FAQ's
Personal Life & Health
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What is a catastrophic health plan?
This type of health insurance plan pays hospital and medical expenses once they have exceeded a higher deductible. The cost for these plans is usually substantially less than "first dollar" plans, with lower deductibles.
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What is a co-payment?
The co-payment is a small fixed dollar amount that you pay ($10 or $15 dollars for example) at the time services are rendered. Typical co-pays are for office visits, prescriptions, or hospitalizations.
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What is a deductible?
A deductible is the portion of your health care that you pay before insurance starts to cover the expense. Usually, the higher the deductible, the lower the premiums. You can have more than one deductible on your policy ~ for example, one for a hospital stay and one for prescriptions.
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What is a health savings account?
A health savings account can be set up by any adult who is covered under a qualified high deductible health plan. Money is contributed into the health savings account by the individual, their employer, or both. Money is not lost at the end of the year if it isn't used; it rolls over to the next year. The health savings account is portable so if an individual leaves their employer they can take this account with them. Money from the account is used to pay for qualified medical expenses not covered under the health plan due to the deductible or co-insurance. You can also used money for other qualified expenses as permitted under federal tax law. This includes dental, vision and also over the counter drugs.
The savings account has several tax advantages:
1. The individual or family can make tax deductible contributions to the HSA even if they do not itemize deductions
2. The individual's employer can make contributions tat are not taxed to either the employer or employee
3. Employers sponsoring cafeteria plans can allow employees to contribute untaxed salary through salary reduction
4. Earnings in the account are tax free
5. Funds distributed from the HSA are not taxed as long as they are used for qualified medical expenses
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What are the most common types of life insurance policies?
Term Insurance provides protection for a specific period of time (5, 10, 20 years), and pays a benefit only if you die during that term. Often, this type of insurance can be renewed when you reach the end of the specified time period. The yearly premium usually increases as you grow older and continues as long as stated in the policy.
Permanent Insurance (unlike term insurance) enables you to accumulate a cash value while you are still alive. This cash value grows tax-deferred until withdrawal of the cash value during your life. Normally, permanent life insurance passes to your beneficiary as a tax-free death benefit.
Universal Life Insurance (a form of permanent insurance) is a flexible plan that has the added option of tax-deferred earnings on your accumulated cash value. Both the insurance and cash value components of Universal Life are designed to allow adjustments in contribution amounts as financial needs change.
Mortgage Life Insurance: Mortgage protection life insurance is simply insurance that is meant to pay off your mortgage in case of your death while the mortgage is not fully paid. The original type of mortgage life insurance followed the amount of the mortgage balance so, as your mortgage obligation decreased, so did the amount of insurance. Today it usually makes more sense to get mortgage life insurance equal to the original mortgage amount but instead of a decreasing amount of insurance, you simply get the most inexpensive level term insurance.
Return of Premium Life Insurance is term life insurance that gives you all your money back if you keep it? Yes, it's true. You are under no obligation to keep the policy for the entire term, but if you do, you are guaranteed to get your money back from the insurance company, tax free. Contact one of the professionals at Clark-Mortenson to learn more!
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How much life insurance should I have?
In order to determine how much protection you need, a number of factors, such as immediate needs, funds for a re-adjustment period and ongoing financial needs, need to be considered. In addition, determining what type of life insurance you need is just as important. This is where the trusted advisers at Clark-Mortenson can help. There are many variations of life insurance. We can review these, along with the considerations above and help you determine what would be best for your personal needs and budget. To come up with your own estimate ~ got to tools and check out our life insurance calculator.