How Social Media Could Void Your Insurance Claims

Social media sites such as Facebook and Twitter are among the fastest-growing segments of the Internet. More people are turning to them. They’re a wonderful way to stay connected with family and friends. Unfortunately, there’s a dark side to even the most valuable tool.

Following are some of the ways social media websites can increase the risk for your family, business and even insurance coverage:

Increase Crime: Real-time broadcasting of your location makes it easy for criminals to know when you are away from a home or business and even some of the possessions that may be available. Be cautious when sending messages and avoid real-time feeds, especially if you don’t have a very strong security system in place.

Void Claims: Several high-profile cases have recently gone to court in response to the growing concerns over insurance fraud. Online communications are increasingly subject to scrutiny so watch what you say. Even the photographs you take could be misconstrued or taken out of context. For example, someone with an active injury claim might be on shaky ground when confronted with photographs showing a big night out on the town.

Reputation Matters: Everyone from prospective employers to landlords are making a habit of checking social media sites in addition to standard reference sources. If you claim to be a non-smoker, but show photos of a house filled with smoking relatives, don’t be surprised to find an offer rescinded.

Should You Cash In Your Life Insurance Policy?

You might want to think twice before selling your life insurance policy for cash.

With uncertain labor, housing and stock markets, it’s no wonder many investors are considering selling their life insurance policies to strangers for cash. But is it a good idea?

Selling a life insurance policy is referred to as a life settlement transaction.

Under such a transaction, someone buys your life insurance policy for a lump sum.

The new owner of the policy continues paying your premiums until you die, at which point the new owner collects your death benefit.

Getting cash from your life insurance policy in times like these may sound great – but this strategy may not make as much sense as it used to.

One reason is a steep decline in the price life settlement investors are willing to pay for life insurance policies. To illustrate, life settlement policy prices fell from an average of 21% of the death benefit in 2006 to an average of 13% of the death benefit in 2009, according to the U.S. Government Accountability Office.

Another reason is a 2009 Internal Revenue Service ruling that raised the tax bill for many individuals who sell their life insurance policies.

As a result, Doug Head, executive director of the Life Insurance Settlement Association, a trade group, has stated that the current life settlement market is a buyer’s market.

Before selling your life insurance policy, then, you may want to consult a financial adviser who can help you determine if there are better options.

For example, you may be able to withdraw or borrow funds from your life insurance policy or restructure the coverage to make premiums cheaper. You can even exchange one policy for another in a tax-efficient manner.

The tax information in this article is merely a summary of our understanding and interpretation of some of the current laws and regulations and is not exhaustive. Investors should consult their tax counsel for advice and information concerning their circumstances.

Cancer Insurance Policies: Are They Worth It?

Even the most comprehensive health insurance policy may not be able to cover the large and often unexpected expenses that come with a serious or life-threatening disease such as cancer.

Because of this, many people are turning to specific disease insurance coverage that pays for particular ailments.

With diseases such as cancer, there are many other associated factors that may cause the patient to have additional out-of-pocket costs that are not covered by their conventional health insurance policy. And, while a cancer patient may be able to work while being treated for the disease, they could be deprived of other benefits of their employer-sponsored insurance, such as traditional disability benefits.

One important feature of cancer policies is that they pay the benefits directly to the insured rather than to the medical institution.

This allows the policyholder to use the money for non-medical costs such as transportation, wigs and lodging for family members who may accompany them to treatments. The funds can also be used to supplement income due to long, or permanent, absences from work.

The benefits from cancer policies typically kick in when the insured is diagnosed. This allows the policyholder the use of funds almost immediately.

Many policies will pay a lump sum when the diagnosis is made, and then pay a set daily amount thereafter, for a specific period of time. Often, additional payments are made to the insured for chemotherapy and outpatient visits.

It’s important to note that cancer policies are designed to cover just that – someone who has been diagnosed with this specific disease.

These policies are designed to supplement existing health insurance coverage that is already in place.

Cancer insurance policies can be beneficial – especially for those who have a history of the disease in their family. And, with more than 10 million cancer insurance policyholders nationwide, these policies are becoming much more widely available.

Is ‘Sinflation’ Making Your Premiums Skyrocket?

“Sinflation” is a topic that gets little attention, but it has the potential to cost you hundreds or even thousands of dollars more each year in insurance premiums.

Following is a rundown on the top seven deadly (and costly) sins, as well as some tips on how you can minimize their impact on insurance rates:

Smoking: Tobacco users tend to pay more for almost everything – from general health and life insurance to car and homeowner insurance. The additional risk of fire-related accidents can even negatively impact investment properties.

Drinking: Alcohol adds to the cost of car insurance, especially for those who have had a previous arrest for driving while intoxicated. Homeowners should also be aware of the impact of drinking. Hosting those holiday parties may inadvertently expose you to increased liability should an accident occur in the home or even after someone leaves the party.

Greed: Learning how to live within your budget is another important way to reduce the cost of insurance. Bad credit is associated with higher rates for both vehicle insurance and homeowner coverage. Keep a close eye on expenses and pay down those debts to get the best rates.

The Company You Keep: While it might seem odd to base insurance rates on the company you keep, it does play an indirect role in the cost of your homeowner coverage. Neighborhood crime rates are also likely to increase car insurance coverage. Set up a neighborhood safety group or carefully consider moving to a less volatile area to save big bucks on both your homeowner and car insurance coverage.

Criminal Behavior: Crime really doesn’t pay, especially when it comes to renewing your automobile and homeowner policy. Whether it’s a litany of traffic violations or a white-collar crime, criminal behavior can dramatically increase the rates of some forms of insurance. In fact, even bad behavior from minors and others living in your home can raise your rates, so pay special attention to the legal status of everyone in your home and vehicle.

Love Playing Sports? Make Sure Your Health Is Covered

More than two million adults in the U.S. suffer from sports-related injuries each year. Injuries can affect elite athletes as well as those playing a game of touch football at the park on the weekend.

In fact, some of the most leisurely sports are the most risky. For example, more than 80% of regular badminton players reported having some type of sports-related injury in the last year. And, according to the American Journal of Health Medicine, those who play basketball average an injury for every 71 hours they are on the court.

Interestingly, even though exercise and an active lifestyle are good for your overall health, there is really no way to safeguard against injuries. And athletic performance can actually have the opposite effect on your health if you overdo it.

With the cost of health care rising, it is important to have a health insurance plan that will cover you for the types of injuries you may sustain. In addition, if you exercise regularly, then you should optimize your training by getting regular medical checkups from an experienced doctor or physical therapist who specializes in working with athletes. This is especially important if you make any major changes in your workout or sports-related routine.

Whether you’re hitting the slopes or heading to the gym, be sure that your health insurance plan covers all the bases. A policy that offers comprehensive and prompt care for injuries, as well as access to practitioners who specialize in treating sports-related injuries, is likely your best game plan.

Your Documents: When to Hold ‘Em and Fold ‘Em

If one of your resolutions this year involves cleaning out your office or tidying up your desk, there are a few things you should keep in mind.

Following is a quick tutorial to help you decide what to hold on to and what to toss – and the risks involved:

There are three basic rules to follow.

Rule 1: When in doubt, do not toss it out. It’s better to be safe than sorry when it comes to record-keeping. Retain anything you think might be needed in the future.

Rule 2: Seek professional assistance before making a final decision. All of the information in this tutorial has been derived from the basic IRS Regulation – 26 CFR 1.6001, The Guide of Record Retention Requirements in the Code of Federal Regulations. However, things change and this may or may not apply to your specific situation.

Rule 3: See Rule 1.

Now that we have covered the basics, here are a few pointers to get started.

Tax-Related Documents:

Tax returns should be kept for at least seven years, along with all supporting documentation, receipts and other information. Additionally, according to the Materiality Rule, any books and records used in the computation of any tax should also be kept. For example, receipts demonstrating a depreciation schedule may need to be stored longer than the regular seven-year period. This applies to both individual and small business tax returns.

Accident, Injury and Other Health, Safety or Administrative Information:

Most documents should be retained for at least seven years or until settled, although a few items can extend beyond that date. Pension plan agreements, profit sharing plans and personal files for anyone currently providing services should be kept permanently or until the status changes. Other items, like old applications of non-employees, garnishments, old insurance policies and other time-limited data, can usually be safely discarded in five to seven years.

Insurance Documents:

Expired insurance policies should be kept for 10 years, while appraisals, safety records and other ancillary reports can typically be discarded after six years.

Permanent Retention:

A significant number of items should never be discarded, but remain with you permanently. They include medical records, birth and death certificates, wills, trusts, military papers, changes to corporate structure, life insurance policies, deeds, and other forms of ownership, both individual and business related.

Special Considerations:

Record retention is an important part of your risk planning. Without the right records, it is nearly impossible to prove your point should a claim arise.

One way to reduce the clutter and still retain required documents is to use a scanner to digitize important documents.

However, not every entity will accept copies of the original, so ask your insurance agent in advance.

Should you opt to go this route, be sure to scan both sides of each document and use redundant storage, including an off-site location that is secure and up to date.

What You Need to Know About ERM

Enterprise Risk Management (ERM) is a term making the rounds through small business entities across the nation.

There are a number of things you should know about ERM.

ERM refers to the methods and processes adopted by a business to control risk.

Forms of Risk Commonly Managed

There are several areas that may fall under the ERM category:

capital management

financial management

operational risk

strategic risk

Each area presents unique liabilities, which can be detrimental to the health of a company. Properly managed, each possible problem is defined and then weighted according to the likelihood and impact. Steps are then taken to reduce risk.

Issues and Insight

Research indicates that nearly 45% of small business owners do not have an ERM in place, yet more than one in three also indicate they were caught off guard by an operational surprise. Unfortunately, in an effort to avoid problems and limit risk, some small business owners actually create even larger problems by implementing ineffective protocols or even illegal provisions. It’s essential to work with a knowledgeable insurance agent to avoid complications.

Those seeking funding should also implement an effective ERM as soon as possible. Standard and Poor’s and banks intend to incorporate ERM into credit rating scores by the end of 2010.