Archives For Insurance

This is the first I have heard of this story: Annuity Case Chills Insurance Agents.

Last month, Glenn Neasham, an independent insurance agent, was ordered to spend 90 days in jail on a felony-theft conviction for selling a complex annuity to an 83-year-old woman who prosecutors alleged had shown signs of dementia.

The agent’s conviction, by a state-court jury in Lake County, Calif., is sending shivers down the spines of Mr. Neasham’s peers across the country. They can’t recall another case where an agent was sent behind bars for selling an annuity.

The guy talked the woman into putting $175,000 into an equity-indexed annuity. His commission: $14,000 (8 percent). I know it’s not the same product, but the commissions for $175,000 put into American Funds mutual funds are 3.5%.

Wow!

There is a quick way to end these abuses: stop paying bigger commissions for these products.

Now, it’s important to note that we do not have all the information. I just think putting an 83-year old into an equity-indexed annuity is not looking out for her best interest.

Let the ticked-off insurance agents’ vitriol begin…

Car shopping? If so, Insure.com’s list of 20 least and most expensive cars to insure might be something you will want to read.

Their list of the 20 least expensive cars to insure:

1. Toyota Sienna LE: $1,111
2. Toyota Sienna 4 cyl: $1,114
3. Jeep Patriot Sport: $1,116
4. Jeep Compass Sport: $1,118
5. GMC Sierra K1500 Regular Cab: $1,121
6. Chevrolet Silverado 1500 Regular Cab: $1,125
7. Dodge Grand Caravan SXT: $1,129
8. Ford Escape XLS: $1,137
9. Toyota Sienna 6 cyl: $1,139
10. Chevrolet Silverado 1500 Extended Cab: $1,143
11. Dodge Journey SXT: $1,143
12. Honda Odyssey LX: $1,146
13. Kia Sportage: $1,151
14. Hyundai Santa Fe GLS: $1,152
15. Jeep Wrangler Unlimited Sport: $1,154
16. Nissan Frontier S King Cab: $1,162
17. Nissan Frontier SV King Cab: $1,163
18. Hyundai Tucson GL: $1,166
19. Ford Escape XLT: $1,167
20. GMC Canyon: $1,167

The 20 most expensive cars to insure (I don’t have to worry about this list):

1. Audi R8 Spyder Quattro Convertible: $3,384
2. Mercedes CL600 BI-T Coupe: $3,307
3. Mercedes S600 BI-T: $2,948
4. Audi R8 4.2 Quattro Coupe: $2,903
5. Porsche Panamera Turbo: $2,738
6. BMW 750i Hybrid: $2,701
7. Porsche 911 Turbo Convertible: $2,674
8. Porsche 911 Turbo S Convertible: $2,674
9. Mercedes CL65 AMG Coupe: $2,669
10. BMW 750Li Hybrid: $2,641
11. Mercedes SL63 AMG Convertible: $2,615
12. Mercedes CL63 AMG Coupe: $2,613
13. Jaguar XKR Supercharged Convertible: $2,585
14. Mercedes S63 AMG: $2,542
15. Mercedes C63 AMG Coupe: $2,532
16. Audi A8 L Quattro: $2,513
17. Mercedes SL550 Convertible: $2,458
18. Nissan GT-R Coupe Turbo: $2,457
19. BMW 750XI: $2,446
20. BMW 750i: $2,430

You can read about their methodology here.

I read this in The Ultimate Financial Plan: Balancing Your Money and Life* in the chapter on life insurance:

“Although the benefits of permanent life insurance exist, the costs must also be weighed. I recently replaced one of my term life insurance policies with a new policy bearing a $1 million death benefit and an annual premium of $465 per year, so in preparation for this chapter I reached out to several life insurance agents to see what the cost would have been for permanent life insurance policies with the same death benefit. The answers? A comparable whole life policy was 20 times more costly—$10,380 per year! The universal or variable life policies would cost around 10 times the amount that I am paying for my term policy. I’d rather control the fate of that extra money than trust a life insurance company to manage it.”

I’m about halfway through The Ultimate Financial Plan: Balancing Your Money and Life* and I have to say, I’m impressed. The main author, Tim Maurer, clearly has the reader’s best interest at heart throughout the book. Good stuff for someone just starting out.

*Affiliate Link

Here’s today’s Question of the Day:

How much did your health insurance premiums go up this year over last year?

Our premium went up 9.07% over last year. The trend over the last ten years was much higher, as you can see from this graphic:

I’m not sure what happened in 2008 to cause premiums to jump over 100%. I’m just thankful my wife’s company pays 80% of the premium. I don’t know how long that will continue but I’m thankful for it while we have it.

What about you? What kind of premium increases are you seeing?

The poor economy has led Americans to cut corners on their life insurance—at levels not seen in half a century, according to a new study.

Only 44% of U.S. households have individual life insurance, according to the latest Trends in Life Insurance Ownership, a study conducted every six years by Limra, the investment research company.

That represents a 50-year low in U.S. life insurance ownership, according to the study, and means there are 11 million fewer households with life insurance than there were six years ago.

That little snippet was taken from this short article one of my friends posted on facebook this morning.

The article went on to state that people aren’t focusing on life insurance because they are have other financial priorities like retirement planning. This is sad when you figure that a $500,000 term insurance policy can be had for $20 to $30 per month. Who can’t afford that?

The other day I called our insurance company with a question about our policy. While I had the agent on the phone, I asked them to give me an idea of what our insurance rate would be once our oldest son starts driving (about a year from now). After asking me a few routine questions, she gave me the answer: $900…every six months. $1,800 per year! And, that’s with a discount for taking driver’s ed and a good student discount. To make matters worse, we have another son who will be driving 17 months after our oldest son starts. We could be looking at car insurance premiums about three times what we currently pay. OUCH!

After I got off the phone with our agent, I sent a message to a friend of mine who runs a local insurance agency. He and his wife have older kids too and I thought he’d be a good source for some tips. Here is what he sent me:

When you add a new driver to an existing car, you can expect the rate on that vehicle to increase by as much as 40 – 50%. If you add a new driver and a new car, you can expect that vehicle to cost around $600-$700 for coverage without comp and collision. With comp and collision, $1000+.

Most carriers have discounts for drivers that make good grades. They get a discount for drivers ed. The premium is usually lower for girls than boys (not much).

The premium drops some when they reach 21.

One thing I always suggest is for parents to find a car that’s safe and they can pay cash for. Don’t include comp and collision to keep the rate down. If Jr wrecks it, he’s on foot until he fixes it or earns the money for a replacement.

When you think about what not to get a kid….all the high powered sports cars. It’s not that the insurance co. won’t insure them—they will and collect large premiums to do so. But it’s just not smart sending a new driver out in a high powered car or truck.

Insurance companies check for tickets and accidents when given a reason to do so, i.e.. lots of accidents and claims. I suggest setting a higher deductible and not claiming small things that can be paid out of pocket. Of course if other parties are involved, that still won’t help. But if jr runs into your garage door, you may want to pay that yourself and “bank” your future claim for a time when you must make a claim.

Hope this helps.

Mike Roby Insurance (facebook)

Now, there are some things we could probably do to drop our rate a bit. I think the insurance representative ran the numbers with comprehensive and collision, which would have definitely increased the premium. I’ll learn more as my son gets closer to driving. He’s even going to be responsible for some of his premium. He’s also going to be driving our 2002 Buick Rendezvous. Won’t that be cool?

The bottom line is insuring a teen driver is expensive! What’s been your experience with having teen drivers? What things did you do to lower the premiums so that you didn’t have to eat bread and water during the teen driving years?

Longtime AFM reader, Don, volunteered to write a post detailing his experience in dealing with medical bills and insurance companies. It would be worth your time to read this. Thanks to Don for writing this.

The financial consequences of a significant medical event.

In February of 2004, my wife suffered a thrombophilic stroke, which is a fancy way of saying she had a blood clot get stuck in her brain. This is the kind of thing that is not supposed to happen to thin healthy non-smokers in their 30s. In short, it was very rotten luck.

An ambulance took her to the emergency room early Saturday morning where she received a CAT scan and a test for meningitis. By late morning, she was transported by ambulance to a larger hospital 75 miles away. She received two MRIs on Saturday, another on Sunday and she spent the next 12 days in the hospital, about half in a neuro-intensive care unit, and half in a regular room on the neuro floor.

From the acute hospital, my wife was discharged directly to an inpatient rehabilitation hospital where she did physical, occupational, and speech therapy until the end of May. We left the rehab hospital for home and did outpatient therapy five days per week for the remainder of the calendar year (and more).

I have never added up all of the costs of my wife’s treatment, but our insurer probably made between $150,000 and $250,000 in medical payments that first year. Our personal cost was a bit over $2000 (our out-of-pocket limit), plus lots of headaches and frustrations.

It is probably no surprise that I have had more experience with medical billing than I ever desired, and from time to time people ask me for my perspective. I have had no formal training, just the sum of my experience. But I have never failed to have a legitimate medical claim paid, so I think my point of view might be worth something.

This is my (free) advice. You may get what you pay for.

1. Start off on the right foot.

The first thing you want to do once a medical emergency is stabilizing is notify your insurance company. Our emergency happened over the weekend, so I had to leave a confidential voice mail at the number on the back of my insurance card. One great tip is that hospitals employ people specifically to deal with insurance companies, and those people become your first ally in medical billing. I made sure first thing Monday morning that the hospital staff had called on my behalf to follow up with my insurance company. That way I could focus on my wife.

2. Become a cynic.

I don’t really mean you should become a cynic, but my second piece of advice will sound cynical. Buy a telephone tape recorder and record every conversation you have with anyone that concerns money (if it is legal to do so in your state). Keep a diary if you can’t record calls.

You need to start doing this right away, even though you won’t feel like it is necessary. When your medical situation is extreme and has just occurred, the insurance company will be very accommodating. But as your case continues, as it gets more expensive, there will become a point when things change. The company has to look after its bottom line, and they will attempt to cut you off. It is likely that they will be extremely unreasonable (they may even lie to you) when this moment comes, and you need that conversation on tape so you can review it later carefully.

You also need to record your other conversations (if they involve your bills or treatment). We unexpectedly received a call from a collector who very combatively attempted to get immediate payment (via credit card over the phone) for medical equipment that we had never even been billed for. I wasn’t expecting the call, and I didn’t get it on tape.

I eventually learned to start the tape, then answer the phone. If it was a friend calling, I just discretely turned the tape off. Otherwise, I kept a pad of paper next to the recorder, and I marked down date, time, and the setting of the tape counter for each call—along with a summary of the conversation.

3. The enemy of my enemy is my friend.

There are three players in the medical billing game. There is the provider (the hospital or doctor), there is you, and there is the insurance company. If you want your bills paid correctly according to your insurance policy, I recommend that you attempt to form a coalition with the provider against the insurance company. If you don’t have the cooperation of the provider, your job becomes substantially more difficult.

That means first and foremost, you do not pay your bill. If you pay the hospital, what incentive do they have to work with you against the insurance company? I am always very clear and direct about this. I will pay my portion of any bill in full as soon as it has been correctly discounted by the insurance company and applied to my deductible or coinsurance.

I also get to know the billing staff, as much as I can (and I sympathize, because their job sucks). When I have bills from the local hospital, I always go in person and I wait to talk to the same billing specialist. She knows I have never let a bill go unpaid, and that I always do my part to get my insurance to come through (to the tune of more than $100,000 by now).

When I have to talk to billing people on the phone, I always ask their name, and I ask where their office is. I do this for two reasons. One, it helps build rapport if you treat people like humans. It also helps to get the same person if you have to call again. Remember, you’re trying to build a coalition. I also like to know what state they are in so I can research the legality of taping our conversations without notifying the other party (I’m legal in Missouri, but if it is forbidden in their state that would make a difference in a lawsuit).

In my experience, billing specialists have quite a bit of influence over whether your account goes to collections or not. It is safe to assume that do not want your account going to collections. So be nice to the billing people.

4. A word about denied claims.

You are going to have denied claims. Some things are denied as a matter of routine. Ambulance charges are always denied as I understand. This is not something to get stressed over. Generally, the hospital will appeal the denial and the charge goes through the second time.

Many claims are denied over billing code numbers. If the doctor bills something under one code number, but the insurance company wants it billed under a different code number, your claim will be denied. Usually, this can be worked out with very little involvement from you. I generally check with my provider, let them know that I got a notice of denial, and ask about having the bill resubmitted.

Other claims will be denied for lack of “medical necessity,” which is a way of saying you did not need that treatment, or that it went beyond reasonable and customary care. This may be true or not. For example, many insurance companies will not pay for both a wheelchair and a walker, since both are ambulatory devices. However, if you can show evidence that each device serves a different function (because the walker gets you in and out of your house that cannot accommodate a wheelchair ramp), then you may get both claims paid.

5. Appeals.

If a denial drags out too long, you need to get involved. This means writing a letter. You can call, but you almost certainly have more rights when you write. One of my insurance plans required a physical letter within one month of a denial to retain full rights of appeal (and they tried to use that against me once).

Even if it seems that the doctor is going to handle an appeal successfully, if things looks like they will drag out beyond a month, I write a letter. The letter should be polite and it should have all of the relevant data about the claim. At a minimum, I always give the full name of the patient, the social security number of the patient, and the claim numbers and dates of services. I always state that I am writing to “appeal” the denials. I note the actions that have been taken already (say by the doctor) to resolve the matter, summarize why the claims are legitimate, and I ask for the claims to be reconsidered and paid.

Remember that coalition you formed with the medical provider? If you write a letter of appeal to the insurance company, I think it ays to call up your billing specialist (or drop by in person) and let them know. I generally never let a month go by on a bill without checking in with the provider, since I really hate working with collectors. Keep the billing people in the loop and they will (hopefully) keep your account out of collections.

6. Escalation of force.

A single letter will not always get your appeal resolved. Sometimes I have had to write a second letter and a third letter. This becomes a process of escalation.

When I write appeal letters, I always remember WWJD: What would a judge do? I imagine that somewhere down the line I might have to sue my insurance company. In practice, a suit will probably go to arbitration and not a court, but the relevant thing to remember is that some third party is going to be looking at the history of the claim and trying to decide what is the correct action.

You want to be able to bring in a set of letters that will leave the judge offended on your behalf. They should look at your letters and see that you are a patient person who made every honest effort to get this reasonable claim resolved. So, when you write your second letter, you make reference to your first letter. You lay out your claim again, in slightly stronger language. You are patient and persistent.

Your third letter refers to both your first and second letter. It may express polite exasperation. You are becoming frustrated, because you are doing everything right, and this keeps dragging on.

I personally save the word vexatious for the third or fourth letter. I once wrote, “It is impossible (for me) to distinguish between embarrassing incompetence and a vexatious business pattern designed to wear us down and thereby avoid paying our valid claim.” Naturally I was trying to express extreme frustration at the continued lack of progress. I was also letting the insurance company know, without explicitly threatening, that I was aware of Missouri’s vexatious denial law. (If an insurance company denies your claim just because they’re so damned mean, then they can be hit extra for punitive damages.)

7. Deceit.

Your insurance company may lie to you. It may be intentional, or it may just be that one representative tells you something and another representative tells your provider something different. I have found it extremely helpful on more than one occasion to go see the billing specialist in person, and we call the insurance company together. It is time consuming, but it is more difficult to lie to both of us simultaneously. It’s that coalition thing again.

8. A word about attorneys.

Don’t mention attorneys when you talk to people on the phone. It ruins the rapport that you are building with the billing specialist, insurance representative, etc. It shuts them down cold. You are talking to them because you need them to do something for you, and threats of any kind get in the way of that process.

If you need to threaten using an attorney, it would probably be best to do it in writing so you can craft the language just right. You’ll explain that you are so exasperated that you feel your only recourse will be the help of an attorney if this isn’t resolved presently. Remember, you are a reasonable person that has tried every other possible avenue first. You can only threaten this once and remain credible, so save it until you really are only one step from getting legal representation.

If you do go to an attorney (and I did once), ask around. Attorneys are good at different things. Some are good at divorces, some are good at defending insurance companies, and some are good at winning judgments from insurance companies. Be assured that your insurance company knows whom they don’t want to cross swords with. A quick success with a $100 letter from an attorney who routinely cleans the clocks of insurance companies is better than winning at arbitration or trial after an extended fight.

And don’t be intimidated by the opinions of experts (doctors) that work for insurance companies. Good doctors practice medicine. Bad doctors, who can’t make a living practicing medicine, work for insurance companies. If you have good doctors and valid claims, you should not fear going head to head with bad doctors. (One of our docs was good enough to point that out.)

9. Stress and persistence.

If this all sounds stressful, it is. During 2004 and 2005, I regularly received bills from the local hospital for amounts anywhere between $5000 and $15000 that would say (incorrectly), “Your insurance has paid their portion. The remainder is your responsibility.” Even when you know that’s a lie, it is stressful to get a bill for thousands of dollars every month.

But in my experience persistence pays off. I had one claim that I worked on from April 1 until February or March of the following year. I spent a whole day in December crafting the “vexatious” letter. Right about that time, my billing person at the hospital offered me a deep discount to just pay the bill, and it was tempting to accept her inducement just to end the stress. But I told her that I thought I was really close to winning. So she kept the bill out of collections for a bit longer, and eventually the win came a couple of months later, clearing away a $4000 bill. It saved me at least $2400 (I had been offered a 40% discount to pay it myself).

I steel myself with the expression, “Evil people shouldn’t win.” If your claims are for reasonable, medically necessary expenses, then they should be paid. That’s what you paid for when you paid your insurance premiums, and that’s the way it should work. Trying to deny you is good for the bottom line, but it is not “good.”

Insurance companies (and collection agencies for that matter) hire professional bullies, people who are good at being mean. Mean people have to work somewhere. But you should stand up to bullies.

The short summary.

You will have the most success against insurance companies if you are methodical, polite, and superhumanly persistent. Get the billing people for your hospital or doctor on your side, against the insurance company. Handle appeals in writing, with careful language that escalates over time. If your claim is legitimate, you are likely to win without needing the recourse (or expense) of an attorney.