frequently asked questions
Can I expect underwriting in a Medicare insurance policy?
The primary factor that will affect your ability to purchase the policy – regardless of your health – will be whether you enroll during your Medigap Open Enrollment Period.
If you don’t enroll during the six months that starts with the month you turn 65, carriers in most states are allowed to use your medical history to determine eligibility for coverage and to set your premium if you apply for coverage later on.
What about companies that advertise “no physical exam?”
The insurance may be more expensive than if the company required a physical. Although there is no physical, you will probably have to answer a few, broad health questions on your application.
How much life insurance do I need?
Determining how much life insurance you need requires an examination of your current and future financial obligations, along with the resources your family could tap. Your future obligations are a combination of what it would cost to help your surviving family members meet immediate and ongoing needs like funeral costs, taxes, food, clothing, utilities, mortgage payments, and your future obligations like college and retirement funding. The resources that your surviving family members could draw on to meet those obligations include your spouse’s or partner’s income, savings and investments, other income producing assets, and any life insurance you might already own.
Ads that claim I can't be turned down. What's the catch?
Such ads are for “guaranteed issue” policies that ask no health history questions. The company knows it is taking a risk because people with bad health could buy their policies. The company balances the risk by charging higher premiums or by limiting the amount of insurance you can buy. The premiums can be almost as much as the insurance. After a few years you could pay more to the insurance company than it will have to pay to your beneficiary. Such policies may offer only the return of your premiums if you die within the first couple of years after you buy the policy.
What happens to the cash value in my policy when I die?
When you die, the insurance company will pay the death benefit. No matter how much cash value you may have had in the policy the moment before you died, your beneficiaries can collect no more than the stated death benefit. Any loans you have not repaid (plus interest) will be subtracted from the death benefit. your beneficiary could wind up with less than the face amount of the policy. The exception: some whole life policies pay both the death benefit and the cash value when you die.
Do I really need disability insurance?
Most people hear the word “disability” and assume this form of insurance only applies to very serious injuries and illnesses — yet many common injuries (like fractures) or chronic conditions (like back, hip, or knee problems) can result in your not being able to do your job and earn a paycheck.
According to the U.S. Social Security Administration, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of some disabling condition before they reach age 67 (the normal retirement age). Will you have an ability to pay your bills if you need to miss work for several months? If you don’t have access to that much in emergency savings, or friends or family that can help pay your bills when you need to take time off work, disability insurance makes a lot of sense.
Can I work part-time and still collect benefits?
Your insurance contract will specify if you can receive benefits while working part-time. Many policies allow you to work, but take the amount you earn and subtract it from your benefit. If your policy has a lifetime benefit cap, working part-time may extend the life of your benefits.
How much disability insurance do I need?
Insurance companies typically do not sell disability insurance policies which replace all of your income, but they do sell policies which can replace up to 70 percent of your income. If your employer does not offer a disability plan with 70 percent coverage, you may want to look for supplemental insurance coverage to offset the difference.
One major benefit of owning your policy: When you pay premiums yourself, you are paying with after-tax dollars. Therefore, any benefits will likely be tax-free. Tax-free benefits paying 70 percent of your income comes close to being 100 percent of your take-home pay. If your employer pays the premiums and the cost is not included in your taxable income, then benefits will likely be subject to taxation.