Louisiana Department of Insurance Office of Consumer Advocay
Volume 3, Issue 1
JANUARY 2012

Dawn Busters Kiwanis Meeting
1/4/2012
4929 York Street
Metairie, LA

Highland Baptist Christian Career Day
1/11/2012
708 Angers St.
New Iberia, LA

Beauregard/ Vernon Sunrise Rotary Club
1/11/2012
Impromptu Players Theatre
102 W. First St.
DeRidder, LA

Bossier City Lions Club
1/12/2012
Bearkat Drive
Bossier City, LA

Rotary Club of Lafayette North
1/17/2012
Holiday Inn
2032 Northeast Evang
Lafayette, LA

Calcasieu Kiwanis Club
1/19/2012
Pioneer Club
One Lakeside Plaza
Lake Charles, LA

Kiwanis Club of Alexandria
1/26/2012
Piccadilly Restaurant
1400 MacArthur Drive
Alexandria, LA

LA Municipal Association Mid-Winter Conference
1/31/2012 – 2/2/2012
Crowne Plaza Hotel
4728 Constitution Ave.
Baton Rouge, LA

 

For speaking engagements scheduled after the release of the newsletter or for more detailed information about engagements listed in the newsletter, visit our Web site at www.ldi.la.gov. Click on the Events tab found in the center of the home page.

To view previous newsletters, click on Consumer Advocacy under Consumers; then click on Consumer Advocacy Newsletters.

To find out if Consumer Advocacy will be in your area or to request a speaker for your organization or group, call (225) 219-0619 or e-mail
consumeradvocacy@ldi.la.gov

If you no longer wish to receive this newsletter please e-mail the following address with "REMOVE" in the subject line.
consumeradvocacy@ldi.la.gov

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Overview of Annuities

An annuity is a contract between you, the annuity owner, and an insurance company. Annuity contracts traditionally provide a guaranteed distribution of income until the death of the person(s) named in the contract or until a final date, whichever comes first. In return for your payment, the insurance company agrees to provide either a regular stream of income (often, per month) or a lump sum pay-out at a future time (generally, once you retire or reach age 59 ½).

Since an annuity is funded with after-tax dollars, give careful consideration to the purchase of an annuity unless you have fully funded or intend to fully fund your Retirement Investment Plan (401(k)), Tax Sheltered Annuity (403(b)) or Individual Retirement Account (IRA). If after funding these products you have additional funds to invest, you might consider an annuity.

There are two basic categories of annuities: deferred and immediate. With a deferred annuity, your money is invested until you begin making withdrawals, typically in retirement.  An immediate annuity begins soon after you make your lump sum investment.  A deferred annuity accumulates money while the immediate annuity pays out. If you want the income right away, a deferred annuity can be converted to an immediate annuity.

Within these two categories, annuities can also be either fixed or variable. A fixed annuity, as its name implies, has a fixed interest rate. Changes in currency or the stock market will not affect the monthly interest rate. Your interest rate is consistent up to such time your annuity has matured. The variable annuities, on the other hand, have a variable interest rate. Changes in the stock market affect the amount of interest earned. If the stock market is good and the currency in which your annuity is based, your interest will be less than usual.  If the stock market has a downgrading trend, your interest rate will increase.

Unlike a Retirement Investment Plan (401(k)), there are no annual contribution limits for an annuity. You can select your investment amount. In addition all the money you invest compounds yearly. However, most annuities are sold by insurance brokers or other sales people who collect a commission. Commission charges can sometimes be as much as 10 percent. Also, an annuity may have surrender charges and sometimes annual fees. Traditionally, annuities impose a surrender fee if you take your money out prematurely.  It is not a good idea to take money out of an annuity until you reach age 59 ½ because withdrawals made prior to age 59 ½ have a 10 percent early withdrawal penalty. An annuity does not guarantee that you will receive your money upon retirement without a hassle. Annuities can be risky. If you invest your money in an insurance firm that lacks a creditable reputation, your investment may be adversely affected.

Shop around to find an annuity that best fits your needs. It is recommended that you sit down with a financial planner or an insurance producer to determine if an annuity is right for you.

While an insurance company issues an annuity, the sales representative must be specially licensed to sell annuities. These people may work for different financial institutions—banks, brokerage firms, financial planning companies or they may be independent licensed financial advisors.

Contact the Louisiana Department of Insurance at 1-800-259-5300 to answer your questions regarding annuities.

What Determines the Cost of Health Insurance Premiums

It is fairly obvious that the cost of your health insurance premium includes the cost of doctor visits and hospitalizations but there are several other calculations that are used to determine the insurance premium.  A private health insurance policy premium is essentially equal to the sum of two components, the average amount that an insurer expects to pay for services covered under the plan and a loading factor that reflects the insurer’s cost of operating the plan.

There are several behind-the-scene calculations that are used to establish a health insurance premium.   The average cost of a health insurance plan includes the share of medical spending that is paid for by the plan and that which is paid by the insured.   If your plan covers most of your services and procedures, the more expensive your premiums will be.  Actuary calculations include the cost of medical services and procedures; the risk level of the insured, with such factors as pre-existing conditions; whether the type of plan being offered is group or individual coverage; the marketing and administrative cost which includes the money spent on advertising and marketing; and finally, the insurance company’s profit margin and investment performance.

The Patient Protection and Affordable Care Act is a federal statute that became effective March 23, 2010.   The intent of this Act is to offer the same premium to all applicants with the same age, sex, geographical location and benefit structure.  By 2014, the Act will require nearly all persons not covered by Medicaid, Medicare or other public insurance programs to purchase an approved private insurance policy or pay a penalty. Health insurance exchanges will commence operation in each state by offering a marketplace where individuals and small businesses can compare policy coverages and premium costs.

Generally, the actuarial data provides a framework for the cost of health insurance premiums and the analysis may include age, gender, demographics, health status, expenditures and the use of different types of services.  However, even health plans that are actuarially equivalent will more than likely have different premiums due to different profits and expense components.

Filing An Insurance Complaint: How and Why

The Louisiana Department of Insurance is tasked with regulating insurance companies, producers, adjusters and brokers who operate in the state of Louisiana.  If it seems as if any one of these has not acted in accordance with your purchased insurance policy or the insurance laws and regulations of Louisiana, you might consider filing a complaint.   A complaint is a written communication that expresses dissatisfaction with a specific person or entity subject to regulation under the state’s insurance laws.  Any questions or expressions of opinion regarding an insurance-related issue are considered “inquiries.”

When purchasing coverage, many consumers want to know the number of complaints filed against a perspective company, agency, or producer. The department, along with the other states' insurance departments file the number of complaints with the National Association of Insurance Commissioners

A common question to the LDI is “How do I file a complaint?” Complaints or inquiries can be made on the LDI Web site, by telephone, or by mail.  When filing a complaint, make sure you provide all pertinent information that will help in the resolution of your filing.  The LDI will assign your file to a qualified compliance examiner to review.  However, please be aware that the LDI cannot

  • provide legal advice,
  • dispute an underwriting decision which has been approved in the insurer’s underwriting guidelines, or
  • resolve a dispute that is a question of fact which will be handled in the courts

Once you have filed a complaint, you will be given a case number.  When contacting the LDI to check the status of your case, please refer to this number. 
The Louisiana Department of Insurance is here to help you try to resolve your complaint. An LDI compliance examiner will make every effort to promptly and thoroughly research your claim and work toward a fair resolution.

10 ways to be “Insurance Smart” in 2012
  1. Make time to review ALL insurance policies.  Be clear about coverage limits, deductibles and exclusions. If you have questions, contact your insurance professional or the Department of Insurance.
  2. Take an inventory of all items that are insured.  Keep pictures, videos and records away from the insured location in case of a catastrophic loss.
  3. Make an appointment to meet with your insurance professional to discuss your inventory and any changes you have made in your life or with your property within the last policy period.  You may be underinsured.
  4. Know your insurance company’s claims process before there is a need to make a claim.
  5. Note when premium payments and/or installment payments are due.  Missed payments can lead to cancellations.
  6. Make necessary inspection, wellness and auditing appointments.
  7. Claim any applicable Citizens Assessment when you file state taxes or complete the appropriate forms with the Louisiana Department of Revenue. 
  8. View the Louisiana Department of Insurance Web site (www.ldi.la.gov) to find informative consumer brochures, consumer alerts, upcoming events and other useful information.
  9. Find out when and where the Office of Consumer Advocacy will be doing outreach in your area.
  10. Subscribe to and share the Office of Consumer Advocacy newsletter!

 

 
Office of Consumer AdvocacyP.O. Box 94214Baton Rouge, LA 70804-9214
(225) 219-0619 or (800)259-5300www.ldi.la.govconsumeradvocacy@ldi.la.gov