I have a relative who is quite ill.
I was wondering what information would be out there to create a budget for all of the medical expenses that will occur.
I have to say there was very little if anything available.
Based on my understanding, insurance companies must have models for various illnesses - otherwise, how would they predict the costs in order to set premiums?
I find this conundrum perplexing.
Regards, makingourway
Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts
Thursday, March 05, 2009
Wednesday, January 14, 2009
2008 Exclusion on Long Term Care Insurance per diem benefits
The 2008 exclusion for per diem long term care (LTC) payments is $270 per day. This should cover most ongoing care expenses. You can read more about it here at the IRS website.
I have long term care insurance provided as an employment benefit.
It's fairly unusual for someone so young (usually people in their 50s get it), but as long as I could attach an annual increase rider to the policy, I felt the monthly premium would not be prohibitive.
Long Term Care Insurance does just that, it pays for your long term care should you be in a situation where you need long term care either in a nursing home or with help at home. Not all policies provide the same coverage at home and in a facility, so you should check to see what your options or policy says.
I look at it as a form of protection for disability insurance income. If I were disabled, I could easily spend much if not all of my disability income on care services and have little left over for my mortgage, etc....
regards, makingourway
PS Keep in mind that I'm not an accountant, but an investor and business person like many of you. Please consult your tax and insurance adviser before making any decisions on these topics.
I have long term care insurance provided as an employment benefit.
It's fairly unusual for someone so young (usually people in their 50s get it), but as long as I could attach an annual increase rider to the policy, I felt the monthly premium would not be prohibitive.
Long Term Care Insurance does just that, it pays for your long term care should you be in a situation where you need long term care either in a nursing home or with help at home. Not all policies provide the same coverage at home and in a facility, so you should check to see what your options or policy says.
I look at it as a form of protection for disability insurance income. If I were disabled, I could easily spend much if not all of my disability income on care services and have little left over for my mortgage, etc....
regards, makingourway
PS Keep in mind that I'm not an accountant, but an investor and business person like many of you. Please consult your tax and insurance adviser before making any decisions on these topics.
Wednesday, December 10, 2008
will insurance companies be relieved of financial pressure?
The recent adoption of mark to market accounting has put many insurance companies in dire straits. One executive i've talked with was concerned his firm would have to BK.
Recently the NAIC began discussions (this last weekend) to exempt insurers from mark to market accounting. This could be a signicant development.
What is mark to market accounting?
It's an accounting method that forces companies to value their investments at current market price.
Why is this good?
It prevents "phantom capital" from being kept on the books - imagine what a company would be worth if all it's capital were tied up in valueless Fannie May bonds?
What is it bad?
Not all companies trade their investments. Bonds retain their value if held to maturity (provided the bond issuer is solvent at that time). Many insurance companies have long term debt investments that are low in value now but were never intended to be redeamed before maturity - they can do this based on the long time between policy issuance and claims for certain types of insurance - such as life insurance.
however, if you discount the value of these bonds - even if their government bonds - the insurance company will look like it has less money available to pay claims.
Most property and casualty insurers are not at risk here, however, life companies are.
I would expect this issue to be addresses shortly.
Regards, makingourway
Recently the NAIC began discussions (this last weekend) to exempt insurers from mark to market accounting. This could be a signicant development.
What is mark to market accounting?
It's an accounting method that forces companies to value their investments at current market price.
Why is this good?
It prevents "phantom capital" from being kept on the books - imagine what a company would be worth if all it's capital were tied up in valueless Fannie May bonds?
What is it bad?
Not all companies trade their investments. Bonds retain their value if held to maturity (provided the bond issuer is solvent at that time). Many insurance companies have long term debt investments that are low in value now but were never intended to be redeamed before maturity - they can do this based on the long time between policy issuance and claims for certain types of insurance - such as life insurance.
however, if you discount the value of these bonds - even if their government bonds - the insurance company will look like it has less money available to pay claims.
Most property and casualty insurers are not at risk here, however, life companies are.
I would expect this issue to be addresses shortly.
Regards, makingourway
Friday, November 14, 2008
when will the shoe drop for insurance companies?
Besides AIG, there has not been much noise in and around the insurance industry. How are they affected?
I've heard that some Hartford, CT based companies may have issues, but I wonder what about the rest of the industry.
Many of the life companies have long investment horizons that allow them to more aggressively invest money (and embrace risk).
I wonder what's happening there. Have any of the Big 4 Accounting firms began certifying insurance company financials?
I doubt the traditional parties would be creditable.
Regards, makingourway
I've heard that some Hartford, CT based companies may have issues, but I wonder what about the rest of the industry.
Many of the life companies have long investment horizons that allow them to more aggressively invest money (and embrace risk).
I wonder what's happening there. Have any of the Big 4 Accounting firms began certifying insurance company financials?
I doubt the traditional parties would be creditable.
Regards, makingourway
Saturday, February 16, 2008
why criticize Buffett for offering to insure municipalities?
Over the last week a number of less than financially focussed friends discussed concerns about municipal bond insurers and repeated mainstream media accusations that Warren Buffett was looking to chery pick the best investments by offering to insure municipal bond issuance.
I was struck by the ridiculousness of mainstream media moral condemnation of buffett - they accused him of trying to pick-up the best investments available on wall street while their insurers were in distress.
I found the whole thing remarkably illustrative of the general lack of economic and financial education amongst mainstream journalists.
There's a nice article in the February 18th issue of Business Week that analyzes the municipal insurer crisis. Their oppinion, many municipalities have such high credit ratings they may not need municipal insurance at all.
The backstory is that several municipal bond insurers - the companies that insurer bond issuances by local government (from default) - diversified into CDOs. CDO's are collaterized debt obligations - the bad boys of the shakey credit markets. About 1/3 of debt insured by the muni bond insurers industry is asset backed debt, which includes CDOs. The other 2/3s are municipal debt.
The question is: why malign Buffett for offering to insure municipalities' debt? He's adding liquidity to a market that's been tarnished and allowing more municipalities to obtain insurance than the current market would normally be able to absorb (due to several insurers racking up large CDO related offers).
Buffett has found the perfect moment to strike and start an insurance company while some of his competitor's have been knocked out of the ring.
It's a sounds idea and frankly a very positive service to the economy, unworthy of the criticism that he's snapping up the safest debt at a discount.
Regards,
makingourway
I was struck by the ridiculousness of mainstream media moral condemnation of buffett - they accused him of trying to pick-up the best investments available on wall street while their insurers were in distress.
I found the whole thing remarkably illustrative of the general lack of economic and financial education amongst mainstream journalists.
There's a nice article in the February 18th issue of Business Week that analyzes the municipal insurer crisis. Their oppinion, many municipalities have such high credit ratings they may not need municipal insurance at all.
The backstory is that several municipal bond insurers - the companies that insurer bond issuances by local government (from default) - diversified into CDOs. CDO's are collaterized debt obligations - the bad boys of the shakey credit markets. About 1/3 of debt insured by the muni bond insurers industry is asset backed debt, which includes CDOs. The other 2/3s are municipal debt.
The question is: why malign Buffett for offering to insure municipalities' debt? He's adding liquidity to a market that's been tarnished and allowing more municipalities to obtain insurance than the current market would normally be able to absorb (due to several insurers racking up large CDO related offers).
Buffett has found the perfect moment to strike and start an insurance company while some of his competitor's have been knocked out of the ring.
It's a sounds idea and frankly a very positive service to the economy, unworthy of the criticism that he's snapping up the safest debt at a discount.
Regards,
makingourway
Friday, May 18, 2007
insurance for the new house
I spent quite a bit of time today talking with an insurance broker. Home owners insurance for "very expensive houses" is truely quite expensive.
Chub and Atlantic Mutual are two of the players commonly considered.
Typical deductibles start at $5,000.
Overall premiums are about $3,000 for the year. Overall at least 25% more expensive than my NC house (which also includes a very expensive wind insurance policy). On the other hand, my Chicago house does cost twice as much.
Both players want you to insure your automobiles with them as well. Atlantic gives a 10% deductible.
Both companies are allegedly much more flexible when it comes to claims.
One thing for sure is the amount of default (included) coverages are much more generous. Usually $5,000 - $10,000 for jewelry. $5,000 for furs, etc.... Very impressive differences.
Both companies have great reputations, but Chubb is the gold standard for higher end properties.
I'm still trying to resolve the flood claim from several years ago -- it's with one of the main line carriers. I have a feeling Chubb would have been much better.
A friend of mine is a claims manager for an insurance company. He's offered to help me package and finish the claims submission. I'm quite excited.
Regards, makingourway
Chub and Atlantic Mutual are two of the players commonly considered.
Typical deductibles start at $5,000.
Overall premiums are about $3,000 for the year. Overall at least 25% more expensive than my NC house (which also includes a very expensive wind insurance policy). On the other hand, my Chicago house does cost twice as much.
Both players want you to insure your automobiles with them as well. Atlantic gives a 10% deductible.
Both companies are allegedly much more flexible when it comes to claims.
One thing for sure is the amount of default (included) coverages are much more generous. Usually $5,000 - $10,000 for jewelry. $5,000 for furs, etc.... Very impressive differences.
Both companies have great reputations, but Chubb is the gold standard for higher end properties.
I'm still trying to resolve the flood claim from several years ago -- it's with one of the main line carriers. I have a feeling Chubb would have been much better.
A friend of mine is a claims manager for an insurance company. He's offered to help me package and finish the claims submission. I'm quite excited.
Regards, makingourway
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