Insurance

Insurance is a contract used to help transfer a policy owner’s risk of loss to an insurer.  If you own a home, for example, you may want an insurance company to replace your home for you if it is destroyed.   The following is a basic overview of the types of insurance you generally should consider:

Health Insurance:  covers some portion of the cost of your or your family’s medical and dental treatment.  After recent legislative changes (Obama Care) every person must have health insurance and if not could face a fine. 

Life Insurance:  provides a decedent's beneficiaries with a lump sum payment of money or a series of payments of money typically for the purpose of replacing the decedent's income and to cover the decedent's final expenses.  “Second to die” life insurance can also come in handy to cover estate taxes that may apply when the second of two parents decease and leave a sizeable estate to their children or other heirs.  Life insurance comes in many different forms; what follows is a high level overview.  Term life insurance covers an insured for a specified period of time and does not build any cash value; ten year term, for example, would cover the insured’s life only for the ten years following the inception of the contract.  If the insured deceases after ten years, the owner of the policy receives no money from the life insurance company.  Whole life or permanent insurance, on the other hand, remains in force for as long as the insured is alive.  Whole life insurance tends to be more expensive than term insurance since it does not expire as long as premiums are paid, and because it builds a cash balance that can be borrowed against or used by the policy owner for purposes other than maintaining the insurance policy.  Whole life insurance comes in a variety of forms, can offer flexibility for savers that want to pay varying dollar amounts over time, or that want access to investment vehicles that allow their cash to fluctuate in value in the financial markets.  The cost of insurance varies greatly between insurance companies, and in large part is a function of the insured’s health and age.  Research and fully understand the features, benefits, and costs of a policy before you make the decision to buy life insurance.  It is common for employers to offer life insurance in a group plan which can reduce the individual’s cost of insurance.  Businesses sometimes use life insurance including:  "Key man" insurance to cover losses should a key contributor to the business' income decease or "Buy/Sell" insurance which is typically used by business owners to fund their acquisition of a decedent's share of a business.

Long Term Care Insuranceprovides funds when you need someone to help you with certain activities of daily living either in your own home or in a residential facility.  Those activities typically include bathing, dressing, transferring to or from a bed or chair, eating, and toileting.  The long term care insurance industry is constantly changing in large part because people are living longer and actually using the benefits they’ve paid for; insurance companies have had to either get out of the business of providing long term care insurance altogether or have come up with products that are profitable to them that also satisfy the needs of consumers.   The spectrum of products available range from pure “use-it-or-lose it” insurance to hybrid insurance products.  Use-it-or-lose it insurance policies are those that provide no benefits to policy owners or the policy owners heirs if the insured never qualifies to use the benefits offered by the policy.  That is to say, all of the money paid into the policy is lost if the benefits are not used.   Hybrid insurance products, on the other hand, pay a benefit either to the insured’s heirs on the insured’s death or pay benefits to cover the cost of the insured’s receipt of long term care.   There are a multitude of products that vary from carrier to carrier, and this is not an exhaustive description of the long term care insurance landscape.  Because this area of insurance continues to evolve for consumers, Placer Summit’s professionals can provide further information about the various alternatives available to you based on your circumstances, needs, and goals. 

Disability Insurance:  provides financial support in the event you are not able to work due to a qualifying illness or injury.

Auto Insurance:  protects you against financial losses that result from damage to your car, damage to property, theft, liability to others, and medical expenses.

Homeowners Insurance:  provides coverage for damage or the destruction of your home.  It may provide coverage for liability to others from injury or damages associated with your home including any injury caused by pets.

Umbrella Insurance:  provides liability insurance that is in excess of other specified policies or is a primary form of insurance for losses not covered by a person's policies.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.  This article is intended to assist in educating you about insurance generally and not to provide personal service.  It may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that wouyld be right for you.  In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs.  If you need more information or would like personal advice you should consult an insurance professional.  You may also visit your state's insurance department for more information.

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