House Insurance

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Should You Choose a High Deductible Health Insurance Plan?

As “consumer-driven health care” (CDHC) becomes increasingly popular, you may soon face the decision of whether to switch to a high-deductible health care plan with a health savings account (HSA) if you don’t have one already. 

The basic idea is that your health insurance premiums are lower but you have to pay more out-of-pocket (the deductible) before the insurance kicks in. To help you cover those higher out-of-pocket costs, you and your employer can contribute pre-tax to a health savings account, which allows you to use the money tax-free for qualified medical expenses like a medical FSA.  

But unlike an FSA, any money you don’t withdraw can be carried over indefinitely and used for any purpose without penalty after age 65. In fact, you might even want to pay your medical expenses out-of-pocket if you can and let your HSA grow to be used tax-free for health care expenses in retirement. Some HSAs allow you to invest in mutual funds for that reason. (This the health insurance plans we have at Financial Finesse.)

The general rule of thumb is that these high-deductible plans are best for the “healthy and the wealthy.

” In other words, the less health care you use, the more you can afford to put away in your HSA, and the higher your tax bracket, the more likely the high-deductible plan will make more financial sense for you. On the other hand, if you have a lot of health care expenses or are in a low tax bracket, a more traditional low-deductible health insurance plan may be better for you.

I recently spoke to someone on our Financial Helpline who seemed to fit the latter profile. He estimated that he would use the entire $2,400 deductible for the high-deductible plan and he’s only in the 15% tax bracket so he wasn’t sure that the HSA would be very beneficial. To make sure, we decided to crunch the numbers, assuming he spent $2,400 in health care expenses. (After that, both plans would have the same co-insurance covering 80% of his remaining costs.)

If he chose the low-deductible plan, he would pay $4,692 in premiums, $800 as his deductible, and $320 in co-insurance (20% of the expenses after the deductible) for a total of $5,812. 

If he chose the high-deductible plan, he would pay only $3,384 in premiums but $1,600 towards his deductible (his employer would contribute $800 to his HSA) for a total of $4,984. In addition, if he contributed that $1,600 of out-of-pocket expenses to his HSA, he’d get an additional $240 in tax savings. If he spends less than $2,400, the high-deductible plan becomes even more favorable .

So even though it appeared that he was a better fit for the low-deductible plan, the high-deductible plan ended up saving him more money even without contributing to the HSA. Adding the tax savings from the HSA and the possible savings of potentially spending less than $2,400 on health care was gravy on top. 

Here are some things you want to make sure you factor in before making your own decision:

1)      What’s the difference in premiums, deductibles, and co-insurance between the plans?

2)      Will your employer contribute to your HSA?

3)      How much can you save in taxes by contributing to your HSA?

A wrong decision can cost you hundreds or thousands of dollars each year so don’t just jump to conclusions. Instead, answer those questions and run the numbers. The result may surprise you.

[Source: https://besthealthinsurancepoliciesinindia.wordpress.com/2015/11/20/should-you-choose-a-high-deductible-health-insurance-plan/

Tips for Buying Homeowners Insurance

Homeowners across the country value what they have: their homes and what’s inside them. Homeowners insurance protects your home and personal property. It also provides liability protection plus more. But over time, things change. To better understand how homeowners insurance works and what you need to know, Designing Spaces met up with one homeowner and an Allstate agent

Homeowners insurance can be a very expensive proposition but of course it’s essential it can protect your home against fire flood in even earthquake. Feel this can afford to build our homes for scratch and so earthquake is essential there are several ways to reduce your home owner’s insurance costs.

1.  First maintain a security system and smoke alarm in your home a burglar alarm can help lower your annual premium by up to 10 percent usually it’s required that it be monitored by a certain station but it’s good protection especially in these days of tough economic times smoke alarms are standard in most modern homes these days but installing them in all their home can save you 10 percent or more on your insurance bill.
2.  The second way to lower your insurance bill is to raise your deductible the higher your deductible the lower your annual premium you will be responsible for damage up to the cost of your deductible and your lender way limit the amount of that deductible.
3. Third look for multi policy discounts many insurance companies give a discount maybe if 10 percent or more if you have more than one policy with them this could be an auto or health policy in addition to your homeowner insurance. 
4. The fourth way is a little off the wall but if you pay off your mortgage your homeowners insurance will go down because companies assume that if you own your home outright you’ll take better care of it.
5. The fifth way to lower your home insurance bill is a senior discount if you’re over 50 and are willing to admit it you might be eligible for a discount insurance companies have different names for age preference policies they’re often called everything from senior discount to mature policy discounts if you qualify why not go for it.
6. And the sixth way to reduce your home insurance bill is to regularly review and compare your policy at least once a year compare your policy to other insurance policies available on the market you should also review your existing policy and note any changes that could lower your premiums also make sure that you have all the coverage that you need. 

Homeowner insurance is in this essay the while there are many ways to save money you should shop wisely there were some features that homeowners shouldn't skimp on when you’re buying homeowner insurance and you should know the difference and then shop around.

[Source: http://eduinsuknowledge.blogspot.in/2015/04/tips-for-buying-homeowners-insurance.html]

Should you review your Insurance after Home purchase?

Financial plans and the suggested course of action are based on the facts pertaining to you. When a financial advisor hands over a financial plan to you and suggests buying an insurance cover, the value of that insurance cover is based on factors such as your current income, expenses, goals, assets, liabilities and commitments. But circumstances change over time. New loans, increased salary, higher children education costs, higher expenses, are all variable in nature and therefore, evaluating one's insurance- is important. Let us understand this with an example. When Manish was 18 years old, his parents had purchased an insurance plan for him for Rs 10, 00,000, more as a tax saving mechanism. He probably was not even aware of it or the reason for this cover. Now Manish is 30 years old, getting married, and planning to purchase a new home for self and his wife.

His wife is a home maker. It is prudent to buy an insurance that at least covers the home mortgage amount. Since Manish has just started his career, the accumulated savings for down payment may not be more than 15% of the value of the property, and hence he would need to take a loan for the remaining 85%. Assuming the cost of the house is Rs 80,00,000, the loan amount taken would be Rs 68,00,000(@85% of value of house) Since Manish is the sole income earner for now, he should take a pure term insurance cover plan for the remaining Rs 58,00,000, after considering the existing insurance cover of Rs 10,00,000. This is done to ensure that in case of an unfortunate eventuality of his death, his wife is not left with a home loan burden and no income to pay that loan. She would not be faced with the financial trauma of selling the home to repay loan to the bank.

The proceeds from the home insurance cover would be used to repay the mortgage to the bank and she would continue to stay in the home. Again, in his absence how would she continue to maintain the same lifestyle and manage the household expenses? She is a home maker and has no source of income to fund the living expenses. Therefore, while Manish is re- evaluating the life cover needed at the time of purchasing the new home to cover his mortgage value, he should also consider protecting his family to maintain the same standard of living, should something happen to him to ensure cash flow of the household is not affected. He must therefore, consider a pure term insurance plan that would pay a lump sum to his wife, should anything happen to him, so that she can deposit the amount in the bank and fund the living expenses year on year till her life.

For that, the present value of income that is used for the family discounted by inflation for the remaining tenure will determine the life insurance needed by the life assured. Let us say Manish’s gross total income is Rs 5,00,000 per annum. His personal expenses are Rs 1,00,000. His personal income tax payable is Rs 23690. Premium paid by him for his personal life insurance policy is Rs 20,000. Amount available for his family is Rs 3,56,310. Lets round this to Rs 3,57,000 per annum. This is the amount his family would need year on year in his absence to maintain the same lifestyle until retirement. The human life value for Manish is calculating the present value of all future incomes that he would contribute to his family for the next 30 years (60-30), which is Rs 40,19,028 assuming a discount or inflation rate of 8% per annum. This amount does not include the assumed increase in income that Manish would get through his career. Therefore, if Manish dies at age 31 years, his family will receive the above amount that will sustain their lifestyle needs in his absence for their remaining life. 

If Mr. and Mrs. Manish are planning to have children, the insurance cover would increase with added dependents and responsibilities of education costs. Another important cover one must buy is personal accident insurance cover to protect oneself from accidental dismemberment. This means loss of limbs or a part of your body that would not allow you to carry on work with the same level of income. With reduced income, how would one service the mortgage payments? Therefore, there are policies that pay a part of the mortgage to the bank, in case of partial/ total dismemberment. Homeowners need to purchase home insurance to protect their homes and personal property.

Therefore, you need to re-evaluate the replacement value year on year. Change in Coverage available- With so many changing terms and conditions and coverage rules, it is important to evaluate what is the best package available presently to protect your home against damage. For example, fire, theft, storm, reimbursement against additional living expenses, doctor visits in case of personal damage, are coverage items to reconsider. Change in structure- If there are modifications made to the house structure, like addition of new rooms, remodeling, the added costs of replacement should be incorporated in the new policy. So think twice, before tucking away that insurance bond document in the drawer the next time.

[Source: http://www.moneycontrol.com/news/insurance/should-you-review-your-insurance-after-home-purchase-_4160221.html?utm_source=ref_article]

How to Choose the Best Home Insurance Company in India

The prices of home insurance can vary. This is why it is important to shop around for the best home insurance in India which can provide adequate coverage without burning a hole in your pocket. Most people avoid taking a home insurance policy just because they think that the sophisticated alarm systems and locks that they have installed are adequate for protecting their home. However, despite the best protection measures there is always a risk of thefts and damages caused by natural disasters. This is why there is a need for a taking a home insurance policy which is a much more concrete step in covering these risks.

Along with the price and the type of cover, it is also important to check the home insurance company while comparing the policies. Here are some

Tips for Choosing Home Insurance in India

Check the Premium and Coverage

The first thing you need to do is evaluate the risks your home faces. For example, if you live in an area that is prone to natural disasters such as floods, then you should ensure that the policy covers these risks. Apart from natural disasters, your home insurance policy should cover against the financial loss caused by the damage to the structure and/or contents of your home due to man-made disasters. The policy should also cover jewelry and valuables. For example, home insurance policies by Bajaj Allianz General Insurance cover jewelry and valuables in the event of burglary, house breaking, waylaying, and snatching.

While checking the coverage, it is also important to check if the premium for the home insurance policy fits your budget. You can solicit quotes from individual insurers or use price comparison sites to compare quotes online.

Look at the Service

The hallmark of a good insurance company is the customer service standard of the company. Does the insurance company have a good turnaround time? Does the company have knowledgeable customer service representatives who can resolve your queries while buying the policy? The company should be equipped to assist you at virtually any time and the service standards of the company should be high.

Know the Claim Settlement Ratio

Your premiums may be low but it may be fruitless to opt for the company if the claim settlement record of the company is not good. The very purpose of insurance will be defeated if the claim is not provided for when required. Check the company’s claim settlement ratio along with the duration for claims settlement while looking for the best home insurance in India.

Focus on Financial Stability

The financial ratings of the company are important to assess the financial stability of the company. For example, ICRA has reaffirmed IAAA rating to Bajaj Allianz General Insurance Company Limited. The rating indicates highest claims paying ability and shows the fundamentally strong position of the company. This is indicative that the prospects of meeting policyholder obligations are among the best.

Keeping these factors in mind can help in choosing the best house insurance company in India and find the cover that suits your need and your budget.

[Source: https://support.bajajallianz.com/support/how-to-choose-the-best-home-insurance-company-in-india/]

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