1. Health Care Planning

2. How Can You Reduce Your Personal Health Care Costs? Stay well - focus on prevention  eat a balanced diet and keep your weight under control  avoid smoking and don’t drink to excess  get enough rest, relaxation, and exercise  drive carefully and look for accident and fire hazards in your home

3. Health Insurance and Financial Planning Protection against financial loss due to illness or injury. Part of your overall risk management plan to safeguard your family’s economic security  medical expense insurance  disability income insurance to protect your most valuable asset - your ability to earn an income

4. Health Care Planning  Direct medical care  Recuperative care  Rehabilitation  Replacement of income FOUR LOSS TYPES:

5. Health Care Providers Individual Group  Lower rates  Employee fringe  Coverage for existing health problems

6. Health Insurance and Financial Planning Group plans comprise more than 85% of all health insurance issued Most group plans are sponsored by employers, with the employer paying most or all of the cost Group plans can be supplemented with individual plans Following divorce, a former spouse can remain covered for three years, but the premiums can be as high as $4,000 a year (continued)

7. Private insurance companies Managed care plans  Preferred provider  Health maintenance Health Care Providers

8. Government plans  Medicare  Medicaid Health Care Providers

9. Health Care Coverages Hospital Surgical Medical expense Major medical expense Comprehensive health Dental expense and vision care

10. A Good Health Insurance Plan Should.. Provide quality care at a reasonable cost Offer basic coverage for doctor and hospital bills Cover 120 days’ hospital room and board Provide at least $1,000,000 lifetime maximum per person Pay 80% of out-of-hospital expenses after the deductible is met Have no unreasonable exclusions Limit out-of-pocket expenses

11. Types of Health Care Coverages Hospital  hospital room, operating room, lab tests, X-rays, medicine Hospital indemnity  pays a fixed amount for each day in hospital. Best for people in high risk groups Surgical  surgeon's fee Physician  office visits, lab tests and X-rays

12. Types of Health Care Coverages Major medical  covers expenses for a long term injury or illness Comprehensive major medical  low deductible offered without a separate, basic plan Dread disease  focuses on unrealistic fears, and only pays out for very specific conditions. Often sold by people working on commission. (continued)

13. Types of Health Care Coverages Dental  group coverage for exams, cleaning, x-rays, fillings, oral surgery Vision care  some group plans include exams and glasses Long term care  fastest growing coverage, especially for women (continued)

14. Medicare supplement (Medigap) Long-term care Accident and dread disease Health Care Coverages

15. 1996, Teacher's Insurance and Annuity Association Why Do People Buy Long-Term Care Insurance? To avoid dependence 25.0% To avoid losing assets 23.0% Other reasons 25.0% Guarantee services 12.0% Protect standard of living 15.0%

16.  Definitions  Who is covered  Time period Making Sense of Health Benefits GENERAL TERMS AND PROVISIONS:

17.  Policy Limits  Deductibles and copayments  Coinsurance  Coordination of benefits Making Sense of Health Benefits PAYMENT LIMITATIONS:

18.  Based on timing of loss  General exclusions  Maternity benefits Making Sense of Health Benefits COVERAGE LIMITATIONS:

19. Disability Income Insurance Disability income insurance replaces a portion of the income lost when you cannot work because of illness or injury. The chances of becoming disabled for at least three months are seven times greater than the chances of death!

20. Disability Income Insurance Level of need Important policy provisions  Elimination period  Benefit period  Degree of disability

21. Disability Income Insurance Important policy provisions (continued)  Residual clause  Social Security rider  Cost-of-living adjustments

22. How Long Your Money Will Last

23. Trade-Offs in Choosing a Policy Reimbursement versus indemnity Inside limits versus aggregate limits Deductibles and coinsurance Out-of-pocket limit, or stop-loss Benefits based on reasonable and customary charges

24. How to Choose an HMO Consider the following factors  accessibility  convenient office hours  alternative physicians  second opinions  type of coverage  appeal procedures  price

25. Life Insurance Planning

26. What is the Purpose of Life Insurance? To protect people who depend on you from financial loss related to your death  78% of all American households have it To make charitable bequests upon your death To save money for retirement or children’s education To leave as part of your estate To pay off a mortgage or other debts at the time of death

27. The Principle of Life Insurance Mortality tables provide odds on your dying, based on your age and sex Your premium is based on the projections for the payouts for persons who die

28. Determining Your Life Insurance Needs - Ask Yourself... Do you need life insurance?  do you have people you need to protect financially?  does your partner work? What are your objectives for life insurance?  to accumulate money for retirement?  to provide funds when you die?  how much can you afford?

29. Estimating the Amount of Life Insurance You Need  The Easy Method  typically, you will need to have enough insurance to cover 70% of your income for seven years  The DINK (dual income, no kids) Method  The “Nonworking” Spouse Method  The “Family Need” Method looks at  employer provided insurance  Social Security benefits  income and assets

30. Multiple-of-Earnings Approach Determining Life Insurance Needs CALCULATING DOLLAR LOSS:

31. Types of Life Insurance Policies  Term life insurance  protection for a specified period of time  if you don’t pay premiums, coverage stops  renewability option  at the end of the term you can renew the policy without having a physical

32. Types of Life Insurance Policies  Term life insurance (continued)  conversion option  can change your policy from term to a whole life policy without a physical  decreasing term insurance  your premium stays the same, but the amount of coverage decreases as you age 12-8

33. Types of Life Insurance Policies  Whole life insurance  you pay a premium as long as you live  amount of premium depends on your age when you start the policy  provides death benefits and accumulates a cash value  you can borrow against the cash value or draw it out at retirement  look carefully at the rate of return your money earns (continued)

34. Whole Life Policy Options Nonforfeiture clause  if you stop paying premiums you can use the cash value in a variety of ways. Limited payment policy  pay higher premiums during your earning years only, keeping lifetime coverage Variable life policy  minimum death benefit guaranteed, but can be more depending on how your premium dollars are invested

35. Whole Life Policy Options Adjustable  you can change your premium amount and thus your coverage Universal life  lets you pay premiums in almost any amount  combines term insurance and investment elements (continued)

36. Decreasing Term Insurance

37. Comparison of Term vs. Cash Value

38. Types of Policies Issued in 1994* 10% *1997 Insurance Fact Book 8% Term 22% Whole Life 45% Other Variable Universal Universal 11% Variable 2% Decreasing 2.0% 12-12

39. Other Types of Life Insurance Policies  Group life insurance  often through an employer  no physical required  usually term insurance  Credit life insurance  debt is paid off if you die  mortgage, car, furniture  also protects lenders  expensive protection

40. Life Insurance Contract Provisions Naming your beneficiary (one or more) Length of grace period for late payments Reinstatement of a lapsed policy if it has not been turned in for cash Suicide clause during first two years Automatic premium loans  uses the accumulated cash value to pay the premium if you do not

41. Life Insurance Contract Provisions Misstatement of age provision Policy loan provision  can borrow against your cash value Rider to add or alter benefits  cost of living protection Waiver of premium disability benefit Accidental death benefit  pays twice the policy face amount Guaranteed insurability option Accelerated benefits (continued)

42. Buying Your Life Insurance Look at your income, savings, group life insurance, and Social Security benefits Compare policy costs which are affected by  cost of doing business  return on its investments  mortality rate among policyholders  features of the policy  competition from other companies

43. Buying Your Life Insurance Use the interest-adjusted index to compare policies  takes into account the time value of money  helps you make cost comparisons among insurance companies Determine from whom to buy your policy  examine both private and public sources  look up the company’s rating (continued)

44. Choosing Your Insurance Agent Ask friends, parents and neighbors for recommendations Find out if the agent belongs to professional groups or is a CLU Is the person willing to take the time to answer your questions and find a policy that is right for you? Do they ask about your financial plan? Do you feel pressured? Are they available when needed?

45. Obtaining and Examining a Policy Apply and provide medical history Read all of the contract After you buy it you have ten days to change your mind Give your beneficiaries and lawyer a copy

46. Choosing Settlement Options Options are the choices for how you want the money paid out  One lump-sum is most common  Limited installment plan  in equal installments for a specific number of years after your death  Income for life  payments to the beneficiary for life  Proceeds left with the company  pays interest to the beneficiary

47. Should You Switch Policies? If benefits exceed costs of getting another physical and paying policy set up costs. Are you still insurable? Can you get all the provisions you want?

48. Financial Planning with Annuities What is an annuity?  a contract where you pay money in, and at a certain date get regular payments back during your lifetime Why do people buy annuities?  to supplement retirement income and to shelter income from taxes How are annuities taxed?  income deducted and interest earned is not taxed until you draw the money out