Top 5 Benefits for Completing Your Insurance Course Online

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Online-Insurance-Course-Benefits

In preparing for your state insurance exam, the three most common study options include traditional classroom courses, insurance study manuals, and online insurance courses.  One style of learning does not fit everyone, so let’s review what is included with each option.

Traditional classroom courses usually consist of an instructor verbally explaining insurance concepts from a manual or syllabus which may include a few visual aids to reinforce the material.  Although an instructor usually has a good understanding of the material, his or her explanations may not always be concise, consistent and clear every time it is presented.  In addition, since not every state requires the completion of a pre-licensing course before taking the state insurance exam, an instructor may or may not be certified by his or her Department of Insurance, depending on the state’s requirement.

Preparing for the state exam with only the use of a study manual often includes text, illustrations and exam questions.  While the explanation of insurance concepts from a study manual may be consistent and clear, it may not always be up-to-date and it loses the interactive learning process associated with a classroom.

Online insurance courses take a multimedia approach by combining the interaction of a traditional classroom with the clarity and consistency of a textbook, while including some important additional benefits. Read More

Knowing When to Schedule Your State Insurance Exam

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With the amount of information you need to know in order to be prepared for your insurance license exam, it is common to question whether or not you have spent enough time studying to take the next step and schedule your state exam.  To alleviate this anxiety and help guide you through your online course, we developed an individualized Pass Report to gauge your readiness for the state exam.

Your Pass Report is similar to a personal instructor, guiding you through the course by illustrating the areas that need additional study time, as well as tracking and reporting your progress as you move through the course.  Your Pass Report allows you to see how much time you have spent in each lesson within the course, your final exam, exam simulator results and your overall preparation for the state exam. Read More

Top Insurance License Exam Tips

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Are you a good test taker? Or, like many, do you cringe at the thought of having to pass an exam? Most people would agree that it can be stressful, takes time to study and prepare for the exam, and quite frankly, something they would rather not have to undergo.

I cringe at the thought of taking an exam!!

Preparing for the Test

Though it may seem somewhat overwhelming at first, preparing for and taking the state health and life insurance exam is NOT that difficult. In fact, most agents who take the exam admit that it was easier than they imagined. The reason was that they were prepared for the exam by learning and understanding the basic concepts of health and life insurance.

The concepts in health and life insurance are universal throughout the United States, even though each state enacts laws that govern it’s own insurance regulations.  Having an understanding of the basic concepts allows you to answer questions logically.

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The Benefits of Online Learning (e-learning)

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The working class America of today can be characterized as being overly stressed and overworked.  The average worker spends more time at work now than in the past, leading to valuing the concept of time and becoming more efficient in the use of it.  Thus, the trend of online learning is increasing to further an education, acquire a new degree, or attain a government required license.  As Stephen Smith, Professor at Purdue University has stated,

They (workers) value control over and flexibility in scheduling their time.

The reality is that in order to exceed in today’s working economy, individuals must become more flexible and take more initiative towards their success.  In doing so, acquiring a degree or furthering one’s education to increase the ability to earn a higher income has become a task best fulfilled online.

Of the multiple reasons why online learning has become a more popular method of advancing in education, a few main reasons include:

  • Convenience
  • Cost effectiveness
  • Time effectiveness
  • Concentrated educational focus vs group learning flow Read More

Insurable Interest

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The Purpose of Insurance

An important topic insurance training covers is the function of an insurance company and the legal construction of an insurance policy.  Insurance is a form of ‘risk management’ used to protect the financial well-being of an individual, company, or other entity in the event of unexpected financial loss.  While health, life, and disability insurance provides a financial safety net against the unexpected financial loss associated with illness, disability, or death, the goal of an insurance company is to maintain profitability for it’s shareholders.

Risk Protection

Some small risks can be managed with personal or company finances; however, larger, more catastrophic expenses are best handled by transferring the risk to an insurance company.  The insurer will assume the cost resulting from the insured’s risks, and in exchange, the insurer charges a monthly premium (monthly payment) to the insured.  This is accomplished by purchasing an ‘insurance policy.’

An insurance policy is a binding agreement designed to protect against financial loss, and as a legal contract, it reflects the insurer’s responsibilities of covering such loss.

A life insurance policy is designed to pay a stated sum to the designated policy beneficiary in the unlikely event that the insured dies within the policy’s coverage period.  A health insurance policy is designed to indemnify an insured for medical treatment in the event of an accident, illness, or disease.  And a disability insurance policy is designed to indemnify an insured by replacing lost income during a time of disability.  In all cases, Indemnity refers to the insurance proceeds that are paid to the insured or beneficiary in the event of a loss. 

Insurable Interest

The legality of any insurance policy is based on the concept of insurable interest.  In other words, in order to obtain insurance, an ‘interest’ must exist between two parties where one party has the potential to suffer a loss in the event that a particular outcome occurs (which was covered by the insurance policy). Read More

Insurance Underwriting

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How Risk Affects an Insurance Application

When an insurance company ‘underwrites’ a health or life insurance application, it assesses the risks associated with the applicant.  As a licensed insurance agent, it is important to understand that the goal of an insurance company is to maintain a profit while providing financial protection to its customers.  In order to measure the amount of risk that is associated with the applicant, the insurer’s underwriting department reviews the application according to its ‘underwriting guidelines.’

Simply stated, an insurance company determines an applicant’s eligibility and premium amount based on the total overall risk, and how it is classified according to the company’s risk limits and standards.

Underwriters are individuals who are employed by the insurance company to review and determine whether an applicant is acceptable or declinable, based on the medical history of the applicant.  The ‘underwriting guidelines’ used to determine the class of risk associated with an applicant can vary from each insurer, according to the amount of risk the insurer can assume.

Each applicant is ‘rated’ according to sex, age, height, weight, medical conditions, medical history, smoking status, occupation, and even hobbies (riding motorcycles, rock climbing, etc).  The policy’s risk classification and associated premium rate (monthly cost) are determined using this rating system.

4 Classifications of Risk: Read More

Health Savings Accounts (HSA)

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Tax-Advantaged Health Insurance

Health Savings Accounts, simply called “HSAs,” are a form of health insurance that combines a health ‘savings account’ with a High Deductible Health Plan (HDHP).

Still relatively new to the market, these tax-advantaged medical savings plans are often purchased by self-employed individuals and small employers to provide tax deducted funding as well as tax free withdrawals if used towards qualified medical expenses.  HSAs, were enacted into law in January 2004 by the 108th Congress as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 under Title XII, Section 1201.

This form of medical insurance is exempt from taxation and provides for the accumulation of pre-tax dollars deposited and held in a health savings account that grows and rolls over each year to accumulate a long-term savings fund.  HSA funds are also used to pay for qualified medical expenses, such as doctors visits and prescribed medications, are not considered as gross income, and can be withdrawn from the HSA savings account tax free!  Accumulated funds can also be withdrawn without penalty or tax after the beneficiary (insured) reaches the Social Security retirement age.

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What is an Annuity?

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Retirement Cash Flow

An annuity is a financial tool that will provide a succession of payments to a policyowner, or annuitant, in exchange for a single lump sum payment or series of payments to the insurer.  In other words, an annuitant pays an insurance company a certain amount which is then credited with a certain rate of interest, and this is how money grows in an annuity.

Annuities are interest bearing, tax deferred savings vehicles designed to provide future income in exchange for a lump sum or series of payments now.

During this growth period, or accumulation period, the rate of interest is not taxed, which allows for a greater accumulation of funds.  Once an annuitant is ready for the policy to start paying out (payout or annuity period), the annuity concludes its accumulation task and benefits are paid at specified periodic intervals.  These payments can either be paid over a certain amount of time, paid at a specific monetary amount per payment or act as a death benefit to an annuitant’s beneficiary. Read More

Insuring a Partnership or Corporation Buy-Sell Agreements

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Life insurance is similar for a business as it is for an individual in protecting against the financial loss associated with premature death.  Though various kinds of companies exist (sole proprietorships, partnerships and corporations), life insurance is necessary to ensure capital is adequate and available if unexpected loss occurs.

The death of a business owner or partner in a business can also bring the end to the business; life insurance plays a vital part in protecting the integrity of a business if such event were to occur.    Life insurance, in the form of a ‘buy-sell’ agreement, provides the necessary protection to ensure the survival of the business and a disbursement of ownership rights to remaining partners or owners.

As a licensed insurance agent, it is important to understand the basic concept of a buy-sell agreement as well as the types of buy-sell agreements available to properly insure against the loss of a business owner or partner.

The death of a business owner doesn’t necessarily mean the end to the business.  Buy-sell agreements are used to provide structure in the absence of the business owner or partner.

A ‘buy-sell’ agreement, also known as a ‘buyout’ agreement,  is defined as a financial agreement or arrangement that protects business partners against financial loss by securing a predetermined fair market value share of a partner that, upon a predetermined event such as death, is sold to the remaining partners in the business to ensure the continuation of the business. Read More

Traditional IRA vs Roth IRA

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Planning for Retirement

Individual retirement accounts, or IRAs, were enacted by Congress in 1974 as part of the Employee Retirement Income Security Act (ERISA).  IRAs are popular tax-deferred retirement plans that provide individuals with a method of investing their income and saving money for retirement.  As a licensed insurance agent, it is important to understand the benefits of each type of IRA.  Two types of IRAs include the ‘traditional IRA’ and a ‘Roth IRA.’

Traditional IRA

Simply known as an IRA, individuals and self-employed business owners have the opportunity to save money for retirement while receiving a current tax break.  As the amount contributed accumulates, it grows tax deferred until it is withdrawn at retirement.  Contribution amounts may be fully or partially deducted from current income, which results in a lower current income tax for the individual.

Any individual under the age of 70½ who has earned income can participate in an IRA.  Contribution levels allow up to 100% of an individual’s annual income, but cannot exceed contribution limits set each year by the federal government.  Any contribution that exceeds annual limits will be subject to a 6% “excise” tax.  Individuals who are 50 years or older are allowed to make “catch up” contributions that exceed normal annual limits.

 

Withdrawal from an IRA owner’s account must begin no later than April 1st following the year an individual reaches 70½ years old.  From this time on, a minimum amount must be withdrawn every year from the IRA to avoid a penalty tax on such difference.

If an individual withdraws IRA funds prior to reaching age 59½, the withdrawal will be viewed as income, and not only will it be taxed as income, it will also be subject to a 10% penalty fee because it is being withdrawn prematurely.  Exceptions to this penalty tax include withdrawals for a first-time home purchase, higher education expenses, or to cover qualified medical expenses.

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