Life and Health Insurers
The necessary coverage for unexpected medical risks that happen throughout an insured person's life.
What are Life and Health (L&H) Insurers?
Life and Health insurers provide the necessary coverage for unexpected medical risks throughout an insured person's life. In addition, the life and health departments within the insurance companies assist insured individuals with various benefits.
Yet there are distinguishable differences in benefits between the two insurers. Whether one or both insurance plans are needed to support your lifestyle, each contract offers a number of attractive benefits.
A few top-performing life insurance companies provide at least two to three different insurance types with an AM best rating of an A or higher. These companies include Metlife, Northwestern Mutual, New York Life, Prudential, and Lincoln Financial Group.
The top-ranked companies in health insurance excelled in medicare coverage, nationwide and global coverage, and health maintenance organizations. The top health insurers of the provided care include Aetna, Blue Cross Blue Shield, Cigna, Humana, and Kaiser Foundation.
Key takeaways
- Each insurance plan offers various insurance premiums
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Insurance premiums are adjusted to an individual’s status and credit history
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Insurance premiums can be paid off through installments or a lump sum
life and health insurers
It is important to note the difference between various insurance plan offers and the benefits proposed in each plan. Although insurance plans are similar in protecting an individual's health and financials, understanding the difference will help determine the best option for you, if not both.
1. Life Insurance
Life Insurance covers the death of the insured individual. If the insured individual passes away, the remaining death benefits are issued to a specified beneficiary, a responsible person designated to manage the benefits.
Financially, life insurance offers families of the insured individual long-term financial coverage. Moreover, in case of an unexpected event, life insurance can provide the necessary protection against the loss of income, such as taxes and mortgage payments.
In addition to long-term benefits, the insurer can manage life insurance retirement plans, commonly known as LIRP. Depending on the life insurance plan, insurers can provide the funds to contribute to the retirement plans and objectives of the insured.
Example scenario: Joe passes away unexpectedly. Under his life insurance policy, he designates his children as his beneficiaries, whom he trusts to hand over the remaining death benefits.
2. Health Insurance
Health Insurance covers medical expenses such as doctor and hospital, dental, and surgical expenses. One of the main reasons for providing health insurance is to allow easy access to medical care for insured individuals.
Whether the medical is scheduled in advance or a last-minute emergency, health insurance provides medical care and financial protection for the insured individual. Under a health policy, the insurer pays out events such as those planned and unexpected.
Any medical activities not covered under the health policy are then paid out-of-pocket by the insured but are typically notified before issuing payment.
Unlike life insurance, health insurance assists in a short-term plan that provides care at a fixed premium. Based on the chosen plan and premium requirements, insured individuals are covered for the allotted time of the plan.
There are three most commonly used health plans – it is imperative to understand which health plan suits you best and the short-term benefits each plan offers.
Example scenario: Sarah had an accident requiring her to get checked at the hospital. Although the emergency visit was quick, she was covered by her health insurance, allowing her easy access to medical care in any given situation.
life insurers Plans
Life Insurance provides two standard plans, analyzed by Aflac, that protect insured individuals for a limited number of years: term life and whole life.
1. Term Life
Term Life insurance plan protects policyholders for a fixed amount, typically between ten to thirty years.
a) Advantages are
- Adjustable to specific individual needs
- Less expensive than whole life insurance
b) Disadvantages are
- The policy covers a limited timeframe
- Does not amass cash overtime
There are also two types of term life insurance plans to consider:
- Level term life
- Decreasing term life.
Level-term life can last a short amount of time, as short as a one-year plan that can be renewed each year. Throughout the policy plan, the death benefit remains permanent without any alterations.
On the other hand, decreasing term life is a nonrenewable policy with which the death benefits gradually decline as mortgage payments are paid off and the general balance is lowered.
However, the policy of decreasing death benefits does not affect the policy premium, as the premium remains constant throughout the life of the term.
2. Whole Life
A whole life insurance plan covers policyholders for the entire life of the individual
a) Advantages are
- The value of the plan consistently grows at a given rate
- Premiums paid remain constant throughout the plan
b) Disadvantages are
- The length of the whole policy is predetermined
- Pricier fees than term life
The two types of whole life insurance are whole ordinary life and limited payment whole life, as researched by Financial Planning (Elliott, 2012). Ordinary whole life offers a premium at the lowest cost out of all the whole life policies. In this case, cash values are also lower than other policies under whole life.
Unlike whole ordinary life, premium payments are restricted to limited payment whole life. Therefore, the policy term is fully paid off once the premium is paid for the specified period of the payment policy, either in years or at a certain age.
No other premiums need to be paid, which could last for durations of one to twenty years or at the age of sixty-five.
Term and whole life plans are best for comparison as these are the most commonly issued life insurance plans individuals choose from. Whichever insurance plan appeals to your personal needs, consider the pros and cons of each.
If you want a closer look into the average cost of both term life and whole life insurance, considering individuals are in good health and credit standing, check out the average market value in updated terms.
The average costs are not only considering the well-being of an individual but are also broken down to represent comparables between gender and age groups.
Importance of Health Insurers
Two main factors in identifying the importance of health insurance are: free preventative care and combatting soaring medical costs. The United States health care program helps determine the degree of significance health insurance offers to the insured and their family.
Free preventative care allows quick and easy access to obtaining vaccinations or visiting the doctor for a check-up. Considering purchasing an insurance plan can save a bundle because of the added-up costs for every preventative care need of an individual.
Secondly, health insurance provides insured individuals the coverage they need to cover the financial costs of increasingly high medical expenses.
Once deductibles have been paid off by the insured, the remaining costs of the plan are reduced and covered by the health policy without yearly limitations.
In addition, specific health policies allow for added benefits that cover birth control, dental, and vision insurance. Most states offer added benefits, but it is best to check your specific condition and compare policy benefits that fit your needs.
All in all, health insurance supplies insured individuals with the necessary and updated medical needs. In addition, health insurers can help cover the expenses signed in the policy if you need health-related protection or injury assistance.
Need for life and health insurance
Furthermore, the important factors that life and health insurance offer can now be applied to all the personal needs in your life; when it comes to building a family and having dependents, insurance assists by providing a large sum of financial coverage.
When starting, consider which life plan, term or whole life, best suits your personal needs as the insured and the family.
As for health insurance, accidents can occur at any time, and going in for yearly check-ups can create a build-up in financial costs. However, health insurance provides that exact financial coverage for insured individuals and families that undergo medical care.
Example Scenario: Jack’s family goes out to the park with their two young children. One of them gets stung by a bee and needs medical attention. With the care of their health policy insured to Jack, the family is already covered in expenses for a brief doctor’s check-up.
As for dependents, the Affordable Care Act (ACA) permitted those under the age of 26 to remain under their parents' insurance plan if not independently insured.
Due to the high percentage of young adults that had not applied for insurance because of lowered risks of injuries and expensive costs, the ACA declared it responsible for those 26 years and under to be on an insurance plan if it means staying on their parent’s plan.
Until the time comes for young adults to venture into their insurance plans, it is crucial to find the best insurance plan within the marketplace.
Picking a plan specific to your needs should not be difficult, which is why the marketplace offers many resources and informational guides to starting a new insurance plan.
It is best to begin your search before hitting the age deadline of insurance plans, as you will be more well-informed and prepared for future expenditures.
Insurance premiums
There will be a required insurance premium when considering getting an insurance plan, whether life or health. Insurance premiums are a given payment the insured must pay to the insurer.
In return, the insurer will provide the coverage provided by the insurance policy.
Life insurance offers two options for paying the required insurance premium, with which the money paid can be redeemed at maturity.
- First, an insured individual can pay the specified amount in installments until it is fully paid off.
- The second option is to deliver the lump sum payment, a single payment paid upfront.
Similarly, health insurance offers insured individuals to pay in either broken down installments or a lump sum payment. Whichever payment option identifies best with the insured, insurance premiums are required to gain full access to an insurance policy.
Also included in calculating insurance premiums are the individual’s selected plan, livelihood status, and credit history. These frequently used factors help insurers calculate a fair price point to issue policyholders, so each insurance premium is charged to individual standings.
Premium Annuities
Similar to how premiums are paid in exchange for policy coverage, Financial Planning addresses that single or installment annuities are paid in exchange for premiums.
Single payment annuities are paid as one payment, and installment payment annuities are categorized as either fixed or flexible.
Fixed premium annuities are guarantees made by the insurer that the interest will attribute to the cash value of the annuities. The interest rates of fixed premiums can range from the lowest to highest rates agreed upon on annuities policy.
Flexible premium annuities are more commonly used than fixed premium annuities. Flexible premium allows room for payments to be paid at any time as billing dates are issued and paid according to the insured’s current needs.
Most common health Insurance plans
Health insurance offers an array of health plans; whether you are starting a family or branching off to take an insurance plan, here are three of the most commonly used plans and what each offers.
1. Health maintenance organizations
- A primary care doctor and access to specialists when needed (based on referrals)
- An insurance premium, deductible, and copay
- Copay example: Depending on the plan issued, a $20 fee rate is charged to the insured for a dentist check-up.
- Least expensive plan
2. Preferred provider organizations
- A primary care doctor, along with access to out-of-network specialists (at a given cost)
- An insurance premium, deductible, and copay
- More expensive than health maintenance
3. Exclusive provider organizations
- A primary care doctor with access to out-of-network specialists (at a given cost)
- An insurance premium (lower than preferred provider), deductible, and copay
Keeping in mind the agreement of each health plan, out-of-network specialists are considered an additional cost to the insured individual, not covered by the insurer.
Even though portions of medical care are not fully covered, each plan has perks and expenses according to the proposed specific purposes.
Comparably, health maintenance, preferred provider, and exclusive provider organizations offer various levels of medical care to their policyholders.
Along with the top three health plans listed, health plan benefits are organized by rank: bronze, silver, gold, and platinum. The ranks can help determine how many financial costs are covered in each specified plan.
It is crucial to consider the rank of each plan when comparing costs and insurance coverage, as these ranks will help determine costs covered and insurance costs needed to be paid by the insured individual.
Take the next steps to ensure the financial protection and physical care provided by life and health insurers. Check out our courses to understand financial planning and how to handle your statements effectively.
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