It’s time for open enrollment. That means millions of workers will be evaluating their health-, life- and disability-insurance options as part of their employee benefits package.
I don’t know about you, but when that fat envelope comes in the mail, I cringe. There’s just so much information to pore over that my head hurts.
Trying to decide what coverage to get for yourself or your family can be a trying experience. According to a survey conducted by Aetna and the Financial Planning Association, nearly two- thirds of women are responsible for family health-care decisions and 35 percent of them do not know basic information about health benefits. More than half (54 percent) say they have some difficulty choosing a health plan.
But it’s not just picking the right health plan at work that confounds consumers. Many people aren’t getting the best deal for their auto insurance. Or they don’t have enough disability insurance, if they have it at all. Or there are gaps in their homeowners-insurance coverage.
Kimberly Lankford, a columnist at Kip linger’s Personal Finance who has covered the industry for 10 years, says many people make big mistakes when they purchase insurance.
“Your entire financial plan is at risk if you do not have the right insurance,” Lankford writes in her new book “The Insurance Maze: How You Can Save Money on Insurance – And Still Get the Coverage You Need” ($18.95, Kap lan Publishing).
Just ask many of the victims of Hurricane Katrina who are still fighting with their insurance companies and arguing over whether damage was flood-related, for which they had no coverage, or wind-related. This type of legal bickering and the resulting financial chaos can happen to anyone, Lankford warns.
Because insurance is so critical for any financial plan, your best defense is a good offense: becoming better informed. You can do that by reading Lankford’s book, which is the Color of Money Book Club selection for October.
This book won’t bore you. Lankford deftly avoids using industry jargon that typically weighs down such books. Still, she covers the basics that you need to know about the major insurance products – health, homeowners, auto, life, long-term care and disability insurance.
Lankford says this is a particularly good time to re-evaluate your insurance because the industry is going through some changes. For example, life-insurance rates have plummeted over the past decade, and many consumers can take advantage of these lower rates. Got a pre-existing medical condition? It may not be impossible to get coverage, Lankford writes.
As many employees enter their employer’s open enrollment period, the chapter on health insurance will be particularly helpful. For example, Lankford does a good job of explaining the new health savings accounts, or HSAs. This type of plan was created by the Medicare bill signed by President Bush in 2003. The plans are supposed to help people save for future qualified medical and retiree health expenses on a tax- free basis.
If you’re having trouble finding health insurance because of a pre-existing condition, don’t get discouraged, Lankford says, just keep shopping. One excellent source is the website for Communicating for Agriculture and the Self-Employed at www.selfemployedcountry.org.
Scroll to the middle of the home page and click on the link for “Risk Pools,” which directs high-risk consumers to states that offer insurance to those who have been denied coverage.
And just because you’re high-risk, don’t be so desperate that you fall for a scam, Lankford warns. Specifically, she cautions against getting health insurance though an association group policy. As Lankford reports in the book, between 2000 and 2002, state investigators shut down 41 illegal operations selling insurance through phony and real associations.
Got a home office? Did you know all that expensive equipment might not be adequately covered under your homeowners policy? That was news to me.
Most helpful is how Lankford concludes the book. She walks readers though the insurance that they need depending on where they are in life, such as when you get married, send your children off to college or retire.
Contact Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, DC 20071, or singletarym@washpost.com.
