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How does Short term, long term insurance works? |
I amcurious because at work, the employer pays as much as twice for people in management than for clerical workers. Does that mean people in management get better/more coverage than clerical workers or could it mean they are older and more at risk of becoming disable than their younger co-workers in clerical positions. Does the premium depends on age, health and other things or does it go up for additional coverage, or is it based on salary? You are right. In some companies, management may be getting an "executive package as part of their benefits". It has nothing to do with being old, however, each policy is rated based on: 1. age 2.zip code 3.Gender(sometimes) 4. Health (smoker, health issues) 5. Coverage. Also, the higher the deductible, the lower the premium. If the policy does not cover maternity, you may have a lower premium. If Pharmacy covers generic only or no pharmacy, the premium may be lower. It also depends whether it is "group" insurance or "individual" insurance. Group insurance, generally, is sold thru companies of two employees or more. Individual insurance is sold to single people, families. Group insurance is more expensive and usually the employer contributes 25%, 50%, 100% or a fixed dollar amount, and gives the appearance that it cost less, however, Group insurance typically is richer in benefits, it may include dental(may or may not include orthodontics) and Vision benefits. The difference is paid by the employee. Individual policies rarely have dental coverage and seldom have vision benefits. Regarding Short term insurance. A short term insurance is a policy that you can buy for limited medical coverage on a month to month basis, not to exceed 6 months to a 12 months, depending on the carrier. It does provides almost the same coverage as an individual policy. It is a policy that is used as a interim medical coverage, for example, somebody who is applying for insurance and needs immediate coverage. Somebody who is between jobs who lost coverage while transitioning employment and do not want Cobra coverage. Long term Insurance, a rare terminology, it could be interpreted as Group insurance. Long term care insurance is a policy that provides a "pool of money" for when you are somewhat disable, lacking some of the ADL, hearing impaired, dementia, loss of vision, etc. I hope this answer your question. Regards, Roy From reading mountains of policies... A person only has so many years, the insurance company estimates how many years people have to live. The insurance company has X number of years to get money from that person before the Company has to pay up. Older people have higher insurance bills because that time is running out, and they are more accident prone(broken bones,strokes, heart attacks etc). On the other hand if a person smokes, drinks, or is obese. That decreases life expectancy, premiums go up. People in management get more benefits cause they have been there longer and know the system. If you lose one worker you have other to do the work. But lose a manager, there isn't as many of them as there are workers. Also it is one of the perks from working in a certain place for many years. Some place make it an incentive to stay at their job, such as HP used to offer a 25 years of work, meaning after working at HP for 25 years your premiums drop by 1/3 In short it depends on your living situation employer and insurance company/policy hope I could help Short term/long term is length of years for policy before have to do anyother term (years). example: 5 year policy/20 year policy. Issue price for a policy is based on male/female, smoker/non-smoker, age, and risk factors such as health risks and job risk (water tower worker/desk job), etc... (not based on salary). Companies have extra coverage on management employees if the employees are listed as Key Personnel (or have a position that would be a greater loss for the company). If they are in a position that puts a financial burden on the company if they died (partner/owner or perhaps large # of company shares), the beneficiary may be the company instead of employee's loved ones. There could be other factors; these are the most common. There are literally hundreds of ways employers structure benefit plans that result in difference in premium. For example, if your employer has purchased only group coverage, then the premium is based upon covered salary and so higher paid employees premium will be higher. It's not unusual for employers to buy group insurance for everyone and then buy additional individual disability policies for management employees. There is a significant difference in price between the two and that would also account for a difference in premium. It's also not unusual for employers to buy a basic policy for non-management employees and then purchase a richer benefit program for management using only group products. There are lots of other ways, too - but these are most common. Briefly, disability premium is based upon a rate that is set by the insurance company based upon the corporate industry, job occupations, gender distribution, ages, salaries and geographic locale. The rate is reevaluated every year or every few years using current census data. That rate is then multiplied by covered salary to determine each employee's monthly premium. It should not be a secret that benefits improve in management or with tenure since these employees are much harder to replace and train, so they usually have better salary, benefit and vacation packages as an incentive to stay with the company. Ask your HR to explain the benefit structure so that you will know what is available to you as you move up the corporate ladder. Good luck! For group coverage, it's age and salary. For individual coverage, it's age, health and salary. agent, 21+ years |
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