Perhaps it’s the wrong way to think about insurance, but it’s really nothing more than a form of licensed gambling. You find this insurance company prepared to take you on and then place a bet on how long you are going to live. The insurance companies studies the form guide and decides how long people like you tend to live. It sets the premium and the jackpot number. If you die within the first few years, your family are big winners. They hit the jackpot for just a few premium instalments. But if you live far longer than expected, the insurance company wins big because it has the use of all your money during your lifetime and only pays back the sum agreed. That’s one of the interesting things about inflation. What looks a big number now may be peanuts in fifty years time. That’s why buying a policy with a fixed benefit is such an interesting bet.
Now to a simple distinction: a term policy buys you a fixed cash sum if you die within the period agreed. If you live past the due date, you lose, i.e. no benefit is payable and there is no refund of your premium instalments. The contract terminates. A permanent policy pays a benefit but there is an accumulating cash value, i.e. there is a form of savings account built into the plan. This appreciates in value during the term of the policy so, if the insurance company makes good investment decisions, the amount payable on death can be significantly more than the amount you paid in. This reflects and offsets the problem of inflation. Agreements to pay a fixed dollar amount usually represent very poor value over the long term. The further benefit of the investment element is that you can recover the cash value of the policy before you die. This is done either by surrendering the policy to the insurance company or by selling the policy on the open market. Sale of the policy realises more than the surrender value. Alternatively, most insurance companies allow you to borrow money from the investment account. This is good over the short term but never forget that interest is payable on the loan. If you are not careful, the continuing deduction of interest over time can wipe out the remaining cash value in the account. It is always worth paying back the loan or cutting your losses and surrendering the policy if repayment is unaffordable. Continue reading →
No-one said life ever has to be fair but, as parents, you quickly discover the world is not set up to make things easy for you. There are challenges at every turn. Of course, all the healthcare needs can be put on the back burner if you or your partner have a family plan provided by your employers. Now all you have to do is read the small print to see what coverage is provided for children while they are at elementary school or high school while still under the magic age of 18 years. After they pass the threshold of their eighteenth birthdays, the coverage gets more patchy. They are still family members but the extent of the coverage may change. If you have not been fortunate to find an employer offering health coverage as part of the pay package, the world has been less welcoming. It’s entirely possible that you and your family are one of the growing millions who are uninsured or underinsured. This leaves a number of options to explore for the children.
For some years, the federal government has recognized that children are the future of our country. If they do not grow up strong, the future may not see the US remain so dominant internationally. So, with federal encouragement, states have been offering a safety net for children. The alternatives are Medicaid and the State Children’s Health Insurance Program (SCHIP) which was established by the Balanced Budget Act of 1997 to expand health insurance coverage to uninsured children in families with income too high to qualify for Medicaid. For the record, Congress has provided about $40 billion to fund SCHIP through 2007. Federal funding is currently available. Outside the federal and state programs, some elementary and high schools group together to offer health coverage for their students where the families are uninsured or underinsured. Some states have not set generous criteria for access to their SCHIP and the group policies help the modestly well-off families bridge the health plan gap. Continue reading →
Imagine one of your top salesmen wins a contract in Asia and has to fly there to seal the deal. What if the $5000 trip needs to be laid off due to a public health problem, disaster or another disruption?
You might expect refundable business class tickets to allow them being laid off or that the company investment is protected by travel “waivers” offered by the travel agents. Sometimes this is the case but not always. Waivers apply to very specific circumstances and are loosely regulated. Always remember to read the small print to understand exactly what your rights are.
The alternative, of course, is to take out travel insurance. This way you can manage the risk of changing business travel plans and add other types of cover to the policy, proving extra security to your employee. Travel insurance can entail a complete risk management plan designed to protect the employee, company and investment.
Travel insurance is available for purchase per trip or it can cover all the travels of workers within a specified period of time, one year being the most typical period. Policies like these are specifically designed for enterprises where employees and management have to travel internationally on a regular basis, visiting risky areas on occasion.
Travel Insurance Types
Travel insurance is primarily designed to cover five categories:
Cancellation. If the trip is canceled, this ensures the cost is covered. Coverage should be as broad as possible to protect against cancellation for any reason although this will cost extra.
Travel and Major Medical. This determines the medical insurance coverage. Travel Medical insurance covers medical care for short overseas trips and includes assistance from the insurer in finding doctors, hospitals and overcoming language problems. Major Medical covers long-term travel or overseas postings.
Emergency Medical Evaluation. This covers the evacuation or transportation of an employee to medical facilities or even home at a cost of $25,000. Transportation by helicopter is very expensive.
Accidental Death-Flight Accident. Similar to life insurance, if a traveler should die because of a crash or accident, his/her beneficiaries will receive benefits.
Luggage and Personal Belongings Coverage. This covers the loss, theft or damage of luggage or personal belongings during travel. Considering the cost of electronic devices used by travelers, this can be very valuable coverage.
Based on the information provided by the US Travel Insurance Association, travel insurance coverage accounts about 4% to 8% of the entire cost of the business trip including various riders and extras that can push the percentage even higher. That means that a $5,000 worth business trip will account $200 to $400 in insurance costs. Continue reading →