Question

For each of the questions below, cut and paste the question onto an email or word document. Provide a short answer and email it to me by the due date. Short answer is all that is required. Demonstrate you understand the subject and support your answer. For question #2 below, your answer can be more opinion based. That is, how you feel or your position regarding the topic is more important to me than citing a source that doesn’t agree with your position.

A paragraph or two should be more than enough to secure a solid grade/points.

1. Disability Insurance

Each disability income insurance policy has its own definition of "total disability," or what qualifies you to collect income replacement benefits. This definition is one of the first things to think about when you are reviewing disability income insurance policies. You need to know how disability is defined by the policy you select and be certain that you will have income replacement benefits if they are ever needed. Please comment on what types of coverage, features and definitions would be important to you as the purchaser of the coverage.

2. Health Care Reform

A very important and controversial subject to say the least….what are your thoughts about Health Care Reform? Comment about the costs, benefits, availability and the impact to our economy just to name a few items that will impact all of us.

3. Long Term Care

If you were asked by a client to help design a well-rounded Long Term Care policy what benefits and features would you include? How does the cost of these benefits and features impact your consolation to the client?

Answer 1

What is a disability insurance cover?

Disability insurance can replace a portion of your lost income if you are unable to work due to sickness or injury. In case of an accident that leads to disability, you will receive payments to cover not just actual expenses but also loss of income. It can help you meet your financial obligations and maintain your current lifestyle. It includes paid sick leave, short-term disability benefits, and long-term disability benefits.

What is covered?

The most basic versions cover temporary and permanent total disability due to accident. In case you are disabled, fully and permanently, you will receive the full sum insured. If the disability is partial, the policy will pay a percentage of the sum insured, depending on the degree of disability. For example, Max Bupa’s Disability Benefit Cover provides up to 125% of the sum insured in case of permanent total disability, and in case of permanent partial disability, you will be paid up to 100% of sum assured.

Further, if the disability is for a short term, you would be paid a weekly benefit to compensate for the loss of income up to the maximum period specified in the policy.

How to select a disability insurance cover?

There are a few points to consider before you sign up for a disability insurance cover:

Choose the right coverage amount: Income level and age are the main factors that play a vital role in determining the sum insured. Assess your needs and select the sum assured accordingly. Getting this step right will ensure that you and your family can continue to maintain your current lifestyle even if your income dries up.
Compare plans against disabilities covered: It is important to compare the degree and types of permanent disabilities that are covered across products and opt for the widest coverage. Even though comprehensive coverage is more expensive, it is more effective than limited disability coverage. For example, if a policyholder with total disability cover loses his index finger and his hospital gives him a certificate of 15% disability, his insurer might deny his claim as he is not totally disabled.
Read the fine-print: Policies differ in the degrees of disability that they cover and the percentage of sum insured they pay. In case of partial disability, the percentage you are paid depends on what is stated in the policy document. So, pay attention to the clauses.  
Buying Tip

We can either choose a standalone disability insurance policy or opt for disability cover riders along with an insurance plan. If the basic protection is what you are looking for, then you may opt for the disability/accidental death riders which you can buy as an add on to your Life Insurance cover. However, if you would like a cover that provides comprehensive coverage, go for a standalone policy.

Disability insurance is a type of insurance that will provide income in the event a worker is unable to perform their work and earn money due to a disability. ... Short term disability insurance policies offer a worker a portion of their salary if they are unable to work for a short period- typically three to six months.

Disability insurance provides income when a worker is injured, gets sick or is unable to work. Disability income is not typically as much as a worker's salary but is based on a percentage of his wages. Disability coverage is among the most expensive types of insurance due to the high number of claims against such policies.

Disability coverage provides income for employees who are unable to work.
Short Term Disability
Short-term disability covers workers who are initially disabled, or disabled for a short time. An employer may pay the premiums for short-term disability through a plan that covers all employees. The typical waiting period for a disabled employee to receive benefits is two weeks, and coverage lasts between six months and two years. Benefit payments are between 80 and 100 percent of salary.

Long Term Disability
Long-term disability commonly has more restrictions than short-term disability. Policies define disability in terms of whether a worker can perform customary job duties or any work. Benefits are often limited to 70 percent of the worker's salary. The average waiting period for disability insurance payments is 90 days. Many policies pay benefits for a fixed period such as five years, but others will continue to provide disability income up to age 65.

Employer Group Plans
Employers often bear the cost of disability insurance premiums for all workers through a group coverage plan. Group plans paid by employees are generally less expensive than individual policies purchased by employees. Insurance companies charge premiums based on the employment hazards at a given workplace. Office employees pay less than construction workers, for example. The benefits paid to employees are not taxable income if the employee paid the premiums, but benefits are taxed if the employer paid.

Individual Coverage
The cost of individual disability coverage is often prohibitive despite a person's occupation. Individual plans offer greater flexibility to make policy changes and to define coverage for paying benefits if you are not able to perform your current job tasks, even if you are able to earn income through another job. Individuals are often subject to a probationary period before coverage begins. This prevents carriers from immediately paying disability income for ongoing recoveries or pre-existing conditions.

One of the goals of the Affordable Care Act is to improve the quality and safety of health care. In that way, health care reform means better care for everyone.

Other provisions of the Affordable Care Act help people get health insurance who couldn't before. They also help make coverage more affordable. So what does health care reform mean to you? It may depend on how you get your insurance, or whether you have any.

If you're insured through an employer
Employers with more than 50 full-time employees weren't required to make changes to the health plans they offer. If your employer has fewer than 50 full-time employees, health care reform means your coverage changed. That's because small-group health plans must cover the same basic set of benefits and plans you buy yourself.

Regardless of business size, your employer's plan may not be your only option. If the coverage your employer offers doesn't meet certain health care reform guidelines, it might be cheaper for you buy your health insurance. Then you may qualify for a tax credit that lowers your costs. What are those guidelines?

Your annual share of the cost of your plan's premium for one person is more than 9.5 percent of your household income.
Your plan doesn't share at least 60 percent of the cost of covered services.
If you buy your own health insurance
Health care reform brought a lot of changes to people who buy their own health insurance. It means that your health plan:

Must meet Affordable Care Act requirements.
Covers a basic set of services, called essential health benefits.
Falls into one of four metal tiers.
It also means you may be able to get financial assistance from the government that lowers the cost of your health insurance. This assistance is called a subsidy. One subsidy lowers your monthly payment. Another kind of subsidy lowers your share of the costs. Many people qualify. When you're shopping for plans, you'll be able to see if you qualify for lower costs.

If you don't have health insurance
Health care reform has made it possible for more people to get coverage. How?

Health insurance companies can't turn you down because you're sick or have a medical condition. They also can't charge you more based on your health.
You may get help paying for your plan, or be eligible for plans with lower deductibles and other cost sharing. This help is called a subsidy.
More people are now eligible for coverage through the state of Michigan that costs you very little or nothing. These programs include Medicaid, the Healthy Michigan Plan and the Children's Health Insurance Program.

THE ECONOMIC IMPACT OF SLOWING HEALTH CARE COST GROWTH
The central finding of this report is that genuine health care reform has substantial benefits. CEA estimates that slowing the growth of health care costs would have the following key effects: It would raise standards of living by improving efficiency.

The Economic Case for Health Care Reform
Download the full report as a printable PDF

The Council of Economic Advisers (CEA) has undertaken a comprehensive analysis of the economic impacts of health care reform. The report provides an overview of current economic impacts of health care in the United States and a forecast of where we are headed in the absence of reform; an analysis of inefficiencies and market failures in the current health care system; a discussion of the key components of health care reform; and an analysis of the economic effects of slowing health care cost growth and expanding coverage.

The findings in the report point to large economic impacts of genuine health care reform:

We estimate that slowing the annual growth rate of health care costs by 1.5 percentage points would increase real gross domestic product (GDP), relative to the no-reform baseline, by over 2 percent in 2020 and nearly 8 percent in 2030.

For a typical family of four, this implies that income in 2020 would be approximately $2,600 higher than it would have been without reform (in 2009 dollars), and that in 2030 it would be almost $10,000 higher. Under more conservative estimates of the reduction in the growth rate of health care costs, the income gains are smaller, but still substantial.

Slowing the growth rate of health care costs will prevent disastrous increases in the Federal budget deficit.

Slowing cost growth would lower the unemployment rate consistent with steady inflation by approximately one-quarter of a percentage point for a number of years. The beneficial impact on employment in the short and medium run (relative to the no-reform baseline) is estimated to be approximately 500,000 each year that the effect is felt.

Expanding health insurance coverage to the uninsured would increase net economic well-being by roughly $100 billion a year, which is roughly two-thirds of a percent of GDP.

Reform would likely increase labor supply, remove unnecessary barriers to job mobility, and help to "level the playing field" between large and small businesses.

WHERE WE ARE AND WHERE WE ARE HEADED
Health care expenditures in the United States are currently about 18 percent of GDP, and this share is projected to rise sharply. If health care costs continue to grow at historical rates, the share of GDP devoted to health care in the United States is projected to reach 34 percent by 2040. For households with employer-sponsored health insurance, this trend implies that a progressively smaller fraction of their total compensation will be in the form of take-home pay and a progressively larger fraction will take the form of employer-provided health insurance.

The rising share of health expenditures also has dire implications for government budgets. Almost half of current health care spending is covered by Federal, state, and local governments. If health care costs continue to grow at historical rates, Medicare and Medicaid spending (both Federal and state) will rise to nearly 15 percent of GDP in 2040. Of this increase, roughly one-quarter is estimated to be due to the aging of the population and other demographic effects, and three-quarters is due to rising health care costs.

Perhaps the most visible sign of the need for health care reform is the 46 million Americans currently without health insurance. CEA projections suggest that this number will rise to about 72 million in 2040 in the absence of reform. A key factor driving this trend is the tendency of small firms not to provide coverage due to the rising cost of health care.

INEFFICIENCIES IN THE CURRENT SYSTEM AND KEY ELEMENTS OF SUCCESSFUL HEALTH CARE REFORM
While the American health care system has many virtues, it is also plagued by substantial inefficiencies and market failures. Some of the strongest evidence of such inefficiencies comes from the tremendous variation across states in Medicare spending per enrollee, with no evidence of corresponding variations in either medical needs or outcomes. These large variations in spending suggest that up to 30 percent of health care costs (or about 5 percent of GDP) could be saved without compromising health outcomes. Likewise, the differences in health care expenditures as a share of GDP across countries, without corresponding differences in outcomes, also suggest that health care expenditures in the United States could be lowered by about 5 percent of GDP by reducing inefficiency in the current system.

The sources of inefficiency in the U.S. health care system include payment systems that reward medical inputs rather than outcomes, high administrative costs, and inadequate focus on disease prevention. Market imperfections in the health insurance market create incentives for socially inefficient levels of coverage. For example, asymmetric information causes adverse selection in the insurance market, making it difficult for healthy people to receive actuarially reasonable rates.

CEA’s findings on the state of the current system lead to a natural focus on two key components of successful health care reform: (1) a genuine containment of the growth rate of health care costs, and (2) the expansion of insurance coverage. Because slowing the growth rate of health care costs is a complex and difficult process, we describe it in general terms and give specific examples of the types of reforms that could help to accomplish the necessary outcomes.

THE ECONOMIC IMPACT OF SLOWING HEALTH CARE COST GROWTH
The central finding of this report is that genuine health care reform has substantial benefits. CEA estimates that slowing the growth of health care costs would have the following key effects:

It would raise standards of living by improving efficiency. Slowing the growth rate of health care costs by increasing efficiency raises standards of living by freeing up resources that can be used to produce other desired goods and services. The effects are roughly proportional to the degree of cost containment.

It would prevent disastrous budgetary consequences and raise national saving. Because the Federal government pays for a large fraction of health care, lowering the growth rate of health care costs causes the budget deficit to be much lower than it otherwise would have been (assuming that the savings are dedicated to deficit reduction). The resulting rise in national saving increases capital formation.
Together, these effects suggest that properly measured GDP could be more than 2 percent higher in 2020 than it would have been without reform and almost 8 percent higher in 2030. The real income of the typical family of four could be $2,600 higher in 2020 than it otherwise would have been and $10,000 higher in 2030. And, the government budget deficit could be reduced by 3 percent of GDP relative to the no-reform baseline in 2030.

It would lower unemployment and raise employment in the short and medium runs. When health care costs are rising more slowly, the economy can operate at a lower level of unemployment without triggering inflation. Our estimates suggest that the unemployment rate may be lower by about one-quarter of a percentage point for an extended period of time as a result of serious cost growth containment.

THE ECONOMIC IMPACT OF EXPANDING COVERAGE
The report identifies three important impacts of expanding health care coverage:

It would increase the economic well-being of the uninsured by substantially more than the costs of insuring them. A comparison of the total benefits of coverage to the uninsured, including such benefits as longer life expectancy and reduced financial risk, and the total costs of insuring them (including both the public and private costs), suggests net gains in economic well-being of about two-thirds of a percent of GDP per year.

It would likely increase labor supply. Increased insurance coverage and, hence, improved health care, is likely to increase labor supply by reducing disability and absenteeism in the work place. This increase in labor supply would tend to increase GDP and reduce the budget deficit.

It would improve the functioning of the labor market. Coverage expansion that eliminates restrictions on pre-existing conditions improves the efficiency of labor markets by removing an important limitation on job-switching. Creating a well-functioning insurance market also prevents an inefficient allocation of labor away from small firms by leveling the playing field among firms of all sizes in competing for talented workers in the labor market.

The CEA report makes clear that the total benefits of health care reform could be very large if the reform includes a substantial reduction in the growth rate of health care costs. This level of reduction will require hard choices and the cooperation of policymakers, providers, insurers, and the public. While there is no guarantee that the policy process will generate this degree of change, the benefits of achieving successful reform would be substantial to American households, businesses, and the economy as a whole.

Long term care-

Long-Term Care Insurance
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Long-Term Care Insurance Explained

BARBARA MARQUAND
May 28, 2019 Insurance, Life Insurance
It might be hard to imagine now, but chances are you’ll need some help taking care of yourself later in life. The big question is: How will you pay for it?

Buying long-term care insurance is one way to prepare. Long-term care refers to a host of services that aren’t covered by regular health insurance. This includes assistance with routine daily activities, like bathing, dressing or getting in and out of bed.

A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will reimburse you for care given in a variety of places, such as:

Your home.
A nursing home.
An assisted living facility.
An adult day care center.
Considering long-term care costs is an important part of any long-range financial plan, especially in your 50s and beyond. Waiting until you need care to buy coverage is not an option. You won’t qualify for long-term care insurance if you already have a debilitating condition. Most people with long-term care insurance buy it in their mid-50s to mid-60s.

Why buy long-term care insurance?
About half of 65-year-olds today will eventually develop a disability and require some long-term care services, according to a study revised in 2016 by the Urban Institute and the U.S. Department of Health & Human Services. Most will need services for less than two years, but about 14% will require care for more than five years.

Regular health insurance doesn’t cover long-term care. And Medicare won’t come to the rescue, either; it covers only short nursing home stays or limited amounts of home health care when you require skilled nursing or rehab. It does not pay for custodial care, which includes supervision and help with day-to-day tasks.

If you don’t have insurance to cover long-term care, you’ll have to pay for it yourself. You can get help through Medicaid, the federal and state health insurance program for those with low incomes, but only after you’ve exhausted most of your savings.

People buy long-term care insurance for two reasons:

To protect savings. Long-term care costs can deplete a retirement nest egg quickly. The median cost of care in a semi-private nursing home room is $89,297 a year, according to Genworth’s 2018 Cost of Care Survey.

To give you more choices for care. The more money you can spend, the better the quality of care you can get. If you have to rely on Medicaid, your choices will be limited to the nursing homes that accept payments from the government program. Medicaid does not pay for assisted living in many states.
Buying long-term care insurance might not be affordable if you have a low income and little savings. The National Association of Insurance Commissioners says some experts recommend spending no more than 5% of your income on a long-term care policy.

Companies that sell long-term care insurance
The number of insurance companies selling long-term care insurance has plummeted since 2000. More than 100 insurers were selling policies in the late 1990s, according to a 2016 study published by the National Association of Insurance Commissioners. Less than a dozen are selling policies today.

The uncertain cost of paying future claims as well as low interest rates since the 2008 recession led to the mass exodus from the market. Low interest rates hurt because insurers invest the premiums their customers pay and rely on the returns to make money.

The market is continuing to change. Genworth, one of the largest remaining carriers, suspended sales of individual long-term care insurance through agents and brokers in March 2019. The company sells policies to groups and directly to individual consumers through its own sales department.

How long-term care insurance works
To buy a long-term care insurance policy, you fill out an application and answer health questions. The insurer may ask to see medical records and interview you by phone or face to face.

You choose the amount of coverage you want. The policies usually cap the amount paid out per day and the amount paid during your lifetime.

Once you’re approved for coverage and the policy is issued, you begin paying premiums.

Under most long-term care policies, you’re eligible for benefits when you can’t do at least two out of six “activities of daily living,” called ADLs, on your own or you suffer from dementia or other cognitive impairment.

The activities of daily living are:

Bathing.
Caring for incontinence.
Dressing.
Eating.
Toileting (getting on or off the toilet).
Transferring (getting in or out of a bed or a chair).
When you need care and want to make a claim, the insurance company will review medical documents from your doctor and may send a nurse to do an evaluation. Before approving a claim, the insurer must approve your “plan of care.”

Under most policies, you’ll have to pay for long-term care services out of pocket for a certain amount of time, such as 30, 60 or 90 days, before the insurer starts reimbursing you for any care. This is called the “elimination period.”

The policy starts paying out after you’re eligible for benefits and usually after you receive paid care for that period. Most policies pay up to a daily limit for care until you reach the lifetime maximum.

Some companies offer a “shared care” option for couples when both spouses buy policies. This lets you share the total amount of coverage, so you can draw from your spouse’s pool of benefits if you reach the limit on your policy.

Cost of long-term care insurance
The rates you pay depend on a variety of things, including:

Your age and health: The older you are and the more health problems you have, the more you’ll pay when you buy a policy.
Gender: Women generally pay more than men because they live longer and have a greater chance of making long-term care insurance claims.
Marital status: Premiums are lower for married people than single people.
Insurance company: Prices for the same amount of coverage will vary among insurance companies. That’s why it’s important to compare quotes from different carriers.
Amount of coverage: You’ll pay more for richer coverage, such as higher limits on the daily and lifetime benefits, cost-of-living adjustments to protect against inflation, shorter elimination periods, and fewer restrictions on the types of care covered.
A single 55-year-old man in good health buying new coverage can expect to pay an average of $2,050 a year for a long-term care policy with an initial pool of benefits of $164,000, according to a 2019 price index from the American Association for Long-Term Care Insurance. Those benefits compound annually at 3% to total $386,500 at age 85. For the same policy, a single 55-year-old woman can expect to pay an average of $2,700 a year. The average combined premiums for a 55-year-old couple, each buying that amount of coverage, are $3,050 a year.

A caveat: The price could go up after you buy a policy; prices are not guaranteed to stay the same over your lifetime. Many policyholders saw spikes in their rates in the last several years after insurance companies asked state regulators for permission to hike premiums. They were able to justify rate increases because the cost of claims overall were higher than they had projected. Regulators approved the rate increases because they wanted to make sure the insurance companies would have enough money to continue paying claims.

Tax advantages of buying long-term care insurance
Long-term care insurance can have some tax advantages if you itemize deductions, especially as you get older. The federal and some state tax codes let you count part or all of long-term care insurance premiums as medical expenses, which are tax deductible if they meet a certain threshold. The limits for the amount of premiums you can deduct increase with your age.

Only premiums for “tax-qualified” long-term care insurance policies count as medical expenses. Such policies must meet certain federal standards and be labeled as tax-qualified. Ask your insurance company whether a policy is tax-qualified if you’re not sure.
How to buy long-term care insurance
You can buy directly from an insurance company or through an agent.

You might also be able to buy a long-term care policy at work. Some employers offer the opportunity to purchase coverage from their brokers at group rates. Usually when you buy coverage this way, you’ll have to answer some health questions, but it could be easier to qualify than if you buy it on your own.

Get quotes from several companies for the same coverage to compare prices. That holds true even if you’re offered a deal at work; despite the group discount, you might find better rates elsewhere.

The American Association for Long-Term Care Insurance advises working with an experienced long-term care insurance agent who can sell products from at least three carriers.

In its 2019 price comparison, the association found that rates varied widely among insurers.

Understanding state ‘partnership’ plans
Most states have “partnership” programs with long-term care insurance companies to encourage people to plan for long-term care.

Here’s how it works: The insurers agree to offer policies that meet certain quality standards, such as providing cost-of-living adjustments for benefits to protect against inflation. In return for buying a “partnership policy,” you can protect more of your assets if you use up all the long-term care benefits and then want help through Medicaid. Normally in most states, for instance, a single person would have to spend down assets to $2,000 to be eligible for Medicaid. If you have a partnership long-term care plan, you can qualify for Medicaid sooner. In most states, you can keep a dollar that you would normally have had to spend to qualify for Medicaid for every dollar your long-term care insurance paid out.

To find out whether your state has a long-term care partnership program, check with your state’s insurance department.

As you make a long-range financial plan, the potential cost of long-term care is one of the important things you’ll want to consider. Talk to a financial advisor about whether buying long-term care insurance is the best option for you.