Consumer Info

Health Care is missing the mark because those in public office are so caught up with “insurance” and not with the costs of health care. Insurance is just the means to pay for health care and insurance cannot get cheaper until the costs of care are addressed. Is it any wonder that a body made up of mostly lawyers does not want to address tort reform which would lower doctors’ liability insurance premiums? That would have a direct impact on the cost doctors charge which would lower insurance premiums.

What is the point of this “Health Insurance Exchange?” Are they going to set up call centers where people can call in to get information from a government employee about plans that are available to them? If you address the issues you want to change with how the insurance plans are constructed and how pre-existing conditions are covered, etcetera, then why do you need to expand government to change the method of delivery? If it is the same plan then why increase the cost by setting up “The Exchange?” This part of the equation makes no sense. If you still have Company A and Company B selling insurance then creating a government facility staffed with government would not lower the cost of care because we would all pay to set up this unneeded entity.

To dispel the myth (if there is one) that somehow the government can run something better we need to only look at emerging market countries. Nobody has an incentive to not spend money needlessly when it is government run. Emerging market countries are 'emerging' because they are taking government controlled companies and privatizing them. This is sparking growth, expansion and jobs in those countries.

Another way to look at it is to hire two sales people. Pay one commission and only compensate them on their effort (private) and pay the other a flat salary regardless of whether the make sales, deliver on customer service, etc...(government). What do you think the outcome would be?

I was having lunch yesterday with a friend in the fitness industry and he told me a story about a client of his who was confused by all the conflicting information he had been receiving about various benefits of nutritional products.  After my friend gave him the “real” story the man replied, “You know, you never buy BS more than once.”

And every industry has them because the conversation came up when I was telling him about the different scams (or at least less than 100% honest) in the insurance industry:

• Selling a catastrophic health insurance plans to self-employed people and failing to be truthful about it’s short-comings, (link)
•  Selling a whole life insurance policy to someone to be used (and this one was new to me this week) as a way to become your own banker?  One of the sites actually cited an example of how a $25,000 car miraculously only cost $5,000 by borrowing the money of the whole life policy. (link
• Selling a discount card as if it were health insurance (link)
• Selling a whole life policy to someone by eluding that regular retirement plans are “horrible” investments, etc…(link)

Even though the underlying product…at least in the case of the whole life insurance…may be a good product, is selling it under false pretenses a good idea?  And is selling something that may be good to someone who has no business owning it good?

Knowing that being unethical doesn’t build a sustaining business my question really is why would someone lie about a product or its capabilities just to make a sale?  Is it just deceit or is it that the salesperson is uneducated and doesn’t know any better?

Ok, most of the questions are rhetorical, but just in case you’re wondering BS has never been on the product line at InsurancePickle.com

Insurance is confusing enough when you're faced with just the facts.  Often though I'm given stories by my clients of information they've received from a NASE - Mega Life Insurance agent.

The latest I heard just yesterday was "(with other insurance companies) if you're self-employed, work from your home and get injured there your claim will get denied" essentially because you're injured on the job.  WRONG.  The ONLY time this would be the case is if you have worker's compensation (which most self-employed do NOT) AND worker's comp was paying the claim instead.  An insurance company won't double pay if someone else is responsible for the accident and has paid for the claim (or will be).  To suggest that you don't have coverage due to this is ridiculous. 

This is just one of many scare tactics used.  The other popular one is that (with other companies) your coverage can be taken away from you if you have excess claims.  Considering that's illegal in almost every state we're going to chalk that up as just another scare tactic.  They also say that an individual can be singled out for rate increases which 99% of the time is also false.  Most insurance companies use a group rating process which means all of the claims on the policies of a particular area (generally the state) contribute to the factors that increase rates.

What they really need to point out is how the plans they sell aren't major medical or comprehensive PPO/HMO plans.  They need to illustrate that if (in many cases) you end up in the hospital for two different reasons in the same year that you're responsible for your deductible all over again.  And finally they need to illustrate that because their plans are limited-benefit (surgical/catastrophic) plans and not gloss over the short-comings of their plans -- but I guess they wouldn't want to do that.

If you want to buy a limited benefit plan there are many on the market, so just make sure you compare it to a comprehensive plan because it wouldn't make any sense to get less benefit for MORE money.

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Information from AttorneyPages.com
Mega Life and Health/ NASE Health Insurance/ Health Markets (formerly UICI)

I just came across a person in my database who I guess can best be described as someone who was almost a client.  Seeing him in my database reminded me of his story and it's worth sharing so you'll know what not to do.

About four years ago I received a call from someone who had left their job and was facing paying for COBRA which was expensive (of course).  This is an everyday call and very common.  I showed him (amongst other plans from other companies) a $3600 deductible HSA with UnitedHealthcare with the recommendation that he fund the HSA account with $300/month.  The total cost of the plan was going to be about $600 ($300 for the plan and $300 into the account - read my $0 Deductible HSA to get info on that)  For $600 per month he had (or would have had) 100% coverage and would not have to go into pocket over an above the $600 for just about anything that medically could happen to him OR his wife.

Even though this would have saved him hundreds of dollars every month he decided to stay on the COBRA plan.  Well 18 months passed and he decided he wanted to apply for the plan I had recommended.  BUT, in the previous 6 months his wife developed a pre-existing condition that precluded her from getting coverage, but not him.  So, he opted to get coverage for neither of them -- even though a high risk plan was available to her.  The next time I hear from him he's spent something to the tune of about $80,000 on medical bills and now finally decides he wants to get coverage for himself.  But, of course he has since developed pre-existing conditions that have now precluded him from getting coverage as well.

Living in Virginia he has an Open Enrollment plan from CareFirst BlueCross BlueShield that has been available all along.  At every step of the way he would have been better off taking my advice, but yet he opted not to and ended up wiping through tons of savings - because the $80k I mentioned was just one issue that he encountered.  If the moral of this story isn't obvious then you may end up like this guy.

Have you heard of this software that's for sale from United First FInancial?  Well for a measley $3,500 (of which $2,500 is paid as commissions and bonuses in a multi-level marketing format -- think Amway) you get a software package that's touted to help pay your mortgage off in 1/3 to 1/2 the time.

I have a big problem with companies praying on the uninformed and taking advantage of them.  I also have a big problem with these multi-level marketing companies that don't offer a competitive product signing up salespeople to (likely unknowingly) rip off their friends and family (for the small percentage of these companies that have a legitimate product I apologize).  The bottom line is if you want to pay off your mortgage early send more money toward it. 

What they're doing is opening a line of credit and making lump sum deposits against the mortgage with the credit line and then paying that back with your expendable income each month. That potentially could work, but it depends on the interest rate on the home equity line and the mortgage. The problem is the odds that you could get a home equity loan at a lower interest rate than a first mortgage is slim to none. (**update - actually that's easy to do in this market; however, you could refinance the first to an interest rate you wouldn't necessarily want to pay down any faster and give up opportunity costs)

If you took the $3,500 for the program and simply applied it to the mortgage you'd save about $19,000 in payments -- using their example of a $200,000 mortgage at 6%. Couple that with the $1,000 a month of ADDITIONAL funds (from their example) going to pay back the equity loan to make the lump sum deposit and you could pay off the mortgage in less than 10 years....no software needed. Whether you'd want to do that is a different question. Either way you could net a better result on your own.

My guess is that they market the software dwelling on the "interest saved" over time which does not take into account "opportunities lost."  Send the $3,500 to the bank and nobody gets paid but you.

Ufirst Money Merge Account Scam -- look here for another article...

Good question.  Let me answer that and in doing so I'll also explain the image above.  Your agent isn't a broker because at first they don't know any better and later it's too late.  Most people who enter the insurance industry do so by being hired by a large firm and they're hired as an "agent."  Agents, in most cases, are bound to sell only the products of the company they work for.  AND, if they can sell products of other companies they usually receive a lower commission or are otherwise provided with disincentives to sell other companies.

Once they figure out how the system works though it's too late.  Meaning when an agent/broker sells an insurance product they get paid not only up front, but each and every time you (the consumer) pays your premium.  But, if the agent leaves the insurance company to become a broker they usually give up all of the clients they've accumulated making it difficult to make the jump.  It's akin to starting over and nobody enjoys that.  Of course while they're at the insurance company their manager is candy coating everything because each time they sell a policy the manager gets paid as well, so it's in the best interest of the manager that the agent sell policies for the company they work for.

Ok, so the company has great ratings, has been around for 150 years, etc.. etc.. so why not just do business with them because the agent is knowledgable, likeable, etc.. In comes the chart above which was provided by one of the biggest, oldest insurance companies in North America. You can see that for this particular Term Life Insurance product it's ONLY competitive if you're 45-55 years old and in "great" health.  But, if you're 25-40 years old or 55-65 years old or not in "great" health which company do you think your agent is STILL going to show you?  The one that they get paid less on and doesn't provide their office space OR are they going to show you the same company?  Your broker SHOULD start at zero and search the market for you because as you can see NO company tries to be competitive for all ages and health categories.