As 2011 begins, many are facing new opportunities… and new challenges.  One of those challenges may well be significant increases in the cost of medical insurance as new coverage contracts begin.  In order to keep premium increases to a minimum, many employers have opted for substantial increases in deductibles to be paid by employees or have made changes such as removing annual caps on employee’s co-insurance payments.

While AGLA does not carry Major Medical policies, we do offer solutions that can lessen the impact of such changes.

One option for the short term event is the Emergency Care (Accident) Policy.  The policyholder will receive cash payments to help defray the deductibles incurred from Emergency Room visits as well as the associated charges for items such ambulance fees, stitches, x-rays and other diagnostic services, follow up doctor visits along with a long list of others expenses which might be incurred.

Depending on the level of coverage purchased, AGLA will pay up to $360 for the Emergency treatment expense, up to $1,600 toward emergency surgery resulting from injury and as much as $10,000 toward the cost of serious compound fractures.  In addition, this policy provides for as much as $120,000 coverage for accidental death of a covered individual.

Protect your family from the potentially devastating effects of an unexpected accident.  Contact me for further information.

We just received word yesterday of a local case where that slogan has just been proven true.  One of our customers in Tampa purchased a $1 million term policy two years ago.

She was diagnosed this April with brain cancer and filed a claim using the Living Benefit option which is a part of all of our Quality of Life policies, including term policies.  She is requesting the advance of the entire $1 million and AGLA has just made her a settlement offer of over $919,000.  This is cash which she and her family can use right now for the expenses of her treatment as well as providing for their other needs during this most difficult time.

I am sure that, like most customers, she had no idea when she took this policy out two years ago she would be needing it so soon.

However, I am also sure that she and her family are grateful that this resource is there for them right now!

We all have no way of knowing what unexpected challenges lie ahead for us.  Let us help you make sure that needed resources will be there for you and your family when the time comes!

Do “Empty Nesters” need life insurance?

Comparing deferred and immediate annuities
There are two main types of annuities—deferred and immediate—and two main types of life insurance—term and whole life.

Here is another good article from the Insurance Information Institute outlining these considerations:

How should I choose what type of life insurance to buy?

You should consider term life insurance if:

• You need life insurance for a specific period of time. Term life insurance enables you to match the length of the term policy to the length of the need. For example, if you have young children and want to ensure that there will be funds to pay for their college education, you might buy 20-year term life insurance. Or if you want the insurance to repay a debt that will be paid off in a specified time period, buy a term policy for that period.
• You need a large amount of life insurance, but have a limited budget. In general, this type of insurance pays only if you die during the term of the policy, so the rate per thousand of death benefit is lower than for permanent forms of life insurance. If you are still alive at the end of the term, coverage stops unless the policy is renewed. Unlike permanent insurance, you will not build equity in the form of cash savings.

If you think your financial needs may change, you may also want to look into “convertible” term policies. These allow you to convert to permanent insurance without a medical examination in exchange for higher premiums.

Keep in mind that premiums are lowest when you are young and increase upon renewal as you age. Some term insurance policies can be renewed when the policy ends, but the premium will generally increase. Some policies require a medical examination at renewal to qualify for the lowest rates.

You should consider permanent life insurance if:

• You need life insurance for as long as you live. A permanent policy pays a death benefit whether you die tomorrow or live to be 100.
• You want to accumulate a savings element that will grow on a tax-deferred basis and could be a source of borrowed funds for a variety of purposes. The savings element can be used to pay premiums to keep the life insurance in force if you can’t pay them otherwise, or it can be used for any other purpose you choose. You can borrow these funds even if your credit is shaky. The death benefit is collateral for the loan, and if you die before it’s repaid, the insurance company collects what is due the company before determining what’s goes to your beneficiary.

Keep in mind that premiums for permanent policies are generally higher than for term insurance. However, the premium in a permanent policy remains the same no matter how old you are, while term can go up substantially every time you renew it.

There are a number of different types of permanent insurance policies, such as whole (ordinary) life, universal life, variable life, and variable/universal life.

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As your American General Life & Accident agent, I can help you sort through all these various considerations and come up with a plan best suited to your family’s needs.  Contact me for further information at 727-386-6350.

Here is another great article from the Insurance Information Institute explaining the need for and benefits of life insurance for key employees:

Who Is a Key Employee?

A key employee is someone whose knowledge and skills contribute significantly to your business income. Losing a key employee would most likely cause substantial negative financial consequences for your business. According to a survey of small businesses by the National Association of Insurance Commissioners, 71 percent of the firms surveyed said they were very dependent on one or two key people for their success. However, only 22 percent of respondents had key person life insurance in place.

What Is Key Employee Insurance?

Life or disability income insurance can compensate your business when certain key employees die or become disabled. These coverages cushion some of the adverse financial impact that results from losing a key employee’s participation.

How Much Life Insurance Is Advisable?

There is no set formula for putting a dollar value on the financial impact of a key employee’s death. Nevertheless, you need to come up with a figure as a guide to how much insurance coverage to buy. Some life insurance companies provide formulas for this which may or may not have a realistic relationship to the employee’s worth to your business.

In some cases, a look at the employee’s responsibilities can facilitate valuation. If, for example, the employee is responsible for a certain volume of sales, the loss is the profit derived from the person’s sales, less the profit that could be expected from a replacement.

Also to be included is the expected cost of replacing the employee, including employment agency fees and moving expenses and possibly a higher salary for the replacement.

Who Owns the Life Insurance Policy?

Usually, your organization owns the policy, pays the premium and is the beneficiary. Alternatively, your business and a key employee may agree to split the premium payments, cash surrender and death benefit value.

The employee must agree to the company’s purchase of this insurance. The insurer may also require a resolution from your board of directors stating the policy’s purpose.

What Kind of Life Insurance Should I Buy?

Businesses usually use term insurance when the only purpose is to compensate for losses caused by the key employee’s death. Policies that accumulate cash value are appropriate in some circumstances. Discuss which is better for your business with your life insurance agent.

What Is Key Employee Disability Income Insurance?

Key employee disability income insurance is less well known than key employee life insurance. Nevertheless, the risk of a key employee experiencing partial, total or permanent disability is actually much greater than the risk the person will die. Should a key employee suffer permanent total disability, the loss to your business will be just the same as if the person had died. Key employee disability income insurance protects the business from this loss exposure by paying you anywhere from 40 to 70 percent of the disabled employee’s earned income.

If the disabled person is a partner or sole proprietor, a business overhead expense disability policy provides some protection. This pays, up to the policy limit, office expenses including rent, utilities, salaries and depreciation that continue when a partner or sole proprietor is disabled.

If you are in a saving-money stage of life, a deferred annuity can:

• Help you meet your retirement income goals. Employer-sponsored plans such as a 401(k), 403(b) or Keogh are an important part of planning for retirement. However, contributions to these plans and to IRAs are limited, and they might not add up to enough for the retirement income you need, especially if you started saving for retirement late or had contributions interrupted—perhaps due to job changes and/or family responsibilities. Moreover, your social security and defined-benefit pension (if you have one) may provide less than you need to retire. Remember that the purchasing power of defined-benefit pension income is eroded by inflation.
• Help you diversify your investment portfolio. Investment experts routinely advise that, to get the best return for a given level of risk, you should diversify your investments among a number of asset classes. Fixed annuities, in particular, offer a unique asset class—an investment that is guaranteed not to decrease and that will actually increase at a specified interest rate (and, often, potentially more). The guarantees are supported by the claims-paying ability of the insurer.
• Help you manage your investment portfolio. Investment experts routinely advise that, whenever your investments in various asset classes get too far from the percentage allocations you prefer, you “rebalance” to the original formulation, by shifting funds from the classes that have grown faster to the ones that have grown more slowly. If you do this with mutual funds, you pay capital gains taxes; if you do it in a variable annuity, you don’t pay capital gains taxes. When you eventually withdraw money from the annuity (which could be many years after the rebalancing), you pay tax then at the ordinary income rate.

If you are in a need-income stage of life, an immediate annuity can:

• Help protect you against outliving your assets. Social security pays retirement income for as long as you live, as do defined-benefit pension plans. But the only other source of income available that continues indefinitely is an immediate annuity.
• Help protect your assets from creditors. Generally the most that creditors can access is the payments from an immediate annuity as they’re made, since the money you gave the insurance company now belongs to the company. Some state statutes and court decisions also protect some or all of the payments from those annuities.     from Why Should I Consider Purchasing Annuities?

American General just raised the guaranteed rates for our fixed annuities.  Feel free to contact me for further specific information on what we can offer.