“An ounce of prevention is worth a pound of cure.” “Look before your leap.” “Preparedness is half the battle.” There are certainly plenty of sayings that express the idea we want to get across in today’s column. All of these sayings can be applied to many situations in life, but today they apply to your health insurance. And of course, my personal favorite that has been uttered by Irene more times than I can count: “If we had a crystal ball we would know exactly what choices to make, but we don’t.” So in lieu of the crystal ball theory of decision making we must revert back to the earlier saying – about preparedness and proper planning.
Health insurance, life insurance, and long term care insurance are all very essential elements for most of us. And like homeowners insurance, it is important to choose wisely BEFORE you need the benefits. If I could sum up the theme for the phone calls our office has received this past month it would have to be “Oops, I guess I should have done that already!”
Living in New Jersey you are privileged to live in a state where health insurance is guarantee issue right now. This means if you apply for a health insurance policy you are guaranteed to be issued that policy. Insurance companies can ask medical questions, but they can not raise or base your premium on those answers. You could answer yes to every question about a diagnosis and still be issued a policy. If you have had continuous coverage you will not have a waiting period for pre-existing conditions. If you have had a gap in coverage you will have a waiting period for anything pre-existing, but new ailments will be covered immediately. You have no idea how fortunate we are to have guarantee issue health insurance. (A client of mine recently moved one state over, and has not yet been able to obtain health insurance.)
However, that does not mean you can wait until you have been diagnosed with something to enroll with a good plan. I met with a woman a few weeks ago, who had wisely continued her health insurance benefits under the COBRA law when her job ended. When her COBRA ended she had a gap of a few months before contacting me for another medical plan. Her family has a few medical conditions and she was horrified when I explained that those conditions would not be covered for the first year the policy was in place. She is now going to be subjected to covering the costs of the monthly prescriptions as well as any other medical visits or procedures for a full year. I just hope no one has an in-hospital stay related to a pre-existing condition! You simply can not wait until you get around to it – health insurance is a very serious matter. Take advantage of the laws of COBRA, NJ Continuation, and HIPPAA and don’t expose yourself to unnecessary risks!
Life insurance, on the other hand, is medically underwritten. What that means is not only do the insurance companies ask you questions on the application, they can also request your medical records from your physician, and they have the right to reject you if they do not like what they read. This creates a strong case for purchasing life insurance when you are in excellent health. Or they may issue a policy to you but “rate you”. There are several classifications that can vary from company to company. Examples are super preferred, select, preferred, standard, and sub standard. The classification you fall into has a direct link to the premium you pay. In other words you may have a medical condition that would not prevent them from issuing a policy to you, but they will charge you a higher premium than they would for someone who did not have that condition. Smokers by the way, pay a much higher premium for life insurance than non-smokers. Draw your own conclusions from that.
We had an individual call us recently who wanted to purchase life insurance. After a few preliminary questions we learned he had just left his physicians office and was scheduled for major cancer surgery. He will have to wait until he is a few years past the surgery at this point to even attempt to apply for life insurance. His pressing concern of course is getting through the surgery and that he is the sole supporter of three children.
Long term care insurance is also medically underwritten. The younger and healthier you are when you enroll, the better off you will be and the less you will pay in premium. That is the bottom line – no secrets.
Which health, life, or long term care insurance is appropriate for you is a personal matter. You should discuss your situation with a competent licensed professional. This is not a conversation for your neighbor, doctor, or the girl who cuts your hair. Discuss it with your health insurance agent.
Irene Card & Betsy Chandler share the responsibilities of running Medical Insurance
Claims, Inc. a health insurance services company. If you have questions relative to this
column or other related topics, we invite you to call (973) 492-2828, browse our
past columns on our web
site at
www.micinsurance.com.
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