Reinsurance

What is reinsurance?

Insurers manage the risks they take on through the process of reinsurance.

When you look at the risks that insurers take on, it is not surprising that they themselves might want to have insurance. When insurers insure a risk again, it is called reinsurance. A third of all business carried out at Lloyd’s is reinsurance.

Reinsurance is an extension of the concept of insurance, in that it passes on part of the risk for which the original insurer is liable. Reinsurance contracts are slightly more specialist than insurance contracts but for most part they work in exactly the same way – it is just that the ‘insured’ is another insurer, known as the ‘reinsured’ .

A contract of reinsurance is between the insurer and reinsurer only and legally there is no direct link between the original insured and any reinsurer. The original insurer is still the one who must pay any claim from the insured – the insurer must then make its own separate claim against the reinsurer.

Reinsurance is important for a number of reasons, including:

To protect against large claims. For example, in the case of a fire in a large oil refinery or a large city hit by an earthquake, insurers will spread the risk by reinsuring part of what they have agreed to insure with other reinsurers so that the loss is not so severe for any one insurer.

To avoid undue fluctuations in underwriting results. Insurers want to ensure a balanced set of results each year without ‘peaks and troughs’. They can therefore get reinsurance which will cover them against any unusually large losses. This keeps a cap on the claims the insurer is exposed to having to pay itself.

To obtain an international spread of risk. This is important when a country is vulnerable to natural disasters and an insurer is heavily committed in that country. Insurance may be reinsured to spread the risk outside the country.

To increase the capacity of the direct insurer. Sometimes insurers want to insure a risk but are not able to do so on their own. By using reinsurance, the insurer is able to accept the risk by insuring the whole risk and then reinsuring the part it cannot keep for itself to other reinsurers.

Like the direct insurance market, reinsurance usually involves specialist brokers who have expert knowledge of the market and access to reinsurance underwriters on behalf of their clients.

Source : http://www.lloyds.com

Check list for Buying Individual Health Insurance

How to choose an individual health plan

When shopping for an individual health insurance policy, it pays to do your homework.


* Do I want to keep my doctor? If you have a particular physician you like, that might dictate whether an HMO or a PPO is right for you. In an HMO, you must use the plan's network of doctors in order to receive coverage. A PPO plan will let you visit any doctor.

* What is my household's current and anticipated health care need? Consider the services you and your family will need on a regular basis. If your child has asthma, will he have to see an asthma specialist routinely to keep it under control?

* What will my out-of-pocket expenses and monthly premiums cost? Does it make sense for me to pay a higher premium for lower out-of-pocket costs? If you want a comprehensive health plan — and don't want many of out-of-pocket expenses — an HMO provides a very cost-effective plan. But if you're in your 20s or 30s, have no children and some extra savings, you can possibly save money by buying a policy that covers only catastrophic illnesses. Remember, though, you'll have to pay out of your own pocket for routine doctor visits and laboratory test.


* Does the plan cover prescriptions and X-rays? Prescriptions are one of the most used benefits of health plans. Review the coverage of any health plan to determine if your current prescriptions are covered and at what level. X-rays are a routine part of some treatments, so it's wise to make sure X-rays are covered in each plan you consider.

* Do I prefer certain specialists? Some plans limit not only your visits but also who you can see. If you want to see an acupuncturist or chiropractor, be sure to ask your insurance agent about coverage for these services. Psychotherapy and other mental health services will likely have specific limitations as well.

* What do I look for if I can't afford a policy that covers routine care?Look for comprehensive inpatient/outpatient plans with higher deductibles rather than cutting back on hospital/surgical plans. A basic hospital/surgical plan might cost less, but if you end up in the hospital, the last thing you need to add to your list of worries is how you're going to pay for follow-up care once you're released.

* What will it cost me for emergency care? Look at what costs, including co-pays or coinsurance, or services such as hospital and surgery care, apply towards the deductible.

"Some policies may pay for a broken leg or an injury due to an accident, but won't cover an illness you were treated for in the emergency room. And still, other more affordable plans will cover a visit to the emergency room, but not an extended stay in the hospital.

Source :http://www.insure.com

Top Ten Medical Insurance Tips

source :http://www.shulayim.com

Having health insurance can give you peace of mind, knowing that you won’t have a large financial burden should you have any short-term health problems.

These top tips will help you choose the policy that’s right for you, at the best price.

1. It’s never too early to invest in health insurance for you or your family – As a general rule, the younger you are, the lower your health insurance premiums are likely to be. Additionally, when you are young you’re less likely to have developed pre-existing conditions which would be excluded from your policy cover. Even when you’re older, it isn’t too late to sign up for health insurance though, and you’ll still be able to reap the benefits.

2. Don’t skimp on cover - Not having enough health insurance cover could be a false economy, Do some research into how much some procedures cost and ensure you have the necessary insurance.

3. Choice - Look for a policy provider that offers you choice about when, where and by who you’re treated.

4. Check your records - Make sure that your doctor’s records are correct and up to date. Any incorrect information could mean that you end up paying higher premiums or can’t get cover for certain conditions.

5. Assess the excess options - Paying a higher excess fee can be one way to keep your medical insurance premiums low.

6. Shop around - Do your research before you sign up to any insurance policy. Don’t just accept the first quote you’re offered. Experts recommend that anyone shopping for health insurance gets a minimum of three policy quotes before making a decision.

7. Understand the policy - Make sure that you fully understand what is and isn’t covered by your health insurance policy. If you make presumptions without checking the facts, you could get caught out if you become ill.

8. Read the small print - Ask for clarification on anything that isn’t clear and seek independent advice if necessary. Don’t be embarrassed to query anything as it’s important you know what you’re signing up for and that you get the policy that’s right for you.

9. Avoid stress - Conditions such as depression or stress can increase the premium prices and avoiding stress can make you less prone to illness.

10. Be healthy - Leading a healthy lifestyle can help you keep your insurance premiums as low as possible and is clearly just better for you. Cut down on smoking and drinking and watch your weight. Try to take exercise for at least 20 minutes, three times a week.

Source :http://www.buzzle.com

Tips For Selecting Auto Insurance

When shopping for auto insurance, do a little homework first, shop around, and select your insurer carefully. Your insurer should offer both fair prices and excellent service. These tips will help you find the right insurer for you:

* Know your state's auto insurance requirements:

Most states require you to carry a minimum amount of liability coverage. Many states have "no-fault" auto insurance systems. Coverage for medical costs for you and your passengers is optional in some states. Coverage for damage to your car is optional.

* Write up your personal auto insurance profile:

List pertinent information concerning what type of vehicle you drive, where you drive, who else drives, what your driving record is, where you live, what optional safety features your car has. This profile will make the next step easier.

* Comparison Shop:

Prices for the same coverage can vary by hundreds of dollars, so it pays to shop around. Ask your friends, check the Yellow Pages, and call your state insurance department for guidance. Contact insurance agents or companies for general pricing information. Select a few insurers for personalized quotes.

* Meet with potential insurance agents:

Make a few appointments, bring your personal auto insurance profile with you, and ask questions. You want a fair price AND quality service. Ask about available discounts, higher deductibles, service options and claims procedures after accidents. Take notes.

* Compare Again:

Consider cost, coverage offered, and quality of service available. Select your insurer.

* Read your policy:

Yes, even the fine print! Ask questions. Keep your policy at hand. Call your insurer to keep your policy up-to-date, inform your agent of any changes (new car, new job, new driver, etc.), and ask periodically about any possible discounts. Review your policy yearly with your insurer.

* Keep your insurance information with you:

Many states require drivers to carry a proof-of-insurance card with them when driving. Ask your insurer for a card, and keep it in your wallet or in your car.

Source : http://www.collision-insight.com

Life Insurance

Picture Source :http://www.healthinsurance.org

Before You Start

* Think about which members of your household should be covered by life insurance. (It's typically a good idea to insure anyone who earns income.)
* Find out whether you're eligible for group life insurance coverage at work. If you already have it, review the policy to understand exactly what benefits it provides.
* Keep in mind that you may not need life insurance if you have no dependents and nobody else relies on you for financial support.


1.Buying Life Insurance

Conventional wisdom says that life insurance is sold, not purchased. In other words, some people are reluctant to discuss the importance of owning life insurance, and others are simply unaware of the need to have life insurance. Although many large companies provide life insurance as part of their benefits package, this coverage may be insufficient.

Who needs life insurance? If there are individuals who depend on you for financial support, or if you work at home providing your family with such services as child care, cooking, and cleaning, you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple's retirement savings being depleted by unexpected medical expenses. And individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.

2.Types of Insurance

Term insurance is the most basic, and generally least expensive, form of life insurance for people under age 50. A term policy is written for a specific period of time, typically 1 to 10 years, and may be renewable at the end of each term. Also, the premiums increase at the end of each term and can become prohibitively expensive for older individuals. A level term policy locks in the annual premium for periods of up to 30 years.

Declining Balance Term insurance, a variation on this theme, is often used as mortgage insurance since it can be written to match the amortization of your mortgage principal. While the premium stays constant over the term, the face value steadily declines. Once the mortgage is paid off, the insurance is no longer needed and the policy expires. Unlike many other policies, term insurance has no cash value. In this sense, it is "pure" insurance without any investment options. Benefits are paid only if you die during the policy's term. After the term ends, your coverage expires unless you choose to renew the policy. When buying term insurance, you might look for a policy that is renewable up to age 70 and convertible to permanent insurance without a medical exam.

Whole Life combines permanent protection with a savings component. As long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate. Part of that premium accrues as cash value. As the policy gains value, you may be able to borrow up to 90% of your policy's cash value tax-free.

Universal Life is similar to whole life with the added benefit of potentially higher earnings on the savings component. Universal life policies are also highly flexible in regard to premiums and face value. Premiums can be increased, decreased or deferred, and cash values can be withdrawn. You may also have the option to change face values. Universal life policies typically offer a guaranteed return on cash value, usually at least 4%. You'll receive an annual statement that details cash value, total protection, earnings, and fees.

Drawbacks to this type of insurance include higher fees and interest rate sensitivity. Universal policies include up-front fees as well as ongoing administrative fees totaling as high as 5% to 7% of your premiums. You may also find your premiums increasing when interest rates decline.

Variable Life generally offers fixed premiums and control over your policy's cash value. Your cash value is invested in your choice of stock, bond, or money market funding options. Cash values and death benefits can rise and fall based on the performance of your investment choices. Although death benefits usually have a floor, there is no guarantee on cash values. Fees for these policies may be higher than for universal life, and investment options can be volatile. On the plus side, capital gains and other investment earnings accrue tax deferred as long as the funds remain invested in the insurance contract.

Universal Variable Life insurance is the most aggressive type of policy. Like variable life, you control your investment in mutual funds. However, there are no guarantees on universal variable policies beyond the original face value death benefit. These policies are probably best suited to affluent buyers who can afford the risks involved.

Key Terms and Definitions

* Face Value -- The original death benefit amount.
* Convertibility -- Option to convert from one type of policy (term) to another (whole life), usually without a physical examination.
* Cash Value -- The savings portion of a policy that can be borrowed against or cashed in.
* Premiums -- Monthly, quarterly, or yearly payments required to maintain coverage.
* Beneficiary -- The individual(s) or entity (e.g., trust) that is designated as benefit recipient.
* Paid Up -- A policy requiring no further premium payments due to prepayment or earnings.


3.How Much Insurance Do I Need?

A popular approach to buying insurance is based on income replacement. In this approach, a formula of between five and ten times your annual salary is often used to calculate how much coverage you need. Another approach is to purchase insurance based on your individual needs and preferences. The first step is to determine your unique income replacement needs.

Currently, a large portion of your income goes to taxes (insurance benefits are generally income tax free) and to support your own lifestyle. Start off by determining your net earnings after taxes. Then add up all your personal expenses such as food, clothing, magazine subscriptions, club memberships, transportation expenses, etc. The remainder represents annual income that your insurance will need to replace. You'll want a death benefit amount which, when invested, will provide income annually to cover this amount. Then, you should add to that the amounts needed to fund one-time expenses such as college tuition for your children or paying down mortgage or debt.

Income replacement for nonworking spouses is an important and often overlooked insurance need. Coverage should provide for your costs for day care, housekeeping, or nursing care. Add to this any net earnings from part-time employment.

Finally, estimate your own "final expenses" such as estate taxes, uninsured medical costs, and funeral costs.

4.Other Types of Life Insurance

Survivorship life insurance (also referred to as last-to-die or second-to-die) is a unique type of contract that insures the lives of two people. It pays a death benefit upon the death of the second insured. Therefore, it is typically less expensive than two individual policies. Survivorship life is often used for estate planning, where it may be possible to potentially leverage today's dollars -- via insurance premiums -- into a potentially significant death benefit that can be used to fund estate taxes, create wealth for future generations, or benefit a charity. These policies may be available if one insured is medically "uninsurable."

First-to-die life insurance insures the life of at least two people and pays a benefit upon the death of the first insured. This policy is useful for covering a mortgage or other large debt obligation where there is more than one debtor. In addition, it can be an ideal tool for funding a buy-sell agreement within a closely held business.

Summary

* Term insurance is basic, inexpensive coverage with premiums that increase over time and have no cash value.
* Consider a term policy that is renewable and convertible to whole life should your needs change.
* Whole life provides level coverage with level premiums. A portion of those premiums goes into tax-deferred savings.
* Check rates on whole life policies and compare them to other investment opportunities.
* Variable life offers control over your investments.
* Premiums on variable policies are fixed, but face value and the value of your investments can fluctuate.
* Universal life offers more investment options, but is highly sensitive to interest rate changes. Universal variable life is highly flexible, but offers no guarantees beyond the original face value.
* Insurance needs are based on income replacement and personal preferences.