Insurance

A Section 125 cafeteria plan is an employee benefit plan governed by the rules of Section 125 of the Internal Revenue Code. Cafeteria plan is a nickname for plans that give an employee a choice of selecting either cash or a qualifying, nontaxable benefit. Its purpose is to provide a method for allowing the employee to choose from a menu those benefits the employee desires to utilize. Generally, the benefits are fully or partially paid for by the employer. If the employee is required to pay for some or all of the benefits, they typically pay for them on a pre-tax basis.

Generally, worker's compensation protects you if you are injured while performing your job. Disability insurance covers you for any injury or illness, whether it happens at home or on the job. If you work for an employer who provides you with disability insurance, you should assess exactly how much you are protected for to determine if additional coverage is warranted.

Generally, there is no limit to the duration of Social Security disability benefits. If you qualify, you will keep collecting Social Security Disability benefits as long as your disability condition prevents you from working. The Social Security Administration will periodically review your case to see if there has been an improvement in your condition. If you are once again determined healthy enough to work, your benefits will stop. If you are still receiving benefits when you reach age 65, your disability benefit will be automatically converted to retirement benefits.

Split dollar insurance is not a type of insurance. It is an arrangement by which the premiums, cash values, and death benefits of a regular insurance policy are split by two or more participants. A split-dollar plan is a tool for an employer or owner of a small business to reward hard-working employees. By using a split-dollar plan, the owner can provide important key employees with life insurance protection and at the same time help them earn a fund to provide for additional retirement income.

The Health Insurance Portability and Accountability Act was created on July 1, 1997. It protects an insured person's insurability. Before this law, if an insured person lost insurance coverage they could be required to prove insurability before obtaining new coverage. Now, if a person has been insured for the past 12 months, a new insurance company can't refuse to cover that person and can't impose pre-existing conditions or a waiting period before providing coverage.

No. Some government, church and self-insured plans are exempt from the COBRA law, so be sure to check before assuming you can continue coverage.

This type of insurance is relatively new, but becoming popular for people over 60 years old. Long term care provides home custodial care or nursing home care. Long term health care makes sense for those who want to protect their assets for their spouse or children.

Many policies offer "market value coverage" which may not be enough to rebuild your house after a major disaster. You should look for a policy that offers "100% replacement coverage" for both your home and possessions. Also verify that the policy includes an automatic inflation provision. Generally, home insurance policies also include liability coverage to protect you from injuries that occur on your property. The minimum standard of $100,000 may not be enough. Consider increasing it to $300,000, $500,000 or as high as $1,000,000. Get price quotes for the additional coverage amounts. Also consider getting additional riders for items such as jewelry. Generally there is a limited maximum payout on jewelry theft losses. Also consider the geographic location of where you live when considering additional coverage for floods, hurricanes, tornados or earthquakes.

Lenders usually require PMI if the mortgage loan is more than 80% of the home's purchase price. If you do not have the standard 20% down payment, there are ways to avoid the PMI. Speak to your local CPA about the 80-10-10 financing plan and other strategies to avoid the PMI.