One of the most important insurance decisions you can make is purchasing life insurance – it ensures that your loved ones will not suffer financial hardship in the event you are no longer there to care for them.
However, life insurance is a complex legal contract, so it’s essential to understand how to properly select a beneficiary in order to provide the needed protection and reduce the risk of extended legal battles.
Decide Who Will Be Your Beneficiary
Typically a spouse, a child or another relative is named as beneficiary, but when the designation is properly set up, a charity, a trust or even an estate can be named as the beneficiary instead. It’s also possible to have more than one beneficiary. For example, your spouse may be listed as the primary beneficiary, with the children listed as secondary beneficiaries in the event something were to happen to both of you.
Determine how much to buy based upon need. For example, a newly married couple with toddlers at home may have significantly greater need than a middle-aged couple with grown children. Likewise, a sick spouse or a child with special needs may require additional care throughout his or her lifetime. The goal is to replace the care, compensation and other essential financial measures you contribute to their lives.
Understand the Rules
Depending upon your state and individual situation, there may be legal considerations that mandate how the insurance policy is to be written. For instance, many states require a spouse to sign a waiver if he or she is not listed as primary beneficiary on a policy. Likewise, taxes and other considerations should be carefully reviewed in order to understand the implications for the prospective beneficiary.
Plan on Change
It’s important to periodically review your policy to make needed changes, especially if you have experienced a major life event such as a change of marital status or the birth of a child.
Purchasing coverage for children away at school can be confusing if you aren’t familiar with the options. Learn the ABCs of keeping your student protected with these building blocks of coverage:
A – Analyze: The first step is to analyze your current insurance policies against the needs of your child. Most students will need health insurance, automobile insurance and some type of renter’s policy. It’s also a good idea to evaluate your liability coverage to protect your family from legal claims in the event your child is involved in an accident or other liability situation.
B – Bargain: Most parents are surprised to learn how easy it can be to qualify for discounts, especially on auto insurance or for multi-policy coverage. Ask about alumni discounts, safe driving perks and other programs designed to reduce the rates of providing coverage for your child.
C – Compare: Most parents simply add riders to an existing automobile policy or extend their homeowners coverage to provide insurance for a college student. However, it may be more affordable to purchase insurance in your child’s name instead. For example, if your student owns an older make/model of automobile, the lower value of the vehicle combined with decreased liability needs often provides enhanced savings over increasing primary policies or purchasing an umbrella policy. Many colleges also provide low-cost health insurance, although you should carefully review limits and exclusions of coverage prior to purchasing, especially if your child has a pre-existing condition.
Most people shop for auto insurance after they have purchased a new vehicle, but for the best rates and biggest savings, it’s actually better to begin at the end.
Learn how to buy right to save big on car insurance costs without putting the brakes on the fun.
Shop Used Rather Than New
Not only will a used vehicle mean a slower rate of depreciation, but it’s often less expensive to insure a gently used car.
The sweet spot of savings is on vehicles roughly two to three years old and with less than 45,000 miles, although it varies considerably from car to car.
Keep Credit Tuned
Not only does good credit help reduce the cost of financing your new vehicle but insurance companies routinely consider credit score, driving record and other personal criteria in the cost of insurance.
Make it a priority to stay in shape by performing annual credit evaluations while steering clear of traffic violations in order to obtain the best rates.
Call for Quotes – Especially on Customized Cars
That super-charged engine or enhanced wheel package might look fantastic but tripping the light fantastic could cost you a bundle when it comes time to buy insurance. In fact, depending upon the type of work performed, it may negate the warranty and limit the terms of liability should damage related to the custom changes occur.
Safety Rating Rule
Perform a search for the most recent safety rating associated with the make and model of the car you are considering for purchase.
How you legally hold title to the vehicle is especially important when it comes time to purchase an auto insurance policy.
Parents or partners with poor driving records should pay special attention to how the title may impact the purchase of auto insurance.
Decoding health insurance lingo isn’t always easy but with a little planning and preparation you will soon be speaking the same language as your agent.
The first step is to understand the basic types of health care plans including:
HMO or Health Maintenance Organization. You select a primary care provider who coordinates care. Low co-payments are typical. Often the lowest cost option, HMOs only provide coverage for providers employed or contracted by the HMO.
Point of Service Plans or POS. POS plants are similar to an HMO except you act as your own coordinator for care options. Although a POS provides a greater degree of latitude in provider selection, the additional time requirements may add a layer of complexity.
Preferred Provider Organizations or PPO. PPOs are typically the most flexible care arrangements but cost varies according to whether the provider is “in-network” or “out of network”. Typically PPOs tend to be more expensive than HMO options.
Fee-For-Service or Indemnity Plans. Indemnity plans provide extensive freedom but often require larger annual deductibles before insurance reimbursement begins. Monthly insurance premiums may also be substantially higher.
Catastrophic Coverage. Often the least expensive form of insurance, many catastrophic plans require high deductibles and exclude office visits or other day-to day-medical care. The emphasis is on major medical coverage for illness or hospitalization.
Short-Term Insurance. A policy that typically is used for 30, 90 or 180 days of coverage or to bridge the gap between jobs, prior to qualifying for employment-sponsored benefits of other situations where regular insurance has lapsed for a brief period.
Health Savings Accounts, or HSAs. A relatively unknown type of plan that combines a high deductible with a special tax-exempt savings account to keep premiums low.
Whether you have a chronic health condition, work in a high-risk occupation or simply find yourself nearing those retirement years, chances are you have faced the prospect of going without life insurance.
Instead of forgoing coverage, use these tips to find affordable coverage options and protect the financial future of your family.
Low-Cost Term Life Insurance
Term life insurance is an especially helpful option for those deemed high risk. Ask about graded or high-risk policies that provide coverage for a set period of time (1 to 40 years) without a medical examination or questionnaire. Typically the shorter the term, the less expensive it is. However, the benefits of locking in a lower price over a longer period of time could become more cost-effective in the future. Take time to review your individual insurance needs to weigh cost versus duration while taking the rate of inflation into account.
Supplement your primary policy with other options such as mortgage insurance or an accidental death policy. Mortgage insurance pays the premiums on your home, while an accidental death and dismemberment policy provides coverage in the event that you are hurt or killed due to an accident. Other supplemental policies are available to pay off your credit cards, car loans or other obligations at relatively affordable rates and without the need to take a medical exam. With a little planning, it’s possible to provide meaningful coverage for your family.
Learn how to protect your property and save big on premiums with these burglar-proofing and alarm ideas.
Perform a Personalized Review. Develop a plan of action based on existing security measures and needed upgrades. Create an inventory for each door, window and room in the house. Do you have dead bolt locks? Fire alarms with battery backup? Make a note of deficiencies; then visit a store to begin your own DIY upgrades.
Contact Your Insurance Agent. Now that you have taken care of the basics it is time to contact your insurance agent for more specific information. Be sure to mention the addition of deadbolts or other first-line-of-defense security measures implemented in step one above then ask about discount levels for each of the below to determine which is the best buy for your situation.
Evaluate Options. Most security systems fall into three general categories:
- Passive DIY: This is primarily an extension of other security measures you may have already put into place. For example, enhanced security lighting along the perimeter of the property, or sirens or alarms that sound in the event of a security breech, as well as other measures designed to prevent intrusion into the home. No monitoring or notification is included. Typical insurance discounts range from 2% to 5%.
- Passive Monitoring: The advent of wireless technology combined with the Internet has created a new breed of security system within the reach of most homeowners. Security cameras along with standard alarms, locks and other devices provide passive monitoring and record the home and property with a visual backup of all activity in the event of a breech. No automatic notification is included. Typical discounts range from 5% to 10%.
- Active Monitoring and Notification: Typically provided by a third party, this type of security system is available in a wide range of pricing plans. Security monitoring may include fire, burglary and even health threats, with 24/7 surveillance and immediate emergency notification. Discounts range from 10% to 20%.
If you are like most boat owners, then you believe only the best boat insurance will do. Unfortunately, buying boat insurance can feel like navigating stormy waters when you don’t understand a few basics. Use this checklist to make sure you encounter nothing but smooth sailing when buying or renewing your boat insurance policy:
Inside or outside? Collect basic information about where and how the boat will be stored when not in use. Is it secure? Weather protected? At home? Out of state? These and other location considerations can increase or decrease the cost of boat insurance substantially.
Exclusions and limitations? Always ask about exclusions or limitations to boat insurance coverage, especially if you have custom work or a rare vintage boat. Other common clauses to specifically review include those covering liability, boat trailer coverage, and hired workers performing labor or repairs to the boat on your behalf. It is often possible to purchase additional riders to make sure coverage is adequate for your needs.
Personal property coverage? Don’t assume your personal property, fishing gear or other belongings are covered by the boat insurance. Most policies require additional coverage, or these items may fall under another policy, such as homeowners insurance. When in doubt, ask your agent.
Perils? Vandalism, wrecks and physical damage are typically covered, but what about sinking, storm damage or hail? You might be surprised to learn that it often depends on the type of boat, your usage and other factors.
Most parents dread the day their teens take to the road: high insurance rates combined with natural concern for your new driver do little to alleviate the suffering. Fortunately, you can reduce high insurance premiums while keeping the entire family safe with these rules for the road:
Ask about Good Grades and Other Discounts
Honor students and those who invest in driver education classes can instantly cut 10% to 20% from their annual premiums.
Consider Buying a Clunker Rather Than Loaning the Family Car
One of the main causes of increased car insurance is allowing your teen to borrow the family car. Rather than risk the wreck of an expensive vehicle, carefully weigh the savings of buying a safe but inexpensive car for your teen instead. The independence and insurance savings often more than compensate for the initial outlay.
Calculate the Total Cost
Having a teen driver in the home impacts the family finances in more than one way: professionals and small business owners may be especially vulnerable to increased liability in the event your teen is involved in an accident.
Remember, even though your teen may not own a lot, it is a mistake to scrimp on liability coverage. Most lawsuits will not seek damages from the teen; they’ll go after the family. Don’t risk your family’s financial future – increase the liability portion of your insurance prior to handing over the keys.
Go It Alone
Sometimes it makes more sense for teen drivers to go-it-alone and purchase an independent insurance policy, especially once they leave for college.
Different cities,vehicles, and other demographic data impact auto insurance premiums. Always obtain quotes as part of the family plan and as a stand-alone policy to determine which is the best option.
Many homeowners assume their big-ticket items like jewelry and antiques are covered by a standard insurance policy. Unfortunately, that assumption is often wrong. Most standard homeowners insurance policies provide a cap or limit on luxury items, collectibles or other expensive belongings; usually $2,000 to $3,500. Above that level, it is necessary to obtain additional coverage typically in the form of a rider or endorsement. Protect all your property by following these simple steps.
- Make a list of all “big ticket” items – be sure to include gifts, inherited items or large purchases. Common examples include works of art, collections, electronics, cameras, computer systems and jewelry.
- If you have an appraisal, be sure to include it; otherwise, photographs, receipts and other items documenting the condition of the object(s) are helpful.
- Call your insurance agent for quotes. Ask about replacement coverage as well as limitations. For example, if the item is used for business, you may need a different policy than for items retained exclusively for personal use. Items such as jewelry or collectibles may require additional coverage depending upon geographic areas – for example, when traveling out of the country or when away at college, it may be necessary to obtain a temporary policy to ensure that full protection is in place.
- Do your homework. Ask your agent if the same provider insures big-ticket items and what would happen in the event of a claim.
What you don’t know about long-term care insurance could hurt you for years to come. Everyone knows they need insurance, but even those who are diligent about other forms of insurance tend to forget about long-term care insurance until late in life. Unfortunately, that is often a big mistake. Not only does it cost more the longer you wait, but you may not even be able to obtain it once an accident or illness strikes.
What It Is
Long-term care insurance provides needed assistance during one’s later years and, even more important, also provides the type of coverage required in the event of a disability or severe illness.
Why It’s Important
Since federal Social Security disability or SSD benefits require a minimum of six months’ illness or injury prior to even applying for coverage – and it takes an average of six months to two years to obtain benefits – there is a significant gap in coverage until basic expenses are covered. Even then, the federal government plans do not cover all expenses.
According to the US Census, four out of five people will eventually experience at least six months of illness or injury that leaves them unable to provide for their own basic activities of daily living.
When to Buy It
Purchasing long-term care insurance early in life is the most affordable and certain way to guarantee your family doesn’t encounter hardship due to unexpected circumstances during your high-income years and long-term outlook.
Part of Your Portfolio
If you are the primary wage earner for your household, have no children or family members to assist during your retirement years or simply can’t count on Social Security to provide for all of your needs, then long term care insurance is a must for your insurance portfolio.
Remember, plan ahead and purchase while you are young and healthy in order to obtain the best rates.
One of the common misperceptions surrounding life insurance is that the working spouse is the only person who should be insured. If you or your spouse stays at home with the children it is essential to calculate the equivalent cost of replacing that support in order to maintain your standard of living in the event of a major loss.
Make a list of what it would cost to provide care and support if your spouse was not at home. Common examples include day care and babysitting fees, meal preparation or the cost of purchasing meals outside the home, transportation, tutoring, housecleaning, and errands. Remember, it is rare or even impossible for one spouse to do it all alone.
Once you have created the entire list, be sure to add in the rate of anticipated inflation. Based upon the age of your children, determine what the total cost of care will be until they are grown. Healthcare and education tend to rise faster than the general inflation rate, so leave wiggle room.
Don’t forget yourself. While it’s important to preserve the quality of life for your children, it is equally important to add in the loss of companionship and care that will impact the surviving spouse. Couples benefit from the help and assistance afforded by the relationship: everything from travel to and from medical appointments to a second income that would provide an additional layer or protection for couples as they age. Include the long-term impact and cost to your own quality of life when considering the total amount of life insurance to purchase.
While shopping online for insurance is fast and convenient, there are a few dirty little secrets that might end up making it cost more than you realize. Find out why using an agent or broker beats shopping online for insurance.
Only advertisers: Online insurance quotes compare only the rates of companies that advertise on their website. Although it can be convenient to shop online for insurance, online insurance websites make money by selling advertising space. Insurance providers that don’t participate won’t show up in search results. Since a broker make money only when they sell policies – not when they sell advertising space – you can be sure to obtain the most competitive rates the broker has available.
Personal service: Insurance is complex, so it should come as no surprise that terminology and other contractual situations can be confusing. Work with a broker who is able to inform you about available options that could impact your coverage or cost.
Traditionally, people tend to purchase life insurance then forget all about it. Unfortunately, that is one of the worst possible things to do.
Learn why and when to adjust your life insurance with these quick life scenarios and other tips:
Change of marital status
Whether you are newly married, recently divorced or widowed, it is important to update your name and beneficiary information as soon as possible.
Be sure to review the terms of coverage to make sure it provides the type and quantity of coverage required for your new status.
Change of employment
If you are recently retired, unemployed or starting a second career, you may have different life insurance needs – especially if your employer no longer provides coverage. It’s easy to obtain life insurance quotes if you are self-employed or as a supplement to employer-sponsored coverage. Don’t forget to increase coverage in the event that your spouse has decided to stay home to care for children; the loss of income could be a double blow to your financial future without adequate life insurance and your ability to quickly restore a full income.
Change of financial situation
The recent economic crisis has resulted in the reduction of many retirement accounts, pension plans and even the appraised value of other assets you may have counted on to provide income or assistance in addition to life insurance. Re-evaluate your net worth and supplement life insurance needs accordingly to make sure your loved ones are provided for despite the recent economic downturn.
Change of dependents
While it’s natural to add life insurance with the birth of a child, few people remember to do so when granted the long-term care of parents or other dependents. Update life insurance to reflect the needs of adult dependents, aging parents, adopted children or others.
An umbrella policy is one of the most affordable and important types of insurance available.
It is also one of the most overlooked and misunderstood types of insurance on the market.
Protect Your Assets
Once considered a policy for the rich, umbrella insurance is actually more important for many middle-class homeowners or others with assets they simply cannot afford to lose.
Umbrella insurance provides additional protection against liability claims; whether you own your own business, or have extensive real estate holdings or significant savings of any type, the risk of being sued for an amount above and beyond your primary policy limits has grown in recent years.
Today, a simple auto accident can result in medical bills amounting to hundreds of thousands of dollars.
Follows On from Liability Insurance
An umbrella policy protects your financial health by picking up where normal liability limits end.
For example, if your car insurance had a cap rate of $500,000, then the umbrella policy would begin at $501,000 and extend to $1 million or whatever other denomination was indicated.
Because it is based upon your personal risk, it covers excess liability for all your regular needs, including auto, homeowners, investment properties and even inherited risk from minor children or pets.
What You Will Pay
Most umbrella policies are affordable; the average monthly rate for a $1 million umbrella policy is likely to run you less than the price of taking the family out for a fast-food meal.
Where to Start
Speak to your agent today to learn how to protect your financial future with an affordable umbrella policy.
When buying insurance, many people make the mistake of thinking “less is more,” but scrimping on insurance rarely saves money in the long run. Sadly, when the time comes to submit a claim, people often realize what an expensive mistake they made. Get the best deal on insurance without paying the ultimate price or sacrificing your financial future with these quick tips:
Schedule a time to speak with your agent in person. Whenever you change policies or have major life events, it is important to sit down with your agent to review your insurance needs. Make a list of belongings as well as changes to your personal status in advance. Many people are surprised to find they are eligible for discounts simply because a vehicle has reached a certain age or their driving habits have changed. Your agent will be able to provide greater insight into your specific needs while identifying discounts you may not have thought about.
Coordinate benefits and stick to one provider. While it might be tempting to change policies every year in search of the elusive discounts, in the long run it rarely pays to keep jumping from company to company. Not only does it increase the likelihood of duplicating insurance coverage, but many companies provide long-term customers with additional discounts.
Buy all your insurance from one provider. Having your automobile, homeowners and umbrella policies with one provider is a fast way to save 5 to 10% or even more.
Chances are buying auto insurance isn’t on your top ten list of fun things to do this weekend. Don’t worry – it’s easy to buy right when you follow these simple steps:
Review your current coverage at least 30 days prior to the renewal date. Not only will you have a current copy of your renewal notice, but it allows you plenty of time to make necessary changes to your policy due.
Make a List
Make sure you understand current limits and exclusions in effect on your policy then ask about any changes or modifications that may impact the premium. For example, if you have recently had a change of marital status or employment it could impact your rates. Inform your agents of all changes to find out if you qualify for better rates.
Ask for discounts! It is possible to reduce premiums by 5 to 25% by combining common discounts, including special rates for organizations and memberships, as well as safe driver and multiple policy discounts.
Different makes, models and safety features can save thousands of dollars over the life of the vehicle. The same applies when it comes to customized features; everything from the stereo to security systems dramatically influences insurance rates.
Prior to making modifications to the vehicle ask your agent for a quote related to additions or modifications to the vehicle.
Eliminate and Don’t Duplicate
Don’t pay for coverage you already own; common examples include rental coverage or supplemental medical coverage.
Take time to coordinate your auto insurance with other policies you may own to get the best coverage possible at the most affordable rates; in many cases you might find auto insurance provides superior coverage at a better rate than credit card provided rental policies or supplemental medical coverage.
As the New Year approaches, it is only natural to reflect on changes that took place over the past year. It’s also the perfect time to assess your insurance needs and take steps to protect your financial future for the year to come.
Schedule a time to speak with your insurance agent if any of the following apply:
Change in marital status: Everything from auto coverage to beneficiaries on life insurance may need to be updated to reflect a change in marital status. Other policies likely to be impacted include medical, homeowners and ancillary policies. Be sure to notify agents about any name changes as well.
Relocation: It’s easy to forget to change insurance information during the hustle and bustle of moving, but auto insurance and other policies are impacted (for better or worse) by zip codes. Make sure all contact information is up to date for all forms of insurance.
Children: Whether you have just welcomed a new addition to the family or sent the last one off to college, children make a big difference when it comes to insurance. Other commonly encountered situations that impact insurance include new drivers and teens traveling on their own.
Change in employment status: Retirement, starting a new business, unemployment and other lifestyle changes require extensive re-evaluation of insurance needs. Everything from auto mileage discounts to medical coverage is likely to be impacted by employment status.
You have spent your lifetime building assets to take care of your financial future but how much time have you spent learning how to protect those investments?
Your business, real estate holdings and other assets could be wiped out with just one lawsuit. Many people are surprised to learn they are more “at risk” than they realize.
Think you are exempt or just not sure you need personal liability insurance?
If any of the following apply to your present life situation then chances are you are at greater risk than you realize:
- You are employed or work in a high-risk professional occupation including private practice or own your own business.
- You own valuable assets including land, rental property or other investments.
- You have a teen or young adult at home or in college; remember, you are responsible for their liabilities until they reach adulthood… including auto accidents or other functions that could put your property at risk.
- You sit on the board of directors, advisory board or other position for a corporation or not-for-profit agency.
Personal liability insurance is affordable and a great safe-guard from potential lawsuits or claims against personal and/or family assets and holdings above and beyond those covered by standard auto, malpractice or homeowners policies.
One of the most affordable types of insurance available, personal liability policies cost between $200 and $450 annually for $1 to $2 million in coverage.
To calculate the size of your policy simply add up all of your assets including financial, real estate, cash or other valuables then subtract the amount of your current coverage.
The remaining figure should be the basis of your coverage.
Be sure to take inflation and recent appraisal values into account by speaking with your insurance agent.
If you have never purchased life insurance or if it has been a while since you bought your policy then you may be under-insured. Use these tips to help calculate your life insurance needs.
Plan ahead for life-changing events: Marriage, retirement, childbirth, starting a business or even buying a home can alter the amount of life insurance required to care for your family. Make a point of reviewing your life insurance needs at least once per year.
Define your goals: Depending upon your life stage, the purpose of life insurance may be to replace a lost income or supplement a retirement pension and health benefits. Whatever the main financial goal may be, include the actual annual amount plus benefits and intangibles such as health insurance, care-taking and help with household duties. Remember, it will be necessary to pay someone else to perform those same duties in the event of an untimely death.
Add Inflation: After you have derived an estimate of the total base benefit amount, include anticipated rates of inflation. Don’t use the average government inflation rate, especially for college or health care expenditures which tend to rise far above those of other goods.
Draw-Down Period: Ideally the “perfect” amount is one that allows your family to use a combination of interest on the funds plus principle until the amount is exhausted.
Taxes: Depending upon how the life insurance is purchased and held, some portions may be taxable.