Insurance Articles

usiness owners and executives - especially those who run small and medium-sized enterprises where rules and procedures are more lax compared to larger corporations - are more vulnerable than ever in the day-to-day operation of their businesses.

As a result, employment practices liability insurance (EPLI) has become more prevalent in the work world of today.

Following are some examples where EPLI would help:

• A male employee is discriminated against because of his sexual orientation.
• A female employee is harassed because she is pregnant with her fifth child.
• A co-worker is berated because of a disability and feels that he has suffered emotional distress.
• An employee sues over what she feels is a wrongful termination because she was ready to retire within a year.
• A delivery person files a suit because he feels sexually harassed while at your place of business.
• A long-term employee sues because she feels she should have been promoted to a high-ranking position.

Should a claim arise of the nature listed above, EPLI coverage would provide for the investigation and defense of the claim as well as provide a limit of insurance should a judgment be made against a business.

Steps can be taken to prevent and minimize the instances of these types of circumstances.

For example:

• Management at all levels should make a very clear, strong and consistent statement to everyone in the company that there is a zero tolerance level for any behavior that makes another employee uncomfortable. This can be done through the employee manual and seminars on harassment in the workplace.
• Management should implement and communicate a procedure that makes employees feel safe to report a situation that may make them feel uncomfortable. Implement an open-door policy between management and employees to keep the lines of communication open and free from anxiety.
• Management should communicate with the person making the claim to let him or her know that his or her statement is being taken seriously. An action plan should be created to investigate all complaints, and discipline and potential termination of the offending parties should be undertaken.
• Management should ensure executives are adequately insured. Up to $1 million in coverage can be included on a business owner’s policy for a minimum premium. Higher limits can be quoted as part of the general liability policy or even its own separate policy. Not all insurance carriers offer the same coverage and deductibles.

Your agent would be happy to find the best coverage that suits you.

Employee benefits liability insurance can provide small and midsize business owners peace of mind as they build and grow their business.

Often, when a new employee starts a job, a flurry of paperwork is initiated.

This is necessary to make sure that he or she is signed up for payroll and any corresponding benefits.

Some of those benefits may include company retirement plans, health insurance and life insurance.

Larger corporations have human resources departments to handle these responsibilities.

Small to midsize businesses usually do not have a human resources department.

Owners of such businesses usually wear many hats.

The business owners not only produce their product or service, but they’re also the director of sales and marketing, the accountant, the technician, the inventory department and the hiring manager.

When a new employee is hired, a small to midsize business owner may not get to file the necessary paperwork for some time afterward.

In the meantime, if the new employee needs to use his or her health insurance and finds out that the employer did not properly enroll him or her, he or she can sue to collect damages for the amount of his or her medical claim.

This is where employee benefits liability insurance comes in.

This coverage provides protection not only for business owners but also for anyone who administers the benefit program.

Coverage is provided for any negligent act, error or omission with regard to running an employee benefit program. This might include late enrollment of an employee, failure to enroll, improper termination of a plan or improper record keeping of that plan as far as the amount of a benefit available to an employee.

This coverage really protects businesses in three ways.

First, because the coverage provides a limit of insurance, the business owner knows he or she won’t have to pay such claims out of pocket.

Second, the policy puts a time limit on reporting claims. The claim must be made and reported within the current policy term.

If a business has a policy that runs from March 1, 2010 to March 2, 2011, all claims must happen and be reported in that window. If an employee notifies his or her employer of a claim that happened on February 15, 2010, there is no coverage.

Usually, the first year of this coverage is as far back as someone can report a claim.

Finally, whether the claim is actual or alleged, the insurance carrier has the responsibility of investigating it and defending the employer in a court of law.

Large and small businesses alike have a need for this type of insurance coverage. As soon as an employer offers an employee benefits plan, the employer should consider purchasing this coverage.

Many carriers will throw in a limit of insurance as an added value on small to midsize policies so the cost is either very minimal or included in the total price of a policy, thus making it very attractive for buyers.

Security breaches seem to be in the news on almost a daily basis.

Just recently, a worker went to a local bar with a thumb drive of his employer’s sensitive customer information in his pocket.

When he left the bar, he left behind that thumb drive, leaving that sensitive information at risk.

In today’s technological age, small to midsize businesses with websites and computer networks that are conducting business across the Internet are at risk of having information compromised.

The insurance industry has responded to the problem by offering cyber-liability insurance to business owners.

First- and third-party coverage is typically provided.

First-party coverage deals with the losses due to a breach of security or privacy caused by an employee.

Coverage may also be provided to notify customers and handle public relations after an event has occurred.

Third-party coverage would deal with losses due to an outside element breaking into computer networks.

Cyber extortion or cyber terrorism - like a threat to initiate a virus if a demand is not met - may also be covered in a cyber-liability policy.

Each insurance carrier has its own type of cyber-liability program. Your agent can help you determine how much coverage you may need and which carrier offers the best plan to meet those needs.

Once the dust has settled from moving into your home, you may want to review your home insurance policy. Indeed, it’s always a good idea to regularly review your policy to give you peace of mind that you have properly protected your most valuable asset.

The policy is usually divided into two parts. The first section typically deals with property coverage, and the second section usually deals with liability coverage. The section on property coverage includes the following groups:

Dwelling: This includes your home.

Other Structures: This includes things like garages and sheds.

Personal Property: This is quite broad and includes all of your stuff anywhere in the world. It also includes other people’s stuff while it is kept at your home.

Loss of Use: This covers costs associated with additional living expenses.

Coverage is provided, presuming that the limit requested is on an “insurance to value” basis. This means if the cost to rebuild your home in the same condition it was prior to the claim is $100,000, then the limit of insurance is $100,000. This is also called replacement cost.

There are cases where you might not want to insure your home for the full replacement value. Your mortgage lender may not require it. You may buy $60,000 of coverage. Using that “insurance to value” concept, the carrier insures $60,000 and you insure the other $40,000. Your home is considered to be insured on a 60% coinsurance basis.

A benefit of coinsurance is that you still receive the full replacement cost at the time of a claim. If this coinsurance option is chosen, many carriers require that you carry a minimum of 80% of the dwelling’s value.

In addition to knowing your limit of coverage, it is also important to know how your insurance carrier settles claims.

The conditions section of the policy outlines the loss-settlement provision and whether or not the coinsurance provision applies.

The days of having one deductible for all property insurance claims are gone.

Insurance companies have introduced varied deductibles, depending on the type of claim.

Wind/hail deductibles are showing up more frequently on both personal and business insurance policies, thanks to the number of claims from windstorms, hailstorms and hurricanes in the last decade.

If you have any type of claim other than those listed above, you would pay your chosen standard deductible, perhaps $1,000.

When it comes to a wind or hail claim, the deductible is calculated a little differently. It is a percentage of your building limit.

The percentage can be from 2% to 5% of that building limit.

This means that if you have a $100,000 building with a 5% wind/hail deductible, your deductible becomes $5,000 rather than $1,000 for that claim.

A “named storm endorsement” is another option a carrier uses, depending on the hurricane proneness of the state. Here, the percentage deductible would apply for damage as a result of a named hurricane by the National Weather Service. In the event of wind or hail damage in a non-named storm, your deductible goes back to your standard deductible.

The cover or declaration page of your policy will list whether or not there is a separate wind/hail deductible and, if there is, the percentage. Have your insurance agent take the time to explain the deductibles on your policy and how they would affect you at the time of a claim.

If you’re looking for life insurance, you’ll probably want to ask yourself an important question.

That question usually is: What type of life insurance is the best fit - term or permanent?

Both types of life insurance have their uses.

The one you choose will depend on a number of factors.

There are some very important differences between the two.

Term life insurance, for example, provides coverage over a set period of time, such as 15 to 30 years, then expires.

Permanent life insurance lasts until death.

Term life insurance may appeal to many people because it is the easiest to understand and often is the most affordable.

It might be a good choice if you’re trying to ensure that you’ve provided for specific expenses, such as a mortgage or your child’s college education.

Permanent life insurance may be more expensive, but it also often builds a savings account that grows tax-deferred.

It might be a good option if you’re trying to ensure that you’ve provided for your beneficiaries.

Term and permanent life insurance policies aren’t the only two options, though.

Hybrid options are available that allow you to convert a term life insurance policy into permanent life insurance at a later date.

These convertible policies are usually more expensive.

However, such policies might be useful if you develop a chronic health condition that makes it difficult to qualify for new coverage after your term expires.

Your advisor can help you determine which type of policy is best for you given your individual circumstances and goals.

Moreover, whichever type of life insurance you choose, it’s important to check rates and ratings.

Over the past few years, with companies cutting back on expenses, many people who previously had health insurance through an employer have found themselves seeking coverage elsewhere.

But for those who still have the option of obtaining health insurance through an employee benefits plan, there may still be good reason to at least compare the plans that are offered with an individual health insurance plan.

In fact, today more people are purchasing private health insurance coverage that is custom-designed to better fit their individual insurance needs. And in some cases, these more personal policies may be even more affordable.

When comparing an employer’s health insurance offering to an individual plan, there are several factors to consider:

Co-Payments and Co-Insurance: Most health insurance plans will charge a certain amount of out-of-pocket charges - referred to as a co-payment - for doctor visits and other types of healthcare services.

Deductibles: A health insurance deductible is the amount that an insured will need to pay out of pocket before the policy will pay for coverage. Deductibles may range from a very small dollar amount up to thousands of dollars per year. There are some plans that offer a $0 deductible, but the premiums for this type of coverage can be quite costly.

Customized Coverage: In most group health insurance policies, the coverage tends to be a “cookie cutter,” one-size-fits-all approach. Yet each individual requires different types of healthcare services. Therefore, many employer-sponsored plans may not fully meet the needs of the participants.

Premium: Premiums on employer-sponsored health insurance plans may be lower in most cases due to the fact that there are many insureds, creating a group discount. However, it may be surprising to note that even a more customized individual plan may still be more affordable - while also offering more personalized coverage. Therefore, it definitely pays to compare.

For those on Medicare, there are a wide variety of healthcare services that are covered. However, the Medicare program does not cover all medical and healthcare expenses, and there are many copayments and deductibles. Medicare supplemental insurance, also known as Medigap, is a type of insurance that is designed to fill in some of the gaps in coverage that are not paid for by Medicare. These plans are offered by private insurance companies.

Although Medicare supplemental policies are available to most people over age 65 on an ongoing basis, the best time to apply for such coverage is during a participant’s “open enrollment” period. The open enrollment period for Medicare supplemental insurance begins six months after an applicant turns 65 and is enrolled in Medicare Part B. Therefore, when one applies for Medicare Part B, his or her open enrollment period for Medicare supplemental insurance begins automatically. And once this period begins, it cannot be changed.

During an applicant’s open enrollment period, insurance companies that offer Medigap insurance are not allowed to deny coverage to a participant in a Medicare supplemental plan. The company is also not allowed to charge an additional premium for a preexisting condition if the individual had prior “creditable insurance coverage” for at least six months. In addition, the company cannot require an applicant to wait for his or her coverage to begin. Should an individual decide to wait until his or her open enrollment period has expired before applying for Medicare supplemental insurance, some insurance companies may require medical underwriting to take place prior to issuing coverage.

For most people, buying auto insurance is like filling the gas tank. They do it once and then forget about it until it’s needed again.

Unfortunately, many people don’t have as much protection as they believe.

There are a number of common mistakes drivers make when purchasing auto liability insurance.

That’s why drivers should work with an agent to pick the right protection for their specific needs.

Following are some pitfalls to avoid when purchasing auto liability insurance:

Purchase the Legal Limit: One of the most common mistakes is purchasing the minimum amount of liability coverage required by your state. While it might seem like a great way to save money in the short term, it’s often a big mistake. Remember, liability protection provides payment in the event that you are at fault in an accident. Property damage, medical bills, and even pain or suffering may exceed the limits of liability, leaving you personally responsible for the remainder of the bill.

Failure to Name Other Drivers: In order to hold costs down, some drivers limit coverage to their personal use of the vehicle. If you ever loan your vehicle to friends or family, even for a short period of time, be sure to name other drivers on the policy.

Consider Your Personal Protection Needs: Don’t assume other drivers are as responsible in their decisions to purchase the right levels of insurance. Instead, make sure you have adequate coverage to protect your own interests in an accident, including medical coverage.

Key-person coverage is a unique form of business insurance that provides invaluable protection of critical employees.

Any person with a uniquely valuable contribution may be deemed a key person. A scientific or medical company may rely on a specific scientist working on a new drug, while a manufacturing company may depend upon the talent of a specially qualified engineer.

Why Purchase a Key-Person Policy?

A small business is often extremely vulnerable to the loss of one or two key people. In the event of an untimely death or disability, the policy would provide the financial means for the small business to continue operations despite the loss of the critical employee. Business owners also opt for key-person protection to satisfy the concerns of investors, shareholders or partners.

What Is Commonly Covered?

In general, key-person coverage protects a business against lost profits directly related to the specialized skills or contribution of the designated employee. Losses related to the need to hire or replace a critical employee as well as to protect shareholder or partner interests is also a typical provision.

Key-Person Versus Life Insurance

Small-business owners often confuse key-person coverage with life or disability coverage. In fact, some business owners purchase life insurance on a key employee rather than key-person coverage. Unfortunately, that may be a mistake. Both life insurance and key-person coverage protect a critical employee, but there are a few important differences that every small-business owner needs to understand in order to make an informed decision.

For example:

Protecting the Business: The main difference between the policies is the emphasis on protecting the business versus the employee. In the event of disability, the impact on the company may be substantially different than on the individual. Key-person coverage recognizes that impact and provides valuable protection for the business.

Minimal Coverage: One of the most significant reasons to purchase key-person coverage rather than a company-owned life insurance policy is the dollar amount of potential damages.

The coverage of most life insurance policies is fairly minimal when compared to the real value of the company.

For example, a life insurance policy in the amount of $1 million or even $5 million may be very small in relation to the full value of the company itself.

Investors, partners and other stakeholders need assurance that they are protected in the event a critical contributor is no longer able to perform.

Tax Free: Last but not least, most proceeds received by a business in the event of a claim are tax-free, which is a significant advantage to a small business required to justify long-term expenditures during a period of adjustment and growth.

By minimizing risk and locking in affordable long-term security, it’s possible for a small business to generate impressive investor interest, especially given the relative scarcity of alternatives in today’s tough economy.

When it comes to working with an insurance agent, more isn’t better.

Unlike medicine, where a second opinion is often a prudent course of action, insurance is one area where two minds are rarely better than one.

Following are some of the dangers of working with multiple agents:

Higher Prices: The threat to your bottom line is very real. Multiple agents increase the risk of purchasing redundant coverage options. An agent who is familiar with all your insurance needs is able to provide comprehensive coverage without duplicating other coverage options. For example, rather than having to write an entirely new policy, it may be possible to add a rider to an existing policy.

Gaps in Coverage: As if paying for duplicate coverage wasn’t a sufficient threat, the risk of leaving out important coverage is especially high when working with multiple agents. Finding a gap in coverage is one lesson most small-business owners can’t afford.

Claim Complexity: Having a trusted agent to turn to in the event of a claim is often as critical as the terms of coverage. Not only is the agent able to expedite filing the proper forms and to inform you of progress, but he or she becomes instrumental in coordinating the process when multiple policies are impacted.

Lack of Continuity: The more policies, the greater the likelihood of forgetting to pay a premium. When working with a single agent, everything you need is in one place - from annual updates of inventory to a single source of contact in the event of an emergency.

Health insurance plans that have high deductibles are often referred to as catastrophic policies. In most cases, they have yearly deductibles of at least $1,000. However, some can offer deductibles of up to $10,000 annually.

In some cases, a high-deductible health insurance plan may allow the insured to receive preventive care before the entire deductible has been met. In other cases, no services will be paid for until the annual deductible is met. There are pros and cons to these types of insurance plans. For example:

Pros

Typically, the higher the amount of the plan’s deductible, the lower the premium will be. In the case of younger and healthier individuals, this option may make sense, as they will not need to allocate a high amount of premium toward their health insurance plans. When used in combination with a health savings account, an insurance plan with a high deductible can even allow individuals to set money aside with various tax benefits.

Cons

A high-deductible plan could be the wrong choice for some - primarily those who may not have the needed funds to pay the deductible if services are needed from the policy. In addition, for high-deductible plans that don’t offer preventive care, even a basic doctor visit could end up costing the insured several hundred dollars. In many cases, this amount would have to be paid by the insured until the entire amount of the annual deductible has been met. A high-deductible plan may also require an insured to pay more for prescription drugs.

When an individual leaves an employer that had health insurance, he or she is often offered COBRA as a means of continuing that coverage - at least for a certain period of time.

In many cases, this may make sense to the individual, especially if he or she is not going directly to another place of employment that will offer the person medical benefits.

COBRA, named because it was created under the Consolidated Omnibus Reconciliation Act, allows the individual to continue coverage under the former employer’s health insurance plan as a way to avoid a lapse in health insurance benefits.

While this program may offer peace of mind in maintaining health insurance coverage, it is important for individuals to really weigh the pros and cons, as there are several reasons why going this route may not be the best option.

Following are some reasons for not using COBRA:

Premium Cost: One of the primary reasons for opting out of COBRA has to do with cost. Typically, the cost of maintaining coverage through COBRA will be more than the amount of premium that the former employee was paying while he or she was still working.

In addition, COBRA premiums cannot be locked in. This means that because COBRA insurance is simply a continuation of an individual’s group health insurance plan, any changes to that plan - including a premium increase - will also affect the cost of the COBRA premium.

Temporary Coverage: Should the individual not be obtaining a more permanent health insurance policy in the near future, he or she should be aware that COBRA benefits typically last only between 18 and 36 months. Therefore, this should not be considered an ongoing health insurance plan.

Before leaving an employer that has a health insurance plan, it’s important to know all the facts about COBRA in order to make a determination as to whether it’s the best option for health insurance coverage.

Deciding how much coverage you’ll need isn’t the only thing to think about when purchasing life insurance.

You’ll also have to determine the most appropriate beneficiaries.

You can name three types of beneficiaries on a life insurance policy. The three types are:

• Primary
• Contingent
• Tertiary

The primary beneficiary will receive the benefit if he or she is alive at the time of your death.

If the primary beneficiary is deceased at the time of your death and you haven’t updated your policy, the benefit will go to your contingent beneficiary.

Similarly, if the contingent beneficiary is deceased at the time of your death, the benefit will go to your tertiary beneficiary.

When selecting a beneficiary, the most important factors may be whether you’re married or single and whether you have children.

If you’re married without children, you may want to name your spouse as your primary beneficiary and a sibling or a parent as your contingent beneficiary.

If you’re married with children, you may want to name your spouse as your primary beneficiary and your children as your contingent beneficiaries.

If your children are minors at the time of your death, their guardian will receive the benefit on their behalf.

If you’re single with children, you may want to name your children as your primary beneficiaries and a sibling or a parent as your contingent beneficiary.

If you’re single without children, you likely have more options. For example, you might want to name a sibling as your beneficiary.

You can also create a trust and name it as your beneficiary or name a charitable organization.

Beneficiaries are easily changeable, so don’t feel stuck with a decision.

Also, remember to update your beneficiaries after any life changes, such as a death or divorce.

One of the key ways to keep your auto insurance rates low is to reduce the risk of theft.

Not only does a stolen car cost you dearly in terms of time and effort, but the long-term expense associated with higher auto insurance rates adds insult to injury.

Unfortunately, many people underestimate the risk of having their car stolen and fail to plan accordingly.

Recent statistics from the Federal Bureau of Investigation indicate that the odds of having your car stolen are roughly one in 207. People who live in the city are at much higher risk than those living in rural areas.

Fortunately it’s possible to fight back against auto theft and save money at the same time.

Following are some tips to help you get started:

Search the Zip: When possible, do a search on your designated zip code. Insurance underwriters routinely use zip code data for both home and work to determine a portion of your individual risk factor. Higher property crime rates are associated with higher premiums.

Install Security Devices: Installing antitheft devices, tracking and other security measures can act as a deterrent and money-saving measure. Discounts on premiums may offset a significant portion of the cost.

Watch Where You Park: Parking a car inside a garage is a great way to reduce the risk of auto theft as well as keep your vehicle secure. When away from home, search for a secure and well-lit area, preferably one with cameras as well as security personnel.

Major medical insurance is a type of health insurance plan that provides coverage for most types of medical expenses that are incurred by a policyholder. They typically offer a broader, more complete range of coverage than traditional health insurance policies. This means that these plans usually provide for higher individual policy coverage limits as well as larger overall maximum policy limits.

Major medical plans can be divided into two primary categories:

Comprehensive Major Medical Insurance:

With comprehensive major medical insurance, basic health insurance coverage, along with nearly any other type of medical expense will be coordinated into one overall comprehensive plan. In these plans, benefit payments will begin after a deductible is satisfied - although some plans have a zero deductible.

Supplemental Major Medical Insurance:

With a supplemental major medical plan, coverage will begin with a basic traditional policy that will pay out benefits initially. Then, coverage for major medical expenses is added to cover the costs that are not covered by the basic plan. Typically, these types of plans will include coverage for hospitalization and surgery along with an additional policy that covers a wider range of other types of medical expenses.

Regardless of whether a major medical insurance policy is considered to be comprehensive or supplemental, most will cover a wide range of benefits, including hospital inpatient room and board, surgical services, physicians’ services, outpatient services, X-rays, and other types of tests.

The Medicare program came into existence 46 years ago when President Lyndon Johnson signed into law the Social Security Act of 1965.

This program is federally administered and provides healthcare coverage to Americans who are age 65 and over, as well as to those under 65 who have certain types of disabilities or illnesses.

Parts A & B

The original Medicare program consists of Medicare Part A and Medicare Part B.

Part A offers healthcare coverage for hospital stays, as well as hospital inpatient procedures.

This part of Medicare will also provide some limited coverage for skilled nursing care. There is no premium required for Medicare Part A as long as the recipient and/or his or her spouse have paid into the Social Security system for 40 quarters, or typically for 10 years.

Medicare Part B offers coverage for physicians’ services and outpatient care.

There is a premium that is required for those who wish to participate in Medicare Part B.

The amount of premium due is based on the annual income of the Medicare Part B recipient. Oftentimes, the monthly premium for Medicare Part B is simply deducted from the recipients’ Social Security income check.

Part C

Another name for Medicare Part C is Medicare Advantage.

Medicare Part C essentially includes both Medicare Parts A and B. Part C is offered by private insurers, who are approved by the Medicare program to provide this coverage.

In most cases, those enrolled in Medicare Part C are required to use specific hospitals, doctors and other providers similar to the operation of a health maintenance organization or preferred provider organization.

Medicare Part C requires a monthly premium to be paid, and oftentimes co-payments or co-insurance is required for certain services.

Once considered a relatively exclusive form of insurance, errors and omissions (E&O) insurance is now believed to be one of the most important forms of coverage available to many busy professionals.

Who Needs E&O Insurance?

E&O provides an additional layer of protection for lawyers, architects, financial consultants and other small-business owners who routinely provide services to others. In fact, nearly anyone who provides services or information to others may be at risk of a lawsuit. Rather than risk your financial future, E&O insurance provides the peace of mind in knowing you are protected in the event of a problem. By transferring risk to the underwriter, you have a powerful partner on your side in the event of a claim.

What’s Covered?

E&O policies typically help defray the cost of defending against litigation arising from professional liability claims due to mistakes. Legal costs and damages are usually included up to the specified limit.

What’s Not Covered?

Intentional, illegal or fraudulent activities are excluded, along with punitive damages. Specific limitations or restrictions may be included in your individual policy, so it is important to work closely with your insurance agent to select the right coverage options for your specific needs.

Is E&O Insurance Expensive?

E&O insurance rates vary by the type of services provided, annual revenue generated, type of policy and prior claim history. In general, E&O can be structured to fit nearly any type of budget, depending upon selected options.

Getting a home business off the ground entails many of the same concerns and considerations as any other startup, including the purchase of proper insurance. Unfortunately, many business owners are under the false impression that a home business doesn’t entail the same risk associated with other settings. Few things could be further from the truth.

What’s in a Name?

One of the biggest mistakes made by new, home-based business owners is failing to buy a policy naming their business as the owner of record. Remember, even if you are a sole proprietor, it is important to distinguish between you and your home-based business. Set aside a special area, use the same name and implement other standard operating procedures designed to differentiate business from personal use of the home, equipment and other assets.

Home Is Where the Hazards Are

Working from home often entails many unique hazards. Home-based business owners routinely tackle everything from the plumbing to computer-related repairs on their own. Disability insurance may be especially important, not only to counter the risk, but to help defray expenses associated with the loss of income should an injury or accident occur.

Beyond the Basics

For a home-based small-business owner, it is imperative to keep good records and insurance for all business-related equipment. Standard homeowner policies typically exclude the business use of computers, cell phones and other technology. Instead, stand-alone policies can help provide protection against everything from equipment failure to unexpected emergencies. It’s also a good idea to add a loss-of-income and enhanced liability protection to guard against unanticipated events.

Other Forms of Coverage

Following are some other important forms of coverage:

Inventory: Working from home is convenient, but don’t become complacent when it comes to storage. Protect your investment by insuring inventory and business-related equipment separate from personal belongings.

Liability: Whether you are a private consultant or full-time eBay business, running a small business often entails risk. Protect yourself and your business by purchasing additional liability coverage specified to your individual needs. If you work with client data or confidential information, be sure to ask your agent about coverage options that include data loss or theft provisions to protect you and your clients.

How to Get Started

Purchasing insurance for your home-based business is relatively simple.

Following are some things to consider:

Assets: Make a list of current coverage needs and compare against those supplied by a spouse, other employment or outside providers.

Be Realistic: It may be tempting to “self-insure” equipment or convince yourself data loss is unlikely, but it’s important to be realistic. What situations are you most likely to encounter in your type of business? What are the consequences in a “worst case” scenario? Which could you survive, and which would potentially put you out of business?

Virtually all would-be retirees ask themselves the same question at some point: How much of my retirement savings can I afford to spend each year?

The answer depends on your income stream, but determining that isn’t always easy. Since it isn’t simple to figure out what to do with your 401(k) plan after retirement, for example, many financial products and services have been developed to allow you to convert your retirement savings into a consistent stream of lifelong income.

For example, you might work with a financial advisor to determine how to invest your retirement savings to maximize the odds of making your nest egg last. This would involve an analysis of your risk tolerance and an estimate of how much you can afford to spend annually.

You would then decide which products could best help you achieve these goals. For example, you might try to cover essential expenses like housing and food with predictable income sources, such as Social Security, pension benefits and fixed annuities. The rest you can cover with investments in other securities, such as mutual funds.

An annuity is a contract with an insurance company. You make payments in one lump sum or for a certain amount of time. In return, the insurance company provides you with payments at regular intervals either immediately or at some point down the road.

Like all investments, annuities have pros and cons and may work better for some investors than others. Your advisor can help you determine if annuities are suitable for your individual financial circumstances.