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Life Insurance:
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| What
is the difference between Term
Life Insurance and Whole Life
Insurance? |
Term Life Insurance
is purchased for set durations
of time such as 5, 10, 15, or
20 years, and offers only the
Death protection benefit. It is
generally inexpensive for the
term of coverage, but very costly
to renew without medical review.
Whole Life Insurance is permanent
coverage. The premium is geared
to remain unchanged for the duration
of the policy, but begins at a
higher premium than Term Life.
Benefits such as an increasing
cash value, usable for estate
and retirement planning are included,
while other benefits such as an
increasing death benefit are available
too. Other permanent policies
similar to Whole Life that are
offered today are Universal Life
and Variable Universal Life.
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| How
much Life Insurance do I need? |
| How much Life Insurance
an individual should maintain
varies greatly for each situation.
Financial Planners often recommend
an amount large enough that beneficiaries
would be comfortable with an annual
income generated by a 5 to 10%
investment return from the policy's
face amount. |
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Health Insurance: |
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| What
is the difference between a PPO,
an HMO, and a POS? |
A PPO is a Preferred
Provider Organization. This is
an organization of Physicians
and hospitals that are contracted
by insurance companies at discounted
rates. By selecting the option
of purchasing a Major Medical
Insurance Plan with a PPO, the
insured is offered a lower premium.
The insured may chose any provider
of service, but claims reimbursement
is far greater when PPO providers
are accessed. An HMO is a Health
Maintenance Organization, and
it is a business that manages
the medical options of its members.
In return for this management,
members are offered generally
lower premiums and out of pocket
deductibles, but also less freedom
of choice regarding medical care.
A newer plan option, the POS,
Point of Service, is a type of
option offered by HMO's. It allows
its members to receive claims
coverage outside of the HMO at
a lower level of reimbursement.
Both the PPO and the HMO are available
to groups and individuals, while
the POS is currently only available
as group coverage.
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| What
is the difference between group
and individual coverage? |
Group coverage
is available to businesses, unions,
and associations that have 2 or
more members (one member with
restrictions in Florida). Business
groups are most common in Florida,
and must have 2 or more full time
employees to be considered. Individual
coverage is available to anyone
not covered in the employer sponsored
group market, and it is medically
underwritten.
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Long Term
Care Insurance: |
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| What
do these types of policies cover? |
Long Term Care
policies are designed to cover
claims for Skilled, Intermediate,
and custodial nursing care in
a Nursing Home or at home. This
would include coverage for illnesses
such as stroke, heart disease,
and Alzheimer disease, as well
as recuperation from surgery such
as joint replacement.
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| When
should I buy coverage? |
Coverage is frequently
not available for individuals
under the age of 40. There is
no correct time line of when to
purchase Long Term Care Insurance.
Many financial planners recommend
that individuals begin applying
for these types of plans when
they are approaching retirement.
Premiums are age sensitive and
lower when purchased at younger
ages. As a rule, prices dramatically
climb after age 65.
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Financial
Planning: |
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| What
is the difference between a Roth
IRA and a regular IRA? |
An IRA is an Individual
Retirement Account. It allows
an individual to hold savings
in an account that has tax-deferred
growth until the money is withdrawn
at retirement. Money deposited
each tax year is deductible from
the individuals' earning as well.
The current allowable annual deposit
into these accounts is $3000.
The Roth IRA allows the same current
deposit as the traditional IRA,
but there is no deduction from
annual earnings. Where as the
traditional IRA has tax consequences
when money is withdrawn, the Roth
IRA has none.
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| What
is an Annuity? |
An Annuity is offered
by an Insurance company, and is
designed to provide a series of
payments over a period of time.
When money is deposited into an
Annuity, this is called the accumulation
period. Deposits into an annuity
that have the potential of growth
at a fixed rate offered by the
insurance company, are called
fixed annuities. Deposits into
an annuity that have separate
investment accounts (i.e. stock
and bond accounts) are called
variable annuities. Growth in
all Annuities is tax deferred
until withdrawal.
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| What
is a Mutual Fund? |
A Mutual Fund is
a company that offers investors
an interest in a portfolio of
professionally managed investment
assets. The company pools the
investments of hundreds or thousands
of investors (institutions and
individuals) to provide diversification
and professional money management
to all shareholders, regardless
of the amount invested. Among
the most frequently cited advantages
of mutual fund investing are the
diversification, money management,
and liquidity.
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