July 20th, 2011
Recently, I was talking to a Texas woman who happened to be looking for a term life insurance quote. Fifty-eight years old, retired, and healthy, she described her desire to leave something behind… to leave a legacy for her children. The first question I asked was how long she would expect her term life insurance to last. Her answer was classic, tragically common, and it highlights the unfortunate lack of simple life insurance knowledge possessed by the general population. Her answer was…
“Until I die…” I stepped back and settled in for a heart to heart. Not a formulaic “needs analysis” discussion—but immediately I recognized the need to explain main life insurance options on a fundamental level. She would benefit more, I knew, from conversation… educational conversation with healthy doses of empathy.
I quickly found out that she already had some coverage in place. I was encouraged at first—admiring her past initiative and level of responsibility. Then she told me what it was… “Accidental Death and Dismemberment…” she said. My educator hat firmly glued to my head, I knew this was going to be a long talk. So rather than give a play by play of the entire conversation, I’ll provide some basic descriptions of the main kinds of life insurance and then let you know what I recommended for “Teresa” in Texas:
* Accidental Death and Dismemberment Insurance (AD&D) : I will limit this description to the stand-alone version. Sometimes this type of life insurance coverage can be purchased as a rider attached to a term life insurance plan or permanent life insurance policy. It really is when it really is purchased as a stand alone plan that I get concerned. When someone purchases this type of life insurance as their primary coverage, it usually indicates a poor understanding of their options and that they jumped at the first sales pitch in a flyer received from their bank. Banks are notorious for partnering with insurance companies to offer this type of coverage. Because it does not usually require a medical exam, it’s quick to put in place, and means a speedy kickback for the bank, they push it shamelessly. It works like this: You die in an accident (not for health related reasons) and your beneficiaries get paid the face quantity (death benefit) of the policy. It’s that simple really… While in the top 10 leading causes of death, “unintentional injuries” or accidents (at #5) is not an insurance company’s top concern when deciding whether or not to insure someone. Individuals are more most likely to die from heart disease or cancer. The “dismemberment” part of this coverage works fairly simply as well… lose a limb… get paid. A typical reimbursement may possibly be perhaps $7,500 for the loss of a hand or an arm. Morbid reality… the insurance company decides how much your arm is worth. As you’ll be able to tell, I’m not a fan of this type of coverage—unless it’s the only type of coverage for which someone can qualify. Teresa in Texas is not well served by Accidental Death Life Insurance. She’s healthy, has a defined goal to leave something for her children, and she leads a safe, stable lifestyle as a retired teacher. Teresa needs a new plan…
* Term Life Insurance : This is by far the most recommended form of life insurance… and for good reason. Term life insurance allows you to buy a lot of coverage for very little money. It also pays your beneficiaries with virtually no regard to how you die. The premiums, in most cases, remain level as does the benefit. So it’s inexpensive, comprehensive, and you always know what to expect. So what’s not to like? In short, it’s temporary… and in the event you outlive it… you have to start all over. So Teresa in Texas can get a term plan, sure. But chances are very good that she’ll live beyond age 70. Since term life insurance from most companies is only issued up to a maximum of age 70, she’ll find herself out of options when a term plan expires—especially if there is any change in her health. So even if she buys a 10 year term life insurance (Term life is generally found in 5 year increments of coverage: 10 year term life insurance, 15 year term life insurance, 20 year term life insurance, 25 year term life insurance, and 30 year term life insurance) plan and has ample opportunity to reapply for another… if there is an adverse change in her health, she could be declined for coverage or an approval could produce rates that are prohibitively costly. So if she buys a 10 year plan now and another at age 68… she’ll be 78 years old and out of options when her next plan expires. By the way… the older you get, the slimmer your term options become. Ten year term life or 15 year term life insurance will be her last remaining term options at age 68. So while term life is the right way to go when you’re young, purchasing coverage when you’re older require a bit more thought. The well known monetary gurus like Dave Ramsey and Suse Orman preach the value of term and why everyone should focus on this type of coverage and this type of coverage only. While I agree with this most of the time, I believe that adhering to this philosophy as an absolute does more harm than good. Teresa is an ideal candidate for a permanent life insurance policy like Universal Life Insurance or Whole Life Insurance and I’ll explain why in the next section. There are other aspects of term life insurance I would like to discuss like, convertibility, renewability, and Return of Premium Term … but I’ll reserve these topics for future discussions.
* Permanent Life Insurance (Whole Life Insurance and Universal Life Insurance ): This is what Teresa ultimately bought—Universal Life Insurance. It was the smartest choice for her given her very clear desire to be assured of leaving something behind for her children. Universal Life Insurance is a flexible premium, adjustable benefit life insurance plan that is designed to last until a person dies. (Whole life insurance is less flexible, and also less cost effective. It has become less prominent over the years as a result. Like Universal Life insurance, it’s designed to be permanent.) Teresa will spend a little over $60 per month for life time protection that will pay her beneficiaries $50,000 if she dies for nearly any reason. It also gradually builds in cash value at a current non-guaranteed interest rate of almost 5%. It’s noteworthy to point out that in my discussion with Teresa—I barely mentioned the cash value. I bristle when life insurance agents hawk their wares on the basis that their plans will make the policy holder money. In my view, this overstates the purpose of life insurance and does customers a disservice. The best thing about permanent life insurance coverage is that it’s permanent.
Teresa is a happy camper. She clearly stated that her goal was not to have to worry about whether or not she’ll be able to leave something behind for her kids. It was not her intent to make them rich… but she did want to ensure they were not burdened with her final expenses and burial expenses when she died and that they perhaps would have a little some thing left over. She now has a better understanding of what is available to her as she heads into her golden years and she can feel comfortable that she did the right thing.
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July 20th, 2011
To many Americans… this seems to be a mystery. This fact continues to be made apparent to me. For the past many weeks I've been communicating by e-mail having a prospective customer looking for life insurance in Los Angeles. I attempted to have at least one telephone conversation with her, only to be given the cold shoulder when I started asking health questions. She politely stated that she preferred to communicate via electronic messages and I agreed to accommodate her. Today, I received an e-mail that told me I would have my work cut out for me for Lola in LA. She gave clear signals that she had no idea how life insurance quotes and, consequently, actual life insurance rates were calculated. I knew it would take more than e-mail conversations to aid her when she said…
"I don't like the thought of someone asking personal questions… Unless they don't get too in-depth…" My response wasn't as detailed as this post, because my next step with Lola is to coerce her to talk to me. The e-mail method of communication has run its course. Accurately quoting life insurance rates requires some know-how and it requires that the person seeking coverage share information. Think about it… you could be asking an insurer to pay your spouse, son, or daughter $1,000,000 (as an example) in the event you die. Do you think they deserve to know about your medical history? Especially since the terms of a traditional life insurance policy will allow your beneficiaries to be paid the full face quantity of your plan the same day it goes in force. So here are some basics about how life insurance rates are calculated:
Age… Obviously, the older you are, the more pricey the coverage. You'll find that the way the statistics shake out, most life insurance companies aren't banking on your survival a lot past your late 60's. Rates increase dramatically at that point. The moral of the story is that you ought to buy coverage when you're young and don't let it lapse. Procrastination can cost an arm and a leg.Health… This is huge. And this is also where Lola needs to listen up. Her fear and apprehension with regard to discussing her health is a red flag for me… Right away I'm thinking… what's physically wrong with this person? Any imperfection in your health can add up to an increase in rates. Some conditions are just plain not insurable at any price. Life Style… My favorite question to ask applicants for life insurance is whether or not they like to jump out of perfectly good airplanes or SCUBA dive. These are fine examples of risky life styles or "hazardous avocations" as they're called by life insurers. Other hazardous avocations or life style choices folks can make to impact their rates are:*Tobacco/Nicotine use. Smoking cigarettes is one of the biggest factors in determining life insurance rates. Some insurance companies look at other forms of tobacco in a more favorable light but all seem to agree that smoking cigarettes is not good for longevity. Chewing tobacco or "dip" is also viewed mostly as a very negative factor. Some companies, like Midland National Life Insurance Company and Prudential Life Insurance Company , have a "non-smoker" class for which applicants might qualify even if they dip. Likewise, American General Life Insurance Company (AIG) will give special dispensation to those who smoke cigars, admit to not smoking more than one per week on a life insurance application, and who demonstrate a nicotine metabolite free result in a blood test when their medical exam is completed. The best rates come to those who have been off nicotine for at least 5 years. In case you do smoke, I've found the best smoker rates are usually offered by a company called RBC Liberty Life Insurance Company . I say usually… there are others that have demonstrated the desire to be competitive when it comes to those who don't want to give up the smokes. A reputable broker will have a wealth of options to present to you and will use a complete snapshot of your risk factors to make a company recommendation.
*S.C.U.B.A. Insurers will want the details of this activity fleshed out in a Hazardous Avocation questionnaire. Based on your answers, they could decline coverage, add a flat fee for every thousand dollars worth of coverage, or take no action at all with regard to your rates.
*Flying. This activity will generate more paperwork just as S.C.U.B.A. does. If you're a pilot, American General and Genworth Life Insurance Company have favorable pilot life insurance rates. But they'll want to know details. If you're a professional commercial pilot with a major airline, you could enjoy little to no impact on your life insurance rates with these companies.
*Bull riding, bungee jumping, sky diving, race auto driving, boat racing… again… all activities that cause insurance companies to bristle at the thought of providing coverage in the face of such inherent risk. The best course of action is to consult a broker with the ability to shop dozens of companies on your behalf in case you like to participate in dangerous extreme sports and activities.
*Foreign travel. Planning on going to Iraq for a little R&R? Don't bother applying for life insurance. In general, life insurance companies will use the State Department's travel warnings as guidance when it comes to making an offer for coverage. They could choose to offer coverage if you're planning a trip to South America by way of example… but if you're going to a locale with an active travel warning, you’ll be able to either expect the aforementioned additional flat fee or a declination.
After answering a range of questions about your age, health, and life style, a life insurance agent or broker will attempt to place you in a "health classification". Every health class has a cost factor associated with it for your age. Here are the simple health classes:
Preferred Best or Super Preferred: You're perfect… don't change a thing. You take no medications, your height and weight are proportionate, you have no issues with cholesterol, blood pressure, family members history, and you have a clean record when it comes to your credit, moral fiber (no criminal offenses), and driving history. You deserve the best rates because you take care of yourself, have good genes, don't use nicotine, and don't do anything crazy with your spare time or for work.Preferred: You're in good shape… but perhaps you take medication to control blood pressure. Maybe you're slighly overweight, have slightly elevated cholesterol levels, or have a skeleton in your closet when it comes to household history. Preferred is good… but some very minor risk factors are present.Standard Plus: You're just slightly above average. Height and weight loom large here as does the spectre of adverse household history. Maybe everything about you is perfect… but you've only been off nicotine for 2 years. This is the health class for you if that's the case.Standard: You're average all the way. Again… you might be perfect with the notable exception that you only quit smoking one year ago. I've found most people qualify at this level when they have issues with their weight. Preferred Tobacco and Standard Tobacco: This is why smoking rates are usually significantly higher. You're placed in the smoking category regardless of how good your health is otherwise and charged accordingly. Table Ratings: Life insurance applicants are placed in the table rating category when unqualified for the more favorable fundamental health classes. Perhaps you have diabetes, you qualify as obese, you were once treated for cancer or another serious illness… Table ratings are given numbers or letters. Usually they start at Table B (also called Table 2) and progress through to Table H (also called Table 8). As a rule of thumb, the rates increase by roughly 25% for every rung on the Table rating ladder.
When getting her rate on-line, Lola called herself "Preferred Best". Her fear of discussing her health history speaks volumes about just how much she actually tried to figure out what her likely outcome is going to be. If she is perfect, why would she be reluctant to discuss her health with me? This is the danger of generating quotes for yourself on-line. Should you don't know the basics when you're presented with rate options over the Internet– of course you'll pick the lowest priced life insurance quote you see. Most on-line quoting engines provide the means for you to drill in and get information on the available health classes, but unfortunately most folks ignore the tools and expect the best rates.
I've provided alot of information here, but there is even more that I haven't discussed. Calculating life insurance rates can be complex when there are mitigating risk factors and very simple when there are none. But since very few individuals can count themselves as perfect– you really should know that life insurance rates are not written in stone until you've gone through the application, medical exam, and underwriting process and been made an offer. A good agent will tell you that… and he or she will not sugar coat your potential outcome having a low ball estimate of what you can expect to pay.
Lola in LA needs to understand that I need to ask questions to put my best foot forward to offer her the best life insurance rates in Los Angeles. This all starts with an honest discussion… and yes Lola… in-depth is good. So talk to your agent, assess his or her knowledge and experience with some tough questions of your own to build a comfortable level of trust. Once you've accomplished that and feel the rapport is there, encourage your agent to do the needed work for you to provide the best available rates on your behalf. Generating your own life insurance rates on-line can provide a good guideline– but there's no substitute for real life feedback from an experienced agent.
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July 20th, 2011
This is a question coming up with increasing regularity these days. Baby boomers are approaching retirement and need to know that the expenses of making the future as cushy as possible are high. It's not enough to figure out just how much retirement income it will take to live a comfortable life when you're healthy– you need to know what could happen if you're sick. The numbers are staggering. In 2006 the average costs of Long Term Care on a national basis were…
* $171/day for a semi-private room in a nursing home, $62,415 per year;
* $194/day for a private room in a nursing home, $70,810 peryear;
* $2,691/month for care in an Assisted Living Facility (for aone-bedroom
unit), $32,292 per year;
* $25/hour for a Home Health Aide
* $17/hour for a Homemaker services
* $56/day for care in an Adult Day Health Care Center
With prices like these, it's easy to see why Long Term Care Insurance has become an important consideration for people in their fifties who seek ways to bolster their retirement planning and insurance portfolios. According to the 2006 Cost of Care Survey by Genworth Monetary, here is what you can expect in your home state:
StateAvg. Daily Nursing Home Rate: PrivateAvg.Daily Nursing HomeRate: Semi-PrivateAvg. Monthly Cost in Assisted Living FacilityHome Health Aide Average Hourly RateHomemaker Services Average Hourly RateAlaska Long Term Care Costs523.67489.833,750.4042.7818.05Alabama Long Term Costs147.46134.452,033.2126.8011.41Arkansas Long Term Costs127.22114.581,744.7929.4214.35ArizonaLong Term Care Costs187.40150.512,441.5221.0017.17CaliforniaLong Term Care Costs230.03179.842,729.0132.0919.11ColoradoLong Term Care Costs167.35153.022,690.0122.0317.33ConnecticutLong Term Care Costs326.28299.004,060.1024.2217.34District of Columbia Long Term Care Costs218.43193.993,057.4423.1218.23DelawareLong Term Care Costs196.70185.403,575.5328.5619.47FloridaLong Term Care Costs195.84169.622,385.7618.6915.56GeorgiaLong Term Care Costs147.34137.452,206.8127.5715.32HawaiiLong Term Care Costs270.92247.252,739.5127.3517.48IowaLong Term Care Costs130.50115.932,647.0822.3917.33IdahoLong Term Care Costs155.25148.282,501.6121.0614.78IllinoisLong Term Care Costs161.44135.203,219.0926.2218.49IndianaLong Term Care Costs169.48145.932,216.9625.2517.41KansasLong Term Care Costs122.04112.242,788.0024.0515.53KentuckyLong Term Care Costs152.41137.412164.7621.2014.83LouisianaLong Term Care Costs115.90100.562,276.0725.7713.38MassachusettsLong Term Care Costs277.76257.013,969.6522.0519.32MarylandLong Term Care Costs191.55178.552,401.5720.8916.04MaineLong Term Care Costs219.43196.933,758.1126.6919.12MichiganLong Term Care Costs177.91163.262,430.4320.6817.47MinnesotaLong Term Care Costs143.56123.622,575.9528.8819.97MissouriLong Term Care Costs133.96118.832,317.0422.6217.00MississippiLong Term Care Costs151.05142.952,129.5837.5614.23MontanaLong Term Care Costs154.96139.812,325.2719.1514.48North CarolinaLong Term Care Costs166.47155.522,849.1520.8515.86North DakotaLong Term Care Costs13.75118.081,726.1829.5315.21NebraskaLong Term Care Costs130.90117.212,484.8826.0615.52New HampshireLong Term Care Costs233.10213.253,290.9426.9619.67New JerseyLong Term Care Costs236.00216.104,276.2023.7418.39New MexicoLong Term Care Costs151.29140.452,635.3827.7414.99NevadaLong Term Care Costs186.15168.482,213.9826.2017.72NewYorkLong Term Care Costs297.60285.133,064.8422.5016.78OhioLong Term Care Costs179.67158.472,548.8820.0016.41OklahomaLong Term Care Costs134.87105.852,052.3820.1614.70OregonLong Term Care Costs193.03170.102,644.3442.5318.07PennsylvaniaLong Term Care Costs229.25202.812,376.7521.6916.21Rhode IslandLong Term Care Costs200.82184.132,371.5023.9518.14South CarolinaLong Term Care Costs151.97140.722,165.9821.2915.18South DakotaLong Term Care Costs135.58124.791,984.7123.7716.17TennesseeLong Term Care Costs151.18137.082,160.0030.1417.52TexasLong Term Care Costs147.21107.102,641.5123.0716.49UtahLong Term Care Costs165.18130.621,951.3321.0115.82VirginiaLong Term Care Costs158.53144.842,940.0518.4914.52VermontLong Term Care Costs207.55189.732,515.3331.8625.94WashingtonLong Term Care Costs210.66184.443,252.5231.4819.33WisconsinLong Term Care Costs199.13175.463,133.3529.2919.49West VirginiaLong Term Care Costs176.02167.912,415.8732.8412.49WyomingLong Term Care Costs156.64142.772,143.0030.6116.38
Studies show that over one third of males over age 65 will need some form of Long Term Care and nearly two-thirds of females will need it as well. Why do men seem to need it less? Because men don't live as long. The number of individuals in need of some form of Long Term care is expected to nearly double from 15 million in the year 2000 to 27 million in 2050.
Without some form of insurance coverage in place to assist defray the costs of a prolonged nursing home stay or another form of Long Term Care– lack of planning can be a recipe for ruin. If you're in your fifties, start planning now for the cost of long term care. Consult a reputable agent or broker who represents a company with at least an "A" rating from A.M. Best. Defend your family, your legacy, and prepare for the future now.
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July 20th, 2011
There are a limited number of ways to reduce your life insurance rates… but it may possibly not be impossible. Life insurance rates are based on many factors…
Your age, health history (such as family history), and lifestyle are the primary factors, but there are others as well.
The quantity of coverage you acquire (face quantity or death benefit), the inclusion of riders, as well as the length of time your coverage is in place are all factors as well. The challenge is that there are some things about yourself that you simply cannot change. For instance if you're paying more for your life insurance because you have a parent or sibling that died of heart disease or cancer prior to the age of 60– you cannot turn back the clock. Although some of us would like to– we can't push the rewind button on our age either. So while we can't change our age or our genetics, there are some practical things to think about when trying to accomplish a reduction in life insurance rates. Here are a few:
* Change companies: Literally thousands of consumers are on-line each day searching for more affordable life insurance. You'll find that there are a wealth of resources available that allow you to instantly compare rates and plans from the top insurers in the country.
* Reduce your face amount: Do you really need all that coverage? Take inventory of your needs and factor in savings and assets. You could find that you were a bit oversold when your needs were assessed originally.
* Reduce your term length: In the event you purchased term life insurance and have taken good care of your finances– will you need all of that life insurance beyond age 65? The shorter the term, the less pricey your coverage becomes.
* Replace your permanent plan (whole life insurance or Universal Life Insurance) having a term life insurance plan. This is a common way that most accomplish a rate reduction– but it's tricky territory. Make sure that, if your permanent plan has been building cash value, that you're not shooting yourself in the foot. It may possibly not be in your best interest to get rid of a permanent plan that you've been paying on for years. Beware of an agent that advises you to do this without knowing everything about your existing coverage.
* Lose the riders: Do you really need a $5,000 child rider or that waiver of premium rider? An assessment of your current situation could cause you to realize you don't need these additions and they're simply adding expense.
* Lose weight: Were you a bit on the chunky side when you bought your plan originally? You might qualify at a better rate if you've been taking care of yourself. Usually with weight loss comes better cholesterol and blood pressure readings as well. If your health has improved– you could benefit from a better underwriting health classification at the insurance company and therefore a better rate.
* Quit using nicotine products: Once you've been off tobacco for 12 months– your rates improve dramatically. The longer you manage to kick the habit– the better your rates become.
While these are your main avenues to explore… you need to beware. Never cancel anything you already have in place based on a quote and the fact that you've applied elsewhere. Your rates and policy are not secure until a new plan officially goes in force. Just because you've qualified for life insurance before, doesn't mean you'll sail through the underwriting processagain snag-free. The clock is always ticking– you're getting older and increasingly susceptible to the health challenges associated with advancing age. So before you embark on the road to a rate reduction– prepare. Figure out exactly just how much coverage you'll need and for how long. Go to the doctor and get a complete physical. Take note of your height/weight, cholesterol (HDL, LDL and HDL to total cholesterol ratio), blood pressure, liver enzymes, and blood sugar. Talk to a broker that represents numerous companies and ask them the guidelines for the best possible rate. Compare the results of your exam to the guidelines and see how you'll fare. Thousands of Americans are finding ways to reduce their life insurance rates every day. It is possible to too… but it pays to be prepared. Do your research on-line and by talking to reputable brokers and you might find yourself a tidy savings on your life insurance plan without ever leaving your house.
For more information on how life insurance rates are calculated, you’ll be able to refer to How are life insurance rates calculated?
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July 20th, 2011
Besides protecting your home and its contents—or your vehicle or motorcycle for that matter—there is also coverage that protects you from financial harm arising from negligence.
Liability insurance coverage is the result of a real need to shelter individuals and business from negligent acts. In order for a liability claim to be valid there must be clear indicators that negligence has occurred. Negligence can be determined by evaluating a given situation involving an insured person or business (the entity with the liability insurance) and a claimant (the entity harmed by the negligent acts of the insured). In order for negligence to be proven and liability insurance to come into play, there must be a duty for the insured person to act, failure to perform that duty, and someone has to experience some form of damages as a result of the failure to act. With this basic definition you can imagine wide ranging implications and it’s easy to see just how important liability insurance can be. Having begun my insurance career as a claims adjuster, I’ll never forget my first claim that involved a case of pure negligence and how liability coverage factored into the equation. I represented a company that provided homeowners insurance. My case involved a home that was severely damaged when significant rainfall inundated it during renovation. The owner was adding a second floor to the house and the hired contractor did not adequately seal off the exposed areas from the elements. It was a disaster. As the company representing the claimant in this case—I was responsible for quickly estimating damage and paying my insured customer for the harm. But this was only the beginning… It was up to the contractor to make the situation right by filing a claim with his business liability insurer. Eventually, the liability coverage the contractor had purchased made my customer whole again. Negligence was acknowledged as well as the insured—and my company—were reimbursed adequately for damage.
Liability Insurance can be a stand-alone product, but most commonly you see it bundled together with other forms of coverage like auto insurance and homeowners insurance.
You have a duty to drive responsibly—in case you drive with negligence and hurt someone—the liability insurance integrated into your auto policy covers you up to a certain limit. Incidently—states require that all drivers carry certain minimum amounts of auto liability coverage. It really is possible to obtain auto insurance policies that cover you for liability only. Owners of older vehicles commonly acquire liability coverage only since old vehicles have little value. The financial ramifications of “totaling” the vehicle aren’t significant enough to warrant complete coverage for the car’s value. Similarly—you have a duty to ensure that your sidewalk is shoveled clear of snow in the winter. If it’s not and someone slips and gets hurt—you will be deemed negligent along with the liability portion of your homeowners policy will cover it.
Other forms of liability insurance include: Malpractice Insurance (covering negligent acts of a doctor or other professional), Employer’s Liability (such as Worker’s Compensation), and D&O Liabilty (Directors and Officers Liability to cover negligence of a person in charge of making decisions for a company so that the entire company cannot be held responsible).
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July 20th, 2011
It’s the law. Do you know the laws in your state? Nearly all states require that drivers carry a minimum amount of auto liability insurance.
Actually, Tennessee is the only state in the country with no compulsory minimum automobile insurance guideline. They require simply that proof of financial responsibility be in the vehicle at all times—but financial responsibility doesn't have to be insurance coverage. State minimum auto insurance liability coverage is generally quite low which, for most, means it’s very affordable. There’s really no excuse not to have it, and why wouldn’t you? When you consider the degree of seriousness of many of the nation’s auto accidents, the expenses of treating injured folks from these events can be staggering. Even a short stay in a hospital without surgeries and advanced procedures can run into the tens of thousands of dollars. With the minimum amounts of liability coverage as low as $10,000 (for bodily injury to a single person) in states like Louisiana, and Florida—these amounts are hardly adequate.
Besides your home state requiring you to carry it, you need auto insurance to make sure that in the event you cause an accident, it is possible to afford to pay for the harm you caused. Additionally to the basic liability coverage , you also may want to include Comprehensive (Comp) and Collision —coverages that ensure it is possible to replace or repair your vehicle in the event it’s damaged. Although states don’t require Comp & Collision—the bank that loaned you the money to buy that shiny new auto probably will. With a new auto and a whopping loan to go along with it—you won’t want to be out a vehicle when it’s wrecked and still be responsible for making a payment on a worthless pile of scrap metal in the junk yard.
So there are really 3 main reasons you need auto insurance:
1.It’s the law in most states. Hefty fines, loss of your license and even jail time can result if you’re caught without auto insurance.
2.You’ll set yourself on a clear path to bankruptcy without coverage if your unintentional actions behind the wheel cause injury or death to another human being. Causing property harm with your vehicle could also land you in the poor house should you don’t carry auto insurance.
3.You need to safeguard your hardware investment and also the loan you acquired to make that investment. In other words… you’ll still be responsible for getting from point A to point B when you don’t have your car. And likewise—the bank will expect that you’ll continue to make the payments as well.
Auto insurance is a “must-have”… And Tennessee notwithstanding—we should all contemplate ourselves lucky that most states require auto insurance coverage and that there are insurance companies around to absorb the risk. The road can be a hazardous place…
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July 20th, 2011
Using smokeless tobacco (“dip” or “chew”) can cause a marked increase in the rate you’ll be able to expect to pay for life insurance.
Most insurance companies take into account tobacco use a very negative factor and usually they won’t differentiate use of particular kinds. They don’t care if you inject it, inhale it, eat it, wear it, or just chew nicotine based gum. In the event you have nicotine in your blood when you submit to the exam—you’re penalized as a tobacco/nicotine user and given a rate consistent with that.
There are a few exceptions though. Prudential Life Insurance Company and Midland National Life Insurance Company happen to be two carriers that are somewhat kind to users of smokeless tobacco. Someone who chews tobacco and is otherwise in excellent health might be eligible for a “non-smoker plus” rate at Prudential. If a smokeless tobacco user is looking for a permanent plan, Midland will be kind to chewers when put through the underwriting process. Prudential opens the door considerably wider though and is usually the “go-to” carrier when a broker is asked to aid someone who uses nicotine products but doesn’t smoke. Their entire product line is pretty much fair game for chewers and, since their rates are very reasonable at the non-smoker plus rates, they’re a wise choice.
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July 20th, 2011
An adjuster, or claims representative, is the person who evaluates a loss by an insured party, estimates the cost of repair or replacement, and authorizes payment for a claim.
Adjusters will often travel to your home if the loss is significant—say over $1,000—for a homeowners insurance claim but could also adjust the loss from a desk at an insurer’s branch office.
An auto adjuster will do the same thing—except they might simply travel to an auto body shop to view damage to your vehicle. A good adjuster with a reputable company is on your side when you experience a loss. They tend to have the reputation of being insensitive to a customer’s plight—but I think in most cases they’re misunderstood. They have a lot of paper to push and a lot of processes and procedures to follow—all the while trying to prevent the possibility of fraud on the part of a few unscrupulous policy holders.
Adjuster’s have the unenviable task of always trying to please the company they represent as well as the policy holder. This can be difficult when someone experiences a genuine loss that is genuinely not covered.
The thing to keep in mind is that most adjusters want to pay your claim and put your file to rest. Large case loads are stressful and they would like nothing more than to visit your claim once, acquire the required documentation, photographs, proof of loss, statements etc… write you a check, lighten your load and be on their way. In case you ever experience a loss—roll with the punches and let the adjuster do what he or she is paid to do. The purpose of the adjuster is to fulfill the contract the insurance company has made with you. In case you let it play out—in time—your loss is going to be a memory and you’ll be grateful you had insurance.
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July 20th, 2011
A premium is the verbiage used to describe the payment you make to an insurer for an insurance policy.
In other words… since an insurance policy, as a legally binding contract, must involve “consideration” (fancy legal term for a payment arrangement in a contract situation) your premium is just that. You pay the premium regularly along with the insurer is obligated to honor the terms of the contract forged with you.
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July 20th, 2011
Guaranteed Issue Life Insurance is also often called Graded Benefit Life Insurance. It’s a type of coverage generally offered to those between the ages of 40 and 80 that have…
significant health problems. There are many health related issues that could cause you to be without options for life insurance. Cancer, the one-two punch of heart disease and insulin dependent diabetes, severe Lupus… to name a few that cause insurers to bristle at the thought of providing coverage. Fortunately—Guaranteed Issue/Graded Benefit Life Insurance provides a way for everyone to have coverage despite the state of their health.
The coverage comes at a cost though… both in premium expense and what you have to give up getting it. It’s pricey and it’s limited, for a period of time at least, in terms of what it will do for you. This is where the name “Graded Benefit” comes in. Graded is what they call a plan that provides some but not all of the benefit for a period of time. So… for the first 2 or 3 years that you have the coverage in force… you may not be eligible for the full face amount of the plan that you’ve purchased. You would be eligible to receive the full benefit should you were to die in an accident—but death as a result of your poor health would only allow your beneficiaries to receive premiums paid plus some interest. So—at least in the short term—it only acts like an aggressive savings plan.
It’s good that Guaranteed Issue/Graded Benefit Life Insurance is there in the event you need it… but it’s certainly not the ideal. Most agents only pull it out of their tool bag when all other options have been explored and shot down by the most liberal carriers they know. In the grand scheme of things… it’s always better to have some thing rather than nothing at all.
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July 20th, 2011
Underwriting is a process that insurers use to determine whether or not coverage will likely be extended to an individual or business.
An underwriter evaluates an application, claims histories, and hazards to recommend coverage as applied (you’ll pay the rate you were quoted) or coverage at some new premium rate.
An example of the underwriting process as it applies to life insurance by way of example, would include reviewing the application and outcome of a medical exam, past doctor records, reports from the Medical Information Bureau (MIB) etc. If the agent that sold the policy did a good job when the application was originally taken—the applicant will likely be approved as applied as well as the underwriter will simply acknowledge that the correct rate was quoted and the policy need to soon go in force.
If the underwriter finds, after reviewing doctor records or the results of the medical exam, that the applicant is at an above average risk for a heart attack—then an adjustment will likely be made in health classification and also the applicant will probably be asked to pay a greater premium. At worst—the applicant could be declined.
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July 20th, 2011
Universal Life Insurance is a type of permanent life insurance. Of the two main kinds of permanent coverage, it’s the least pricey and offers great flexibility.
With Universal Life Insurance, you are able to buy a plan that will stay in force until you die and earn cash value. Interest will accumulate on the portion of the premium not allocated to pay the death benefit, fees, or commissions.
The best thing about a Universal Life Insurance plan is that it’s permanent—not that it earns cash value. Insurers will usually provide guarantees with regard to keeping the plan in place as long as you meet a minimum required premium. But the guarantees provided for how much cash you’ll earn aren’t that great. Over time though, it’s possible that you can earn a fair quantity of interest and build a good sum of money. This is where individuals often get in trouble. They’re tempted to take some or all of the cash value as a loan, or perhaps they’ll stop paying premiums for awhile and allow the cash value of the plan to pay them. Policy holders can get behind and never catch up. Suddenly, the plan that was purchased for its’ permanence has lost the main benefit it provided. As soon as cash value is removed and not replaced, the permanent nature of the plan is compromised since the foundation of it really is built on paying a certain amount over a period of time.
If a Universal Life Insurance plan is considered as an option—you should get it for the right reasons. You need some thing that will last forever and you intend to pay the premiums forever or you intend to fund it having a large sum of money from some other resource. If you have an agent that’s telling you he’ll make you a ton of money… be skeptical. There are some aggressive earners out there in the form of Equity Indexed Universal Life Insurance for example—but mostly you might wind up getting an high-priced lesson in why term life insurance is a better choice for most.
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