About the Episode
The world of insurance can seem rather daunting with all the complex vocabulary and legalities, but this latest episode of Making it Count helps to break down the most confusing aspects of insuring ourselves and our things so you can be protected no matter what life throws your way. Take a listen below as Cristina and Will interview two experienced insurance experts from Hylant, Andria and Shawna, and then go out and review all of your policies to make sure you are appropriately insured!
 |
 |
 |
6:20
Will asks Question 1: “Let’s start with health insurance because that’s something that looms large for all of us. Why do people need health insurance?”
Andria responds: “It, just like every other type of insurance, is not needed at all until it's needed. And that's the thing that I think is different with regard to all types of insurance is that it's not an investment. It's never an investment. You can't look at how much you got versus how much you spend. You are actually exceptionally fortunate if you pay the premium and never have a claim.”
“The challenge with health insurance is that most people have no earthly idea how much health care costs until they're in the throes of it. And these days, access to care other than through the emergency room, if you have an inability to pay, is exceptionally difficult. So if you're not Medicaid eligible, which would give you a version of health insurance and you're not insured, you are literally in the wasteland of health care. And so you don't want to find yourself there. There are tremendous options out there available for folks that find themselves in that situation.”
Read More: How to Find an Affordable Florida Healthcare Insurance Plan
7:30
Cristina asks Question 2: “So even before I think we dive in even deeper, Andria, can we go through the vocabulary of health insurance? So like deductibles, co-pay, premiums – what are all these words? What do they mean?”
Andria responds: “That's a great question. So the deductible is the amount that you pay prior to the insurance company paying anything. It is the first portion of the loss that the person has to pay before the insurance company starts to pick up the tab. So similar to car insurance, if you had a $250 deductible, that would be your responsibility before they pay for anything towards your car repairs. It's the same thing with a human.”
“Copayments are a little bit different. Copayments create the opportunity for you to have a budgetable amount that you know you're going to spend when you interact with a provider. So a primary care physician may have a low copayment – $20 or $25. A specialist may have a copayment of $50 or $75. And you don't have to hit your deductible typically before you pay the copayment.”
“A high deductible plan starts at about $1,500 to $1,600 dollars for the deductible range. And quite honestly, these days that's not that high, but that is a classification of a benefit plan. Those plans have no first dollar coverage. A copayment, even though you're paying the copayment, is considered first dollar coverage because there was no deductible applied up front and those plans are not eligible for a health savings account or an HSA, which is a tax deferred savings basis.”
“And so there's a little bit of complication with copayments, but for the most part, copayments are upfront, you avoid the deductible and then there's the deductible for things like a hospitalization a lot of times in emergency room visits. And then once you meet your deductible, coinsurance comes into play. Basically, you're going to co-insure yourself. You're paying a much smaller portion of it, typically 20%.”
“And the insurance company is paying 80% of the bill until the maximum out-of-pocket, which is exactly that, your maximum amount you pay out of pocket. The only tricky thing about a maximum out-of-pocket is that it only applies to covered services. So if you do something that's not a covered benefit – say a facelift or you go to a non-preferred provider, etc. – that will not apply to your maximum out-of-pocket. So when providers try to upsell you on services in their offices, which is happening more and more these days at a dermatologist office or a chiropractor office, those don't apply. That's fully your responsibility.”
Read More: Differences Between HMO, PPO & EPO Health Insurance Plans
12:05
Cristina asks Question 3: “A lot of people have purchased health insurance through the Affordable Care Act, and many of those plans have high deductibles. Can you talk a little bit about the benefits and risks of high deductible health insurance?”
Andria responds: “I actually don't think there's any greater risk with a high deductible plan than there is with any other plan. It's simple math. You just have to know your numbers. So know whether or not you have access to co-payments for first dollar visits. If you do not, you still need to know what the deductible is on your plan, whether it's a high deductible or not a high deductible.”
“And you need to know that should there be a bad diagnosis, even a minor slip and fall, you will hit your maximum out-of-pocket. Typically, the cost of healthcare is exorbitant. By the time you potentially get transported in an ambulance to an E.R., get a diagnosis, get the problem solved – you could never hit the hospital – and still hit your maximum out-of-pocket.”
“So you need to know what your deductible is, what your maximum amount of pocket is, and you need to know whether you have the ability to pay that in the instance that it's needed. Typically, you're not going to have to pay it upfront, although there are instances where you have to, but you need to know where you're getting it.”
“There are government regulated maximums on deductibles and maximum out of pockets to prevent people from going bankrupt. But it may take you a few years to pay that back. You just need to know that that's your responsibility. The upside to a high deductible is that you have a lower premium. And so if you have the discipline to save what you're not spending on insurance, you would win in the scenario that you don't use the plan.”
14:10
Cristina asks Question 4: “Sometimes, employers offer more than one health plan to employees. What are some tips to help people compare plans and choose the one that’s right for them?”
Andria responds: “I think one of the most confusing things these days for employers that have multiple plan choices is it's often thought that because I do have a chronic health condition or I do know that I need care, that the most expensive plan is going to be the best for me. And you really need to do the math because sometimes it's not, particularly if you have other family members.”
“So you're taking a higher payroll deduction because you've insured your family. You really need to sit down, calculate the math, plug in what you think you're going to use. And in a lot of instances, the plans are set up so that you're incented to go to the high deductible plan. Often employers are putting a deposit into your health savings account or health reimbursement arrangement, that helps you defray the cost of that deductible. And that's significant.”
Read More: 10 Main Types of Health Insurance Plans & Providers You Should Know
15:30
Will asks Question 5: “All right. So let's pivot to life insurance. Who should be purchasing life insurance and why?”
Andria responds: “So life insurance is an interesting coverage. And oftentimes because there is a significant guilt factor with life insurance sales approaches, I find that folks are over insured on life insurance. You need to purchase life insurance to cover those that are left behind should you lose your life.”
“And you need to make a decision whether or not you're covering them through the loss to a transitional lifestyle. Maybe the new lifestyle isn't going to be the life that you left them with. It's going to be a different life without you or you want to set them up so that nobody misses a step and the house gets paid for, etc.. So that's the decision to make when you buy it and why you buy it.”
“There are several different types of life insurance. I always give the precautionary note that your first type of life insurance should not be whole life. It should be term life insurance. It's the least expensive. Whole life insurance has a savings component to it and the sales pitches associated with that are pretty amazing. Part of your premium goes into your savings account. It takes a very long time for you to get to the point where that savings account is meaningful. So again, it's a math equation. Do the math.”
Read More: 6 Types of Life Insurance Explained w/ Expert Recommendations
17:00
Cristina asks a follow-up question: “What is the difference between whole and term life insurance?”
Andria responds: “Whole life insurance has a savings mechanism with it. So they charge you more premium and a portion of the premium goes into a savings account that's typically invested. And if you stay in it long enough, it will cover itself. That's the pitch. You have to stay in it a very long time.”
“Term life insurance is the life insurance that we all typically buy through our employer. Life insurance, for the most part, is term coverage. It's very low cost because there's a very low incidence of payout. But there was no savings mechanism. It was affordable. It gave us the opportunity to have a high enough amount on it that quite literally the mortgage would be paid off for the one remaining parent. That's how we did it, because that person would probably have to quit their job to figure it all out.”
“And so that life insurance, from my perspective, is not the second or the first most important insurance. Health insurance is the most important insurance, followed by long term disability. What long term disability covers is your paycheck. Because in the case of a long term disability, the inability to do your job or another job due to an injury or illness, it will cover a portion of your pay until retirement age.”
“In the instance of losing your life, your family loses your expenses. In the instance of losing your income, your expenses go up. If you're not able to work, typically there's a care component, etc., and you're still eating and using gas in the car and all of those good things. But your income either goes away entirely if you don't have coverage, or at least it only goes down if you do have coverage.”
“Long term disability typically has a companion coverage: short term disability. Typically it's no longer than 26 weeks. A lot of people buy it before they buy long term, and long term is much less expensive because we all plan for right now, what we can see now we think we're invincible. For half of the population, we give birth and we know we're going to be out for six weeks. And that's a coverage that we know at some point we're going to need. But long term is way more important than short term.”
Read More: How to Compare Term vs. Whole Life Insurance Rates & Quotes Online
17:50
Cristina asks another follow-up question: “Well, how do we know how much insurance or short term or life insurance we should have?”
Andria responds: “So with short term and long term disability, it's typically based on your income. You may get to pick what percentage you buy, but you won't get to pick above your income level. And there's a really good reason for that, because why would you ever come back to work if you were making more than you made when you were working? So it's built so that we don't have a perverse incentive as human beings. Life insurance is really philosophical and very personal.”
“I know people that refuse to buy it. I know people that put it on their children. I struggle with that. I personally, philosophically, have always struggled with that. That being said, I can afford a funeral should one be needed, God forbid. But there are folks that can't and therefore they buy it. So I appreciate that there's different levels of need. So it is an exceptionally personal decision around life insurance.”
“And life insurance should come in multiple forms, so max out. Your life insurance with your employer may be one thing because they typically don't offer huge limits. But a lot of folks do buy life insurance through your employer in addition to an outside market. So there is no max out. At some point they can't sell it to you, but for the most part, there's no max out.”
22:15
Will asks Question 6: “Let's pivot to home insurance. What kinds of insurance should people buy for their homes?”
Shawna responds: “If it's your primary residence, then you're going to need a regular homeowner's insurance policy, which is going to cover loss, damages and rebuilds. If you have any other structures on the property, say a shed, a fence, a swimming pool, etc., that's also going to be covered. You’ll also have contents on your policy – all of your personal belongings from your clothing, your dishware, your furnishings. Basically, if you were to take your home and turn it upside down, everything that fell out.”
“If you then sustain a loss, you want to make sure that you have loss-of-use coverage because, in the event you're not able to live in your home, you want to make sure that that policy is also providing you some coverage for a temporary place to stay with food and clothing.”
“The homeowner's policy is also going to cover liability. Say somebody slips or falls at your residence, they could then come after you with a liability claim. So you want to make sure that you have enough liability coverage there. There's also umbrella policies that you can add just because you want to make sure the liability is 100% to protect your assets. The last thing that you want to do is leave yourself open to any type of claim like that, as that can also impact your future income.”
“A lot of times people are in their homes and they start renovations, but they don't think to report it. Any time you're spending money on renovations, you want to make sure that you're increasing the coverage on the homeowners insurance because you want to protect what you've just built.”
“Something else to note: with swimming pools, the screen enclosures are typically add-ons. So if you don't buy the screen enclosure coverage, you're going to have to pay out of pocket to replace that.”
Read More: 5 Reasons to Avoid the Cheapest Homeowners Insurance
24:50
Cristina asks a follow-up question: “I’ve read that recently there have been a lot of Florida homeowners who have been dropped by their insurance companies and that premiums are going up. What is causing this?”
Shawna responds: “First, just the housing market in Florida is crazy right now. But we’re also seeing an increase in benefits claims that are driving prices up. Basically these roofing companies would go door-to-door and provide free roof inspections to homeowners. They would claim there was damage to your roof and then get the homeowner to sign over all of their insurance policy rights to their company.”
“Then the roofing companies gets involved in litigation fights with the insurance company, which increases the cost well above what you would have paid for a new roof. So by the time that the claim is paid out, your roof might have cost $10,000 to $20,000, we're seeing claims of upward of over $100,000!”
“So in the state of Florida, they are trying to mitigate the losses. And because of so many roof claims, now we're at a point where insurance guidelines are being updated and underwriters are coming back and they're placing restrictions on ages of roofs – 10 to 15 years when originally you would get a guarantee of maybe 25 to 30 years.”
“So you're put into a position to either replace your roof more frequently than what we normally would, or you're going to have to go to an independent agency like Hylant and we can shop the rates for you. We have all of the nation's leading insurance companies to look at and to help our clients see.”
28:05
Cristina asks Question 7: “What are some tips to help people decide how much homeowner's insurance we should buy?”
Shawna responds: “Well, I would say you would want to definitely review that with your insurance agent. The insurance agents have cost guides. For example, we use the Marshall and Swift cost index. We take into account your home’s square footage and we ask a series of questions about upgrades in your home and the types of materials used. Because we want to make sure we’re replacing the same kind and quality of materials should you sustain a loss.”
“That generates an estimated replacement cost, which has recently been adjusted because of the increased cost of construction and the housing market. So there's a lot of factors to consider and I would definitely review that with your agent.”
Listen Now: Buying a Home for the First Time
33:10
Cristina asks Question 8: “Let’s switch to auto insurance, which is something most of us pay for. What kinds of auto insurance do people need?”
Shawna responds: “Any vehicle that you want to register to drive on our roads in Florida, you are supposed to have insurance coverage on. If you don't have insurance coverage and you're caught, you can go to jail.”
“Florida mandates also that you carry personal injury protection of at least $10,000 and the same amount for property damage. However, they're not mandating people cover bodily injury liability. So if somebody hits you, they might have just personal injury and property damage, but they're not going to have any bodily injury to cover you or your family's injuries in that car. So that's when it's imperative that you also take a look at uninsured motorist coverage for those types of situations.”
“Your bodily injury liability essentially protects you and your family, or whoever is driving your vehicle in your family, against a liability claim because accidents happen. Depending on how the accident happens, both parties could be at fault. There's even individuals in Florida who will stage accidents and pull out in front of you so that you hit them.”
“So it is important to have a high enough liability to protect you, your assets, and your future income. Then you also want to protect your vehicle. On an auto policy, you could have a comprehensive loss that's going to protect you from, say, fire, theft, vandalism, hurricane, tornado, flooding of our roads. And then the collision part of your policy comes in when you're actually involved in an accident and hit another vehicle.”
Read More: What Happens if You're Caught Driving Without Insurance?
33:10
Cristina asks Question 9: “So is there a rule of thumb on how much we should be spending on auto insurance?”
Shawna responds: “Well, your auto insurance premium is going to be gauged on several different factors. So it's going to take into consideration what liability limit you're choosing, what deductible option you're choosing, and also your personal driving record. For example, if you've had tickets or accidents on file and the accidents were your fault, generally, you're going to pay higher premiums.”
“Another thing that insurance companies look at is an insurance score, which is kind of like your creditworthiness and how you pay your bills. It also factors in the age of your male children rather aggressively. If you have young drivers, especially males, they pay the highest premiums.”
“Car color doesn’t play a role, it's going to be more geared towards the horsepower of the car. It really boils down to the type of vehicle that you're driving, how expensive the parts are should you get into an accident.”
Read More: What's the Average Full Coverage Car Insurance Cost Per Month?
40:35
Cristina asks Question 10:“What would you say to people who balk at the idea of buying multiple insurance policies and paying those premiums every month?”
Shawna responds: “So remember that the insurance that I'm talking about is insurance on your health. It's literally insurance on your human body or your family's human body. I see the angst that’s created when somebody chooses not to purchase the plan and they get sick. They end up stuck trying to navigate the healthcare system themselves, opening up GoFundMe pages to pay for it all. The reality of the situation is that that is not how the system works.”
“For you to put those that are around you in that situation because you have a personal predisposition against insurance is simply unfair. And mostly it's unfair to yourself, but it's also unfair to those that are closest to you. So I am a big fan of ‘Suck it up, Buttercup.’ I don't like that I have home insurance either, but never thought I'd come home to 21 wheelbarrows of mud in my daggone bathroom. The expense for that was equal to buying a small home!”
“Why put yourself at that risk? For what? The ability to buy something else that you really probably don't need? I have a hard time when I'm doing enrollment meetings with folks in an employer setting, and you can kind of see a lifestyle when you sit with folks and talk and they're like, ‘Well, no, I'm not going to cover the kids. We'll just figure that out later.’ But yet, living a fairly lavish lifestyle and that's just a misplaced priority.”
“But I will tell you, we had a very rude awakening with the pandemic. A very rude awakening, because even those that thought they were invincible weren't. And so I just don't ever want to see people in that situation.”
40:35
Cristina asks a follow-up question: “What about you, Shawna?”
Shawna responds: “I like to explain it like this: say you’re involved in an automobile accident and you’re hit by somebody who doesn't have insurance. You were burned by the airbag and now you have very severe injuries to your face. Typically, health insurance is going to help put you back together, but cosmetic procedures are excluded. If you had uninsured motorist coverage, you could claim cosmetic and get the surgery you need.”
“Another point that I would bring up as far as homeowners insurance is the concept of self-insuring after you’ve paid off your house. Sure the mortgage company isn’t mandating you to have coverage, but you could still have a claim or a liability on your property. If somebody slips and falls while you’re entertaining or a neighbor kid sneaks into your pool while you’re away and drowns, those are still claims.”
“So if you're not even insuring from a liability aspect, you're potentially impacting your future income as well because they can take you to court, you can have judgment against you. They could set it up to where they're taking your paycheck. There's a lot of factors to consider.”
“A lot of people have misconceptions about insurance, but insurance is really there to protect you against something catastrophic. We never plan hurricanes or floods. There are so many weather elements that can happen. Pipes can burst. You know, I've even had clients who have had refrigerator ice maker lines flood their entire house. There's so many different things that can happen and can occur.”
“Especially with the water damage in Florida, it could be 24 to 48 hours. And before you have mold and mold remediation alone is not cheap to repair. You have to literally cut out drywall, replace walls, because otherwise you can get very, very sick from being exposed to mold.”
47:20
Cristina asks Quick Question 1: “Is there a way that we can get value from our health insurance?”
Andria responds: “Certainly you don't want to get sick in order to use your health insurance. But a lot of people do not realize that the health insurance policies of today have preventative care built into them so you can get your annual wellness exam through your primary care physician with no co-payment and no deductible. You can get screenings like mammography, or colonoscopy to get value out of your plan.”
49:45
Will asks Quick Question 2: “Will you tell us about state mandated minimums for car insurance?”
Shawna responds: “Well, the state mandated minimum for personal injury is $10,000 of property damage, which is very low. If you're involved in an automobile accident, $10,000 is going to be immediately exhausted in the emergency room. For property damage, there are many vehicles on the road today that are far more than $10,000. So I would definitely encourage people to look at that, consider that and increase that accordingly. Because if your coverage isn't high enough, they're going to come after you and your assets to cover the loss of their vehicle.”
52:35
Will asks Quick Question 4: “What is your best tip to help people when they are buying multiple insurance policies?”
Shawna responds: “You can look at a same-carrier or a multi-policy discount. However, in the state of Florida, with the property markets currently, a lot of times it is best to shop the rate as a package. Shop all of your policies together just to see what the potential savings are.”
“Another thing with the newer roofs, depending on when your house was built, you may also want to consider a wind mitigation inspection because the building guidelines codes did change and there are substantial credits that will apply to the hurricane portion of your premium.”
“So make sure that you are mentioning any additional credits that you have, even burglar or fire alarms, generators in your home in case the power goes out. Or if you're in a wind county, you want to make sure that you do need to notate that you have hurricane shutters.”
53:55
Andria and Shawna work for Hylant, a family business based out of Toleo, Ohio. You can visit their website here. Andria’s email address is andria.herr@hylant.com and she is available to answer any questions you may have or point you in the right direction. Shawna’s email address is shawna.andrews@hylant.com and her office number is 407-215-2202. She is always happy to assist anybody with any of their personal or business insurance needs.
Posted on Apr 7, 2022
Topics:
