Risk Avoidance Tools

HEALTH INSURANCE - The catastrophic cost of an illness or injury can potentially bankrupt a family without adequate health insurance coverage. Many individuals have coverage through their employer or through an individual plan. Those who do not qualify for 'public assistance' may face significant medical fees even for what seems to be a minor illness or injury.

Health insurance comes in 3 forms:

Rehabilitation - The most common form of health insurance provides benefits for covered individuals who become sick or are injured so long as the covered individual show signs of improvement and recovery. With certain sustaining conditions such as diabetes, coronary, cancer and similar diseases coverage for their medical treatment usually continues so long as the coverage remains in force.

Maintenance - Long Term Care insurance is the other half of health insurance which provides continuing coverage for a sustaining illness or injury. It is most often triggered by the inability to perform certain ADL's (Activities of Daily Living), cognitive impairment and may also provide benefits for medically necessary circumstance (the latter is not included in “Tax Qualified” policies issued after 12/31/1996). It may be payable as a reimbursement or indemnity benefit.

Disability - Often referred to as income replacement insurance for a 'Short' or 'Long' Term period, it pays a stream of income to an insured person in the event of an illness or injury, the existence of which prevents the insured person from earning an income through work related activities.

LIFE INSURANCE - Pays a benefit at the death of an insured person. Most often used to replace future family income, pay for the costs at death (including taxes), purchase the business interest of a deceased business owner, provide for charitable bequests, reimburse a business for the costs of a benefit payable to or on behalf of the insured and other situations which require the creation of cash at the death of the insured.

There are various forms of life insurance. Because of the tax provisions applicable to life insurance, ancillary benefits may also be created. A qualified professional can provide a more detailed overview of how these features might apply in a specific situation.

ANNUITIES - Pay a periodic benefit for a specified period of time or over the lifetime of the annuitant. As a counter-point to life insurance, it is positioned to provide continuing payments which the annuitant cannot outlive (when paid over the lifetime of the annuitant).

During the accumulation phase internal earnings are generally not subject to current income taxation and special tax treatments generally apply during the distribution phase.

PROPERTY & CASUALTY INSURANCE - Most commonly referred to as Homeowner's, Tenant's, Automobile, Umbrella and other forms of coverage, it provides indemnification for the loss of the item insured. Various coverages and conditions apply which should be discussed with a qualified professional who can explain the differences in coverages, triggers and limitations.

Other forms of insurance also exist. They may be focused on covering the business or a professional practice, personal or entity liability, marine, flood as well as other areas of concern where unexpected, catastrophic losses can occur. These should be reviewed with a qualified professional who can assess the extent of the exposure to loss and recommend the appropriate coverage need to replace the loss.

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