Saturday, February 7, 2015

Medigap Insurance: Who Needs It?

If you’re looking for an example of a large government program that’s difficult to understand, look no further than Medicare. contains hundreds of pages of information – few of which are easy reading.
But one of the most confusing aspects is why, given all of Medicare's parts (see Medicare 101: Do You Need All 4 Parts?) Americans on Medicare are encouraged to buy even more health insurance: a Medicare Supplementary Medical Insurance policy, also known as Medigap. These answers will explain why.
1. What is Medigap Insurance?
Medigap is additional insurance for Medicare recipients. Insurance for your insurance, basically.
2. Why do I need more health Insurance?
Because Medicare has holes (or gaps – get it?). "Original Medicare," as the government calls it, defined as parts A, B, and D, doesn’t do a very good job of really covering you if you were to get seriously ill or injured. It pays some of your expenses, but far from all.
That’s where Medigap insurance kicks in. Depending on the plan you get, Medigap will pay all or a potion of the costs Medicare doesn’t cover.
3. Those “extra” charges can’t be that substantial, can they?
Oh, yes they can. Here are a few examples. If you are admitted to the hospital and only have Original Medicare, you have to pay the first $1,216 of expenses. If you stay more than 60 days, you have to pay a portion of each day’s cost from then on.The size of your daily payment depends on how long you have been in the hospital and goes up the longer you stay.
Doctor visits and medical procedures are going to cost you too. Your deductible is $147 but, after that, you have to pay 20% of "the Medicare-approved amount" for most doctor services. What if you have a $250,000 bill? Look for a $50,000 bill in your mailbox – even more if the Medicare-approved fee is lower than $250,000. There’s no limit on how high it goes.
Prescription drugs can also eat at your budget. Original Medicare will leave you paying as much as 72% of the cost of some of your prescription drugs if you need enough medication to push you into notorious doughnut hole, the period when Part D gives people with high medication costs no coverage until their spending exceeds $4,550.
4. How do Medigap insurance policies work?
Glad you asked! You know all those “parts” of Medicare? Part A, B, and D? Medigap policies have parts of their own.They're labeled with the  letters, A–N  (though E, H, I, and J are no longer offered). The last thing you need with Medicare is more letters, but these letters make the options consistent across every provider.
Because private insurance companies offer these policies, you have to do some comparison shopping. Your shopping is made easier because an “F” plan, for example, is the same no matter which insurance company offers it. You don’t have to worry about one insurance company offering something different in the “F” plan than another does.
5. Which Medigap insurance plan is right for me?
You know what we’re going to say, right? “Talk with a qualified insurance agent or Medicare advisor to find the plan that fits your individual profile.” Here's some other advice. First, read the Medicare publication, “Choosing a Medigap Policy.” On page 11 you’ll find a chart of each policy type and what it covers. If you want to be completely covered—as in 100% of everything—“F” is your choice. The other options cost less but allow more of those gaps to remain open.
6. What’s the difference between Medigap insurance and Medicare Advantage?
A Medicare Advantage plan is similar to an HMO or PPO; it incorporates your Original Medicare benefits, plus additional coverage, such as for preventive care, within a pre-selected network of doctors and hospitals.
A Medigap policy supplements your Original Medicare coverage, paying expenses Original Medicare doesn't cover. It will probably give you more freedom of choice than Medicare Advantage (as long as your physician or facility accepts Medicare) and is a better option for snowbirds and others who travel a great deal or live in more than one location. You need to be signed up for Medicare before you can get Medigap. For more on the pros and cons, see Medigap Vs. Medicare Advantage: Which Is Better?
7. Can I have both Medicare Advantage and Medigap Insurance?
No. However, an insurer can sell you a Medigap policy if you explain that you’re leaving Medicare Advantage. This allows you to start your Medigap coverage the day after your Advantage plan runs out.
8. Does a Medigap policy cover both my spouse and me?
Unfortunately, it doesn’t. A Medigap policy covers only one person.
9. Can the insurer cancel my Medigap insurance if I get sick?
No…that’s illegal. As long as you pay your premiums, your policy is renewable for the rest of your life.
The Bottom Line
Original Medicare has coverage gaps. Without some type of supplemental insurance, you could end up paying a lot of money out of pocket. Medigap insurance closes those gaps. If you want to search for a policy that is right for you, click here for Medicare's official Medigap search capability.

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Steer Clear of Over-Priced Gap Insurance Providers

If you lease or purchase a new car with a loan, you might want to consider obtaining the extra financial protection known as gap insurance. In the event the vehicle is stolen or totaled in an accident, this specialized coverage pays the difference between what you owe on the loan and the compensation your primary insurer will offer you. For more on this, see Do Drivers Really Need Gap Insurance?
While gap insurance can be a good idea if eat up a lot of miles on the road or have a model that’s known to depreciate quickly, be careful about where you buy it. The dealership may try to sell you its own policy, but that is likely to end up costing a good deal more than going with an outside carrier.
Gap Insurance Basics
The idea behind gap insurance is to provide a safety net for drivers who are underwater on their loan – in other words, they owe more than the car would be worth on the used market.
Because cars lose a significant amount of value the moment you pull off the lot, having negative equity is actually quite common in the early years of a car loan. According to, the worth of the average car drops by about 19% after just one year of driving. After the second year, it typically loses another 12%.  Unless you have a short-term loan, it can be difficult to keep the loan balance below the vehicle’s market value during these early years.
Gap insurance makes up for this shortfall. Let’s say you have a sedan that you bought for $30,000. A year later, you get into a major collision and the car is declared a total loss by the insurance company. With traditional coverage alone, the primary insurer will reimburse you for the “actual cash value” of the vehicle, which is $24,000. Unfortunately, you still owe $26,000 to the lender. If you have a gap policy, it will cover the remaining $2,000 to help you retire the loan. For more on this, see Get Up To Speed On Car Gap Insurance.
Know Your Options
Drivers who lease a car may have gap insurance built into their contract. But if it’s not included with the lease, or you’re purchasing the automobile with a loan, you can do some shopping around.
Experts say you’re generally better off going with one of the major insurance companies than getting it from your car dealer. Dealerships typically charge a flat fee between $500 and $700 for gap coverage – and it could go higher still if the premium is combined into the loan.
One place to start for a more competitive rate is the company that already insures your car. Several big-name insurers offer a variant of gap protection – including Esurance, Progressive and Nationwide.  Ordinarily, they’ll bill you between 5% and 6% of your collision and comprehensive premium. So if you pay $1,000 for these two components, gap coverage will amount to roughly $50 or $60 a year in addition.
Keep in mind that depreciation is most aggressive when cars are relatively young, so you may only need gap insurance for two or three years. When you go with a major insurer, you can usually cancel the policy once you start to build equity, thus lowering your bill. It’s a good idea to periodically check the NADA Guides or other valuation sources to make sure you’re not paying for coverage you don’t need.
Some specialty insurers also provide gap insurance.  If you choose to go this direction, just make sure the company has a strong financial rating from A.M. Best, as well as a favorable grade from the Better Business Bureau.
Some Policies Don't Cover the Full Gap
Perhaps the biggest caveat when price-shopping among different insurers is that not all gap policies are the same. For example, some companies, including Progressive, refer to their offering as “loan/lease” coverage.
The main distinction is that loan/lease policies put a cap on the payout. Typically, the company reimburses up to 25% of the car’s cash value at the time of the accident or theft. Most of the time, this won’t make a huge difference, except for those who are deep underwater on their loan.
As an example, say you crash an SUV that’s currently worth $20,000 and you still owe $30,000 on your car loan. Rather than pay the full $10,000 difference, loan/lease protection entitles you to just $5,000 (25% of the SUV's $20,000 cash value).
To be on the safe side, go over the policy details before taking out gap coverage, and ask a representative to explain exactly how the coverage works, with specific examples such as the one above.
The Bottom Line
Gap insurance plays an important role for drivers who have significant negative equity in their automobile. Just remember: It pays to shop around rather than blindly accepting what the dealer has to offer.

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Burial Insurance Costs

And is even the least costly burial insurance a good buy? Be sure to compare it against term life or permanent life before you sign up.
Burial insurance is a type of life insurance marketed to seniors and their families that is used to pay for funeral expenses.
At various online independent agencies and insurance companies, you can get instant quotes on burial insurance policies that will give you a basic idea of how much this type of insurance would cost. Of course the rates that you are quoted, as they are based just on brief questionnaires, are not a guarantee. Before you sign up for anything, get a careful explanation of any policy you’re considering from an experienced professional.
Sample Costs
The prices quoted here are for a $20,000 policy for a 65-year-old male nonsmoker who lives in Florida. The three companies on the bottom of this chart say that they offer “guaranteed issue,” and Gerber and Kemper say they ask “no health questions.” These guarantees are a key reason burial insurance policies attract seniors who are concerned about being screened.
Monthly premium

SI _Provider Simplified Issue
Vantas Life
Gerber Life Insurance

Doing the Math
Is burial insurance a good buy?  Probably not, compared to other forms of life insurance that you can buy. Consider that the cheapest option listed here, Foresters, would cost $1,227.48 a year. If the 65-year-old lives for 20 more years, he would end up paying $24,549.60 in premiums for a $20,000 payoff.
Compare these figures to an automated quote from Prudential for a $100,000, 20-year Term Essential Life Insurance policy. The premium is $113.58 a month or $1,362.96 a year. If the person lives for 20 years he would pay in $27,259.00. If he dies while the insurance is in effect, his beneficiaries would get $100,000.
Not Underestimating Your Lifespan
The Prudential policy quoted above is for survivorship to 100 year of age. The company also offers a slightly more expensive option that insures you to 121. While that may seem laughable, keep in mind that a person who turned 65 in 2008 can expect to live, on average, until age 84.3 if he’s male and 86.6 if she’s female. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95, according to data compiled by the Social Security Administration.
Finding Help
On-line quotes are a convenient way to get a general idea of costs. It's wise to start your shopping that way so that you can get a sense of the marketplace. But most insurance companies offer a range of products with subtle but important differences among them. You're unlikely to pick up these fine-print differences by comparison shopping on your own.
An insurance broker who deals with multiple companies can help you find the best deal. Bring your research to a broker and search together for the best options for someone in your situation. One possibility is a term life insurance policy with a clear renewal process if you outlive the term. Another is a permanent life insurance policy.
Some policies accrue cash value and can be expanded to cover accidents and disability. One possible approach: Instead of choosing a benefit amount, tell the insurance broker how much you’re willing to pay in monthly premiums and ask for the best deal for the money. See Burial Insurance Vs. Life Insurance.
The Bottom Line
Don’t be wooed by “easy” insurance. Take the time to research your options and see what kind of deal you can get.
Even if you have health problems, you may still qualify for term or permanent life insurance and avoid the higher prices of “guaranteed issue” burial insurance policies. An independent insurance agent who deals with multiple companies can help steer you to the best buy for your situation. Ask the agent for quotes on a variety of insurance options that could cover funeral expenses.

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Burial Insurance Vs. Life Insurance

Term or whole life insurance is usually a better deal than burial policies. Here's why.
Whether it has a gentle name, like final expense, memorial or pre-need insurance, or is frankly called burial insurance, there are a variety of plans being sold to people who want to make sure they’ve tied up all their financial loose ends before they depart this life. A type of burial insurance – referred to as industrial life, small benefit and street insurance – was widely sold door-to-door in poorer neighborhoods in the past, though that is now on the decline.
Whatever it’s called, burial insurance is, in fact, a form of life insurance, and can be a term or permanent life policy. Many insurance companies sell it – and it is sometimes included in the pre-need packages offered by funeral homes.    
The Burial Insurance Sell
Often marketed to seniors, burial insurance plays to many powerful practical and emotional needs.
– Easy to get. You can buy the policy online or on the telephone without waiting for an insurance-company doctor to examine you. In fact, burial insurance does not require a medical exam. Applicants are asked about age, smoking history and whether they currently have some serious conditions, and for some policies acceptance is guaranteed. Some require a two-year premium-paying period before you can collect and only insure you to 100 years of age. This may seem like no problem, but remember that one out 10 people who survive to age 65 are expected to live past 95.
– Seemingly inexpensive. Burial insurance can be purchased for small amounts, such as $5,000 and $10,000, while other term or whole life insurance may require substantially larger minimum coverage. The premiums for burial insurance may therefore seem more affordable than bigger benefits policies; look more closely before you decide it’s a bargain.
– A love vehicle. The ads can be touching, touting burial insurance as one of the most important things you can do for your family so they don’t have to struggle to pay for your funeral and settle your bills. This is a worthy goal, but burial insurance is neither the only, nor necessarily the best, way to achieve it.
Life Insurance: Similar Cost, Much Higher Benefits
Consumer advocates have raised red flags about burial insurance. It’s “a predatory type of insurance,” according to J. Robert Hunter, director of insurance at the Consumer Federation of America. People who buy it tend to be less educated, minority and low-income, and they get a poor deal.  Hunter reports he recently helped a woman buy a 20-year term life policy with $75,000 in coverage for the same premium as a $5,000 burial policy.
Here’s why burial insurance is usually a bad deal. The very fact that a medical exam is not required and acceptance is guaranteed means you’re being insured as part of a high-risk pool of people. In order for the insurer to make a profit, the premiums have to be high relative to the benefit.
Yet most people, even with severe health issues, qualify for policies many times better than burial insurance. Don’t assume poor health locks you out of underwritten term or permanent life insurance policies. Term life insurance expires after a set period and you may need to go through the process again and not be eligible at that point, so find out what the options are when the term expires. Permanent life insurance, as the name implies, is guaranteed to cover you as long as you pay the premiums.
A Third Option
Another strategy for making sure your survivors have money to pay for final costs is to contribute regularly to a small savings account for that purpose, set up either as a trust or simply as a joint account with your designated survivor. This money could be withdrawn immediately if needed after you die. Survivors won’t have to wait for the insurance check or probate.
The Bottom Line
Think through your goals before you decide on how to set aside money for final costs. If the pressing issue is to make sure there are sufficient funds available to survivors to pay for a funeral and settle bills, a term or permanent life insurance policy can be purchased – or a bank account set up – for that purpose.
If the main concern is to ensure that the individual’s wishes for burial, cremation and/or memorial service will be funded and followed, and the demise is expected in the next few years, it may also pay to make pre-need pre-paid arrangements with a funeral provider. If a longer life is anticipated, this route has drawbacks, such as a possible change of mind about the services desired or a move to a location far from the funeral site. For more on the overall topic see Intro To Insurance: Types Of Life Insurance.

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'Donut Hole' Essentials For The Financial Advisor

The Medicare Part D donut hole can confound the best of us. Here's what financial advisors and their clients should know.
The so-called Medicare maze can be notoriously difficult to navigate for consumers, caregivers, and healthcare professionals. While Medicare provides an affordable way to cover doctors’ bills, hospitalizations, and prescription drugs, there’s a level of bureaucracy that confuses even financial advisors, CPAs and other savvy professionals. It’s worth investing the time, however, to ensure proper coverage and planning.
The Medicare Prescription Drug Plan coverage gap – known as the “donut hole” in industry jargon – is among the most confusing elements of the program. While the “donut hole” has been closing since the 2011 Affordable Care Act was passed, consumers are still responsible for paying a portion of their drug costs until reaching a point where the plan picks up the majority of the costs.
Gap in Coverage
The “donut hole” is the gap in Medicare Part D coverage that begins after you’ve paid the $320 deductible and your drug plan has spent a certain amount for covered drugs. In 2015, you’re in the coverage gap once you’ve spent $2,960 on covered drugs. After reaching the gap, you’re responsible for paying 45% of the costs for covered brand-name prescription and 65% of the price for generic drugs.
For example, suppose that Mr. Smith reaches the coverage gap in his Medicare drug plan and needs to fill a prescription for a covered brand-name drug. The drug’s cost is $60 with a $2 dispensing fee that gets added to the cost. Mr. Smith will pay 45% of the plan’s cost for the drug ($60 x 0.45 = $27), or $27, for the prescription. (For more, see: Getting Through the Medicare Part D Maze.)
Getting Out of the Gap
The “donut hole” gap in coverage ends when you’ve spent $4,700 in out-of-pocket expenses. At that point, Medicare’s “catastrophic coverage” kicks in and you’ll only be responsible for paying a small co-insurance amount or co-payment toward covered drugs for the rest of the year. Of course, the entire process repeats itself the following year when the out-of-pocket amount must be re-met.
Out-of-pocket expenses incurred during the “donut hole” gap in coverage differ depending on the type of prescriptions. For name-brand drugs, the amount that you pay plus the manufacturer discount payment can be counted as out-of-pocket spending. For generic drugs, you can only count the plan’s cost of the drug and the dispensing fee as out-of-pocket spending under the plan. (For more, see: Filling in The Medicare Gaps.)
Other Considerations
There are some other things, in addition to drug costs, that count towards out-of-pocket expenses. For instance, you may include yearly deductibles, co-insurance, and co-payments as out-of-pocket expenses. Items that aren’t included as out-of-pocket expenses include the drug plan premium, pharmacy dispensing fees, and what you pay for drugs that aren’t covered under Medicare Part D plans.
Usually, the “catastrophic coverage” kicks in automatically when the limits are met. If the discount doesn’t appear on your next “Explanation of Benefits” (EOB), you can file an appeal with Medicare with your prescription records and your plan’s contact information on hand to help. These appeals can be filed using resources on Medicare’s website or through a lawyer or other professional. (For more, see: Medigap vs. Medicare Advantage: Which is Better?)
Looking Ahead
The Affordable Care Act promises to phase out the “donut hole” by decreasing the beneficiary’s share of drug costs until it reaches 25% in 2020 for both brand-name and generic drugs. In general, Medicare enrollees can expect to pay 45% of brand-name drug costs through 2016 before larger discounts come into effect, while generic drug costs are more rapidly accelerated to 58% by 2016. has created a chart showing these dynamics through 2020.
Finally, when comparing Medicare plans, you can view out-of-pocket costs by month, based on a plan’s coverage, and which month a client is likely to fall in the “donut hole” in order to help better prepare. These details can be found on Medicare’s Plan Finder, but it’s important to keep “open enrollment” periods in mind when selecting plans since changes can only be made in certain months. (For related reading, see: Financial Advisors Need to Seek out This Group NOW.)

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Tips On The Health Insurance Marketplace/Exchange

Whatever your political views of the Affordable Care Act of March 2010 (ACA) – better known as Obamacare – there’s good news if you need to buy health insurance for yourself or your family for 2015. The website hosting the Health Insurance Marketplace, or Exchange, where you can apply for insurance has emerged from its early problems and added new features that make it easier to use.
For example, this year on the federal exchange you can easily preview the policies, rates and tax credits (applied in advance) you are eligible for by answering just a few questions before you go through the formal application process. Thirteen states plus the District of Columbia have their own exchanges and the rest rely on the federal exchange; entering your zip code into will get you to the right one.
Owners of small businesses with 50 or fewer employees can insure their employees. Those with fewer than 25 full-time employees may qualify to receive tax credits through the SHOP (Small-Employer Health Option Program) exchange. The promised “employee choice” option that would allow a business’ employees to choose among a variety of plans in a selected tier is available in 14 states for 2015. But employee choice has been delayed until 2016 in 18 federal exchange states. In those states, employers will only be able to offer a single health and a single dental plan to employees.
The long-term future and shape of the ACA is still a work in progress due to an upcoming decision by the Supreme Court  and the political shift in Congress. But for today, the federal insurance marketplace, and those implemented by various states, are up and running. About 7.1 million people bought health insurance under the ACA for 2014, a figure that’s expected to reach 9.1 million in 2015
Applying is a fairly complex process, and it's a good idea to start now. Enrollment began on November 15, 2014, for coverage starting as early as January 1, 2015. February 15, 2015, is the last day to enroll for 2015 coverage.
Here are five key things individuals and families need to know to avoid frustration and get the insurance they need.
1. Be sure you're eligible to apply.
Whether you’re a 26-year-old just coming off your parents’ policy, a parent who needs affordable coverage for your family, or a 55-year-old who has lost employment and/or health coverage, you should be able to find a suitable insurance policy and may be eligible for significant tax credits (delivered in advance in the form of reduced premiums) to help you afford it.
People who cannot use the marketplace include those who have an employer-sponsored health plan, including COBRA – or who have Medicare, Medicaid or TRICARE for military families.
2. Understand that health conditions do not raise rates.
The great boon of the Affordable Care Act is that insurers cannot reject applicants or charge them more because of pre-existing health conditions or gender. Rates do vary depending on age, where you live, whether you're buying individual or family coverage, and whether the applicant uses tobacco.
3. Collect key information before you start.
When you apply for insurance – or even preview the rates and tax credits – you’ll be asked about your household size and income. While these may seem like straightforward questions, there are many permutations, so be sure to check before you answer them.
“Household size” is a misnomer because it actually means “dependents,” not the number of people who live in your home.  For example, if your parents or unmarried partner or his/her children live with you but are not your dependents on your tax return, they don’t count. In addition, anyone who is your dependent but doesn’t live with you should be included.
“Income” is even more complicated. If your pay stub lists “federal taxable wages” that is the figure to report as income. As you apply, you can also list certain deductions, such as alimony you pay or school tuition costs. Other items, such as child support and proceeds from loans, do not have to be included as income.
When you apply, you will also be asked to estimate your income for 2015, and your tax credits will be based on that figure. Tread carefully. If you make more money than you estimate, you could wind up having to pay back some of the tax credit savings when you file your next tax return.
4. Choose the right plan for your needs.
All plans must offer the same “essential health benefits,” which include coverage for outpatient care, emergency services, hospitalization, pregnancy, maternity and newborn care, mental health and substance use services, prescription drugs, and laboratory and wellness services.
The differences among plans involve premium prices and the size of deductibles and coinsurance. Disclosure is very clear and includes the tax credit you may qualify for and the maximum amount of out-of-pocket expenses (which includes deductibles, coinsurance and co-pays) you would have to pay for a year.
In many areas, a dizzying multitude of plans is available. For example, 94 plans are available for a Florida family of four (ages 45, 43, 10 and 6) with an income of $60,000, who qualified for significant tax credits for all plans. Here’s a sampling of the range of plans:
Sample Plans for A Family of Four in Florida
Plan Monthly Premium Deductible Maximum out-of-pocket costs
Humana Bronze 6300/South Florida HUMx (HMOx) $369 $12,600 $12,600
United Healthcare Silver Compass 4000 $695 $8000 $13,300
Florida Blue (BlueOptions All Copay 1424 $1572 $0 $4000

You can also search plans in “metal level” categories: bronze, silver, gold, and platinum, which signify how much of the total costs of an average person’s care they pay. For example, with a bronze plan you pay about 40% of the healthcare costs, and with a platinum plan you pay 10% on average. A separate category of catastrophic plans, which pay less than 60% of costs are available only for people under 30 years of age and those with a hardship exemption.
5. Avoid penalties for being uninsured.
The individual responsibility requirement (known as the “individual mandate”) in the Affordable Care Act requires all citizens to obtain minimum standard health insurance starting in 2014. Your tax return will ask for information about your health insurance coverage.
The penalty in 2015 for not having health insurance is $325 per adult and $47.50 for a child, or 2% of your total household income, whichever is greater. In 2016, the penalty will be higher: $695 for each adult and $347.50 for each child, up to $2,085 per family, or 2.5% of family income. Certain groups of people are exempted from the penalty.
The Bottom Line
If the idea of buying health insurance on a website makes your head spin, remember that many insurance agents and brokers can help you with the process. If you think you may qualify for tax credits, make sure they enroll you in a marketplace plan.
To find a plan on,  you can search by “metal level” categories for the amount of coverage you desire. Or, you can look at all plans you qualify for and sort them in order of either deductible or premium amounts. If you have difficulty enrolling, call the 24/7 hotline 1-800-318-2596. For further help, enter your zip code at to find a list of local community groups that will assist you. Once you’ve purchased a plan, stay alert for announcements for the "open enrollment" period for 2016 insurance, when you can renew or switch plans.

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Open Enrollment For Health Insurance Marketplace

Time to renew your health plan – or shop for a new one for 2015. Here's how to get the most from marketplace open enrollment for the Affordable Care Act.
If the term “open enrollment” makes you a bit anxious, you’re already ahead of the game. At least you're aware that health insurance plans have these periods. If you're insured by your employer, open enrollment probably happens once a year in October, November or December. For Medicare, the period in 2014 is October 15 to December 7. And if you qualify for healthcare coverage under the Affordable Care Act, better known as Obamacare, the opening date is November 15, 2014.
According to a recent Kaiser Health Tracking Poll, about 9 in 10 of uninsured Americans do not know when the next open enrollment period for marketplace insurance purchased under the Affordable Care Act begins. Just over half don’t know that low and moderate-income people can get financial assistance to help them purchase insurance.
Open Enrollment for marketplace policies starts November 15, 2014, for coverage starting as early as January 1, 2015. It ends on February 15, 2015. This is the window for renewing or changing your insurance, or purchasing a policy. However, if you lose your employee-sponsored or other health insurance after the window closes you can apply at any time.
If you need to buy your own insurance, take heart from the fact that, according to a recent Gallup poll, the majority of Americans newly insured in the marketplace give their coverage good marks. Most of the newly insured (74%) rated the quality of the healthcare they received as excellent or good. And 71% said the same about their healthcare coverage. These satisfaction levels were about the same or better than those of the average insured American.
Renewing Marketplace Health Insurance
If you enrolled in coverage for 2014, you will likely be automatically renewed in your plan or a similar one for 2015. But it's important to update your income and household information, and check for any increase in costs. Also find out whether your medications will still be covered next year – and what they will cost you. If you are taking any new medications or have other changes in your healthcare needs, make sure your current plan is still the best available choice for you. If you’d like to change plans, you can do so during open enrollment.
If your plan has been cancelled, there’s a hotline (1-866-837-0677) for talking to a representative who will help you find coverage.
Rate Increases for 2015
Data released by the federal government in November suggest that prices for some 2014 policies purchased on the federal or state marketplaces will substantially increase for 2015. The increase can be as much as 20%. However, the price increase can be kept to as little as 4% or 5% for people willing to shop around for another policy.
Analysis by the New York Times found that premium increases were largest in areas where there were fewer insurance plans available. Fortunately, about 25% more insurers are participating in the marketplaces for 2015, giving consumers a choice of an average of 40 different plans. Overall, nine out of 10 applicants will have at least three competing insurers to choose from.
For applicants, reports of national or statewide premium changes are not as important as the details of the particular plans you are considering.  If you purchased marketplace insurance for 2014, you can compare 2015 plans and prices to your current coverage before you decide whether to stay in the plan you have for 2015 or enroll in a different one.
The Bottom Line
Even if you’re happy with your marketplace health insurance, it's wise to shop around for 2015 coverage. Rates for some policies have soared, while increases for others are quite modest so you want to be sure you have reviewed all your options. It’s also important to update your income and household information so that any tax credits you receive will be accurately calculated. Use this quick step-by-step action plan to make sure you touch all the bases for staying covered for 2015.

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Stock Insurace: 3 Strategies to Limit Stock Losses

People protect their largest assets by buying insurance on their home, cars, expensive jewelry and even their lives. Much the same way, investors can use derivative securities to effectively buy insurance on their individual holdings or on their portfolio as a whole. Although derivative securities may seem risky, when used properly they function in exactly the opposite way – to reduce risk and insure against loss. One can also use order-management strategies such as a stop loss order. (For more, see: Are My Investments Insured Against Loss?)
Using Futures to Hedge
Futures are derivative contracts that obligate the owner to purchase the underlying asset at a specified fixed price and at a specified future date. Likewise, the seller of a futures contract has the obligation to deliver the underlying asset at that price and time. Of course, in the majority of cases traders close out their positions buy selling a long position or buying back a short position prior to expiration as not to take delivery.
Although there isn't much of a market in futures on individual stocks, there is a large and highly liquid market for stock index futures. If an investor's portfolio largely resembles an existing equity index such as the S&P 500, Nasdaq 100 or Dow Jones Industrial Average, or if they are passively invested in an indexed strategy they can use futures contracts to insure themselves against a drop in market value.
Suppose an investor owns a portfolio that consists of a large amount of SPDR S&P 500 ETF (SPY), and she anticipates a decline of at least 10-15% in the price of the index at some point in the next six months, but she does not want to sell her position outright (perhaps due to tax considerations, to avoid transaction costs, or because the strategy prohibits holding large cash positions etc.). She can sell enough futures contracts that expire in six months to cover her portfolio value.
In our example, four months later the S&P 500 declines 15%. Her portfolio value has lost 15% of its value, but the futures contracts that she sold have also declined by the same amount. She can then buy back those futures to cover at the lower price, and her resulting loss is net zero. If her portfolio was left unhedged, she would be down the full 15%. In this hypothetical example, the hedge fully protected the portfolio against a decline and she preserved the value of her portfolio despite a significant decline in the market of 15 percent. But, if the market had risen, the portfolio's gains would have been exactly offset by losses on the futures contracts. If the market were to rise instead of fall, our investor would have had to consider removing her hedge by buying back the short futures contracts at a higher level. (For more, see: A Beginner's Guide To Hedging.)
Using Options to Hedge
Options are derivative contracts that give the owner the right, but not the obligation, to buy or sell the underlying asset at a specified price, at or before a specified future date. Owning call options gives the right to buy the underlying asset and owning put options gives the right to sell it.
There is an active and liquid market in stock indexes and also on many individual stocks. Listed options can therefore provide insurance on portfolios that deviate from a benchmark or index.
The Protective Put
Since put options give the owner the right to sell the underlying asset at a specified price, they can also be used as an insurance policy on that asset. Suppose our investor also has 50,000 shares of Apple, Inc. stock (AAPL) and although it has done very well for her, she is concerned that it might decline from its recent highs in the next few months and wants to ensure that she can lose no more than 10% from its current price. She may purchase 500 put options (each listed option represents 100 shares of the underlying stock) with a strike price 10% below the current price, and with an expiration date in three months time.
If the price were to fall more than 10%, she would still retain the right to sell her shares at that fixed price, 10% lower than where it is now, effectively capping out her potential loss. She could also sell her put options back in the market at a profit which would offset some of her losses in the stock.
If, on the other hand, shares of Apple continued to rise, her options would expire worthless and all she would have lost is the premium, or price, of the put options. (For more, see: Risk Management And Options - Hedging With Options.)
Order Management Strategies
Not everybody has access or the desire to trade derivatives, even if it is intended to hedge against loss. Some brokerage firms do not offer derivatives trading, and their use may be restricted in certain types of accounts. Alternatively, an investor's holdings might not have a market for an adequate derivative instrument to be used. In these cases, losses can still be mitigated using order management strategies like stop-loss orders and stop-limit orders. With derivative hedging the traders owns the underlying asset, whereas order management strategies set up orders to sell the underlying stock given some triggering event, which means the end of the hedge.
Stop-Loss Orders
A stop-loss order is a specific type of order that can be placed with one's broker. In essence, it is an order to sell triggered when the price of the stock in question falls to a certain price specified by the investor. Once the stop price is reached, the order can be executed as either a market or a limit order. Our investor owns 1,000 shares of a foreign biotech company in her portfolio with no listed options. The company is issuing a report on it's latest drug trials and a bad result could cause the share price to drop significantly. She initiates a stop-loss limit order with a stop price 10% lower than the current price and the same limit price. If the stock were to drop 10%, the stop would be triggered and her shares offered in the market at that price. If the stock did not fall that far, or instead rose, the order would not be triggered.
Some variations on the stop-loss order include trailing stop-loss orders which continually re-adjust when the price of the stock increases. In our example, if our investor had initiated a trailing stop-loss order at 10% below the current price and the stock then rose in value, the stop-loss order would automatically re-adjust higher to 10% below that new price. It would then be triggered if the stock fell 10% from that higher level. Trailing stop-loss orders can generally be set as a percentage below the current price or a set dollar amount, and they are useful to preserve gains while managing potential downside moves. (For more, see: Trailing-Stop Techniques.)
The Bottom Line
The same way that people protect their physical assets with insurance – such as their home, car or expensive jewelry – people can also protect their financial assets from adverse down moves using derivative securities or order management techniques. The one thing to keep in mind is that just like home or auto insurance, financial insurance comes at some cost – albeit a cost that many are willing to pay.

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The Short Guide to Insure Stock Market Losses

First time stock investors may ask, is there any way to buy insurance on stocks to prevent losses?
The stock market can give an investor great returns, but not without risk. To buy a share of stock is to acquire a share of equity in a corporation with returns coming from increases in the value of the asset or dividends paid quarterly or yearly. Stock prices can increase due to a number of factors, expected or unexpected. If a company is set to acquire another company or if their earnings exceed expectations the stock price may surge higher. While investing in stocks can be lucrative, however, most investors are not the next Warren Buffett. Investors unaware of the risks and basic strategies of trading are susceptible to investment blunders.
First time stock investors may ask, is there any way to buy insurance on stocks to prevent losses? At the moment, purchasing insurance for stocks isn't as easy as buying a policy for your portfolio. There are ways to insure, or hedge, against stock market losses, however. Diversifying your portfolio and utilizing variety of options can help prevent an investor’s stocks from suffering substantial losses.
To diversify a portfolio is to reduce your non-systemic risk by investing in a variety of assets. Through diversification, the net loss realized from a decrease in stock prices will balance returns from other assets. When approaching a diversifying strategy, it is important to spread the wealth between investments with constant and volatile returns. With respect to the stock market, safe stocks are ones which do not witness volatile movements in prices and pay dividends. Investing in a whole index such as the S&P 500 or Dow Jones Industrial Average, which encompasses many stocks, are a more effective strategy to insure individual stock investments. Bonds, commodities, currencies, and funds are also valuable assets to diversify a portfolio. In particular, U.S. Treasury Bonds backed by the U.S. government are deemed by the most conservative investors to be the safest asset. A portfolio that holds a percentage of 10 to 30 year U.S. Treasury Bonds can ease risk-related stock market losses. (For more, see: Risk and Diversification: Different Types of Risk.)
Stock Options
Options can be a valuable tool to hedge risk and insure stock losses. An option is a contract between two parties in which the buyer has the right to buy or sell a stock at an agreed upon price within a pre-determined date. A call option gives the investor the right to purchase a stock at a strike price with the expectation that the stock will increase in value beyond the strike price. Conversely, a put option gives the investor the right to sell a stock at a strike price with the expectation that the price of the underlying stock will decrease. Purchasing stock options for individual stocks is a valuable way to protect risk related losses associated with volatile stocks.(For more, see Investopedia's Options Basics Tutorial.)
Other Types of Options
While stock options can be a safe way to mitigate risks of investing, there are a variety of different options that give investors leverage and market exposure. Like stock options, index options are a financial derivative which draws its value from an underlying index. The contract owner has the right to buy or sell a basket of assets such as the S&P 500 or Dow Jones Industrial Average. In particular, index put options provide insurance to investors in a bear market. During a bear market, assets in an investor’s portfolio will decrease while an index put option will generate positive returns. Like index options, ETF options insure a sector of stock investments. ETFs options can replicate whole indexes or specific sectors such as energy, healthcare and technology.  While index options are cash settled, ETF options can be settled in the underlying asset.  Different from both index options and ETF options, VIX options allow traders to speculate on market volatility without factoring in the price of the underlying instrument. As cash settled asset, VIX options are a great way to diversify and hedge portfolios. (For more, see: The 4 Advantages of Options.)
The Bottom Line
The stock market is very unpredictable with profits and losses realized every day. Insuring your investments can be valuable means to prevent substantial losses. Diversifying your stock portfolio is essential for any investor in the stock market. By diversifying a portfolio, an investor will acquire assets uncorrelated with the ones they currently own so as to balance losses. Diversification can be done by a variety means and not only by purchasing a variety of stocks. Bonds, commodities, funds and particularly options are a valuable method to insuring your stock investments.

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Someone Stole Your Identity And Bought A Car

Always wanted to own a Mercedes? Maybe you do and just don't know it.
The National Insurance Crime Bureau (NICB) warns that thieves are using stolen identities to lease or buy new vehicles, drive them off the lot, then disappear without making a payment. Often the cars are exported to other parts of the world, says Frank Scafidi, spokesman for the NICB.
If you're the identity theft victim who just had a vehicle purchased in your name, "the big problem is unscrewing the situation," Scafidi says. "Once you can demonstrate it (the car) is not yours, the banks will eat it or recoup it if it's found somewhere."
This type of crime has caught the attention of the FBI, as well as NICB. In May, the U.S. Attorney's Office in San Diego charged three men in an international auto theft ring. The trio used stolen identities and stolen credit card numbers to purchase 44 vehicles worth more than $500,000, and ship them to Ghana.
The three had purchased stolen credit card numbers and corresponding counterfeit driver's licenses online. They used that information to purchase cars from U.S. dealerships, stocking up on Toyotas and Mercedes. The cars were transported to New Jersey, then shipped to Ghana, where they were sold.
The scam came to an end when a dealership became suspicious and contacted the FBI.
It's fraud, not auto theft
Scafidi says it's impossible to say how many similar cases have occurred in the United States in the past few years because they're classified as financial fraud rather than auto theft. The FBI tracks annual auto thefts under its Uniform Crime Reporting Program.
These types of cases will catch the attention of the banks that have financed these vehicles when no payments are made on the loans, Scafidi says. The financial institutions typically turn to law enforcement for assistance, and if they try to repossess the vehicles and can't find them, they may contact the NICB.
If you're one of the innocent victims who has had both your credit card number and your identity swiped, you could be in for a wild ride as you try to clear your name.
"Identity theft is really more of a hassle trying to get the record straightened out," Scafidi says.
Despite the headaches, you won't have a black mark on your auto insurance record from failing to cover a car you never knew you owned, says Lynne McChristian, Florida representative for the Insurance Information Institute.
"Identity theft crime victims won't have an insurance obligation associated with a scam involving a car they didn't own or rent," McChristian says.
When you're purchasing a new vehicle, you're supposed to have proof that you have the necessary auto insurance already in place. (See "How to insure a brand-new car.")
"Reputable auto dealers do not let a new car owner leave the dealership without insurance coverage," McChristian says, "so that very first contact with the insurance company may work as a fail-safe step."
It's your identity that's wrecked
If you find out a car has been bought in your name, it will be up to you to clean up the mess.
"The victim will have to prove that it wasn't them," says Eva Velasquez, president and CEO of the Identity Theft Resource Center.
If you receive an unexpected call from a car dealership or finance company asking about the vehicle, you should request a copy of your credit report to see if there are any unauthorized charges, Velasquez says. (See "How to spot identity theft.")
If so, you'll need to file a police report. Then you can expect to have to deal with a host of organizations, including your state's department of motor vehicles, the auto dealership, your auto insurance company and the three main credit reporting agencies, she says.
A situation such as this can have a major impact on your finances, particularly if you really do need to a buy a new car, Velasquez says. Until identity theft issues are resolved, having the extra vehicle listed in your name can impact your debt-to-income ratio and make it appear that you've skipped out on making your car payments.
Velasquez says of the fraudsters, "they're really clever and they can build some really convincing documents."
Often, identity thieves will use your information to run up a few hundred or a few thousand dollars in credit card charges, she says, rather than trying to score vehicles that can costs tens of thousands of dollars. Buying a vehicle in someone else's name is a "new and creative way for thieves to monetize our data."
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Someone stole your identity and bought a car

Let Insurance Be Your Peace of Mind
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Strategies To Use Life Insurance For Retirement

Can the right life insurance policy help you meet your retirement savings goals? Yes, but maybe not in the way you’re thinking. While life insurance agents will try to sell you on the benefits of permanent life insurance that accumulates cash value, such policies usually only make sense for individuals with a net worth of at least $5 million, the threshold where estate taxes kick in after death.
For almost everyone else, the best way to incorporate life insurance into your retirement-planning strategy is to get the right death benefit for your family at the lowest cost so you have the most money left over to take other key steps toward financial security. Let’s take a look at how this strategy works.
Step 1: Buy Term
If you have a spouse or children who depend on your income or who depend on your “free” services as a stay-at-home parent or homemaker, life insurance should be part of your financial plan. In other words, almost everyone needs life insurance. Even if you miss out on retirement because of an early death, you’d still like your spouse to be financially secure enough to have a chance at enjoying retirement, right? The least expensive type of life insurance, not just considering your out-of-pocket expense but also considering how much coverage you get for what you pay, is term life insurance. (For related reading, see Insuring Against the Loss of a Homemaker.)
Life insurance prices vary significantly depending on your age, health and policy features, but here’s one example that shows how much extra cash you could have to work with if you buy term instead of permanent life insurance. A nonsmoking, 35-year-old New York man in good health, meaning his blood pressure and cholesterol might be a bit higher than the ideal, might be able to get a 20-year term policy with a $1 million death benefit for $1,030 per year.  If the same man bought a whole life policy, a type of permanent life insurance, the premium might be $14,090 annually for the same death benefit. That’s a $13,060 difference per year.
Given these costs, term life insurance can be an ideal retirement savings tool in two ways. First, it provides the basic financial protection your family will need if you pass away before you’ve accumulated enough savings for them to live off of. Second, its low, fixed price frees up more of your disposable income to create an emergency fund, purchase long-term disability insurance and invest in low-cost funds.
How long a term you should buy depends on how long you think it will take to amass enough savings for your family to live comfortably without you. It also depends on your current age, because it can be difficult to get term insurance past age 65. How much life insurance you should carry depends on how much debt you have, how much income you need to replace and the cost of any future obligations you want to fund, such as a child’s college tuition.
If you get life insurance as a benefit through work, your employer-provided life insurance may not be enough; you may need to supplement if with a policy you buy on your own. Also, if you want the security of knowing that your insurance will be renewed each year as long as you pay the premiums and of knowing that your premiums will be the same every year for as long as the policy is in force, get a level-premium, guaranteed renewable and noncancellable term life insurance policy.
Step 2: Create an Emergency Fund
The first way you should put the savings from buying term life insurance to work is by building yourself an emergency fund of three to six months’ worth of expenses – maybe more, if you’re really risk averse or have an irregular income. Having an emergency fund prevents you from going into debt to handle times of increased expenses or reduced income.
Avoiding debt means avoiding paying interest; having to pay interest, especially at credit card rates, makes it that much harder to recover from a setback. A financial emergency often means temporarily stopping your retirement contributions; the sooner you can bounce back, the sooner you can get back on track with your retirement savings.
Step 3: Protect Your Income with Long-Term Disability Insurance
Ideally, you’d take this step at the same time as you’re building your emergency fund; there’s no reason to wait. While many people think they can get disability benefits from Social Security if a serious illness or injury prevents them from working, it is hard to qualify for these benefits and they might be far below what you’d need to maintain your household’s standard of living. What’s more, you won’t qualify for those benefits if you haven’t paid into the system; many public employees have not.
Among disability insurance policies, an own-occupation policy will cost you more than an any-occupation policy, but it will provide more comprehensive coverage. If you’re unable to work in your own profession – say, accounting – you won’t have to become a retail store greeter to get by; your disability insurance will replace a significant percentage of your lost income. Again, look for a guaranteed renewable and noncancellable policy, which ensures that your premiums won’t increase and you won’t have to worry about requalifying. You can keep the policy as long as you pay the premiums. Even if you're single and don't have children to support, having disability insurance is still important – maybe more so, as you don't have a spouse or other immediate family to help you get by should you become seriously ill.
Choosing the best disability insurance means either purchasing your own policy to protect your income and anyone who depends on it or making sure you have enough coverage through your employer. As personal finance guru Dave Ramsey likes to say, “your most powerful wealth-building tool is your income.” Without an income, you have no way to save for retirement. (Learn more in our Intro to Disability Insurance.)
Step 4: Invest the Rest
You’ve got life insurance, an emergency fund and disability insurance. Finally, let’s talk about investing the rest of the money you’ve saved by using term life insurance as a retirement tool.
While permanent life insurance policies have a cash value component that accumulates savings and can be invested, you’ll have the greatest control over your money and the potential to earn the highest returns if you invest it yourself, through the brokerage of your choosing, rather than through a life insurance policy. You won’t pay the high policy fees and agent commissions associated with permanent life insurance, your investment performance won’t be tied to the life insurance company’s financial performance, and you won’t be limited to the investments the insurance company offers.
You can set up a tax-advantaged retirement account at a brokerage that offers rock-bottom investment fees, which is one of the keys to growing your portfolio. You can create a well-diversified portfolio of uncomplicated index funds or exchange-traded funds. For even more hands-off investing, consider a target-date fund, which – depending on the fund's strategy – adjusts your portfolio mix to become more conservative as you get closer to retirement age.
The Bottom Line
Buying term life insurance and investing the difference isn’t what most people think of when considering how a life insurance policy can help meet their retirement savings goals. Yet, for most people, it’s the most effective strategy.

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