FAQs - Insurance
Following are a series of frequently asked questions (FAQs) and answers
about insurance in general.
Do I have to take a physical exam in order to
get life insurance?
Can an insurance company refuse to insure me
if I have a preexisting condition under an individual medical plan?
What is a Pre-existing condition?
What is meant by Creditable Coverage?
How much life insurance do I need?
If I develop a serious illness or become disabled.
How can I protect my family?
How many participants does it take to purchase
group health insurance?
Q: Do I have to take a physical exam in order to get life insurance?
A. Many life insurance companies issue non-medical life insurance, where
you simply have to answer a series of questions in an application. However,
depending on your answers, the company might require you to take a physical
examination for any of the following: seriously impaired health, existence
of a terminal illness, or a request for an unusually large amount of
coverage. If you refuse to take an examination, then the company has
the right not to sell you a policy.
Q: Can an insurance company refuse to insure me if I have a preexisting
condition under an individual medical plan?
A. Yes, a company can reject you for a preexisting condition with almost
no exceptions. A preexisting condition is a medical condition that the
insured knows about before applying for coverage. Such a condition might
affect either insurability or premium amount.
Q: What is a Pre-existing condition?
A. A pre-existing condition is an illness or injury for which medical advice or treatment was recommended or received up to six months preceding the enrollment date (excluding pregnancy).
Q: What is meant by Creditable Coverage?
A. Creditable coverage generally includes the period of coverage under an individual or group health plan not followed by a break in coverage of 63 days. Examples of creditable coverage include group or individual health coverage including governmental or church plans, medicare, Medicaid, military-sponsored health coverage (CHAMUS), state health insurance high risk pool, and COBRA.
Q: How much life insurance do I need?
A. Before buying life
insurance, you should assemble personal financial information
and review your family's needs. There are a number of factors to
consider when determining how much protection you should have. These
include:
- Any immediate needs at the time of death, such as final illness expenses,
burial costs and estate taxes;
- Funds for a readjustment period, to finance a move or to provide time
for family members to find a job; and
- Ongoing financial needs, such as monthly bills and expenses, day-care
costs, college tuition or retirement.
Although there is no substitute for a careful evaluation of the amount
of coverage needed to meet your needs, one rule of thumb is to buy life
insurance that is equal to five to seven times your annual gross income.
Q: If I develop a serious illness or become disabled. How can I protect
my family?
A. People in their prime working years are more likely to become disabled
than to die. Thus, depending on your personal circumstances, one potentially
excellent way to protect you, your family, and even your business, is
to buy disability insurance.
In essence, disability insurance provides a "backup" income
if you are temporarily out of work. Most disability plans are pretty flexible,
and you can buy coverage for a variety of illnesses or injuries, or exclude
specific injuries, such as a bad back.
Q: How many participants does it take to purchase group health insurance?
A. Within certain participation guidelines, two participants is the minimum
number required to set up a group health policy.
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