insurance until they hit retirement age and all of their debt has been paid off.
What Is Whole Life Insurance?
Whole life insurance lasts for your entire life as long as you continue to make payments on the policy. Additionally, you have the option of cashing out the policy and the money that you have paid into the policy at any time during your lifetime. This will cancel the insurance policy but may provide you financial help when you need it. The cost of whole life insurance is much higher because of this, and the rates of return on whole life insurance are usually much lower than normal investments. Many life insurance sales people focus on the investment portion of the whole life insurance policies. However, the investments do not have a very good return when compared to the stock market or mutual funds. You may be able to earn more by investing the money yourself and save money by purchasing a term life insurance policy.
Although whole life insurance does offer the benefit of being able to cash out the policy most people would make more money by purchasing the term life policy and investing the difference on their own. If you already have a whole life insurance policy you may opt to keep it if you have had a serious medical condition that would make it difficult to find term life insurance.
Otherwise, you may want to switch your whole life to term. You should keep your whole life insurance policy in place until you have already purchased and been approved for a term life insurance policy.
How Much Life Insurance Should I Buy?
When you purchase life insurance you are usually safe purchasing about ten times your annual income, some experts say eight percent will work as well. You should have enough to cover your debts and still have a sizable amount left over for your loved ones to invest and then draw off the interest to live on. When purchasing insurance be sure that you go with a reputable company and that you shop around for the best rate. There is no excuse for having for not having life insurance. Take the steps you need to get coverage today.


CMS gives Medicare Advantage plans a raise

By Virgil Dickson | April 2, 2018
The CMS finalized a rule Monday giving Medicare Advantage plans a 3.4% pay hike in 2019. That’s well above the 1.84% bump the agency initially proposed and higher that the 2.95% increase for 2018.

The CMS is also moving forward with plans to increase the use of encounter data to determine risk scores for plans. As a result of the finalized rule, 75% of Medicare Advantage risk scores will be based on traditional fee-for-service data, and 25% based on encounter data. That differs from 2018, when the agency used a risk score blend of 85% fee-for-service data and 15% encounter data.

Stakeholders such as the American Hospital Association have pushed back at using encounter data after a January 2017 Government Accountability Office report found such information often isn’t accurate.

“Since the quality of the encounter data has improved, CMS believes it is appropriate to move forward with the proposed increased percentage of encounter data in the blend,” the agency said in a release Monday.

The CMS also finalized a policy to prevent Medicare beneficiaries who are deemed at risk for opioid misuse or abuse from obtaining prescription drugs from multiple doctors or pharmacies. Instead, they’ll be locked into one pharmacy or prescriber for Medicare Part D benefits.

This lock-in will limit an at-risk beneficiary’s access to coverage for frequently abused drugs to those that are prescribed by a specified pharmacy or provider.

Medicare Advantage enrollment is projected to grow by 9% to 20.4 million in 2018. The CMS estimated that more than one-third of all Medicare enrollees, or 34%, will be in a Medicare Advantage plan in 2018.