Insurance Owl :: Insurance explained

Composite insurance may soon be a reality

Radhika Menon
YOU may soon be able to insure your life as well as your motor pump by buying a single policy.

The Insurance Regulatory and Development Authority (IRDA) is currently toying with the idea of allowing insurance companies to issue composite policies for micro-insurance.

In India micro-insurance is defined by the size of the policy (Rs 5,000-Rs 50,000 sum assured) and covers health, household, fire and motor insurance portfolios that are non-commercial or of lower asset value.

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Long Term Care Insurance and Tax Breaks

Is the cost of long term care insurance keeping you from signing up? Help may be on the way from federal legislators, in the form of tax advantages and a new way to tap your retirement fund.

Federal lawmakers seem to be recognizing that the cost of a long term care insurance policy is one of the biggest barriers to coverage, says Sean Denny of Long-Term-Care-Insurance-Planners.com, which provides competitive coverage quotes. One way to offset this concern is through enhancement of tax advantages for purchasers of long term care insurance.

Currently, if you qualify for itemized medical expenses as deductions on your taxes, you can deduct the premiums of a federally tax-qualified long term care insurance policy. But most insurance is purchased with post-tax dollars, and proposed legislation would allow use of pre-tax dollars to pay for those premiums, providing an added level of incentive.

On Sept. 15, a bill was introduced in the U.S. Senate to amend the tax code to allow income distributions from retirement accounts, such as 401(k) or 403(b) accounts, to pay for long term care insurance premiums. Under the Long Term Care Act of 2005, the pre-tax retirement funds could be used to pay for long term care premiums without incurring penalties for early withdrawal.

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Insurance is no longer a safeguard

CAMBY, Ind. - Until the fourth trip to the hospital in 1998, Zachery Dorsett's parents thought their son was an average child who was having trouble getting over a passing illness. He was 7 months old, and it was his second case of pneumonia.

Sharon and Arnold Dorsett were concerned about Zachery's health, but they were not worried about the financial consequences. They were a middle-income couple, with health insurance that covered 90 percent of doctor bills and most prescription drug costs.

Then the bills started coming in. After a week in the hospital, the couple's share came to $1,100 — not catastrophic, but more than their small savings. They enrolled in a 90-day payment plan with the hospital and struggled to make the monthly installments of nearly $400.

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