Insurance Articles

So you’re going on vacation. Great! But don’t forget, if you’re renting a car, you still need insurance protection. Don’t wait to get to the checkout counter to think about coverage; you may be pressured into purchasing unnecessary rental insurance.

If you have comprehensive auto insurance, you might already have car rental coverage, but there could be stipulations. Play it safe; check your personal policy first.

Insurance companies may provide rental coverage only up to a certain amount. If the rental car is totaled, your policy may only reimburse the rental company for actual cash value. Many rental car contracts state that reimbursement should be for the full retail value.

While you’re reviewing contracts, ask your insurance agent if possible loss of use is covered. If your insurance policy includes a Use of Non-Owned Cars endorsement, you should be covered, but it’s important to know the coverage limits. If the rental company makes a claim for diminished value, your personal policy will not cover this.

Driver coverage is an important consideration, especially if you’re traveling out of town. Anyone listed on your policy should be covered, but for others be sure to check first.

If you’re traveling abroad and don’t have a comprehensive policy or a high deductible plan, you may need additional coverage. Many agencies require a credit card for purchase and, depending on the card, your rental may be covered. If not, bite the bullet and purchase the rental insurance.

It’s better to be safe than sorry, especially on vacation.

The recent popularity in do-it-yourself repairs and renovations has many homeowners rolling up their sleeves and getting to work. Replacing a faucet may be easy, but installing a roof or dishwasher can be daunting.

These larger projects are better left to the professionals, but hiring a contractor can be a job in itself. Protect yourself from less-than-honest contractors by watching for these telltale signs of fraud.

A knock on the front door

One prevalent scam occurs when a “contractor” not known to you offers to conduct a free inspection of your home. The contractor then “finds” serious problems. Of course, you want it fixed. And not only do you have to pay the scammer, you may have to make a claim on your homeowners insurance. Seniors and people without much repair knowledge can be susceptible to this scam.

The negotiator

If a contractor offers to negotiate your insurance claims, walk away. A contractor cannot ensure that your claim will be approved and no amount of negotiating will change this.

A reputable contractor lets you handle the insurance company.

A work in progress

If a contractor is in the process of repairing your home and asks you to file another claim, you may want to get a second opinion. Many contractors will agree to fix repairs cheaply and then intentionally cause more damage. If you agree, you may be participating in insurance fraud.

Make sure you aren’t duped into making unnecessary homeowners claims; do your research before hiring a contractor.

Successful businesses don’t go door to door. Check your insurance company’s recommended contractor list and the Better Business Bureau. Ensure your contractor has proper licensing.

Avoid being scammed, and that kitchen repair that was done properly and came in on time and on budget will make you happy every time you look at it.

Until recently, health insurance carriers and workplace plan sponsors were not required under federal law to cover any dependent over the age of 18.

Some states offered college students the opportunity to be part of their parents’ health insurance plans, but there was no requirement to do so.

Federal law now requires carriers and plan sponsors who offer plans with family coverage to extend health insurance to adult children up to age 26 – even if the adult child gets married. Effective January 1, 2014, adult children can remain on their parents’ plans despite qualifying for coverage from their employers.

Adult children who are about to lose their insurance coverage because they are graduating from college may re-enroll in their parents’ plan during the open enrollment period. For plans that began on or after September 23, 2010, they can also expect an offer of continued enrollment.

The young adult is entitled to the same full benefit package he or she had prior to leaving the plan; however, the carrier may still require the primary enrollee – the parent – to pay a higher premium. With workplace group plans, the employer pays at least half of the premiums. The employer’s contribution is not included in parental compensation for income tax purposes.

An exception to the rule occurs when the parent is on Medicare. Adult children will not be permitted to enroll in Medicare unless he or she is otherwise qualified – if, for example, the adult child has been diagnosed with advanced renal failure or amyotrophic lateral sclerosis.

As part of the health insurance reform package under the Affordable Care Act (ACA), each state was to create its own online marketplace (Health Insurance Exchange) to connect consumers to health insurance products.

The idea was to allow insurance carriers to compete on a level playing field, to facilitate the comparison of plans, and to make it easy for individuals to obtain coverage.

The deadline for online exchanges to become operational and begin to accept enrollees for their 2014 plans is coming up fast: The law requires them to start enrolling in October, 2013 – and that’s proving to be more difficult than expected.

To date, only 17 states, plus the District of Columbia, have thus far committed to setting up their own plans. The remaining states have elected to have the federal government set up their exchanges for them. It’s harder than it sounds.

While securities – such as stocks, bonds and mutual funds – are regulated at the federal level, insurance contracts have a long tradition of state-by-state regulation.

As a result, each state has its own diverse set of insurance laws and regulations, with different procedures for rate-setting, different mandated insurance coverages, and different licensing and authorization for carriers and agents.

Therefore, the US Department of Health and Human Services cannot create a one-size-fits-all website. Every exchange has to be customized to conform to each state’s unique set of laws and regulations.

As a result, both the federal government and the states are becoming concerned about the ACA timelines.

According to a recent report, some states have begun to approach federal officials for extensions; however, at press time it appeared the October 2013 deadlines were firm.

It’s critical to be up on what’s happening in this area: To ensure you have the most current information, discuss this and other health insurance issues with your insurance advisor.

Many holders of universal-life insurance bought their policies years ago, at a time when interest rates were high. Today, many of these policyholders will have to pay more or face cancellation, according to news reports.

To understand why, you have to understand that we’re talking about permanent life insurance. Unlike term life insurance, this insurance type doesn’t limit the time period for payout: It stays in effect for the policyholder’s life.

Categories of permanent life insurance

Permanent life insurance is subdivided into two categories. Under the permanent life umbrella is whole life insurance, which generally charges set premiums, and universal life insurance, which generally comes with flexible premiums.

Universal life insurance holders often use the cash value of their policies to pay for the policy’s future costs. Now, that’s become a problem, given the low level of interest rates.

Because interest rates are so low, the cash value of many life insurance policies is rising at a rate that is less than expected.

Policyholders facing a conundrum.

As a result, many policyholders who depended on that cash value to pay the policy’s premium can’t afford to do so. The worst case scenario is that the policy, then, could be cancelled.

Those at risk are primarily consumers who bought life insurance policies before interest rates fell sharply in 2008 – and that could be a lot of people. Industry association Limra has said that, in 2008, the percentage of life-insurance premiums from universal policies totaled 40 percent.

If you’re in this predicament and interest rates stay low, you can opt to pay the premiums yourself rather than out of the cash value. Or you could accept a lower payout or abandon the policy.

Steps can mitigate the impact

However, there are some steps you can take to salvage at least part of your coverage. Discuss your options with your advisor.

In what has been called “The New Agent Economy,” more and more employers are opting to use contractors – or “agents” – to outsource any number of tasks that formerly were performed by employees.

For employers, this can be a real money-saver: By using outsourced labor, companies pay less payroll tax, unemployment insurance, and workers’ compensation premiums. However, in this era of increased regulatory scrutiny, it is critical that you correctly categorize your independent contractors to avoid a long list of potential problems.

Problems relating to on-the-job injuries

What many employers fail to realize is that a contractor who is hurt while working on their behalf can make a negligence claim. While it’s easy to assume an independent contractor does not fall under workers’ compensation rules, it may not be so.

It’s important that employers recognize the real costs of losing the protective shield that workers’ comp provides to employers against such lawsuits.

To start defining your employer-employee relationship, one great place to start is with the IRS rules established to classify contractors.

Note, however, that you cannot rely solely on the IRS rules to shield you from a workers’ compensation claim filed by a contractor.

State industrial commissions have been liberal in determining whether a contractor is an employee or not when that worker is injured.

Additionally, the federal government and many states are cracking down on companies’ use of the independent contractor status.

Guidelines to determine status

Here are some guidelines to use when determining the status of a worker. In general, the more “yes” answers, the more likely it is that your worker is an independent contractor.

• Is your worker employed by another company, or his or her own business entity?
• Does the worker generally set his or her own hours and supply his or her own tools to complete the job?
• Is the worker licensed or has he or she devoted significant time and expense to learning the trade?
• Does the worker advertise or offer his or her services to other companies, as well as to your organization?
• If the worker makes mistakes, is he or she is responsible for fixing the problem or paying for any damages resulting from the problem?
• Do you pay the worker on commission or on a per-job basis?
• Does the worker make or lose money from the work he or she does for your company?

Whether to classify employees as contractors is not always an easy decision.

In most states, if contractors do not have their own coverage, anyone who uses their services can be charged for workers’ compensation exposure on their business policy if the carrier discovers the contractor payment; calling someone a contractor may prove wrong on audit and create problems in other areas.

If you determine you have workers who are independent contractors, ask them to furnish their current certificate of insurance so that you are not charged additional premiums at audit.

Taking the time initially to correctly classify your “agents” will save you money and heartache later.

According to a number of major insurance carriers and other experts, tort costs – those costs associated with defending and paying liability claims – are on the rise.

Here are just a few of the latest concerns for business owners.

• The United States Liability Insurance Group (USLI) states the average cost to defend an employment claim is $150,000, with an average jury award of $250,000.
• Approximately 75 percent of all corporate litigation is employment related, according to the USLI.
• Jury Verdict Research reports that the average jury verdict for an employment lawsuit in 2010 was $317,032.
• The cost to defend a class-action suit can range from $5 million to $100 million, according to Marsh USA, one of the world’s largest insurance brokerages.
• According to a 2010 study by the US Chamber of Commerce, businesses pay 33 percent of tort costs out of pocket. No insurance coverage will reimburse you for staff time lost in administering a claim or a lawsuit, or for a product line that you don’t bring to market for fear of litigation.
• Claims alleging negligence in maintaining buildings and parking lots, plus failure to provide adequate security, are on the rise.
• Product liability cases also continue to increase.

No longer is purchasing liability coverage a one-size-fits-all endeavor. To find the product that’s right for you, contact your advisor, who has years of experience in helping businesses adjust to changing environments, such as rising tort costs.

Insurance is probably the least exciting part of buying a home, but it’s one of the most important. Buying the right amount of coverage is essential to protecting your home and your assets, and understanding the most common claims on homeowner policies can help you determine where you need that extra protection.

Fire

Fires can have dire consequences. Insure your house and personal belongings at replacement cost rather than actual cash value. Premiums are higher, but, if you consider you may lose everything, it’s well worth the extra money.

Animal attacks

It’s hard to imagine Fido or Fluffy biting someone. But if they clamp down on a visitor or neighbor, you too may feel the pain. As a pet owner, you’re liable for your animal’s actions, and if someone is bitten and needs medical attention, you’ll have to pay for it. Ensure you have sufficient liability coverage.

Water

Ruptured pipes, clogged drains, leaky roofs or a faucet you forgot to turn off all cause water damage. If it’s serious, the main structural supports of your house can be compromised. Standard homeowner policies do NOT insure against flood, so make sure you purchase supplemental insurance.

Wind and hail

No matter where you live, you’re susceptible to wind and hail: Coastal states suffer through hurricanes; the plains have tornadoes; and blizzards affect the north. The exterior of your house can suffer damage in serious weather conditions, so make sure your coverage limits and deductible are prepared for high-cost repairs.

As summer draws near and temperatures warm, it’s almost overwhelmingly tempting to jump into summer activities. But before you start enjoying the great outdoors again, examine your homeowners’ policy to make sure it covers the hazards that summer can bring. Updating your insurance now will ensure you have a relaxing summer ahead.

BBQ

As the thermometer rises, you can almost hear the sizzle of the grill. Place it too close to your home, and you might hear the sizzle of your house.

Follow proper safety precautions and make sure your policy covers not only your house, but also other freestanding structures.

Renovations

Now that the winter chill has passed, you can finally put that new roof on your garage. Or maybe it’s time for that addition you’ve been saving for. If you’re making substantial renovations to your home, it likely will drive up the replacement cost. Make sure your homeowners’ insurance policy is updated accordingly.

Pools

Summer means pool time. But with 3,000 plus accidental drownings a year, your pool could be a potential hazard. If you have a pool, be sure to notify your insurance company. Your premiums will increase, but you’ll be protected. Ensure your liability coverage covers all situations, even if someone is in your pool without your permission.

Trampolines

Standard homeowners’ policies come with liability coverage, but they may not extend to trampolines. Many insurers view trampolines as lawsuits in the making and exclude them.

Check your insurance policy to see if there are restrictions on trampolines before making a purchase.

Pets

Summer may seem like a great time to make an addition to your family.

But if you buy a new puppy, don’t forget to tell your insurance company. If your dog bites someone, your liability insurance will cover it … but only if your dog is listed on the policy.

Traditionally, we think of life insurance as a way to ensure our loved ones are cared for after our death.

But life insurance can also be used to solve a host of other financial headaches – and some of the most interesting uses can come when the house is paid off and the children are out on their own.

Consider this situation: You have a beach house worth $500,000, and it constitutes half of your wealth. Your two sons don’t use it, but your daughter regularly spends her vacations there. You want your daughter to have the beach house, but you aren’t able to leave an equivalent amount to your sons.

The solution: You purchase a life insurance policy for the value of the beach house. When you and your spouse die, your daughter will inherit the beach house that she loves, one son will get your $500,000 in savings, and the other son will get all of your life-insurance payout.

Once you start thinking of life insurance as way to turn a non-liquid asset into a liquid asset, it’s easy to see other ways it can be used to address liquidity problems, often faced by individuals with family businesses or considerable (illiquid) assets.

For example, the owner of a family business could insure himself in order to distribute the worth of the business to his children, who don’t want to join the company.

Or two business partners could use life-insurance policies to allow one partners’ heirs to buy themselves out of their half the business.

This alternative use of life insurance may look tricky, but it’s actually simple.

It essentially relies on life insurance’s intended purpose – providing your heirs with liquidity when they need it most.

Instead of replacing a salary, however, the policy replaces the value of an asset.

Your advisor can help you decide if a life insurance purchase will solve a liquidity – or family – problem for you.

This year brings changes to flexible spending accounts (FSAs) – the workplace arrangement that allows employees to save, pre-tax, for expected medical expenses. You contribute to an FSA through a monthly paycheck deduction by your employer, then the account is available to you for medical expenses, and you are not taxed on it.

As a result, FSAs have been popular, but changes to the Affordable Care Act (ACA) could make them less attractive:

Reduced contributions

Under previous rules, your employer could deduct any amount, usually $3,000 to $5,000 a year. Now FSA contributions are limited to $2,500 a year, adjusted annually for inflation.

Over-the-counter meds

You may recall that FSA dollars could be used for over-the-counter medications up to 2011; since then, FSA dollars can only be used for prescription medications.

Use it or lose it

You must use your FSA dollars by the end of the year, or they revert back to company control.

Who should contribute

Flexible spending accounts may make sense for families with steady, recurring and/or predictable health spending needs that aren’t covered by their medical insurance policies – including deductibles.

If you or a family member has regular health expenditures or needs orthodontic care, you may want to consider contributing to an FSA. But don’t over-contribute. You’ll run into the use-it-or-lose-it provisions.

If you’re not sure about FSA changes and how they affect you, your advisor can help you understand your options.

Accidents can happen anytime to anyone. Whether it’s a broken bone or a bee sting, sometimes the unexpected medical costs can be more shocking than the actual accident. That’s why it’s important to be prepared. While major medical insurance will cover most accident treatments, every insurance policy has exclusions.

How can you fill the gaps caused by those exclusions? Through accident insurance – an affordable policy that can assist you with excluded expenses and unexpected costs during recovery.

But accident insurance has other benefits. These include:

Income replacement

If you’re hurt and can’t work, you won’t receive a paycheck unless the accident happened on the job. Even if you have savings, this can create significant problems.

Accident insurance can replace your income if you’re injured, or if you must take time off work to care for an injured family member.

You can use this money just like your regular paycheck, but here’s the real bonus: it’s tax free!

Coverage for non-medical expenses

Your medical insurance will help with most major medical costs, but when you’re injured, every aspect of your life is affected.

With accident insurance, you can get cash to cover non-medical expenses like extra childcare and/or educational expenses, hospital parking and meals.

Personalization

Your plan can be tailored to your needs. For example, children are covered under family plans and most policies don’t have age or claim penalties. Individual plans are also available, and depending on your occupation and risk level, coverage can be extended to cover additional medical and non-medical expenses.

Priceless peace of mind

There are many accident insurance policies available – all with different benefits. Discuss your needs with your advisor, who will be able to help you select the policy for you. And, while accident insurance has all the benefits noted above, it’s most important benefit is peace of mind – which is priceless.

A commercial general liability policy (CGL) provides coverage for bodily injury to a person, or damage to the property of others caused by a company’s negligence. Although you never think it will happen to you, damage caused by negligence does happen, and it’s something you should prepare for.

Effectively, your CGL offers broad coverage and peace of mind. If you read an insuring agreement – which is at the heart of the CGL policy – it says: “We will pay those sums that the insured becomes legally obligated to pay as compensatory damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.”

But your coverage doesn’t end there: Your CGL also covers personal injury liability, including libel and slander, as well as advertising injury, a very important addition for many businesses.

For the last several years, courts have repeatedly ruled that the CGL policy is not a performance bond.

This means that a CGL policy does not cover the quality of a company’s advice or services. As a result, a business owner is less likely to low-bid a job and perform poorly, because the owner is not able to rely on an insurance carrier to assume that risk.

Following are several factors you should be aware of when deciding if your company needs CGL cover:

A few of many business exposures covered under CGL:

• Additional insured coverage when you sign agreements or contracts.
• Premises and operations liability for persons injured or items damaged while on your premises, or due to your business operations.
• Tenant’s liability, which protects tenants in the event they damage someone else’s property. For example, they accidentally start a fire in rented premises.

Benefits of having CGL cover:

• A legal defense for covered claims.
• Payment of bonds and court costs associated with a claim.
• Limited financial remuneration when assisting the carrier in the defense of a claim.

CGL exclusions:

There are exclusions under CGL cover, but understanding all of them can be tricky. Forms differ, and different jurisdictions render very diverse opinions. Here, however, are some general exclusions:

• Intentional injury is excluded. Generally, there is coverage if you act in self-defense.
• Loss of property owned by others in your care, custody and control is excluded. If you repair equipment such as computers, you may need additional bailee coverage (protecting individuals who, with the approval the property’s owner, have temporary possession of someone else’s property.)
• Faulty workmanship is excluded.
• Liability arising from an aircraft, auto or watercraft is excluded. However, entrusting an automobile to a negligent employee may trigger coverage, depending on the coverage form and the jurisdiction.
• Perhaps most importantly, CGL cover excludes losses arising out of your employees’ injuries.

While the CGL policy offers broad coverage, it may not protect all your company’s exposures as your business grows, particularly when you begin to hire employees. For assistance in selecting the right policy for your business, contact your advisor.

As Kermit the Frog once said, “It’s not easy being green.” Despite many obvious advantages to the greening of your commercial space, green upgrades may mean your current insurance coverage could be insufficient in the event of a loss.

Over the last few years, green building improvements have continued to help building owners cut costs. A number of corporations across the US have installed vegetative roof systems in their buildings and have benefited from the shading and cooling properties that reduce energy consumption.

Experts predict the green market will double over the next few years. As quoted by EarthShare, a 2011 study by MIT indicated that sustainability is now on the agendas of 70 percent of the country’s corporations. In response, insurance carriers now offer coverage options for these growing green initiatives.

Some coverages for green initiatives that have been or are being developed are:

• Coverage to replace normal HVAC systems with green systems upon loss.
• Coverage for the installation of alternative plumbing systems for reduced water consumption.
• Coverage for the use of materials that emit fewer indoor air contaminants.
• Coverage for the cost of recycling building materials after a loss.
• Coverage for increased business interruption after a loss due to longer construction periods required for green rebuilds.

Discuss your green coverage – before you suffer a loss – with your advisor, who can suggest options.

There’s nothing quite as much fun as spending money to furnish your new home.

Unless it’s that feeling of satisfaction that comes with a careful inspection by an accredited home inspector certifying your dream home is in great condition. It makes good insurance sense as well.

Your home inspection can be a money saver all around, so here are some suggestions to make the most of it.

A home inspection gives you insight into the history of your potential purchase, providing a record of previous repairs and identifying problems. Consider asking for extra tests of electrical, plumbing and HVAC systems; they may cost more, but it’s usually worth it.

While every home has problems that can be easily fixed, your inspection may identify serious problems: leaks, bad DIY repairs, electrical problems and fire hazards. In these cases, you’ll be glad you found out.

Fixing these could add thousands of dollars to your costs, but by not identifying potential problems you could be in even more difficulty.

You can avoid higher insurance premiums or more stringent mortgage terms by identifying – and dealing with – all the potential problems up front.

Effectively, a home inspection may wind up paying for itself in costs you can avoid. And by identifying problems before you sign on the dotted line, you’ll have a stronger negotiating stance with sellers – they will either have to fix the problems or reduce the price.

Even better: You may now have the extra cash to furnish your dream home.

Consumers are often frustrated by the amount of insurance their mortgage company requires them to carry on their home.

Sometimes that amount is greater than the home’s market value; often it’s more than the amount remaining on the mortgage.

But many insurers still insist your home be insured for at least 80% of its replacement cost. Not its market value.

Here is the reasoning behind this and how it can help you.

First, the homeowners’ policy will replace – not just repair – damaged property. That means hardwood floors will be replaced with hardwood, not laminate, as it might be without this replacement clause.

Second, 96% percent of all homeowners’ losses are partial; only 4% of homes suffer a total loss.

Next, think of insurance as a big pool of money.

All insurance buyers put their premiums into this pool, and the insurance company invests the money and uses it to pay claims and expenses.

Insurers know if they collect premiums on limits of insurance equal to 80% of replacement cost, they will have enough money in the pool to pay full replacement cost for partial losses.

So if you don’t carry an amount of insurance that equals 80% of your home’s replacement cost, you will be penalized in the event of a partial loss.

Here is the formula used to calculate a partial payment:
(Amount of Insurance Carried / Amount of Insurance Required) x Amount of Loss

For example; your home has a replacement cost of $500,000. However, you must carry at least $400,000 in coverage (80% of replacement cost).

You owe only $300,000 on the mortgage, so that’s all you decide to carry. However, this is only 75% of the $400,000 you require.

If a fire causes $50,000 in damage you will receive only a 75% ($37,500) payment for this partial loss because you are carrying only 75% of the required amount.

If you’re in the market for life insurance, you may be attracted to whole life policies. These have a cash value that builds tax-deferred each year. But are they worth it?

Here’s a refresher course on some things you should know about life insurance.

Whole life policies – Pros

Essentially, when you purchase whole life insurance, you’re buying a policy that pays a fixed amount upon your death.

However, part of your premium is put into investments by the life insurance company, and that is used to build cash value. That cash value builds tax-deferred for each year you have the policy, meaning you can borrow against it without being taxed.

Because whole life policies offer tax deferral and the ability to borrow funds, some people will argue that these policies are superior to term life policies, which pay a fixed amount upon your death. But that may not be the case.

Whole life policies – Cons

For example, whole life policies may have higher fees than do term life policies. Moreover, the tax-free accumulation of cash isn’t as appealing today as it was when whole life policies first came into existence.

That’s because other tax-deferred investment vehicles – such as individual retirement accounts and 401(k) plans – are readily available. And they may come with lower costs and the benefits of portability.

Simple may work best

Indeed, you may find term life insurance more appealing.

As noted, it has no investment component; you simply pay a premium to buy coverage that lasts for a set period of time or until your death.

It sounds simple, and it is – sometimes simple just works best.

If you’re considering life insurance and you aren’t sure which type of policy to choose, it’s a good idea to consult your advisor, who can walk you through the options and make a recommendation based on your individual circumstances and goals.

The cost of an extended stay in an assisted living facility or skilled care nursing home can be devastating. And it’s time for baby boomers – individuals born between 1946 and 1964 – to consider this.

According to statistics, a stay in a skilled nursing facility can cost in excess of $90,000 per year for a private room. That’s enough to overwhelm most pensions and devastate many nest eggs. Furthermore, the chance of experiencing a long-term care event at some point is one in seven, according to the Public Policy Institute at Georgetown University.

Medicare does not pay significant long-term care benefits. Medicaid does help with limited nursing home care, but only after you spend yourself down to the poverty level. Specific rules vary by state.

What is long-term care insurance?

Long-term care insurance generally pays the cost of needed services for anything from home health care to advanced skilled nursing and hospice care plus everything in between, depending on the specifics in the policy.

Benefits become payable when the insured loses the ability to perform two or three activities of daily living, such as eating, dressing and other basics.

Generally, long-term care policies cover up to a certain daily amount. For example, you can buy a policy that pays up to $200 or $250 per day in benefits for up to five years.

Why you need it

Long-term care insurance can help protect a spouse from financial problems caused by long-term care events and eliminate the possibility of having to sell the family home or risk foreclosure in order to pay the costs of long-term care. Benefits may also enable family members to stay in the workforce rather than provide day-to-day care for a family member in need.

So, long-term care insurance helps protect family members’ incomes as well as the insured’s income and assets.

Americans are spending billions on prescription drugs, but there are ways for individuals to exercise some control over the high cost of taking a pill.

According to a recent article in Fox Business, Americans spent $269.2 billion on prescription drugs in 2011. And as baby boomers age, this is only likely to grow.

There is help: Seniors in the “donut hole”, who are now responsible for paying for their drugs, qualify for discounts-50 percent on brand-name drugs and 14 percent on generic drugs covered by Medicare Part D. As well, the government has implemented a one-time $250 rebate check, but this is a drop in the bucket for many seniors.

Prescription-drug coverage is surprisingly affordable, but it’s important to find a plan appropriate to your circumstances. Plans vary widely, and you need to do your homework. Your insurance professional can suggest a plan that works for your needs.

That said, you too have a role to play in keeping down prescription costs. Here are two suggestions:

Switch to generic drugs: Even though you may get a larger discount on brand-name drugs, the cost of generic drugs is generally lower. In most plans, copayments are also lower for generic drugs, and the result is overall savings.

Shop around for pharmacies: The cost of the same drug varies from pharmacy to pharmacy; let your fingers do the walking. Even easier, mobile phone users can get free apps that compare prices between pharmacies. Free discount cards are also widely available from many sources, including insurers and pharmacies.

One guiding principle in risk management is “Don’t risk a lot for a little.” But how that motto impacts your particular insurance choices isn’t always clear. There is one thing you do need to realize, and that is that juries are often outraged at organizational negligence, especially when those organizations are perceived to have deep pockets.

Assuming your organization won’t ever face a negligence claim isn’t advisable. Instead, consider the factors below and select sufficient coverage to adequately protect your organization.

Your business type

If, for example, you sell hardware to consumers, your risks of being sued are somewhat limited. On the other hand, if you manufacture handguns, your risk factor is considerable. That said, every business, no matter how small, should be aware of today’s million-dollar verdicts; damages awarded can easily range from $1 million to $20 million or more.

Your organizational appetite for risk

Every management team should determine its individual “risk tolerance.” Some companies embrace risk, while others are extremely risk-averse. Either approach is fine; however, if you assume more risk, you should be prepared with sufficient cash or credit reserves to cover any underinsured loss.

Where you operate

Certain legal venues make defending cases highly problematic. Each year, the American Tort Reform Association (ATRA) outlines the worst U.S. venues for civil litigation. However, you don’t have to live in an ATRA “hellhole” to be impacted.

If your organization sells products or operates in those areas, you may still feel the pinch. In ATRA hellholes, you will very likely face an unsympathetic court system if, for example, a product you’ve developed malfunctions and injures someone.

The liability limits of comparable businesses

The insurance industry can assist you in identifying what is happening in your industry, but you need to ask these kinds of questions of your trade associations. You also should keep up to speed yourself by regularly reading trade journals online and following recent verdicts.

For example, the National Law Journal annually lists some 60 of the largest verdicts from the previous year. Some samples: a $64 million award for an age discrimination claim and a $32 million verdict for the death of a sheet metal worker struck by an improperly welded beam.

Insurance premiums fluctuate from year to year depending on many factors, including interest rates on investment income and previous years’ losses in your company and industry.

Resist the temptation to decrease limits when the market “hardens” (that is, when rates increase). Sophisticated insurance buyers who have enough liquidity to pay higher losses may choose to respond to a hard market by retaining more risk, but they will avoid lowering limits just to save money.

In the final analysis, the best advice is this: “Don’t risk a lot for a little.” In other words, saving a few hundred or even thousands of dollars in premium will not seem like such a great idea in retrospect if you suffer a loss or losses that exhaust your coverage limits. Your insurance professional can help you select the right coverage.