The Insurance Mom, brought to you by Alison Gordon Insurance Services, Inc, CA Lic. 0780178

F.A.Q. — Questions that commonly come up when learning about insurance

Click on any question below to see the answer. If you have a question that is not in the list below call The Insurance Mom at 323-654-2207 or email it to her. If you are wondering about specific terms, the Glossary is a great place to check.

• Health Insurance Questions

  1. Why do I need health insurance?

     Are you kidding? The Insurance Mom doesn’t want you to be exposed to the very high cost of medical care. You have health insurance to protect you against high medical expenses that would otherwise bankrupt you.

  2. What is a deductible?

     A deductible is the amount of money for which you are responsible before the insurance company starts to help you with the cost of medical care.

  3. Why should I choose a high deductible?

     The higher the deductible, the lower the cost of the health insurance. Let The Insurance Mom teach you about the wisdom of having a high deductible and a low monthly premium. But don't let a high deductible scare you off. The Insurance Mom will coach you on how to negotiate with your doctors for a payment plan that works for your budget – not theirs!

  4. What is a co-pay? Is it the same as co-insurance?

     Whether it's called a co-pay or co-insurance, it still means that you and the insurance company share in the cost of a medical expense. You may be a co-producer or have a co-worker… you and the other person share the same responsibility towards a common outcome. A co-pay – or co-insurance – is no different. You and the insurance company share in the cost of a medical bill.

  5. How do I know you are getting me the best price possible?

     Whether you buy from The Insurance Mom or directly from the insurance company, the premium will be exactly the same, because the prices are approved by the State of California. The Insurance Mom knows you want to be heard… and I'm here to listen to your concerns so that you're sure to get the plan that's best for you and your budget.

  6. Why should I use an independent agent?

     Having The Insurance Mom on your team means you never have to call an 800 number and sit on hold forever, only to get disconnected (right?). You can just call me directly on 323-654-2207 or send an email to Alison@TheInsuranceMom.com.

     If you get a policy directly from an insurance company, The Insurance Mom won't be able to look out for your best interests. Wouldn't you rather have personal help getting answers to general questions or solving problems that could come up later with regard to claims, billing, or even a simple change of address?

     The Insurance Mom will keep you clued in about any benefit or premium changes and help you decide if another plan may be better suited to your needs and budget.

     … and there is no charge to you. You get The Insurance Mom for free!!

  7. What is a Health Savings Account (HSA)?

     A Health Savings Account is a smart way to save tax-free dollars to pay for your medical expenses, including dental, vision, prescription and over-the-counter expenses too! Think of an HSA like an IRA, but for medical expenses only.

     If you have a health insurance plan that is "HSA compatible" you can open a Health Savings Account so you can:

     * Make contributions that are tax-deductible
     * Earn interest that is tax-free
     * Use the money — tax free — to pay for medical, dental, vision, prescription and over-the-counter expenses

     The Insurance Mom wants you to learn how to be a good money manager, and having an HSA is an easy lesson!

• Life Insurance Questions

  1. Why do I need life insurance?

     If there are people who financially depend on you, life insurance makes a lot of sense. Whether it's a friend, family member, child, bank or business associate, if the worst happens, you can still protect them. Life insurance financially protects the people you love (or do business with).

  2. How much life insurance should I have?

     The Insurance Mom doesn't want to make this more complicated than it needs to be. Generally, you should have life insurance that equals approximately 15-20 times your annual income. But the real answer will come after we talk to determine your own unique needs. Call The Insurance Mom on 323-654-2207 or email Alison@TheInsuranceMom.com.

  3. I'm young and single, should I have life insurance?

     Sometimes single people don't need life insurance… and sometimes they do. However, besides marital status, there are many other issues that we'll talk about to establish your need for life insurance.

     If you died tomorrow, who would pay for your funeral expenses? Even a simple funeral could create financial havoc in some families. Now may be a good time to consider buying a small life insurance policy to pay your debts and cover funeral expenses.

  4. What is the difference between Term Life and Whole Life insurance?

     Term Life insurance is considered "pure" insurance with no bells or whistles, and, it is relatively inexpensive. Whole Life (and its siblings Universal and Variable Life) is expensive, has lots of added features and may not be the right protection for you.

     The basic difference between Term and Whole LIfe insurance? A term policy is life insurance only. When you die it pays the life insurance to your beneficiary. You can buy Term Life for periods of one year to 30 years. Whole life insurance, on the other hand, combines life insurance with an investment feature (aka cash value). The investment could be in bonds and money-market instruments or stocks. The policy builds cash value that you can borrow against.

     The Insurance Mom wants you to have the least expensive life insurance possible, which would be Term Life. Some brokers refer to Whole Life insurance as retirement plans. But Whole Life can be very expensive and there are better ways to have a retirement plan than life insurance.

• Disability Insurance Questions

  1. Why do I need Disability Insurance?

     If you couldn't work because of an injury or illness, how would you pay for the things that are important in your life? Without an income, you can't pay for your car or your house or get a new bicycle or even download new tunes!

     Disability Insurance will replace your lost income. This is especially critical if you are self-employed.

     Did you know that disability insurance is just as important as life insurance? While The Insurance Mom doesn't like to throw statistics around, the reality is you are much more likely to become disabled than to die prematurely. If you're reading this with your friends, one in three of you staring at this monitor will have a disability before age 65. Really!

  2. How much Disability Insurance should I have?

     That depends on your annual income. The disability insurance companies will replace approximately 50% - 60% of your income. Why not your full income? The Insurance Mom is so glad you asked!

     The reality is that you don't live on 100% of your income. (There's that little issue of taxes, remember?) The disability insurance companies will replace that part of your income on which you actually live. And, really, if 100% of your income was replaced, what incentive would you have to get back to work?

  3. If I get disabled and have a claim, do I have to pay taxes on the disability insurance income?

     Nope. Not if you have a private policy and you're paying the premium. However, if you have disability benefits at work and your employer is paying all or part of the premium, you will get taxed on all or part of the benefits.

  4. If I'm self employed and get hurt on the job is there any insurance protecting me?

     No. You do what we call "self-insure." That is, buy disability insurance. If you're not on anyone's payroll and paying payroll taxes, then you're not paying into California's State Disability Insurance plan.

  5. If I get hurt on the job won't my employer's disability insurance cover me?

     Only if your employer provides disability insurance as part of your benefits package. Otherwise, through your California payroll taxes, you're paying into the State's Disability Insurance plan.

• Long Term Care Questions

  1. Why do I need Long Term Care insurance?

     If you get seriously sick or injured, most likely you'll need some kind of care, possibly for a long period of time (like months or years). My Dad always said, "Assume the best, but plan for the worst." And this is exactly what Long-Term Care (LTC) insurance is all about. And, neither your health insurance nor Medicare will pay for long term care expenses!

  2. Who needs Long Term Care Insurance?

     Everyone!

     The unfortunate truth is that more than 60% of us will need some kind of long term care at some time. In California, the average cost of a one-year stay in a nursing home is $80,300, an amount that grows at about 5% annually. The cost of care in your own home can be upwards of $40,000 a year. And these are costs that are not covered by regular medical insurance or Medicare!

  3. At what age should I consider getting Long Term Care insurance?

     Starting at about age 45, while you're young and, presumably in good health, it's a good idea to at least get a proposal for LTC.

     At that age, the LTC premiums should be quite affordable. And there's the real possibility that they will never be increased.

  4. What does Long Term Care cover?

     Long Term Care Insurance covers the cost of care in almost any setting; at home (which most people prefer), but also in a nursing home, in a residential care facility or in other community-based settings, such as adult day care.

     It provides funds to pay for assistance needed over an extended period of time to manage, rather than cure, a chronic, long lasting health condition such as AIDS, diabetes, heart disease, etc.

• Short Term Insurance Questions

  1. Why should I consider temporary health insurance?

     If you're between permanent health insurance plans then a temporary, short term, health insurance plan may be just the ticket. For example, if you're too old to stay on your parents' health insurance (you're so grown up!), or you've just become a college graduate (good job!), are in between jobs, or you're waiting for your group coverage to start, then it might be the time to think about a temporary health insurance plan.

  2. Is temporary insurance expensive?

     No, it doesn't have to be. Remember, you're getting a temporary plan for the "just in cases" that happen in life, so you don't want to buy a rich, comprehensive (expensive) plan.

  3. What if I need insurance for more than 6 months?

     Some temporary policies will cover you for 6 months, others for 12. If you need protection for more than 12 months it may be time to consider permanent health insurance instead.

  4. What if I have a pre-existing condition?

     Temporary health insurance policies don't cover pre-existing conditions, generally for things treated or diagnosed within the previous 12 months. If you have existing medical conditions, talk to The Insurance Mom about your options before you cancel any other coverage you might have.