Insurance

Tuesday, March 10, 2015

Tips for Finding Affordable Health Insurance

When the Affordable Care Act went into full effect this year, it gave uninsured Americans a powerful incentive to go out and obtain a health policy: a fee if they didn’t comply. And while the penalty was relatively mild in 2014, it’s only going to increase starting in 2015. As a result, many individuals who never thought they could afford health insurance are being pushed into the marketplace.
There is some good news for those on a budget, however. The ACA provides more insurance options than before. And those on the lower end of the income scale qualify for subsidies that make premiums a lot more manageable.
If you’re one of the many Americans looking for insurance on their own because they don’t get coverage through work, here’s what you need to know to keep your payments as low as possible.
See if you can get a subsidy
If you’re buying an individual health care plan, you can either do so the old-fashioned way – purchasing it directly from a carrier – or shop policies on your state’s health insurance exchange. An exchange, or “marketplace,” is comprised of private insurers who must offer standardized plans for individuals, families and small businesses.
From a cost perspective, going through this marketplace is a double-edged sword. Because the government sets minimum standards for what’s covered under these plans, their sticker price is sometimes higher than plans sold outside the exchange. However, some consumers can get income-based tax credits if they use the marketplace. For that reason alone, it’s worth checking them out when you go looking for a policy.
To obtain a subsidy as an individual, you have to be a citizen or legal resident of the U.S. and earn less than 400% of the federal poverty level. Currently, that amounts to $46,680 or less per year for an individual and below $95,400 for a family of four. Once you go on the exchange website, you’ll be asked for your income and family size to determine your eligibility.
Decide if a basic plan fits your needs
One of the easiest ways to keep your monthly expenses in check is to choose a high-deductible health plan (HDHP). You’ll have lower premium, but also a lot more risk if something unforeseen should happen – they’re called high-deductible plans for a reason.

A nice benefit of HDHPs is that you can pair them with a health savings account, which enables you to pay for out-of-pocket medical expenses using pre-tax dollars. If you’re in the 15% income tax bracket, it’s like getting a 15% discount on all the health-related charges you incur, from doctor bills to eyeglasses.
If you’re even more daring, a so-called “catastrophic” plan might be worth a look. These offer bare-bones protection – you’re covered for three office visits a year – but saddle you with higher deductibles and co-insurance expenses. Not everyone qualifies, either. You have to be under 30 years of age or obtain a hardship exemption that demonstrates you were unable to afford coverage on the exchange.
See if you’re eligible for Medicaid
In its quest to increase the number of insured, the ACA created a minimum eligibility for Medicaid, the joint federal and state health care program for low-income residents. Now that threshold must be at least 133% of the national poverty level. That’s $15,521 a year for an individual and $31,720 for a family of four. If you’re historically in the middle class but your income has dropped recently – for example, you went part-time at work because you’re taking classes – you might just qualify. You’re chances are even higher if you live in a state that’s raised the income cut-off above the federal requirements.
Fortunately, determining your eligibility for Medicaid doesn’t require any extra work. The same application that you fill out to see if you can get a tax credit will tell you whether you’re entitled to Medicaid benefits.
Investigate parent’s plan
A lot of college graduates these days are having a tough time finding a full-time job with health insurance. However, the ACA is making it a lot easier for cash-strapped young adults to get coverage.
Now, individuals can join or stay on their parent’s plan until they turn 26. There are some restrictions here. You have to be single and living under your own roof. You also have to be financially independent and ineligible to obtain insurance through your employer’s plan.
The Bottom Line
One of the easiest ways to save money is to compare plans sold on an exchange and those sold directly through a carrier. But keep in mind that policies with lower premiums aren’t always the best deal if they mean dramatically higher deductibles and co-insurance.

Let Insurance Be Your Peace of Mind
Do you know the 4 Types of Insurance Everyone Needs? Investopedia’s FREE Personal Finance newsletter provides the knowledge and information you need to make the best financial decisions. Click here to get this weekly guide and start learning how to prepare for life’s unexpected surprises.

Is Life Insurance A Smart Investment?

When it comes to considering life insurance as an investment, you’ve probably heard the adage, “Buy term and invest the difference.” This advice is based on the idea that term life insurance is the best choice for most individuals because it is the least expensive type of life insurance and leaves money free for other investments. Permanent life insurance, the other major category of life insurance, allows policyholders to accumulate cash value, while term does not, but there are expensive management fees and agent commissions associated with permanent policies, and many financial advisers consider these charges a waste of money.
When you hear financial advisers and, more often, life insurance agents advocating for life insurance as an investment, they are referring to the cash-value component of permanent life insurance and the ways you can invest and borrow this money. (See 6 Ways To Capture The Cash Value In Life Insurance.) When does it make sense to invest in life insurance in this way – and when are you better off buying term and investing the difference? Let’s take a look at some of the most popular arguments in favor of investing in permanent life insurance and how other investment possibilities compare.
Arguments in Favor of Using Permanent Life Insurance As an Investment
There are many arguments in favor of using permanent life insurance. The issue is: These benefits aren’t unique to permanent life insurance. You often can get them in other ways without paying the high management expenses and agent commissions that come with permanent life insurance. Let’s examine a few of the most widely advocated benefits of permanent life insurance one by one.
1. You get tax-deferred growth.
This benefit of the cash-value component of a permanent life insurance policy means you don’t pay taxes on any interest, dividends or capital gains in your life insurance policy until you withdraw the proceeds. You can get this same benefit, however, by putting your money in any number of retirement accounts, including traditional IRAs, 401(k)s, 403(b)s, SIMPLE IRAs, SEP IRAs and self-employed 401(k) plans.
If you’re maxing out your contributions to these accounts year after year, permanent life insurance might have a place in your portfolio. For more on the tax advantages of permanent life, see Cut Your Tax Bill With Permanent Life Insurance.
2. You can keep your policy until age 100, as long as you pay the premiums.
A key advertised benefit of permanent life insurance over term life insurance is that you don’t lose your coverage after a set number of years. A term policy ends when you reach the end of your term, which for many policyholders is at age 65 or 70. But by the time you’re 100, who will need your death benefit? Most likely, the people you originally took out a life insurance policy to protect, your spouse and children, are either self-sufficient or have also passed away.
3. You can borrow against the cash value to buy a house or send your kids to college, without paying taxes or penalties.
You can also use money you put in a savings account that you control – one on which you don’t pay fees and commissions – to buy a house or send your kids to college. But what insurance agents really mean when they make this point is that if you put money in a tax-advantaged retirement plan like a 401(k) and want to take it out for a purpose other than retirement, you might have to pay a 10% early distribution penalty plus the income tax that’s due. Further, some retirement plans, like 457(b)s, make it difficult or even impossible to take out money for one of these purposes.

That being said, it’s generally a bad idea to jeopardize your retirement by raiding your retirement savings for some other purpose, penalties or not. It’s also a bad idea to confuse life insurance with a savings account. What’s more, when you borrow money from your permanent insurance policy, it will accrue interest until you repay it, and if you die before repaying the loan, your heirs will receive a smaller death benefit. (To learn more, read How Do 401(k) Loans Work?)
4. Permanent life insurance can provide accelerated benefits if you become critically or terminally ill.
You may be able to receive anywhere from 25% to 100% of your permanent life insurance policy’s death benefit before you die if you develop a specified condition such as heart attack, stroke, invasive cancer or end-stage renal failure. The upside of accelerated benefits, as they’re called, is that you can use them to pay your medical bills and possibly enjoy a better quality of life in your final months. The drawback is that your beneficiaries won’t receive the full benefit you intended when you took out the policy. Also, your health insurance might already provide sufficient coverage for your medical bills.
In addition, some term policies offer this feature; it isn’t unique to permanent life insurance. Some policies charge extra for accelerated benefits, too – as if permanent life insurance premiums weren’t already high enough. (Read A Closer Look at Accelerated Benefit Riders to learn more.)
Arguments in Favor of Buying Term and Investing the Difference
When you buy a term policy, all of your premiums go toward securing a death benefit for your beneficiaries, who are usually your spouse or children. Term life insurance, unlike permanent life insurance, does not have any cash value and therefore does not have any investment component. However, you can think of term life insurance as an investment in the sense that you are paying relatively little in premiums in exchange for a relatively large death benefit.
For example, a nonsmoking 30-year-old woman in excellent health might be able to get a 20-year term policy with a death benefit of $1 million for $480 per year. If this woman dies at age 49 after paying premiums for 19 years, her beneficiaries will receive $1 million tax-free when she paid in just $9,120. Term life insurance provides an incomparable return on investment should your beneficiaries ever have to use it. That being said, it provides a negative return on investment if you are in the majority of policyholders whose beneficiaries never file a claim. In that case, you will have paid a relatively low price for peace of mind, and you can celebrate the fact that you’re still alive.
Do you really hate the idea of potentially “throwing away” almost $10,000 over the next 20 years? What would happen if you invested $480 per year in the stock market instead? If you earned an average annual return of 8%, you’d have $25,960 after 20 years, before taxes and inflation. Considering the opportunity cost of putting that $480 per year into term life insurance premiums instead of investing it, you’re really “throwing away” $25,960. But if you die without life insurance during those 20 years, you’ll leave your heirs with almost nothing instead of leaving them with $1 million.
What if you bought permanent life insurance instead? The same woman described above who purchased a whole life insurance policy from the same insurance company could expect to pay $9,370 annually.The whole life policy’s cost for a single year is just slightly less than the term life policy’s cost for 20 years. So how much cash value are you building up for that extra cost?
– After five years, the policy’s guaranteed cash value is $19,880, and you will have paid $46,850 in premiums.
– After 10 years, the policy’s guaranteed cash value is $65,630, and you will have paid $93,700 in premiums.
– After 20 years, the policy’s guaranteed cash value is $181,630, and you will have paid $187,400 in premiums.
But after 20 years, if you had bought term for $480 a year and invested the $8,890 difference, you’d have $480,806 before taxes and inflation at an average annual return of 8%.
Sure, you say, but the permanent life insurance policy guarantees that return. I’m not guaranteed an 8% return in the market. That’s true. If you have no tolerance for risk, you can put the extra $8,890 a year in a savings account. You’ll earn 1% annually, assuming interest rates never go up from today’s historic lows. After 20 years, you’ll have $208,671. That's still more than the permanent policy’s guaranteed cash value of $181,630.
The Bottom Line
Using permanent life insurance as an investment might make sense for some people in some situations — usually high net-worth individuals looking for a way to minimize estate taxes.
For the average person, the odds are poor that permanent life insurance will be a good investment compared with buying term and investing the difference. For more on the topic, see Strategies To Use Life Insurance For Retirement.

4 Important Steps For Choosing Dental Insurance

Dental insurance will cost you much less in premiums than health insurance, but of course there’s a catch. Most health insurance policies cover a hefty percentage of even towering expenses once you’ve paid your deductible. But dental insurance policies have an annual limit to coverage, from $1000 to $1500 a year, along with a $50 to $100 deductible. While plans may pay 80% to 100% of exams, x-rays and cleanings, when it comes to crowns, root canals and gum-disease treatments by in-network dentists the benefit may be only 50% of the cost. Some procedures, such as orthodontia and cosmetic dentistry, are not covered at all.
It's not surprising that cost constraints can make even people with dental insurance delay needed procedures. Some put off care because their insurance doesn’t cover the procedure, and others because they have used up their maximum coverage for the year, according to a survey by Consumer Reports.
To avoid getting caught with unexpected expenses, here some key steps to take when buying dental insurance.
1. Find Out If You Can Get Group Coverage
The great majority of people with dental insurance have benefits through their employer or other group coverage programs such as AARP, Affordable Care Act marketplace health insurance policies or public programs such as Medicaid, Children’s Health Insurance Program and TriCare for the military.
These plans are generally less expensive than purchasing individual insurance and may also have better benefits.But take a good hard look at the details of even an employer-sponsored plan to decide whether the premiums are worth the money for someone in your situation.
2. Check Into Individual Policies
More expensive than group policies – and often with more limited benefits – individual policies (whether you're buying one just for yourself or for your family) often have waiting periods for major procedures. If you’re thinking of signing up for a plan “just in time” because you need implants or a new set of dentures, realize that insurers are well aware of that tactic and institute a waiting period of perhaps a year before you can start using certain benefits.
It's best to comparison shop. Get price quotes and policy details from insurance-company websites or talk to a knowledgeable insurance agent.
3. Examine the List of Dentists in the Network
Indemnity insurance plans allow you to use the dentist of your choice, but the common PPO and HMO plans limit you to dentists in their networks. If you have a dentist you like, ask which insurance and discount plans he or she accepts. If you’re OK with using a new dentist, a PPO or HMO might fit your needs.

But be wary if a new dentist you visit says you need a great deal of unexpected work. A revealing account by the son of a dentist describes how some in-network dentists may recommend unnecessary procedures to make up for income lost on preventive services, for which they are reimbursed at a low rate by dental insurers. Ask health professionals, neighbors and friends if they can recommend a local dentist they’ve found to be good. Then check what insurance and discount plans those practitioners accept.
4. Know What the Policy Covers
In order to budget for dental expenses, it's important to carefully review the policies you’re considering. For example, from the time your insurance begins, AARP Delta policies cover gum cleanings, denture repairs, restorations, oral surgery and root canals. But you need to wait until your second year of coverage to get benefits for gum-disease treatment, crown and cast restorations, dental implants or dentures. Even then, the benefit is limited to 50% of costs.
If you or your child need major dental work, know that you’ll likely have to pay a hefty share of the cost. With both group and individual policies, remember benefits are limited and can vary significantly. Group plans may also have waiting periods, and almost all plans pay only a fraction of costs for major work, so check the details. Your coworkers or friends may be insured by the same company but have a different benefit package from the one you are offered.
The Bottom Line
The bright spot of dental insurance is that coverage is good for preventive care, such as check ups, cleanings and dental x-rays (though x-rays may be covered less frequently than eager dentists want to take them). Adults and children with dental benefits are more likely to go to the dentist, receive restorative care and experience greater overall health, according to a report by the National Association of Dental Plans. Purchasing insurance may well motivate you to get preventive care and avoid more expensive and uncomfortable procedures.
When purchasing individual dental insurance (rather than group insurance through your employer or another source), be aware that major procedures may not be covered in the first year, and even then the benefit is likely to be only half of what the dentist charges. You’ll need to set aside money in a health savings account or personal fund so you’re not caught short if you need major work. For more on this topic, see Do You Need Dental Coverage? and Should You Bite On Dental Insurance?

How To Buy A Health Plan With A Chronic Condition

'Tis the season for health insurance, whether you're buying a plan through your employer, through a government-run marketplace in your state or directly from a health insurance company on your own.
Thanks to the Affordable Care Act, you can no longer be denied health insurance because you have a pre-existing condition. But that doesn't mean your choice of health plan gets any easier. If anything, having a chronic condition makes a purchase decision more difficult.
According to the Partnership to Fight Chronic Disease, more than 133 million Americans -- about 45 percent of the population -- has at least one ongoing or chronic condition such as heart disease, cancer, diabetes or asthma.
Your health insurance decisions are the same whether or not you have a pre-existing condition, says Craig Rosenberg, health and wellness practice leader for Aon Hewitt, a human resources solutions firm. Everyone has to look at coverage levels, premiums, deductibles and other out-of-pocket expenses. "But your choices become even more important simply due to the fact that you're likely to use more health care than someone who is healthy," he says.

Start the decision with your doctors

A good place to start is with your health care providers. Before you sign up for a health plan, talk to your health care providers about what the coming year might look like for you, advises Glenda Terry, a registered nurse on Aon Hewitt's advocacy team. Are you likely to need surgery or costly procedures? Or is your disease well managed? You may need little more than prescription refills and periodic checkups. While it's impossible to predict exactly how healthy you'll be, having an idea of what's in store will help you crunch numbers and see what options are best.
Too many people buy health insurance based on the monthly premiums alone, Rosenberg says. Big mistake. You should never automatically choose the most expensive plan or the least expensive or even the one in the middle, he says. Look at the plan's copays, annual deductible and out-of-pocket maximum. Then make yourself a worksheet. Look at how much you may spend in the next year going to doctors and whether you're likely to be hospitalized.
"If you have a chronic condition and use a lot of health care, the plan that is the most expensive to purchase could end up being the lowest cost given how it covers your needs," Rosenberg says.
In addition, here are 5 big mistakes when buying a health plan at work.

Check the provider networks and medications

Another major consideration when you have a chronic illness: What providers and hospitals are in the plan's network? Most plans pay more when providers participate in their networks. Some plans provide some coverage for out-of-network providers and some don't.
Checking that your doctors are in network is always important but even more so if you have a chronic condition, says Pamala McIntire, a benefits advisor with Reames Employee Benefits Solutions Inc. in Daytona Beach, Florida.

Don't assume because your doctors were in your plan this year that they will be next year. Health insurers change their plan networks all the time. Plans generally list their providers on their website. You also can call your doctor's office and ask. If you call, be sure to be very specific about the plan name because some doctors may take a plan from your company (Aetna, Blue Cross Blue Shield, UnitedHealthcare, etc.) but not your particular plan from that insurer.
Even seeing your doctor on the list doesn't guarantee that he'll be there the whole year. Here's what to do when your doctor disappears from your plan's provider network.
If you have been seeing a doctor for your condition and he won't take your insurance next year, you have a big decision to make.
"You have to decide if you want to continue to see your doctor or choose another doctor who is in your plan," Rosenberg says. "You have to decide how important your relationship with your current provider is." You also have to consider whether you could afford to pay more toward your care if you go out of network.
You should also check whether your medications are covered. Most plans have "formularies," or lists of preferred drugs that they cover at a higher rate. "Someone who has a chronic health condition is more likely to take medications on a regular basis," Rosenberg says. Some plans might require that you get your medications by mail order. That requirement could play into your choice, Rosenberg says.

Consider your lifestyle and pre-certification requirements

Think about your lifestyle as well, McIntire advises. If you have a chronic condition and travel a great deal, you might want to choose an HMO. Here's why: HMOs must treat emergency room visits and resulting hospital stays, no matter where the ER is, as in-network. Preferred provider organizations (PPOs) or point of service plans (POS) don't have to. If you have a PPO or POS and end up being admitted to the hospital while out of town, you could be billed for out-of-network follow-up care by the different providers who treat you.
On the other hand, McIntire says, HMOs tend to have more restrictive formularies. So if you have a chronic condition and need a new prescription, it may not be covered. Also, HMOs often require you to get pre-certification for treatment or tests or they won't reimburse you for them. You have to weigh the pros and cons of each of your choices, she says.
Employers today often provide online tools to help you chart your possible copays and out-of-pocket costs. Take full advantage of them, Rosenberg says.
Finally, Terry says, see whether the plan offers a disease-management program for your chronic condition. The plan may offer close coordination of care to help you manage your disease better. And that could be a factor in its favor when you're making a health insurance comparison.
More from Insure.com
10 things to know about open enrollment for 2015 individual & family health plans
Using your health plan for doctors who don't take your insurance
The original article can be found at Insure.com:
How to buy a health plan when you have a chronic medical condition

Life insurance Policies: How Payouts Work

Life insurance is a popular part of long-term financial planning. But to effectively incorporate this tool into your portfolio, you must understand how and when life insurance payouts are delivered to beneficiaries. This includes understanding how quickly benefits will be paid and designing the policy with the payout option that works best with your estate planning.
When Benefits Are Paid
Typically life insurance benefits are paid when the insured has died, and the beneficiary(ies) file a death claim with the insurance company, submitting a certified copy of the death certificate. Many states allow insurers 30 days to review the claim. Then they can pay it, deny it or ask for additional information.
Most insurance companies pay within 30 to 60 days of the date of the claim, says Chris Huntley, an insurance agent and director of marketing at JRC Insurance Group in San Diego, Calif.
“There is no set time frame but insurance companies are motivated to pay as soon as possible, after receiving bona fide proof of death, to avoid steep interest charges for delaying payment of claims,” adds Ted Bernstein, CEO, Life Insurance Concepts, Inc., a life insurance consulting and auditing firm in Boca Raton, Fla.
What Could Delay Payouts
Several situations can result in later payment of a claim. If the insured died within the first two years after the policy was issued, beneficiaries could face delays of six to 12 months. The reason: the two year contestability clause, says Huntley. “Most policies contain this clause, which allows the carrier to investigate the original application to ensure fraud was not committed. As long as the insurance company cannot prove the insured lied on the application, the benefit will normally be paid,” he says. Most policies also contain a suicide clause that allows the company to deny benefits if the insured commits suicide during the first two years of the policy.
Another scenario that could delay payment, not surprisingly, is when “homicide” is listed as the cause of death on the death certificate. In this case, a claims representative may communicate with the detective assigned to the case to rule out the beneficiary as a suspect.“If the beneficiary is a suspect, the benefit will be held until charges are dropped or he/she is acquitted of the crime,” says Huntley.
New Choices in Payout Options
Since the inception of the industry more than 200 years ago, the payout to the beneficiary was always a lump-sum payment of the proceeds. [6] The default payout option of most policies remains a lump sum, says Richard Reich, President, Intramark Insurance Services, Inc.
Installments, Annuities. More than five years ago, there was a monumental improvement in how life insurance payouts can be delivered to the policy’s beneficiaries, says Bernstein. These included an installment-payout option, or an annuity option, in which the proceeds and accumulated interest are paid out regularly over the life of the beneficiary.

These choices give the policy owner the opportunity to select a pre-determined, guaranteed income stream of between 5 and 40 years. “For income-protection life insurance, most life insurance buyers prefer the installment option to guarantee the proceeds will last for the necessary number of years,” says Bernstein.
Pre-death Benefits. Traditionally, life insurance policies only pay out at the time of the policy holder’s death. “However within the last 20 years, some life insurance companies have designed policies that allow their policyholder’s to draw against the face value of the policy in the event of a terminal, chronic or critical illness. These policies enable the policyholder to be the beneficiary of their own life insurance policy,” says Bernstein.
The term for this is accelerated death benefit; to learn more, read A Closer Look At Accelerated Benefit Riders. Talk with your insurance agent about whether this option makes sense for you.
Filing a Claim
The life insurance company should be contacted as soon as possible following the death of the insured to begin the claims process. The claims representative will request paperwork to process the claim.
The beneficiary of the insurance policy must obtain a certified copy of the death certificate. This can usually be obtained through the county in which the named insured dies. If the insured died in a hospital or nursing home, the institution may have completed the certificate, says Luke Brown, a retired insurance lawyer in Tallahassee, Fla., who operates YourProblemSolvers to help consumers with insurance, healthcare and consumer issues.
“The death certificate has to be submitted to the insurance company address listed in the policy along with a statement of claim, which is sometimes called a "request for benefits," signed by the beneficiary,” says Brown.
Policies owned by revocable or irrevocable trusts must ensure that the insurance company has a copy of the trust document identifying the owner and the beneficiary, adds Bernstein.
The Bottom Line
Life insurance policies provide both policy holders and their loved ones peace of mind that financial difficulties may be avoided in the event of a person’s death. To expedite the claims process, and avoid errors and delays, Reich stresses that accuracy is essential when submitting any documentation or communicating with the life insurance company. “A person’s life insurance agent can help make sure that the claim form is filled out correctly and help answer questions throughout the process,” he says.
For more on receiving benefits, read How are life insurance proceeds taxed?

Understanding Life Insurance Loans

If you need money in an emergency, one place to look is your insurance policy. That is, if what you have is permanent life insurance – available as either “whole life” and “universal life ” (see Permanent Life Policies: Whole Vs. Universal).
Unlike term life insurance, which has a set time limit on its coverage period and does not accumulate cash value, universal life does have a cash component, especially later on. "In the early years of the policy, most of the premium goes to funding the indemnity benefit. As the policy matures, cash value increases," says Luke Brown, a retired insurance lawyer in Tallahassee, Fla., who operates YourProblemSolvers to help consumers with insurance, healthcare and consumer issues. (For details, read How Cash Value Builds In A Life Insurance Policy.)
How Much, How Soon
As cash value builds in a whole or universal life insurance policy, policy holders can borrow against the accumulated funds. Life insurance policy loans have one distinct advantage: The money goes to your bank account tax-free.
Insurers generally make no promises as to how fast or to what extent the cash value will increase. So it’s hard to know exactly when your policy will be eligible for a loan. What's more, insurers have varying guidelines outlining how much cash value a policy must have before you can borrow against it – and what percentage of cash value you can borrow.
Your policy is likely to have sufficient cash value to borrow against "typically after the 10^th year the policy is in force,” says Richard Reich, president, Intramark Insurance Services, Inc. a life insurance agency in Glendale, Calif.
Something else to know: This loan isn't taking money from your own cash value. “You are actually borrowing from the insurance company and using your policy’s cash value as collateral,” says Reich.
No Need to Repay
One attractive aspect of loans against cash value is that you don't have to repay them – a huge benefit in an emergency.

If you do pay back all or a portion of the loan, options include periodic payments of principal with annual payments of interest, paying annual interest only or deducting interest from the cash value. “Loans have an interest rate like any other type of loan. It tends to be in the 7% to 8% range, which is high in our current environment," says Reich. Interest will be fixed or variable, depending on your policy.
There is a good reason to repay the loan if you can. “If the loan is not paid back before death, the insurance company will reduce the face amount of the insurance policy when the claim is paid,” says Ted Bernstein, CEO, Life Insurance Concepts, Inc., a life insurance consulting and auditing firm in Boca Raton, Fla.
The accumulated interest can cut deeply into the benefit: “If the policy loan remains outstanding for many years, the amount of the loan grows and grows due to the added interest,” Brown cautions. “That puts the policy at risk of not providing beneficiaries any money upon the death of the insured.
“At the very least, interest payments should be made so that the policy loan does not effectively grow,” Brown adds. That gives you a better shot of having money left to pay out after your death.
When Life Insurance Loans Make Sense
Here are some financial situations when a life insurance loan might be a sensible choice:

You can’t qualify for a standard loan or need cash really, really fast. Because the money is already within the policy and immediately available, it's a quick source of immediate funds for a new furnace, medical bills or another emergency, with no credit check required. Even if you qualify for a traditional loan from a bank or credit union, a life insurance loan could be a valuable stopgap if you t don’t have time to wait for your application to be processed. When the traditional loan comes through, immediately use it to repay the life insurance loan.
You can’t afford your policy’s annual premium. Don’t let a life insurance policy lapse because you can’t afford the payment. A loan can keep the policy in effect as long as the death benefit is greater than the amount of the loan.
Your only other loan options have much high interest rates. Before paying a higher interest rate for a loan or pledging additional collateral for a traditional loan, consider taking out a life insurance policy loan, says Bernstein. “Since there are no loan terms such as repayment dates, renewal dates or other fees, compared to traditional loans, life insurance policy loans can be very competitive,” he says.

The Bottom Line
Choosing if and when a life insurance loan is right for you is subjective, Reich says. “You have to look at which is more important; the immediate need for the cash or your family’s need for the death benefit. Understand that any outstanding policy loans will be deducted from the death benefit, resulting in a smaller benefit for your family."
Before borrowing against your life insurance, it may be helpful to consult a financial advisor to weigh all possible options and outcomes based on your financial portfolio. For more, see What are the pros and cons of life insurance policy loans? and 6 Ways To Capture The Cash Value In Life Insurance.

What Age For Medicare Eligibility?

When you think of Medicare, you probably assume that it’s for people of retirement age. That’s true, but the program covers more than just those who have worked all their life. You might be eligible right now and not know it.
In 2013 (the most recent numbers available) Medicare covered more than 52 million people in the United States. The bulk of beneficiaries, more than 42 million, were people aged 65 or older. The remaining nearly 10 million received services as a result of a disability.
Like Social Security, Medicare is a U.S. government program funded by tax withholding from most workers' paychecks. When they reach 65 or meet other eligibility requirements, they receive Medicare services. You will probably receive Medicare Part A coverage free of charge because of your payroll deductions, but Medicare has other requirements that will likely cost you. See Medicare 101: Do You Need All 4 Parts?
Who’s Eligible at 65?
Retirees and those still working. To receive full Medicare coverage at 65, you (or your spouse) have to have earned enough credits to be eligible for Social Security. In 2014, each $1,200 you earn equals one credit, but you can only earn a maximum of four each year. Starting in 2015, getting a point will require earning $1,220.
You will receive full benefits at retirement if you have earned 40 credits –10 years of work if you earned at least $4,800 in each of those years (at 2014 rates).
If you paid into a retirement system that didn’t withhold Social Security or Medicare premiums, you’re probably still eligible for Medicare – either through your retirement system or through your spouse.
If you continue to work beyond age 65, things get more complicated. You will have to file for Medicare, but you may be able to keep your company’s health insurance policy as your primary insurer. Or, your company-sponsored insurance plan might force you to make Medicare primary, or other conditions may apply to you (see The Employee's Guide To Medicare). There’s a lot to consider that makes it prudent to talk to a Medicare expert about your choices.
Spouses. Maybe you were a stay-at-home parent or spouse. You can still receive Medicare benefits at age 65 based on your spouse's work record. If your spouse has the required 40 credits and you’ve been married for at least one year, you qualify for benefits.
People in same-sex marriages may qualify for spousal benefits if they live in the state where they were married or in another state that recognizes same-sex marriages – or are civilian or military employees of the federal government. For same-sex couples outside of these categories, the guidelines are vague but couples should apply anyway.

If you’re divorced and don't qualify for Medicare under your own work record, you may qualify based on your ex-spouse's record as long as your marriage lasted at least 10 years and you're currently single.
Disability Benefits: You Can Be Younger
You may be eligible for full benefits before the age of 65 if you have a qualifying disability. There is no published list of qualified disabilities. Caseworkers evaluate each case individually.
How to Qualify. In order to receive Medicare disability benefits, you must first receive Social Security Disability Insurance (SSDI) benefits for 24 months. There is usually a five-month waiting period after a worker or widow is labeled as disabled before he or she can receive Social Security Disability benefits. During this waiting period, the person may be eligible for coverage under an employer’s health plan or COBRA if they’re no longer employed.
People who qualify as disabled fall under the same rules as a recipient who receives retiree benefits. There is no difference in coverage.
If a person has end stage renal disease (ESRD) or amyotropic lateral sclerosis (ALS, also known as Lou Gehrig’s disease) there is no 24-month waiting period for benefits. A person diagnosed with ESRD can generally begin receiving benefits three months after a course of regular dialysis or after a kidney transplant. As soon as a person diagnosed with ALS begins collecting Social Security Disability benefits, he or she is enrolled in Part A and Part B Medicare benefits.
What if you work? You can work and receive Medicare disability benefits for a transition period under Social Security's work incentives and Ticket to Work programs.
There are three time frames to understand. The first, the trial work period, is a nine-month period during which you can test your ability to work and still receive full benefits. The nine months don’t have to be consecutive. Any month in which you earn at least $770 (after expenses) or work more than 80 hours if you're self-employed counts as a month. The trial period continues until you have worked for nine months within a 60-month period.
Once those nine months are used up, you move into the next time frame – the extended period of eligibility. For the next 36 months, you can still receive benefits in any month you aren’t earning “substantial” benefits – generally considered anything over $1,070 per month or $1,800 if you are blind.
Finally, you can still receive free Medicare Part A benefits and pay the premium for Part B for at least 93 months after the nine-month trial period if you still qualify as disabled. If you want to continue receiving Part B benefits, you have to request it in writing.
If you’re disabled, you may incur extra expenses that those without disabilities do not. Expenses such as paid transportation to work, mental health counseling, prescription drugs and other qualified expenses might be deducted from your monthly income before the determination of benefits, which may allow you to earn more and still qualify for benefits.
The Bottom Line
To see if you qualify for benefits, go to Medicare.gov’s eligibility and premium calculator. Here, you can check your eligibility for benefits and get an estimate of your monthly premium.
Your individual situation may not be covered in the calculator. Contact Social Security to discuss your case and get the assistance you need. Experts there will help you understand your particular situation and guide you through the next steps.