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The Choice Between HMOs and PPOs explained

There is something deeply annoying when people in a particular trade or industry start using jargon and letters to talk to us. What is wrong with the English language? Why must they hide the meaning? Why do they believe we will be impressed? The insurance industry is one of the worst offenders. By the time the experts have finished describing the different health plans and the lawyers have wrapped everything in obscurity, we seem left with a take-it-or-leave it choice. They seem to be saying, “close your eyes, trust everyone has your interests to heart, and pick something out of the alphabet soup.” Well here is a quick tour through two of the most common plans to help you decide. The essence of all plans is a definition of the healthcare professionals available to deliver the care should you need it. The wider the choice you have, the higher the premiums you will be required to pay. With a Health Maintenance Organization (HMO), a group of healthcare providers contracts with an insurance company to deliver services to the policy holders. Because the insurance company guarantees a high volume of business to the group, the rate for the services is lower than usual and so the premium rates charged and copayments are also lower.

Access to the services is controlled by a primary care physician. He or she will refer you on to other members of the group for different specialist services. If you want to go outside the group, you will have to pay the difference between the HMO rate and the actual cost of your own choice doctor. Although this is the cheapest form of plan, the lowness of the fees charged by the group encourages members to see as many patients as possible every day. A Preferred Provider Organization (PPO) also contracts with an insurance company, but the relationship is less restrictive and the rates are slightly higher. In this plan, you are free to choose any doctor within the group without having to get a referral. If you decide to see someone outside the group, you will have to pay the out-of-pocket expenses. Here, you are paying slightly more to have more control over your treatment options. So, for example, if your own doctor is not a member of an HMO, you would have to change. With a PPO, you can continue to see your own doctor. All health insurance decisions are a balancing of costs and benefits. In this case, the choice between an HMO and PPO comes down to what you can afford and whether you prefer more control over the care you and your family receive. It is fair to say that the majority pick the cheaper option of an HMO and then complain about the restrictions. This does not mean the quality of the care is worse than in a PPO. It simply reflects most people’s preference to make their own informed decisions. Perhaps it is cynical but, whichever you pick, it is better than not having insurance. When the choice is offered through your employer, look carefully at the cost differences in copayments and out-of-pocket expenses. If you are paying privately, get the maximum number of health insurance quotes. When you see a wide range of offers, it is easier to find the best deal.

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If professional writers like Grace Oaks really help you learn more about things going on in the world, will definitely give you enough food for thought on many interesting topics.

Types of Life Insurance Explained

There are many types of life insurance with different features and benefits that meet different needs. Before you purchase a life insurance policy you need a basic understanding of the types of polices available.

Term Life Insurance Explained

Term life insurance provides coverage for a term of from 1-30 years. Annual premiums are paid to the insurance company to keep the policy in effect. If the policy owner dies during the term, his or her beneficiary is paid a lump-sum of cash. If the policy owner lives beyond the term, the policy expires, and no death benefits are paid.

There is no savings or investment feature to a term life insurance policy. The insured must meet medical conditions before obtaining a policy. The annual premium varies depending on the amount of coverage desired and the insured’s age and health. Because chances of death increase with age, standard term life premiums increase every year.

The pros of term life insurance are its affordability and the short term protection it provides with no risk. The cons include the temporary nature of the coverage, annually-larger premiums, and no gains on you investment. Term life policies work well if you want to pay off a mortgage in the event of your death or for other similar period specific life insurance needs.

Whole Life Insurance Explained

Whole life or permanent life insurance provides a lump sum payment to the beneficiaries upon the insured’s death. The advantage of whole life policies is they have no defined term, so as long as the premiums are being paid the policy will remain in force for life, or until the endowment age which is typically 100. This just means that if you live to the endowment age, the benefit is paid to you at that point and the policy is no longer in force. Another advantage of the whole life policy is that the cash value in the policy can be accessed in if the insured needs the funds or can no longer make the monthly premium payments.

The premiums for a whole life policy are more expensive than term insurance since the policy holder is covered for the remainder of their life. Often the premiums are flat or decrease over time. This is possible because the insurance company can invest part of the premium in bonds and equities and use the proceeds to cover the rising cost of premiums and/or to make a payment when the insured dies.

Whole life is typically purchased as part of an estate planning arrangement to make sure heirs are taken care of if you predecease them.

Universal Life Insurance Explained

Universal life is also called “flexible premium adjustable life insurance,” and is a more flexible version of whole life insurance. Similar to whole life, universal life includes a savings element that grows on a tax-deferred basis. A portion of your premiums are invested and the return on the investments is credited to your policy tax-deferred. Most policies guarantee a minimum return on your money. Universal life offers two death benefit options. One pays the death benefit out of the policy’s cash value; the more cash value you build up the less the policy costs the insurance company. The second option pays a fixed amount stated in the contract, plus any cash values you accumulated over the years and costs more.

Universal life policies give you the ability to adjust the death benefit as your needs change, as well as the flexibility to pay smaller or larger premiums for periods of time. However, you need to make a minimum premium payment as specified in the contract to avoid the policy lapsing.

Universal life like whole life is generally used as a part of an estate plan to ensure heirs are taken care of after your death.

Variable Universal Life Insurance Explained

The variable universal varies depending on the performance of the investments chosen by the policy holder.

Since the insured chooses the investments for a variable universal policy the risk and benefits of the investments accrues to policy holder. The policy allows the insured to choose among a variety of investments so the investment can be spread between higher and lower risk investments to ensure there is always some value to the policy and still take advantage of higher risk investments with the potential of higher returns. If the investments do well the policy holder does not have to pay a premium. If the investments perform poorly there is the risk the premiums will have to be paid or the policy will lapse.

Life insurance premiums vary within a set range and the cash value of the policy.

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Insurance Choices Work with a trusted financial advisor to have your options for life insurance explained fully before you make a decision as to which type of insurance to purchase.

EPO Plans Explained

Having an Exclusive Provider Organization (EPO) means that the medical service providers you will receive care from should have signed up an agreement with the insurance company to allow offering you these services. This way EPO plans are somewhat similar to PPO (Preferred Provider Organization) plans, meaning that the person having such a plan can obtain inexpensive medical services at a facility that makes part of the EPO network. Still, if you choose to receive your medical care at a facility outside the network, a PPO plan will still cover your costs, only to a smaller extent. With most EPO plans, you won’t receive any insurance coverage when visiting a specialist outside the network.

When you choose an EPO plan, you will instantly notice that the fees you are charged with by the medical service providers that have accepted to join your insurance company’s network are significantly lower than those normally charged. So when you receive your health benefits within the EPO network, you can rest assured that the rates you will be charged for the services will be very advantageous and your insurance provider will pay for all the services you receive.

However, if you have a condition that none of the specialists making part of the EPO network can help you with and you are forced to seek medical attention outside of the network, make sure you have enough money because you will pay for the service to the full extent. This is because EPO plans do not include any services provided outside the selection of facilities and specialists that have an agreement with the insurance carrier. Moreover, in contrast with PPO and HMO plans that have fairly large networks of health service providers, EPO plans usually have a much smaller number of specialists and facilities being part of their network. This means that you have fewer professionals to choose from when you need medical attention.

In what concerns health service providers, their advantage in joining an EPO network is in the increased number of patients they work with. So instead of charging higher rates to a smaller number of patients, they charge lower rates for a much higher number of people and get more revenue as a result. This is especially useful to those providers who target themselves at a certain geographical area and want to get more people through group health insurance coverage plans. The insurance companies, which choose to provide EPO plans charge their customers with monthly premiums and act as mediators between the customers and the medical service providers.

As a conclusion, EPO plans would definitely be appealing to those looking for cheap health insurance and having no special medical needs such as pre-existing conditions. The group of people who will probably benefit the most from such plans are young healthy workers with no serious health risks. And those who will find EPO plans quite uncomfortable are older people with complicated conditions that need regular and special care from certain specialist, who may be outside the network. Think well before you purchase such a plan and make sure to shop around to get the best rates. Use health insurance quotes online or contact your agent to see what local providers can offer and start from there.

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Want to see what Grace Oaks has to say on other topics? With years of experience Grace Oaks is a constant writer for and you can see all his contributions on that site.

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