Here are some common automobile insurance frequently asked questions. Just click on the question you are interested in to find the answer. Do you have another question that is not answered here? You can post it on the forum or email me directly!
What are Car Financial Responsibility Laws?This is the state law that says you have to prove that you are financially able to pay for anything you may be responsible for while driving your car.
zSB(3,3)
What Happens if I Choose Not to Purchase Car Insurance and Still Drive My Car?That depends on the state you live in. Most states have stringent laws about having car insurance and if you don't choose to follow these laws by not purchasing car insurance, there can be tough penalties and fines.
Sunday, September 13, 2009
Your First Insurance Policy for Your Car
Getting your first insurance policy for your car may not be a priority, but it should be. Your first car insurance policy protects one of your first investments, your car. But buying your first insurance policy for your car can be complicated and often new car insurance shoppers fail to compare car insurance rates and in turn fail to reap the financial benefits of finding the best and affordable car insurance available to them.
Shopping for Your First Insurance Policy: Who Needs Car Insurance?
The question asked by most people shopping for their first insurance policy is who needs an insurance policy and why? The answer is simple: it’s the law. The DMV (Department of Motor Vehicles) requires that you take financial responsibility for owning and operating a car in all fifty states. Car insurance protects you when you cause property damage or bodily injury to someone else when driving your car. If you are caught driving without car insurance you will be charged hefty penalties. Violators can face up to hundreds of dollars in fines for a first time offense. Also, if you are involved in an accident and do not have car insurance, your license may be suspended whether you are at fault or not.
Understand Your First Insurance Policy
Now that you know you know how important it is to get your first insurance policy for your car, you will want to understand how car insurance works before you start deciding on which company you will choose for your first insurance policy. The best place to start is Auto Insurance 101. This article will take you step by step in understanding car insurance. Once you understand how car insurance works and have an idea of what type of car insurance you need, you are on your way to the next step of finding the best and most affordable car insurance for you.
Just Because it is Your First Insurance Policy, that Does Not Mean You Have to Pay Too Much
This is often where first insurance policy buyers get sucked into paying too much for their car insurance. Don't just assume since you are purchasing your first insurance policy that you will have to pay extremely high premiums. Yes, you will pay higher premiums than people who have had car insurance for some time, but that does not mean you can not find affordable car insurance. You ask then how does one find the best and most affordable car insurance? Here is a checklist of ways to find affordable car insurance and the best first insurance for you:
Tips for How to Find the Best Affordable First Insurance
1. Compare first insurance rates online and locally.
2. Know what you need and how much of a first insurance policy so you don't buy more than you want.
3. Tell the car insurance company that you are comparing X amount of companies so they know that you are looking for the best deal.
4. When shopping online or locally for your first insurance policy, make sure you know what car insurance discounts you may be eligible for. If you are unsure, ask the insurance agent of all their discounts.
5. If you are choosing full coverage car insurance, remember the higher your deductible, the cheaper your car insurance premium will be.
6. If you feel an insurance company or agent is treating you unfairly or breaking the law, know how to file a complaint.
Shopping for Your First Insurance Policy: Who Needs Car Insurance?
The question asked by most people shopping for their first insurance policy is who needs an insurance policy and why? The answer is simple: it’s the law. The DMV (Department of Motor Vehicles) requires that you take financial responsibility for owning and operating a car in all fifty states. Car insurance protects you when you cause property damage or bodily injury to someone else when driving your car. If you are caught driving without car insurance you will be charged hefty penalties. Violators can face up to hundreds of dollars in fines for a first time offense. Also, if you are involved in an accident and do not have car insurance, your license may be suspended whether you are at fault or not.
Understand Your First Insurance Policy
Now that you know you know how important it is to get your first insurance policy for your car, you will want to understand how car insurance works before you start deciding on which company you will choose for your first insurance policy. The best place to start is Auto Insurance 101. This article will take you step by step in understanding car insurance. Once you understand how car insurance works and have an idea of what type of car insurance you need, you are on your way to the next step of finding the best and most affordable car insurance for you.
Just Because it is Your First Insurance Policy, that Does Not Mean You Have to Pay Too Much
This is often where first insurance policy buyers get sucked into paying too much for their car insurance. Don't just assume since you are purchasing your first insurance policy that you will have to pay extremely high premiums. Yes, you will pay higher premiums than people who have had car insurance for some time, but that does not mean you can not find affordable car insurance. You ask then how does one find the best and most affordable car insurance? Here is a checklist of ways to find affordable car insurance and the best first insurance for you:
Tips for How to Find the Best Affordable First Insurance
1. Compare first insurance rates online and locally.
2. Know what you need and how much of a first insurance policy so you don't buy more than you want.
3. Tell the car insurance company that you are comparing X amount of companies so they know that you are looking for the best deal.
4. When shopping online or locally for your first insurance policy, make sure you know what car insurance discounts you may be eligible for. If you are unsure, ask the insurance agent of all their discounts.
5. If you are choosing full coverage car insurance, remember the higher your deductible, the cheaper your car insurance premium will be.
6. If you feel an insurance company or agent is treating you unfairly or breaking the law, know how to file a complaint.
Auto Insurance 101
Why do you need a five step guide to auto insurance shopping? Because, if you want to get the best coverage for your buck, shopping smart for your car insurance is the way to do it. Also, car insurance is one of the top ways to chisel down your insurance budget if you know how to do it right. Let's start with deciding what car insurance coverage you need:
1. What Kind of Coverage Do You Need?: Before calling the insurance company and getting your insurance quote, take the time to decide what kind of coverage you need. In every state you have to have at least liability coverage. But, you need to decide if you would like to add these additional car insurance coverages:
Comprehensive Collision
If you choose comprehensive and collision coverages, you will need to decide what deductible amounts you would like. And, it is important to know what policy limits your state requires so you can decide what policy limits you would like. Other coverages you may also be interested in:
Emergency Roadside Service Gap Insurance
2. Choosing an Insurance Company: When you are ready to select your insurance provider, besides just looking for the best car insurance premium, you will want to take some time to research what insurance company you want to go with by learning about their financial strength. Another important aspect of choosing your insurance provider is knowing if and how they will use your credit score to determine your rate. Take the time to research different companies and then make a list of the providers you are interested in contacting for an insurance quote. Here are some tools to help you research your car insurance company:
Car Insurance Company Report Card Your Credit Score and the Insurance Company
3. Making the Call: When you have your list of selected car insurance providers you are ready to start calling around to search for the one who can give you the best deal. It is important to have certain paperwork handy, such as your drivers license number. In addition, having a list of discounts you may be entitled to can save you some extra money. Here are some resources to help you when you are ready to make the call:
Car Insurance Savings Checklist Online Car Insurance Company Quote Worksheet
4. Understanding Your Car Insurance Policy: Now that you have your car insurance policy, do you understand what it means? Did you get what you paid for? It is important to know how your car insurance policy works and how it can work for you. Here is some help in understanding your policy:
Getting What You Paid For eCourse: How to Know if Your Insurance Contract is Legal Car Insurance Frequently Asked Questions
5. Filing a Car Insurance Claim: Let's hope you never have to file a car insurance claim, but if you do it is important to learn some things before the accident comes. Learning what things you need to do when you have an auto accident can help the claims process go much smoother. Here are some claim filing tools you will want to learn before you file a car insurance claim:
1. What Kind of Coverage Do You Need?: Before calling the insurance company and getting your insurance quote, take the time to decide what kind of coverage you need. In every state you have to have at least liability coverage. But, you need to decide if you would like to add these additional car insurance coverages:
Comprehensive Collision
If you choose comprehensive and collision coverages, you will need to decide what deductible amounts you would like. And, it is important to know what policy limits your state requires so you can decide what policy limits you would like. Other coverages you may also be interested in:
Emergency Roadside Service Gap Insurance
2. Choosing an Insurance Company: When you are ready to select your insurance provider, besides just looking for the best car insurance premium, you will want to take some time to research what insurance company you want to go with by learning about their financial strength. Another important aspect of choosing your insurance provider is knowing if and how they will use your credit score to determine your rate. Take the time to research different companies and then make a list of the providers you are interested in contacting for an insurance quote. Here are some tools to help you research your car insurance company:
Car Insurance Company Report Card Your Credit Score and the Insurance Company
3. Making the Call: When you have your list of selected car insurance providers you are ready to start calling around to search for the one who can give you the best deal. It is important to have certain paperwork handy, such as your drivers license number. In addition, having a list of discounts you may be entitled to can save you some extra money. Here are some resources to help you when you are ready to make the call:
Car Insurance Savings Checklist Online Car Insurance Company Quote Worksheet
4. Understanding Your Car Insurance Policy: Now that you have your car insurance policy, do you understand what it means? Did you get what you paid for? It is important to know how your car insurance policy works and how it can work for you. Here is some help in understanding your policy:
Getting What You Paid For eCourse: How to Know if Your Insurance Contract is Legal Car Insurance Frequently Asked Questions
5. Filing a Car Insurance Claim: Let's hope you never have to file a car insurance claim, but if you do it is important to learn some things before the accident comes. Learning what things you need to do when you have an auto accident can help the claims process go much smoother. Here are some claim filing tools you will want to learn before you file a car insurance claim:
Does Your Insurance Company Offer Gap Insurance?
You are buying a new or newer vehicle and you know you need gap insurance. The dealer has the paperwork for you to sign and with the stroke of a pen you will be off with your new car and your new gap insurance policy. Or, you bought a new car a few months ago and decided at the time to not purchase gap insurance but now realize that you want it. So, you go online to get an online gap insurance quote. If you have been in either of these situations and decided to follow through with your gap insurance purchase, then you may possibly be paying twice for gap insurance.
Who Wants to Pay Twice for Gap Insurance?
Pay twice for gap insurance? Who wants to do that? No, you don't get double the coverage but only double the payment. How could that happen? Well, it happens when you already have gap insurance coverage through your insurance company and then buy a gap insurance policy either because the dealer has pressured you into it or you just did not realize you already had the insurance.
The Lesson: Always Call Your Insurance Agent First
So, the lesson here is to always check with your insurance company first. You can do this by simply giving them a call or taking a look at your current insurance policy. If you first take a look at your current insurance policy and either think or don't think you have the coverage listed, I urge you to still call your insurance agent. Although insurance policies should be fairly understandable to most consumers, they usually are not and you may assume you have a coverage or miss a coverage that you think you have.
Gap Insurance Look-Alike
Another reason to first call your insurance agent to ask about gap insurance is that insurance companies often offer a form of gap insurance but, it sometimes works a little different than traditional gap insurance and is often called by another name. These coverages that insurance companies offer that are similar to gap insurance are sometimes referred to as "automotive loss protection", "loan payoff coverage", "lease payoff coverage" and "new car replacement." Whatever your insurance company decides to call it, you need to understand how it works and since every insurance company's gap insurance coverage may work a little different, again, you will want to contact your insurance agent to see how their gap insurance coverage will work for you.
Who Wants to Pay Twice for Gap Insurance?
Pay twice for gap insurance? Who wants to do that? No, you don't get double the coverage but only double the payment. How could that happen? Well, it happens when you already have gap insurance coverage through your insurance company and then buy a gap insurance policy either because the dealer has pressured you into it or you just did not realize you already had the insurance.
The Lesson: Always Call Your Insurance Agent First
So, the lesson here is to always check with your insurance company first. You can do this by simply giving them a call or taking a look at your current insurance policy. If you first take a look at your current insurance policy and either think or don't think you have the coverage listed, I urge you to still call your insurance agent. Although insurance policies should be fairly understandable to most consumers, they usually are not and you may assume you have a coverage or miss a coverage that you think you have.
Gap Insurance Look-Alike
Another reason to first call your insurance agent to ask about gap insurance is that insurance companies often offer a form of gap insurance but, it sometimes works a little different than traditional gap insurance and is often called by another name. These coverages that insurance companies offer that are similar to gap insurance are sometimes referred to as "automotive loss protection", "loan payoff coverage", "lease payoff coverage" and "new car replacement." Whatever your insurance company decides to call it, you need to understand how it works and since every insurance company's gap insurance coverage may work a little different, again, you will want to contact your insurance agent to see how their gap insurance coverage will work for you.
New Car? Make Sure You Have Gap Insurance
Just bought a new car? What if an accident occurred soon after taking your brand new ride off the lot? You have full coverage insurance, right? So, you're covered... or maybe not.
When you drive your new car off the lot the value of your vehicle plummets, sometimes as much as 20%-30%. Say for instance you pay $25,000 for your new vehicle and have an accident a month later. You probably have only made at the most one payment and if you did not put any money down your loan amount is still close to the $25,000 purchase price. Unfortunately, even with full coverage, which includes comprehensive and collision, you will only receive the market value of your vehicle which could be as much as 20%-30% lower than the purchase price. That means you may be stuck paying that 20%-30%. On a $25,000 car, just a 20% depreciation would be $5,000! That amount could be more if you financed your taxes and license into your loan.
GAP stands for Guauanteed Auto Protection. Most people just use the term GAP to represent the gap in coverage between how much one owes on a car and how much the car is worth. GAP insurance is necessary in almost all cases and is reltivily low cost. GAP insurance is a must if you are buying or leasing a new vehicle and should not be something that you decided to skip to cut costs.
Fortunately, you may already have GAP insurance with your current insurer, which would insure you for the difference between your loan amount on the car and the actual market value of the car. But, not all insurance companies offer GAP insurance.
In some cases GAP insurance is not available from your insurance company. So, what do you do? Of course the dealership will probably be able to offer you GAP insurance. If GAP insurance is not available from the dealership then you can purchase it from an online GAP insurance company. Just do an online search for GAP insurance and you will find many companies available.
When you drive your new car off the lot the value of your vehicle plummets, sometimes as much as 20%-30%. Say for instance you pay $25,000 for your new vehicle and have an accident a month later. You probably have only made at the most one payment and if you did not put any money down your loan amount is still close to the $25,000 purchase price. Unfortunately, even with full coverage, which includes comprehensive and collision, you will only receive the market value of your vehicle which could be as much as 20%-30% lower than the purchase price. That means you may be stuck paying that 20%-30%. On a $25,000 car, just a 20% depreciation would be $5,000! That amount could be more if you financed your taxes and license into your loan.
GAP stands for Guauanteed Auto Protection. Most people just use the term GAP to represent the gap in coverage between how much one owes on a car and how much the car is worth. GAP insurance is necessary in almost all cases and is reltivily low cost. GAP insurance is a must if you are buying or leasing a new vehicle and should not be something that you decided to skip to cut costs.
Fortunately, you may already have GAP insurance with your current insurer, which would insure you for the difference between your loan amount on the car and the actual market value of the car. But, not all insurance companies offer GAP insurance.
In some cases GAP insurance is not available from your insurance company. So, what do you do? Of course the dealership will probably be able to offer you GAP insurance. If GAP insurance is not available from the dealership then you can purchase it from an online GAP insurance company. Just do an online search for GAP insurance and you will find many companies available.
Shopping for Long Term Care Insurance
In reality, almost everyone needs long term care insurance. Of course, not everyone will need long term care but current statistics estimate that as much as 50% of Americans may need long term care sometime in their lifetime. If you become one of those people who need long term care, will you be able to afford up to $75,000 a year for a nursing home facility? Most people, of course, could not.
4 Things You Will Want to Have in a Long Term Care Insurance Policy
1. Inflation Protection: Get a policy that raises your long term care benefit amount automatically... the cost of a nursing home today will be much higher 20-30 years from now.
2. Variable Coverage: Make sure your policy includes coverage for not only nursing homes but home health aids, adult day care providers, and assisted living facilities so you will have a choice of care.
3. Independent Care Management: If you have a claim, the insurance company will send a representative to determine your benefit needs... make sure your policy gives you the option to have an independent licensed health care provider to manage your care and not someone working for the insurance company.
4. 70% Minimum Daily Benefit: If you need services, don't just choose the cheapest daily benefit amount but find out what is the average daily cost of nursing homes in your area and request at least 70% of that. Also, make sure this amount is adjusted annually to reflect 70% of the current yearly amount.
Estimating Your Long Term Care Projected Costs and Insurance Premiums: Long term care costs can vary depending on what state you live in and the nursing facility or home care staff you choose. It is good to know what long term care facilities are charging in your area so you can get an idea of the benefit amount you would like for your long term care insurance policy. Genworth Financial long term care website offers an interactive map where you can scroll over your state to get an idea of current annual nursing home and assisted living costs. You can also simply pick up the phone book and call local nursing home facilities and ask them what their annual costs are.
When it comes to long term care premiums, that can vary greatly depending on the type of policy you choose, the age that you choose to start your policy, and the benefit amount. Of course the younger and healthier you are when you start your policy then the lower your premiums will be. Also, the lower your benefit amount is, then the lower your premiums will be. So, the best time to check into long term care insurance is now, before you get any older! Although it is best to try not to cut corners when choosing your long term care benefits, there are additional ways to reduce your long term care premium costs.
Where and How to Purchase Long Term Care Insurance: There are many places that you can purchase long term care insurance. Your employer may offer group long term care insurance. You can also purchase long term care insurance from individual insurance companies or agents. If you or a family member has or does work for the federal or state government then you may be able to purchase a long term care insurance policy from those sources. Also, another place to look for long term care insurance policies are associations or membership groups.
When you are ready to select your long term care insurance provider, besides just looking for the best insurance premium, you will want to take some time to research what insurance company or agent you want to choose by learning about the insurance agent or company's financial strength.
Another important aspect of choosing your insurance agent or company is knowing if and how they will use your credit score to determine your insurance rate. Take the time to research different companies and then make a list of the providers you are interested in contacting for an insurance quote.
Answers to 4 Important Disadvantages and Misconceptions about Long Term Care Insurance
1. Group Long Term Care Insurance May be a Disadvantage for Younger Persons: If you decide to look at your employer's long term care insurance plan and you are young and in good health, make sure you get some quotes from other individual long term care insurance companies or agents. This is because when insurance is purchased for a group, the risk is spread among the group and then an average premium is set according to the group. That means everyone is sharing in the cost. So, in reality, the older people in the group are getting a good deal while the young people, who are paying the same premiums as the older people, may be paying more than they would if they chose a policy on their own independently.
2. You Won't Get Paid Right Away: Know what your long term care policy's elimination period is. The elimination period is the amount of days you have to pay before your policy will pay, like a deductible. Sometimes this can be as long as 90 days, so it can really add up. Also keep in mind that a longer elimination period equals a lower premium, but before going for the cheaper premium, make sure you can afford to pay for all those days if needed.
3. Long Term Care Insurance Will Not Take the Place of Life Insurance, Health Insurance or Disability Insurance: Long term care insurance will provide help with paying for assistance in dealing with a disability or long term medical condition. You will still need to keep your life, health, and disability insurance.
4. Long Term Care Insurance is For Any Age: If you acquire a disability or long term illness at any age, your long term care insurance policy will be available to you. There is no upper age in which it kicks in.
4 Things You Will Want to Have in a Long Term Care Insurance Policy
1. Inflation Protection: Get a policy that raises your long term care benefit amount automatically... the cost of a nursing home today will be much higher 20-30 years from now.
2. Variable Coverage: Make sure your policy includes coverage for not only nursing homes but home health aids, adult day care providers, and assisted living facilities so you will have a choice of care.
3. Independent Care Management: If you have a claim, the insurance company will send a representative to determine your benefit needs... make sure your policy gives you the option to have an independent licensed health care provider to manage your care and not someone working for the insurance company.
4. 70% Minimum Daily Benefit: If you need services, don't just choose the cheapest daily benefit amount but find out what is the average daily cost of nursing homes in your area and request at least 70% of that. Also, make sure this amount is adjusted annually to reflect 70% of the current yearly amount.
Estimating Your Long Term Care Projected Costs and Insurance Premiums: Long term care costs can vary depending on what state you live in and the nursing facility or home care staff you choose. It is good to know what long term care facilities are charging in your area so you can get an idea of the benefit amount you would like for your long term care insurance policy. Genworth Financial long term care website offers an interactive map where you can scroll over your state to get an idea of current annual nursing home and assisted living costs. You can also simply pick up the phone book and call local nursing home facilities and ask them what their annual costs are.
When it comes to long term care premiums, that can vary greatly depending on the type of policy you choose, the age that you choose to start your policy, and the benefit amount. Of course the younger and healthier you are when you start your policy then the lower your premiums will be. Also, the lower your benefit amount is, then the lower your premiums will be. So, the best time to check into long term care insurance is now, before you get any older! Although it is best to try not to cut corners when choosing your long term care benefits, there are additional ways to reduce your long term care premium costs.
Where and How to Purchase Long Term Care Insurance: There are many places that you can purchase long term care insurance. Your employer may offer group long term care insurance. You can also purchase long term care insurance from individual insurance companies or agents. If you or a family member has or does work for the federal or state government then you may be able to purchase a long term care insurance policy from those sources. Also, another place to look for long term care insurance policies are associations or membership groups.
When you are ready to select your long term care insurance provider, besides just looking for the best insurance premium, you will want to take some time to research what insurance company or agent you want to choose by learning about the insurance agent or company's financial strength.
Another important aspect of choosing your insurance agent or company is knowing if and how they will use your credit score to determine your insurance rate. Take the time to research different companies and then make a list of the providers you are interested in contacting for an insurance quote.
Answers to 4 Important Disadvantages and Misconceptions about Long Term Care Insurance
1. Group Long Term Care Insurance May be a Disadvantage for Younger Persons: If you decide to look at your employer's long term care insurance plan and you are young and in good health, make sure you get some quotes from other individual long term care insurance companies or agents. This is because when insurance is purchased for a group, the risk is spread among the group and then an average premium is set according to the group. That means everyone is sharing in the cost. So, in reality, the older people in the group are getting a good deal while the young people, who are paying the same premiums as the older people, may be paying more than they would if they chose a policy on their own independently.
2. You Won't Get Paid Right Away: Know what your long term care policy's elimination period is. The elimination period is the amount of days you have to pay before your policy will pay, like a deductible. Sometimes this can be as long as 90 days, so it can really add up. Also keep in mind that a longer elimination period equals a lower premium, but before going for the cheaper premium, make sure you can afford to pay for all those days if needed.
3. Long Term Care Insurance Will Not Take the Place of Life Insurance, Health Insurance or Disability Insurance: Long term care insurance will provide help with paying for assistance in dealing with a disability or long term medical condition. You will still need to keep your life, health, and disability insurance.
4. Long Term Care Insurance is For Any Age: If you acquire a disability or long term illness at any age, your long term care insurance policy will be available to you. There is no upper age in which it kicks in.
When To Continue COBRA Insurance Coverage
Important "COBRA Stimulus Bill" Update: The American Recovery and Reinvestment Act, signed into law by President Obama on February 17, 2009, has given some the ability to enroll or re-enroll into COBRA and pay only 35% of their original premiums. It is important that anyone who is considering COBRA insurance learn about the The Stimulus Bill and COBRA Benefits.
COBRA's History
The Consolidated Omnibus Budget Reconciliation Act of 1985, otherwise known as COBRA, continues to be a very helpful law to many. This law makes it possible for most individuals to continue their health care coverage from their employer for up to 18 months if for some reason the individual had a change in employment status such as a layoff, reduced work hours, or a termination of employment by the employee or employer. This continuation of COBRA insurance coverage is available to the individual, their spouses, and dependants.
Understanding What COBRA Is
COBRA insurance coverage lets one continue their employers’ health insurance plan, which can be a real benefit to many, especially when one could have a hard time qualifying for private insurance (unlike the insurance provided by one's employer, one must usually have to qualify for private health insurance plans and their premiums would usually be based mostly on their health status) or would have a gap in health insurance coverage for other reasons. But, in order for one to continue their employers’ health insurance coverage through COBRA, they must pay the complete monthly insurance premium instead of the discounted premium current employees get. That can add up to a costly monthly premium.
More Access to Alternatives to COBRA
Now, with the help of the internet, most people have access to many health insurance companies. With this larger access comes more choices and of course, more choices gives consumers the advantage of comparison shopping. Although continuing COBRA insurance coverage through one's employer is a good option for many, it may not be the best choice for everyone. Depending on one's health status, finding private insurance to fill the gap may provide adequate coverage without the costly price tag of COBRA insurance.
Who Then Should Continue COBRA Insurance Coverages from Their Employer?
1. People who have health problems that they are currently being treated for or pre-existing health conditions, should strongly consider the COBRA insurance option from their employer. It is very difficult and costly to get private health insurance with current health problems or pre-existing conditions and if one did find it, those conditions would either be excluded or the premium would be very costly.
2. Also, persons who know that their next employer will not have health insurance available should also consider continuing the COBRA insurance coverage, at least until they can provide themselves with another health insurance option. This is also important because it is much better to not have any gaps in health insurance coverage when shopping for new coverage as one is less risky to the new health insurance company when they have had continuous health insurance coverage.
For Some, Shopping for a COBRA Alternative May be Better
On the other hand, if one is a young, healthy individual with no previous serious health problems, it may pay to shop around a little to find some type of temporary health insurance coverage instead of choosing the COBRA insurance option from their employer. But again, it is important even for these individuals to avoid any gaps in their health insurance coverage in order to obtain the best rates for their new policy. 10 Key Considerations When Comparing Health Care Plans
COBRA's History
The Consolidated Omnibus Budget Reconciliation Act of 1985, otherwise known as COBRA, continues to be a very helpful law to many. This law makes it possible for most individuals to continue their health care coverage from their employer for up to 18 months if for some reason the individual had a change in employment status such as a layoff, reduced work hours, or a termination of employment by the employee or employer. This continuation of COBRA insurance coverage is available to the individual, their spouses, and dependants.
Understanding What COBRA Is
COBRA insurance coverage lets one continue their employers’ health insurance plan, which can be a real benefit to many, especially when one could have a hard time qualifying for private insurance (unlike the insurance provided by one's employer, one must usually have to qualify for private health insurance plans and their premiums would usually be based mostly on their health status) or would have a gap in health insurance coverage for other reasons. But, in order for one to continue their employers’ health insurance coverage through COBRA, they must pay the complete monthly insurance premium instead of the discounted premium current employees get. That can add up to a costly monthly premium.
More Access to Alternatives to COBRA
Now, with the help of the internet, most people have access to many health insurance companies. With this larger access comes more choices and of course, more choices gives consumers the advantage of comparison shopping. Although continuing COBRA insurance coverage through one's employer is a good option for many, it may not be the best choice for everyone. Depending on one's health status, finding private insurance to fill the gap may provide adequate coverage without the costly price tag of COBRA insurance.
Who Then Should Continue COBRA Insurance Coverages from Their Employer?
1. People who have health problems that they are currently being treated for or pre-existing health conditions, should strongly consider the COBRA insurance option from their employer. It is very difficult and costly to get private health insurance with current health problems or pre-existing conditions and if one did find it, those conditions would either be excluded or the premium would be very costly.
2. Also, persons who know that their next employer will not have health insurance available should also consider continuing the COBRA insurance coverage, at least until they can provide themselves with another health insurance option. This is also important because it is much better to not have any gaps in health insurance coverage when shopping for new coverage as one is less risky to the new health insurance company when they have had continuous health insurance coverage.
For Some, Shopping for a COBRA Alternative May be Better
On the other hand, if one is a young, healthy individual with no previous serious health problems, it may pay to shop around a little to find some type of temporary health insurance coverage instead of choosing the COBRA insurance option from their employer. But again, it is important even for these individuals to avoid any gaps in their health insurance coverage in order to obtain the best rates for their new policy. 10 Key Considerations When Comparing Health Care Plans
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