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Category: Insurance

Health-Savings-Account-PlansHealth savings accounts (HSAs) are wildly common.  Since their introduction in 2004, approximately 2.5 million Americans have enrolled in these so-called consumer-driven health plans.  But, alas, HSA plans are not for everyone.

Here are some pointers to help you consider whether an HSA will profit you and your family.

1. An HSA plan can cut healthcare costs by an average of 40% for many people.

Nevertheless, some people will not realize any net savings. Those most likely to realize significant savings are people who pay all of their own health insurance policy premiums, such as the self-employed, who are relatively healthy with few medical expenses.

2. health savings plan restores freedom of choice.

An HSA plan puts individual consumers back in control of their own health care. This also means that each individual must be more responsible for his or her own health care decisions. This approach of self-reliance is not always popular with or appropriate for everyone, especially those who have become comfortable with HMO-type “co-pay” plans.

3. Health savings accounts reduce income taxes.

Every dollar contributed into your HSA account is deducted from your taxable income in the same manner as contributions into a traditional IRA account–regardless of whether you spend it or just save it.  Interest and investment earnings in a HSA accumulate tax-deferred, just like a traditional IRA. Unlike an IRA, withdrawals are tax-FREE when used to pay qualifying medical expenses.  In many situations, new account holders are able to almost fully fund their HSA with money saved on premiums from a prior, higher priced plan.  By stashing all or most of those savings into an HSA, the account holder realizes instant, additional savings in the form of reduced taxes.

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In the UK around 7 million people spend around £3 billion a year on medical insurance. One in seven policies are demanded out by individuals with the balance being put in place by their employers. The problem is that Medical insurance is complex and few policyholders take the time to really study the details of their cover. As a result, many misunderstand what will be covered. If you expect medical insurance policy to pay every health claim, you’re mistaken.

Medical insurance is designed to supply protection for curable, short-term health problems and reserve policyholders to jump the NHS queues to see consultants, be diagnosed, receive surgery or be treated. That sounds fine, but before you buy you need to appreciate the treatments and situations that fall outside the scope of the cover.

But first a word of warning. This article does not relate to any specific policy and the terms and considerations issued by individual insurers do vary. So please secure you also check your policy documents. After reading this article, you’ll know what to look out for!

Sorry – it’s a chronic term

If a term can be cured and is not a long-term problem, your insurance policy company will classify it as acute and should see the cost. If your problem is incurable or it’s a trouble that, despite appropriate handling, will be with you for a long time, then your insurance company will classify it as chronic – and no, you won’t be covered.

But deciding whether a term is acute or chronic is fraught with problems. It’s rarely a black and white decision and this can lead to a major area of conflict between policyholder and insurer.

It’s clear that asthma and diabetes are chronic circumstances as you’re almost certain to suffer from them for the rest of your life. So those categories of illness are not covered.

Problems arise when Doctors initially consider a patients’ condition to be curable, but the term later deteriorates and the medical team changes its’ mind, it’s now become incurable. This can sometimes happen, especially in the treatment of certain types of cancer.

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Terminal illnesses not only destroy lives, but they can also erode the financial stability of individuals and their families. A viatical settlement, however, can leave financial support and emotional comfort to those with serous diseases.

A viatical settlement is simply the sale of the gains of a life insurance policy to a third party. Viatical settlements, also called “viaticals”, grant individuals facing a terminal illness to use the present day value of their life insurance policy policy to ease the financial burdens.

The viatical settlement business originated in the 1980s as a way to give terminally ill AIDS patients previous access to their life insurance benefits. Since then, the use of viatical settlements has broadened significantly. Viaticals now include policy holders suffering from Lou Gehrig¹s disease, cancer, heart disease and other life-threatening illnesses.

The Importance of Viatical Settlements

Viatical settlements can supply an important source of funding for terminally ill people battling the high costs of medical care. An estimated 40 million Americans are not covered by health insurance policy, and many are often unable to earn a living because of their illness. These individuals must cover their medical costs out-of-pocked on top of daily living expenses such as food, shelter, utilities and transportation. Viatical settlements reserve people in these circumstances to maintain a level of financial security during their final months or years.

Viatical settlements are completely legal transactions based on this concept: Investors buy life insurance gains from insured individuals for a percentage of the face value of their insurance policies. Then they collect the full amount of the death profit on the policy when that person dies. For terminally ill people, viatical settlements leave them to match a partial payment on their insurance policies while they are still alive. They can use these funds to pay for their health care, to see daily living expenses, or even take a well-deserved vacation with their families. The bottom line is: Viatical settlements enable individuals to take reward of their life insurance policy benefits before they die and enhance the quality of the life they have remaining.

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OK, now you have a lovely new home and with it comes a lovely new mortgage. With the average mortgage advance  standing at around £150,000 it’s a long-term commitment to repay a lot of money. The repayments also take a fair slice out  of your monthly income.

What could go wrong with these financial arrangements and can you hedge your bets by insuring against the hazards? After all  you have a family to protect.

Most somebodies would identify 5 main areas of concern, all of which boil down to your ability to maintain the mortgage  repayments:

- Interest rates might increase and make the monthly repayments unaffordable

- You might loose your job

- You might be forced to take time off work through illness or accident

- You may become permanently unable to work through accident or very serious illness

- You could die before the mortgage is paid off.

The financial industry is packed with pretty shrewd somebodies so it’ll come as no surprise to learn that there are financial  products to help with each of these dangers.

If you want to reduce the risk of interest rates rising to unaffordable levels, you should have discussed these matters with  your mortgage adviser. He will then have told you Around “fixed” and “capped interest rate” mortgages. As the name implies,  a fixed rate mortgage fixes the interest rate you give whilst with a “capped” mortgage, the lender agrees not to increase  your interest rate above a pre-agreed level. Both types of mortgage revert to the standard variable rate after the fixed or  capped period finishes which is typically after three or five years, depending on your lender.

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Selling your life insurance is an option you might consider if you’re in a difficult financial situation for which you don’t see a close end. A terminal illness or old age could cause you to think twice about paying those hefty premiums at this stage of your life. Selling your life insurance carries with it complex implications and substantial risks, so it is important that you educate yourself regarding the big picture. If you’re interested in selling your life insurance, this is a good starting point to obtain some basic information.

Basics: Vocabulary

If you’ve already done any research on selling your life insurance, chances are good that you’ve come across two main terms: viaticals and life settlements. Both refer to the selling of your life insurance to a third party. So what’s the difference? “Viatical” is typically used to refer to the transaction involving a chronically or terminally ill insured, while a “life resolution” is a transaction involving a senior (generally over the age of 65) who is not terminally ill.

Even though you now know the difference, it does not mean that your state does. These terms might be used interchangeably, or your state might use one of them to refer to both transactions. For example, your state could use “Viatical resolution” to refer to any type of transaction regarding selling your insurance. Be aware that this kind of ambiguity may exist in relation to the vocabulary used in the sale of your life insurance policy.

How it Works
The owner of the life insurance policy policy will sell it for a percentage of the death profit a lump sum to a third party and, in exchange, receives an often substantial lump sum payment. The third party then gets the new owner and/or beneficiary of the policy and pays all of the future premiums and eventually collects the death benefit when the insured passes away.

Those considering selling their life insurance may either directly approach a viatical company or resolution firm, or they may Choose to work with a broker. The broker will act as an intermediary and present the information to several different companies/firms in an effort to find the highest price for the sale.

The settlement firms buy the insurance policy on behalf of investors. In this position, the investors become the owners and beneficiaries, and the resolution firm pays the premium until the insured dies. The firm then collects the death profit and either pays its investors a percentage of the annual return or repackages the policy for sale to another party.

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