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Common Questions
Why is it beneficial to hire a licensed agent when applying for life insurance rather than completing a form on an online service?
Internet services and AI have made applying for life insurance very easy, and seemingly very inexpensive. Advertisements are all over television, radio, and the internet touting the cheapest rates available.
Points to consider:
1. Price is one consideration and absolutely should be considered. It’s surprising however, that pricing from an agent is the same as the pricing on the internet.
2. Published prices on the internet are not guarantees. Underwriting has to be completed and often results in higher pricing, or even denial of coverage. A knowledgeable agent is there to navigate the process and will assist when help is needed.
3. The least expensive policy is sometimes best, but not always. A knowledgeable agent can help a buyer understand his/her available options. Situations change for everyone and a knowledgeable agent can help a person make the best choice for today, while also keeping an eye on the future.
What factors should I consider when planning a life insurance policy?
Planning involves several key considerations, such as:
- The purpose of the policy (e.g., loan protection, estate planning, business buy-sell agreements)
- Duration of coverage needed
- Whether to choose term or permanent insurance
- Tax implications and how premiums will be paid
- Whether agreements like split-dollar or deferred compensation are appropriate
- It’s also wise to involve your accountant or attorney, but don’t delay securing coverage while sorting out these details.
Is getting life insurance difficult or time-consuming?
Not anymore. Applying for life insurance has become easier thanks to electronic health records and online applications. Many policies no longer require extensive medical exams, depending on your age, health, and tobacco use. Acting early is critical—waiting until a health issue arises could limit your options or make coverage unavailable.
Why is life insurance important, and how much coverage do I need?
Life insurance provides crucial financial protection for your loved ones in the event of your premature death. The first and most important question to ask is: How much life insurance will it take to protect my family’s current standard of living? Once this is determined, securing that coverage should be your top priority—even while you work through other planning decisions.
What is a level-premium self-funded health plan and how does it benefit small businesses?
A level-premium self-funded plan is designed for small businesses (typically with 12 to 100 employees) and offers the cost predictability of a fully insured plan, with the transparency and potential savings of a self-funded plan. Employers pay a fixed monthly amount covering admin costs, reinsurance, and expected claims. If claims are lower than expected, unused funds are reimbursed to the employer, rather than kept by an insurance carrier.
What are the requirements for a small business to qualify for a level-premium plan in North Carolina?
To be eligible for self-funding in North Carolina, a company must:
- Have at least 26 full-time employees
- Ensure 75% of eligible employees participate (those with other coverage are excluded from the calculation)
- Undergo full medical underwriting, where employees answer health questions (done through a third-party to protect privacy)
Plans that don’t meet these requirements may still qualify for a fully insured option.
How is a level-premium plan different from a fully insured plan?
Unlike fully insured plans—where costs are bundled and profits go to the insurer—a level-premium plan is fully transparent. Each cost component (claims, admin, reinsurance, etc.) is itemized, and any unused claim funds are returned to the employer. This structure encourages cost-saving strategies like pharmacy management, telemedicine, and reference-based pricing.
What is a self-insured health plan and how does it differ from a fully-insured plan?
A self-insured (or self-funded) health plan is one where the employer takes on the financial risk of providing healthcare benefits to employees, rather than paying fixed premiums to an insurance carrier. While it offers potential cost savings and greater transparency, it also comes with more risk and responsibility compared to a fully-insured plan.
Can employers save on health plan costs without shifting more expense to employees?
Yes. While many companies have responded to rising health plan costs by increasing employee contributions, true savings are possible by understanding and optimizing key elements of a health plan—such as plan administration, networks, claims management, and pharmacy benefits—rather than just shifting costs.
What are the key components of a health plan that impact cost and savings?
The primary elements include:
- Transparency – Understanding each component clearly can reveal hidden inefficiencies and savings opportunities.
- Plan Administration (TPA) – Oversees plan operations, eligibility, and claims.
- Provider Networks – Deliver discounted rates for medical services.
- Pharmacy Benefit Manager (PBM) – Manages prescription drug costs.
- Claims Management – Since claims make up ~80% of plan costs, managing them well is crucial.
- Compliance – Staying compliant helps avoid costly penalties.
How do self-insured plans create more opportunities for savings than fully-insured plans?
Self-insured plans allow employers to choose best-in-class providers for each component (network, PBM, TPA, etc.) rather than relying on a bundled, one-size-fits-all package from a carrier. This flexibility increases transparency and enables employers to identify and improve inefficient areas—often leading to better cost control compared to traditional fully-insured plans.
What are the risks and benefits of choosing a self-insured health plan?
Benefits include potential savings, plan transparency, and retaining unused claim funds (especially in level premium plans). Risks involve financial liability if claims are high and the need for more active plan management. Success depends on how well the plan is structured and how thoroughly each component is analyzed.
When should a small business consider a self-insured or level premium plan?
Self-insured plans are typically considered for companies with 25 to 200 employees. A level premium plan—a hybrid self-insured model—is often a good fit for businesses with 25 to 100 employees due to its budgeting predictability and potential cost savings. For companies with 100 to 200 employees, a full self-funding strategy with reinsurance may also be advantageous, depending on underwriting results and plan analysis.