How Much Life Insurance Does a Stay at Home Spouse need?

Posted on Jul 25, 2017 in Success ideas

When deciding how much life insurance a person needs, Financial Planners recommend an amount of 7 to 10 times your annual income.

But what if you don’t have any annual income? What if you are a full-time, stay at home spouse and parent? Do you need a life insurance policy if you have no income?

Well, in a way, yes. In fact, as a stay at home spouse or parent, you make hugely valuable contributions to the household. Contributions that could cost thousands should something happen to you.

According to a recent Salary.com survey in 2016, the value of a stay at home parent would be about $143,000 if you had to outsource those jobs. These services include those provided by a typical homemaker which include a housekeeper, child care, a driver for the kids, and more.

But how much does this stay at home spouse or parent need for life insurance? $1,000,000? Probably not. Use the following as a guide.

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Common Health Insurance Definitions

Posted on Jul 16, 2017 in Success ideas

The challenge with health insurance is that we hear about it once a year during open enrollment, and the next time we use it we are either not feeling well, or checking out at the pharmacy or doctor’s office. You’ve heard about the following terms, now you’ll know what they mean:

Copay – a preset amount you pay for a covered health care service, such as a doctor visit or prescription. You pay the set amount, your health plan pays the rest.

Deductible – an annual amount you’ll pay before your health plan begins to pay for certain covered services.

Coinsurance – your share of the cost of covered health care services after the deductible has been met. Your health plan pays the rest of the covered charges.

Out-of-Pocket Maximum – the most you’ll pay before your health plan begins to pay 100% of covered medical services. In many cases, your deductible, coinsurance, and copays counts towards your total out-of-pocket maximum. Check your health plan for details.

In-Network – health care facilities, doctors, and pharmacies that have contracts with your health insurance plan to deliver services at a negotiated rate or discount. You will typically have lower out-of-pocket costs for services you receive in-network.

Out-of-Network – a health care facility, doctor, or pharmacy that does not have a contract with your health insurance plan. They typically don’t provide services at a discounted rate and you will have higher out-of-pocket costs.

Primary Care Provider – also known as a PCP, this is your personal health care provider who coordinates all of your medical care, from routine physicals to referring you to specialists. This physician gets to know you, your medical history, and your personal preferences, which can be very valuable.

Pre-certification – pre-certification is getting approval from your health insurance plan before receiving services such as hospital stays, advanced testing, or outpatient procedures. During this process, your health insurance plan reviews medical criteria to determine coverage under your health insurance plan.

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Know Before You Go – a guide for where to go if you need medical care

Posted on Jul 12, 2017 in Success ideas

I often talk with clients about when to use different providers for medical care. “Should I go a Convenience Care Clinic, Urgent Care Clinic, the Emergency Room, or see my doctor?” is a question often asked in enrollment meetings. So I thought I’d give a handy primer.

But, as always, if it is a life threatening emergency dial 911!

Convenience Care Clinic – these clinics treat minor medical concerns. They are typically staffed by Nurse Practitioners and Physicians Assistants. Located in retail stores and pharmacies. Often open nights and weekends. Cost is typically lower than a doctor’s office, no appointment needed, and wait times are typically 15 minutes or less.

Conditions treated*

  • Common Cold / Flu
  • Rashes or skin conditions
  • Sore throat, earache, sinus pain
  • Minor cuts or burns

Doctor’s Office – the best place to go for routine or preventive care, to keep track of medications, or to see a medical specialist. May charge a co-pay or cost applies to your deductible, usually requires an appointment, short wait times.

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Group Life Insurance – What is Imputed Income?

Posted on Jul 31, 2015 in Industry & Legislative News, Success ideas

Many employers provide employees with employer-paid group-term life insurance benefits or arrange for employees to purchase group term life insurance benefits. But did you know that in some cases, if an employer pays for more than a $50,000 life insurance benefit, there can be tax implications for the employee?

Must the cost of employer-provided group-term life insurance be included in an employee’s gross income?

Pursuant to Internal Revenue Code (Code) Section 79, an employee may exclude up to $50,000 of employer- provided group-term life insurance from his or her income. This tax exclusion applies only to insurance on the life of the employee. It does not apply to insurance on the life of the employee’s spouse or dependent or other individual.

In addition, the employer may generally deduct the premiums it pays for the coverage as an ordinary and necessary business expense, so long as the employer is neither directly nor indirectly the beneficiary under the policy.

May the employer provide group-term life insurance for its employees in excess of $50,000?

Yes. However, the “cost” of the coverage in excess of $50,000 must be included in the employee’s gross income. “Cost” as used here does not refer to the premium paid by the employer but to the cost determined under the Uniform Premium Table contained in IRS regulations. The “cost” of the coverage added to an employee’s gross income is commonly referred to as “imputed income”.

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How much coverage do I need for Key Person Insurance?

Posted on Jun 24, 2015 in Success ideas

Valuing a Key Employee

It can be hard to put an exact monetary value on how important a key person is to a given business. The goal when valuing a key person for life and disability insurance is to get the correct amount of coverage based on the specific needs of the business, but that also corresponds to the realistic loss associated with the death or disability of the key employee from the insurance company’s viewpoint.

In many cases the amount of key person insurance requested is dramatically higher than is available from the life and disability insurance companies. For example, just because a firm is borrowing $10,000,000 for a project expansion doesn’t mean the insurance company will willingly write $10,000,000 of key man life or disability insurance. Specific details will be required by the insurance company to justify the insurance amount requested.

There are several valuation methods commonly used to determine the proper amount of key person insurance needed from both the business and insurance companies perspective. These valuation methods include: the replacement cost method, the contribution to earnings method and the multiples of income approach. A brief explanation of each valuation method follows below.

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