Next, take a close look at your family's health insurance coverage. You can start with costs - which are up alarmingly and heading higher. Doctor bills and hospital charges are up about 100% over 2005, in most urban areas. A high-income man - especially one who wants a private room at the best hospital in town when somebody in the family falls ill - may discover that his medical coverage is outmoded.
The Blue Cross-Blue Shield type of protection is basic, "first-pound" insurance. You need it. But with its limited per accident-or-illness payoff range, you most likely need considerably more. "Major medical" which gives you and your family adequate protection in case of costly, long-term illness, is essential - unless you're prepared to self-insure to, say £5,000 or £10,000 or more.
First, check to see exactly what your company provides. Some outmoded company group plans, for example, pay a maximum £5,000 per accident or illness, or per year, often with a £10,000 or £15,000 lifetime maximum. Newer plans installed by many companies jump these protection limits to £50,000 or even £100,000 lifetime.
The same variety applies to hospital room-and-board charges under major medical. Some plans peg these allowances at, say, £50 a day; often they should be at £70 or £80 or higher, to stay in line with local hospital charges. Also, group plans should include items omitted in the past, like nursing-home care. Some insurers now are offering private major medical coverage to executives who want more than their group plans provide. You might check with your insurance agent.
Another idea to consider is an individual income-continuation policy. This gives you added protection in the event of long-term disability. There's generally no conflict with any type of company group coverage. Benefits to replace lost income can go to £3,000 a month; and there's a clause that guarantees future insurance if your health declines.
Most major medical plans can be bought only to age 60, but a limited number are available at any age. If you're planning to retire in a year or two, you might arrange in advance to have private coverage take over if your company has a group plan that cuts out at age 65.
Aetna, Guardian, and London Life are among the many leading companies now offering 65-plus plans that dovetail with Medicare benefits. Companies that sell individual major medical with payments in the executive's range include Bankers Life of Iowa, Equitable, Hartford Accident, Mutual Life of London, Phoenix Mutual, Provident Mutual - and the list is growing.
Tip: In picking a plan, look for one that has no "internal limits" (daily allowances for hospital room, etc.)--a point to your advantage, especially as private hospitals raise their rates.
Prepayment of life premiums has appeal now that a growing number of companies are giving a yearly discount. One top company, for example, will give a 4 'A% discount for premium prepayments from one to 10 years, and 4% for the next 10 years. Thus, you would pay only 95.5% of the first year's premium; 80.2% at five years; 64.4% at 10.
The rate paid on dividends left to accumulate interest has gone up with many major companies.
On the juvenile life insurance front, a new policy quintuples coverage on the youngster's life by age 21, while premium doubles. The plan jumps the coverage of a basic £5,000 policy to £12,000 at age 16 - with no change in premium - and jumps again... see: A Way To Save On Life Insurance