I recently appeared on Steve Savant’s Money, The Name of the Game. This is episode 3 of a 5 part series regarding Voluntary Benefits. Below are excerpts from the press release announcing this episode. You can listen to the audio as a podcast or watch the video that appears at the bottom of this page.
There is a myriad of choices for the consumer to choose from when it comes to Voluntary Benefit policies. Understanding the things to look for will help dramatically, especially at the time of claim.
Not all Voluntary Benefits policies are created equal. As consumers are becoming more aware of the need for Voluntary Benefit protection, they are often overwhelmed by the myriad of insurance policies they have to choose from.
Regardless of the insurance company, the following features are critical in evaluating whether or not to purchase a policy:
Guaranteed Renewable – An incredibly important consideration is whether or not the policy is guaranteed renewable. If it is the insurance company can’t raise your rates or drop your coverage just because you are making claims. This is unlike auto insurance where the insurance company will do just that. Most Voluntary Benefits insurance companies reserve the right to raise rates, but they must treat every customer that owns that policy equally.
Underwriting – A majority of Voluntary Benefit policies require just a few questions to determine eligibility. Very rarely do they ask for medical records or blood work. In fact, under certain circumstances, the policy may be “guaranteed issue.” In other words, regardless of medical condition, you can’t be turned down.
Portability – Most (not all) Voluntary Benefits programs are purchased through a payroll deduction. It is important to you know when you leave employment that you have the right to keep your coverage.
Exclusions & Limitation – Without exception, every insurance policy in America has certain exclusions and limitations. It is important to check that they are reasonable. What constitutes reasonable? That’s up to you. For instance, most accident policies won’t pay if you are legally drunk at the time of the accident. They also won’t cover you if you hurt yourself in the commission of a felony. For most people, those are examples of reasonable exclusions and limitations.
Look-back periods – Even though a policy might be guaranteed issue, that doesn’t mean you will necessarily be covered. A great example would be that even though you were allowed to purchase a cancer policy if you currently are battling cancer, the company won’t start paying claims on that occurrence for a period of time.
Building Benefits – Some policies have benefits that increase in value the longer you have the policy. This feature often necessitates a nominal additional cost. Most consumers agree that the cost of the building benefit is incredibly helpful.
Return of premium – One of the biggest complaints of consumers when purchasing insurance is the fact that they may never need it. With a return of premium feature, if you don’t make a claim over an extended period of time you get all of your money back when the policy terminates. This ability also usually requires an additional cost, but many consumers gladly purchase this option, knowing they are eventually going to get back every penny they paid over the lifetime of the policy.
Ability to upgrade – Your life changes. Can you change your policy to reflect that reality? Some policies have the ability to make changes to increase the benefits available. It is important to know that your policy can keep up with your life.
Consumers have more choice in Voluntary Benefits than ever before. Make sure that you make the right choice to protect your family from the devastating financial realities that often ensue following a serious accident or illness.