YOUR PERSONAL INSURANCE NEEDS

by Alan Plafker, PRESIDENT & CEO Member Brokerage Service LLC

A Melrose Credit Union Service Organization

(This article was first published two years ago. It has been updated and is being published here in its updated form.)

Protection and security products such as Insurance serve as the foundation of a financial plan and help ensure that no matter what happens, immediate and future needs can still be met. Insurance provides financial protection.

• If someone would suffer financially at your death you need LIFE INSURANCE.

• If you need to replace income in the event you become ill or injured you need DISABILITY INSURANCE.

• To cover catastrophic costs incurred to Doctors and Hospitals providing you treatment you need HEALTH / MEDICAL INSURANCE.

• At older ages, you may incur high costs for nursing homes and home care. For coverage to protect you in these instances you need LONG TERM CARE INSURANCE.

• You can be sued for liability in an accident with an auto, injury to others at home, or off your premises. A sudden fire or other peril (such as theft, storm damage, vandalism, etc.) can damage your property. You need other coverage such as AUTOMOBILE, HOMEOWNER / RENTERS, UMBRELLA / EXCESS LIABILITY, and VALUABLE ITEMS INSURANCE.

PROPERTY AND LIABILITY INSURANCE COVERAGE

The law requires some coverage like AUTOMOBILE INSURANCE if you have an auto. A bank requires a HOMEOWNER Policy if you have a mortgage on your home. Other insurance policies may be needed to protect property and to cover liability in the event you are sued for causing bodily injury or property damage to someone else or their property. You should review Auto & Homeowner policies often to be properly covered at the lowest rates.

HEALTH INSURANCE COVERAGE

Medical and Hospital coverage is most important because a serious illness or accident could result in astronomic bills incurred to Doctors, Hospitals, and other Medical providers. An extended hospital stay as a result of a serious accident or illness related to the heart, cancer, or other conditions could cost hundreds of thousands of dollars. For most of us, this would wipe out our savings and leave us in debt without insurance to protect us.

In some countries, the government provides all medical needs at no cost. Many employers in the United States provide coverage to employees. Many people are not covered if it is not provided at work, if they are not employed, or if they are self employed unless they purchase insurance themselves.

GETTING HEALTH INSURANCE COVERAGE IN THE “FOR HIRE” INDUSTRY

Many owners and drivers must get their own coverage because they are not an “employee”. Availability of this coverage is limited and expensive so many go without coverage. There are some government subsidized programs such as HealthyNY. With these types of programs the cost is based on income and you must have low earnings to qualify for reduced cost. If you cannot get coverage from an employer or from a subsidized program you must go to the insurance companies as an individual risk.

HEALTH INSURANCE COMPANY BACKROUND AND STATE LAWS

There are insurance companies that offer medical health insurance to the public as individuals as well as groups. They are companies such as HIP, GHI, OXFORD, BLUE CROSS, and others. They have rates filed with the NY State Insurance Department for various available plans. They offer low cost HMO plans which are restricted to a network of doctors and hospitals and require a primary physician. There are also more expensive plans available which allow you to go “outside the network” to any doctor of hospital.

The laws relating to health insurance in New York State were established so that an insurance company would have to accept an applicant without regard to his or her medical condition. In addition, a new company could not deny coverage for a pre existing medical condition as long as you were continuously covered for twelve months prior to changing companies. THIS PROTECTS YOU THE CONSUMER. IT IS MOST IMPORTANT THAT YOU NEVER HAVE A LAPSE OF COVERAGE OR YOU CAN BE DENIED BENEFITS BECAUSE OF A PRE-EXISTING CONDITION!

As a result of this law insurance companies cannot discriminate and charge lower rates for preferred risks and higher rates for poor risks. They have to accept everybody and charge the same rates for each “community”. This means that everyone in a geographic area has the same rate.

The New York City Metropolitan area has the highest rates in the state because medical services costs are highest compared to other areas in New York State.

MEDICAL INSURANCE RATES

With “community rates” the insurance companies are able to spread the risk through a larger population than they used to when they would evaluate each employer group. The result is that the rates they have is already composed of a very large group. For example, all the people insured in the NYC area. As such, it is difficult to offer a lower rate to an employer or association which would actually be a smaller group.

Many people in the “for hire” industry have tried unsuccessfully to get a lower rate by forming a group. I am often asked to help present a group to an insurance company for better rates. This doesn’t work since the insurance companies have their rates based on groups that are already hundreds of thousands large because of community rating.

The only way to pay a lower rate is to reduce coverage. When you see how limited the coverage must be to save a small amount this option usually doesn’t make any sense. We have to pay the current rates to be properly covered until there is some other significant changes in the laws or in the costs charged by medical providers.

OTHER LIFE AND HEALTH COVERAGES

In addition to medical coverage you need other coverage if you have a family that depends on your ability to earn income. An accident or sickness could disable you resulting in loss of income which could be significant. Obviously, death would leave a dependent family without any means for support without insurance. Before retirement you should consider coverage for Long Term Care to protect your assets.

INSURANCE NEEDS ANALYSIS

The best advice is to rely on an honest, independent insurance professional with the expertise and experience to do a complete coverage needs analysis. An agent or broker that is licensed in all areas of insurance should give you all the options to consider, not just try to sell you a policy without consideration to all your needs.

Take the time every few years or whenever your needs change to review your coverage. This way you will always have a plan to provide for immediate and future needs, so no matter what happens, you and your family have the financial protection you need at the lowest possible cost.

Your Professional Insurance Agent…
We want you to know about the insurance you’re buying.

Alan Plafker is President of Member Brokerage Service LLC, a Melrose Credit Union Service Organization. He is a licensed Insurance Broker and serves on the Board of Directors the PIANY (Professional Insurance Agents Association of NY) and on the Board of CIBGNY (Council of Insurance Brokers of Greater NY). His Agency insures thousands of polices for TLC Insurance as well as many policies for all types of insurance. You can reach him in his Briarwood, Queens office at (718) 523-1300 ext. 1082.

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