“It’s not real insurance unless there are Co-pays.”
This is a widely-held, yet incorrect, assumption.  We’re not exaggerating much to say that co-pays are why the insurance industry lives and works in much nicer, larger buildings than we do.  Longhorn consultants disclose to our clients the percentage of premium that goes toward setting up a co-pay structure on their plan.  It is NEVER, EVER a cost-effective proposition for the client.

Just think about this for a second:   a well-known, A-rated company (that we have all heard of) charges a family of four an $850 monthly premium for a traditional co-pay plan.  Of that $850 monthly payment, about $235 a month goes to setting up the doctor co-pay system.  This family is giving the insurance company almost $3,000 annually in order to pay for a $35 co-pay instead of the doctor’s insurance-discounted fee of $75 without the co-pay.  How many visits to the doctor would this family have to incur to be in the black?  By the way, this carrier restricts the doctor’s visits to four (4) annual visits by each member of the family.  If each member of the family made a point to go all four times, they would recoup $120 each, or only $480 of the over $3,000 spent to set up the co-pay system. That means you GAVE AWAY about $2,520 to the insurance companies and you got absolutely nothing in return.

Insurance companies love to sell these plans to consumers who have “co-payitis.”  This is why we often recommend the relatively new “high deductible” health plans.  These plans are specifically designed to provide comprehensive Major Medical coverage combined with significant tax advantages.  Premiums are lower primarily because the co-pay structure is eliminated. Monthly premiums are lower and you have a tax deduction. Which system is better for you?

“Insurance companies will raise my rates if I have a claim.”
Well, this is only true if you participate in a Group plan through your employer.  Group insurance plans can, and do, raise rates to address specific claims.  In a smaller group, one significant condition - like cancer or diabetes - can be devastating to everyone’s rates.  That’s why, in Group plans, your plan administrator is always blaming “claims history” for every year’s rate hike.  In a Group plan, there will ALWAYS be claims and there won’t be any years where your claims history doesn’t justify significant rate increases.

However, in an individual contract, the insurance industry is specifically prohibited from raising rates in a targeted fashion towards a client who has a claim, no matter how significant or expensive.  Rate increases in individual health insurance are achieved through use of trend factors.  These are relatively low-grade rate increases that accrue to all the policy holders in a state.  While any one policy holder who has a big claim is protected against having his/her rates raised because of that claim, we all bear smaller increases every year to protect us against targeted increases toward someone who becomes ill.  

“I can wait until I actually need the coverage to purchase insurance.”
This is more of a procrastination issue than it is a true misunderstanding.  Most of us recognize that an insurance company has no intention of issuing individual health or life insurance, for example, to a client who is a current heart patient.However, many in our society simply choose to ride bareback and hope they won’t fall off until a moment of their choosing.  You’ve seen the statistics…47 million Americans have no health insurance…and that number is rising. However, during our national healthcare debate currently raging, other facts relating to that 47 million have come to light.  For example, of that 47 million who do not own coverage, forty percent (over 16 million) can actually afford good coverage…they  simply choose not to purchase it.

The hard and simple truth is that a family must put into action a risk management strategy that protects the family financially if a wage-earner becomes seriously ill, unable to work, or suffers an untimely death.   Further, it is a cruel paradox that when times get tough financially, we must commit in an even stronger way to keeping this plan in place and funding that plan in the future.  

“I don’t want to purchase a Disability or Long Term Care policy because I probably won’t need that coverage.”
Well, we hope you’re right.  But statistics would argue otherwise.  Between ages 40 -50 we are four (4) times more likely to suffer a disability that causes a long term disruption of our work and salary than we are to suffer an untimely death.  How would you replace your income if you are unable to work?  Your Life Insurance policy won’t help you when you become disabled.

Medical science has seen to it that we are living longer and longer, which is directly causing a significant increase in Alzheimer’s disease and dementia, in general.  These conditions often directly, or indirectly, result in the need for nursing care.  Since people are living longer, nursing care is, and will be, required more than ever before.  Long Term Care (LTC) policies will help us to maintain our dignity and independence, as well as to fund the cost of our care in later years.  As with Life Insurance, we purchase LTC and Disability insurance for our loved ones, not for us.  

Premium for LTC policies can be tax-deductible in above-the-line fashion (no itemization required) up to $1,150 per person for people 51 - 60 years old, the amount gradually increasing as we get older.  That means a couple can currently pay their LTC premiums with pre-tax dollars up to $2,300 for the 2009 tax year.  

Disability and Term life insurance policies can be written with “return of premium” feature that insures the client will have all premium returned to him at the end of the term specified in the policy.  At the end of a 20-year term, all premiums paid in are paid back to the client, if the policy is not needed.   This feature seems to suit many of our clients - they like knowing that the premium is returned to them if they live through their term or are never disabled during their working life.

“I don’t need LTC because my kids or wife will take care of me.”
There are two issues here.  One issue is financial and the other is an issue of dignity. While a family may have a very compassionate son or daughter who would willingly care for a very ill parent who needs nursing care, can she afford to leave her job to do so?  Can her family afford for her not to be on hand for their family needs on a long term basis?  

Even if the daughter has the time to devote to caring for a loved one and it does not create a financial hardship for her family to do so, would we as parents really wish for our children to have to perform tasks for us such as toileting, transfers and feeding for us in our waning years?  Good long-term care policies will bring nursing care to the home and allow a private nurse to perform those tasks while the well-meaning daughter can focus on providing emotional care instead of the most basic of physical needs.

Of course, the financial issue is protecting one’s assets at that point in time when long term care is actually needed.  Without a policy to pay for LTC (average cost in Houston TX is currently $140 day), a family is often forced to comply with Medicaid regulations that require the sale of that individual’s assets down to no more than $2,000.  At that point the patient can enter a Medicaid nursing home, often not the best choice for care.  If you have seen or participated in this process, you know that the entire process is incredibly demeaning.  All of this misery can all be avoided by a policy that can generally cost about one’s age per month and the premium can be deducted above the line on one’s income tax return each year.  

"Big Enough to Make a Difference ... Small Enough to Care."