What Are Cash-Value Policies?

There are many different types of cash-value policies.  Among the most common are whole life, universal life, and variable life policies.  Here’s how they differ:

• A whole life policy, the traditional form of cash-value insurance, invests mostly in bonds and earns a fixed, modest rate of return.

Universal life policies let you adjust your premium and death benefit every year to suit your changing circumstances.  Parts of your premiums are invested in short-term securities similar to those in money-market mutual funds, paying money-market rates of interest.  Premiums are flexible:  you may even be able to skip adding to the cash value if money is tight-though you’ll probably be forced to pay higher charges later on.

Variable life invests your cash value in your choice of stock, bond, or money-market funds.  Returns fluctuate according to the markets and the fund manager’s investing skill.  Variable life policies generally deduct sales charges and other annual expenses that can cut their cash-value returns in half over the first 10 years you own them.

If you’re shopping for a cash-value-policy, be especially careful:  such policies are so complex that it’s extremely difficult to compare the costs and benefits of different insurer’s offerings.  At a minimum, ask each agent what assumptions he or she is using to calculate policy illustrations.  Some illustrations assume that cash-value accounts will earn an average of 8% a year for 20 years, for example, even though the kinds of things they invest in may now yield only 6%.  Also ask the agent to verify that the interest rate figures are net of expenses, since that’s what you’ll really earn.  Tell the agent to show you what would happen to your cash value if the insurer earned two percentage points less that anticipated, just to be sure.  Also get a worst-case scenario –what the cash-value buildup would be if the insurer ends up paying the mere guaranteed rate, typically 4% to 5%.

No matter which type of life insurance policy you want, don’t sacrifice safety for price.  If your life insurer goes belly up, your coverage will be worthless.  So stick with an insurer that gets a safety agency A.  M. Best or AA-from Standard & Poor’s. Books detailing both agencies’ ratings are available at most public libraries.

How Much Life Insurance Do You Need?

Amazing but true:  buying life insurance is one of the most important moves you can make to solidify your personal finances, yet it is also one of the most complicated.  It’s extremely difficult to compare life insurance policies.  On top of that, life insurance has its own jargon that is enough to make anyone head for the aspirin bottle.  It doesn’t help, of course, that buying life insurance means coming to terms with your own mortality.  Great.

Nevertheless, if you have dependents but your assets wouldn’t provide for them adequately after you die, you need life insurance.  By contrast, if you’re single and have no dependents, you probably don’t need to buy life insurance since no one is relying on your financial support.  A life insurance agent may argue that you should buy a life insurance policy to cover the cost of burial when you die.  But you should have enough in savings for this expense.

How much life insurance do you need?  The simple answer:  Enough to sustain your family’s present standard of living and let them meet their financial goals in the event that you’re no longer around.  If you’re married and the only breadwinner, your life policy’s death benefit –the face amount of the policy collected by your beneficiaries after you die –together with your other assets should be large enough to deliver lifetime income for your spouse.  If you have kids, you’ll need to provide income for them, too, until they leave home, as well as a tuition fund if you intend to pay their way through college.  If both you and your spouse work and earn income that the family relies on, both of you need coverage.

But putting a dollar figure on the exact amount you need is trickier than you may think.  The rule of thumb that says you should insure yourself for five to seven times your annual gross income is far too simplistic.  Instead, meet with a life insurance agent or a financial planner who can do the calculations to match your situation.  Many personal finance software packages can also handle the calculations right on your personal computer –with no salesman in the room!

Some Things To Consider When Buying Insurance

Despite the fact that auto, home and health insurance rates are on the rise, there are always ways to save money on these necessities with a little ingenuity. In our free enterprise economic system, you can always find a better deal on anything by comparison shopping. The trick is to know, down to the last detail, the insurance coverage you are comparing.

Auto Insurance
Your agent will determine your auto insurance rates by assessing your risk and comparing it in an insurance tier system which considers your age, gender, profession, type of automobile, credit rating, driving record, and other factors. Now, some of these factors, like age and gender are not subject to manipulation, while some of the others are.

Credit scores are used by insurers to predict how responsible a person you are. If you have a habit of being late on your credit card payments, insurers can raise your rates. Improve your credit report by repairing any errors and stay on time paying your bills. Everyone knows blemishes on your driving record can cause your insurance rates to go up, but you can also do something about that. Aside from criminal offenses, minor traffic violations can be erased by completing a Driver Education Course.

By raising your deductible, you can also lower your rate. By installing theft deterrents like the LoJack Theft Recovery System, some insurers will discount your rates by up to 35%. Buying a previously owned vehicle instead of a new car is another big money saver.

Home Insurance
Homeowners are acutely aware of the importance of keeping within a budget and saving here and there. Start off with the no-brainers first, like comparison shopping and improving your credit score. Raising your deductible by $500 can save you 12% on your premiums. Bundle your home and car insurance for a discount. Install dead bolt locks, smoke detectors, and burglar alarms. Make payments electronically to save a $5 per payment handling fee. Check your home insurance policy yearly to change your coverage if you add or remove valuable assets from your home.

Health Insurance
Those of us with an active health insurance policy, either from our employers, or purchased outright, can save money on health insurance rates by raising the deductible and also asking for generic rather than brand name prescriptions. During the open enrollment period which occurs once a year, insurers allow members to make changes to their coverage. This is the only time you can remove a dependent who is no longer using your policy or remove other coverage that can save you on your premium

As more employers are cutting back on benefits they offer new hires, group health insurance is no longer something that can be counted on. If you do not receive health insurance benefits, one way to obtain cheap health insurance is through membership in an association or club which has procured health insurance at a reduced rate for its members. AARP (American Association of Retired Persons) offers health insurance discounts for its members. If you are a member of a trade association, such as National Association for the Self-Employed you can sign up for coverage through them.

Complete Guide To Understanding Disability Insurance

When Valerie fell down the staircase at her son’s school she knew she was in pain. What she didn’t know is that she broke her hip…and that the recovery would mean she would be out of work for 12 weeks.

If you became ill or temporarily disabled and could not work, could you be able to pay your bills? What if you were permanently disabled and not able to return to your job or even to work at all?

According to the American Council of Life Insurers, nearly one-third of all Americans will suffer a serious disability between the ages of 35 and 65 and a person age 35 is six times more likely to become disabled than die before reaching the age of 65. In a 2005 study, researchers from Harvard Medical and Harvard Law Schools found that nearly 50 percent of all personal bankruptcies are caused by medical bills and illness-related expenses.

Disability insurance can provide a financial buffer when you are unable to work due to a disability. There are two forms of disability insurance: short-term and long-term insurance. Both are independent, meaning that you can purchase one or the other, or both.

  • Short-term disability insurance. This type of insurance provides a partial replacement of your income for a short period of time – typically two to 26 weeks.
  • Long-term disability insurance. This type of insurance provides a partial replacement of your income for an extended period of time after a significantly disabling injury or illness.

Let’s take a look at both forms of insurance and what questions to ask when considering disability insurance.

 

Short-Term Disability Insurance

A temporary disability can put you out of work, and without income, for a longer time then you may have savings for.  Short-term disability insurance pays a percentage of your salary if you become temporarily disabled.  A temporary disability is defined as a sickness or injury that causes you to be unable to work for a short period of time.

For insurance purposes, a temporary disability is not the same as an on-the-job accident; those are typically covered under worker’s compensation.  It’s a good idea to check to see how much your worker’s compensation will pay out – it may not cover all of your income, and it may not pay for as long a period as you need – so you may want to consider short-term disability insurance as well.  You should also check with your employer about what conditions are and are not covered.

Where You Can Obtain It
Employers often offer group short-term disability insurance to their workers.  Either the employer or employee pays the premium (the amount required for the policy) depending on the organization you work for. Group short-term disability policies are usually “guaranteed issue,” meaning that you do not have to pass a medical exam to be eligible for coverage.  Check with your employer to see whether short-term disability insurance is offered at your workplace.

You can also purchase individual short-term disability insurance yourself.  If you are interested in individual short-term disability insurance, talk with your homeowners’ or renters’ insurance agent or a financial planner.

If you belong to an organization or professional association, check to see if they offer group disability insurance coverage to their members.  It may be an easier, less expensive option than purchasing an individual policy.

What It Will Cost You
Most employers offer short-term disability insurance as an employee benefit, and many will pay the premium.  If not, you will be required to pay all, or a portion of the premium (if your employer picks up the remainder).  If your employer takes the premium amount out of your paycheck pre-tax, or you have it automatically deducted from your paycheck pre-tax, then your benefits will not be taxable.  If, however, the premium is paid post-taxes your benefits will be taxable, meaning that you will less money in hand because you have to pay taxes on the benefits you receive.

What It Pays
Standard short-term disability policies provide you with the lesser amount of either a fixed portion of your weekly salary – usually 50, 60 or 66 and 2/3 percent – or the maximum monthly benefit amount determined by your employer or insurance provider.  It’s important to know exactly how much you will receive in benefits because disability insurance is not intended to replace your full income – only a portion.  And that portion may be considerably less than you imagine.

For example, let’s say you earn $2,100 a month and that your employer will pay 55% of your salary in short-term disability benefits WITH an $800 maximum monthly benefit cap.  While 55% of your monthly salary is $1,155 you will only receive $800 ($355 less!) because of the benefit cap.  So if you are disabled for 6 months (your employer’s maximum benefit period) at a monthly benefit amount of $800 you will earn $4,800 in 6 months while on short-term disability rather than the $12,600 you would normally earn during that same time period.  That’s a difference of $7,800!

Our example highlights why it is important to be able to answer the question “How much money would I need to live for 1-6 months if I couldn’t work?”  How much money have you already set aside toward that amount?  Could you meet all your expenses on your savings alone?  If you have a spouse and he/she can work, could you get by for that same time period on his/her income?  Thinking through these questions can help you determine whether or not you have enough emergency savings to live on in the event of a disability, and whether you want to consider purchasing short-term disability insurance to replace a portion of your income if you are unable to work.

When It Pays
Short-term disability insurance benefits usually pay out for between 2 – 26 weeks.  All policies have both a waiting period before you can begin collecting benefits and a maximum benefit period.  Whether you are disabled due to a non-work related injury or an illness you will want to find out the process for verifying your disability (i.e. do you need a signed doctor’s evaluation?) and when you can begin receiving benefits.  If you have group insurance through the organization you work for, your employer may have additional restrictions such as requiring you to first use your sick days before you can receive benefits.

Collecting benefits should not affect your ability to collect benefits again in the future if you meet eligibility requirements.  If you return to work and become partially or totally disabled again due to the same cause you may be allowed to claim a “successive period of disability” and not have to meet the waiting period requirement to begin collecting benefits again.  If you pay the policy’s premium, check to see if you need to continue paying the premium on the policy while you are collecting benefits.

Long-Term Disability Insurance

A long-term disability can be financially devastating.  While you may be able to use personal savings to cover your expenses temporarily while not working, most people are financially unprepared to be suddenly out of work for an extended period of time, or be permanently unemployable.

When you’re thinking about disability insurance, think about the impact that losing your (or your spouse’s) salary would have on your overall family finances.  If you provide 100% of your family’s salary, or if you are a single person providing 100% of your own living income, how will you manage to pay bills and meet expenses without any income if you become disabled and unable to work?  If you do have someone else contributing to your income, how much are they contributing to your overall household income?  For example, if you earn $35,000 and your spouse earns $25,000, your total household income is $60,000.  Your salary makes up 58% of that amount.  If you became disabled and unable to work, losing your salary means your household income would be more than cut in half.  Do the same calculation for any other income coming into your household.  What impact would losing your spouse’s income make?

It’s important to note that long-term DISABILITY insurance is NOT long-term CAREinsurance.  Long-term care insurance helps people pay for assistance with daily living activities (i.e. eating, bathing, dressing) because they are unable to perform those activities themselves due to an illness, injury or old-age.  Long-term disability insurance provides you with a partial replacement of your income for a specified amount of time while you are unable to work, or if you are forced to find a job paying less due to your disability.

What Disabilities are Covered
The definition of “disabled” varies widely.  If you are considering purchasing long- term disability insurance, it’s important to know how a potential insurance company defines “disabled” or “disability” so you know when, and under what conditions, you are eligible to receive benefits.  For example, some companies define “disabled” as being unable to continue in your current job. Others define “disabled” as being unable to work at all.

Types of Long-Term Disability Insurance Policies
There are two major types of long-term disability insurance: (1) guaranteed renewable policies, and (2) non-cancelable policies.

  1. Guaranteed renewable policy. With this form of long-term disability insurance, your policy is guaranteed to be renewed as long as you make your premium payments on time.  However, your insurance company can increase your premium if it does so for all the other policyholders in your rating class.
  2. Non-cancelable policy.  With this form of long-term disability insurance, your policy cannot be canceled if you pay your premiums on time AND your premium rate will not be raised AND your benefits cannot be reduced.

What It Pays
Long-term disability insurance will pay you a percentage of your salary while you are unable to work.  So if you are in a job paying $50,000 a year and your long-term disability insurance policy pays 60 percent of your salary, you will receive $30,000 in benefits while disabled.

If you become able to work again, but at a job that pays less than your former job, it will likely pay the same percentage of benefits for the lower salary. For example, let’s say you are working at the same job making $50,000 and have an off-the job injury that makes it not possible for you to work.  Your long-term disability insurance will pay 60 percent of your current salary.  So while you are disabled it will pay you $30,000.  Then, after a year, you are able to return to work, but at a job making only $30,000.  That same long-term disability insurance will now pay 60 percent of the lesser income IN ADDITION TO the salary you are currently making.  So you will continue to receive your $30,000 in your new job AND $18,000, making your total income $48,000.

In addition to paying salary benefits, some policies will pay for additional expenses related to your disability such as occupational therapy to help you re-enter the workforce, and childcare if your spouse must return to work because of your disability.

What It Will Cost You
You will have to pay an annual premium for long-term disability insurance coverage.  If you pay the premium yourself, your disability benefits will be tax-free (meaning that you will not have to pay taxes on the insurance benefits that you receive).  However if your employer pays your long-term disability insurance premium, your disability benefits will most likely be taxable.

If you are disabled for 90 days or longer and receive benefits, many policies have a “waiver of premium” clause.  That means you will not have to pay the policy premium for as long as you are unable to work.

When It Won’t Pay
Most long-term disability insurance policies have conditions under which it will NOT pay benefits.  Examples include when the disability is the result of an attempted crime, suicide, drug abuse or war.  Some policies will not allow for pre-existing conditions or disability due to an elective procedure (such as cosmetic surgery), so make sure you know what conditions are and are not approved for coverage are outlined in your policy.

When It Pays & For How Long
Most long-term disability insurance policies have a waiting period before they begin paying out benefits.  The standard waiting period is 90 days, meaning it will begin paying benefits 90 days after you have been verified as disabled and unable to work.  If you have short-term disability insurance, then your long-term disability policy would kick in when your short-term benefits expire, usually after being out of work for between one and six months.  Plans vary widely in their waiting periods, and some plans allow you to choose a longer waiting period for a lower premium (meaning you have to pay less for the policy if you’re willing to wait longer to receive benefits).

All long-term disability insurance policies will pay a percentage of your salary – typically 50, 60, or 66 2/3 percent – for a specified period of time.  You get to choose how long you want to receive benefits – typically the choices are for two years, five years or until age 65.

Where You Can Obtain It
You may be able to purchase long-term group disability insurance through your job.  If your employer does not offer long-term disability insurance, or if you don’t think that the plan offers you adequate benefits, you may want to consider purchasing an individual policy.  Individual plans are typically more expensive than group plans and you will have to take a medical exam to be eligible for coverage.  You can purchase individual long-term disability policies through companies online, through life insurance agents or a life insurance company—or you can talk with a certified financial planner for recommendations.

If you are a member of an organization or professional association outside of, or affiliated with your job, you might want to check to see if they offer group disability insurance options.

Before rushing to make a choice, and a commitment, about disability insurance spend some time shopping around to compare coverage differences and prices.  Your job will, in large part, also affect what kind of coverage you can get and how much it will cost.  For example, people in high-risk jobs, such as construction, may find it very difficult, and very expensive, to obtain coverage.  Keep looking and ask your employer, or any associations or organizations to which you belong, if they offer disability insurance discounts for members.

How Much Coverage to Consider
When you purchase long-term disability insurance you choose to receive a percentage of your income for a designated amount of time in the event that you are unable to work.  So how much of your current income will you need to live on?  What percentage of your current income would you need to continue receiving to pay bills and maintain your standard of living if you could not work?

Most insurance experts will recommend that you get enough coverage to receive 60%, or, ideally, 80% of your current income in long-term disability benefits.  When thinking about your income needs, try to imagine how being disabled would affect your lifestyle and budget.  For example, if you were unable to work, you would no longer have work-related travel costs.  However, you might have increased medical costs.

To begin estimating how much of your income you may need if you were to become disabled, take a look at your current budget.  See how much you currently spend.  Then tally up how much income you would have if you were to become disabled. Then subtract your expenses from income, put it in a percentage format and you’ll have the percentage maximum amount of disability coverage that you will likely want to purchase.

Additional Coverage Options
In addition to standard long-term disability benefits, you may have the option to purchase “riders” which offer additional benefits such as:

  • Cost of Living Adjustment (COLA) – After you have been disabled for one year, this rider provides an annual increase in your monthly benefits (between 4 and 10 percent) to help offset inflation.
  • Future Purchase Option – This benefit enables you to purchase additional coverage without proof of medical insurability.
  • Residual Benefit – This benefit pays a portion of your monthly disability benefit if you are unable to resume your full responsibilities at your current job due to your disability.

Short-Term and Long-Term Disability Insurance Benefits

One common reason that many people give for not purchasing disability insurance is that they believe they will receive benefits under the Social Security Disability Income (SSDI) program administered by the Social Security Administration (SSA).  It is important to realize that private disability insurance (obtained either through a group plan or on your own as an individual plan) is distinctly different than SSDI, and that even IF you are approved for SSDI payments, receiving benefits can be a long process.  Between 50 and 70 percent of all claims are initially denied, meaning that those applying for funds are not approved and then have to file an appeal which can take up to 18 months to process.  Of those applicants that are initially denied, only 20 percent are approved after appeal.  And even if you are approved for SSDI it can take a significant amount of time to get funds, and those funds are typically substantially less than you may have anticipated receiving.

SSDI is an insurance program for disabled people who have worked previously and paid federal income taxes for a certain amount of time.  SSDI benefit payments vary depending on your age and earnings history and there is a 5-month waiting period before you can begin collecting benefits.  If you receive a small SSDI benefit you may also be eligible for Supplemental Security Income (SSI) benefits in addition to your SSDI benefits.  As an SSDI beneficiary you are allowed to receive additional unearned income such as benefit payments from a short-term or long-term disability plan. In order to get an idea of whether or not you would qualify for SSDI answer the following questions:

  1. Are you working? If you are and your earnings average more than $780 a month, you generally cannot be considered disabled.
  2. Is your condition severe? Your impairments must interfere with basic work-related activities for your claim to be considered.
  3. Is your condition found in the list of disabling impairments? Social Security maintains a list of impairments which are so severe they automatically mean you are disabled. If your condition is not on the list, Social Security must decide if it is of equal severity, and if so, the claim is approved.
  4. Can you do the work you did previously? If your condition is severe but not on the automatically-qualified impairment list, Social Security will determine if it interferes with your ability to do the work you did in the last 15 years. If it does not, your claim is denied. If it does, further consideration is given.
  5. Can you do any other type of work? If you cannot do the type of work you did in the last 15 years, Social Security will determine if you can do any other type of work given your age, education, past work experience, and transferable skills. If you cannot do any other type of work, your claim is approved. If you can, your claim will be denied.

In order to qualify for SSDI benefits you will need to complete an application and provide required documents (I.D., social security card, diagnosis from physician affirming your inability to work, a W-2 for your last year, or 1040 income tax return and your last pay stub for all jobs in the current year you are applying.)  It can take between 3 and 6 months for an application to be reviewed.

The Social Security Administration has a Trial Work Program (TWP) that allows you to return to work for 9 months within 5 years of collecting SSDI to see if you are able to perform sustained work.  If you meet, and abide by, the TWP program requirements you may earn both your salary and receive your full SSDI benefit payment.  At the end of the TWP you will have to decide whether or not you want to begin working full-time or collect your full SSDI benefits.

 

Questions to Ask When Considering Disability Insurance

Whether you are evaluating a short or long-term disability insurance policy offered through your employer or purchasing an individual plan through an insurance company or agent, consider asking the following questions before making a commitment:

  • How do you define disabled?  In other words, when am I eligible to receive benefits?
  • What is the process to file a claim and begin receiving benefits?
  • If my claim is denied what is the appeal process?
  • Do you require that I be under direct and constant physician care during my disability?
  • Do you require that I not work at all while I am collecting benefits?
  • Do you pay out partial benefits if I lose a portion of my income due to a disability?
  • Will you pay, and if so how much, for occupational therapy?
  • What types of disabilities would disqualify me for benefits?
  • Do you cover people with pre-existing conditions?
  • What choices do I have about the maximum amount of time that I can receive benefits?
  • What type of riders do you offer with the policy?
  • Is this a “non-cancelable” or “guaranteed renewable” policy?
  • What is the premium for this policy?
  • Will my employer, or I, pay the premium before or after taxes?
  • Can I voluntarily elect to have federal taxes deducted from my benefit checks or am I responsible for paying them myself?
  • What happens if I am not able to make my policy premium on time?  Will it be automatically cancelled or can I work out a payment schedule to maintain coverage?
  • Do you require that I work a certain number of hours while I am NOT collecting benefits in order to maintain coverage?
  • What happens to the waiting period if I am able to, and elect, to return to work early from a disability and then apply again in the future for benefits if I am unable to work?  Will the days I returned to work early count toward my waiting period?
  • If this is an employer-sponsored plan and I am laid off or take a leave of absence what would happen to my coverage?
  • Am I eligible to maintain coverage if I retire?
  • If I become disabled and begin collecting benefits, will I still need to pay the premium to maintain coverage?
  • Is there a maximum cap on the benefits I can collect under this policy?
  • Is there an income cap on this policy?
  • How will receiving disability benefits under this policy affect my Social Security, workman’s compensation or unemployment benefits?
  • Will my benefit amount adjust for inflation?
  • Does this policy offer any work incentive benefits such as an increase in benefits for participating in an approved rehabilitation program?
  • How long has your company been in business?  How many clients do you provide insurance for and do you have testimonials as to their satisfaction with your company’s service?  (You may work with this company for a long time so you want to know that it is established, well-run and will be in business for the long run.)

Remember to get a copy of the plan’s provision in writing and have a contact name and phone number in case you have a question in the future about your policy.

 

 

 

A Guide To Windstorm Insurance

Windstorm Insurance

Most standard homeowner’s and renter’s insurance policies cover damage or loss created by wind-related weather such as hurricanes or tornadoes. However, some private insurance companies have removed wind damage from homeowner’s and renter’s insurance policies for residents living in high-risk coastal areas. If you live in a high-risk area you may need to, or want to, look into the possibility of purchasing a separate, specialty form of insurance called “windstorm insurance.”

Where to Find it

Some private insurance companies offer separate windstorm, or “wind and hail,” insurance policies. In some states where no private windstorm insurance is available, the state has created a high-risk insurance pool to provide wind and hail coverage to residents living in specifically designated high-risk areas. States offering state-sponsored windstorm insurance pools are:

  • Alabama
  • Delaware
  • Florida
  • Georgia
  • Louisiana
  • Maryland
  • Massachusetts
  • Mississippi
  • New Jersey
  • New York
  • North Carolina
  • South Carolina
  • Texas

How to Get It

If you have homeowner’s or renter’s insurance, first check your policy to learn what wind-related damage is covered under your policy. If you have a “named perils” policy it will list the specific circumstances under which you are provided coverage – i.e. fire, windstorm, hail, etc. If you have an “all risks” policy then you are covered under any peril EXCEPT for perils specifically excluded in the policy. If you have any questions or it is not clear to you when reading the policy what it covers, contact your insurance agent. His/her name and contact information should be on your policy.

If your insurance company excludes wind damage from your homeowner’s or renter’s insurance policy, you may first want to contact your agent to ask if they offer separate windstorm insurance. If they don’t, ask if another company operating in your state does. If you are unable to find private windstorm insurance in your state, you might want to look into purchasing windstorm coverage from your state-sponsored windstorm insurance pool if your state provides it.

What It Costs

You will need to pay an annual premium for windstorm insurance coverage, and a deductible when you file a claim to help pay for home damage repair following a windstorm. The deductible for windstorm insurance can either be a flat fee or a percentage of the value of your home, typically anywhere between 1 and 15 percent of the value of your home. So, for example, if your home is appraised, or valued, for $150,000 and you have a 2 percent deductible policy, you will have to pay the first $3,000 in damage-related expenses before your insurance company will pay on a claim.

If your homeowner’s or renter’s policy DOES provide coverage for wind-related damage, ask if there is a separate deductible to meet if you file a claim related to a windstorm. Ninety percent of all private homeowner’s insurance companies require policyholders to pay a separate deductible from their homeowner’s deductible for expenses caused by wind.

What Damage Qualifies for Coverage

In order for your claim to be approved under your windstorm insurance policy, typically it must be caused by a “trigger” event. Trigger events vary by insurer and state, but in coastal areas the events are typically one or more of three conditions:

  • An official “hurricane watch” issued by the National Hurricane Center, or
  • Sustained winds of 74+ mile per hour winds by the National Weather Service, or
  • A latitude/longitude point for a declared hurricane.

Remember that most standard homeowner’s policies cover damage or loss created by a tornado. Check your policy for coverage, and then ask a private insurance company agent or your state’s windstorm insurance pool representative about coverage for tornadoes.

 

Questions to Ask When Considering a Windstorm Insurance Policy

When considering a windstorm insurance policy – whether you are thinking about purchasing a policy from a private insurance company or from a state insurance pool – you should gather as much information as you can before making any formal, written commitment.  Following is a list of questions you may want to ask an agent or insurance representative:

  • What wind-related damage or “named perils” does my renter’s or homeowner’s insurance cover?
  • Do you offer windstorm or wind and hail insurance?  What does this insurance cover in terms of damage?
  • What is the premium for the policy?
  • What is the deductible for this policy?
  • Can I choose a lower premium and pay a higher deductible instead?
  • Can I qualify for any discounts on my premium, for example, by making disaster-prevention improvements related to wind damage?
  • If I file a claim against the policy, will it affect my ability to renew my policy?  Under what conditions could I be denied renewal?
  • If the property I want windstorm coverage for is a rental investment property (meaning you rent it out and don’t live there year-round), is there a “seasonal occupancy surcharge” for coverage?
  • Do I also need to purchase flood insurance in order to qualify for a windstorm policy?  If so, do you offer flood insurance?
  • If damage is created during a storm that also involves rain (i.e. a hurricane, storm that causes flooding), which policy provides me with coverage?
  • What is the process for filing a claim?
  • Who is my point of contact if I have questions or need to file a claim?
  • What happens if I disagree with how your company/the insurance pool wants to settle a claim or denies a claim?  What is the dispute resolution policy?
  • Do I need to have a home inspection done in order to qualify for the insurance?  And if so, how often do I need to have an inspection done – just once when I apply or yearly?

Check your current homeowner’s or renter’s policies first to see if you have windstorm coverage and if not, look into your other options.   A little homework now may provide you with some much-desired financial protection in the aftermath of a damaging windstorm.   As with your other insurance policies,  remember to keep a copy of the policy in a safe, waterproof container and keep your insurance agent’s contact information in a convenient place in the event that you need to make a claim immediately following a wind storm.

 

Understanding Earthquake Insurance

If you live in an earthquake zone, where you’ve felt the tremors of small quakes, or been through a big earthquake, you know that few things can be more frightening. Earthquakes have caused damage in all 50 states and approximately 90 percent of all Americans live in seismically-active areas. While the government may provide disaster relief to individuals following an earthquake, it will typically come in the form of a low-interest loan to help repair or replace possessions, and is not designed to protect homeowners from loss due to earthquakes.

It’s important to know that standard homeowners or renters insurance policies do not cover losses due to “shifting earth” situations – including earthquakes, landslides, mudslides, mudflows, sinkholes or any movement that involves ground shifting, rising or sinking. But for those living in earthquake-prone areas, or people concerned about the possibility of an earthquake, earthquake insurance is available in almost every state.

Homeowners, renters and condominium owners living across the U.S. can obtain earthquake insurance from private insurance companies. Earthquake insurance can provide some financial protection in the event that your personal property is damaged or destroyed due to earthquake.

What Does Earthquake Insurance Cover?

This is very important to clarify.  Earthquake insurance policies typically cover major property damage or loss due to earth movement – sinking, rising or shifting. So earthquake insurance policies typically pay to make repairs to, or replace, possessions damaged as a result of:

  • Earthquakes
  • Mudslides
  • Sinkholes
  • Mudflows

Earthquake insurance policies typically split out a homeowner’s loss into two categories – structure (the home) and contents (possessions).

What Does Earthquake Insurance Cost?

The cost for earthquake insurance varies widely.  There are two types of costs you will typically have to pay to obtain, and keep, earthquake insurance coverage – the “premium” and the “deductible.” 

Premium:  The policy premium is the amount that you will be required to pay on a regular basis, typically annually, to maintain your earthquake insurance coverage.  Premium amounts vary widely–as little as $500 to in excess of $3,000.  The amount of your premium will depend on several factors including:

  • Type and age of your house
  • Any “earthquake-proofing” improvements made by the builder or you as the homeowner
  • How close you are to fault lines
  • What type of soil is your house built on

Deductible:  Most earthquake insurance policies carry a deductible, meaning you will have to pay a certain amount first for repair or replacement of your property (home and or possessions) before the insurance company will pay for any claims you make.  Earthquake insurance deductibles are typically a percentage of the replacement value of the home – meaning how much it would cost to replace your home in the current economy.

Deductibles in earthquake prone areas are typically a minimum of 10 percent of the home’s replacement value. So if it would cost $200,000 to replace your home and your earthquake insurance policy has a 10 percent deductible, you would have to pay the first $10,000 in repair or replacement costs.

It’s important to know how your insurance company applies the deductible because most companies split a homeowner’s property into two separate categories – structure (the physical home) and contents (possessions).  If your company does, then you will have to pay the deductible for EACH category.

Earthquake Insurance for California Residents

In addition to obtaining standard earthquake insurance through private insurance companies, California residents also have the option of obtaining California Earthquake Authority (CEA) sponsored earthquake insurance.  The CEA is a state-sponsored public-private partnership to provide earthquake insurance to California homeowners, renters and condominium owners.

CEA earthquake insurance can be purchased through licensed insurance companies who are members of the CEA.  A standard CEA insurance policy carries a 15 percent deductible.  The basic CEA policy covers damage to the home, for personal property up to $5,000 and up to $1,500 in “loss of use” coverage, meaning that it will pay up to $1,500 for certain expenses that you incur if you have to live somewhere else because your home is considered uninhabitable and/or is being repaired, including such expenses as:

  • Temporary rental home, apartment, or hotel room
  • Restaurant meals
  • Telephone or utility installation in a temporary residence
  • Relocation and storage
  • Furniture rental
  • Laundry

Only structural damage counts toward meeting the 15 percent deductible.  So if you hold CEA insurance BUT the damage to your home’s physical structure is not at least 15% of its insured value under the earthquake policy, the CEA will not pay any claimed loss for structure or contents.  You are still eligible for the loss-of-use expense reimbursement up to $1,500 if you have that coverage and your home is uninhabitable for a period of time following the quake.

An Example of How the CEA Deductible Works

Let’s say that you have a CEA earthquake insurance policy that includes $200,000 coverage on your home, (the cost to replace just the structure itself); $5,000 coverage on its contents (furniture, appliance, etc.) and $1,500 loss of use coverage.  The deductible for this policy is 15% of the home’s insured value of $200,000, which means you will have to pay out the first $30,000 in expenses before the policy would pay out on a claim.  Your house and contents are damaged as the result of an earthquake and made uninhabitable, and your family has to stay in a motel for several days and eat in restaurants.

  • SCENARIO A:  If the damage to the structure of your home IS LESS THAN $30,000 (15% of the insured value of $200,000), you will have to pay all the expenses associated with damage or loss and will not be able to file a claim to receive money from the CEA for structural damage repair or replacement.  If you are temporarily forced out of your house due to the earthquake, the CEA will still pay up to $1,500 under the loss of use coverage provision for your living expenses.
  • SCENARIO B:  If the damage to the structure of your house IS MORE THAN $30,000 (15% of $200,000), you can file a claim and will receive an insurance policy payout to help with repairs and/or replacement costs.

If you hold a CEA earthquake insurance policy and you want additional coverage beyond the basic policy you can choose a CEA policy with “add-ons” including:

  • a 10 percent deductible (meaning you will have to pay 5 percent less out-of-pocket for initial costs)
  • coverage for other structures (such as extensions to the home)
  • coverage for up to $25,000 for personal property (up from $5,000 under the basic policy), and
  • $10,000 in coverage for “loss of use” expenses (up from $1,500 under the basic policy).

However, be aware that the premium (annual payment to maintain coverage) for this type of policy will be more than with a 15 percent deductible policy.

Insurance companies selling homeowners’ insurance in California are required to offer earthquake insurance in writing to all prospective customers.  The earthquake insurance policy description must describe coverage amounts, the deductible and the policy premium.  You have 30 days from the time you receive the quote to respond.  If you don’t respond, the insurance firm will assume that you have rejected the offer to purchase earthquake insurance in addition to your homeowners’ insurance.  Be sure you look for that description and ask your agent if you don’t see it when reviewing your policy.

When considering whether to purchase earthquake insurance, consider asking an agent the following questions:

  • If you are a California homeowner, ask if the insurance company participates in the CEA program or if the policy they offer is not affiliated with the CEA.  Ask how their policy compares with a CEA policy.
  • If you already have a homeowners policy, ask the company if it provides earthquake insurance and if it offers a discount for policy holders who hold both homeowners’ and earthquake insurance policies through the company.
  • What is my home’s risk for earthquake damage?  Even if you do not think you live in an earthquake-prone area such as the California coastline, you may still have a significant risk for damage due to earth-shifting incidents such as landslides in steep rocky terrain.  Ask your agent, or potential agent, how he/she is able to determine your home’s risk.
  • What, specifically, is covered under this earthquake insurance policy?  For example, what is the maximum coverage to repair or rebuild my home if it is damaged or destroyed in a quake?  Does the policy cover possessions in my house?  Does the policy cover how much I originally paid for the items or what they are currently worth?  Does the policy cover how much it cost to build my house or what it would cost to replace it?
  • What is the time limit for filing a claim with this policy?  It can be difficult to detect damage after an earthquake and sometimes earthquake damage may not be apparent until much later, so you will want to know how long you have until the deadline for filing a claim.
  • What is the premium (cost) for this policy?
  • What will my deductible be with this policy (meaning how much will you have to pay before your insurance policy will pay out)?  How is the deductible determined (meaning is it a percentage of your home’s total insured value?) What types of expenses qualify toward meeting my deductible?
  • Is there a waiting period between the time I purchase the policy and when it takes effect?  Or how long do I have to wait after an earthquake to purchase earthquake insurance?
  • What if I fail to make my payment on time?  Is there a penalty?  Will my policy be canceled?
  • Are there any additional expenses for the policy in addition to the premium?
  • What levels of coverage can I choose from?
  • How do I file a claim in the event that my home is damaged or destroyed due to an earthquake?
  • Will the premium amount automatically go up, or could my policy be cancelled, if I make a claim?
  • How quickly does your company settle earthquake-related insurance claims?
  • Are discounts available if I do anything to “earthquake-proof” my home and possessions?
  • How often do I need to renew my policy to maintain coverage and what is the process to renew?
  • Are there any conditions under which my home’s risk could increase or decrease?  How would it affect my eligibility and premium?
  • What earth-moving conditions that could cause damage to my home qualify under this policy?
  • How does this earthquake insurance policy work in conjunction with my homeowners’ policy?  For example, are there types of damage or loss that would not be covered under the earthquake insurance policy that would be covered under my homeowners’ policy and vice versa?
  • If I am a renter and looking for an earthquake insurance policy to provide financial protection for my possessions, what kind of information do I need to get in order to qualify for a policy – i.e. do I need to get my possessions appraised?  How does being a renter and not a homeowner affect my premium and deductible?  If I become a homeowner do I need to apply for a new policy?
  • If I have to make a claim against the policy, can you tell me what will happen to the amount of my premium payments after that—will they increase?

Premiums for earthquake coverage vary widely.  If you have looked at the risk and believe it would be smart for you to purchase earthquake insurance and you want to, but feel like you’re not in a position to financially afford it, consider a few options:

  • ask your agent if you qualify for any discounts
  • review your budget and see if there are any places you could cut back to build up enough savings to pay the premium
  • plan ahead and decide in advance that you will set any unexpected bonuses, gifts and even tax return money to pay the premium

Finally, if you choose to purchase earthquake insurance, remember to keep a copy of the policy in a safe, waterproof and fireproof container and keep your insurance agent’s contact information in a convenient place in the event that you need to make a claim immediately following an earthquake.  It’s also a good idea to consider setting up a household and personal property inventory book to keep a complete record of your belongings.

 

 

 

Understanding Flood Insurance Can Save You Thousands

The devastation of natural disasters like Hurricane Katrina is heart-breaking. Some of you are wondering what would happen if a natural disaster involving flooding struck in your area. Do you have insurance that would cover or help offset some of your losses in the event of a flood?

Look at your policy. Most standard homeowners and renters insurance policies specifically do not provide financial protection in the event of a flood. If you live in a high risk area for flooding, your mortgage lender may have required you to purchase protection against flooding. But if you own your home outright or you rent, you are almost certainly not required to have protection, even if you live in an area at high risk for flooding. Should you consider purchasing flood insurance? Let’s take a look at what type of flood insurance protection is available and how to think about, and evaluate, your need for coverage.

What Standard Homeowners Insurance and the Government Offer

If your home is damaged or destroyed due to a flood, your loss will almost certainly not be covered under standard homeowners insurance. Think about that carefully. If your home is damaged or destroyed due to a flood, your loss will almost certainly NOT be covered under standard homeowners insurance. And only if your area is formally declared a federal disaster area due to a flood will you be eligible for a loan from the Federal Emergency Management Agency (FEMA) to help make repairs your home or obtain temporary housing. You may also be eligible for a low-interest Small Business Administration (SBA) loan for up to $200,000 for rebuilding your home. Both of those are government loans that must be repaid. Unless your mortgage company grants you forbearance (meaning that the bank or mortgage company holding your home loan allows you to postpone your mortgage payment for a certain period of time), you are still required to pay your mortgage even if you are unable to live in your home. So you will need to pay your mortgage loan in addition to repaying your new loan(s).

Flood insurance can provide you with some protection against financial losses in the event that your home is damaged or destroyed by a flood. That includes damage created by flood-related conditions such as storm surges, waves, and tidal waves.

Basics of Flood Insurance

Flood insurance is provided by the federal government through a program called theNational Flood Insurance Program (NFIP). In order to obtain this federally-backed flood insurance, you must live in an NFIP community. To find out if you live in an NFIP community, an area that participates in the NFIP, visit FEMA’s Community Status Book.

If you live in an NFIP community and in a designated high-risk flood zone, you WILL be required by your mortgage company to purchase flood insurance. If you live in a community that participates in the NFIP but do not live in a high-risk flood zone, you can still purchase the same flood insurance policy to provide you with coverage. If you live in a low-to moderate-risk area for flood damage you may qualify for NFIP’s low-cost Preferred Risk Policy. To determine your home’s flood risk, enter your home address on the Floodsmart.gov site. You can also determine your home’s risk for flood damage onFEMA’s Flood Mapping Platform.

Forms of Flood Insurance and Standard Coverage

There are three forms of NFIP flood insurance policies:

  • “Dwelling” policy: for most standard homes and homeowners
  • “General Property” policy: for apartments and businesses
  • “Residential Condominium Building Association Policy”: for condominiums

Under a standard flood insurance dwelling policy, the foundation of your home and equipment necessary for the home’s normal function (i.e. furnace, water heater, electrical system) are covered if damaged or destroyed as a direct result of flooding. You can purchase separate coverage for your personal possessions (such as furniture, appliances, clothes, etc.).

Levels of Coverage Available

With flood insurance, homeowners can insure their homes for up to $250,000 and contents (possessions inside the home) for up to $100,000. Renters can purchase flood insurance coverage for up to $100,000 for their personal possessions. People who own rental properties (single-family houses, condominiums or townhomes) that they rent out to tenants can insure their building and contents for up to $500,000 through the NFIP program. There is a 30-day waiting period for flood insurance, meaning that the policy does not take effect until 30 days after purchasing it.

If you want to purchase additional coverage above the standard NFIP $250,000 property limit and $100,000 content limit, you can purchase Excess Flood Protection through private homeowners insurance providers. Contact your agent to see if his or her insurance agency sells Excess Flood Protection or if he/she can recommend an agent in the area that does sell it. If you cannot find a local agent that provides Excess Flood Protection on your own, visit the Floodsmart.gov website for assistance.

Sometimes following a flood, homeowners are required by law to bring their homes up to current community and/or state safety standards. If you have flood insurance through NFIP and your home is declared damaged by local officials, you can receive up to $30,000 in Increased Cost of Compliance (ICC) funds to make necessary repairs, or to demolish, your home.

Evaluating Your Need for Coverage

Once you have determined what your home’s flood risk is, and if you live in an NFIP community, you will want to evaluate your sense of the need for flood insurance coverage. If you are not required to carry it, then it really is your choice. It’s a choice that will require you to think about how to balance:

  1. risk of the event happening
  2. the likelihood that it will happen and
  3. your ability to deal with any damage or loss you might occur if your home is flooded and you do not have insurance.

While you may feel like a significant flood is unlikely, all it can take is one heavy flood to severely damage or destroy your home and/or possessions. That’s what insurance is for  to help provide a level of financial protection for extraordinary circumstances, in case it happens to you.

So when considering flood insurance as a means of helping protect the value of your home and possessions, you will probably want to gather information, to weigh getting flood insurance against your current financial situation, the risk that a potential flood could occur, and then make an informed choice. Let’s look at how to find the help and answers you need to some important questions about flood insurance.

Finding an Agent and Purchasing a Policy

If you currently hold homeowners or renters insurance and losses due to flooding are not covered, you may want to first contact your insurance agent to learn more about flood insurance and to see if he or she can sell you a flood insurance policy. You can also visit the NFIP site to find a list of insurance companies in your area that offer flood insurance, or contact your state’s insurance commissioner.

Some Questions to Ask

When working through the decision about whether or not to purchase flood insurance, consider asking an agent the following questions:

  • Is my home eligible to purchase flood insurance through the NFIP program? Not every home is located in an area that participates in the NFIP program, and therefore you might not be eligible to purchase flood insurance.
  • What is my home’s flood risk? The NFIP assigns a level of risk based on a number of factors, but primarily your home’s physical location. There are four major categories of risk:
    • Moderate to Low Risk Areas
    • High Risk A Areas
    • High Risk Coastal V Areas
    • Undetermined Risk Areas

Even if you do not live near a coastal area you may still have a significant flood risk. For example if you live in a low-lying area or near a pond or a levee or dam, you may be at greater flood risk than you think. Your insurance agent can do a quick analysis to determine your home’s flood risk and explain exactly what the risk assessment means.

  • What, specifically, is covered under this policy? For example, what is the maximum coverage to repair or rebuild my home? Does the policy cover possessions in my house? Is it how much I originally paid for the items or what they are currently worth?
  • Are conditions created by flooding covered under this policy? For example, what about water damage or mold created by flooding?
  • What is the premium (cost) for this policy?
  • Is there a deductible with the policy (meaning a certain amount that you have to pay before your insurance policy will pay out)?
  • Is there a waiting period between the time I purchase the policy and when it takes effect? There is typically a standard 30 day waiting period before a policy becomes effective, so if you hear news of a coming storm, it will likely be too late to purchase flood insurance and have coverage if your home sustains damage.
  • What if I fail to make my payment on time? Is there a penalty? Will my policy be canceled?
  • Are there any additional expenses for the policy in addition to the premium?
  • What levels of coverage can I choose from?
  • How do I file a claim in the event that my home is damaged or destroyed due to a flood?
  • How quickly does your company settle flood insurance claims?
  • Are discounts available if I do anything to “flood-proof” my home and possessions?
  • How often do I need to renew my policy to maintain coverage and what is the process to renew?
  • What happens if the area in which I live increases or decreases in flood risk? How will it affect my eligibility and premium?
  • If I have to make a claim against the policy, can you tell me what will happen to the amount of my premium payments after that? Will they increase?

The average annual flood insurance premium is approximately $400. If you would like to purchase flood insurance but feel like you’re not in a position to financially afford it, consider a few options:

  • ask your agent if you could qualify for any discounts
  • review your budget and see if there are any places you could cut back to build up enough savings to pay the premium
  • plan ahead and decide in advance that you will set any unexpected bonuses, gifts and even tax return money to pay the premium

Finally, if you choose to purchase flood insurance, remember to keep a copy of the policy in a safe, waterproof container and keep your insurance agent’s contact information in a convenient place in the event that you need to make a claim immediately following a flood situation.

 

Why You Should Make Health Insurance A Priority

Health insurance is a vital part of a long-term savings plan. Too many people in this country don’t think twice about automobile insurance to cover their car, but will gamble with their own health.

1. Opt-In for Employer Health Benefits If your employer offers health insurance, take it. These plans usually run far less than what out-of-pocket plans would cost you. Even if the employer deducts money out of your check each pay period, you will learn to live without that money.

2. Health Insurance May Save Your Financial Life Even though health insurance might seem too expensive, it could save you from minor financial hardships or total financial ruin. Could you imagine owing a hospital thousands of dollars for a surgery? This isn’t a fantasy or a made up figure. It’s a modern day reality. You could get caught in a cycle of paying hospital bills monthly–money that could go towards a mortgage or your retirement. Do not let your health become a financial liability–from which you may never recover.

3. Shop Around Many out-of-pocket plans offer different levels of coverage. Think about what you need and–when that emergency comes around that keeps you out of work–what you can afford. Research, research, research.

4. Make Health Insurance A Priority In addition to getting covered, budget for check-ups, emergency room visits and medication co-pays. In the long run, the sting of these forgotten costs associated with doctor visits won’t cause an unexpected dent in your monthly spending plan.

5. Don’t Delay, Do It Today In keeping with my central message of taking control of your life, you have to act today in making sure that you don’t get caught uninsured.

Tips For Keeping Your Auto Insurance Rates Low

If you can take the measures now to ensure certain things are in order, you’ll definitely save money in the long run. Hence, the existence of different types of insurance. If you have read this blog for any period of time, you know I extol the value of buying insurance (especially health insurance). Being caught uninsured can only lead to ever-increasing costs–and stressful headaches–down the road.

In addition to health, life, and home insurance, it’s important to not only have automotive insurance, but to make sure you keep your payments current and that you’re getting the best bang for your buck. (The only way to guarantee this is by doing your research. Another value whose virtues I extol on this blog. My mantra: Research, research, research.)

But, I digress. Back to the idea of prevention. We often take car of our cars when that check engine light comes on. We change the oil every 3,000 miles. We wash our cars. Each of these is a preventative measure. Too often though, many of us don’t take the necessary precautions that might prevent our cars from being stolen or the headaches that ensue if our cars our robbed.

I came across the following helpful hints from Geico. Some preventative measures that can keep you save and, possibly, limit your financial loss if your car is stolen. My responses/comments are in parenthesis.

  • Keep your vehicle locked at all times, even while driving. Close all windows and sunroofs, no matter how hot it is. (I live in L.A. My car is locked at all times. The windows and sunroofs however, are sometimes open. It’s hot. I live in L.A.)
  • Never leave your keys in the car. (What is this? 1963? Who leaves their keys in their car?)
  • Avoid leaving valuables inside your vehicle where passersby can see them. (Sometimes, I leave things out for the world to see. I need to get better with this.)
  • Install an anti-theft system in your vehicle if it doesn’t have one. A mechanism that locks onto the steering wheel can be a very visible sign that you’ve taken steps to protect your vehicle. Ignition cut-off systems prevent a car from being started. Some new cars come with passive alarms that activate automatically when the key is removed from the ignition. One system emits a signal that can be tracked by the police. Thieves are reluctant to steal vehicles that can be tracked and recovered quickly. Many insurers offer discounts for these types of systems. (That last line is important. Spend a little money now to save a lot down the road.)
  • Beware of the “bump-and-rob” technique. Carjackers bump your car from the rear, then steal it when you get out to look for damage. When stopped at a traffic light, leave room to maneuver around the vehicle ahead if you need to. If another car bumps yours and you feel threatened, drive to a populated area. If you have a cell phone, call the police for assistance. (Have you heard of this? Terrifying. I’ve also heard that insurance fraud is being committed by people who work together driving two different cars. The car in front of you will slam on his brakes causing you to stop abruptly…but the driver behind you–who is in cahoots with the car in front of you–rear ends you because of your unsafe driving. How ridiculous is this?)
  • Do not leave registration or title in the car. Too often a car thief is pulled over and gets away from the police because he or she can produce the auto registration. If multiple drivers use the vehicle, the best suggestion would be to hide the registration in a secret location that only the owners know. (Interesting…never thought of this.)
  • If confronted by a carjacker, do not resist. Cars can be replaced; you can’t. (As stated above: I live in L.A. I am ready to walk away from the scene. Car-less, yes. But alive.)
  • Have your car’s vehicle identification number (VIN) etched on each of the windows. Car thieves want to get off cheap. They don’t want to go to the expense of replacing all the glass. (How much would this cost?)

Some things to think about and ponder. I can’t imagine the frustration of having your car stolen. In fact, I have to clean my car out tomorrow, just to make sure no important papers or objects are in it…

Health Insurance Overview

Insurance, insurance, insurance. Figuring it out is daunting. Auto insurance. Home insurance. Renter’s insurance. Health insurance. Dental insurance. Whole life insurance vs. term life insurance. I know. It’s overwhelming, isn’t it? But, sticking your head deep into the sand won’t make the need to pay attention go away. As a preventative measure, you should be properly insured in all areas of life.

For those friends of mine in the blogosphere who are just starting out in the work world, it’s important to know how to insure yourself.

HEALTH INSURANCE

Throughout my twenties, I’ve had friends who were in between jobs and, in trying to cute expenses, have told me they planned to let their health insurance lapse. I repeated my typical response, “Don’t be caught uninsured.” It became a mantra of mine. Too often people think health insurance is too expensive–and, quite frankly, it is. However, in a moment you can find yourself in a medical emergency and, if you’re uninsured, you might be paying for it for the rest of your life. Medical bills for an uninsured individual may climb to tens of thousands of dollars (perhaps even, hundreds of thousands). You want your money to be put towards savings accounts, retirement funds, and your mortgage. You don’t want to be facing a mountain of debt because your appendix burst.(Talk about an EUE.)

TYPES OF INSURANCE

Look at your life and your medical needs. Research your options. If you are not covered through work, find a place for health insurance in your monthly budget. Now.

There are three main types of health insurance. Even within each general category, there are a multitude of plans that you can buy each offering different monthly premiums, different fees for hospital stays and doctor visits, medication and tests. Find out which option works best for you.

Fees for service: Undoubtedly, the most expensive. With this option, you can go to any provider and your will most likely be covered for almost any medical issue. Furthermore, you don’t need to be referred by other doctors to see a specialist.

Preferred Provider Options (PPO):
Allows you to self-refer to any doctor in the network of providers. Also, any treatment or services recommended by the providers are also covered.

Health Maintenance Organization (HMO): Generally, the least expensive. (I hesitate to say “cheapest” because monthly premiums for HMOs can still stretch the budget.) You select your primary physician and, through this provider, you are referred out to specialist within the HMO.

Like all insurance policies—health, auto, life, home—there are many plans to choose from offered within the same organization. Figuring out which option works best for you will take some time and some research. So, if you are currently uninsured or will be soon, you should start your research today.