Quiz 9: Insuring Your Health
a. The estimated disability insurance needed is calculated as follows- b. Mr. B should go ahead for a disability insurance of $ 3,750 as the company only provides benefit for 6 months. The size of the insurance should depend on the current needs as well as the future requirements. Cost of Living Adjustment is offered by some insurance companies wherein the effect of inflation is adjusted in the benefits provided which would be appropriate for Mr. B. Mr. B should also consider the expense of higher education of his children while deciding the benefit required. Some other factors that must be considered before selecting the insurance is as follows- 1. The definition of disability provided in the insurance policy focusing on the exclusions. 2. The benefit amount payable and the coverage period during which the benefit will be paid. 3. Probationary period is the period after which the privilege under the policy becomes active. 4. Waiting period is the period after disability after which the benefits are payable.
Long term medical care insurance covers medical and personal expenses other than hospitalization such as in nursing home or patient's home of a person with chronic medical conditions. The advantage of the insurance is that it helps in meeting the high expenses in chronic medical conditions. In the absence of such insurance the meeting the medical expenses becomes difficult. The disadvantage of the insurance is that premium can be as high as 7% of the amount insured. Another disadvantage is that the hospitalization expenses are not covered; hence separate insurance cover may have to be taken. Buying a long term medical care insurance for a family member requires consideration of various factors which are discussed below. The various factors are- 1. Assets and future commitments- The value of the assets and the amount required for the future needs are to be considered to determine the amount available to meet long term care expenses. Based on the amount available the need for insurance may be decided. 2. Premium paying capability- The premium for such insurance is high and therefore a person may chose to invest rather than pay premiums. 3. Disabling disease in family history- History of any disabling disease of a family member should be considered and decision for buying an insurance may be taken.
Disability income insurance would be required and the estimated disability insurance needed is calculated as follows- While selecting disability insurance some of the following factors that must be considered are as follows- 1. The definition of disability provided in the insurance policy focusing on the exclusions. 2. The benefit amount payable and the coverage period during which the benefit will be paid. 3. Probationary period is the period after which the privilege under the policy becomes active. 4. Waiting period is the period after disability after which the benefits are payable.